oversight

HUD Did Not Ensure That Housing Authorities Properly Administered the Community Service and Self-Sufficiency Requirement

Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-03-24.

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

                                                                 Issue Date
                                                                          March 24, 2008
                                                                 Audit Report Number
                                                                              2008-KC-0002




TO:        Milan Ozdinec, Deputy Assistant Secretary for Public Housing and Voucher
           Programs, PE

           //signed//
FROM:      Ronald J. Hosking, Regional Inspector General for Audit, 7AGA

SUBJECT: HUD Did Not Ensure That Housing Authorities Properly Administered the
           Community Service and Self-Sufficiency Requirement


                                   HIGHLIGHTS

 What We Audited and Why

             We audited the U.S. Department of Housing and Urban Development’s (HUD)
             community service and self-sufficiency requirement (the requirement) as a result
             of news media reports that the requirement is rarely enforced. Our audit objective
             was to determine whether HUD ensured that housing authorities properly
             administered the requirement.


 What We Found


             HUD did not have adequate controls to ensure that housing authorities properly
             administered the requirement. Specifically, HUD did not have sufficient
             guidelines, adequate data collection and reporting systems, or effective
             enforcement mechanisms. Of 68 statistically selected households, 44 households
             did not comply with the requirement and were, therefore, ineligible for continued
             occupancy. Based on these results, we estimate that housing authorities
             improperly renewed or extended the leases of at least 85,000 ineligible
             households costing $21.5 million in monthly operating subsidies.
What We Recommend


           We recommend that HUD improve controls to ensure that housing authorities
           properly administer the requirement, resulting in more than $257 million put to
           better use annually. We also recommend that HUD require housing authorities to
           take corrective action against the 44 ineligible households identified as part of our
           statistical sample review.

           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.


Auditee’s Response


           We provided the discussion draft to HUD for comments on February 13, 2008.
           We received its written comments on March 14, 2008. HUD generally agreed
           with all five recommendations, but disagreed that $257 million can be put to
           better use.

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




                                             2
                             TABLE OF CONTENTS

Background and Objectives                                                         4

Results of Audit
        Finding: HUD Spent an Estimated $21.5 Million Each Month Subsidizing at   6
        Least 85,000 Ineligible Public Housing Households

Scope and Methodology                                                             10

Internal Controls                                                                 12

Appendixes
   A.   Schedule of Questioned Costs and Funds to Be Put to Better Use            13
   B.   Auditee Comments and OIG’s Evaluation                                     14
   C.   Schedule of Statistical Sample Results                                    18
   D.   Listing of Clarifying Guidelines Needed                                   20




                                              3
                      BACKGROUND AND OBJECTIVES

The U. S. Department of Housing and Urban Development’s (HUD) community service and
self-sufficiency requirement (the requirement) is intended to assist adult public housing residents
in improving their own economic and social well-being and give these residents a greater stake
in their communities. The requirement allows residents an opportunity to “give something back”
to their communities and facilitates upward mobility.

The Quality Housing and Work Responsibility Act of 1998, which amended Section 12 of the
U.S. Housing Act of 1937 (the Act), established the requirement that every nonexempt adult
resident of public housing contribute eight hours of community service each month and/or
participate in an economic self-sufficiency program. Community service is the performance of
voluntary work or duties that are a public benefit and that serve to improve the quality of life,
enhance resident self-sufficiency, or increase resident self-responsibility in the community. Self-
sufficiency programs generally include programs for job training, employment counseling, work
placement, basic skills training, and education. The only residents exempt from the requirement
are those who are

   •   Age 62 years or older.
   •   Blind or disabled and who certify that, because of this disability, they are unable to
       comply with the service provisions or primary caretakers of such individuals.
   •   Engaged in eligible work activities.
   •   Exempt from having to engage in a work activity under the state program funded under
       the Social Security Act or a state-administered welfare-to-work program.
   •   A member of a family receiving welfare assistance, benefits, or service under a state
       welfare program.

Regulations for the requirement are provided in 24 CFR (Code of Federal Regulations) 960.600-
609. In addition, Public and Indian Housing (PIH) Notice 2003-17, issued June 20, 2003,
notified housing authorities of the requirement. HUD requires housing authorities to retain
reasonable documentation of service requirement performance or exemption in residents’ files.
In addition, HUD requires the following:

   •   Notice to all residents: The housing authority must be able to provide documentation that
       a written notice was issued to all residents, eligible or exempt, regarding the requirement.
       The housing authority must also have a process for verifying eligibility and informing
       residents of their status.
   •   Lease provisions: The housing authority must be able to demonstrate that all eligible
       residents were given appropriate lease amendments containing the required 12-month
       termination clause and provisions for curing deficiencies.
   •   Tracking compliance: Approximately 30 days before the annual recertification, the
       housing authority must have in each eligible resident’s file signed verification by the
       organization sponsoring the requirement activity that the resident is fulfilling the
       requirement. For those eligible residents who are not compliant, there should be in the
       file a copy of the letter that was sent to the resident reminding him/her of the


                                                 4
       consequences of noncompliance. The housing authority must report compliance for each
       eligible family member in the family report, line 3q, at the time of the annual
       recertification.

Each resident has the initial 12-month lease term to complete his/her required hours. Before the
expiration of the initial lease term, the resident and housing authority can enter into a workout
agreement to cure any noncompliance by making up the required number of hours. If a
household includes a noncompliant adult member and a workout agreement is not executed, the
Act prohibits renewing or extending the household’s lease or providing any new lease.

Operating subsidy is the amount of annual contributions for operations a housing authority
receives from HUD each funding period under Section 9 of the Act.

Section 6 of the Act provides sanctions against any housing authority that fails to comply
substantially with any provision of the Act relating to the public housing program. The sanctions
include but are not limited to terminating, withholding, or reducing assistance payments. These
sanctions would be applicable to housing authorities that failed to substantially comply with the
requirement.

Our audit objective was to determine whether HUD ensured that housing authorities properly
administered the requirement.




                                                5
                                RESULTS OF AUDIT

Finding: HUD Spent an Estimated $21.5 Million Each Month
Subsidizing at Least 85,000 Ineligible Public Housing Households

HUD did not have adequate controls to ensure that housing authorities properly administered the
community service and self-sufficiency requirement. The requirement had not been one of
HUD’s priorities. As a result, we estimate that housing authorities inconsistently administered
the requirement and housed at least 85,000 ineligible households using $21.5 million in monthly
operating subsidies.




 Inadequate Controls


              HUD did not have adequate controls to ensure that housing authorities properly
              administered the requirement. Specifically, HUD did not have sufficient
              guidelines, adequate data collection and reporting systems, or effective
              enforcement mechanisms.

              Insufficient Guidelines

              HUD did not have sufficient guidelines for housing authorities to use to
              administer the requirement. HUD issued a regulation, notice, directive,
              guidebook, family report instructions, and question and answer guide as
              administrative guidelines between 2001 and 2004. However, these guidelines
              were incomplete, confusing, and in some cases, poorly written. HUD needs to
              provide additional clarification regarding

                  •   Acceptable and unacceptable community service and self-sufficiency
                      activities.
                  •   Adequate documentation required for evidencing performance of
                      acceptable requirement activities.
                  •   Allowable exemptions and documentation required to support the
                      exemptions.
                  •   Proper processing of noncompliant households.
                  •   Proper application and use of status codes.

              See appendix D for a more specific list of areas needing clarification.




                                               6
Inadequate Data Collection

HUD did not have adequate data collection and reporting systems in place to track
compliance and identify problems.

HUD did not collect data in a manner which would help in the administration of
the requirement. It required housing authorities to report resident compliance on
each annual recertification, but the data collection system was not comprehensive
and did not adequately cover the complex and diverse circumstances encountered
by housing authorities administering the requirement. HUD’s reporting system
included only one code for resident noncompliance, and the computer system did
not contain an edit check to prohibit entering repeated noncompliant or pending
codes. In addition, the reporting codes did not address changes in resident
exemption status during the reporting period. As a result, HUD could not easily
monitor whether the housing authority had executed a workout agreement with
the resident, taken enforcement actions (nonrenewal of lease, termination of
subsidy, or eviction activity) against the household, or allowed noncompliant
residents to be housed.

HUD did not effectively use the data collected from housing authorities. While it
created and distributed monthly reports to its local field offices summarizing the
data reported, the reports were not designed to identify patterns of noncompliance
or abuse. Specifically, these reports

   •   Did not identify residents repeatedly reported as noncompliant or pending.
   •   Excluded disabled residents whose disabilities did not automatically
       exempt them from the requirement.
   •   Excluded residents who had current wages greater than zero even though
       the earnings, hours worked, or length of employment may have been
       insufficient to meet the prior year exemption.

Further, HUD did not require field offices to use the reports to perform
monitoring and did not collect or review the results of any monitoring performed.

Ineffective Enforcement Mechanisms

HUD did not have effective enforcement mechanisms for the requirement. It did
not require housing authorities to adequately enforce the requirement.
Specifically, HUD did not

   •   Identify housing authorities with policies that did not comply with the
       laws and regulations regarding the requirement.
   •   Take corrective action against housing authorities that did not apply
       penalties against known noncompliant households.




                                 7
           While the U.S. Housing Act of 1937, as amended, indicates that HUD may
           terminate, withhold, or reduce assistance payments to housing authorities that fail
           to comply with its requirements, HUD had not developed procedures to use this
           enforcement mechanism. Specifically, HUD did not have procedures in place to
           penalize housing authorities that failed to develop a process for verifying
           eligibility, amending standard leases to include the mandatory provisions,
           notifying residents of the requirement and their status, performing official
           eligibility determinations, reporting resident compliance, and taking corrective
           action against noncompliant households.

Requirement Not a Priority



           HUD did not consider the requirement to be a priority and instead focused on
           preventing unreported income and improperly calculated subsidy payments.
           HUD believed the law might be repealed in the near future. While the
           requirement became law in 1998, Congress suspended its implementation in
           November 2001, reinstating it in February 2003. Since then, Congress has
           introduced legislation to repeal the requirement three times. In addition, HUD did
           not believe the requirement was practical. HUD indicated that the requirement
           creates an administrative and financial burden on housing authorities, and, while
           it had not actively tracked the issue, HUD officials told us they were concerned
           that both HUD and the housing authorities would be unable to enforce the
           requirement because courts nationwide would not uphold evictions of
           noncompliant households.

           Despite these reasons for not previously focusing on the requirement, HUD
           acknowledged that it needs to monitor and enforce the requirement so long as it is
           currently congressionally mandated. In addition, HUD agreed that it needs to
           develop additional guidelines, including a clearer process to assist housing
           authorities in handling noncompliance. Some housing authorities have found that
           they can successfully enforce the requirement and gain possession of the unit by
           not renewing the lease and eliminating the subsidy. If the household does not
           voluntarily move out, the housing authority can get court enforcement on the
           grounds that the household no longer has a lease.

At Least 85,000 Noncompliant
Households

           HUD did not have assurance that housing authorities properly administered the
           requirement and that the requirement met its stated purpose.

           To illustrate the effect of HUD’s lack of controls, we performed a nationwide
           statistical sample of 68 households that we determined were likely to be out of



                                            8
       compliance with the requirement. Based on 44 households identified as
       ineligible, we estimate that housing authorities renewed or extended the leases of
       at least 85,000 ineligible households, violating this congressionally mandated
       requirement. As a result, noncompliant households are occupying units that could
       otherwise house deserving families from the waiting list. These units cost an
       estimated $21.5 million in operating subsidies each month.

       If HUD strengthens controls over the requirement, we estimate that more than
       $257 million future operating subsidies will be better spent to house compliant
       households over the next year.


Recommendations


       We recommend that the Deputy Assistant Secretary

       1A. Develop guidelines to assist public housing authorities in understanding and
           administering the requirement.

       1B. Improve data collection and reporting of requirement status, to clarify status
           codes and make reports sent to field offices more useful.

       1C. Develop a process to ensure that housing authorities take appropriate action
           against noncompliant tenants to annually put more than $257 million to
           better use.

       1D. Require housing authorities to use due process to take action against the 44
           ineligible households identified as part of our statistical sample review.

       1E. Apply penalties/sanctions established by the 1937 Act, as amended, against
           housing authorities housing ineligible households.




                                        9
                         SCOPE AND METHODOLOGY

Our audit objective was to determine whether HUD ensured that housing authorities properly
administered the community service and self-sufficiency requirement. To accomplish our
objective, we

   •   Reviewed applicable laws and regulations,
   •   Reviewed monitoring reports and reviews provided by HUD,
   •   Interviewed key HUD staff to gain an understanding of relevant controls,
   •   Interviewed housing authority staff regarding their administration of the community
       service requirement,
   •   Reviewed an initial sample of files from three local housing authorities to gain an
       understanding of common requirement administration issues,
   •   Analyzed computer-processed data contained in HUD’s Public and Indian Housing
       Information Center (PIC),
   •   Used auditing software to select a statistical sample of households likely to be out of
       compliance with the requirement, and
   •   Evaluated the results of the statistical sample to estimate the number of households
       residing in public housing that contained ineligible noncompliant residents.

To assess the reliability of PIC data, we reviewed prior audits and assessments, performed
analytical procedures to verify that data fields contained expected values, and traced information
to source documents for sampled items. We determined that the computer-processed data were
sufficiently reliable for our purposes because the data were corroborated by documentary
evidence supplied by housing authorities.

We identified records in PIC for 1,004,862 households nationwide, whose most recent
reexamination during our audit period indicated ongoing tenancy. We initially determined that
156,185 of these households were likely to be out of compliance with the requirement. We
defined a household likely to be out of compliance as a household currently residing in public
housing with one or more current adult members who were not coded by the housing authority as
compliant or exempt on all annual recertifications during the two-year period ended August 31,
2007.

We developed an unrestricted attribute sampling plan using a 90 percent confidence level with
10 percent desired precision and 50 percent estimated error rate. We then used the Army Audit
Agency’s statistical sampling software to calculate the sample size and a random number
generator to identify the sample items. The sampling plan resulted in a sample size of 68
households currently residing in public housing.

For each of the 68 households sampled, we contacted the housing authority to obtain all relevant
documentation for the adult members of the households. This documentation included local
policies; pertinent communication between the authority and household; documentation of
household member compliance, exemption, or noncompliance with the requirement; specific
details about household circumstances; and documentation of any actions processed against the


                                                10
household. We then evaluated the compliance of all adult household members for annual
recertifications which took effect during our audit period. When we identified noncompliance in
a household, we determined whether the housing authority improperly renewed or extended the
lease. When appropriate, we provided our draft conclusions to the housing authorities.

After evaluating all of the sample items, we projected the results of 44 ineligible households to
the sampling universe. We statistically estimate that of the 155,693 households (see revised
sampling universe in the following chart) we identified as likely to be out of compliance, 85,904
were ineligible and currently residing in public housing, resulting in an estimated $21,476,000 in
improper operating subsidy payments each month or $257,712,000 annually. This estimate does
not include offsetting costs for HUD to implement our recommendations to strengthen controls
because we were not able to reasonably estimate these costs. The following chart details key
information related to the statistical sampling results.

                                   Results of statistical sample
         Initial universe of households                                          156,185
         Households later identified to be excluded from requirement                 492
         Revised universe of households used for projection of results           155,693
         Sample size (number of households)                                           68
         Number of ineligible households in sample                                    44
         Error rate                                                               64.7 %
         Confidence level                                                         90.0 %
         Actual sampling precision                                                 9.5 %
         Estimated number of ineligible households (point estimate)              100,743
         Estimated lower limit of ineligible households                           85,904
         Estimated upper limit of ineligible households                          115,580
         Estimated monthly operating subsidy cost per household                   $ 250*
         Estimated operating subsidy improperly spent per month on
                                                                            $ 21,476,000
         ineligible households (using lower limit)

       *We calculated the estimated monthly operating subsidy cost per household by dividing
       the 2007 public housing operating budget of $3.564 billion by the nearly 1.18 million
       low-rent units under management by 12 months.

Our audit period generally covered September 1, 2005, through August 31, 2007. We expanded
the period as necessary to address issues identified during our household file reviews. We
conducted the audit from our office in St. Louis, Missouri, with site work performed at three
Missouri housing authorities: the St. Louis Housing Authority, Fulton Housing Authority, and
Columbia Housing Authority. We performed our audit work from June 2007 through January
2008.

We performed our review in accordance with generally accepted government auditing standards.




                                                11
                             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:

                  •   Controls over ensuring compliance with the community service and self-
                      sufficiency requirement.

              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 and as described in this report’s finding, we believe the
              following items are significant weaknesses:

                  •   HUD did not have sufficient guidelines for housing authorities to use to
                      administer the requirement.
                  •   HUD did not have adequate data collection and reporting systems in place to
                      track compliance and identify problems.
                  •   HUD did not have sufficient mechanisms to ensure that housing authorities
                      were enforcing the requirement.




                                               12
                                     APPENDIXES

Appendix A

               SCHEDULE OF QUESTIONED COSTS
              AND FUNDS TO BE PUT TO BETTER USE

                            Recommendation           Funds to be put
                                   number             to better use 1/
                                           1C         $257,712,000




1/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. This includes reductions in outlays, deobligation of funds, withdrawal of
     interest subsidy costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     which are specifically identified. In this instance, if HUD implements our
     recommendations, it will ensure that residents who do not perform their required
     community service are not permitted to continue to reside in public housing. Housing
     authorities will no longer spend HUD’s operating subsidies for noncompliant households
     but will instead spend those funds to house compliant households. Once HUD improves
     its controls, this will be a recurring benefit. Our estimate only reflects the initial year of
     this benefit. These amounts do not include potential offsetting costs incurred by HUD to
     implement our recommendations to strengthen controls.




                                                13
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                         14
Ref to OIG Evaluation   Auditee Comments




Comment 2




Comment 3




                         15
Ref to OIG Evaluation   Auditee Comments




                         16
                         OIG Evaluation of Auditee Comments

Comment 1   HUD generally agreed with our findings and recommendations. If HUD
            implements the planned actions, we believe they will correct many of the
            problems with the requirement.

Comment 2   We offer the following suggestions to improve the usefulness of the monitoring
            reports:

               •   Include all tenants, regardless of current income or disability status.
               •   Identify the tenants coded as pending or noncompliant, to enable field
                   office staff to follow up on the specific tenants.
               •   Provide instructions to field office staff on how to use the reports to ensure
                   the housing authorities are taking corrective action.

Comment 3   We agree that when a noncompliant family is evicted from the subsidized unit, the
            PHA continues to receive operating subsidy for that eligible vacant unit and when
            the unit is reoccupied by a new family. However, if HUD implements our
            recommendations, it will ensure that residents who do not perform their required
            community service will no longer be permitted to reside in public housing.
            Instead, housing authorities will spend operating subsidies to house eligible
            households taken from waiting lists. As a result, scarce operating subsidies
            exceeding $257 million will be put to better use by housing eligible residents
            instead of ineligible residents.




                                             17
            Appendix C

       SCHEDULE OF STATISTICAL SAMPLE RESULTS

                                                 Hours do
                  Eligible Ineligible  Claimed  not qualify Workout    Workout
       Housing      for       for     exemption      as     agreement agreement
Sample authority continued continued     not    community      not       not
number   code    occupancy occupancy documented   service    executed  fulfilled
   1    KY049                  X                     X
   2    AL114                  X                                X
   3    MS094        X
   4    NJ015                  X                                X
   5    NY005                  X          X                     X
   6    NH003                  X                     X
   7    NY005        X
   8    MT003        X
   9    AL086                  X                     X
  10    FL057                  X                                X
  11    NC117        X
  12    MS111        X
  13    NY005                  X                                X
  14    IL126                  X                                X
  15    OH003                  X          X                               X
  16    OH018        X
  17    NY005        X
  18    NY005                  X                                X
  19    WI002        X
  20    NY005        X
  21    RQ005                  X                                X
  22    RQ005                  X                                X
  23    TX011        X
  24    RQ005                  X                                X
  25    TX224        X
  26    IL002        X
  27    CT004        X
  28    TX004                  X          X                     X
  29    FL005                  X                                X
  30    RQ005                  X                                X
  31    TX073        X
  32    VA007        X


                                        18
                                                 Hours do
                  Eligible Ineligible  Claimed  not qualify Workout    Workout
       Housing      for       for     exemption      as     agreement agreement
Sample authority continued continued     not    community      not       not
number   code    occupancy occupancy documented   service    executed  fulfilled
  33    NY006                  X                                X
  34    GA086        X
  35    NY005                  X                                X
  36    NY005                  X                                X
  37    CO001        X
  38    RQ005        X
  39    AL057                  X                                          X
  40    AL086        X
  41    RQ005                  X                                X
  42    CT005                  X                                X
  43    NY005                  X                                X
  44    NY041                  X                                X
  45    KS001        X
  46    RQ005                  X                                X
  47    NY005                  X                                X
  48    RQ005                  X                                X
  49    NC002        X
  50    RQ005                  X          X                     X
  51    NY005                  X                                X
  52    FL033                  X          X                     X
  53    MD001                  X                                X
  54    VA007                  X          X                     X
  55    NY005        X
  56    NY005                  X                                X
  57    CT036                  X                                X
  58    CA005        X
  59    OK002                  X                                X
  60    TX003                  X                                X
  61    RQ005                  X                                X
  62    RQ005                  X                                X
  63    NY005                  X                                X
  64    TN001                  X                                X
  65    TX003                  X                                          X
  66    RQ005        X
  67    NY005                  X                                X
  68    NY005                  X                                X
        Totals       24        44         6          3          38         3


                                        19
Appendix D

         LISTING OF CLARIFYING GUIDELINES NEEDED


Community Service and Self-Sufficiency Activities
• Provide documentation requirements for recording hours performed (i.e., acceptable forms of
  documentation and minimum information required on documentation).
• Clarify whether housing authorities are required to verify hours performed (i.e., contacting
  the organization/agency to verify the hours/dates or that the activity qualified as community
  service or a self-sufficiency activity). If required, develop guidance for housing authorities
  to use when verifying compliance.
• Clarify acceptable organizations/agencies for which community service can be performed
  (i.e., profit-motivated business).
• Clarify whether a resident can perform community service for an individual who is not
  associated with an agency/organization.
• Clarify whether a resident can use community service hours performed to comply with a
  court order (i.e., probation) to satisfy the requirement.
• Clarify which types of education can be used as self-sufficiency program hours toward
  meeting the requirement.

Exemptions for Blind or Disabled Individuals and Primary Caretakers
• Clarify how housing authorities should handle residents who do not self-certify that their
   disability prevents them from performing community service (Does lack of self-certification
   compel the housing authority to require the resident to perform hours?).
• Provide concrete guidance on the definition of a primary caretaker (i.e., can more than one
   person claim to be the primary caretaker of a given individual, can residents claim the
   exemption when providing care to an individual who does not reside in public housing, are
   parents of children receiving supplemental security income automatically exempt, etc.).
• Provide documentation requirements for housing authorities to use when granting a primary
   caretaker exemption.

Exemptions for Residents Engaged in Eligible Work Activities
• Provide documentation requirements for housing authorities to use when granting work
   activities exemptions, including documentation requirements to use when granting the work
   activities exemption for education (i.e., types of documents accepted, what period the
   documents must cover, how to document the exemption when third-party verifications cannot
   be obtained).
• Provide more concrete guidance on the minimum number of weekly work hours required to
   qualify for the work activities exemption.
• Clarify whether it is acceptable to use an annual minimum income in lieu of documenting the
   number of hours worked per week. If this is acceptable, provide concrete guidance on the
   minimum annual income required to grant a work activities exemption and how authorities



                                              20
    should handle residents who meet the minimum annual income but are unemployed or not
    working for several months during the year.
•   Clarify which types of education qualify a resident for the work activities exemption.
•   Provide more concrete guidance on the handling of seasonal work activities (i.e., students,
    teachers, school food service employees, bus drivers, etc.).

Exemptions Related to Welfare
• Provide documentation requirements for housing authorities to use when granting an
   exemption for residents who meet the requirements for being exempted from work activities
   under a state welfare program.
• Provide documentation requirements for housing authorities to use when granting an
   exemption for residents who are members of a family receiving welfare assistance, benefits,
   or services, including whether housing authorities are required to document that the resident
   is in compliance with the welfare program.
• Clarify which members of a household receiving welfare assistance, benefits, or services are
   exempt from the requirement (i.e., are only immediate family members of the resident
   receiving assistance payments exempt, or is everyone in the household exempt).

Change in Circumstances
• Clarify how long a resident has to notify the housing authority of a change in status (i.e.,
   exempt to nonexempt or nonexempt to exempt).
• Provide guidance on how housing authorities should handle residents who become adults
   during the term of the lease (i.e., does the resident’s responsibility for compliance with the
   requirement begin on his/her 18th birthday, when he/she is notified of the requirement, at the
   end of the lease term, etc.).
• Clarify whether a current exemption cures prior noncompliance (i.e., past due community
   service and self-sufficiency hours are permanently forgiven), puts prior noncompliance on
   hold (i.e., residents are not required to cure prior noncompliance until they are no longer
   exempt), or has no effect on prior noncompliance. Provide guidance explaining how housing
   authorities should handle
       o A noncompliant resident who turns 62 years old.
       o A noncompliant resident who becomes disabled.
       o A noncompliant resident who now participates in work activities.
       o A noncompliant resident who now qualifies as exempt from work activities under a
           state welfare program.
       o A noncompliant resident whose family now receives welfare assistance.
• Clarify what a housing authority should do when a noncompliant resident moves out of the
   housing authority but later moves back into public housing (i.e., is the resident required to
   cure the prior noncompliance before moving in, is the resident required to sign a workout
   agreement to cure the noncompliance within the first lease term).

Noncompliance
• Provide more detailed guidance concerning the enforcement actions and eviction process that
  housing authorities should use when addressing noncompliance.
• Clarify the required terms of a workout agreement (i.e., timeframe of noncompliance covered
  by the workout agreement, timeframe allowed to make up hours, number of delinquent hours


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    and number of hours that will come due during the course of the workout agreement,
    explanation of enforcement actions that will be taken if noncompliance is not cured by the
    due date, explanation of the residents rights, signatures required, etc.).
•   Clarify the period over which a workout agreement can last. Clarify whether housing
    authorities can allow residents more or less time to make up delinquent hours.
•   Clarify the number of workout agreements a resident can enter (i.e., are consecutive workout
    agreements allowable, is there a maximum number of workout agreements a resident may be
    given over the course of his/her entire tenancy).
•   Clarify whether housing authorities have the power/authority to forgive delinquent hours
    when a resident substantially completes the hours required by his/her workout agreement.
•   Clarify how a housing authority should handle a resident who has entered into a workout
    agreement but later provides documentation stating that he/she should have been exempt
    during the period covered by the workout agreement.
•   Clarify whether a housing authority’s failure to notify a resident of the requirement absolves
    the resident of responsibility to meet the requirement.
•   Clarify whether a housing authority’s failure to notify a resident of noncompliance and/or
    failure to offer a workout agreement precludes it from refusing to renew the lease.


Status Codes
• Revise current guidance to make it clear that housing authorities are coding the resident for
    his/her prior year compliance or exemption. The verb tense used in the instructions should
    consistently be past tense to convey this message, rather than the current wording of “is in
    the process of meeting” or “who meet the exemptions.”
• Clarify the use of the pending (3) code and determine how long this code can be used for one
    individual.
• Clarify how housing authorities should code a resident who was exempt for part of the prior
    year and compliant or noncompliant for the other part of the prior year.
• Provide guidance on how housing authorities should code residents of a household whose
    first annual reexamination is less than one year after it moved into public housing.
• Provide guidance on how housing authorities should code residents who are new to a
    household.
• Provide guidance on how housing authorities should code residents who have entered into a
    workout agreement.
• Provide guidance on how housing authorities should code residents when they have not
    renewed the lease and are still residing in the unit while in the process of undergoing
    termination/eviction.

Other Issues
• Clarify when housing authorities should assess compliance with the requirement in situations
   in which the lease expiration date does not coincide with the annual reexamination date.
• Provide guidance on evaluating a resident’s compliance when his/her annual reexamination
   occurs less than 12 months after he/she moved in or since the lease effective date.
• Clarify whether housing authorities are allowed to develop additional exemptions (i.e.,
   residents who are pregnant, residents with children under a certain age, residents



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    homeschooling their children, single parent residents with more than a certain number of
    children, residents drawing unemployment, residents in a drug or alcohol program, residents
    who are currently in the armed forces, residents who are non-active-duty reservists, etc.). If
    allowable, develop guidance explaining housing authority requirements for granting and
    documenting the additional exemptions.
•   Clarify whether housing authorities located in U.S. territories are allowed to define 21 as the
    minimum age at which residents must meet the requirement.




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