Issue Date October 20, 2006 Audit Report Number 2007-LA-1001 TO: William F. Bolton, Director, Los Angeles Multifamily Housing, 9DHMLA Margarita Maisonet, Director, Departmental Enforcement Center, CV R. Faye Austin, Regional Counsel, 9AC FROM: Joan S. Hobbs, Regional Inspector General for Audit, Region IX, 9DGA SUBJECT: The Associates Group Pioneer Pines Park, Bakersfield, California, Did Not Follow the Provisions of the Regulatory Agreement HIGHLIGHTS What We Audited and Why We audited The Associates Group Pioneer Pines Park (Pioneer Pines), located in Bakersfield, California, in response to a request from the U.S. Department of Housing and Urban Development’s (HUD) Departmental Enforcement Center. Our audit objectives were to assess HUD’s concerns about potential equity skimming and to determine whether the project was administered in compliance with the regulatory agreement and HUD rules and regulations. What We Found Pioneer Pines failed to collect $195,202 in rental payments from its mobile home dealers; paid $133,049 in unsupported wages; made payments of $373,827 for ineligible expenses, of which $27,515 remains outstanding; commingled funds and repaid advances while in a non-surplus-cash position; failed to maintain its vacant spaces in good repair and condition; and failed to make required mortgage payments. We attribute the deficiencies to the president of Pioneer Pines’ insufficient understanding and in some cases disregard of HUD and regulatory agreement requirements and the lack of adequate internal controls and procedures. As a result, project funds were used improperly, which unnecessarily increased the risk to HUD. Furthermore, Pioneer Pines’ failure to properly maintain the vacant lots in a rent-ready condition may have adversely impacted potential homeowners’ decisions to move to Pioneer Pines, and thus, hampered its ability to maximize its occupancy rate. What We Recommend We recommend that the director of HUD’s Los Angeles Multifamily Hub require The Associates Group for Affordable Housing, Inc. (owner), to develop and implement new procedures and lease agreements to collect full rent from affiliated companies once spaces are leased, which will result in $195,202 in funds to be put to better use. In addition, we recommend that HUD require the owner to repay Pioneer Pines’ project account from non-project funds for the $195,202 in uncollected rent, the $133,049 in unsupported salary expenses related to non-project activities, and the $27,515 in ineligible expenses. Further, we recommend that HUD require the owner to correct the deficiencies relating to the vacant spaces we inspected. We recommend that the president discontinue commingling funds and repaying advances while in a non-surplus-cash position and attend training on HUD’s regulatory agreement and other pertinent rules to assure future compliance with the requirements. We also recommend that HUD’s Regional Counsel, in conjunction with HUD’s director of the Los Angeles Multifamily Housing HUB and HUD’s Office of Inspector General (OIG), pursue double damages remedies against the owner for the inappropriate disbursements that were used in violation of the regulatory agreement. In addition, we recommend the director of the Departmental Enforcement Center pursue action under the Program Fraud Civil Remedies Act against the president, impose civil money penalties and pursue administrative sanctions against the president for his part in the regulatory violations cited in this report, and impose administrative sanctions against Pioneer Pines and its owner for the inappropriate disposition of project assets cited in this report. 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 or directives issued because of the audit. 2 Auditee’s Response We provided Pioneer Pines a draft report on September 5, 2006, and held an exit conference with Pioneer Pines’ president on September 18, 2006. Pioneer Pines provided written comments on September 25, 2006. Pioneer Pines generally disagreed with our report findings. The complete text of the auditee’s response, along with our evaluation of that response, can be found in appendix B of this report. 3 TABLE OF CONTENTS Background and Objectives 5 Results of Audit Finding 1: Pioneer Pines’ Owner Failed to Administer the Project in 7 Compliance with the Regulatory Agreement and HUD Rules and Regulations Scope and Methodology 18 Internal Controls 19 Appendixes A. Schedule of Questioned Costs and Funds to Be Put to Better Use 20 B. Auditee Comments and OIG’s Evaluation 21 C. Criteria 53 D. Schedule of Uncollected Rental Income and Utilities – New Homes 56 E. Schedule of Uncollected Rental Income and Utilities – Used Homes 57 4 BACKGROUND AND OBJECTIVES Built originally in 1973, The Associates Group Pioneer Pines Park (Pioneer Pines) is a 336-space mobile home park located in Bakersfield, California, and is insured by the U.S. Department of Housing and Urban Development (HUD) (project number 122-00225) for $7.83 million under the Section 207(m) program of the National Housing Act. This federal mortgage program is for new construction and substantial rehabilitation and insures lenders against loss on mortgage defaults. The project is also funded by the Housing Authority of the County of Kern with $350,000 Series 2002 B and $1,517,677 Series 2002 C tax-exempt bonds. The Associates Group for Affordable Housing, Inc. (owner), was formed in 1988 as a California nonprofit corporation dedicated to providing persons and families of low and moderate income with affordable housing. The owner’s initial purchase of Cedar Hill, a 281-space condominium conversion park, in 1999 was a success. In November 2002, the owner purchased Pioneer Pines with the intention of mirroring that success. In September 2002, the owner’s board of directors unanimously agreed to create a supporting organization, The Associates Group Pioneer Pines Park, to manage the operations of the park. The Internal Revenue Service did not designate the nonprofit status of the new entity until December 2002 and thus forestalled the transfer of the project to the new entity. It was held in abeyance until the transfer was made in December 2004. In the meantime, the owner assumed the role as the supporting organization and stripped itself of its assets and liabilities to enable it to act as the single asset entity for the park. The former entity’s assets and liabilities were transferred to another non-HUD-related organization, The Associates Group Cedar Hill, LLC (The Associates Group Cedar Hill). In February 2004, The Associates Group Cedar Hill transferred all of its rights and title in the park to Pioneer Pines. Before HUD’s limited management review, the president shared the managing responsibilities with management company La Cumbre Management, which was hired in November 2002 and also manages The Associates Group Cedar Hill. Pioneer Pines has not achieved the success of The Associates Group Cedar Hill. As of April 2006, Pioneer Pines had a 34 percent vacancy rate and is currently in default on its mortgage obligation, with the last payment received on July 14, 2006, for the November 1, 2005 loan payment. As of January 13, 2004, Pioneer Pines has struggled to pay its mortgage obligation and has requested disbursements from the working capital and operating deficit reserves. The Los Angeles HUD Multifamily Hub conducted an on-site limited management review of Pioneer Pines in October 2004, which resulted in nine findings and one observation. Shortly after meeting with HUD staff in March 2005, the president employed a certified public accountant to examine the backup documentation (invoices, checks, and vouchers) for all of Pioneer Pines’ bank accounts to reconcile the questionable items and determine the amount due back to the project. The accountant identified $346,312 in unauthorized distributions of project funds relating to the purchase, refurbishment, installation, and transport of mobile home units and questionable salary, tax, and travel expenses. The total amount was repaid to the project in the form of home sale proceeds, The Associates Group Cedar Hill loans/advances, and intercompany transfers. 5 In a February 2006 memorandum, the Departmental Enforcement Center recommended we review the operations of Pioneer Pines for potential equity skimming. The project was an elective financial referral from the Los Angeles Multifamily Hub for unauthorized distribution of project funds. HUD’s Real Estate Assessment Center also referred the project to the Departmental Enforcement Center for review as a result of the bank accounts not being in the name of the project, unauthorized distribution of project funds, an unauthorized loan, and collection of receivables on behalf of an affiliate. Our audit objectives were to assess HUD’s concerns about potential equity skimming and to determine whether Pioneer Pines was administered in compliance with the regulatory agreement and HUD rules and regulations. 6 RESULTS OF AUDIT Finding 1: Pioneer Pines’ Owner Failed to Administer the Project in Compliance with the Regulatory Agreement and HUD Rules and Regulations Pioneer Pines’ owner failed to administer the project in accordance with requirements relating to the receipt and expenditure of project funds and did not properly maintain the project. Pioneer Pines Failed to collect $195,202 in rental income and utilities for the project, Paid $133,049 in unsupported payroll charges for grounds worker wages, Inappropriately used $373,827 in project funds for ineligible expenses, Commingled project and non-project funds, Failed to properly maintain 90 of the 114 vacant lots on the premises, and Failed to make required mortgage payments. We attribute these deficiencies to the president’s insufficient understanding and in some cases disregard of HUD and regulatory agreement requirements and the lack of effective internal controls and procedures. As a result, project funds were used improperly, which unnecessarily increased the risk to HUD. Furthermore, Pioneer Pines’ failure to properly maintain the vacant lots in a rent-ready condition may have adversely impacted potential homeowners’ decisions to move to Pioneer Pines, and thus, hampered its ability to maximize its occupancy rate. Pioneer Pines Failed to Collect $195,202 in Rental Income and Utilities The president of Pioneer Pines failed to collect $195,202 in rental income for spaces used by 17 new homes that were brought into the park and 46 used homes that were purchased and rehabilitated by two of the president’s affiliated companies, Homes of the West and The Associates Group Cedar Hill. Homes of the West is a home dealership located on the Pioneer Pines premises and owned by the president’s son. The Associates Group Cedar Hill operates like a home dealership, except that it purchases, rehabilitates, and resells used homes rather than new homes, as does Homes of the West. According to the accommodations lease agreement between Pioneer Pines and the two dealers, they would lease a space on the park for the purpose of rehabilitating and selling the mobile home unit located on the space. Monthly rental for the space would be $1 (plus utilities) until the mobile home located on the space was 7 rehabilitated to the president’s satisfaction, at which time, the monthly rent would increase to $350 per month plus utilities. Paragraph 18(b) of the regulatory agreement requires that rent paid by dealers for a space shall be a set rate and no special consideration will be given to any specific dealer (see appendix C). While there is no evidence showing that the two dealers actually paid the $1 monthly rent plus utilities, the other home dealers were not given the same benefit. Other dealers, like Accent Homes, Wall Street Capitol, LLC, and Rimer Homes, were required to pay the full rent amount while they rehabilitated the used homes on the lot. The president contended that Pioneer Pines could not charge rent for homes that were not ready for occupancy (i.e., homes that had not been properly installed with electricity and inspected). He also stated that once the homes were habitable, Pioneer Pines would charge rent to the dealer or third parties and would continue to do so until the home was sold to an interested homebuyer. The owner’s contention is obviously not true, as evidenced by the fact that Pioneer Pines charged non- affiliated dealers full rent while they rehabilitated the used homes on the lots. Therefore, it is apparent that the owner disregarded the regulatory agreement to give preferential treatment to its affiliated dealers. We also noted that a majority of the homes might sit on their respective lots for a period of time before being inspected. For instance, a home was placed on space 86 in January 2004, yet it was not inspected until January 2006, which prolonged the period before rent was paid. After homes were inspected, the president did not require the two dealers to pay the monthly rent; rather, rental payments were received only when the home was sold to a homebuyer. Pioneer Pines stood to gain a substantial amount of rental income had it properly charged the dealers the full rent. Appendixes D and E list the affected spaces, separated by new and used homes on the lot, and the corresponding amounts of uncollected rents. Pioneer Pines Paid $133,049 in Unsupported Payroll Charges Pioneer Pines paid $133,049 in unsupported payroll charges related to grounds worker wages because it failed to log work activities that supported the time spent on maintaining and operating the park versus other non-project activities. 8 Two currently employed grounds workers told us they did some work on mobile home units a couple of years ago, but they were not specific on which units and how much time was spent on those units. The April 2004 to December 2005 payroll journals, time sheets, and time cards sent to La Cumbre Management for review did not adequately disclose the number of hours spent on each work activity. As a result, we could not determine the number of hours these and past grounds workers expended on non-project-related activities. The former manager stated that logging work activities and related hours were a waste of time and he abandoned the entire process. It was partly for this reason that the president terminated the manager from his position. The current manager, however, told us that Pioneer Pines has been logging work for the past four years, but the logs are destroyed after a year and are not sent to La Cumbre Management for review before payroll is processed. Although the manager was not able to locate the 2004 grounds maintenance reports, she provided samples of the 2005 reports. The reports listed the activities; however, they did not accurately record and report the time spent on each task. Also, they did not appear to have been reviewed by the supervisor in charge, although the current manager assured us that she verified the work reported once a week. For the rest of the week, she relied on her foreman to supervise. She also told us that the former foreman and manager consistently supervised the crew, yet according to the president, another reason the former manager was terminated from his duty was because he fraternized too much with the grounds workers and would not insist that they complete their work. Based on our review of the grounds reports, we could not identify the number of hours that were spent by the grounds workers on non-project expenses and, therefore, question their wages and related Social Security and Medicare costs. A breakdown of the 2004 and 2005 unsupported payroll charges is as follows: April to December 2004 Pioneer Pines ground workers wages and taxes Employer Total Employer Employee Social Total earnings Medicare Security 1 $ 12,504 $ 775 $ 181 $ 13,460 2 $ 13,871 $ 860 $ 201 $ 14,932 3 $ 8,306 $ 515 $ 120 $ 8,941 4 $ 14,226 $ 882 $ 206 $ 15,314 5 $ 1,676 $ 104 $ 24 $ 1,804 6 $ 3,713 $ 230 $ 54 $ 3,997 Subtotal $ 54,296 $ 3,366 $ 786 $ 58,448 2005 Pioneer Pines ground workers wages and taxes 1 $ 13,226 $ 820 $ 192 $ 14,238 2 $ 19,988 $ 1,239 $ 290 $ 21,517 3 $ 3,676 $ 228 $ 53 $ 3,957 4 $ 11,663 $ 723 $ 169 $ 12,555 5 $ 20,747 $ 1,286 $ 301 $ 22,334 Subtotal $ 69,300 $ 4,296 $ 1,005 $ 74,601 Total $ 123,596 $ 7,662 $ 1,791 $ 133,049 9 Pioneer Pines Spent $373,827 in Ineligible Expenses Between November 2002 and December 2004, Pioneer Pines paid $373,827 in non- project-related expenses as follows: Questionable costs Other Removal and Payroll Mobile home Description Salary Travel entity installation of Total tax purchase expenses homes Balance of accounts as of December 31, 2003 $ 42,796 $ 12,347 $ 5,808 $ 6,477 $ 11,040 $ 60,501 $ 138,969 Balance of accounts as of February 28, 2004 $ 49,410 $ 13,346 $ 7,954 $ 7,982 $ 11,040 $ 95,168 $ 184,900 Balance of accounts as of March 1 to December 31, 2004 $ 26,735 $ 4,708 $ 5,772 $ 20,164 $ 57,000 $ 47,033 $ 161,412 Balance of accounts as of December 31, 2004 $ 76,145 $ 18,054 $ 13,726 $ 28,146 $ 68,040 $ 142,201 $ 346,312 We verified that $346,312 was repaid through proceeds derived from the sale of mobile home units, intercompany transfers, and loans/advances given by The Associates Group Cedar Hill. However, based on our independent review of invoices, checks, and vouchers, we identified $27,515 in ineligible expenses that was not repaid as follows: Pioneer Pines ineligible expenses identified by OIG Description Amount October 2003 - January 2006 invoices $ 8,793 Total advertising expense $ 18,722 Total $ 27,515 Between October 2003 and January 2006, $8,793 was spent on expenses such as electric bills, supplies, and termite fumigation for mobile home units; cable charges for the manager’s unit; and other ineligible expenses that should have been paid by the individual mobile home owners. In addition, $18,722 was spent on advertising consulting fees (supplies, hotels, meals, telephone) incurred by a couple who resided on the premises. During HUD’s review, HUD identified the same items as questionable and stated that it had not resolved the matter with Pioneer Pines. HUD contended that the president did not provide documentation to substantiate the nature of the relationship or provide any documentation to show the services that were rendered. We were only provided a copy of the checks and pay stubs for review. 10 Pioneer Pines Inappropriately Commingled Funds and Repaid Advances While in a Non- Surplus-Cash Position Contrary to paragraph 6(e) of the regulatory agreement, Pioneer Pines inappropriately commingled project and non-project funds and repaid them while in a non-surplus-cash position (see appendix C). At the president’s request, funds were transferred from The Associates Group Cedar Hill to Pioneer Pines to meet operating cash shortfalls. Similarly, Pioneer Pines’ mortgage funds were transferred into an account the president maintained (now closed) and used for both project and non-project expenses. Both types of transactions contributed to the mortgage default and unnecessarily increased the risk to HUD’s insurance fund. Some examples are as follows: • Between 1999 and November 2002, Pioneer Pines’ expenses were primarily funded by The Associates Group Cedar Hill. In November 2002, Red Mortgage Capital, Pioneer Pines’ lender, transferred $288,487 from escrow to its project account, of which $278,487 was used to repay The Associates Group Cedar Hill advances. Pioneer Pines used the remaining $10,000 for operating expenses. (We could not determine whether Pioneer Pines was in a non-surplus-cash position since a financial report was not required for 2002.) Since the funds were fully expended, The Associates Group Cedar Hill was again required to cover Pioneer Pines’ operating expenses through additional advances. • On October 20, 2003, Pioneer Pines repaid The Associates Group Cedar Hill $47,527 for advances while in a non-surplus-cash position. Pioneer Pines used the remainder of its operating funds to pay its November 2003 mortgage obligation but then defaulted on its December 2003 payment. • Between March 11, 2003, and July 16, 2004, La Cumbre Management made several fund transfers from the project account it maintained to the account maintained by the president. The combined amount of $365,487 was spent on project and non-project expenses. By April 7, 2004, the funds were fully expended, and The Associates Group Cedar Hill again covered Pioneer Pines’ operating expenses. While we are not taking issue with the expenditures for project expenses, the transfer and use of project funds for non-project expenses was improper. Between January and July 2005, The Associates Group Cedar Hill transferred a total of $108,333 into the current Pioneer Pines operating account that La Cumbre Management maintains. Based on the work prepared by the certified public accountant, The Associate Group Cedar Hill still owed Pioneer Pines $27,237 for non-project expenses incurred. Therefore, the outstanding advance still owed to 11 The Associates Group Cedar Hill for advances made was $81,096. Details are as follows: Deposits made into La Cumbre Management account in 2005 Deposits made by Deposit The Associates slip date Group Cedar Hill July 11, 2005 $ 9,502 June 10, 2005 $ 25,000 May 11, 2005 $ 21,830 March 7, 2005 $ 25,000 February 2, 2005 $ 30,000 Trustee fees $ (3,000) Total $ 108,333 Less nonproject expenses incurred $ 27,237 Net balance of advances still outstanding for The Associates Group Cedar Hill $ 81,096 Collectively, the equity skimming that occurred when the advances were repaid precluded Pioneer Pines from making required mortgage payments. Pioneer Pines Failed to Ensure the Project Was in Good Repair and Condition Paragraph 7 of the regulatory agreement requires the owner to maintain the mortgaged premises, accommodations, and the grounds and equipment in good repair and condition (see appendix C). The owner disregarded this requirement. Our on-site review performed in April 2006 determined that 90 of the 114 vacant spaces observed contained at least one deficiency. We devised a rating schedule to assist us in quantifying the number of identified deficiencies and established a rating scale to measure the gravity of the deficiencies. A summary of the results follows. Rating Number of spaces Percentage Excellent condition (0 to 1 deficiency) 29 25 Good condition (2 deficiencies) 32 28 Fair condition (3 deficiencies) 22 19 Marginal condition (4 deficiencies) 14 12 Poor condition (5 or more deficiencies) 17 15 Total 114 100 *Percentages do not add up to 100 percent due to rounding. Of the 114 spaces inspected, 17 (15 percent) were in poor condition and contained five or more deficiencies. The most common deficiencies identified relate to the pedestal, utility hook-ups, and spaces that had uncapped sewer lines; needed 12 repainting; were missing pedestal panels; had exposed wiring, rusted pipes, uneven surrounding surfaces, missing or cracked base, or overgrown weeds/bushes; and needed cleaning. A majority of spaces with poor conditions were located within the block of spaces from 285 to 334. The photographs below illustrate a few examples of spaces that received a rating of poor condition. Space 306 - The pedestal needed painting, the pipes had large rusted sections, and the sewer line was uncapped. In addition, the entire space needed to be cleaned. Space 315 - The pedestal needed painting and was missing a cover panel. The gas and water pipes had rusted sections, and the surrounding area needed to be cleared of weeds. Space 327 – The entire top section of the pedestal was missing, while the bottom half needed painting. There was some exposed wiring, and the gas 13 and water pipes had rusted areas. There were also trash and debris around the pedestal. Pioneer Pines Failed to Make Required Mortgage Payments Pioneer Pines failed to make its required mortgage payments in a timely fashion and as of April 2006, is currently in default on its mortgage obligation, with the last payment received on July 14, 2006, for the November 1, 2005 loan payment. Due to the loan advancements made during the early part of the loan term, mortgage payments were made timely until January 13, 2004, the date of Pioneer Pines’ first default. The loan is paid up through October 2005 through disbursements from the working capital reserve or operating deficit reserve funds. After HUD withdrew permission to draw from these funds in June 2004, the loans were paid through a series of rolling defaults. That is, once a loan is past 30 days late it is in default and to reinstate the loan to current, Pioneer Pines would need to make any outstanding payments due by the current month they are paid in. Since Red Mortgage Capital has requested extending the election to assign the loan to HUD several times due to Pioneer Pines’ failure to pay its mortgage, they appear to be satisfied with the efforts of the owner to try and make the project viable. 14 Pioneer Pines Failed to Establish an Adequate Internal Control Environment Pioneer Pines lacked an adequate internal control environment, which contributed to the deficiencies found during our audit. Pioneer Pines failed to segregate work duties and provide adequate supervision as discussed below. Failure to Segregate Duties La Cumbre Management was not independent of the president’s control and could not assure that the president would not circumvent any controls it had in place. Also, La Cumbre Management was unaware of the provisions of the regulatory agreement and did not know that mobile home unit expenses were non-project-related until told by the president, who was also unaware until after the results of HUD’s limited management review. During our review, we determined that La Cumbre Management paid for non-project expenses related to air conditioning repairs, paint and supplies for the mobile home units, door locks for the units, etc. While Pioneer Pines was in a non-surplus-cash position between 2003 and 2004, La Cumbre Management transferred $365,487 in project funds to the account maintained by the president. These funds went to pay for project and non-project expenses at the president’s discretion. When asked whether La Cumbre Management ever refused to cut a check for the president, the bookkeeper stated, “they could have refused, but he was the president so they just wrote the check and believed him.” The bookkeeper incorporated expenses incurred by the president through the bank account he maintained into Pioneer Pines’ general ledger based on the check register amounts that were faxed to La Cumbre Management. La Cumbre Management’s bookkeeper neglected to determine whether those transactions were proper and for the purpose of maintaining and operating the property. Lack of Adequate Supervision The president failed to provide adequate oversight on the premises to ensure that the work was being completed and documented as required. A week before we inspected the park, the managers, a husband and wife team hired in April 2005, were dismissed. The president claimed that they were let go because they failed to complete their managerial duties 15 competently. The husband fraternized too much with employees, which ultimately reduced his ability to get the employees to accomplish their tasks. The husband also did not have adequate organizational skills and eliminated the process of logging the work completed. The wife was unable to use the computer software and relied heavily on the aid of the assistant manager. Contrary to the president’s claim of visiting the park at least once a week, the assistant manager stated that he visited the park infrequently. Had there been adequate supervision, the president would have been aware of the problems with the managers. With inadequate oversight and poor record keeping on the part of the grounds workers (see Failure of Pioneer Pines Employees to Log Work Activities section above), we cannot be assured that the grounds workers were performing their duties as required (see Failure to Ensure Project Was in Good Repair and Condition section above). Based on our discussion with the president and our inspection of the park, it appears that the former manager did not closely supervise the grounds workers as required. As evidenced by our site review, maintenance work was not sufficient to satisfy the conditions of the regulatory agreement. The current assistant manager stated that she reviewed the work completed once a week and had deferred most of the supervisory responsibility to the foreman. We were told that Pioneer Pines hired another grounds worker who started on June 21, 2006, to assist the current manager in this task. Conclusion We attribute the deficiencies noted to the president’s insufficient understanding and in some cases disregard of HUD and regulatory agreement requirements. Another contributing cause was the lack of adequate internal controls and procedures. As a result, the president failed to collect $195,202 in rental income and utilities, paid $160,564 in ineligible and unsupported expenses, and inappropriately commingled funds and repaid advances while in a non-surplus- cash position. These deficiencies resulted in fewer project funds being available for mortgage repayment, which unnecessarily increased the risk to HUD. Further, the president failed to adequately maintain the Pioneer Pines property in good repair and promptly pay its mortgage payments. Recommendations We recommend that the director of HUD’s Los Angeles Multifamily Housing Hub require the owner to 1A. Repay Pioneer Pines project account for the $195,202 (funds to be put to better use) in uncollected rental income (appendixes D and E) from non-project funds. 16 1B. Develop and implement new procedures and lease agreements to collect the full rent from affiliated companies (dealers) once the spaces are leased or terminate all work with its affiliated companies. 1C. Provide documentation to support the portion of the $133,049 in grounds workers’ wages that was related to non-project activities and repay the Pioneer Pines project account from nonfederal funds for that amount. 1D. Repay the Pioneer Pines project account for the $27,515 in ineligible expenses from non-project funds. 1E. Correct the deficiencies related to the conditions of the spaces with poor ratings so they comply with the regulatory agreement, and develop an inspection process and controls to ensure the inspection process is working effectively. 1F. Implement procedures and controls to ensure that future disbursements for project expenses comply with the regulatory agreement and HUD requirements. 1G. Discontinue commingling of funds and seek HUD’s approval before making a repayment of loan advances to an affiliated company. 1H. Attend training on HUD’s regulatory agreement and other pertinent rules to assure future compliance with the requirements. We also recommend that HUD’s regional counsel, in coordination with the director of HUD’s Los Angeles Multifamily Housing Hub and HUD’s Office of Inspector General (OIG), 1I. Pursue double damages remedies against the responsible parties for the inappropriate disbursements that were used in violation of the project’s regulatory agreement. We also recommend that the director of HUD’s Departmental Enforcement Center 1J. Pursue civil money penalties and administrative sanctions, as appropriate, up to and including debarment, against responsible parties for their part in the regulatory violations cited in this report. 17 SCOPE AND METHODOLOGY We performed our audit work at Pioneer Pines, Bakersfield, California, and La Cumbre Management, Santa Barbara, California. We conducted our fieldwork from March 20 through July 21, 2006. Our review generally covered the period from April 9, 1999, through February 28, 2006. We expanded the scope of the audit as necessary. To accomplish our objectives, we • Reviewed the HUD requirements and regulations and the regulatory agreement. • Obtained an understanding of Pioneer Pines’ procedures, including its controls to ensure that the project was properly managed. • Interviewed Pioneer Pines’ president, park staff, certified public account, and construction and management company staff to acquire an understanding of the operation’s procedures. • Reviewed Pioneer Pines’ loan, operating deficit fund, working capital, and reserve accounts provided by the lender. • Interviewed HUD multifamily and Departmental Enforcement Center personnel. • Reviewed the work of Pioneer Pines’ certified public accountant, including the invoices, bank statements, and checks related to the financial activities of the park. • Reviewed the timesheets, time cards, and payroll journals for Pioneer Pines employees between 2004 and 2005. • Reviewed January 2003 through April 2006 rent rolls, monthly traffic reports, additions to income reports, deductions to income reports, deposit slips, and the president’s collection reports pertaining to the new and used homes that were purchased and placed on the lots. • Performed a site review to determine whether the park was adequately maintained as required by the regulatory agreement. • Reviewed HUD’s October 2004 limited management review report to determine whether the monitoring identified any findings or concerns that pertain to the scope of our audit work. • Reviewed Pioneer Pines’ audited financial statements for years ending 2004 through 2005 to determine whether the independent auditor identified any findings that pertain to the scope of our audit work. We performed our review in accordance with generally accepted government auditing standards. 18 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: • Policies and procedures that management implemented to reasonably ensure that the HUD-insured project is administered in conformity with the regulatory agreement and HUD requirements. We assessed the relevant controls identified above. A significant weakness exists if management controls do not provide reasonable assurance that the process for planning, organizing, directing, and controlling program operations will meet the organization’s objectives. Significant Weaknesses Based on our review, we believe the following items are significant weaknesses: • Pioneer Pines lacked effective internal controls and procedures to ensure that the project was administered in compliance with the regulatory agreement. 19 APPENDIXES Appendix A SCHEDULE OF QUESTIONED COSTS AND FUNDS TO BE PUT TO BETTER USE Recommendation Ineligible 1/ Unsupported 2/ Funds to be put number to better use 3/ 1A $195,202 1B $133,049 1C $27,515 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. The $27,515 represents ineligible costs that are unnecessary to the project’s operation or disallowed because they were incurred contrary to the regulatory agreement. 2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program or activity when we cannot determine eligibility at the time of audit. Unsupported costs require a decision by HUD program officials. This decision, in addition to obtaining supporting documentation, might involve a legal interpretation or clarification of departmental policies and procedures. The $133,049 represents unsupported payroll charges related to grounds worker wages. 3/ “Funds to be put to better use” are quantifiable savings that are anticipated to occur if an OIG recommendation is implemented, resulting in reduced expenditures at a later time for the activities in question. This includes costs not incurred, deobligation of funds, withdrawal of interest, reductions in outlays, avoidance of unnecessary expenditures, loans and guarantees not made, and other savings. The $195,202 represents rental income for spaces the park failed to collect for the 17 new homes that were brought into the park and 46 used homes that were purchased and rehabilitated by two of the president’s affiliated companies, Homes of the West and The Associates Group Cedar Hill. 8,793 was spent on expenses such as electric bills, supplies, and termite fumigation for mobile home units; cable charges for the manager’s unit; and other ineligible expenses that should have been paid by the individual mobile home owners. In addition, $18,722 was spent on advertising consulting fees (supplies, hotels, meals, telephone) incurred by a couple who resided on the premises. 20 Appendix B AUDITEE COMMENTS AND OIG’S EVALUATION Ref to OIG Evaluation Auditee Comments Comment 1 21 Comment 2 22 Comment 3 Comment 4 23 Comment 5 Comment 6 24 Comment 7 Comment 8 25 Comment 9 Comment 10 26 27 Comment 5 Comment 5 Comment 4 28 Comment 10 29 Comment 10 Comment 7 30 31 Comment 11 Names Redacted for Privacy 32 33 34 Comment 12 35 Comment 13 Comment 14 36 Comment 15 37 Comment 5 Comment 3 Comment 16 38 Comment 17 Comment 18 39 Comment 19 Comment 20 40 41 42 Comment 21 43 Comment 22 Comment 21 44 45 46 OIG Evaluation of Auditee Comments Comment 1 We disagree. The rental income should have been collected by the owner pursuant to Paragraph 11(b) of the regulatory agreement. Since the rental income was not collected, the owner violated the regulatory agreement. Pursuant to Title 12 of the United States Code, Section 1715z-4a, the Secretary of Housing and Urban Development may request the Attorney General to bring an action in a United States district court to recover any assets or income used by any person in violation of a regulatory agreement that applies to a multifamily project whose mortgage is insured or held by the Secretary under Title II of the National Housing Act. Comment 2 We acknowledge and empathize with the owner’s marketing burdens and difficulty in increasing the occupancy rate. Based on the comments provided by the auditee, we have removed any references to our contacts with other mobile home parks in the Orange County area, since we agree they may not be similar to mobile home parks in Bakersfield. However, we disagree that the conclusions are erroneous. The underlying issue is the park’s failure to collect rental income from two of the president’s affiliated dealers. We also note that our position is consistent with HUD’s position that it took when it raised the issue of uncollected rent in its monitoring review. Comment 3 The auditee did not provide any information that changes our conclusion about the disparity between third party dealers and affiliated dealers. Comments 15 through 18 specifically address the attached commentary and narrative the president prepared in response to our report. Comment 4 Any work performed related to the rehabilitation of mobile home units while being paid out of project funds is in violation of the regulatory agreement. When we interviewed two of the park’s maintenance employees, we were given the impression that rehabilitating of the homes was a secondary part of their functions. Because the records did not document the hours spent and duties performed on specific tasks, we were compelled to question the entire grounds crew’s salaries. We agree that a portion of the salaries is eligible; however, we were unable to determine what portion. During the audit resolution process, the owner can provide documentation evidencing the portion of the salaries that are eligible to resolve the issue. In addition, we noted that the written response did not include the entire relevant portion of HUD Handbook 4381.5, which states that an agent's generalist staff must document hours spent and duties performed 47 on front-line activities for each project and those spent on the central office functions. Weekly timesheets are an acceptable method of documenting hours spent on front-line tasks. Comment 5 According to HUD’s Multifamily Housing officials, advertising of the vacant spaces is a function incumbent on the management company, and the expenses should be borne by the management company. Although the Management Agent’s Certification signed on April 1, 2002 by the president of The Associates Group and March 25, 2002 by the president of La Cumbre Management Company does not specifically state that advertising is a function of the management company, the management company agreed to “ensure that all expenses of the project are reasonable and necessary.” Upon review of the $18,722 in advertising and consulting fees incurred within a two and a half month period (January 12 to March 23, 2004), we determined that these expenses were questionable because the auditee did not provide any documentation to substantiate the services provided in order to support that the expenses were reasonable and necessary to the project operations. Although The Associates Group claimed that La Cumbre Management Company’s services did not involve mobile home sales, our review showed that La Cumbre Management performed the bookkeeping and collecting of the mortgage premiums of these mobile home sales. In November 2004 the president instructed the manager of Pioneer Pines to stop billing residents who owe The Associates Group Cedar Hill for payments not made. Comment 6 By definition, equity skimming is the use of project funds for other than actual or necessary expenses when the mortgage is in default or the project is in a non surplus cash position. There is no required level of intent. Whether the owner willfully, negligently, or without knowledge, utilized project funds for other than actual or necessary expenses, it is still equity skimming. We agree that the $81,096 can be used to offset the ineligible expenses; however, this needs to be reflected in the general ledger before we can consider the issue resolved. The main purpose of this section of the report is to point out that there exists a pattern of requiring advances to be repaid while the park is in a nonsurplus cash position, which is considered equity skimming, and needs to be addressed so that the practice does not continue. Comment 7 We acknowledge that our inspection was not a Real Estate Assessment Center inspection, nor was it meant to be in compliance with Real Estate Assessment Center requirements. The Real Estate Assessment Center inspection score differed from the results of our inspection because the scopes of the inspections were different. Real Estate Assessment Center inspected the common areas, but did not inspect the vacant spaces that we did. Had Real Estate Assessment Center inspected the vacant spaces then the score may have been different. As recommended in the report, the owner can provide information to HUD during the audit resolution process to demonstrate that corrective action has been taken. 48 Comment 8 We amended the report to state that the mortgagee was apparently satisfied with the efforts of the owner to try and make the project viable, and thus has requested extension of the loan’s assignment to HUD. We also corrected the misstatement that the project’s physical conditions resulted in the lack of funds to pay the mortgage. Comment 9 Since the owner agreed that the internal controls were deficient, we have no further comment. Comments on the uncollected rent, ineligible expenses, and project condition are specifically addressed in comments 1 through 3, and 20. Comment 10 We amended the report recommendation regarding the repayment of $29,015, to $27,515 (due to removal of trustee fee, see comment 14 below) as agreed upon at the exit conference. The recommendations we proposed were directed to the Los Angeles Office of Multifamily Housing and the Departmental Enforcement Center, thus the appropriateness of the recommendations can be addressed during the audit resolution process. We also want to point out that the owner was given 15 days to respond to the draft report, which is the same amount of time given to all our external auditees. The owner was given finding outlines back in July, nearly two months before the draft report, but chose not to provide us any comments at that time. We have given serious consideration to the written comments provided in finalizing the audit report. We agree that advances may be used to offset any ineligible expenses; however, this needs to be addressed with HUD during the audit resolution process. With regard to the $97,000 that HUD has not released, we have no comment on the issue since it was not within the scope of our audit. Comment 11 As stated in Comment 4, these declarations conflict with information provided to us during our audit fieldwork and are insufficient to resolve the issue of unallowable expenses of maintenance personnel at this time. Documentation evidencing the amount of time spent on eligible activities can be provided to HUD during the audit resolution process to resolve this issue. Comment 12 As discussed in Comment 10, we have reduced the ineligible expenses in response to your comments. We have provided comments on some of the specific expense items raised by the auditee in Comments 5, and 16 through 19. Comment 13 While the cable expense may be relatively small, it is an unnecessary expense to the park operations, and thus, ineligible. Comment 14 We removed the $1,500 in trustee’s fees from the questioned costs, but we maintain that $27,515 should be repaid back out of non-project funds. Specific comments on some of the other ineligible expenses are as follows: 49 December 22, 2004 $55 payment – This underpayment was the result of a balance carry forward for rental of space number 135. The balance forward as of November 2004 was $952.46 and a payment of $620 was received, bringing the balance to be carried forward down to $332.46 in January of 2005. However, only $277.46 was carried over to January 2005, which was an understatement of $55. The president explained to us that the renter was to receive a renter’s credit of $105 per month and had been inadvertently (due to clerical error) been given a $160 renter’s credit, which is an overstatement of $55 and should be repaid back to the project. Christmas Trees and Flowers – As with the cable expenses, these expenses are unnecessary to the project operations, and thus, are ineligible. Trustee Fees – We verified with the internal auditor that this trustee fee was reversed as an accounting entry and resolved. We have removed this from the ineligible expenses. Comment 15 We cannot provide the space numbers that were involved with the disallowed electrical and gas charges dated between February to October 2003 because the documentation did not clearly delineate those charges as did the other Pacific, Gas, and Electric bills. This is the reason why we questioned those expenses. During the audit resolution process, the owner can provide documentation to HUD to show the break down of the costs and the proper allocation towards each mobile home unit. Comment 16 As stated in Comment 3, the owner did not provide any additional information that changed our conclusion. Between the dates December 2003 and March 2004, the rent roll shows that space number 73 was occupied by Accent Homes. The same information appears on the president’s collection report. During Accent Homes’ occupation of this space, two deposits in the amount of $350 were made, one on January 13, 2004 and another for $350 on February 4, 2004. It was not until March of 2004 did the dealer stop paying its rent and incurred a balance forward of $350. The March 2004 Delinquency report even shows that Accent Homes has an amount due of $350 and it’s “on its way out.” Accent Homes was required to pay rent while it was rehabilitating the home while it sat on space number 73. The Associates Group’s response even admits that Accent Homes was required to pay rent while it was rehabilitating the home, although the rent was refunded back to the dealer due to non performance, which is irrelevant. 50 Comment 17 In the spreadsheet provided by the president, he stated that the home on space #136 “was under contract to LLC and turned over to an outside dealer who later sold the home after some remodel.” The response contradicts that statement and states the contract for the home was never finalized and Rimer Homes made a deal with the homeowner and not the park or LLC. Our review of the dated March to July 2005 rent rolls and collection report shows space 136 to be occupied by Rimer Homes. It was not until the August 2005 rent roll and collection report did the name change to reflect the current tenant. A rent receipt record shows rent to have been paid in April 8, 2005, May 9, 2005, and July 8, 2005. Also, according to the spreadsheet, the park received the tenant application in July 2005 and signed the lease agreement on August 2005, which leads us to conclude that Rimer Homes was required to make rental payments for the time they spent rehabilitating the home. Comment 18 According to the spreadsheet provided by the owner, homes were moved into space number 180 and 181 on January 2005 and passed its inspection on January 7, 2005. Also, these homes were certified habitable on September 2005 and June 2005, respectively. We acknowledge that no rent was collected for these spaces until the homes were sold; however, our position is that other dealers were required to pay the full rent amount. It is evidenced by the balance in the balance and credit forward reports that these dealers are required to pay the full rent amount. The December 2004 and January 2005 balance and credit forward reports show an increasing balance in the amount of rent expected to be collected from Wall Street Capital for utilizing spaces 180 and 181. In The Associates Group’s response, they openly admitted to collecting back rent when each home was sold. Even before the homes were certified as habitable and suitable for occupancy, rent was expected from Wall Street Capital. By June 2005, the balance forward owed by Wall Street Capital for homes on space number 180 and 181 amounted to $2,172 each. So although The Associates Group’s claims to charge rent after a home passes state inspection and is fit for full-time occupancy, the treatment for homes on space numbers 180 and 181 illustrates that they either do not follow the policy or do not adhere to it consistently. Comment 19 As requested by the auditee, we reviewed other homes noted as having been installed by other dealers. Based on the spreadsheet provided by the president, only two other spaces were occupied by another dealer, Visalia Homes. Given that the home was occupied immediately by a tenant or the park’s records conflicted with one another, we could not make a determination whether differential treatment was made with regard to Visalia Homes. Therefore, we were unable to support the auditee’s contention that there was no disparate treatment between the affiliated and non-affiliated dealers. 51 According to the rent roll and collection report, space number 225 was vacant between January 2003 and November 2005. In the month of December 2005, as evidenced by the Pioneer Pines Changes for the Month of December 2005 report and December 2005 rent roll and collection report, a new tenant moved into the space and paid rent on January 4, 2006. According to the rent roll report, space number 259 was vacant between January 2003 and August 2005; however the collection report shows the space as vacant between January 2003 and December 2005. In such a case, we can not make an accurate determination because the records seem to conflict with one another. Comment 20 As discussed in Comment 2, the underlying issue is the park’s failure to collect rental income from two of the president’s affiliated dealers. Based on the auditee’s comments, we have removed all references to our contacts with other mobile home parks. However, we noted that based on our analysis above in Comments 16 through 19, the owner was indeed charging rent to non-affiliated dealers during the rehabilitation phase, and in other cases it was unclear whether there was disparate treatment or not. Comment 21 As recommended in our report, the owner can provide evidence of the corrective action taken to resolve the issues during the audit resolution process. Specifically with regard to the wiring, we are aware that the exposed wiring is not electrical wiring and does not pose a health violation; however, we identified it as a deficiency due to the fact that the exposed wires may be a safety hazard. Children who may play in the vacant lots or even residents may trip over them. Comment 22 With regard to the deficiency on the uneven surrounding surfaces, these are situations where there is a pile of dirt and debris on the front end of the slab and the ground surface beside it is dangerously uneven (see space number 328) 52 Appendix C CRITERIA Regulatory Agreement We extracted the pertinent paragraphs from the executed regulatory agreement. Paragraph 6(e): The owner shall not without the prior written approval of the Secretary [of HUD] make, or receive and retain, any distribution of assets or any income of any kind of the project except surplus cash and except on the following conditions: 1) all distributions shall be made only as of and after the end of a semiannual or annual fiscal period, and only as permitted by law of the applicable jurisdiction; 2) no distribution shall be made from borrowed funds, before the completion of the project or when there is any default under the regulatory agreement or under the note or mortgage; 3) any distribution of any funds of the project, which the party receiving such funds is not entitled to retain hereunder, shall be held in trust separate and apart from any other funds; and 4) there shall have been compliance with all outstanding notices of requirements for proper maintenance of the project. Paragraph 7: The owner shall maintain the mortgaged premises, accommodations, and the grounds and equipment in good repair and condition. Paragraph 11(b): The owner will collect all rents and charges in connection with the operation of the project and use such collections to pay the owners’ obligations under the regulatory agreement and under the note and mortgage and the necessary expenses of preserving the property and operating the project. Paragraph 15: The owner warrants that he has not, and will not, execute any other agreement with provisions contradictory of, or in opposition to, the provisions hereof, and that, in any event, the requirements of the regulatory agreement are paramount and controlling as to the rights and obligations set forth and supersede any other requirements in conflict therewith. 53 Paragraph 18 and 18(b): The mortgagor shall not use or permit the use of any portion of the mortgaged premises for demonstrating mobile home models or for other sales purposes, except the mortgagor may rent up to 10 percent of the total number of spaces in the project to mobile home dealers for the purpose of demonstrating their sales model providing: The rental paid by dealers for a space shall be the rate set forth on Form HUD 92458, and no special consideration will be given to any specific dealer. 24 CFR [Code of Federal Regulations] Part 24 According to 24 CFR 24.305, 24.411, 24.700, and 24.1110, HUD is permitted to take administrative sanctions against recipients of HUD assistance who violate HUD’s requirements. The sanctions include limited denials of participation, suspensions, and debarments. An authorized HUD official may issue a limited denial of participation against a person based upon adequate evidence of any of the following causes: Failure to honor contractual obligations or to proceed in accordance with contract specifications or HUD regulations; Failure to satisfy, upon completion, the requirements of an assistance agreement or contract; and Violation of any law, regulation, or procedure relating to the application for financial assistance, insurance, or guarantee or to the performance of obligations incurred pursuant to a grant of financial assistance or pursuant to a conditional or final commitment to insure or guarantee. An authorized HUD official may issue a debarment or suspension against a person based upon adequate evidence of any of the following causes: Violation of the terms of a public agreement or transaction so serious as to affect the integrity of an agency program, such as (1) A willful failure to perform in accordance with the terms of one or more public agreements or transactions, (2) A history of failure to perform or of unsatisfactory performance of one or more public agreements or transactions, or (3) A willful violation of a statutory or regulatory provision or requirement applicable to a public agreement or transaction. 54 HUD may debar a person from participating in any HUD programs or activities for material violation of a statutory or regulatory provision or program requirement applicable to a public agreement or transaction including applications for grants, financial assistance, insurance, or guarantees or to the performance of requirements under a grant, assistance award, or conditional or final commitment to insure or guarantee. Title 12, United States Code, section 1715z-4a Section 421 of the Housing and Community Development Act of 1987, 12 United States Code, section 1715z-4a, contains double damages remedy for unauthorized use of multifamily housing project assets and income. The double damages remedy is a civil remedy rather than an administrative remedy. It permits the secretary of HUD to request that the attorney general bring an action in a United States district court to recover any assets or income used by any owner or agent of the owner in violation of a regulatory agreement that applies to a multifamily project whose mortgage is insured or held by the secretary under Title II of the National Housing Act and any applicable regulations. 55 Appendix D SCHEDULE OF UNCOLLECTED RENTAL INCOMEAND UTILITIES – NEW HOMES Space Potential rent Trash, sewer & Number of months rental income not collected Count Period number from dealer water (utilities) from Homes of the West 1 4 $3,615 $355 10 1/2 March 2005 to first half of January 2006 2 5 $2,445 $241 7 1/2 April to part of November 2005 3 18 $2,800 $273 8 July 2005 to February 2006 4 32 $4,140 $406 12 March 2005 to February 2006 5 36 $1,340 $133 4 March to June 2005 6 49 $1,690 $166 5 March to July 2005 7 51 $1,050 $101 3 June to August 2005 8 53 $2,780 $271 8 May to December 2005 9 55 $3,110 $304 9 April to December 2005 10 82 $2,450 $240 7 August 2005 to February 2006 11 93 $1,750 $171 5 October 2005 to February 2006 12 99 $2,100 $205 6 September 2005 to February 2006 13 103 $1,750 $171 5 October 2005 to February 2006 14 110 $863 $85 2 1/2 August to first half of October 2005 15 168 $2,100 $205 6 September 2005 to February 2006 16 189 $3,600 $353 10 1/2 April 2005 to first half of February 2006 17 358 $1,050 $103 3 August to October 2005 Total $38,633 $3,783 $ 42,416 The highlighted items indicate that the space was occupied initially by a used home, then a new home. 56 Appendix E SCHEDULE OF UNCOLLECTED RENTAL INCOME AND UTILITIES– USED HOMES Number of months rental income not collected Space Trash, sewer & Count number Potential rent from The Associates Group LLC or Homes of Period water (utilities) the West August to December 2003, June to August 2004, 1 1 $ 6,580 $ 672 20 and March 2005 to February 2006 2 15 $ 3,750 $ 370 11 January to November 2005 3 16 $ 2,450 $ 240 7 August 2005 to February 2006 4 18 $ 3,470 $ 366 11 January and March to December 2004 5 19 $ 290 $ 33 1 Apr-04 6 22 $ 660 $ 67 2 June to July 2004 7 28 $ 1,050 $ 103 3 October to December 2004 8 33 $ 7,400 $ 739 22 May 2004 to February 2006 9 37 $ 990 $ 100 3 August to October 2004 10 46 $ 1,400 $ 137 4 August to November 2005 11 53 $ 1,160 $ 133 4 July to October 2003 12 60 $ 4,170 $ 433 13 March 2004 to March 2005 13 61 $ 2,110 $ 233 7 January to July 2004 14 65 $ 4,170 $ 433 13 March 2004 to March 2005 15 67 $ 7,980 $ 805 24 March 2004 to February 2006 16 71 $ 1,860 $ 200 6 March to August 2004 17 72 $ 3,335 $ 349 10 1/2 March 2004 to first half of January 2005 18 73 $ 580 $ 67 2 November to December 2003 19 78 $ 8,560 $ 872 26 January 2004 to February 2006 20 83 $ 2,110 $ 233 7 January to July 2004 21 85 $ 8,270 $ 839 25 February 2004 to February 2006 22 86 $ 8,210 $ 838 25 January 2004 to January 2006 23 88 $ 870 $ 100 3 January to March 2004 24 90 $ 2,450 $ 240 7 August 2005 to February 2006 25 97 $ 700 $ 68 2 August to September 2005 26 100 $ 4,090 $ 433 13 January 2004 to January 2005 27 110 $ 1,740 $ 200 6 July to December 2003 28 136 $ 1,320 $ 133 4 November 2004 to February 2005 29 139 $ 7,280 $ 737 22 March 2004 to November 2005 and February 2006 30 154 $ 6,450 $ 639 19 August 2004 to February 2006 31 154 $ 2,970 $ 300 9 November 2004 to July 2005 32 158 $ 5,460 $ 539 16 November 2004 to February 2006 33 158 $ 2,970 $ 300 9 November 2004 to July 2005 34 159 $ 580 $ 67 2 November to December 2003 35 162 $ 2,520 $ 266 8 March to October 2004 36 173 $ 3,400 $ 336 10 January to October 2005 37 174 $ 870 $ 100 3 March to May 2004 38 179 $ 580 $ 67 2 April to May 2004 39 212 $ 1,900 $ 233 7 April to October 2003 40 228 $ 3,810 $ 373 11 April 2005 to February 2006 41 230 $ 2,125 $ 266 8 March to October 2003 42 236 $ 1,900 $ 233 7 April to October 2003 43 303 $ 330 $ 33 1 Feb-05 44 311 $ 1,940 $ 200 6 May to October 2004 45 344 $ 990 $ 100 3 September to November 2004 46 350 $ 700 $ 68 2 January to February 2006 Total $ 138,500 $ 14,286 $ 152,786 The highlighted spaces (18, 46, 53, 73, 110, and 212) indicate the space was occupied initially by a used home, then a new home. The highlighted spaces (16 and 90) indicate that it was a space identified in new home list the owner provided; however, it appears to have had a used home sitting on the lot. 57
The Associates Group Pioneer Pines Park, Bakersfield, Did Not Follow the Provisions of the Regulatory Agreement
Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-10-20.
Below is a raw (and likely hideous) rendition of the original report. (PDF)