oversight

The Harrisburg Housing Authority, Harrisburg, Pennsylvania, Did Not Ensure That Its Section 8 Housing Choice Voucher Program Units Met Housing Quality Standards

Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-04-15.

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

                                                               Issue Date
                                                                  April 15, 2008
                                                               Audit Report Number
                                                                  2008-PH-1007




TO:        Dennis G. Bellingtier, Director, Office of Public Housing, Pennsylvania State
           Office, 3APH



FROM:      John P. Buck, Regional Inspector General for Audit, Philadelphia Regional
            Office, 3AGA

SUBJECT:   The Harrisburg Housing Authority, Harrisburg, Pennsylvania, Did Not Ensure
            That Its Section 8 Housing Choice Voucher Program Units Met Housing
            Quality Standards

                                 HIGHLIGHTS

 What We Audited and Why

           We audited the Harrisburg Housing Authority’s (Authority) administration of its
           housing quality standards inspection program for its Section 8 Housing Choice
           Voucher program based on the survey results of our recently completed audit of
           the Authority’s low-rent public housing and Section 8 Housing Choice Voucher
           programs. This is our second audit report issued on the Authority’s programs.
           The audit objective addressed in this report was to determine whether the
           Authority adequately administered its Section 8 housing quality standards
           inspection program to ensure that its program units met housing quality standards
           in accordance with U.S. Department of Housing and Urban Development (HUD)
           requirements.

 What We Found

           The Authority did not adequately administer its inspection program to ensure that
           its program units met housing quality standards as required. We inspected 52
           housing units and found that 37 units did not meet HUD’s housing quality
           standards. Moreover, 35 of the 52 units had exigent health and safety violations
           that the Authority’s inspectors neglected to report during their last inspection.
           The Authority spent $34,113 in program and administrative funds for these 35
           units. We estimated that over the next year if the Authority does not implement
           adequate procedures and controls to ensure that its program units meet housing
           quality standards, HUD will pay more than $884,000 in housing assistance and
           administrative fees for units with material housing quality standards violations.

           Program rents were not abated for units that failed the Authority’s housing quality
           standards inspections. Eleven units that failed inspections performed between
           January 2006 and July 2007 remained in failing status for more than two months.
           However, the Authority failed to abate the program rents or terminate the
           contracts for these units, resulting in an improper payment of $10,796 in housing
           assistance and administrative fees.

What We Recommend

           We recommend that HUD require the Authority to ensure that housing units
           inspected during the audit are repaired to meet HUD’s housing quality standards,
           reimburse its program from nonfederal funds for the improper use of $34,113 in
           program funds for units that materially failed to meet HUD’s housing quality
           standards, and implement adequate procedures and controls to ensure that in the
           future, program units meet housing quality standards to prevent an estimated
           $884,917 from being spent annually for units with material housing quality
           standards violations. Further, we recommend that HUD require the Authority to
           reimburse its program $10,796 from nonfederal funds for the 11 units for which it
           did not abate payment or terminate the assistance contract in a timely manner and
           develop and implement management controls to ensure that employees comply with
           its policies and procedures concerning abatements.

           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 discussed the report with the Authority during the audit and at an exit
           conference on February 28, 2008. The Authority provided written comments to
           our draft report on March 13, 2008. The Authority acknowledged that it needed
           to improve its inspection program and that it had implemented management
           improvements to address some of the issues addressed in the audit report.
           However, the Authority contested some of the violations that we identified,
           asserting that we overstated the amount of ineligible funds included in the report.


                                            2
The complete text of the Authority’s response, along with our evaluation of that
response, can be found in appendix B of this report.




                                 3
                            TABLE OF CONTENTS

Background and Objectives                                                5

Results of Audit
      Finding: Controls over Housing Quality Standards Were Inadequate   6

Scope and Methodology                                                    17

Internal Controls                                                        19

Appendixes
   A. Schedule of Questioned Costs and Funds to Be Put to Better Use     21
   B. Auditee Comments and OIG’s Evaluation                              22




                                             4
                      BACKGROUND AND OBJECTIVES

The Harrisburg Housing Authority (Authority) was established in 1938 under the Housing
Authority Law of the Commonwealth of Pennsylvania to serve the needs of low-income, very low-
income and extremely low-income families in the City of Harrisburg and to (1) maintain the
availability of decent, safe and affordable housing in its communities; (2) ensure equal
opportunity in housing; (3) promote self-sufficiency and asset development of families and
individuals; and (4) improve community quality of life and economic viability. A five-member
board of commissioners governs the Authority. The commissioners serve five-year terms on the
board. The acting executive director of the Authority during the audit was Jerry Shenck. The
Authority’s main administrative office is located at 351 Chestnut Street, Harrisburg, Pennsylvania.

Under the Section 8 Housing Choice Voucher program, the Authority makes rental assistance
payments to landlords on behalf of eligible low-income families. HUD compensates the
Authority for the cost of administering the program through administrative fees.

HUD authorized the Authority to provide leased housing assistance payments for more than 940
eligible households. HUD authorized the Authority the following financial assistance for
housing choice vouchers:

                                                                               Amount
          Authority fiscal year         Annual budget authority               disbursed
                 2006                         $4,227,108                      $4,227,108
                 2007                         $4,361,872                      $4,361,872
                 Total                        $8,588,980                      $8,588,980

HUD regulations at 24 CFR [Code of Federal Regulations] 982.305(a) state that a public
housing authority may not execute a housing assistance contract until it has determined that the
unit has been inspected and meets HUD’s housing quality standards.

HUD regulations at 24 CFR 982.405(a) require public housing authorities to perform unit
inspections before the term of the lease, at least annually during the assisted occupancy, and at
other times as needed to determine whether the unit meets housing quality standards.

HUD regulations at 24 CFR 982.404(a) state that if the owner fails to maintain the dwelling unit
in accordance with HUD’s housing quality standards, the public housing authority must take
prompt and vigorous action to enforce the owner obligations. The authority must not make any
housing assistance payments for a dwelling unit that fails to meet HUD’s housing quality
standards unless the owner corrects the defect within the period specified by the authority and
the authority verifies the correction.

Our audit objective was to determine whether the Authority adequately administered its
inspection program to ensure that its program units met housing quality standards in accordance
with HUD requirements.



                                                 5
                                RESULTS OF AUDIT

Finding: Controls over Housing Quality Standards Were Inadequate
The Authority did not adequately enforce HUD’s housing quality standards. Of 52 program
units selected for inspection, 37 did not meet minimum housing quality standards, and 35 had
material violations that existed before the Authority’s previous inspections. The Authority’s
inspectors did not report 228 violations when they performed their inspections. Further, the
Authority did not abate units that failed its housing quality standards inspections as required.
The violations occurred because the Authority’s contracts with its inspectors coupled with a lack
of quality controls created weakness in its inspection program, the Authority did not adequately
address problems it had identified in the past with completed inspections, it did not routinely
perform quality control inspections, and it contracted with individuals who did not have training
in conducting housing quality standards inspections. The improper abatements occurred because
employees disregarded policy and used their discretion in continuing to make housing assistance
payments for failed units. As a result, the Authority spent more than $44,000 in program and
administrative funds for units that materially failed to meet HUD’s housing quality standards.
We estimate that over the next year, HUD will pay more than $884,000 in housing assistance for
units with material violations of housing quality standards.



 Section 8 Tenant-Based
 Housing Units Were Not in
 Compliance with HUD’s
 Housing Quality Standards


              We statistically selected 52 units from unit inspections passed by the Authority’s
              inspectors during the period April 21 to July 20, 2007. The 52 units were selected
              to determine whether the Authority ensured that the units in its program met
              housing quality standards. We inspected the selected units between August 20
              and August 29, 2007.

              Of the 52 units inspected, 37 (71 percent) had 320 housing quality standards
              violations. Additionally, 35 of the 52 units (67 percent) were considered to be in
              material noncompliance since they had exigent health and safety violations that
              predated the Authority’s last inspection and were not identified by an Authority
              inspector. Two of the 35 units had five violations that were noted on the
              Authority’s previous inspection report, and the Authority later passed the units,
              but during our inspection, it was determined that the violations had not been
              corrected. The 35 units had 233 total violations (including the five identified by
              the Authority but not corrected) that existed before the Authority’s last inspection
              report. The Authority’s inspectors did not identify or did not report 228 violations
              that existed at the time of their most recent inspections. HUD regulations at 24

                                                6
            CFR [Code of Federal Regulations] 982.401 require that all program housing
            meet HUD’s housing quality standards at the beginning of the assisted occupancy
            and throughout the tenancy. The following table categorizes the 320 housing
            quality standards violations in the 37 units that failed the housing quality
            standards inspections.

                                                  Number of Number Percentage
                      Type of violation           violations of units of units
             Structure and materials                 130        28       54
             Illumination and electricity             56        29       56
             Space and security                       56        23       44
             Food preparation and refuse
             disposal                                 22           11          21
             Smoke detectors                          21           15          29
             Sanitary facilities                       20          14          27
             Interior air quality                      5            4           8
             Thermal environment                       4            4           8
             Site and neighborhood                     3            3           6
             Sanitary condition                        3            3           6
             Total                                    320

            We provided our inspection results to the Director of HUD’s Office of Public
            Housing, Pennsylvania State Office, and the Authority’s acting executive director
            during the audit.


Housing Quality Standards
Violations Were Identified

            The following pictures illustrate some of the violations we noted while
            conducting housing quality standards inspections at the Authority’s leased
            housing units.




                                            7
Inspection #23: Mold is present in the basement bathroom on the vanity and wall. This
violation was not identified during the Authority’s June 29, 2007, inspection.




Inspection #47: A mouse hole and droppings are above the baseboard in the dining room.
This violation was not identified during the Authority’s July 25, 2007, inspection.




                                      8
Inspection #29: A leaking drain pipe from the kitchen is wrapped with duct tape in failed
attempts to stop the leak. This violation was not identified during the Authority’s April 26,
2007, inspection.




Inspection #29: There are exposed contacts on a furnace controller near the basement floor.
This violation was not identified during the Authority’s April 26, 2007, inspection.




                                        9
Inspection #23: Damage to plaster and missing                 Inspection #52: There is an unacceptable discharge
ceiling tiles in the back bedroom on the second floor         pipe on the water heater’s pressure relief valve that
were caused by a leak in the roof of the adjacent             leaves a gap through which escaping steam can scald
abandoned unit. The violation was not identified              a tenant. The pipe needs to be continuous to within a
during the Authority’s June 29, 2007, inspection.             minimum of six inches off the floor. This violation
                                                              was not identified during the Authority’s July 5,
                                                              2007, inspection.




                  Inspection #38: The cover plate is missing from the left/rear bedroom wall outlet. This
                  violation was not identified during the Authority’s April 26, 2007, inspection.


                                                        10
Inspection #35: There is a loose carpet on the basement stairs, and a guardrail is needed on
the open side of the staircase. This violation was not identified during the Authority’s
April 26, 2007, inspection.




Inspection #47: The banister protecting the stairway opening on the third floor is only 23 inches
from the floor and insufficiently high for protection. Also, the handrail on the stairway to the third
floor stops three steps short of the top. Neither of these violations was identified during the
Authority’s July 25, 2007, inspection.




                                        11
    The Authority Lacked Controls
    to Ensure Compliance with
    HUD’s Housing Quality
    Standards


                 Although HUD regulations and the Authority’s written policies and procedures
                 required the Authority to ensure that its program units met housing quality
                 standards, it failed to do so. This condition occurred because (1) the fee structure
                 of the Authority’s contracts with its contracted inspectors coupled with a lack of
                 quality controls created weakness in the Authority’s inspection program, (2) the
                 Authority did not take action to address problems identified with the inspections
                 completed by the contracted inspectors, (3) it did not routinely perform quality
                 control inspections, and (4) it hired contractors who did not have training in
                 HUD’s housing quality standards to perform inspections. The following
                 paragraphs provide details.

                 The Authority’s Contracts for Inspection Services and Lack of Controls
                 Created Weakness in the Authority’s Inspection Program

                 The Authority’s contracts with its inspectors stated that “the contractor will
                 provide services on an as needed basis” and “the contractor will be compensated
                 per unit for inspection services.” One inspector was paid a flat fee of $75 per
                 unit 1 for inspection and any reinspections if the unit failed, and the other inspector
                 was paid a flat fee of $49 per unit 2 for inspection and any reinspections if the unit
                 failed. We believe that the inspectors’ flat fee arrangements coupled with the lack
                 of quality controls (discussed in the following paragraphs) created a weakness in
                 the Authority’s inspection program. The inspectors lacked incentive to identify
                 all of the violations in the units that they inspected. This was demonstrated by the
                 significant number of deficiencies that we identified during our inspections. Our
                 inspection results showed the Authority’s inspectors passed 35 units during the
                 prior four month period with a total of 233 preexisting deficiencies. These results
                 provide the basis for the quality of the inspection work provided by the
                 Authority’s inspectors.

                 The Authority Did Not Adequately Address Concerns with Inspections

                 The Authority’s Section 8 coordinator was aware of problems with the quality of
                 the inspections completed by the inspectors but did not take sufficient action to
                 address the problems. The Section 8 coordinator stated that she identified
                 problems with the inspectors’ work when conducting quality control and
                 complaint inspections. As part of the followup procedures for complaints, the
                 Section 8 coordinator addressed problems identified during the complaint
                 inspections with the inspector who had passed the unit during the last inspection.
1
  This inspector had been providing inspection services to the Authority for more than 15 years.
2
  This inspector provided inspection services to the Authority from March to July 2007. The Authority terminated
its contract with this inspector on July 31, 2007, effective September 3, 2007.

                                                       12
           The Section 8 coordinator also stated that, at other times, she counseled one of the
           inspectors regarding the quality of his inspections. The coordinator stated that the
           inspector was indifferent to the assessment of his work. The Section 8
           coordinator did not document her discussions with the inspector. The coordinator
           stated that she was not responsible for enforcing the contracts. The Authority’s
           former executive director had hired the inspectors; therefore, the coordinator was
           reluctant to raise the issue with him. The coordinator stated that she discussed the
           inspector’s performance with the acting executive director, but she did not
           document the discussion.

           The Authority Did Not Routinely Perform Quality Control Inspections

           The Authority did not perform its required quality control inspections throughout
           the year. For 2007, the Authority’s Section 8 coordinator performed quality
           control inspections from January to March. No quality control inspections were
           conducted between March 23 and July 23, 2007. The Section 8 coordinator stated
           that no quality control reviews were conducted because staffing issues prevented
           them from being performed. Periodic quality control reviews performed within
           narrow timeframes may not provide sufficient assurance that inspectors
           consistently perform thorough inspections. For example, the universe for the
           sample of units that we inspected consisted of inspections passed by the
           Authority’s inspectors during the period April 21 to July 20, 2007, which falls
           within the period during which the Authority did not perform quality control
           inspections. Had the Authority performed routine quality control inspections, the
           inspectors could have identified violations that we identified during our
           inspections.

           The Authority’s Inspectors Lacked Training in the Requirements of HUD’s
           Housing Quality Standards

           The Authority contracted for inspection services, and the contracted inspectors
           were responsible for passing 51 of the 52 units that we inspected. There was no
           documentation in the contract files demonstrating that the contractors had any
           training in HUD’s housing quality standards. Further, the Authority did not
           require the inspectors to be trained in HUD’s housing quality standards at any
           time, nor did it provide any training to them. As a result, 35 of the 52 units that
           we inspected had preexisting exigent health and safety violations that the
           Authority’s inspectors did not identify during their inspections.

The Authority Did Not Abate
Failed Units as Required


           The Authority did not abate housing assistance payments or terminate contracts as
           required. We reviewed 12 units that failed inspection at least once during the
           period January 2006 to July 2007. For 11 of the 12 units, the Authority did not
           abate the housing assistance payments or terminate the contracts for the failed

                                            13
            units as required. For 1 of the 12 units, the Authority performed an initial
            inspection and, accordingly, had not made any housing assistance payments for
            the unit before it passed a later inspection. The 11 units failed inspection and
            remained in failed status between two to four months after the initial failed
            inspection, and the Authority continued to make housing assistance payments for
            them. Although the Authority abated $3,886 in payments for eight of the units,
            the abatements were not for the full amount of housing assistance payments that
            the Authority made while the unit was also in failed status.

            HUD regulations at 24 CFR 982.404(a) and (b) require the Authority to take
            prompt and vigorous action to enforce owner and family obligations and prohibit
            the Authority from making housing assistance payments for a dwelling unit that
            fails to meet HUD’s housing quality standards unless the owner corrects the
            defect within the period specified by the Authority and the Authority verifies the
            correction. The regulations state that owners and families have 30 calendar days
            (or any authority-approved extension) to make the necessary repairs for routine
            housing quality standards violations and 24 hours for any life-threatening
            violations. The Authority may terminate assistance to a family because of
            housing quality standards violations caused by the family. The Authority’s policy
            states that abatements will be effective from the day after the date of the failed
            inspection. Notice of abatement is generally for 30 days, depending on the nature
            of the repairs needed.

            This condition occurred because employees did not follow the Authority’s
            policies and procedures regarding abatements and terminations. Employees used
            their own discretion to continue making payments for the units. As a result,
            contrary to HUD regulations and its own policy, the Authority continued to pay
            for units that remained in failed status. The Authority made housing assistance
            payments totaling $9,792 and received administrative fees totaling $1,004 for
            units that did not meet housing quality standards.


The Authority Did Not Take
Timely Action to Address
Violations That We Identified


            The Authority followed up on our inspection results and took action but did not
            take action in a timely manner. The Authority provided a summary schedule of
            the actions it took in response to the results of our inspections. The summary
            schedule showed that for the 37 units that failed our inspections, the Authority
            canceled or planned to cancel 12 housing assistance payments contracts and that it
            reinspected the other 25 units and gave them a passing inspection score.
            However, 22 of the 37 units had life-threatening violations requiring correction
            within 24 hours of notice, and the summary schedule did not indicate that the



                                            14
                  Authority verified correction of the violations within 24 hours as required. 3
                  Further, for the remaining 15 units without 24-hour life-threatening violations,
                  although the Authority’s policy requires violations to be corrected generally
                  within 30 days, the Authority’s summary schedule did not indicate that any of the
                  required repairs were made within that timeframe.

    Conclusion


                  The Authority’s tenants were subjected to health- and safety-related violations, and
                  the Authority did not properly use its program funds when it failed to ensure that
                  units complied with HUD’s housing quality standards and abate units as required. In
                  accordance with HUD regulations at 24 CFR 982.152(d), HUD is permitted to
                  reduce or offset any program administrative fees paid to a public housing
                  authority if it fails to perform its administrative responsibilities correctly or
                  adequately, such as not enforcing HUD’s housing quality standards. The
                  Authority disbursed $31,064 in housing assisting payments to landlords for the 35
                  units that materially failed to meet HUD’s housing quality standards and received
                  $3,049 in program administrative fees for these units. In addition, the Authority did
                  not abate units as required and disbursed $9,792 in housing assisting payments and
                  received $1,004 in program administrative fees for 11 units that failed to meet
                  HUD’s housing quality standards.

                  If the Authority implements the recommendations in this report to ensure
                  compliance with HUD’s housing quality standards, we estimate that more than
                  $884,000 in future housing assistance payments will be spent for units that are
                  decent, safe, and sanitary. Our methodology for this estimate is explained in the
                  Scope and Methodology section of this audit report.

    Recommendations

                  We recommend that the Director of the Office of Public Housing, Pennsylvania
                  State Office, direct the Authority to

                  1A.      Certify, along with the owners of the 37 units cited in this finding, that the
                           applicable housing quality standards violations have been corrected.

                  1B.      Reimburse its program $34,113 from nonfederal funds ($31,064 for housing
                           assistance payments and $3,049 in associated administrative fees) for the 35
                           units that materially failed to meet HUD’s housing quality standards.



3
  The property maintenance staff corrected life-threatening violations in three units while we performed our
inspections. Although the life-threatening violations for these units were included in our overall audit results, we
did not expect the Authority to follow up on these specific violations since we reported to the Authority that they
had been corrected.

                                                          15
1C.   Develop and implement controls to ensure that program units meet housing
      quality standards, thereby ensuring that $884,917 in program funds is
      expended only for units that are decent, safe, and sanitary.

1D.   Develop and implement controls to ensure that supervisory quality control
      inspections are conducted and documented and that feedback is provided to
      inspectors to correct recurring deficiencies noted.

1E.   Ensure that its inspectors are trained in the requirements of HUD’s Section 8
      housing quality standards and hire inspectors who have had training in
      HUD’s Section 8 housing quality standards.

1F.   Reimburse its program $10,796 from nonfederal funds ($9,792 for housing
      assistance payments and $1,004 in associated administrative fees) for the 11
      units that failed to meet HUD’s housing quality standards and for which
      program rents were not abated in a timely manner.

1G.   Develop and implement management controls to ensure that employees
      comply with its policies and procedures concerning abatements.




                               16
                         SCOPE AND METHODOLOGY

To accomplish our objective, we reviewed

   •   Applicable laws, regulations, the Authority’s administrative plan, HUD’s program
       requirements at 24 CFR [Code of Federal Regulations] Part 982, and HUD’s Housing
       Choice Voucher Guidebook, 7420.10G.

   •   The Authority’s accounting records, annual audited financial statements for 2006, check
       register, tenant files, computerized databases including housing assistance payments, and the
       Authority’s board meeting minutes from 2006 and 2007.

   •   HUD’s monitoring reports for the Authority.

We also interviewed Authority employees, HUD staff, and program households.

To achieve our audit objective, we relied in part on computer-processed data in the Authority’s
database. Although we did not perform a detailed assessment of the reliability of the data, we
did perform a minimal level of testing and found the data to be adequate for our purposes.

We statistically selected 52 of the Authority’s program units to inspect using the StatSamp
template for Excel software from 227 unit inspections passed by the Authority’s inspectors
during the period April 21 to July 20, 2007. The 52 units were selected to determine whether the
Authority’s program units met housing quality standards. The sampling criteria used a 90
percent confidence level, 50 percent estimated error rate, and precision of plus or minus 10
percent.

Our sampling results determined that 35 of 52 units (67 percent) materially failed to meet HUD’s
housing quality standards. Materially failed units were those with exigent health and safety
violations that predated the Authority’s previous inspections or were on the last inspection
report, and the violation had not been corrected at the time of our inspection. All units were
ranked, and we used auditors’ judgment to determine the material cutoff line.

Based upon the sample size of 52 from a total population of 227, an estimate of 67 percent (35
units) of the sample population materially failed housing quality standards inspections. The
sampling error is plus or minus 9.37 percent. There is a 90 percent confidence that the frequency
of occurrence of program units’ materially failing housing quality standards inspections lays
between 57.94 and 76.67 percent of the population. This equates to an occurrence of between
132 and 174 units of the 227 units in the population. We are using the most conservative
numbers, which is the lower limit or 132 units.

We analyzed the applicable Authority databases and estimated that the annual housing assistance
payment per recipient in our sample universe was $6,704. Using the lower limit of the estimate
of the number of units and the estimated annual housing assistance payment, we estimate that the
Authority will spend $884,917 (132 units times $6,704 (rounded)) annually for units that are in
material noncompliance with HUD’s housing quality standards. This estimate is presented
                                                17
solely to demonstrate the annual amount of program funds that could be put to better use on
decent, safe, and sanitary housing if the Authority implements our recommendations. While
these benefits would recur indefinitely, we were conservative in our approach and only included
the initial year in our estimate.

We selected a nonstatistical sample of 12 housing units for review from a universe of 895 units
that failed the Authority’s housing quality standards inspection at least once during the period
January 2006 to July 2007. For all 895 units, we determined the length of time between the
Authority’s first inspection of the units, if available, and its reinspections that resulted in a
passing score, indicating that the deficiencies had been corrected and the unit complied with
HUD’s housing quality standards. We nonstatistically selected 12 units and matched the series
of inspection dates for the 12 units to the Authority’s housing assistance payments register to
identify payments that the Authority made for the units after the initial failed inspection. We
calculated the total amount of housing assistance payments the Authority made for these units
before a reinspection resulted in a passing score, if available. The Authority made housing
assistance payments for only 11 of the 12 units. The Authority performed an initial inspection of
one unit and had not made any housing assistance payments for the unit before it passed
inspection.

We performed our on-site audit work from June through December 2007 at the Authority’s main
administrative office located at 351 Chestnut Street, Harrisburg, Pennsylvania, and the Authority’s
Section 8 program office located at 2101 North Front Street, Building #3, Suite 101, Harrisburg,
Pennsylvania. The audit covered the period January 1, 2006, through June 30, 2007, but was
expanded when necessary to include other periods.

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




                                                18
                             INTERNAL CONTROLS

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

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

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




 Relevant Internal Controls

              We determined the following internal controls were relevant to our objective:

                  •   Program operations – Policies and procedures that management has
                      implemented to reasonably ensure that a program meets its objectives.

                  •   Validity and reliability of data – Policies and procedures that management
                      has implemented to reasonably ensure that valid and reliable data are
                      obtained, maintained, and fairly disclosed in reports.

                  •   Compliance with laws and regulations – Policies and procedures that
                      management has implemented to reasonably ensure that resource use is
                      consistent with laws and regulations.

                  •   Safeguarding resources – Policies and procedures that management has
                      implemented to reasonably ensure that resources are safeguarded against
                      waste, loss, and misuse.

              We assessed the relevant controls identified above.

              A significant weakness exists if internal controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.




                                               19
Significant Weakness

           Based on our audit, we believe the following item is a significant weakness:

               •   The Authority lacked sufficient controls to ensure compliance with HUD
                   regulations regarding unit inspections, that units met minimum housing
                   quality standards, and abatement for units that did not meet housing
                   quality standards.




                                            20
                                   APPENDIXES

Appendix A

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

                    Recommendation                        Funds to be put
                        number            Ineligible 1/    to better use 2/
                           1B              $34,113
                           1C                                $884,917
                           1F              $10,796
                          Total            $44,909           $884,917


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

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 Authority implements our
     recommendations, it will cease to incur program costs for units that are not decent, safe,
     and sanitary and, instead, will expend those funds for units that meet HUD’s standards.
     Once the Authority successfully improves its controls, this will be a recurring benefit.
     Our estimate reflects only the initial year of this benefit.




                                             21
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Ref to OIG Evaluation   Auditee Comments




Comment 1




                         22
Comment 2




Comment 3




Comment 4




            23
Comment 5




Comment 6




Comment 7




Comment 8




            24
Comment 9

Comment 10

Comment 11

Comment 12

Comment 13


Comment 14

Comment 15

Comment 16

Comment 17


Comment 18

Comment 19

Comment 20




             25
Comment 21




Comment 22




Comment 23




             26
Comment 24




Comment 25




Comment 26




Comment 27




Comment 27
Comment 29




             27
Comment 28




Comment 29




             28
Comment 29




Comment 30




             29
Comment 31
Comment 31
Comment 32
Comment 31




             30
Comment 33
Comment 31
Comment 34
Comment 31
Comment 35
Comment 31
Comment 36




             31
Comment 31
Comment 37
Comment 31
Comment 38
Comment 31
Comment 39




             32
Comment 31
Comment 40
Comment 31
Comment 41
Comment 13
Comment 31
Comment 42




             33
Comment 31
Comment 43
Comment 31
Comment 44




             34
Comment 31
Comment 45
Comment 31
Comment 46
Comment 31




             35
Comment 47
Comment 31
Comment 48
Comment 31
Comment 31
Comment 49




             36
Comment 31
Comment 50
Comment 31
Comment 51
Comment 31
Comment 52




             37
Comment 31
Comment 53
             38
Comment 31
Comment 31
Comment 54
Comment 31
Comment 55




             39
Comment 31
Comment 56
Comment 31
Comment 57
Comment 31
Comment 58




             40
Comment 31
Comment 59
Comment 31
Comment 60
Comment 31
Comment 61




             41
Comment 31




             42
                         OIG Evaluation of Auditee Comments

Comment 1   We are encouraged by the Authority’s statements that it takes the findings very
            seriously and has implemented management improvements to address some of the
            issues included in the audit report. We commend the Authority for completing
            the followup actions for the 37 units that the audit determined were not in
            compliance with housing quality standards.

Comment 2   We are encouraged by the Authority’s plans to perform the agency-wide
            assessment and make significant management changes that will streamline and
            strengthen it.

Comment 3   The conclusions in the audit report are supported by audit work performed in
            accordance with generally accepted government auditing standards. While many
            of the issues were raised in the Authority’s response to the finding outline
            worksheets, the Authority’s comments were considered.

Comment 4   We used our professional knowledge, tenant interviews, and the Authority’s latest
            inspection reports in determining whether a housing quality standards violation
            existed prior to the last passed inspection conducted by the Authority or if it was
            on the last passed inspection conducted by the Authority and was not corrected.
            During our inspections, the auditor and the HUD OIG housing inspector
            questioned the tenants about the violations identified during the inspections in
            order to determine whether the violations were preexisting or not. The HUD OIG
            housing inspector documented the pre-existing conditions on the inspection report
            and took pictures of the violations, as needed. We provided copies of all our
            inspection reports and the corresponding photographs to the Authority during the
            audit. Representatives from the Authority accompanied us on all of our
            inspections. The representatives intermittently made comments pertaining to
            violations that we identified. We considered the comments in making our
            determinations.

            Contrary to the Authority’s assertion, the testimony of the tenant is a valid method
            to use in determining the existence of deficiencies. For example, HUD's Housing
            Choice Voucher Program Guidebook, 7420.10G, section 10.9, states that for
            SEMAP purposes, a housing quality standards deficiency found at the time of the
            quality control reinspection represents a “fail” quality control inspection. When
            rating an individual inspector’s performance, the quality control inspector should
            take into account whether the failed item occurred since the previous inspector
            was on site. Often the tenant can describe when the deficiency occurred and will
            be helpful in making this determination. Further, the lack of complaints by
            tenants does not directly correlate to a lack of deficiencies in their homes. The
            tenants may have registered complaints with the landlord and not the Authority or
            the tenants simply may not know that deficiencies, such as those we identified
            during our inspections, were violations of HUD’s housing quality standards.



                                             43
Comment 5     The Authority’s objection to the support for the finding is without merit. As
              indicated in the second paragraph on page three of its response, the Authority
              admits, by its own analysis, that 20 units could be substantiated as having
              preexisting conditions. Further, as stated earlier, we used our professional
              knowledge, tenant interviews, and the Authority’s latest inspection reports in
              determining whether a housing quality standards violation existed prior to the last
              passed inspection conducted by the Authority or if it was on the last passed
              inspection conducted by the Authority and was not corrected.

Comment 6     The auditors did not assert that the inspector’s determination that conditions were
              preexisting was the sole support for concluding that a condition was preexisting.
              Rather, in consultation with our certified HUD inspector, we used our
              professional knowledge, tenant interviews, and the Authority’s latest inspection
              reports to determine whether a violation existed prior to the last passed inspection
              conducted by the Authority. In the event that we could not reasonably make that
              determination, we did not categorize the violation as preexisting.

Comment 7     We have considered the Authority’s response and revised the final audit report as
              deemed appropriate. Our evaluation of the Authority’s objections to deficiencies
              that the audit identified in specific units is included in the comments to the
              Authority’s spreadsheet found on pages 30 through 42 of this report.

Comment 8     We did not disregard the explanation provided and did not categorize the unit as
              having a preexisting condition based on the stained ceiling throughout the unit.
              However, the stained suspended ceiling and the leak in the bathroom were cited as
              preexisting conditions. These were not the only preexisting conditions cited for
              this unit. See Comments 13 and 42.

Comment 9     In consultation with our certified HUD inspector, we used our professional
              knowledge, tenant interviews, and the Authority’s latest inspection reports to
              determine whether a violation existed prior to the last passed inspection
              conducted by the Authority. In the event that we could not reasonably make that
              determination, we did not categorize the violation as preexisting. We provided
              the Authority with factual descriptions of all our inspections addressed in this
              report.

Comment 10 The determinations that flaking and chipped paint was a preexisting violation
           were supported by statements made by the tenants.

Comment 11 The determination that a loose board on a deck was a preexisting violation was
           supported by statements made by the tenant.

Comment 12 The tenant explained to the inspector and the auditor, in the presence of the
           Authority’s employees, that the second floor tenant uses the hose to fill a portable
           pool in the back yard and has kept it in the doorway all summer and refuses to
           remove it. As a result, vermin are able to enter the basement through the open
           doorway.

                                               44
Comment 13 The fact that a door seal was broken is enough to determine that the refrigerator
           was unable to maintain the proper interior temperature. HUD's Housing Choice
           Voucher Program Guidebook, 7420.10G, section 10.3, states that the refrigerator
           must be of adequate size for the family and capable of maintaining a temperature
           low enough to keep food from spoiling. The guidebook includes the following
           example for clarification:

                      What temperature must a refrigerator maintain to keep food
                      from spoiling?

                      •   Above 32° F, but generally below 40° F.

                      •   Consider how often the refrigerator will be opened.
                          Proper temperatures are difficult to maintain if the
                          refrigerator is frequently opened during warm weather,
                          door seals are removed or broken, or the door sits open.

Comment 14 We did not cite a loose vinyl baseboard as a preexisting violation in any of the
           units that we inspected.

Comment 15 We did not cite a defective smoke alarm as a preexisting condition in any of our
           inspection reports. We did cite the lack of a smoke detector in the basement, for
           example, as a preexisting condition.

Comment 16 The determination that a hole in the drywall was a preexisting violation was
           supported by statements made by the tenant.

Comment 17 None of the units included in the audit report were cited for having an electric
           cord traversing a walking area. We conducted two extra inspections to ensure that
           we would meet the requirements for our statistical analysis. Although the
           inspection for this particular unit included a violation for having an electric cord
           across the floor, we did not include the inspection for this unit in our audit results.
           We provided the inspection report to the Authority for its information. Further,
           anything that transverses a walking area is considered a tripping hazard and is a
           violation of housing quality standards. The regulations at 24 CFR
           982.401(g)(2)(iv) state that the condition and equipment of interior and exterior
           stairs, halls, porches, walkways, etc., must not present a danger of tripping and
           falling.

Comment 18 At no time did we enter a unit where there was not an adult present. Nowhere did
           we claim that a minor child provided a statement that we used as the sole
           justification for determining that a broken pane of glass was preexisting. Further,
           although the Authority stated that it “has a copy of a “move-in” inspector signed
           by the Landlord and the Tenant, which is attached” the document was not
           attached as indicated.



                                               45
Comment 19 Deficiencies such as holes in the walls, etc., were confirmed by asking the tenant
           and by using professional judgment. The hole in this instance was determined to
           be preexisting. Further, the housing quality standards regulations at 24 CFR
           982.401 (a)(3) state that all program housing must meet the housing quality
           standards performance requirements both at commencement of assisted
           occupancy, and throughout the assisted tenancy. Also, the acceptability criteria
           for structure and materials states that ceilings, walls, and floors must not have any
           serious defects such as severe bulging or leaning, large holes, loose surface
           materials, severe buckling, missing parts, or other serious damage.

Comment 20 The determination that two inoperable stove burners were preexisting violations
           were supported by statements made by the tenant. We did not cite the outlet
           cover and loose carpet on the top risers as preexisting conditions.

Comment 21 To the contrary, these examples demonstrate the efficacy of the OIG inspections
           upon which the conditions of the findings are based. Each of the OIG inspections
           were systematically documented using the HUD Inspection Checklist, Housing
           Choice Voucher Program, form HUD-52580. In order to meet all housing quality
           standards requirements, inspections must be conducted and recorded using form
           HUD 52580-A or 52580. In addition to documenting the results on the
           inspection form, we also documented the results by taking pictures as appropriate.

Comment 22 We believe that the inspectors’ flat fee arrangements coupled with the lack of
           quality controls created weakness in the Authority’s inspection program. As a
           result, the inspectors may not have identified all of the violations in the units they
           inspected as was demonstrated by the significant number of deficiencies that we
           identified during our inspections of the units. The language in the contract may
           be standard within the industry, but the compensation should be related to the
           quality of the inspector’s work. Our inspection results showed the Authority’s
           inspectors passed 35 units during the prior four month period with a total of 233
           preexisting deficiencies. These results provide the basis for the quality of the
           inspection work provided by the Authority’s inspectors. We revised the text in
           the report to clarify this point.

Comment 23 We did not conclude that the Authority did not perform adequate quality control
           inspections; rather we concluded that the Authority did not perform quality
           control inspections throughout the year. Further, although the representative from
           the HUD Philadelphia field office informed the Authority that it could combine
           inspections, the 14 inspections the Authority selected were the only units that we
           initially passed. The Authority did not consider the other 38 inspections that we
           performed during the audit. Had the Authority taken all of our inspections and
           considered them, rather than selectively taking only the 14 inspections that we
           initially passed, the Authority’s quality control process would have shown that 42
           of 67 (15 conducted by the Authority and 52 that we conducted) or 63 percent of
           the units inspected failed the quality control review process.



                                               46
Comment 24 We disagree with the Authority’s statement that each month it conducts quality
           control inspections of at least one of the inspection types, selected from the
           previous month’s passed inspection results because, as stated in the audit report,
           the Authority did not conduct any quality control inspections between March 23
           and July 23, 2007.

Comment 25 We take no exception to these statements. We would expect the Authority to take
           action on complaints.

Comment 26 We considered the Authority’s quality control inspection log and its complaint log
           for housing quality standards deficiencies. However, as stated earlier, the
           Authority did not conduct any quality control inspections between March 23 and
           July 23, 2007; the Authority did not consider the 37 inspections that we
           performed during the audit that resulted in a failing assessment of the unit; and we
           would expect the Authority to take action on complaints. However, the results of
           our inspections were brought to the attention of the Authority via our audit and
           were not detected during any quality control inspections. The audit has identified
           weaknesses and includes recommendations for corrective actions to address the
           weaknesses.

Comment 27 We are encouraged by the Authority’s statements that it has taken corrective
           action and will continue to take corrective action to address the recommendations.
           The objection of the Authority to the ineligible costs is noted. However, as stated
           in the audit report, HUD regulations at 24 CFR [Code of Federal Regulations]
           982.401 require that all program housing meet HUD’s housing quality standards
           at the beginning of the assisted occupancy and throughout the tenancy. HUD
           compensates the Authority for the cost of administering the program through
           administrative fees. In accordance with 24 CFR 982.152(d), HUD is permitted to
           reduce or offset any program administrative fees paid to a public housing
           authority if it fails to perform its administrative responsibilities correctly or
           adequately, such as not enforcing HUD’s housing quality standards.

Comment 28 We did not overstate the amount of ineligible funds. We used a conservative
           methodology to compute the ineligible funds. As we explained at the exit
           conference, for the units that had preexisting violations we did not calculate any
           ineligible housing assistance payments for the first 30 days after the date of the
           Authority’s inspection. At the exit conference, the Director of HUD’s Office of
           Public Housing, Pennsylvania State Office, acknowledged that we were
           conservative in our approach. The Director acknowledged that we did not have to
           exclude the first 30 days from our calculations. Also, after the exit conference, we
           provided the Authority a copy of the spreadsheet showing our calculations.
           Further, the Authority stated that by its calculation, the OIG has overstated the
           amount of ineligible funds by at least $10,512. This figure was also shown on the
           first page of the attached spreadsheet. However, the amount of funds listed on the
           spreadsheet total $9,692 not $10,512.



                                              47
              As stated in the audit report, in accordance with HUD regulations at 24 CFR
              982.152(d), HUD is permitted to reduce or offset any program administrative fees
              paid to a public housing authority if it fails to perform its administrative
              responsibilities correctly or adequately, such as not enforcing HUD’s housing
              quality standards. The Authority disbursed $31,064 in housing assisting
              payments to landlords for the 35 units that materially failed to meet HUD’s
              housing quality standards and received $3,049 in program administrative fees for
              these units.

Comment 29 The Authority did not provide any evidence that it had funds in its administrative
           fee reserve to reimburse the ineligible amounts. If the Authority has funds in its
           administrative fee reserve to reimburse the ineligible amounts, then we would
           expect the Authority to do so, as appropriate. If not, the Authority needs to
           reimburse its program from nonfederal funds.

Comment 30 We have included the Authority’s entire response as an appendix to the audit
           report. We recognize the Authority’s acknowledgement that it needs to make
           program improvements. The methodology supporting the conclusions in the audit
           report is sound and the conclusions are supported. We agree that some judgment
           is involved; however, as stated earlier, we used our professional knowledge,
           tenant interviews, and the Authority’s latest inspection reports in drawing our
           conclusions.

Comment 31 In consultation with our certified HUD inspector, we used our professional
           knowledge, tenant interviews, and the Authority’s latest inspection reports to
           determine whether a violation existed prior to the last passed inspection
           conducted by the Authority. In the event that we could not reasonably make that
           determination, we did not categorize the violation as preexisting.

Comment 32 Regarding the missing handrail on the basement stairway, HUD's Housing Choice
           Voucher Program Guidebook, 7420.10G, section 10.3, states that handrails are
           required when four or more steps (risers) are present, and protective railings are
           required when porches, balconies, and stoops are thirty inches off the ground. In
           this case, there were seven risers and the top of the steps was more than thirty
           inches off the ground.

Comment 33 In the inspection report that we provided the Authority the inspector wrote that
           there was air infiltration through the door gaps. His description of the
           accompanying photos stated that the gaps were visible on the second floor
           bedroom door to the outside and that it was in need of weather stripping. The
           defect results in significant air infiltration into the unit. HUD's Housing Choice
           Voucher Program Guidebook, 7420.10G, section 10.3, states that the Authority
           must determine that units are free from water, excessive air, and vermin
           infiltration.

Comment 34 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted

                                              48
              that although the Authority contested five violations, there were nine other
              preexisting violations that the Authority did not contest. Moreover, the Authority
              did not contest any of the ineligible costs that we reported for this unit.

Comment 35 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested one violation, there were two other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit.

Comment 36 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. When our
           inspector made the notation "GFCI does not trip, stays on" he determined the
           condition was preexisting because the GFCI was improperly wired. That is, the
           GFCI has two sets of contacts. One set is for the "hot" wires to be connected and
           the second set to connect ordinary outlets that would be protected by the same
           GFCI. However, if the "hot" wires are connected to the wrong screws, as was the
           case in the unit inspected, the GFCI stays on and does not trip. We noted that
           although the Authority contested five violations, there were four other preexisting
           violations that the Authority did not contest. Moreover, the Authority did not
           contest any of the ineligible costs that we reported for this unit. Further, the
           Authority indicated that the unit failed reinspection on November 2, 2007, and it
           was scheduled to terminate from the program on December 21, 2007.

Comment 37 The Authority claims that air conditioners are generally not used in the spring and
           that an air conditioner could have been installed and removed by the tenant during
           the months in between our inspection and the Authority’s last inspection. The
           Authority also claims that the unit was painted after the Authority’s inspection,
           but provided no evidence to support the assertion.

Comment 38 When our inspector made the notation "GFCI does not trip, stays on" he
           determined the condition was preexisting because the GFCI was improperly
           wired. That is, the GFCI has two sets of contacts. One set is for the "hot" wires
           to be connected and the second set to connect ordinary outlets that would be
           protected by the same GFCI. However, if the "hot" wires are connected to the
           wrong screws, as was the case in the unit inspected, the GFCI stays on and does
           not trip.

Comment 39 The tenant explained to the inspector and the auditor, in the presence of the
           Authority’s employees, that the second floor tenant uses the hose to fill a portable
           pool in the back yard and has kept it in the doorway all summer and refuses to
           remove it. As a result, vermin are able to enter the basement through the open
           doorway. Moreover, the Authority indicated that the 24-hour deficiency was
           confirmed on September 6, 2007, that there was a reinspection on November 1,
           2007, and the contract was cancelled on November 30, 2007.



                                              49
Comment 40 The Authority indicated that the unit was reinspected on October 16, 2007, and
           the unit was scheduled for contract cancellation on December 31, 2007.

Comment 41 Not only did our inspector determine that the handrail bracket was loose, but he
           also noted that the span between handrail brackets is too long and it needs an
           intermediate bracket. No intermediate brackets were noted to have been installed
           prior to our inspection. Also, the reversed hot/neutral outlets were determined to
           be preexisting because the outlets were wired incorrectly when the outlets were
           installed.

Comment 42 See Comment 38. Also, the Authority claims that the stained ceiling and the leak
           in the ceiling occurred after its May 10, 2007, inspection and makes reference to
           work orders from the landlord. However, the Authority did not provide copies of
           the work orders to support its assertion and these deficiencies were still present
           when we inspected the unit on August 21, 2007. Also, the stained suspended
           ceiling was determined to be preexisting and the stained ceiling in the remainder
           of the unit was determined to be non-preexisting. This unit was also discussed in
           Comment 13 above.

Comment 43 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested four violations, there were three other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit.

Comment 44 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested six violations, there were three other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit.

Comment 45 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested six violations, there were seven other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority indicated that the unit was reinspected on November 1, 2007, that
           the unit failed the reinspection, and was scheduled for contract cancellation on
           December 31, 2007.

Comment 46 HUD's Housing Choice Voucher Program Guidebook, 7420.10G, section 10.3,
           states that plumbing fixtures must be free of threats to health and safety; water-
           heating equipment must be installed safely and must not present any safety
           hazards; and all water heaters must have temperature/pressure relief valves, and a
           discharge line. Program regulations set forth basic housing quality standards
           which all units must meet before assistance can be paid for a unit. Housing
           quality standards establish the minimum criteria necessary for the health and

                                              50
              safety of program participants. In this instance, (see photo on page 10 of this
              report) the condition presented a health and safety issue for the tenant.

Comment 47 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested five violations, there was one other
           preexisting violation that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit.

Comment 48 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested two violations, there were two other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority indicated that the unit was reinspected on November 8, 2007, that
           the unit failed the reinspection, and was scheduled for contract cancellation on
           December 31, 2007.

Comment 49 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested four violations, there were six other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority indicated that the unit was reinspected on November 2, 2007, that
           the unit failed the reinspection, and the contract was cancelled on December 31,
           2007.

Comment 50 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested two violations, there was one other
           preexisting violation that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority commented that “without specific details of the actual condition, it
           is hard to determine if indeed this particular installation was not in compliance
           with article 406 of the National Electrical Code.” However, the Authority
           reported that it reinspected and passed the unit on November 9, 2007. The
           Authority’s inspector should have been able to provide the specific details to
           determine compliance with the code.

Comment 51 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested nine violations, there were three other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit.

Comment 52 HUD's Housing Choice Voucher Program Guidebook, 7420.10G, section 10.3,
           states that plumbing fixtures must be free of threats to health and safety; water-

                                               51
              heating equipment must be installed safely and must not present any safety
              hazards; and all water heaters must have temperature/pressure relief valves, and a
              discharge line. Program regulations set forth basic housing quality standards
              which all units must meet before assistance can be paid for a unit. Housing
              quality standards establish the minimum criteria necessary for the health and
              safety of program participants. In this instance, the condition presented a health
              and safety issue for the tenant.

Comment 53 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested nine violations, there were four other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority commented that “without specific details of the actual condition, it
           is hard to determine if indeed this particular installation was not in compliance
           with article 406 of the National Electrical Code.” However, the Authority
           reported that it reinspected and passed the unit on November 2, 2007. The
           Authority’s inspector should have been able to provide the specific details to
           determine compliance with the code.

Comment 54 The Authority commented that “without specific details of the actual condition, it
           is hard to determine if indeed this particular installation was not in compliance
           with article 406 of the National Electrical Code.” However, the Authority
           reported that it reinspected and passed the unit on November 1, 2007. The
           Authority’s inspector should have been able to provide the specific details to
           determine compliance with the code.

Comment 55 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested six violations, there were five other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit.

Comment 56 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested three violations, there were two other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority commented that “without specific details of the actual condition, it
           is hard to determine if indeed this particular installation was not in compliance
           with article 406 of the National Electrical Code.” However, the Authority
           reported that it reinspected and passed the unit on November 28, 2007. The
           Authority’s inspector should have been able to provide the specific details to
           determine compliance with the code.

Comment 57 The Authority’s quality standards for its Section 8 existing housing program state
           that a bedroom shall not be less than 100-square feet of floor space and shall not

                                              52
              be less than 8 feet in any dimension. Moreover, the Authority indicated that the
              unit was disqualified for being too small and that the tenant transferred to an
              eligible unit.

Comment 58 The Authority commented that “without specific details of the actual condition, it
           is hard to determine if indeed this particular installation was not in compliance
           with article 406 of the National Electrical Code.” However, the Authority
           reported that it reinspected and passed the unit on November 1, 2007. The
           Authority’s inspector should have been able to provide the specific details to
           determine compliance with the code.

Comment 59 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested four violations, there were sixteen other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority indicated that the contract was cancelled due to tenant-caused
           housing quality standards deficiency – no UGI natural gas service.

Comment 60 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested three violations, there were four other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority indicated that the 24-hour deficiencies were corrected and a
           cancellation letter was mailed on September 21, 2007, due to the unacceptable
           unit location.

Comment 61 We disagree with the Authority’s contention. The violations cited were
           preexisting for reasons previously explained with similar violations. We noted
           that although the Authority contested seven violations, there were three other
           preexisting violations that the Authority did not contest. Moreover, the Authority
           did not contest any of the ineligible costs that we reported for this unit. Further,
           the Authority indicated that the unit was reinspected on November 1, 2007, that
           the unit failed the reinspection, and was scheduled to be terminated on
           December 31, 2007.




                                              53