oversight

Royal Oak Township Housing Commission; Ferndale, Michigan; Public Housing Program's Poor Condition of Housing Units and Weak Occupancy Practices

Published by the Department of Housing and Urban Development, Office of Inspector General on 2004-11-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

         AUDIT REPORT




ROYAL OAK TOWNSHIP HOUSING COMMISSION
       PUBLIC HOUSING PROGRAM

         FERNDALE, MICHIGAN

              2005-CH-1003

          NOVEMBER 29, 2004




         OFFICE OF AUDIT, REGION V
             CHICAGO, ILLINOIS



Exit                                 Table of Contents
                                                                 Issue Date
                                                                          November 29, 2004
                                                                 Audit Case Number
                                                                              2005-CH-1003




TO:          Robert E. Nelson, Director of Public Housing Hub, 5FPH
             Margarita Maisonet, Director of Departmental Enforcement Center, CV


FROM:    Heath Wolfe, Regional Inspector General for Audit, 5AGA
SUBJECT: Royal Oak Township Housing Commission; Ferndale, Michigan; Public
           Housing Program’s Poor Condition of Housing Units And Weak Occupancy
           Practices

                                    HIGHLIGHTS

 What We Audited and Why

              We completed an audit of the Royal Oak Township Housing Commission’s
              Public Housing Program. We selected the Housing Commission for audit based
              on two citizen complaints. The complainants alleged that the Housing
              Commission’s Public Housing units were in poor physical condition, tenants were
              housed contrary to HUD’s requirements, and Public Housing funds were
              misspent. The objectives of the audit were to determine whether the
              complainants' allegations were substantiated.


 What We Found

              The Housing Commission’s housing units were in poor physical condition. A
              HUD Construction Analyst inspected 32 statistically selected housing units and
              identified 1,166 deficiencies that did not meet HUD’s Uniform Physical
              Condition Standards and Federal handicap accessibility requirements. The
              Housing Commission also did not meet the Uniform Federal Accessibility
              Standards for access and the required number of handicap accessible housing
              units. HUD’s Construction Analyst estimated that over $5 million of repairs and
              more than $192,500 was needed for unit renovations to meet HUD’s Uniform
              Physical Condition Standards and Federal Accessibility Standards. The Housing


      Exit                                                                           Table of Contents
           Commission allowed new tenants with criminal convictions to be housed and did
           not evict existing tenants with known criminal convictions in violation of HUD's
           One Strike Policy. The Housing Commission also inappropriately paid $3,340 for
           travel expenses for its Board attorney and it approved $7,999 for a new project
           sign changing the name of an existing project without HUD’s prior approval.

           We attributed these conditions to the Housing Commission’s Board of
           Commissioners not allowing its former Executive Director to timely hire,
           evaluate, and fire maintenance and administrative staff and contractors without
           prior Board approval. The Housing Commission’s Board also disagreed with
           HUD’s requirements regarding their role and authority.

What We Recommend

           We recommend that HUD’s Director of Public Housing Hub, requires the
           Housing Commission to: (1) reimburse its Public Housing Program from non-
           Federal funds for the inappropriately used monies; and (2) implement procedures
           and controls to correct the weaknesses cited in this report. We also recommend
           that HUD’s Director of Departmental Enforcement Center take the strongest
           administrative action against the Housing Commission’s Board of Commissioners
           for their improper oversight of the Commission.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06 REV-3.
           Please furnish us copies of any correspondence issued because of the audit.

Auditee’s Response


           The draft audit report requested that the Royal Oak Township Housing
           Commission Board of Commissioners provide their comments by November 9,
           2004. We did not receive an official response to the draft audit report by this
           date. Instead, the Board sent comments to our draft finding outlines that we
           received on November 4, 2004. Our draft finding outlines did not differ
           materially from this report, so we included the Board’s comments verbatim.

           The complete text of the auditee’s response, along with our evaluation of that
           response, can be found in Appendix B.




                                        2
   Exit                                                                          Table of Contents
                            TABLE OF CONTENTS

Background and Objectives                                                           4

Results of Audit
      Finding 1- Public Housing Units Did Not Meet Federal Requirements For
      Physical Condition and Handicap Accessibility                                  6
      Finding 2- Board Commissioners Interfered with the Day-to-Day Operations of
      the Housing Commission                                                        17

Scope and Methodology                                                               24

Internal Controls                                                                   25

Appendices
   A. Schedule of Questioned Costs and Funds Put to Better Use                      27
   B. Auditee Comments and OIG Evaluation                                           28




                                        3
    Exit
                      BACKGROUND AND OBJECTIVES

The Royal Oak Township Housing Commission was established in 1960 by the Township of Royal
Oak as a public housing agency under the laws of the State of Michigan pursuant to the United
States Housing Act of 1937, as amended. HUD executed a Consolidated Annual Contributions
Contract with the Housing Commission to undertake the development and operation of low rent
housing. HUD agreed to render financial assistance for 128 dwelling units in two projects. The 128
dwelling units are primarily large family units consisting of 78-three, four, or five bedroom units
and 50 one or two bedroom units.

As a public housing agency, the Housing Commission is governed by a Board of Commissioners
consisting of five Board members from the community. The Township’s Supervisor appoints the
members to five-year terms, one member’s term expiring each year. The Board is responsible for
appointing the Executive Director to handle the daily operations, and for establishing policies and
procedures for the Housing Commission. The Director is responsible for overseeing the Housing
Commission’s employees, consisting of two administrative and two or three maintenance staff, and
implementing the Housing Commission’s policies and procedures. The Housing Commission’s
fiscal year ends on March 31.

HUD has authorized and provided the Housing Commission over $3 million since fiscal year 2000,
over $2 million in Public Housing Operating Subsidy and over $1 million Capital Grant Program
funds (as of September 30, 2004), as follows:

                       Housing        Operating Operating    Capital   Capital
     HUD Grant       Commission’s      Subsidy    Subsidy     Fund      Fund
      Number         Fiscal Year* Authorized Disbursed Authorized Disbursed
   MI033-001-00M         2000           $235,749   $235,749
   MI28P033-501-00                                            $258,629 $258,629
   MI033-001-01M         2001            261,382    261,382
   MI28P033-501-01                                             262,837  262,837
   MI033-001-02M         2002            367,838    367,838
   MI28P033-501-02                                             250,146  242,464
   MI033-001-03M         2003            387,004    387,004
   MI28P033-501-03                                             194,208   19,637
   MI28P033-502-03                                              41,018
   MI033-001-04M         2004            367,516    367,516
   MI28P033-501-04                                             227,260         0
   MI033-001-05M        2005*            416,163    201,506          0         0
              Totals                  $2,035,652 $1,820,995 $1,234,098 $783,567
                     * April 1 to March 31

HUD’s Real Estate Assessment Center performs annual physical inspections of public housing
commissions’ housing units. During 2003, the Housing Commission received poor physical
inspection scores of 54 and 56 for its two-projects due to the poor condition of its housing units.
Based on the Housing Commission’s low scores under the Public Housing Assessment System for

                                             4
     Exit                                                                              Table of Contents
the physical component, on August 20, 2003, HUD designated the Commission as troubled. This
triggered more HUD oversight and monitoring of its operations. After receiving and approving the
Commission’s fiscal year 2003 financial audit report in December 2003, HUD officially released a
Public Housing Assessment System overall score of 67 that designated the Housing Commission as
“Substandard Physical.” In April 2004, HUD’s Real Estate Assessment Center again cited the
Housing Commission for the poor physical condition of its housing units with low physical
inspection scores of 51 and 40 for its two-projects.

In accordance with HUD Regulations, if the Housing Commission receives a troubled
designation by HUD, it may be referred to HUD’s Enforcement Center if the Commission does
not improve its Public Housing Assessment System overall score by 50 percent in the first year
and become a standard performer again by the end of the second year. The Enforcement Center
may initiate a judicial appointment of a receiver or an administrative receivership and may
initiate other sanctions, including limited denial of participation, suspension, debarment and
referral to other government agencies for imposition of civil or criminal sanctions.

The United States Congress established the Architectural and Transportation Barriers
Compliance Board in 1973 and gave the Board the responsibility to issue uniform minimum
guidelines and requirements for accessibility by physically handicapped persons since various
Federal agencies had previously issued their own standards. The guidelines adopted by the
Board were consistent with the previous standards published by the American National
Standards Institute for general use for the private sector and most state governments. These
standards were published in the Federal Register on August 7, 1984 as the Uniform Federal
Accessibility Standards. Since HUD is responsible for prescribing the Standards for residential
structures, HUD adopted these Standards in 24 CFR Part 40 effective October 4, 1984.

Two citizen complaints alleged poor maintenance of housing units, residents with felony
convictions living in housing units, and misuses of Housing Commission funds. Given the
complaints, the objectives of our audit were to determine if the complainants’ allegations were
substantiated. In accordance with HUD’s requirements, we determined whether the Housing
Commission’s: (1) Public Housing units were adequately maintained; (2) tenant selection and
eviction procedures were properly followed; and (3) use of specific Public Housing funds were
reasonable and necessary.




                                            5
     Exit                                                                           Table of Contents
                                RESULTS OF AUDIT

Finding 1: Public Housing Units Did Not Meet Federal Requirements
           For Physical Condition And Handicap Accessibility
The Royal Oak Township Housing Commission's housing units did not meet HUD's Uniform
Physical Condition Standards due to their poor physical conditions. The Housing Commission’s
housing units did not meet the Federal Architectural Barriers Act because they lacked the
required handicap accessibility. A HUD Construction Analyst identified 1,166 deficiencies in
the 32 statistically selected Public Housing units inspected and estimated the total cost of
required repairs for all of the Commission's 128 units to be more than $5 million. The Housing
Commission also did not meet its obligations to provide a sufficient number of handicapped
accessible housing units that meet uniform Federal Accessibility Standards. It will cost the
Housing Commission approximately $192,500 to convert the minimum seven housing units to
comply with these Standards. The deficiencies occurred because the Housing Commission’s
Board of Commissioners failed to provide adequate oversight of the Authority’s maintenance
operations. As a result, tenants were subjected to conditions that were hazardous to their health
and safety, and physically handicapped applicants lacked available low-income housing.
Furthermore, the Housing Commission did not efficiently and effectively use $367,516 of HUD
provided operating subsidy for fiscal year 2004.


          Housing Commission’s Housing Units Were In Poor Condition

 Poor Board Oversight of
 Maintenance Operations Noted


               The poor physical condition of the housing units was the result of years of neglect
               by the Housing Commission’s Board of Commissioners over its maintenance
               operations. The Housing Commission failed to: (1) hire sufficient and competent
               maintenance staff to handle maintenance requests timely and completely; (2)
               provide control and accountability over maintenance requests to assure all they
               were addressed timely; (3) require training for maintenance staff; (4) conduct and
               properly document annual unit inspections; and (5) exercise adequate control over
               and use annual unit inspections to generate work orders as needed. These
               conditions lead to low annual physical inspection scores under HUD's Public
               Housing Assessment System. These low physical inspection scores also resulted
               in HUD declaring the Housing Commission as troubled, resulting in more HUD
               oversight of its operations. Furthermore, poor physical unit conditions were
               hazardous to the health and safety of the tenants and required more time to
               prepare vacant units for re-occupancy when tenants move out resulting in less
               rental income on these units.



                                            6
     Exit                                                                            Table of Contents
Poor Maintenance Practices
Previously Cited


            Prior housing inspections performed by HUD’s Detroit Field Office in 2001,
            HUD’s Real Estate Assessment Center in 2001 and 2003, and the Housing
            Commission’s insurance provider in 2001 and 2003 cited inadequate maintenance
            practices of the Commission for the poor housing conditions.


Public Housing Agencies Must
Comply With HUD’s Uniform
Physical Conditions Standards Or
Face Possible HUD Takeover.


            The Annual Contributions Contract between the Housing Commission and HUD
            requires that the Housing Commission shall operate all projects in compliance
            with all provisions of the Contract and all regulations issued by HUD at Title 24
            of the Code of Federal Regulations. Section 4 of the Contract requires that the
            Housing Commission shall at all times operate each project solely for the purpose
            of providing decent, safe, and sanitary housing for eligible families. The Contract
            defines the occurrence of a failure by the Housing Commission to maintain and
            operate the project(s) in a decent, safe, and sanitary manner as a substantial
            default. Upon the occurrence of a substantial default, HUD shall be entitled to
            certain remedies set forth in the Contract that includes possession and control of
            the projects by HUD.

            Title 24, CFR, Part 902.23 requires that public housing must be decent, safe,
            sanitary and in good repair. Public Housing Agencies must maintain such
            housing in a manner that meets the physical condition standards set forth in Part
            902.23 in order to be considered decent, safe, sanitary and in good repair. These
            standards address the major areas of the housing: the site, building exterior,
            building systems, dwelling units, common areas and health and safety
            considerations.

Sample Selection and Inspection
Reports


            We selected a statistical sample of the Housing Commission’s Public Housing units
            using Computer Assisted Audit Tools. A statistical sample of 32 Public Housing
            units was selected from the Housing Commission’s 128 units using sampling
            software developed by the United States Army Audit Agency. The units were
            selected to determine whether the Commmission assured its units were maintained
            according to HUD’s Uniform Physical Condition Standards.


                                         7
   Exit                                                                           Table of Contents
            During April and May 2004, a HUD Construction Analyst inspected the Housing
            Commission’s 32 Public Housing units. HUD’s Construction Analyst is a
            Registered Architect with a Bachelor’s Degree in Architecture, and has 24 years
            experience inspecting properties for HUD. During the audit, we provided the
            inspection results to HUD’s Detroit Field Office Director of Public Housing Hub
            and the Housing Commission’s former Executive Director.

Public Housing Units did not
Meet HUD’s Uniform Physical
Condition Standards

          The Housing Commission’s 32 Public Housing units inspected had 1,166 Uniform
          Physical Condition Standards Deficiencies. The following table shows the type of
          deficiencies.

                                                          Number of
                        Types of Deficiencies             Deficiencies
               Cabinets, Doors, Closets, Hardware             206
               Partitions                                     124
               Plumbing                                        99
               Exterior Doors and Windows                      98
               Electrical                                      89
               Refrigerator/Range                              67
               Heating                                         65
               Closet Doors                                    57
               Floors, Carpet, Tiles                           56
               Lawns & plantings                               52
               Interior Painting                               46
               Storm Doors                                     33
               Garbage Disposal and Exhaust Fans               32
               Curtains and Shades                             24
               Exterior Painting                               19
               Caulking and Weather-Stripping                  17
               Exterior Walls, etc.                            17
               Roofs, Vents, Gutters                           16
               Drives, etc.                                    12
               Exterior Lights                                  9
               Steps, Rails, Fences, etc.                       8
               Fire Extinguisher/Smoke Detectors                8
               Stairs                                           8
               Exterior Gas and Insulation                      3
               Exterminating                                    1
                                Total                      1,166

          We determined through the HUD Construction Analyst’s inspections that the
          deficiencies existed for more than one year. The Construction Analyst reported that


                                        8
   Exit                                                                         Table of Contents
           most of the deficiencies were the result of inadequate maintenance repairs and
           tenant caused damages. The Construction Analyst estimated the total cost of
           required repairs for all of the Commission's 128 units to be more than $5 million.

Cabinets, Doors, Closets, and
Hardware


             There were 206 deficiencies related to cabinets, doors, closets, and hardware
             identified in all 32 of the Housing Commission’s Public Housing units inspected.
             Every unit inspected contained these deficiencies. The deficiencies included:
             doors with no doorstops; kitchen countertops damaged from cutting or scorching;
             kitchen cabinet doors misaligned, broken, delaminated, or missing; and bedroom
             and bathroom door latches and strike plates damaged or missing. The following
             pictures are examples of cabinets, doors, closets, and hardware deficiencies.

 The Public Housing unit
 located at 21074 Wyoming was
 missing two kitchen cabinet
 doors and a drawer.




                                          9
   Exit                                                                            Table of Contents
 The kitchen cabinet in the
 Public Housing unit located at
 20861 Parkside was missing
 two kitchen cabinet doors.




Electrical Hazards


               Eighty-nine electrical deficiencies were identified in 26 of the 32 Housing
               Commission’s Public Housing units inspected. The deficiencies identified included:
               corridor and bedroom ceiling lights were missing globes; bathroom and kitchen
               ground fault circuit interrupters did not work; outlets did not work; electrical
               outlets were not grounded; light switch plates missing or damaged; and an
               electrical panel box had missing breakers. The following pictures are examples of
               the electrical deficiencies.




                                           10
   Exit                                                                             Table of Contents
 The electrical light switch was
 pulled out of the wall in the
 Public Housing unit located at
 21057Bethlawn.




The cover for the electrical
panel was falling off in the
Public Housing unit located at
20821 Westview.




Exterior Doors and Windows

                Ninety-eight exterior door and window deficiencies were identified in 23 of the
                32 Housing Commission’s Public Housing units inspected. The deficiencies
                included such items as: exterior window sills bent and damaged due to no wood
                backing; storm doors and window screens were torn; and missing or broken storm



                                           11
    Exit                                                                           Table of Contents
              doors. The following pictures are examples of exterior door and window
              deficiencies.

The storm door missing for the
Public Housing unit located at
10139 Pasadena.




Torn window screen for the
Public Housing unit located at
21383 Wyoming.




                                         12
   Exit                                                                         Table of Contents
Maintenance Operations
Neglected


            The poor physical condition of the Housing Commission’s housing units was the
            result of long-term neglect of its maintenance operations. The Housing
            Commission’s maintenance operations were not adequate to handle maintenance
            requests, and prepare vacant units timely and completely. The Commission’s
            management also did not maintain its computer tracking system for maintenance
            requests and materials used effectively.

            The former Executive Director of the Housing Commission recognized the need
            to increase the competence and size of the Commission’s maintenance staff.
            However, the Commission’s Board of Commissioners did not give its former
            Director the authority to hire or fire maintenance staff without the Board’s
            consent. The Board was not willing to hire sufficient and competent maintenance
            staff to maintain the housing units. Requiring prior Board approval caused delays
            in obtaining the necessary manpower to address maintenance requests,
            preventative maintenance issues, and preparing vacant units timely and properly.
            The Board hindered the former Executive Director’s efforts to perform his job
            successfully while clearly violating its role as described in HUD’s Program
            Integrity Bulletin, Public Housing Agency Commissioners, published in
            November 1990. The Board is responsible for appointing the Executive Director,
            establishing policies and procedures, approving operating budgets and major
            procurements, monitoring financial and operational performance, and overseeing
            the Executive Director regarding compliance with Board policies and HUD, State,
            and local requirements. The Executive Director is responsible for supervising the
            Housing Commission employees’ handling of the daily operations of the
            Commission covering maintenance, admissions and continued occupancy, rent
            collection, and cash management.

             Vacant Units Were Not Prepared For Rental Timely

Unit Turnaround Time Exceeded
HUD’s Recommended Time


            The Housing Commission’s annual average unit turnaround time on vacant units
            for fiscal year 2004 was 91 days, or three months. HUD’s recommended average
            unit turnaround time for a standard performing public housing authority is no
            more than one month. The Housing Commission’s performance of 91 days per
            vacant unit was not satisfactory according to HUD standards. Furthermore, the
            Housing Commission lost an estimated $11,210 in potential rental receipts due to
            the excessive amount of time that units were allowed to remain vacant. These



                                        13
   Exit                                                                         Table of Contents
           rent proceeds could have been used to offset the costs of hiring another
           maintenance employee.

           Based upon our inspection of the Commission’s housing units, the poor physical
           condition of the housing units and the lack of maintenance staff contributed to the
           high vacant unit turnaround time. Additionally, the Housing Commission failed
           to perform annual unit inspections and complete annual unit inspection reports.
           The annual unit inspections and reports could assist the Housing Commission in
           making timely repairs before tenants move out.

           We randomly selected a sample of 20 of the Housing Commission’s 116 tenant
           files. As of April 7, 2004, no annual inspection reports for 2004 were performed
           for the 20 tenants sampled. For 2003, nine of the 20 tenants’ files lacked an
           annual unit inspection report and six tenants had a partial annual unit inspection
           report. We could not determine if a 2003 annual unit inspection was performed
           for five tenants because the partial inspection report was not dated or signed by
           the employee who performed the inspection.

           According to the former Executive Director, the annual unit inspections for 2003
           were not performed timely. Usually, the annual unit inspections are performed
           after all of the tenant re-examinations are completed. Normally, the re-
           examinations are completed by March or April of each year. However, the
           recertification process for 2003 was not completed timely. For 2004, the annual
           unit inspections were just started and only three annual unit inspections were
           completed by April 7, 2004.

           The excessive unit turnaround time occurred because the Housing Commission’s
           Board of Commissioners and its former Executive Director did not give priority to
           performing annual unit inspections and preparing vacant units for re-occupancy.
           They did not work together to bring new maintenance staff or contractors on
           board timely, such as hiring new maintenance staff within 30 days after a position
           became vacant or hiring contractors to complete work on the vacant units within
           30 days after a unit became vacant.

 Housing Commission Units Did Not Meet Federal Handicap Accessibility
                           Requirements
No Housing Commission Units
Met Federal Handicap
Accessibility Requirements


           HUD’s Construction Analyst determined that none of the Housing Commission's
           housing units fully met the Federal handicapped accessibility requirements
           established under the Architectural Barriers Act. The Construction Analyst
           inspected the Housing Commission’s two units designated for the physically


                                        14
  Exit                                                                           Table of Contents
             handicapped. He determined that neither unit fully met the Uniform Federal
             Accessibility Standards. The units lacked the following handicapped accessible
             features: ramps for the front and rear entrance with curbs at the sides and
             handrails; exterior and interior door openings with the required width clearance;
             kitchen cabinets, counters, and plumbing fixtures installed at the proper height;
             bath room grab bars; and electrical outlets installed at the required height.

             The Uniform Federal Accessibility Standards require that the minimum number of
             handicapped accessible housing units be five percent of the total number of housing
             units. Therefore, the Housing Commission should have a minimum of seven
             handicapped accessible units available. HUD’s Construction Analyst estimated it
             would cost approximately $192,500 for the Housing Commission to convert seven
             units to meet the Uniform Federal Accessibility Standards.

             Because of the Housing Commission’s failure to comply with Federal
             requirements, physically handicapped applicants were deprived of accessible low-
             rent housing. The former Executive Director was not aware of the Federal
             requirements for handicapped accessible units until our audit. He said HUD’s
             Detroit Field Office and Real Estate Assessment Center representatives never
             cited the Housing Commission for noncompliance.

Conclusion



             Because of the problems previously mentioned, the Housing Commission’s tenants
             were subjected to conditions hazardous to their health and safety. Furthermore, the
             Housing Commission did not efficiently and effectively use $367,516 of HUD
             provided operating subsidy for fiscal year 2004. Consequently, we have
             questioned the HUD operating subsidy funds as ineligible costs.

             Full implementation of our recommendations and efficiently and effectively use
             of its fiscal year 2005 HUD operating subsidy of $416,163, the Housing
             Commission should be able to comply with HUD’s Physical Condition Standards
             and better occupy its public housing units. Better occupancy of its public
             housing units will ensure that $11,210 or more in tenant rental payments are
             received. These actions will put future HUD and Housing Commission operating
             funds to better use.

Recommendations



          We recommend that HUD’s Director of Public Housing Hub, Detroit Field Office,
          assure the Royal Oak Township Housing Commission:



                                          15
   Exit                                                                             Table of Contents
       1A.   Reimburse its Public Housing Program $367,516 from non-Federal funds
             for the improper use of HUD operating subsidy funds cited in this finding.

       1B.   Perform the necessary repairs to correct all deficiencies identified in the
             32 Public Housing units inspected.

       1C.   Conduct complete maintenance inspections on all other Public Housing
             units not inspected during this audit to identify deficiencies and perform
             the necessary repairs.

       1D.   Implement procedures and controls to ensure that annual inspections of its
             Public Housing units are conducted as required by HUD’s regulations.
             These procedures and controls should help to ensure that the Commission
             properly uses $416,163 in HUD operating subsidy for fiscal year 2005.

       1E.   Conduct annual inspections of its Public Housing units as required by
             HUD’s requirements and corrects all housing deficiencies identified during
             these inspections as soon as practicable.

       1F.   Complete the Uniform Federal Accessibility Standards worksheet for both
             developments to identify specific areas of noncompliance and prepare a
             plan to comply with Uniform Federal Accessibility Standards.

       1G.   Implement procedures and controls to ensure vacated units are turned
             around in a timely manner to meet HUD’s recommended procedures. The
             procedures and controls should help ensure that the Commission receives
             an estimated $11,210 more annually in tenant rental payments.




                                   16
Exit                                                                         Table of Contents
Finding 2: Board of Commissioners Interfered with the Day-To-Day
           Operations of the Housing Commission
The Housing Commission’s Board of Commissioners interfered with the day-to-day
management decisions of its former Executive Director. Specifically, the Board:

   •    Permitted tenants with a criminal record to reside in Public Housing and permitted
        applicants with criminal records to be admitted to Public Housing in violation of HUD's
        One Strike and You Are Out Policy,
   •    Paid $3,340 for travel expenses of the Board attorney to attend conferences in violation
        of HUD’s instructions to the Board,
   •    Approved to pay $7,999 for a new project sign changing the name of the Pasadena site
        project that was not in the budget and did not have prior HUD approval,
   •    Hindered efforts to hire needed maintenance and administrative staff, and
   •    Prevented Housing Commission staff from obtaining required training.

The Board’s actions resulted in the inappropriate use of $45,220 in operating subsidy provided to
house tenants in violation of HUD’s One Strike Policy, ineligible use of $3,340 for travel
expenses, and possible misuse of $7,999 for a new project sign. As a result of the Board’s
interference: deserving worthy applicants were deprived of low-rent housing in favor of existing
tenants with felony criminal records; less funds were available for needed maintenance and
repairs; and new employees were not hired timely which prevented the Housing Commission
from maintaining its housing units and servicing its tenants’ needs properly.


          HUD’s One Strike and You Are Out Policy Was Not Enforced.

 The Commission Housed
 Tenants in Violation of HUD’s
 One Strike Policy


               To determine whether the Housing Commission was enforcing HUD’s One Strike
               and You Are Out Policy, we used the Michigan State Police’s Criminal
               Information Center to identify Public Housing tenants with histories of criminal
               conviction as of May 2004. As of March 31, 2004, 12 tenants resided in Public
               Housing units in violation of HUD’s One Strike Policy. Six tenants had criminal
               convictions when they applied for admission to the Housing Commission’s Public
               Housing Program. The other six residents committed crimes after they were
               admitted to the Program. HUD's One Strike Policy does not require the Housing
               Commission to perform an annual criminal history screening of tenants for
               recertification purposes. As a result, tenants residing in Public Housing may have
               a criminal conviction that the Housing Commission would not be aware of.



                                           17
       Exit                                                                         Table of Contents
       According to the Housing Opportunity Program Extension Act that implemented
       HUD’s One Strike Policy, housing authorities must screen and deny occupancy to
       applicants who have a criminal record and who were evicted from public housing
       in the last three years because of drug-related criminal activity, unless the
       applicants completed a rehabilitation program. Housing authorities must also
       develop standards that deny occupancy to persons illegally using controlled
       substances and to persons, based on illegal use of controlled substances, who may
       interfere with the health, safety, or right to peaceful enjoyment of the premises by
       other tenants.

       In most cases, the Housing Commission’s former Executive Director knew or
       suspected that tenants had a criminal record but claimed lack of support by its
       Board of Commissioners for not enforcing HUD’s One Strike Policy. The
       Housing Commission was notified by a memorandum from the Oakland County
       Sheriff that a resident had a criminal record in March 2001. However, the tenant
       was not evicted because the Board would not support the Director’s efforts to
       comply with HUD’s Policy. The Director said troubled tenants had to be evicted
       for other lease violations, such as nonpayment of rent. The following chart shows
       the tenant reference number, operating subsidy provided to the tenant, when the
       tenant moved in, the criminal incident date, and the type of criminal activity
       identified in the State Police’s Criminal History Database.




                                    18
Exit                                                                          Table of Contents
  Tenant       Operating                                        Description Of Criminal Activity
 Reference      Subsidy                                         That Violates HUD's One Strike
 Number        Provided    Move In Date       Incident Date                  Policy
                                             Applicants
                                                                 Felony assault with dangerous
                                              September 15,      weapon. Misdemeanor domestic
     1.           $2,391     June 1, 2003     2002               violence.
                                                                 Felony dangerous drugs.
     2.           $8,270     June 1, 2001     April 28, 2000     Delivery/Manufacture Marijuana.
                                             April 24, 1999      Felony dangerous drugs.
                             February 12,    June 5, 2000        Possession (narc/cocaine) less than
     3.          $9,019      2001                                25 grams.
     4.           $ 94       March 19, 2004 June 8, 1997         Felony Stalking Aggravated.
     5.          $11,892     August 27, 1999 August 25, 1997     Felony-Retail Fraud First Degree.
                                                                 Felony assault with a dangerous
     6.           $4,707     August 21, 2002 March 3, 2001       weapon.
                                            Residents
                                             April 3, 1999      Felony Larceny. Larceny from the
                                                                Person.
                                              June 7, 1999      Felony robbery. Assault with a
                                                                dangerous weapon and unarmed
     7.                      May 1, 1998                        robbery.
                                                                Ordinance Traffic offense.
                                                                Ordinance violation operating
     8.                      March 1, 2001    July 21, 2001     impaired.
                                                                Misdemeanor controlled substance
     9.                      July 10, 1998    May 2, 2000       possession of marijuana.
    *10.          $8,845     May 13, 1996     September 6, 2000 Felony Fraud over $500.
                                              January 19, 2003 Felony weapons offense. Carrying a
                                                                concealed weapon.
    11.                      June 12, 1998    July 7, 2003      Felony forgery. Counterfeiting.
                                                                Felony Larceny. Larceny from the
     12.                    May 29, 1992      April 4, 2001     person.
    Total       $45,220
* - Housing Commission was notified that resident had a criminal record in March 2001 by a memo from
the Oakland County Sheriff.

             We calculated that through March 2004 the Housing Commission inappropriately
             provided $45,220 in operating subsidy provided for the housing units occupied by
             the above six tenants who were admitted with a criminal record and the one tenant
             who was not evicted after notification by the County Sheriff. We determined the
             number of days the tenant occupied the units times a daily HUD operating
             subsidy rate for each fiscal year in order to calculate the operating subsidy.




                                             19
Exit                                                                                        Table of Contents
  Board Violated HUD’s One
  Strike Policy by Overruling the
  Former Executive Director


             According to the former Executive Director, the Housing Commission’s Board
             would not approve a tenant eviction based on HUD's One Strike Policy because
             some Board members disagreed with the Policy. Even though the One Strike
             Policy was specified in the Housing Commission’s Lease and its Admissions and
             Continued Occupancy Policy, the tenants must violate other lease provisions, such
             as nonpayment of rent or unit damages caused by the family members, before the
             Commission’s Board would approve a tenant for eviction. By overruling the
             former Executive Director’s decisions to not admit applicants or evict residents
             with a criminal record, the Board deprived more worthy applicants from living in
             its housing units. As a result, deserving needy applicants with no criminal record
             were forced to stay on the Housing Commission's waiting list and continue to pay
             higher housing costs and/or live in substandard housing conditions.

Housing Commission Inappropriately Used $3,340 Of Its Funds For Ineligible
                          Travel Expenses

  Board Ignored Prior HUD
  Notification on Ineligibility of
  Expenses


             In January 2003 and March 2003, HUD’s Detroit Field Office notified the
             Housing Commission that the justification for the Board of Commissioner’s
             Attorney to attend the National Association of Housing and Redevelopment
             Officials Conference was not acceptable. HUD advised the Housing Commission
             that the conference and travel costs for the attorney were ineligible expenses.
             HUD also stated that if any Housing Commission funds were spent on the
             Conference for the attorney, the attorney must reimburse the Housing
             Commission and must submit proof of repayment. The Board ignored HUD’s
             specific instructions and used Public Housing funds to pay its attorney to attend
             the conference in March 2003. The Board again used Public Housing funds to
             pay for its attorney’s attendance to the March 2004 National Association of
             Housing and Redevelopment Officials Conference. The Housing Commission
             inappropriately used $1,580 of its funds for the attorney’s airfare and hotel costs
             to attend the 2003 Conference. Furthermore, the Housing Commission used
             another $1,760 of its funds for the attorney’s registration fee, airfare, and hotel
             cost for attending the 2004 Conference.

             Section 401 of the Annual Contributions Contract states in part that the Authority
             may withdraw monies from its Public Housing General Fund only for the

                                          20
   Exit                                                                            Table of Contents
           payment of development costs and operating expenditures and for purposes
           specifically approved by HUD.

           The former Executive Director said the Board of Commissioners disregarded
           HUD's instructions to not pay for its attorney’s travel expenses to attend the
           conferences because the Board disagreed with HUD’s ruling that the expenses
           were ineligible. As a result, the Housing Commission had fewer funds available
           for the benefit of its low-income residents.

Housing Commission’s Board of Commissioners Approves Spending $7,999
                       without HUD Approval
 New Permanent Project Sign
 Costing $7,999 not Approved by
 HUD


           In May 2004, the Housing Commission obtained a quote of $7,999 for installation
           of a new permanent sign renaming the Pasadena site project as the W.C.
           Chambliss Terraces and Townhouses in honor of its Board President. The
           Housing Commission agreed to pay for the sign after a ceremony took place on
           July 9, 2004 renaming the project. As of November 17, 2004, the Housing
           Commission had not paid the contractor who erected the sign. We reviewed the
           Housing Commission’s fiscal year 2005 Budget starting April 1, 2004 and no
           funds were budgeted for the new project sign. HUD approval for the current
           year’s operating budget was required due to HUD declaring the Housing
           Commission as troubled in August 2003.

           The Housing Commission is required to follow 24 CFR Part 85 that incorporates
           Office of Management and Budget Circular A-87, Cost Principles for State and
           Local Government. The Circular requires that all costs must be necessary and
           reasonable for proper and efficient performance and administration of Federal
           awards. Additionally, HUD Handbook 7460.7, “Field Office Monitoring of
           Public Housing Agencies,” Chapter 10, and HUD Notice 94-66 require that
           housing authorities designated as troubled must submit their operating budget to
           HUD for review and approval.

           The former Executive Director said when he began his employment at the
           Housing Commission in September 2002 the Board previously approved
           changing the name of the public housing units at Pasadena to the W.C. Chambliss
           Terraces and Town Houses. W.C. Chambliss was the President of the Board who
           initiated the project name change ceremony and reception held on July 9, 2004.
           The Director stated that he was not provided with the Board meeting minutes or
           any details, such as a detailed budget. In addition, he could not provide the
           specific Board meeting minutes that approved the name change for the Pasadena
           project site.

                                       21
  Exit                                                                          Table of Contents
          The expenditure of these funds is another example of the Board’s misuse of the
          Housing Commission’s funds. It is also an indication of the underlying problems
          for the Housing Commission’s designation as troubled. The use of the $7,999 of
          the Housing Commission’s funds for a new project sign will result in the Housing
          Commission having fewer funds to benefit its low-income tenants. In addition,
          HUD lacks assurance that the Housing Commission paid only reasonable and
          necessary operating costs.

Housing Commission’s Board Has Interfered With Needed Staff Hiring and
                         Disciplinary Action

 Needed Employees not Hired



          The Housing Commission needs more maintenance staff with better maintenance
          skills. This conclusion was repeated in various reports from HUD’s Detroit Field
          and Real Estate Assessment Center, and the Housing Commission’s own risk loss
          insurance program managers. Even though the Operating Budget for fiscal year
          2004 provided for two full-time positions and a part-time position for the
          maintenance department, the former Executive Director still needed the Board to
          approve the new maintenance worker. The former Director had to wait from
          November 2003 to May 2004 to replace a full time maintenance worker. In June
          2004, the former Executive Director requested the Board approve hiring another
          full time maintenance worker to handle maintenance requests and other
          maintenance tasks, but the Board refused. Contrary to the previously mentioned
          reports, the Board also refused to increase the number of maintenance positions
          and the amount of training in the fiscal year 2005 Operating Budget.

          A maintenance person employed by the Housing Commission for many years
          lacked basic maintenance skills and was sent to a maintenance class. The
          employee stopped going to the class after the first week and never completed the
          class. However, the Director could not take disciplinary action because the
          Board did not support his efforts.

          The former Executive Director said the Housing Commission’s excessive housing
          unit vacancies occurred because the former Residential Occupancy Specialist
          resigned in August 2003 and the position was left vacant for over six months until
          February 2004 when the Board finally approved hiring a new employee.

          The current Receptionist/Account Clerk was hired as a temporary employee
          without any fringe benefits in October 2003 to help the Director handle necessary
          administrative office tasks. However, the Board refused to allow the former
          Executive Director to advertise and hire a permanent Receptionist/Account Clerk
          until May 2004. The former employee who left in August 2003 was a full-time
          permanent position in the Housing Commission’s approved Operating Budget and


                                      22
  Exit                                                                         Table of Contents
          adequate funds were available to fill the position immediately. No satisfactory
          reason was found for the delay in hiring a full-time permanent
          Receptionist/Account Clerk.

 Conclusion


          The Housing Commission’s Board of Commissioners failed to support the former
          Executive Director’s day-to-day operations of the Housing Commission. The
          Board refused to implement, enforce, and follow HUD’s requirements.

          Because of the Board’s interference and misuse of Housing Commission funds,
          fewer funds and staff were available to properly operate its Public Housing
          Program.


Recommendations


          We recommend that HUD’s Director of Public Housing Hub, Detroit Field
          Office, assure the Royal Oak Township Housing Commission:

          2A.     Reimburse its Public Housing Program $45,220 from non-Federal funds
                  for the operating subsidy that was not used in accordance with HUD’s One
                  Strike Policy.

          2B.     Implement adequate procedures and controls to ensure that it follows
                  HUD's One Strike and You Are Out Policy.

          2C.     Reimburse its Public Housing Program $3,340 from non-Federal funds for
                  the ineligible travel costs.

          2D.     Does not use $7,999 in Public Housing funds to pay for the new project
                  sign.

          We also recommend that HUD’s Director of Departmental Enforcement Center:

          2E.     Take the strongest administrative action against the Housing Commission’s
                  Board of Commissioners for failing to administer the Commission according
                  to Federal and its own requirements.




                                      23
  Exit                                                                         Table of Contents
                 SCOPE AND METHODOLOGY

       To achieve our audit objectives, we reviewed:

       •   Applicable laws, regulations, and HUD Program requirements at 24 CFR Parts
           5, 901, 902, 960, and 966, and HUD Handbooks 7460.7 and 7465.1,

       •   Uniform Federal Accessibility Standards,

       •   Housing Commission accounting records, audited annual financial statements,
           general ledgers, bank statements and cancelled checks, tenant files, policies and
           procedures, Board meeting minutes, organizational chart, and its Consolidated
           Annual Contributions Contract, and

   •   HUD’s files for the Housing Commission.

       We also interviewed the Housing Commission’s employees, HUD’s staff, and one
       of the complainants.

       We performed our site work between March and August 2004 at the Housing
       Commission’s office located at 8900 Cloverdale, Ferndale, Michigan. The audit
       covered the period January 1, 2003 through March 31, 2004, but was expanded
       when necessary to include other periods.

       We performed our review in accordance with Generally Accepted Government
       Auditing Standards.




                                     24
Exit                                                                            Table of Contents
                              INTERNAL CONTROLS

Internal Control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:

   •    Effectiveness and efficiency of operations;
   •    Reliability of financial reporting; and
   •    Compliance with applicable laws and regulations

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals and objectives. Internal controls include the processes and procedures for
planning, organizing, directing and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.



 Relevant Internal Controls


               We determined the following internal controls were relevant to our audit objectives:

               •      Program operations meet program objectives,

               •      Resource use is consistent with laws and regulations, and

               •      Resources are safeguarded against waste, loss, and misuse.

               We assessed all of the relevant controls identified above, to the extent that they
               impacted our audit objectives.

 Significant Weaknesses


               It is a significant weakness if management controls do not provide reasonable
               assurance that the process for planning, organizing, directing, and controlling
               program operations will meet an organization's objectives.

               Based on our review, we believe the following conditions at the Housing
               Commission are significant weaknesses:

               •   Program Operations

               The Housing Commission did not: (1) ensure that its housing units met HUD's
               Uniform Physical Condition Standards and Uniform Federal Accessibility
               Standards; (2) perform annual unit inspections; (3) prepare vacant units for re-

                                            25
       Exit                                                                           Table of Contents
       occupancy timely; and (4) follow HUD's policy regarding the admission and
       eviction of public housing tenants (see Findings 1 and 2).

       •      Compliance with Laws and Regulations

       The Housing Commission did not follow HUD and Federal regulations and Office
       of Management and Budget Circular A-87 regarding: annual inspections of its
       Public Housing units; Uniform Physical Condition Standards; HUD’s One Strike
       and Your Are Out Policy; and safeguarding of assets (see Findings 1 and 2).

       •   Safeguarding Resources

       The Housing Commission could not support: $367,516 in fiscal year 2004 HUD
       operating subsidy funds used for Public Housing units that did not meet HUD’s
       Uniform Physical Condition Standards; $45,220 in HUD operating subsidy funds
       for Public Housing units occupied by tenants in violation of HUD’s One Strike
       And You Are Out Policy; $3,340 for ineligible travel expenses; and $7,999 for a
       new project sign without prior Board of Commissioners and HUD approval (See
       Findings 1 and 2).




                                    26
Exit                                                                      Table of Contents
                                      APPENDICES

Appendix A

                  SCHEDULE OF QUESTIONED COSTS
                   AND FUNDS PUT TO BETTER USE

                  Recommendation              Ineligible 1/       Funds Put to
                      Number                                      Better Use 2/
                         1A                      $367,516
                         1D                                           $416,163
                         1G                                             11,210
                         2A                        $45,220
                         2C                          3,340
                         2D                                              7,999
                        Totals                   $416,076             $435,372

1/    Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
      that the auditor believes are not allowable by law, contract or Federal, State or local
      polices or regulations.

2/    Funds Put to Better Use are quantifiable savings that are anticipated to occur if an OIG
      recommendation is implemented resulting in reduced expenditures in subsequent period
      for the activities in question. Specifically, this includes costs not incurred, de-obligation
      of funds, withdrawal of interest, reductions in outlays, avoidance of unnecessary
      expenditures, loans and guarantees not made, and other savings.




                                            27
     Exit                                                                              Table of Contents
Appendix B

        AUDITEE COMMENTS AND OIG'S EVALUATION


Ref to OIG Evaluation    Auditee Comments




                        28
    Exit                                    Table of Contents
Appendix B
Ref to OIG Evaluation    Auditee Comments




                        29
    Exit                                    Table of Contents
Appendix B
Ref to OIG Evaluation    Auditee Comments




Comment 1




Comment 2




Comment 3




                        30
    Exit                                    Table of Contents
Appendix B
Ref to OIG Evaluation    Auditee Comments




Comment 4




Comment 5




                        31
    Exit                                    Table of Contents
Appendix B
Ref to OIG Evaluation    Auditee Comments




Comment 6




                        32
    Exit                                    Table of Contents
Appendix B
Ref to OIG Evaluation    Auditee Comments




Comment 7




Comment 8




                        33
    Exit                                    Table of Contents
Appendix B
Ref to OIG Evaluation    Auditee Comments




Comment 9




Comment 10




Comment 11



Comment 12




                        34
    Exit                                    Table of Contents
Appendix B
Ref to OIG Evaluation    Auditee Comments




Comment 13




                        35
    Exit                                    Table of Contents
Appendix B
Ref to OIG Evaluation    Auditee Comments




Comment 14




                        36
    Exit                                    Table of Contents
Appendix B
                         OIG Evaluation of Auditee Comments

Comment 1   These comments by the Board of Commissioners support our earlier comments
            that the Board wants to continue to approve all new hires. Also, the Board’s
            comments that the Director’s recommendation of dismissal was honored is further
            evidence that the current Board wants to approve all employee dismissals.

Comment 2   The Board’s comments imply that the policy of hiring only licensed contractors is
            a new policy. The latest procurement policy on file was dated April 26, 1988.
            The Board’s comments that the Board will implement this policy also implies that
            the Board plans to do more than oversee the Executive Director and the staff’s
            performance in following this policy. These comments indicate that the Board
            plans to take an active role in the decision making process of hiring the
            contractors which is contrary to the role of the Board as cited by HUD in its
            Program Integrity Bulletin of November 1990.

Comment 3   The Board’s comments stated there should be a bank of applicants that can be
            selected at any given time consistent with the Commission’s procurement policy.
            We have a copy of this policy but our interpretation of it differs. There is no
            mention about employee hiring in the Procurement Policy. In addition, the effort
            to advertise frequently and screen applicants on a regular basis for jobs at the
            Housing Commission is not an effective use of the Director’s time and the
            Commission’s public housing funds.

Comment 4   The Board’s statement indicates that the Board approves all new hiring when it
            decided that it would modify this policy to allow all new hires to be selected by
            the Executive Director. The policy modification is the practice expected by HUD
            and is discussed in its Program Integrity Bulletin for Public Housing Agency
            Board Commissioners issued in November 1990.

            The Board failed to explain why there was a long delay in advertising the
            clerk/receptionist position as indicated in the draft finding. Since the Board had
            been approving all new hiring, the reason for the long delay was due to the
            Board’s actions. If the Board wanted the position filled with a permanent new
            employee, it would have directed the former Executive Director at a board
            meeting to fill the position as soon as possible.

            The Board also stated that its procurement policy requires that all positions be
            advertised. There is no mention about hiring employees in the Procurement
            Policy that was identified as Commission Resolution # 4288. If the Board is
            referring to its Personnel Policy instead, we found no requirement for the
            advertisement of employee positions.




                                         37
   Exit                                                                            Table of Contents
Appendix B
                         OIG Evaluation of Auditee Comments

Comment 5   The use of unlicensed and uninsured contractors for some maintenance tasks was
            the practice of the former Executive Director with the Board’s consent. The
            current Director did not change this practice unless he was unsatisfied with the
            quality of a contractor’s workmanship.

            The Board’s concern about the qualifications of contractors should have been
            included in its procurement policy and used to evaluate the Director’s
            performance in complying with Board policies. In addition, according to the
            procurement policy, all contracts over $5,000 shall be approved by the Board. If
            the Board approves all contracts over $5,000, then the Executive Director is not
            primarily responsible. The Board has primary responsibility.

Comment 6   Regarding our draft recommendations, the Board agreed with most of them.
            However, for some recommendations, the Board considered the corrective actions
            to be the sole responsibility of the Executive Director without any monitoring of
            the Director’s performance at future Board meetings. The Board’s comments are
            further evidence that the Board does not fully understand its role and oversight
            responsibilities.

Comment 7   The Board believes that the attendance of its counsel at the National Association
            of Housing and Redevelopment Officials (NAHRO) conference was justified in
            accordance with 48 CFR 31.205. The local HUD office reviewed the request for
            approval of attendance of its Board attorney at one of the National conferences
            and instructed the Board that the related travel expenses are ineligible and any
            expenses paid by the Board must be reimbursed. By ignoring HUD’s instructions,
            the Board violated its Annual Contributions Contract with HUD. Violations of
            the Annual Contributions Contract are grounds for declaring a substantial default
            with remedial actions, including possible HUD takeover of the Housing
            Commission.

            48 CFR 31.205 and its subparts pertain to Federal Acquisition Regulations’
            contract cost principles and procedures for the pricing of contracts and
            subcontracts. They do not apply to Public Housing Agencies. Royal Oak
            Township Housing Commission must follow HUD Regulations at 24 CFR Part 85
            and its subparts. HUD Regulations at 24 CFR Part 85.22 specify that allowable
            costs will be determined in accordance with the cost principles applicable to the
            organization. For local governments, OMB Circular A-87 cost principles is used.
            OMB Circular A-87 states that costs must be reasonable and necessary for proper
            and efficient performance and administration of Federal awards.




                                        38
   Exit                                                                          Table of Contents
Appendix B
                           OIG Evaluation of Auditee Comments

Comment 8     The Board claimed that HUD’s One Strike Policy was renamed “screening and
              eviction for drug use and criminal activity”. There was no specific regulations
              cited to support this position. We believe that the Board is referring to the section
              in its Admissions and Continued Occupancy Policy. HUD’s One Strike Policy
              does allow some discretion regarding documented proof of rehabilitation for drug
              use. The Board only cited continued occupancy arguments claiming consistency
              with 24 CFR Part 966.4 (4) in its response. The draft finding only cited one long
              term tenant with a criminal record after move-in and six applicants who were
              admitted with a criminal record prior to admission. The Board did not comment
              on why six applicants with a criminal record were still admitted into its housing
              units.

              The reference 24 CFR Part 966.4 (4) is HUD requirements for lease provisions
              when charges are due. The lease grievance regulations are found at 24 CFR Part
              966.52.

Comment 9     The Board commented that it was the grievance panel. According to HUD
              regulations at 24 CFR Part 966, the grievance panel must be a impartial person or
              panel appointed by the Public Housing Agency other than the person who
              approved the action under review. As such, the Board should not be acting as the
              grievance panel.

Comment 10 The Board claimed the former Executive Director indicated to the Board that the
           signage was budgeted for and funds were available. The Board failed to specify
           the Board meeting that approved this activity. Also, the Board did not specify
           where this activity was located in the budget. We could not find this in our
           review of the current year’s operating budget. Since the Housing Commission
           was declared troubled because of poor physical condition inspection scores in
           2003, it must submit its operating budget to HUD for approval. Consequently, the
           Housing Commission should have sought specific HUD approval for the
           ceremony and signage costs.

              The Board claimed that the ceremony and signage was done at a limited expense.
              We disagree. Constructing a new project sign for $7,999 and paying $829 for
              photographs and a compact disk on the dedication of the new project name
              ceremony did not seem reasonable.

Comment 11 The Board agreed with the recommendations addressing HUD’s One Strike
           Policy and said it would not interfere with decisions made by its Executive
           Director provided the Director follows HUD’s grievance procedures for tenants.




                                           39
    Exit                                                                              Table of Contents
Appendix B
                           OIG Evaluation of Auditee Comments

Comment 12 The Board disagreed with our recommendation because it still considers these
           expenditures as appropriate and allowable per its operating budget approved by
           the local HUD office. However, the Board failed to provide any new evidence to
           support its position.

Comment 13 The Board agreed with our recommendations regarding maintenance that were
           previously in draft finding outline #3, and are now part of finding #1 on housing
           unit inspections.

Comment 14 We commend the Board’s comments here that acknowledge its role to oversee the
           Executive Director, update its policies and approve major project improvements.
           However, we would look to see that the Board remains consistent in its
           implementation of these recommendations.




                                          40
    Exit                                                                         Table of Contents