Issue Date
September 18, 2008
Audit Report Number
2008-LA-1016
TO: William Vasquez, Director, Los Angeles Office of Community Planning and
Development, 9DD
FROM: Joan S. Hobbs, Regional Inspector General for Audit, Region IX, 9DGA
SUBJECT: The City of Los Angeles Housing Department Did Not Comply with HOME
Affordability Monitoring and Inspection Requirements for Its HOME-
Assisted Rental Housing
HIGHLIGHTS
What We Audited and Why
We audited the City of Los Angeles Housing Department (Department) as a result of an
earlier audit of its HOME Investment Partnerships Program (HOME) rehabilitation
program, which detected problems with the Department’s monitoring of HOME-assisted
rental units. Our audit objective was to determine whether the Department complied with
HOME affordability monitoring and inspection requirements regarding HOME-assisted
rental units.
What We Found
The Department did not comply with HOME affordability monitoring and inspection
requirements for its HOME-assisted rental housing. It failed to maintain the required
tenant eligibility information for 26 HOME-assisted rental housing projects totaling
nearly $38 million. In addition, it did not maintain complete tenant eligibility
information for 27 tenants living in seven projects, resulting in $103,693 in unsupported
costs. Further, it did not ensure that its contractor conducted occupancy monitoring in
accordance with HOME program requirements or its professional services agreement.
Finally, it failed to inspect HOME-assisted rental housing projects when required and
ensure that projects met local housing code regulations. Improvements on controls would
ensure that $226,483 in funds could be put to better use. We attribute these deficiencies
to the Department’s overreliance on its contractor to obtain the required documentation,
compounded by its inability to effectively monitor its contractor due to high staff
turnover; its inadequate database for tracking its HOME-assisted rental housing and
tenants; and poor record keeping.
What We Recommend
We recommend that the Director of the Los Angeles Office of Community Planning and
Development require the Department to properly support or repay from nonfederal funds
more than $38 million in unsupported expenses. Additionally, we recommend that the
U.S. Department of Housing and Urban Development (HUD) require the Department to
establish and implement effective procedures and controls to ensure that its contractor
and all HOME-assisted rental housing projects and units are monitored and units are
inspected in accordance with HOME requirements because such corrective actions would
ensure that $226,483 in funds could be put to better use.
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 our discussion draft report to the Department on August 29, 2008, and held
an exit conference on September 8, 2008. The Department provided its written response
on September 15, 2008 and agreed with our report findings and recommendations.
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 1: The Department Failed to Maintain Required Tenant Eligibility 5
Information for HOME-Assisted Rental Housing Projects
Finding 2: The Department Failed to Monitor Its Occupancy Monitoring Contractor 7
Finding 3: The Department Failed to Inspect HOME-Assisted Rental Housing 11
Projects and Ensure That Projects Met Local Housing Code Regulations
Finding 4: The Department Had Inadequate Controls over the Monitoring of Its 19
HOME-Assisted Rental Housing Projects
Scope and Methodology 22
Internal Controls 24
Followup on Prior Audits 26
Appendixes
A. Schedule of Questioned Costs and Funds to Be Put to Better Use 27
B. Auditee Comments and OIG’s Evaluation 28
C. Criteria 33
D. Schedule of 26 Home-Assisted Rental Housing Projects That Lacked Sufficient 38
Tenant/Unit Eligibility Information
E. Schedule of 27 Tenant Files (Seven Projects) with Incomplete Tenant Eligibility 40
Information
F. Schedule of 52 HOME-Assisted Properties Not Inspected in Accordance with 41
HOME Requirements
G. Schedule of Violations Identified during Our Inspections 43
H. Schedule of Funds To Be Put To Better Use Calculations 47
3
BACKGROUND AND OBJECTIVES
The City of Los Angeles (City) is a participating jurisdiction overseen by the U.S. Department of
Housing and Urban Development’s (HUD) Office of Community Planning and Development,
which executes the HOME Investment Partnerships Program (HOME). The City administers all
of its HOME programs under the City of Los Angeles Housing Department (Department). Due
to the variety of HOME program activities allowed under the law and the size of the entitlement
grant, the Department divides its HOME program activities under the following major
organizational units: the Major Projects Division manages the acquisition, new construction, or
rehabilitation of large affordable rental housing projects; and the Homeownership and
Preservation Division manages single-family or small multifamily purchase acquisition projects
under its Homeownership Unit and manages single-family and small multifamily rehabilitation
projects under its Preservation Unit.
The Department is the administrator of the City’s HOME entitlement program. It follows
monitoring standards and procedures to review and fund affordable housing developments to
ensure compliance with HUD’s program regulations. For example, it reviews the status of the
HOME grant to ensure that the 24-month deadline to commit and five-year deadline to expend
funds are complied with, monitors and reports on the HOME match requirements to ensure that
the 12.5 percent match requirement is met, ensures that HOME-assisted rental units are inspected
with the required frequency and comply with housing quality standards, and ensures that
homebuyer and rental properties follow the applicable period of affordability. During the period
of affordability, it reviews tenant household incomes and rents for compliance with HOME and
other program requirements.
The Department’s Occupancy Monitoring Unit is responsible for monitoring property owners’
compliance with regulations, regulatory agreements, and covenants associated with affordable
housing. The unit monitors properties funded through the Department with federal funds,
properties funded with its issued tax-exempt mortgage revenue bonds, and properties developed
with land use concessions available under the Planning Department’s Affordable Housing
Incentives Program or properties subject to Mellow Act affordable housing set-asides.
Monitoring activities include review of owner compliance with tenant income and rent ceilings
as well as ensuring compliance with any underlying federal regulations, such as HUD housing
quality standards.
The objective of the audit was to determine whether the Department complied with HOME
affordability monitoring and inspection requirements regarding HOME-assisted rental units.
4
RESULTS OF AUDIT
Finding 1: The Department Failed to Maintain Required Tenant
Eligibility Information for HOME-Assisted Rental Housing Projects
The Department failed to maintain required tenant eligibility information for 26 HOME-assisted
rental housing projects to show that projects met affordability and income targeting requirements
for affordable housing. This condition occurred because of the Department’s overreliance on its
contractor to obtain the required documentation, compounded by its failure to effectively
monitor its contractor (see finding 2). As a result, neither the Department nor HUD was assured
that nearly $38 million in HOME funds expended for the 26 projects complied with the HOME
program’s intent to house and support low-income persons.
Tenant Eligibility Information
Not Maintained for Projects
Totaling Nearly $38 Million
Contrary to 24 CFR [Code of Federal Requirements] 92.508(a)(3)(v) (see appendix C),
the Department failed to maintain tenant eligibility information for 26 projects to show
that projects met affordability and income targeting requirements for affordable housing.
The records for all 26 HOME-assisted rental housing projects lacked tenant information
required by HOME and the Department’s policies and procedures (see appendix C).
We examined records for the 26 projects provided by the Department and found that the
records failed to contain all required documentation (see appendix D) in accordance with
HOME requirements and the Department’s policies and procedures, which indicated that
the following tenant information was to be maintained:
Lease application
Lease or lease waiver
Initial income source verification documentation
Tenant income and rent certification forms (tenant form)
Mandatory addendum to the lease or rental agreement
However, none of the 26 projects had complete documentation. A majority of the records
consisted of regulatory agreements and random documents of continued occupancy
certifications and some tenant information that did not identify whether the tenants
resided in the HOME-assisted units. Consequently, we were unable to determine whether
HOME funds expended for the 26 projects complied with HOME requirements.
As a result of these deficiencies, the Department expended nearly $38 million in HOME
funds for which it was unable to support that it housed and supported low-income persons
5
in the 26 HOME projects. It was unable to provide adequate tenant information to show
that projects met HOME affordability and income targeting requirements for affordable
housing. For the majority of the projects, records did not distinguish which units were
HOME-assisted units, thus making it difficult to ensure that the required documentation
was maintained.
Conclusion
We attribute the deficiencies noted above to the Department’s overreliance on its
contractor to obtain the required documentation, compounded by its failure to effectively
monitor its contractor. Department officials explained that the Department’s inability to
effectively monitor its contractor was due to high staff turnover, lack of an adequate
database for tracking its HOME-assisted rental units, and poor record keeping. These
conditions hindered the Department’s monitoring ability because it could not effectively
perform checks and balances to identify which projects and tenants were monitored by
the contractor and whether adequate tenant eligibility information was maintained to
show that projects met affordability and income targeting requirements for affordable
housing. The contractor did not obtain the required documentation because it
misunderstood its professional services agreement (see finding 2). Consequently, neither
the Department nor HUD was assured that nearly $38 million in HOME funds expended
for the 26 projects complied with the HOME program’s intent to house and support low-
income persons.
Recommendations
We recommend that the Director of the Los Angeles Office of Community Planning and
Development require the Department to
1A. Provide documentation for 26 HOME-assisted rental projects to support that each
HOME-assisted unit was occupied by a family that was income eligible and the
projects met the affordability and income targeting requirements for the entire
period of affordability or repay HUD $37,999,014 in unsupported costs from
nonfederal funds.
1B. Ensure adequate controls are in place to ensure that the HOME assisted units meet
program requirements for the entire affordability period.
6
Finding 2: The Department Failed to Monitor Its Occupancy
Monitoring Contractor
The Department did not ensure that its contractor conducted occupancy monitoring of the
HOME-assisted projects as required. Consequently, it did not maintain required tenant
information for its HOME-assisted projects (finding 1). We attribute the deficiency to the
Department’s lack of knowledge of the HOME program monitoring requirements. The
Department had not developed or implemented contractor monitoring policies to ensure that the
contractor performed the services required under its contract with the Department or the HOME
program regulations, resulting in $103,693 in unsupported costs. As a result, neither HUD nor
the Department was assured that its HOME-assisted projects met HOME program requirements.
In addition, the Department paid $551,306 in HOME funds for contracted services, which were
not fully performed as intended under the contract.
Contractor Monitoring Not
Performed
Pursuant to 24 CFR 92.504(a), the Department had a responsibility to manage day-to-day
operations of its HOME program to ensure that HOME funds were used in accordance
with all program requirements. Although the Department paid a contractor to conduct
occupancy monitoring, it was not relieved of this responsibility. It was required to
review the performance of its contractor at least annually (see appendix C). However, it
did not monitor its contractor annually and did not have policies or procedures to ensure
that it met the requirement.
The housing services manager for the Department acknowledged there were no policies
and procedures for monitoring its contractor but stated that the agreement between the
Department and the contractor (see appendix C) stipulated an end-of-contract
performance evaluation. The Department contracted the functions in April 2003 and
conducted a performance evaluation of the contractor in December 2005, found the
contractor’s performance to be satisfactory, and renewed the contract. No other formal
monitoring had taken place since that time.
We interviewed the Department’s management analyst, who stated that the Department
had planned to visit the contractor twice per year but the Occupancy Monitoring Unit was
understaffed and unable to do the planned monitoring. The interview also disclosed that
the analyst was not fully knowledgeable of the HOME requirements related to the
occupancy monitoring or the contract provisions. Specifically, the analyst did not
Know what the professional services agreement required the contractor to do,
7
Know that the Department was required to monitor the contractor at least annually,
Know that HOME regulations required the Department to maintain tenant files and
that the use of a contractor did not relieve it of this responsibility,
Have procedures in place to determine whether the contractor provided all required
documentation to the Department, or
Verify whether the cash receipts received from the contractor were valid before
approving payment.
Contractor Procedures
Inadequate
The professional services agreement between the Department and its contractor required
the contractor to establish and maintain records for all HOME-assisted projects to support
that each family was income eligible and each project met affordability and income
targeting requirements of HOME regulations. We reviewed the contractor’s policies and
procedures used to conduct occupancy monitoring for the Department. The contractor’s
policies and procedures were not adequate to ensure compliance with HOME program
regulations and the professional services agreement. Specifically, the contractor did not
have procedures in place to obtain and retain tenant/unit information needed by HUD to
ensure that the tenant/unit met HOME program regulations.
The contractor was unaware of the project file record retention requirement set forth in
the professional services agreement (contract). The contract stated that original forms for
all documents specified in the agreement shall be maintained for a period of five years
after the termination of the agreement and after final disposition of pending matters. The
contractor stated that it had “purged” requested documentation and sent it to the
Department because of limited storage space. However, the Department disputed the
statement by stating that it did not have the documentation the contractor reportedly sent.
The contractor was also unaware of the requirement to obtain full documentation for all
tenants residing in HOME-assisted units, which included tenants that had been in the
units before the execution of the 2003 contract. The contractor stated that it was not
required to collect documentation for “existing” tenants, resulting in $103,693 in
unsupported costs for the tenant files we reviewed. Of the 27 tenant records reviewed, 24
(89 percent) did not have initial move-in source documentation (see appendix E). During
the review of the 27 tenant records (seven projects that contained documentation)
provided by the contractor, we also found that
25 of 27 (93 percent) tenant files were missing one or more years of tenant
recertification documents,
8
Seven of eight (88 percent) tenant files did not contain full source documentation
required at the sixth year,1 and
27 of 27 (100 percent) tenant files did not contain tenant application/lease documents
(see appendix E).
Although tenant eligibility information was missing, the Department paid the contractor
for services performed with HOME funding for the above units. However, we did not
recommend recovery of the related amount since it was immaterial.
In addition, the contractor did not perform document collection cycles in accordance with
the contract. The contract stated that if the project owner did not submit the required
documentation, the contractor was to perform “up to three Collection Activity Cycles” to
obtain compliance. If the required documentation was not obtained through the
collection activity cycles, the contractor was required to schedule and conduct a site visit.
The contractor did not conduct site visits for noncompliant2 projects and did not inform
the Department of the projects’ noncompliant status. Therefore, five projects were
noncompliant for up to three years (finding 1) (see appendix D).
Conclusion
The problem occurred because the Department did not have monitoring procedures in
place to ensure that the contractor performed the services required under the contract.
The problem was compounded by the fact that the Department’s management analyst and
contractor staff were not fully knowledgeable of the HOME requirements related to
occupancy monitoring or the contract provisions. As a result, neither HUD nor the
Department was assured that its HOME-assisted projects met HOME tenant eligibility
requirements (finding 1). In addition, the Department paid $551,306 in HOME funds for
contracted services, which were not fully performed as intended under the contract. Once
the Department implements monitoring procedures to ensure that the contractor performs
the occupancy monitoring as required, it will allow these $110,2613 in funds to be put to
better use in the future.
1
Of 27 tenants, only 8 were required to have full source documentation for the sixth-year certification.
2
These noncompliant projects are projects for which the contractor did not perform the required site visits to obtain
the required documentation to satisfy tenant/unit documentation related to HOME-assisted units.
3
Average annual contract cost (1/5 the amount of the $551,306 incurred over a five year period).
9
Recommendations
We recommend that the Director of the Los Angeles Office of Community Planning and
Development require the Department to
2A. Develop and implement policies and procedures to ensure that it monitors its
contractor to ensure that the contracted services are performed as intended. Such
action will ensure that the contract amount of $110,261 in HOME funds can be put
to better use in the future.
2B. Provide missing tenant documentation for the 27 tenants to support that each family
was income eligible and that projects met affordability and income targeting
requirements of HOME regulations or repay $103,693 in unsupported costs.
2C. Provide training to the responsible Department and contractor staff to ensure that
they are fully knowledgeable of the HOME regular occupancy monitoring
requirements as well as the contract provisions.
10
Finding 3: The Department Failed to Inspect HOME-Assisted Rental
Housing Projects and Ensure That Projects Met Local Housing Code
Requirements
The Department failed to inspect HOME-assisted rental housing projects as frequently as
required and ensure that the projects met local housing code requirements. It did not conduct the
required number of inspections during our three-year audit period for 36 of 52 properties. In
addition, 69 of 165 units (42 percent) inspected did not meet the local code requirements. The
problem occurred because the Department did not have adequate controls in place to ensure that
HOME-assisted rental housing units were properly inspected and recorded as HOME-assisted
units. As a result, neither the Department nor HUD was assured that the HOME-assisted rental
units were safe and sanitary and complied with local code requirements.
Projects Not Inspected as
Required
Pursuant to 24 CFR 92.504(d), the participating jurisdiction must perform on-site
inspections of HOME-assisted rental housing to determine compliance with the property
standards of section 92.251 no less than
Every three years for projects containing one to four units,
Every two years for projects containing 5 to 25 units, and
Every year for projects containing 26 or more units.
The Department did not conduct the required number of inspections during our three-year
audit period for 36 of 52 properties (69 percent) in our sample. In addition, six of these
properties did not receive any inspections during our audit period. A schedule of the
properties that were not inspected as required is shown in appendix F.
The problem occurred because the Department did not have adequate procedures in place
to ensure that the HOME-assisted rental housing properties were properly inspected and
recorded in the Systematic Code Enforcement Program’s information system as HOME-
assisted projects. This condition caused the properties to fall under the Systematic Code
Enforcement Program’s ordinance, which requires only one inspection of each
multifamily residential unit every three years.
11
Nevertheless, as reported in the City’s audit report,4 the Department exceeded this three-
year requirement, and it took six years to complete the first cycle of inspections. In
addition, the information systems and databases used by staff (Occupancy Monitoring
Unit and Systematic Code Enforcement Program) are all stand-alone systems that do not
interface with each other and do not enable the Department to efficiently track, monitor,
and reconcile data related to HOME-assisted rental housing units (see finding 4).
Local Code Requirements Not
Met
Regulations at 24 CFR 92.251(a)(2) require that HOME-assisted housing meet all
applicable state and local housing quality standards and code requirements (see appendix
C).
We inspected 165 HOME-assisted rental units (20 properties) to determine whether they
met housing code regulations. Of the 165 units, 69 (42 percent) did not meet the local
code requirements and had 407 housing code violations (see appendix G). Of the 69
units, 41 (59 percent) (within 10 projects) were in material noncompliance and comprised
113 of the 407 housing code violations as shown below.
Project
assessor parcel Number of units Number of units with Total violations
number inspected significant violations identified
5028001028 11 11 40
5163013009 10 10 18
5028001021 5 5 23
5546005001 10 3 5
2210019013 10 3 5
5155029010 10 3 6
5148011001 11 3 10
5148012006 10 1 1
5408017023 10 1 2
5141001018 7 1 3
Total 94 41 113
These units had significant violations that created substantially unsafe tenant living
conditions, including exposed electrical contacts or wiring, broken exterior door locks
4
It is the internal audit report issued July 16, 2007, by the City’s Office of the Controller. It was a followup audit of
the Housing Department’s Systematic Code Enforcement Program regarding the audit conducted in 2001, which
found that the Department did not have a systematic approach to prioritize the properties that require inspections,
lacked effective systems to report the inspection results and the program’s performance, and needed to reassess the
funding of the program.
12
and hinges, deficient windows that did not lock, and mildew. By contrast, those units
that were not considered to be materially deficient had less severe violations such as
cracked or broken window glass panes; inoperative burners on stove; air conditioner filter
dirty (lint); excessive grease on kitchen counter, stove, and wall; excessive debris; sink
not properly sealed around counter; and garbage disposal leakage. These types of
deficiencies also affected tenant health and safety but not to a high enough degree to
cause the units to be considered materially deficient.
Examples of Violations
Our inspector identified 75 violations (see appendix G) relating to the failure to maintain
windows, doors, cabinets, and frames in operable, clean, and sanitary condition and in
good repair for 8 (37 units) of the 20 properties inspected. The violations included
cracked window glass, water damage at top of cabinet area, bathroom window frames
damaged with hole and wood rot, defective window lock/latch, kitchen cabinets and sink
wood rot due and water damage, entry door dead bolt not penetrating striker, bathroom
medical cabinet corroded, and bathroom with excessive buildup of mildew. The
following pictures are examples of the violations we observed:
Assessor parcel numbers 5546005001 and 5028001028: J trap leaking, taped in an attempt to prevent from
continuing to leak under sink. Water damage, wood rot, warped floor boards, holes, and mildew existed
under the interior of bottom sink cabinet.
13
Assessor parcel numbers 5028001021, 5155029010, and 5028001028: Entry door to living room - door frame/trim
split, damaged, insecure, and/or missing door hinges. A unit (3 rd picture) had a hollow door used as the exterior
door to the living room. The hollow door does not provide basic standards of security, weatherization, and barrier
against fire and smoke.
Assessor parcel numbers 5028001028 and 5163013009: Broken glass raises concerns for safety of tenants and
poses a cutting hazard.
14
In addition, our inspector identified 36 violations relating to the failure to maintain safe
and sanitary floor covering for nine projects (26 units). The violations identified included
shower floor tiles exposed with missing grout/seal and mildew; carpet worn/torn, with
holes, and/or lifted, creating ripples with potential tripping hazard; kitchen and room
flooring in a rough subflooring condition; and linoleum lifted at tub and shower area.
The following are some examples of the violations we observed:
Assessor parcel numbers 5141001018, 5028001028, 5148012006, and 5028001021: Worn and torn carpets
and floors with missing tiles and mildew growth poses potential health and safety problems and tripping
hazards. A picture shows that duct tape was used in an attempt to cover up the mildew.
Our inspector identified other violations, including but not limited to rotting/peeling
interior and exterior paint, inoperable smoke detectors, exposed wires, aged and dirty
vents for air conditioner and heater, leaking drain pipes, garbage and debris in and around
HOME-assisted rental units, missing handrails on stairways, and loose toilets. The
following pictures are a few examples of other violations identified in the Department’s
HOME-assisted rental units inspected.
15
Assessor parcel numbers 5028001021, 2210019013, 5408017023, and 5546005001: Toilets with no cover,
inoperable smoke detectors, dirty heating and ventilation system, and exposed wiring pose health and
safety concerns.
As previously mentioned, the Department did not conduct the required number of
inspections during our three-year audit period for 36 of 52 (69 percent) properties.
Performing inspections at the required intervals could have prevented, or at least reduced,
the amount of time that units were in noncompliance and in unsafe or unsanitary
condition. Improvements to the Department’s inspection controls to ensure that
inspections are conducted when required will enable $106,8625 in HOME funds to be put
to better use in the future.
5
The amount represents a prorated amount of HOME funds invested in the HOME-assisted rental units that failed
inspection. See appendix H for details on the calculation.
16
Department Not Aware of
Vacant Units
During our inspections, we also identified six units that had been vacant between 12 and
27 months, although there was nothing precluding these units from being occupied. In
accordance with 24 CFR 92.351(a)(1), participating jurisdictions are to affirmatively
market units by having owners adopt procedures to inform and solicit applications from
persons in the housing market area who are not likely to apply for the housing without
special outreach. We brought the vacant units to the attention of the housing services
manager and learned that the Department was unaware that the units were vacant and in
violation of HOME regulations. These vacant units could have been occupied by eligible
tenants. However, the Department and the owner did not maximize the effectiveness of
the HOME program’s intent to house low-income households for the time the units were
vacant. Improvements to the Department’s controls to ensure that vacant units are
identified and then occupied by eligible tenants in a timely manner will ensure that
$9,3606 in HOME funds can be put to better use in the future.
Conclusion
Collectively, we attribute the deficiencies noted above to the Department’s not having
adequate controls in place to ensure that HOME-assisted rental housing units were
inspected when required and that they complied with local code requirements.
Consequently, neither the Department nor HUD was adequately assured that HOME-
assisted rental units were safe and sanitary units that complied with local code
requirements. Improvements to the Department’s controls will ensure that $116,222 in
HOME funds can be put to better use in the future.
Recommendations
We recommend that the Director of the Los Angeles Office of Community Planning and
Development require the Department to
3A. Take action to ensure that units that failed inspection during our site visit (appendix
G) are repaired by the project owners. Such corrective action will ensure that rental
housing assisted with $106,862 in HOME funds can be put to better use.
6
The amount represents a prorated amount of HOME funds invested in the HOME-assisted rental units that were
vacant. If controls are implemented to ensure that vacant units are identified and then occupied by eligible tenants
in a timely manner, funds would be put to better use for the vacant units that we identified. See appendix H for
details on the calculation.
17
3B. Take action to ensure that vacant HOME-assisted rental housing units identified
during our inspections are occupied as soon as possible by eligible tenants and
identify whether there are other vacant units that also need to be occupied. Such
corrective action will ensure that rental housing assisted with $9,360 in HOME
funds can be put to better use.
3C. Implement adequate policies and procedures (internal controls) to ensure that
HOME-assisted rental housing is transferred from the Occupancy Monitoring Unit
to the Systematic Code Enforcement Program in a timely manner and appropriately
recorded in its system so that all HOME-assisted rental projects are inspected in a
timely manner to identify and correct housing code violations.
18
Finding 4: The Department Had Inadequate Controls over the
Monitoring of Its HOME-Assisted Rental Housing Projects
The Department had inadequate controls over the monitoring of its HOME-assisted rental
housing projects. The Department’s databases are inefficient and incomplete because they are
stand-alone systems that do not interface with each other and do not provide user-friendly
reporting. We compared the databases used by the Department and its contractor and found
discrepancies with the number of HOME-assisted rental units and projects recorded as well as
inaccurate property addresses. The problem occurred because of the lack of a uniform database,
compounded by high staff turnover and poor record keeping. Without adequate oversight,
neither HUD nor the Department can adequately ensure that the HOME-funded projects comply
with HOME requirements.
Inadequate Controls over
Monitoring of HOME-Assisted
Rental Housing Projects
Contrary to Office of Management and Budget Circular A-133 (see appendix C), the
Department did not have adequate internal controls in place to monitor its HOME-
assisted rental housing projects to ensure that they complied with HOME requirements.
We reviewed the various databases used by the Department and found the following
problems and issues:
Capital Budget Tracking System – It is a text database used by the Department that
contains project management, fund source, and loan service information; however, it
does not have information on the number of HOME-assisted units.
Integrated Disbursement Information System – It is HUD’s database system that
allows grantees to request grant funding and report on program accomplishments;
however, the Department’s HOME-funded project addresses were not always
accurate.
Contractor’s database – The contractor was unable to export information from its
database on the universe of tenant records and could not retrieve individual tenant
data because all data were entered using project addresses rather than individual
tenants’ names.
Systematic Code Enforcement Program’s spreadsheet – It is a spreadsheet kept by the
Systematic Code Enforcement Program on all of its HOME-assisted rental housing
19
projects for use in scheduling and conducting physical inspections; however, it did
not distinguish HOME-assisted units from non-HOME-assisted units.
The systems also showed different numbers of HOME-assisted rental housing projects
and units. The table below illustrates the numbers reported by the various systems:
Capital Integrated Systematic
Budget Disbursement Code
Tracking Information Contractor's Enforcement
System System database Program
Number of
HOME-assisted
projects 308 536 254 530 7
As evidenced above, the contractor’s database shows that it had only 254 HOME-assisted
rental housing projects, versus the 536 shown in HUD’s Integrated Disbursement
Information System. Thus, there were 282 projects that were not monitored by the
contractor, and there was no assurance that those projects complied with HOME and
affordability requirements.
Collectively, the different systems used by the Department and its counterparts to manage
and monitor the projects are ineffective and inaccurate because they do not interface with
one another.
Corrective Action
The Department’s system staff was developing an in-house system, the Housing
Information Management System. According to the City’s audit report, the new system
should have been operational by December 2007; however, we learned that the
Occupancy Monitoring Unit’s database will not be implemented until possibly fiscal year
2009. The housing services manager was aware of the problem with the databases and
agreed that a problem existed and required correction. The manager also stated that once
the Department transitions to the Housing Information Management System from its
Capital Budget Tracking System, it will need to reconcile the data with HUD’s Integrated
Disbursement Information System.
7
Although it appears that the Systematic Code Enforcement Program had more HOME-assisted rental projects when
compared to other databases, we found that the projects within our sample were not properly recorded as HOME in
its Code, Compliance, and Rent Information System and/or did not show up in its spreadsheet.
20
Conclusion
The problem occurred because of the lack of a uniform database, compounded by high
staff turnover within the Department’s Occupancy Monitoring Unit and poor record
keeping. Without adequate controls, the Department may not have provided the required
level of oversight to its HOME-assisted rental units to ensure that requirements were met.
As a result, HUD may have provided HOME funding to projects that did not meet its
affordability requirements. Without adequate oversight, neither HUD nor the Department
can adequately ensure that the HOME-funded projects comply with HOME requirements.
Recommendations
We recommend that the Director of the Los Angeles Office of Community Planning and
Development require the Department to
4A. Implement a plan and coordinate with all of the divisions and programs within the
Department to assure that data and reporting needs are properly addressed during
the system development of the Housing Information Management System. In the
interim, the Department should reconcile the various databases and ensure that all
HOME-assisted rental housing projects are properly accounted for and monitored.
21
SCOPE AND METHODOLOGY
We performed our on-site audit work at the Department, located in Los Angeles, California,
between January and June 2008. Our audit generally covered the period January 1, 2005,
through December 31, 2007. Our objective was to determine whether the Department complied
with HOME affordability monitoring and inspection requirements regarding HOME-assisted
rental housing units.
We gained an understanding of how the City administered its HOME grants through interviews
with officials from the
HUD Los Angeles Office of Community Planning and Development,
Los Angeles Housing Department and its Occupancy Monitoring and Systematic Code
Enforcement Division, and
The Department’s contractor responsible for the functions of occupancy monitoring.
To accomplish our audit objectives, we reviewed
The applicable federal laws, regulations, and HUD guidance for the HOME program;
Office of Management and Budget regulations for local grantees;
Reports from HUD’s Integrated Disbursement Information System;
The City’s annual action plans and consolidated annual performance evaluation reports;
The Department’s housing code standards, accounting records, policies and procedures, and
file documentation;
The Department’s and contractor’s databases; and
Internal audit reports from the City’s Office of the Controller.
HUD’s Integrated Disbursement Information System identified 536 completed HOME-assisted
rental housing projects as of February 4, 2008. We obtained and reconciled the Department’s
databases and spreadsheets used to monitor its HOME-assisted rental projects and compared
them to the Integrated Disbursement Information System. In doing so, we organized the projects
by seven potential areas of concern. We then selected projects with the highest HOME funding
amount8 per seven potential areas of concern. Based on a sample, we identified HOME-assisted
rental housing projects with potential concerns with a high amount of HOME funding. We
requested and reviewed the following:
1. Tenant information for all HOME-assisted units within the 26 projects because these
projects did not show up in the contractor’s database for occupancy monitoring.
2. Tenant information for 37 projects (116 tenants) from the contractor for review of
tenant eligibility because these projects showed up in the contractor’s database.
8
We selected projects with the highest HOME funding amount. For those projects that did not have a HOME
amount listed, we defaulted to projects with the most rental units per project.
22
3. HOME inspections for 52 HOME-assisted rental properties because these fell within
our sample and should be inspected by the HOME inspectors from the Systematic
Code Enforcement Program.
4. On-site inspections for 20 HOME-assisted properties. We selected for inspections
projects in which the Department was able to identify which were HOME-assisted
units within the projects and a majority of the projects that did not show up in the
Systematic Code Enforcement Program’s database as HOME projects.
We performed our review in accordance with generally accepted government auditing standards.
23
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 had in place to ensure that hard-
copy and database occupancy monitoring records for all HOME projects were
current, valid, and reliable.
Policies and procedures that management had in place to ensure that
occupancy monitoring occurred in a manner that complied with applicable
laws and regulations and met program objectives.
Policies and procedures that management had in place to ensure that hard-
copy and database physical inspection records for all HOME projects were
current, valid, and reliable.
Policies and procedures that management had in place to ensure that physical
inspections monitoring occurred in a manner that complied with applicable
laws and regulations and met program objectives.
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.
24
Significant Weaknesses
Based on our review, we believe the following items are significant weaknesses:
The Department did not have a reliable database that held current, valid, and
reliable records for occupancy monitoring (findings 1 and 4).
The Department did not have policies and procedures for monitoring its
occupancy monitoring contractor (finding 2).
The Department did not have policies and procedures in place to ensure that
hard-copy and database physical inspection records were current, valid, and
reliable (finding 3).
The Department did not have policies and procedures to ensure that it
conducted its physical inspections in accordance with regulations (finding 3).
25
FOLLOWUP ON PRIOR AUDITS
Audit of the City of Los Angeles
Housing Department - HOME -
Assisted Rehabilitation
Program, 2008-LA-1004, Dated
January 15, 2008
We audited the Department’s HOME-assisted rehabilitation construction. The report
contained four findings that the Department did not ensure that all HOME-assisted
rehabilitation work on single-family and small multifamily properties met all applicable
construction standards and/or was complete. On May 14, 2008, we entered into
management decisions with HUD to correct the items in the recommendations, which
have a target completion date of May 14, 2009.
26
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Unsupported 1/ Funds to be put
number to better use 2/
1A $37,999,014
2A $110,261
2B $103,693
3A $106,862
3B $9,360
Total $38,102,707 $226,483
1/ 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 unsupported expenses are HOME funds
expended on 26 projects for which we could not determine whether the HOME-assisted
rental units were occupied by tenants that met the eligibility requirements. The
unsupported costs also include a prorated amount expended on the projects for which the
Department was unable to provide tenant eligibility information for 27 tenants residing in
seven of the HOME-assisted projects.
2/ 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 the auditee implements our
recommendations and improves its controls, it will ensure that HOME funds expended on
contractors’ fees and projects would be funds put to better use in the future. Appendix H
provides more details on our calculations.
27
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
28
29
Comment 2
30
31
OIG Evaluation of Auditee Comments
Comment 1 Thank you for the cooperation extended to us during the audit and for your
proactive efforts to address the audit recommendations as detailed in your
response. HUD will work with you during the audit resolution process to resolve
the audit recommendations.
Comment 2 Your statement gives the impression that all HOME-assisted units were inspected
for code violations, but this is not the case. We found instances where some
properties did not receive any HOME or Systematic Code Enforcement Program
inspections. Both types of inspections require that all units in the properties are
inspected thoroughly by inspectors for code violations. There were instances
where we found properties only received complaint and/or urgent repair
inspections. Complaint and urgent repair inspections were unit(s) and violation(s)
specific. Consequently, HOME-assisted units in the properties did not necessarily
receive regular inspections.
32
Appendix C
CRITERIA
A. 24 CFR Part 92, Home Investment Partnerships Program
Section 92.203(a) states, “ The HOME program has income targeting requirements for
the HOME program and for HOME projects. Therefore, the participating jurisdiction
must determine each family is income eligible by determining the family’s annual
income.”
Section 92.203(a)(1) states, “For families who are tenants in HOME-assisted housing
and not receiving HOME tenant-based rental assistance, the participating jurisdiction
must initially determine annual income using the method in paragraph (a)(1)(i) of this
section.”
Section 92.203(a)(1)(i) states, “Examine the source documents evidencing annual
income (e.g., wage statement, interest statement, unemployment compensation statement)
for the family.”
Section 92.203(a)(1)(ii) states, “Obtain from the family a written statement of the amount
of the family’s annual income and family size, along with a certification that the
information is complete and accurate. The certification must state that the family will
provide source documents upon request.”
Section 92.203(a)(1)(iii) states, “Obtain a written statement from the administrator of a
government program under which the family receives benefits and which examines each
year the annual income of the family.”
Section 92.251(a)(1) states, “…The Participating jurisdiction must have written
standards for rehabilitation that ensure that HOME-assisted housing is decent, safe, and
sanitary...”
Section 92.251(a)(2) states, “All other HOME-assisted housing (e.g., acquisition) must
meet all applicable State and local housing quality standards and code requirements and
if there are no such standards or code requirements, the housing must meet the housing
quality standards in 24 CFR 982.401.”
Section 92.252 states, “The HOME-assisted units in a rental housing project must be
occupied only by households that are eligible as low-income families and must meet the
following requirements to qualify as affordable housing…”
Section 92.252(a) requires that there be a rent limitation. The maximum HOME rents
are the lesser of (1) the fair market rent for existing housing for comparable units in the
area as established by HUD under 24 CFR 888.111 or (2) a rent that does not exceed 30
percent of the adjusted income of a family whose annual income equal 65 percent of the
33
median income for the area, as determined by HUD, with adjustments for number of
bedrooms in the unit.
Section 92.252(b) requires that for rental projects with five or more HOME-assisted
rental units, 20 percent of the HOME-assisted units be occupied by very low-income
families and meet one of the following rent requirements: (1) the rent does not exceed 30
percent of the annual income of a family whose income equals 50 percent of the median
income for the area, as determined by HUD, with adjustments for smaller and larger
families; and (2) the rent does not exceed 30 percent of the family’s adjusted income.
Section 92.252(c) requires that the participating jurisdiction establish maximum monthly
allowances for utilities and services (excluding telephone).
Section 92.252(d) requires that the owner cannot refuse to lease HOME-assisted units to
a certificate or voucher holder under 24 CFR Part 982-Section 8 Tenant-Based
Assistance.
Section 92.252(e) states, “The HOME-assisted units must meet the affordability
requirements for not less than the applicable period” beginning after project completion.”
Section 92.252(f) states, “The maximum HOME rent limits are recalculated on a periodic
basis after HUD determines fair market rents and median incomes.”
Section 92.252(g) provides that changes in fair market rents and in median income over
time should be sufficient to maintain the financial viability of a project with the HOME
rent limits.
Section 92.252(h) states, “The income of each tenant must be determined initially in
accordance with section 92.203(a)(1)(i). In addition, each year during the period of
affordability the project owner must re-examine each tenant’s annual income in
accordance with one of the options in section 92.203 selected by the participating
jurisdiction. An owner of a multifamily project with an affordability period of 10 years
or more who re-examines tenant’s annual income through a statement and certification in
accordance with section 92.203(a)(1)(ii), must examine the income of each tenant, in
accordance with section 92.203(a)(1)(i), every sixth year of the affordability period.”
Section 92.252(i) requires that HOME-assisted units continue to qualify as affordable
housing despite a temporary noncompliance caused by increases in the incomes of
existing tenants if actions satisfactory to HUD are being taken to ensure that all vacancies
are filled in accordance to requirements until the noncompliance is corrected.
Section 92.252(j) states, “In a project containing HOME-assisted and other units, the
participating jurisdiction may designate fixed or floating HOME units.”
Section 92.351(a)(1) states, “Each participating jurisdiction must adopt affirmative
marketing procedures and requirements for rental and homebuyer projects containing 5 or
34
more HOME-assisted housing units. Affirmative marketing steps consist of actions to
provide information and otherwise attract eligible persons in the housing market area to
the available housing without regard to race, color, national origin, sex, religion, familial
status or disability.”
Section 92.351(a)(2)(iv) requires that affirmative marketing requirements and procedures
adopted must include: “Records that will be kept describing actions taken by the
participating jurisdiction and by owners to affirmatively market units and records to
assess the results of these actions.”
Section 92.502(d)(1) states, “Complete project completion information must be entered
into the disbursement and information system, or otherwise provided, within 120 days of
the final project drawdown. If satisfactory project completion information is not
provided, HUD may suspend further project set-ups or take other correction actions.”
Section 92.503(b)(1) states, “Any HOME funds invested in housing that does not meet
the affordability requirements for the period specified in section 92.252 or 92.254, as
applicable, must be repaid by the participating jurisdiction…”
Section 92.504(a) states, “The Participating jurisdiction is responsible for managing the
day to day operations of its HOME program, ensuring that HOME funds are used in
accordance with all program requirements and written agreements, and making
appropriate action when performance problems arise. The use of recipients,
subrecipients, or contractors does not relieve the participating jurisdiction of this
responsibility. The performance of each contractor and subrecipient must be reviewed at
least annually.”
Section 92.504(d) states, “…During the period of affordability, the participating
jurisdiction must perform on-site inspections of HOME-assisted rental housing to
determine compliance with the property standards of section 92.251 and to verify the
information submitted by the owners in accordance with the requirements of section
92.252 no less than: every three years for projects containing 1 to 4 units; every two
years for projects containing 5 to 25 units; and every year for projects containing 26 or
more units. Inspections must be based on a sufficient sample of units.”
Section 92.508(a) states, “Each participating jurisdiction establish and maintain
sufficient records to enable HUD to determine whether the participating jurisdiction has
met the requirements of this part…”
Section 92.508(a)(3)(i) states, “A full description of each project assisted with HOME
funds, including the location, form of HOME assistance, and the units or tenants assisted
with HOME funds.”
Section 92.508(a)(3)(ix) states, “Records demonstrating that each lease for an assisted
rental housing unit complies with the tenant and participation protections of section
92.253. Records must be kept for each family.”
35
Section 92.508(a)(3)(iv) states, “Records demonstrating that each project meets the
property standards of section 92.251.”
Section 92.508(a)(3)(v) states, “Records demonstrate that each family is income eligible
in accordance with section 92.203.”
Section 92.508(a)(3)(vii) states, “Records demonstrate that each rental housing project
meets the affordability and income targeting requirements of section 92.252 for the
required period. Records must be kept for each family assisted.”
B. Office of Management and Budget Circular A-133, Subpart C (.300b), states, the auditee
shall: (b) maintain internal control over federal programs that provides reasonable assurance
that the auditee is managing federal awards in compliance with laws, regulations, and the
provisions of contracts or grant agreements that could have a material effect on each of its
federal programs…”
C. Professional Services Agreement
Section 416(A) states, “The Contractor, in the performance of this Agreement, shall
comply with all applicable statutes, rules, regulations and orders of the United States, the
State of California, the County and the City of Los Angeles, including laws and
regulations pertaining to labor, wages, hours, and other conditions of employment, the
City’s anti-discrimination provisions and Affirmative Action Plan requirements, the
Housing and Community Development Act of 1974 (42 USC Section 301 et seq.) as
amended, 24 CFR Part 500 et seq., the HOME Investment Partnerships Program Act 24
CFR Part 92 et seq., as well as applicable Office of Management and Budget Circulars...”
Section 416(B) states, “If Federal funds are used in the performance of this Agreement,
the Contractor shall adhere to the rules and regulations of the Single Audit Act. P.L. 98-
502 and the implementing OMB Circulars, City Council action dated February 4, 1987
(C.F. No. 84-2259-S1), and any administrative regulations or field memos implementing
the Act.”
Section 416(H) requires that “records, in their original form, shall be maintained in
accordance with requirements prescribed by the City with respect to all matters covered
on file for all documents specified in the Agreement. Original forms are to be maintained
on file for all documents specified in this agreement. Such records shall be retained for a
period of five (5) years after termination of this Agreement and after final disposition of
all pending matters.”
Section 202(C)(2) states, “…If the owner does not comply with the Contractor’s
notification and does not submit the required documentation by the Due Date, the
Contractor shall demonstrate due diligence by completing up to three Collection Activity
Cycles to obtain compliance…” The Collection Activity Cycles are described in the
Professional Services Agreement.
36
D. The Department’s Policies and Procedures for Occupancy Monitoring of Major
Projects’ Neighborhood Preservation Projects
Tenant files containing
1. Lease application
2. Lease or lease waiver
3. Initial income source
4. Tenant income and rent certification forms (tenant form)
5. Mandatory addendum to the lease or rental agreement
E. Funding Approval and HOME Investment Partnerships Agreement
The HOME statute imposes a significant number of data collection and reporting
requirements. This includes information on assisted properties, on the owners or
tenants of the properties, and on other programmatic areas. It is to permit HUD to
determine the following:
1. To permit HUD to determine whether each participant meets the HOME
statutory income targeting and affordability requirements.
2. To permit HUD to determine compliance with other statutory and regulatory
program requirements.
37
Appendix D
SCHEDULE OF 26 HOME-ASSISTED RENTAL HOUSING
PROJECTS THAT LACKED SUFFICIENT TENANT/UNIT
ELIGIBILITY INFORMATION
Assessor parcel Amount of HOME
number funding expended
1 5690022021 $592,783
2 5502018010 $1,073,589
3 6073004027 $343,160
4 5160020051 $2,488,790
5 5134017011 $1,800,000
6 97041300006473 $1,750,000
7 2111005034 $1,617,028
8 5544021900 $1,663,839
5030005016 &
9 $4,336,873
5030006024
10 5152003010 $2,872,460
11 6031006029 $2,817,605
12 5183003030 $2,126,109
13 6067016049 $1,500,000
14 5544024001 $1,326,000
15 6032003018 $683,117
16 2114008020 $100,000
17 2146008035 $300,000
18 2684018036 $1,127,000
19 2156028267 $385,000
20 2265002023 $1,294,118
21 2156025020 $1,351,000
22 5103020009 $35,000
23 5119003010 $20,858
24 5429008026 $1,690,959
38
25 5017015006 $43,182
26 5205013009 $4,660,544
Total $37,999,014
*Item 6: We were unable to obtain the assessor parcel number as it was unavailable. The senior housing inspector from the
Systematic Code Enforcement Program provided the application number related to the subject property.
**Items 1 through 21: The Department did not provide sufficient documentation to satisfy tenant/unit documentation (compliance)
requirements.
***Items 22 through 26: The contractor did not perform required site visits to obtain documentation to satisfy tenant/unit
documentation (compliance) requirements.
39
Appendix E
SCHEDULE OF 27 TENANT FILES (SEVEN PROJECTS) WITH
INCOMPLETE TENANT ELIGIBILITY INFORMATION
Project address Initial income 6th-year income
Recertification Tenant Prorated HOME
Number of identified by Unit number source source
documents application/ funds
projects assessor documentation documentation lease missing expended
missing
parcel number missing missing
Unit 101 X X Not applicable X $2,480
Unit 103 X X Not applicable X $2,480
1 5155029010
Unit 107 X X Not applicable X $2,480
Unit 108 X X Not applicable X $2,480
Unit 410 X X X X $4,581
Unit 604 X X X $2,291
2 5467012016
Unit 606 X X Not applicable X $2,291
Unit 607 X X X X $2,291
Unit 1 X X Not applicable X $3,148
Unit 2 X X X X $3,148
3 5136001005
Unit 3 X X Not applicable X $3,148
Unit 4 X X Not applicable X $3,148
Unable to $4,688
Unit 124 X X X
determine
Unit 126 X X X X $3,125
4 5141001018
Unable to $4,688
Unit 128 X X X
determine
Unit 141 X X X X $3,125
Unit 104 X X X $605
5 5144015046 Unit 201 Not applicable X $605
Unit 202 X X X X $605
Unit 101 X X Not applicable X $1,500
Unit 102 X X Not applicable X $1,000
6 5148011001
Unit 103 X Not applicable X $500
Unit 104 X X Not applicable X $1,000
Unit 202 X X Not applicable X $10,730
Unable to $10,730
Unit 203 X X X
7 5094007010 determine
Unit 204 X Not applicable X $10,730
Unit 208 X X Not applicable X $16,096
Totals
Total 27 25 24 *7 27 $103,693
Percentages
Percent 93 percent 89 percent 88 percent 100 percent
*Only eight tenants were required to have sixth-year source documentation on file, and seven of eight did not have the required six-year
documentation.
40
Appendix F
SCHEDULE OF 52 HOME-ASSISTED PROPERTIES NOT
INSPECTED IN ACCORDANCE WITH HOME
REQUIREMENTS
Number of
inspections
performed 24 CFR
Number of Jan. 1, 2005 92.504 Listed as
Assessor parcel inspections – Dec. 31, complied HOME
number required 2007 (yes/no) (yes/no)
1 5035031021 1 0 No No
2 5185015017 1 0 No No
3 5115022012 1 1 Yes No
5108002036 and
4 5108002006 1 1 Yes No
5 5108002037 1 1 Yes No
6 6071003003 1 1 Yes No
7 6029017003 1 1 Yes No
8 5021023010 1 1 Yes No
9 5021018032 1 1 Yes No
10 5180008009 1 1 Yes No
11 5117007025 1 1 Yes Yes
12 6006010027 1 2 Yes No
13 5028001028 2 1 No No
14 5127008001 2 0 No Yes
15 5180002016 2 1 No No
16 6022015025 2 1 No No
17 5502018010 2 1 No Yes
18 5157020019 2 1 No Yes
19 5030006024 2 1 No Yes
20 5030005016 2 1 No Yes
21 5467017004 2 2 Yes Yes
22 6032003018 2 2 Yes Yes
23 5134017011 3 1 No No
24 5028001021 3 0 No No
25 5408017023 3 0 No No
26 5152003010 3 0 No No
27 5094007010 3 1 No No
28 2138006113 3 1 No No
29 5136001005 3 1 No No
30 5141001018 3 1 No No
31 5544021900 3 1 No No
32 5155029010 3 1 No No
33 5467012016 3 1 No Yes
34 6067016049 3 1 No Yes
41
35 5148012006 3 1 No Yes
36 7423005010 3 1 No Yes
37 6037014029 3 1 Yes No
38 5144015046 3 2 No No
39 6073004027 3 2 No Yes
40 5160020051 3 2 No Yes
41 6031006029 3 2 No Yes
42 5544024001 3 2 No Yes
43 2111005034 3 2 No Yes
44 5183003030 3 2 No Yes
45 5161026004 3 2 No Yes
46 5163013009 3 2 No Yes
47 7417015039 3 2 No Yes
2210019013/
48 2210019011 3 2 No Yes
49 5148011001 3 3 Yes No
50 5142023012 3 3 Yes Yes
51 5546005001 3 3 Yes Yes
9
52 5035025001 3 1 Yes Yes
9
We learned that the construction was not completed until October 1, 2006. Thus, it would be logical that only one
inspection was performed on the subject property.
42
Appendix G
SCHEDULE OF UNITS WITH VIOLATIONS IDENTIFIED DURING OUR INSPECTIONS
43
44
45
Category of violations legend
A Failure to maintain an approved heating appliance and/or venting system. Q Failure to maintain habitable room(s) free from dampness.
Failure to provide and maintain the required guard/handrail and maintain in a Failure to maintain the plumbing system free from defective, damaged/leaking
B secured condition. R faucets or plumbing fixtures.
Failure to provide and maintain permanently wire, with battery backup, smoke
C detectors. S Failure to properly install or maintain required lighting fixtures.
D Failure to maintain safe and sanitary floor covering. T Failure to properly secure loose plumbing fixtures.
Failure to maintain plaster/drywall walls/ ceilings in a smooth and sanitary Failure to maintain the required switch/receptacle cover plates and grounding
E condition. U means in good repair and free from defects or missing portions.
Maintaining inoperative or defective receptacles in kitchen and/or bathroom
Failure to maintain the required water closet, lavatory, bathtub, shower, or and/or exterior locations; ground fault circuit interrupter type receptacle(s)
F kitchen sink as required for a dwelling unit. V required.
Failure to maintain the required weatherproofing of the building, structure,
premises, or portion thereof in conformity with the code regulations and
G Failure to maintain dwelling unit in a safe and sanitary condition. W department approvals in effect at the time of construction.
Failure to maintain windows, doors, cabinets, and frames operable, clean,
H sanitary, and in good repair. X Performing construction without obtaining the required permits or approvals.
Failure to maintain the electrical service, lines, switches, outlets, fixtures
coverings, and supports in good repair and free from broken, loose, frayed
Failure to maintain the required combustion air openings for all fuel burning inoperative, defective, or missing portions or wiring that may be a danger to
I appliances. Y life, limb, heath, and safety.
J Failure to maintain the required mechanical or natural bathroom ventilation. Z Failure to maintain the required fire extinguishing system(s) or equipment.
Failure to provide and maintain all required plumbing faucet and/or valve Failure to maintain the fire extinguishing system and/or equipment required by
K handles. A1 the Los Angeles Municipal Code.
Unapproved use of flexible cords and/or multiple adapters as a substitute for Failure to provide and maintain the required central or individual room heating
L the fixed wiring of the structure. A2 appliance in good repair and operable at all times.
Failure to provide and/or maintain an approved and/or nondefective domestic Failure to provide and maintain a positive seal (caulk or grout) between
M range vent. A3 plumbing fixtures at contact points with walls and/or floors.
Failure to maintain the existing building, structure, premises, or portion thereof
Failure to maintain the required appliance venting system in good and safe in a safe and sanitary condition; in good repair; and free from graffiti, trash,
N condition and in conformance with applicable laws at the time of installation. A4 debris, rubbish, overgrown vegetation, offal, or similar material.
Failure to maintain the counter/drains boards for kitchen sinks, bathroom
lavatories, and adjacent wall and/or floor surfaces in a manner to prevent water Failure to maintain the decking, walkways, or stairway surfaces and their
damage and/or in a clean and sanitary condition and free from dirty or foreign physical elements in conformity with the code regulations and department
O materials. A5 approvals in effect at the time of construction.
Failure to maintain the plumbing system in conformity with the code
P regulations and department approvals in effect at the time of construction.
46
Appendix H
SCHEDULE OF FUNDS TO BE PUT TO BETTER USE
Calculation of $106,862 in funds to be put to better use related to HOME funds invested in the HOME-assisted rental units that failed
inspection
A B C D E F G
HOME HOME
Properties by HOME funding per Number funding per Number of Number Total funds put
assessor parcel funding Affordability year of HOME year per unit units of units to better use (E x
numbers amount period (A/B) units (C/D) inspected failed G)
5136001005 $1,813,019 12 $151,085 48 $3,148 8 3 $9,443
5028001021/
5028001028 $424,657 5 $84,931 58 $1,464 16 16 $23,429
5163013009 $1,110,696 23 $48,291 30 $1,610 10 10 $16,097
5141001018 $1,500,000 40 $37,500 24 $1,563 5 1 $1,563
5185015017 $234,664 15 $15,644 4 $3,911 4 1 $3,911
5161026004 $525,000 50 $10,500 43 $244 9 1 $244
5408017023 $525,000 50 $10,500 49 $214 9 7 $1,500
5148012006 $534,079 50 $10,682 55 $194 10 1 $194
5148011001 $1,200,000 50 $24,000 48 $500 10 4 $2,000
5144015046 $1,269,745 50 $25,395 42 $605 11 3 $1,814
5142023012 $1,048,022 40 $26,201 12 $2,183 9 3 $6,550
5546005001 $1,042,721 40 $26,068 10 $2,607 10 7 $18,248
5155029010 $3,205,762 55 $58,287 47 $1,240 10 6 $7,441
5035025001 $205,570 50 $4,111 36 $114 10 1 $114
2210019013 $2,519,254 40 $62,981 22 $2,863 10 5 $14,314
Total $106,862
Calculation of $9,360 in funds to be put to better use related to HOME funds invested in the HOME-assisted rental units that were
vacant.
47
A B C D E F G H I J
Property Funds put to
identified by HOME Number HOME HOME funding better use Total
assessor HOME funding per of funding per per month per Number of limited to 12 funds put
parcel funding Affordability year HOME year per unit unit Vacant months months to better
number amount period (A/B) units (C/D) (E/12 months) unit vacant (F x I) use
E/12 months
5141001018 $1,500,000 40 $37,500 24 $1,563 $130 124 20 12 $1,560
5141001018 $1,500,000 40 $37,500 24 $1,563 $130 128 15 12 $1,560
5141001018 $1,500,000 40 $37,500 24 $1,563 $130 141 12 12 $1,560
5141001018 $1,500,000 40 $37,500 24 $1,563 $130 223 21 12 $1,560
5141001018 $1,500,000 40 $37,500 24 $1,563 $130 231 22 12 $1,560
5141001018 $1,500,000 40 $37,500 24 $1,563 $130 232 27 12 $1,560
TOTAL Total $9,360
48
The City of Los Angeles Housing Department Did Not Comply with HOME Affordability Monitoring and Inspection Requirements for Its HOME-Assisted Rental Housing
Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-09-18.
Below is a raw (and likely hideous) rendition of the original report. (PDF)