oversight

The Municipality of Río Grande, Puerto Rico, Needs to Improve Administration of Its Community Development Block Grant Program and Its Recovery Act Funds

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-09-25.

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

                                                                 Issue Date
                                                                      September 25, 2009
                                                                 Audit Report Number
                                                                       2009-AT-1012




TO:         José R. Rivera, Director, Community Planning and Development, San Juan Field
               Office, 4ND


            //signed//
FROM:       James D. McKay, Regional Inspector General for Audit, Atlanta Region, 4AGA

SUBJECT: The Municipality of Río Grande, Puerto Rico, Needs to Improve Administration
          of Its Community Development Block Grant Program and Its Recovery Act
          Funds


                                   HIGHLIGHTS

 What We Audited and Why

             We audited the Municipality of Río Grande’s (Municipality) Community
             Development Block Grant (Block Grant) program. We selected the Municipality
             for review as part of our strategic plan. The objectives of the audit were to
             determine whether the Municipality complied with U.S. Department of Housing
             and Urban Development (HUD) regulations, procedures, and instructions related
             to the administration of the Block Grant program and whether the Municipality
             had the capacity to administer additional funds allocated under the American
             Recovery and Reinvestment Act of 2009 (Recovery Act).

 What We Found

             The Municipality awarded 110 contracts totaling more than $1 million without
             following HUD and local procurement requirements. As a result, it could not
             ensure that quality goods and services were obtained at the most advantageous
             terms. In addition, the Municipality did not support the reasonableness of more
             than $1 million in Block Grant contracts.
         The Municipality’s financial management system did not fully comply with
         applicable HUD requirements. The system did not support the allowability of
         more than $57,000 in program disbursements; could not support the allocability of
         more than $218,000 in administrative costs charged to the Block Grant program;
         and did not maintain accurate, current, and complete accounting records.

         The Municipality’s management controls over its housing rehabilitation activities
         were inadequate. The Municipality improperly used Block Grant funds for
         deficient housing rehabilitation work and new housing construction. In addition,
         it did not provide assistance to correct health and safety hazards. Therefore, the
         related program funds of more than $20,000 were ineligible, and more than
         $7,000 is considered unsupported pending an eligibility determination by HUD.

         The Municipality lacked sufficient capacity to administer additional funds
         allocated under the Recovery Act. It had not developed and implemented
         adequate controls to ensure compliance with HUD financial management systems
         requirements and the purposes of the Recovery Act. As a result, HUD lacked
         assurance that Recovery Act funds would be adequately accounted for,
         safeguarded, and used for authorized purposes and in accordance with the
         Recovery Act and HUD requirements.


What We Recommend


         We recommend that the Director of the San Juan Office of Community Planning
         and Development require the Municipality to repay more than $20,000 in
         ineligible expenditures. The Director should also require the Municipality to
         provide all supporting documentation showing the reasonableness and eligibility
         of more than $1 million in Block Grant contracts and more than $276,000 in
         Block Grant disbursements. We also recommend that the Director require the
         Municipality to develop and implement an internal control plan to ensure that the
         Block Grant program has (1) procurement procedures which ensure that goods
         and services are obtained at the most advantageous terms and in a manner
         providing full and open competition, (2) a financial management system that
         complies with HUD requirements, (3) controls and procedures which ensure that
         the housing rehabilitation activities meet the program objectives, and (4) policies
         and procedures to ensure that Recovery Act funds are effectively and efficiently
         used and in accordance with applicable requirements. In addition, we recommend
         that the Director increase monitoring of the Municipality’s performance in the
         administration of its Block Grant and Recovery Act funds.

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


                                          2
Auditee’s Response


           We discussed the findings with HUD and the Municipality during the audit and at
           the exit conference on September 8, 2009. The Municipality provided its written
           comments to our draft report on September 8, 2009. In its response, the
           Municipality generally disagreed with the findings.

           The complete text of the auditee’s response, along with our evaluation of that
           response, can be found in appendix B of this report. Attachments to the
           Municipality’s comments were not included in the report, but are available for
           review upon request.




                                            3
                             TABLE OF CONTENTS

Background and Objectives                                                             5

Results of Audit
        Finding 1: The Municipality Did Not Fully Comply with Procurement             6
                   Requirements
        Finding 2: The Municipality’s Financial Management System Did Not Fully       9
                   Comply with HUD Requirements
        Finding 3: Management Controls over Housing Rehabilitation Activities Were   13
                   Inadequate
        Finding 4: The Municipality Lacked Sufficient Capacity to Administer Its     18
                   Recovery Act Funds

Scope and Methodology                                                                21

Internal Controls                                                                    23

Appendixes
   A.   Schedule of Questioned Costs and Funds to Be Put to Better Use               25
   B.   Auditee Comments and OIG’s Evaluation                                        26
   C.   Criteria                                                                     36
   D.   Schedule of Procurement Deficiencies                                         39




                                              4
                     BACKGROUND AND OBJECTIVES

The Municipality of Río Grande (Municipality) has been an entitlement recipient since 1998. It
currently administers more than $7.7 million in Community Development Block Grant (Block
Grant) funds approved by the U.S. Department of Housing and Urban Development (HUD)
during the last five years ending June 30, 2009. HUD’s Integrated Disbursement and
Information System reflected Block Grant expenditures exceeding $5.5 million during fiscal
years ending June 30, 2007 and 2008, for the following activities:

           Block Grant activity              Fiscal year 2007       Fiscal year 2008
 Public facilities and improvements                 $2,572,446              $1,363,098
 Planning and administration                            287,064                265,058
 Housing rehabilitation and preservation                465,917                280,427
 Public services                                        140,884                126,781
 Total                                               $3,466,311             $2,035,364

HUD allocated more than $1.4 million in Block Grant funds to the Municipality for the fiscal
year ending June 30, 2010. On March 6, 2009, HUD allocated more than $971,000 in additional
funds pursuant to the American Recovery and Reinvestment Act of 2009 (Recovery Act),
consisting of $587,542 under the Homelessness Prevention and Rapid Re-housing Program
(Homelessness Program) and $384,198 under the Block Grant Recovery Act program. At the
time of our review, the Municipality had only performed preaward activities on the Block Grant
Recovery Act program and had not started Homelessness Program activities.

The Municipality’s External Resources (federal programs) Department was responsible for
administering Block Grant and Recovery Act funds. Its books and records were maintained at 37
Pimentel Street, Río Grande, Puerto Rico.

We audited the Municipality’s Block Grant program as part of the HUD Office of Inspector
General’s (OIG) strategic plan. The Municipality was selected for review based on the amount
of HUD funding provided.

The objectives of the audit were to determine whether the Municipality complied with HUD
regulations, procedures, and instructions related to the administration of the Block Grant
program and whether it had the capacity to administer additional funds allocated under the
Recovery Act.




                                               5
                                       RESULTS OF AUDIT

Finding 1: The Municipality Did Not Fully Comply with Procurement
           Requirements
The Municipality awarded 110 contracts totaling more than $1 million without following HUD
and local procurement requirements. This noncompliance occurred because the Municipality did
not have in place adequate internal controls and procedures and disregarded applicable Block
Grant and local requirements. As a result, HUD lacked assurance that the Municipality obtained
goods and services at the most advantageous terms. In addition, the Municipality did not support
the reasonableness of more than $1 million in Block Grant contracts.



    Procurement Standards Not
    Followed

                  Program regulations provide that recipients shall comply with HUD procurement
                  standards contained in 24 CFR (Code of Federal Regulations) 85.36. The
                  standards include conducting procurements using full and open competition, fully
                  documenting all procurement activities, and performing price or cost analyses. In
                  addition, local procurement regulations require the Municipality to obtain at least
                  three quotations or cost proposals for services that do not exceed $40,000.

                  We found procurement deficiencies in 1101 contracts awarded between July 2006
                  and December 2008. For example, the Municipality did not

                           Prepare independent cost estimates before receiving proposals,

                           Maintain adequate specifications of the scope of the services to be
                           performed,

                           Obtain price or rate quotations from an adequate number of qualified
                           sources,

                           Maintain support showing that price or cost analyses were performed and
                           the basis used to determine the reasonableness of the contracted amount,
                           and

                           Ensure that contracts included all provisions required by 24 CFR 85.36(i).
                           For example, it did not include provisions related to (1) the retention of all

1
 A total of 108 housing rehabilitation contracts, one basketball court construction contract, and one water heaters
and cisterns installation contract.

                                                          6
                  required records for three years after the final payment and all other
                  matters are closed; and (2) providing HUD, the Comptroller General of the
                  United States, or any of their duly authorized representatives access to any
                  books, documents, papers, and records of the contractor, which are
                  directly pertinent to the specific contract for the purpose of making audit,
                  examination, excerpts, and transcriptions. A similar deficiency was
                  identified in the 2006 Single Audit report; however, the deficiency
                  continued to exist.

           The Municipality awarded 108 housing rehabilitation contracts totaling $641,630
           between July 1, 2006, and December 31, 2008, to seven contractors. We
           reviewed a statistical sample of 42 contracts totaling $249,353 and found that the
           Municipality awarded the 42 contracts without evidence that it prepared cost
           estimates before receiving proposals, solicited quotations from an adequate
           number of sources, and performed price or cost analyses. In addition, the
           Municipality used noncompetitive procurement to obtain housing rehabilitation
           services without requesting required HUD approval. Based on the results of our
           statistical sample, we determined that the awarded contracts for the entire
           population had procurement deficiencies and the reasonableness of the contracts
           was not supported.

           In addition, the Municipality did not support the reasonableness of two additional
           contracts totaling $481,731 awarded for the re-construction of a basketball court
           and installation of water heaters and cisterns because it did not provide evidence
           that it performed a price or cost analysis, or an independent cost estimate.

           The Municipality did not ensure that procurement of Block Grant-funded goods
           and services complied with HUD and local procurement requirements. It did not
           provide evidence that it created an environment that permitted full and open
           competition as required by HUD. Appendix D contains a list of the procurement
           deficiencies found during the review.


Excessive Expenditures


           The Municipality awarded through formal bid the supply of housing rehabilitation
           materials during the fiscal years ending June 30, 2008 and 2009. We reviewed
           invoices that the Municipality paid for materials it granted for four housing
           rehabilitation activities between February and August 2008. In all four activities,
           the Municipality paid for materials in excess of the approved price. The
           overpayments were related to 6 of 12 invoices paid. As a result, the Block Grant
           program was charged $174 for excessive expenditures.




                                            7
    Conclusion


                    The Municipality did not provide evidence showing that it created an environment
                    that permitted full and open competition as required by HUD. It did not provide
                    adequate support showing the reasonableness of more than $1 million in Block
                    Grant funds. This noncompliance occurred because the Municipality did not have
                    in place adequate internal controls and procedures and disregarded applicable
                    Block Grant and local requirements. As a result, HUD lacked assurance that
                    goods and services were obtained at the most advantageous terms and in a manner
                    providing full and open competition or in accordance with HUD requirements.

    Recommendations


                    We recommend that the Director of the San Juan Office of Community Planning
                    and Development

                    1A.      Require the Municipality to provide support showing the eligibility and
                             reasonableness of $1,096,061 awarded regarding Block Grant contracts for
                             housing rehabilitation activities and the reconstruction of a basketball
                             court.2

                    1B.      Require the Municipality to reimburse the Block Grant program from
                             nonfederal funds $174 for excessive payments and review housing
                             rehabilitation invoices related to housing rehabilitation materials grants
                             awarded between June 2007 and May 2009 to identify additional instances
                             of materials paid in excess. Any amounts overpaid must be reimbursed to
                             the program from nonfederal funds.

                    1C.      Require the Municipality to develop and implement procurement
                             procedures and controls that comply with HUD requirements to ensure
                             that goods and services are obtained at the most advantageous terms and in
                             a manner providing full and open competition.




2
    Total contracts for $1,123,361 were adjusted to consider $17,300 ineligible in recommendation 3A, $7,166
    unsupported in recommendation 3B, and $2,834 ineligible in recommendation 3C.

                                                          8
Finding 2: The Municipality’s Financial Management System Did Not
           Fully Comply with HUD Requirements
The Municipality’s financial management system did not support the allowability of more than
$57,000 in program disbursements; could not support the allocability of more than $218,000 in
administrative costs charged to the Block Grant program; and did not maintain accurate, current,
and complete accounting records. These deficiencies occurred because the Municipality did not
develop and implement policies and procedures to ensure compliance with HUD financial
requirements. As a result, HUD lacked assurance that funds were adequately accounted for,
safeguarded, and used for authorized purposes and in accordance with HUD requirements.




 Unsupported Program
 Disbursements


              Federal regulations at 24 CFR 570.506 require the Municipality to maintain
              sufficient records that properly support charges made to the Block Grant program.
              However, the Municipality did not provide source documentation supporting the
              allowability of more than $57,000 charged to the Block Grant program associated
              with administrative payroll costs. Specifically, it did not provide payroll records
              evidencing costs charged to the program. These costs were associated with 16 of
              62 disbursements between January 2006 and May 2009 for the payment of
              administrative payroll charges. As a result, HUD lacked assurance of the
              allowability of more than $57,000 in administrative payroll costs charged to the
              Block Grant program between January 2006 and May 2009.


 Unsupported Allocated Costs



              Regulations at 24 CFR 570.206 and 24 CFR 570.506 only allow disbursements
              for reasonable expenditures associated with the planning and execution of
              community development activities that are supported by source documentation.
              However, the Municipality could not demonstrate that administrative costs
              allocated to the program were reasonable.

              The Municipality did not track its employees’ time by program activity or
              implement a cost allocation plan to distribute its payroll costs among HUD
              programs. Although it charged the Block Grant program a portion of payroll
              costs associated with three employees who performed additional functions not
              related to the program, it did not maintain documentation to support the basis of
              the allocation and the reasonableness of the costs as required by HUD. The

                                               9
           Municipality’s federal programs director informed us that she did not know the
           basis for these percentages and that this allocation practice was in place before
           she became director in July 2005. A similar deficiency was identified with other
           Municipality administrative costs associated with professional services paid for
           performing the Municipality’s single audits. Therefore, HUD lacked assurance of
           the reasonableness, allowability, and allocability of more than $218,000 in
           administrative payroll and professional services costs charged to the Block Grant
           program between January 2006 and May 2009.


Inaccurate Accounting Records



           Federal regulations at 24 CFR 85.20 state that recipients of Block Grant funds
           must maintain financial records that are accurate and current and that adequately
           identify the source and application of funds provided for assisted activities.
           However, the Municipality’s accounting records were not accurate and complete
           and were not adequate for the preparation of reports.

           The Municipality’s accounting records did not reflect complete and accurate
           financial information on program activities. For example, they did not properly
           account for Block Grant receipts and expenditures by grant and activity. The
           Municipality did not maintain a general ledger for the Block Grant program. The
           accounting record it maintained was basically a check register that did not reflect
           disbursements by grant and activity and contained incomplete and inaccurate
           financial information. For example, the Municipality’s disbursements register did
           not reflect more than $80,000 in program disbursements, including one cancelled
           check that the Municipality improperly recorded as void. The Municipality’s
           Block Grant accounting records also did not account for capital assets acquired or
           constructed with HUD funds, income receipts, and fund balances. There were
           other instances in the Municipality’s accounting records of incorrect and missing
           check amounts, check numbers, and ending balances. The Municipality also did
           not locate one check that it had indicated was void. Therefore, it did not maintain
           a financial management system to permit the tracing of funds to a level which
           ensured that such funds had not been used in violation of the restrictions and
           prohibitions of applicable statutes.

           In addition, the disbursements shown in the Municipality’s disbursements register
           for the fiscal years ending June 30, 2007, and 2008 did not agree with amounts it
           reported to HUD in consolidated annual performance and evaluation reports.
           Total disbursements shown in the Municipality’s disbursements register also did
           not agree with amounts reflected in bank statements for the same period.




                                           10
                                                       Municipality’s
                                                       disbursements
                    Period               CAPER*           register       Difference
              Fiscal year ending
                June 30, 2007           $3,407,949         $3,460,163    <$52,214>
              Fiscal year ending
                June 30, 2008           $1,750,429         $2,080,397   <$329,968>
             *Consolidated annual performance and evaluation report

             A Municipality official informed us that the Municipality did not maintain written
             procedures for accounting for Block Grant program funds. Therefore, the
             Municipality’s internal controls were not adequate to ensure that program funds
             were properly accounted for, safeguarded, and used only for authorized purposes.
             Consequently, HUD lacked assurance that funds were used only for eligible
             purposes since there was no basis for reliance on the Municipality’s accounting
             records and financial information it reported to HUD on its program activities.


Conclusion


             The Municipality did not maintain a financial management system that permitted
             program charges only for supported costs and that adequately identified the
             source and application of Block Grant funds. The Municipality’s Block Grant
             program accounting records were inaccurate and incomplete since they contained
             several instances of incorrect financial information and did not reflect the full
             history of all financial transactions. The noncompliance occurred because the
             Municipality did not implement effective controls to ensure compliance with
             financial requirements of HUD programs. As a result, HUD lacked assurance that
             funds were only used for eligible purposes. Similar deficiencies were identified
             in the 2000 HUD monitoring report; however, the deficiency continued to exist.
             The Municipality must improve its internal controls to safeguard, use, and
             properly account for Block Grant program funds.


Recommendations


             We recommend that the Director of the San Juan Office of Community Planning
             and Development

             2A.     Require the Municipality to submit supporting documentation showing the
                     reasonableness of $218,331 charged to the Block Grant program for
                     administrative costs associated with payroll and professional services or
                     reimburse the Block Grant program from nonfederal funds.



                                               11
                   2B.      Require the Municipality to submit all supporting documentation showing
                            the eligibility and propriety of $57,683 paid for administrative payroll
                            costs or reimburse the Block Grant program from nonfederal funds.3

                   2C.      Require the Municipality to develop and implement a financial
                            management system that permits the tracing of Block Grant funds to a
                            level which ensures that such funds have not been used in violation of the
                            restrictions and prohibitions of applicable statutes.

                   2D.      Increase monitoring of the Municipality’s performance in the
                            administration of its Block Grant program and if the Municipality fails to
                            improve and fulfill its administrative responsibilities, consider imposing
                            sanctions in accordance with 24 CFR 570.910.




3
    Total disbursements of $62,391 were adjusted to consider $4,708 unsupported in recommendation 2A.

                                                        12
Finding 3: Management Controls over Housing Rehabilitation
           Activities Were Inadequate
The Municipality improperly used Block Grant funds for deficient housing rehabilitation work
and new housing construction. In addition, it did not provide assistance to correct health and
safety hazards. These deficiencies occurred because the Municipality lacked effective
management and controls over its housing rehabilitation activities. As a result, HUD lacked
assurance that program objectives were met and that Block Grant funds were used solely for
authorized purposes. Also, program funds of more than $20,000 were ineligible, and more than
$7,000 is considered unsupported pending an eligibility determination by HUD.




 Deficient Housing
 Rehabilitation Work

              The Municipality’s housing rehabilitation program guidelines provide that the
              main objective of the activity is to improve families’ quality of life by creating
              adequate living conditions. However, the Municipality did not ensure that
              program objectives and/or guidelines were met.

              From the Municipality’s 246 units that received housing rehabilitation assistance
              payments between July 2006 and December 2008, we selected seven units for
              inspection. Our inspections in March 2009 found that in three units the
              rehabilitation work was deficient. The Municipality paid a private contractor
              $17,300 with Block Grant funds to repair the roofs of the three housing units to
              eliminate water leaks. However, in March 2009, we inspected the units and found
              that the water leaks still existed.




               The above pictures show deficient rehabilitation work paid for with Block Grant funds. Water
               leaks still existed in the dwelling units when we conducted our inspections.

              The Municipality’s inspector informed us that the purpose of follow-up and final
              inspections was to determine whether the housing rehabilitation was performed as

                                                   13
           agreed upon in the contract and that materials were used as intended. Therefore,
           the Municipality’s management controls over its housing rehabilitation activities
           were inadequate to ensure that rehabilitation work was properly completed, and
           Block Grant funds were used for deficient work. As a result, $17,300 was
           considered ineligible.

Health and Safety Hazards Not
Considered

           The Municipality’s housing rehabilitation program guidelines provide that the
           financial assistance will subsidize housing rehabilitation work to make substantial
           improvements that will remove health and safety hazards to the Municipality’s low-
           income families. However, the Municipality did not ensure that program objectives
           and/or guidelines were followed.

           From the Municipality’s 246 units that received housing rehabilitation assistance
           payments between July 2006 and December 2008, we reviewed 11 cases. In eight
           of the cases reviewed, the Municipality did not provide assistance for all of the
           health and safety hazards identified by its inspector. Improper electrical
           connections and water leaks were some of the health and safety hazards for which
           the Municipality did not provide housing rehabilitation assistance.

           Further, in two housing rehabilitation activities totaling $7,166, the work could
           have been in violation of local building codes.




            Assistance in the amount of $3,215 was        Assistance in the amount of $3,951 was
            approved for the construction of a new        approved for the construction of a new
            bedroom on the second floor of the            bedroom in the back of the existing
            existing dwelling unit. However, the scope    dwelling unit. However, the entrance to
            of the rehabilitation work did not include    the new bedroom would be through an
            the construction of a protecting wall or      existing bedroom.
            fence to avoid falls from the second floor.

           The Municipality did not maintain written procedures or guidance for conducting
           housing inspections to ensure that housing rehabilitation activities complied with
           program requirements. The Municipality’s inspector indicated that he relied on
           his judgment and common sense in conducting housing rehabilitation inspections
                                                 14
           and did not inspect units to ensure that they were free of health and safety hazards
           or ensure compliance with local building codes. Therefore, management controls
           were not adequate to ensure that health and safety hazards were removed from
           units and to promote the welfare of the participants. As a result, $7,166 is
           considered unsupported pending an eligibility determination by HUD.

Ineligible New Housing
Construction

           The Block Grant program allows disbursements to finance the rehabilitation cost
           of existing residential property. However, the cost associated with new housing
           construction and the creation of a secondary housing unit attached to a primary
           unit is not an allowable expense under the Block Grant program. The
           Municipality’s housing rehabilitation regulations also prohibit new housing
           construction.

           The Municipality awarded more than $2,800 in Block Grant funds in August 2006 to
           one participant to provide materials for the rehabilitation of her residence. Our
           inspection of the dwelling unit on May 22, 2009, disclosed that donated materials
           were used for the construction of a new housing unit in violation of HUD
           requirements. Although the Municipality’s inspector reported this violation during
           its March 12, 2009, inspection, no corrective action was taken. This deficiency
           occurred because the Municipality did not have adequate management controls over
           its housing rehabilitation activities.




           The Municipality approved the assistance for a room addition to the existing wooden house.
           However, the participant changed the scope of the work, and Block Grant funds were used to
           complete the construction of a new dwelling unit. Our inspection disclosed that the wooden house
           had not been demolished.

           The use of Block Grant funds for new housing construction is in violation of
           HUD requirements at 24 CFR 570.207.




                                                15
Other Deficiencies


             We identified other deficiencies related to the administration of the housing
             rehabilitation activities.

             Slow progress – The Municipality’s management controls over its housing
             rehabilitation activities were not adequate to ensure that housing rehabilitation
             activities were performed in a timely manner. For example, in three of seven
             housing units inspected, the Municipality awarded Block Grant funds between
             November 2006 and August 2008 for the rehabilitation of the units. However,
             our inspections conducted during March 2009 disclosed that the rehabilitation
             work had not been completed. Between 221 and 881 days had elapsed since the
             Municipality awarded the assistance to the participants.

             Missing work specifications – The Municipality did not prepare detailed work write-
             ups or specifications of the rehabilitation work needed as required by section (17) of
             the Municipality’s housing rehabilitation program guidelines. The files contained
             only a general statement from the Municipality’s inspector. The type of repair
             needed to bring the unit up to program standards was not clearly demonstrated. As a
             result, the files did not properly support the needed repairs, and the work completed
             with Block Grant funds could not be properly determined.


Conclusion


             Because the Municipality did not implement adequate internal controls, it
             improperly used Block Grant funds for deficient rehabilitation work and new
             housing construction and did not ensure that units met program standards and that
             rehabilitation activities were performed on a timely basis. Therefore, program
             funds of more than $20,000 were ineligible, and more than $7,000 is considered
             unsupported pending an eligibility determination by HUD. Management must
             implement policies and procedures to ensure that it complies with HUD
             requirements and that program objectives are met.

Recommendations


             We recommend that the Director of the San Juan Office of Community Planning
             and Development

             3A.     Require the Municipality to reimburse the Block Grant program from
                     nonfederal funds $17,300 paid for deficient housing rehabilitation work.



                                              16
3B.   Require the Municipality to submit supporting documentation showing the
      eligibility and reasonableness of $7,166 awarded for two housing
      rehabilitation activities with possible violations of local building codes or
      reimburse the Block Grant program from nonfederal funds.

3C.   Require the Municipality to reimburse the Block Grant program from
      nonfederal funds $2,834 paid for ineligible new housing construction.

3D.   Require the Municipality to improve management controls and procedures
      to ensure that its housing rehabilitation activities meet program objectives,
      Block Grant funds are only used for eligible purposes, the rehabilitation
      work is performed properly and on a timely basis, and detailed write-ups
      or specifications are properly maintained.




                               17
Finding 4: The Municipality Lacked Sufficient Capacity to Administer
           Its Recovery Act Funds
The Municipality did not develop and implement adequate controls to ensure compliance with
HUD financial management systems requirements and the purposes of the Recovery Act. These
deficiencies occurred because the Municipality lacked sufficient capacity to administer
additional funds allocated under the Recovery Act. As a result, HUD lacked assurance that
Recovery Act funds would be adequately accounted for, safeguarded, and used for authorized
purposes and in accordance with the Recovery Act and HUD requirements.



 Inadequate Financial
 Management System

             Regulations at 2 CFR 176 state that to maximize the transparency and
             accountability of funds authorized under the Recovery Act, recipients must
             maintain records that adequately identify the source and application of Recovery
             Act funds. Section 1512 of the Recovery Act requires recipients to periodically
             report to HUD accurate financial information, including Recovery Act funds
             obligated and expended. However, as described in finding 2, the Municipality
             did not have a financial management system that fully complied with HUD
             requirements. For example, the Municipality’s accounting records for its Block
             Grant program did not adequately identify the source and application of HUD
             funds. The Municipality did not properly account for Block Grant receipts and
             expenditures by grant and activity. The Municipality’s accounting records also
             contained several instances of inaccurate financial information. In addition, its
             financial management system permitted program charges for unsupported costs.

             The above deficiencies in the Municipality’s financial management system
             demonstrated that management controls in place during our review were not
             sufficient to safeguard federal funds and preclude inaccurate reporting to HUD. If
             the financial management system is not promptly corrected to comply with HUD
             requirements, the accountability of more than $971,000 in Recovery Act funds
             allocated to the Municipality will be negatively impacted. Therefore, the
             Municipality must improve its internal controls to ensure adequate safeguarding,
             use, and accountability of Recovery Act funds in accordance with applicable
             statutes. It must also improve its internal controls to ensure the reporting of
             accurate information.




                                             18
    Inadequate Program Controls



                    Section 1602 of the Recovery Act requires that funds be used in a manner that
                    maximizes job creation and economic benefit. However, the Municipality’s
                    controls were not adequate to ensure compliance with the purposes of the
                    Recovery Act.

                    In June 2009, the Municipality awarded two contracts for street improvements
                    within various sites totaling more than $384,000 in Block Grant funds allocated
                    under the Recovery Act.4 The Municipality reported to HUD in its substantial
                    amendment to the 2008 action plan that this activity would create or preserve
                    approximately 10 to 15 jobs related to the construction industry. However, the
                    Municipality’s federal programs director could not explain the basis for the
                    estimated number of jobs to be created or preserved and how the Municipality
                    would ensure that Recovery Act funds would be used in a manner that maximizes
                    job creation/preservation. The Municipality did not require the contractor to
                    create or retain jobs in the awarded contracts. Therefore, its controls were not
                    adequate to ensure compliance with the purposes of the Recovery Act.


    Insufficient Planning



                    HUD Notice FR-5307-N-01state that recipients should ensure that sufficient
                    planning is in place to begin expending Recovery Act funds on eligible activities
                    shortly after the grant agreement is finalized. HUD allocated more than $587,000
                    to the Municipality under the Recovery Act for Homelessness Program activities.
                    On May 15, 2009, HUD received from the Municipality the substantial
                    amendment to the 2008 action plan. Although the Municipality’s federal
                    programs director indicated that Municipality officials had attended training
                    associated with the administration of the Homelessness Program, the Municipality
                    had not developed written policies and procedures for the administration of the
                    program. The Municipality official indicated that the Municipality was awaiting
                    HUD approval of the substantial amendment to the 2008 action plan before
                    developing program policies and procedures.

                    Subject to HUD approval, this will be the first time the Municipality will
                    administer the Homelessness Program. Although the Municipality has prior
                    experience with other community planning and development activities, it has no
                    experience with a similar program, such as the HUD Emergency Shelter Grant
                    program. The Municipality must develop controls and procedures on a timely

4
    The two contracts totaled $1,777,711, which includes $384,198 in Block Grant funds allocated under the Recovery
    Act. More than $1.3 million will be funded with 2008-2009 Block Grant and local funds.

                                                         19
             basis to ensure that the Homelessness Program will be effectively and efficiently
             administered and in compliance with the Recovery Act and HUD requirements.


Conclusion


             The Municipality’s lack of adequate controls to ensure compliance with the
             purposes of the Recovery Act and the deficiencies identified in the administration
             of the Block Grant program demonstrate that the Municipality lacked sufficient
             capacity to administer its Recovery Act funds. As a result, HUD lacked assurance
             that Recovery Act funds would be adequately accounted for, safeguarded, and
             used for authorized purposes and in accordance with the Recovery Act and HUD
             requirements. The Municipality must improve its internal controls to safeguard,
             account for, use, and report, in accordance with the applicable statutes, more than
             $971,000 in Block Grant and Homelessness Program funds allocated to the
             Municipality under the Recovery Act.


Recommendations


             We recommend that the Director of the San Juan Office of Community Planning
             and Development

             4A.    Require the Municipality to develop and implement a financial
                    management system that permits the tracing of Recovery Act funds to a
                    level which ensures that such funds have not been used in violation of the
                    restrictions and prohibitions of applicable statutes.

             4B.    Require the Municipality to develop and implement policies and
                    procedures to ensure that Recovery Act funds are effectively and
                    efficiently used and in accordance with applicable requirements. These
                    policies and procedures should include controls to ensure the
                    Municipality’s compliance with the creation and preservation of jobs in
                    accordance with the purposes of the Recovery Act.

             4C.    Increase monitoring of the Municipality’s performance in the
                    administration of its Recovery Act funds.




                                             20
                         SCOPE AND METHODOLOGY

The audit objectives were to determine whether the Municipality complied with HUD
regulations, procedures, and instructions related to the administration of the Block Grant
program and whether it had the capacity to administer additional funds allocated under the
Recovery Act. To accomplish our objectives, we

       Obtained and reviewed relevant HUD regulations and Municipality guidelines;

       Interviewed HUD, Municipality, and contractor officials;

       Reviewed monitoring and independent accountant reports;

       Reviewed the Municipality’s files and records, including accounting records;

       Performed site inspections of Block Grant activities; and

       Reviewed the Municipality’s controls related to the administration of its Block Grant
       program and the Recovery Act funds.

We obtained a list of the Municipality’s Block Grant procurement efforts performed between
July 1, 2006, and December 31, 2008. The Municipality conducted six significant procurement
actions (requiring public solicitation) totaling $2,578,232. We selected and reviewed the two
procurement activities with the highest contract amount totaling $957,125 ($500,000 for street
resurfacing and $457,125 for a basketball court). In addition, we selected and reviewed the
procurement of a contract totaling $25,960 for installation of water heaters and cisterns. We
reviewed each procurement action to determine whether the procurement process followed by
the Municipality met HUD standards.

We statistically selected a sample of the housing rehabilitation service contracts from the 108
contracts awarded between July 1, 2006, and December 31, 2008, totaling $641,630 to determine
whether the Municipality complied with procurement requirements. We used the U.S. Army
Audit Agency’s Statistical Sampling software to calculate the sample size. Based on a
confidence level of 90 percent, a precision level of 10 percent, and an assumed error rate of 50
percent, the software returned a statistical sample of 42 cases. We used Audit Command
Language (ACL) software to select a random sample from the 108 housing rehabilitation
contracts and to generate 10 additional sample units to be used as replacements if needed.

We used statistical sampling because each sampling unit was selected without preconceptions
from the audit population, thereby allowing the results to be projected to the population.

Our sampling results indicated that for the 42 housing rehabilitation service contracts, the
Municipality did not evidence that it prepared cost estimates before receiving proposals, solicited
quotations from an adequate number of sources, and performed price or cost analyses.
Projecting our sampling results to the population, there are indications that 108 contracts (100

                                                21
percent of the population) were also awarded without following HUD’s and/or the
Municipality’s own procurement requirements. Therefore, we estimated that the Municipality
awarded 108 contracts totaling $641,630 for housing rehabilitation services without support
showing the reasonableness of contracted services.

The Municipality prepared a Microsoft Excel software list of Block Grant disbursements made
between July 1, 2006, and December 31, 2008, totaling more than $6.3 million. Disbursements
were classified in seven categories including planning and administration costs, public services,
housing rehabilitation and preservation, public facilities, and improvements. We selected and
reviewed disbursements with the highest amount in each category, resulting in seven
disbursements totaling $590,159. We selected 92 additional disbursements vouchers totaling
$933,129 based on the vendor name or purpose of the payment. We reviewed the expenditures
and related supporting documents to determine whether the payments met Block Grant
requirements, including allowability and allocability of the costs.

We also obtained a list of housing rehabilitation activities for which the Municipality disbursed
Block Grant funds between July 1, 2006, and December 31, 2008. During this period, the
Municipality made disbursements totaling $841,742 associated with 246 housing rehabilitation
activities. From this list, we selected 10 activities with disbursements totaling $43,174, which
included five grants for labor and materials rehabilitation services and five grants for
rehabilitation materials only. We selected an additional activity in which more than two years
had elapsed since the grant was awarded and no funds had been disbursed. We reviewed each
activity to verify participant eligibility, the status of the rehabilitation work, and the
appropriateness of the assistance provided. From these cases, we inspected seven dwelling units
with disbursements totaling $32,115. We inspected one additional dwelling unit with
disbursements totaling $2,834 because the assistance provided appeared to be ineligible new
housing construction.

We did not consider the Municipality’s accounting records reliable for our purposes because they
did not reflect complete and accurate financial information on program activities. To achieve
our audit objectives, we relied in part on computer-processed data prepared by the Municipality.
Although we did not perform a detailed assessment of the reliability of the data, we performed a
minimal level of testing and found the data to be adequate for our purposes. Except for the
results associated with the review of housing rehabilitation procurements, the results of the audit
apply only to the items selected and cannot be projected to the universe or population.

The audit generally covered the period July 1, 2006, through December 31, 2008, and we
extended the period as needed to accomplish our objectives. We conducted our fieldwork from
February through July 2009 at the Municipality’s offices in Río Grande, Puerto Rico.

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.



                                                22
                              INTERNAL CONTROLS


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

       Program operations,
       Relevance and reliability of information,
       Compliance with applicable laws and regulations, and
       Safeguarding of assets and resources.

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



 Relevant Internal Controls

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

                   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 of assets and 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 management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.

 Significant Weaknesses


              Based on our review, we believe that the following items are significant weaknesses:

                    The Municipality did not follow HUD procurement requirements when
                    awarding 110 contracts totaling more than $1 million (see finding 1).

                                               23
The Municipality’s financial management system did not fully comply with
applicable HUD requirements (see finding 2).

The Municipality’s management controls over its housing rehabilitation
activities were inadequate (see finding 3).

The Municipality did not develop and implement adequate controls to
ensure compliance with the purposes of the Recovery Act (see finding 4).




                          24
                                   APPENDIXES

Appendix A

                 SCHEDULE OF QUESTIONED COSTS

              Recommendation
                  number                 Ineligible 1/        Unsupported 2/

                      1A                                        $1,096,061
                      1B                      $174
                      2A                                           218,331
                      2B                                            57, 683
                      3A                    17,300
                      3B                                             7,166
                      3C                     2,834               ________

                     Total                 $20,308              $1,379,241


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/   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 the 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.




                                             25
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                         26
Ref to OIG Evaluation   Auditee Comments




Comment 2




Comment 3




Comment 4




Comment 5




                         27
Ref to OIG Evaluation   Auditee Comments




Comment 6




                         28
Ref to OIG Evaluation   Auditee Comments




Comment 7




Comment 8




Comment 9




Comment 10




                         29
Ref to OIG Evaluation   Auditee Comments




                         30
Ref to OIG Evaluation   Auditee Comments




Comment 10




                         31
Ref to OIG Evaluation   Auditee Comments




                         32
                         OIG Evaluation of Auditee Comments

            The Municipality generally disagreed with our recommendations, except for
            recommendation 1B. The Municipality did not address recommendations 1C, 2D,
            3B, 3C, 3D, 4B, and 4C.

Comment 1   The Municipality stated that several contractors submitted proposals or quotes and
            these reflect that the contracted amounts were the most favorable to the program.

            According to the supporting documentation the Municipality provided us during
            the audit, it did not prepare independent cost estimates, obtain price or rate
            quotations from an adequate number of qualified sources, and maintain support
            showing that price or cost analyses were performed to determine the
            reasonableness of the contracted amount. Thus, the Municipality did not provide
            evidence it created an environment that permitted full and open competition in
            compliance with HUD procurement requirements at 24 CFR 85.36(c)(1). The
            Municipality did not provide us with additional support that could demonstrate
            that services were obtained at the most advantageous terms and the
            reasonableness of more than $641,000 in Block Grant funds.

Comment 2   The Municipality stated that an independent cost estimate was prepared and used
            as a reference for the development of the basketball court.

            Although an independent cost estimate was in file, the Municipality did not
            explain why it awarded the contract for $200,000 more than the independent cost
            estimate or the basis used to determine the reasonableness of the contracted
            amount. The Municipality did not provide us with additional support that could
            demonstrate the reasonableness of the contracted amount.

Comment 3   The Municipality stated that contracts awarded for the installation of water
            heaters and cisterns was the best alternative for the Municipality and the Block
            Grant program.

            According to the supporting documentation the Municipality provided us during
            the audit, it did not maintain evidence that it performed independent cost
            estimates before receiving proposals as required by HUD procurement standards
            contained in 24CFR84.36(f)(1). The Municipality did not provide us with
            additional support that could demonstrate that services were obtained at the most
            advantageous terms and the costs were reasonable.

Comment 4   The Municipality stated that it will initiate recovery efforts of the excessive
            payments and informed the finance department to be more diligent to prevent any
            recurrence. However, the Municipality did not indicate whether it would review
            additional invoices to identify other instances of excessive payments.




                                            33
Comment 5   The Municipality disagreed with statements attributed to the director of the
            External Resources Department and asked that the statements be removed from
            the report. At the exit conference the director clarified that she was familiar with
            federal and local procurement requirements. Therefore, we removed the
            statement from the report.

Comment 6   The Municipality stated that all the necessary documentation supporting the
            allowability of payroll charges were maintained with the disbursement vouchers,
            but it was not reviewed during the audit. It provided additional documents
            associated with the administrative payroll costs charged to the Block Grant
            program.

            We examined the additional source documents and determined that $191,208
            were supported, but the Municipality did not support the allowability of more than
            $57,000 charged to the Block Grant program. We revised the report to reflect the
            amount that remained unsupported.

Comment 7   The Municipality stated that effective July 1, 2009, it implemented a new
            financial system that allows the accurate tracing of Block Grant funds.

            We acknowledge the Municipality’s efforts to implement a financial management
            system to ensure compliance with HUD requirements. However, it did not
            provide any information on the efforts that it will take to ensure that Block Grant
            expenditures incurred prior to July, 1, 2009, comply with requirements contained
            in 24 CFR 85.20.

Comment 8   The Municipality stated it was not aware of the deficient work. It also said it was
            aware of the need to bring units to standard conditions, but due to the amount of
            funds available and amount of families in need, it donated materials for repair of
            elements most in need of repair.

            The objective of the Block Grant program is to provide annual grants to recipients
            to develop viable urban communities by providing decent housing and a suitable
            living environment, and by expanding the economic opportunities, principally for
            low- and moderate-income persons. Block Grant recipients must develop
            activities consistent with program objectives, including the elimination of
            conditions which are detrimental to health, safety, and public welfare, through
            code enforcement, demolition, interim rehabilitation assistance and other related
            activities. The Municipality did not ensure that its housing rehabilitation activity
            was consistent with Block Grant objectives and/or its own guidelines. Our
            inspection found that some of the rehabilitation work was deficient or did not
            promote the welfare of participants, possibly resulting in a waste of federal funds.

Comment 9   The Municipality stated that the type of minimal rehabilitation performed did not
            require detailed specifications.



                                             34
              However, Block Grant regulations require recipients to maintain sufficient records
              that demonstrate that funds were used in an economical and efficient manner and
              in compliance with HUD requirements. We agree with the Municipality that the
              installation of a door or a window would not require detail specifications.
              However, our concern is related to those cases involving substantial rehabilitation
              work that only contained a general description. Without this information, it
              would be impossible to determine if the required work was completed or
              supported the participants’ needs. As a result, the files did not properly support
              the needed repairs and the completed work could not be identified.

Comment 10 The Municipality stated that it has a financial management system that is accurate
           and consistent with requirements of the Recovery Act. It also stated that it signed
           collaboration agreements with other entities, and that it drafted program
           guidelines that will be submitted for HUD review.

              As described in finding 2, the Municipality did not have a financial management
              system that fully complied with HUD requirements. The management controls in
              place during our review were not sufficient to safeguard federal funds and
              preclude inaccurate reporting to HUD. The Municipality did not provide us with
              additional support showing that Recovery Act funds would be adequately
              accounted for, safeguarded, and used for authorized purposes.




                                              35
Appendix C

                                         CRITERIA


Federal Regulations at 24 CFR 85.20

Standards for financial management systems require recipients’ financial management systems to
provide for the following:

       Accurate, current, and complete disclosure of the financial results of financially assisted
       activities.

       Records which adequately identify the source and application of funds provided for
       financially assisted activities. These records must contain information pertaining to grant
       or subgrant awards and authorizations, obligations, unobligated balances, assets,
       liabilities, outlays or expenditures, and income.

       Effective control and accountability for all grant and subgrant cash, real and personal
       property, and other assets. Grantees and subgrantees must adequately safeguard all such
       property and must assure that it is used solely for authorized purposes.

       Following applicable Office of Management and Budget cost principles, agency program
       regulations, and the terms of grant and subgrant agreements in determining the
       reasonableness, allowability, and allocability of costs.

Federal Regulations at 24 CFR 85.36(b)(9)

Grantees and subgrantees will maintain records sufficient to detail the significant history of
procurement. These records will include but are not necessarily limited to the following:
rationale for the method of procurement, selection of contract type, contractor selection or
rejection, and the basis for the contract price.

Federal Regulations at 24 CFR 85.36 (c) (1)

All procurement transactions will be conducted in a manner providing full and open competition.




                                                36
Federal Regulations at 24 CFR 85.36(f)(1)

Grantees and subgrantees must perform a cost or price analysis in connection with every
procurement action including contract modifications. The method and degree of analysis is
dependent on the facts surrounding the particular procurement situation, but as a starting point,
grantees must make independent estimates before receiving bids or proposals. A cost analysis
must be performed when the offeror is required to submit the elements of his estimated cost, e.g.,
under professional, consulting, and architectural engineering services contracts. A cost analysis
will be necessary when adequate price competition is lacking, and for sole source procurements,
including contract modifications or change orders, unless price reasonableness can be established
on the basis of a catalog or market price of a commercial product sold in substantial quantities to
the general public or based on prices set by law or regulation. A price analysis will be used in all
other instances to determine the reasonableness of the proposed contract price.

Federal Regulations at 24 CFR 570.202(b)(2)

Block Grant funds may be used to finance certain types of rehabilitation activities including
labor, materials, and other costs of rehabilitation of properties.

Federal Regulations at 24 CFR 570.206

HUD allows payment of reasonable administrative costs and carrying charges related to the
planning and execution of community development activities assisted with Block Grant funds.

Federal Regulations at 24 CFR 570.207(b)(3)

New housing construction is an activity that may not be assisted with Block Grant funds unless
authorized under provisions of §570.201 or when carried out by an entity under the provisions of
§570.204.

Federal Regulations at 24 CFR 570.502

Recipients and subrecipients that are governmental entities shall comply with the requirements
and standards of OMB Circular A–87, ‘‘Cost Principles for State, Local, and Indian Tribal
Governments’’, and with 24 CFR part 85 ‘‘Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments’’, as applicable. This includes, but is
not limited to, compliance with procurement standards contained in 24 CFR 85.36 and standards
for financial management systems contained in 24 CFR 85.20.

Federal Regulations at 24 CFR 570.506

The Municipality shall establish and maintain sufficient records to enable HUD to determine
whether the recipient has met the requirements of the program. This includes financial records,
in accordance with the applicable requirements listed in 24 CFR 570.502.




                                                37
Recovery Act at Section 1512

Not later than 10 days after the end of each calendar quarter, the Municipality shall submit a
report to HUD that contains accurate financial information, including Recovery Act funds
obligated and expended.

Recovery Act at Section 1602

The Municipality shall use grant funds in a manner that maximizes job creation and economic
benefit.

Notice of Allocations, Application Procedures, and Requirements for Homelessness
Prevention and Rapid Re-Housing Program Grantees under the American Recovery and
Reinvestment Act of 2009 [FR-5307-N-01]

Grantees should ensure that sufficient planning is in place to begin to expend funds shortly after
the grant agreement is executed.

Municipality’s Housing Rehabilitation Program Regulations-Introduction

The intent of the housing rehabilitation program is to correct existing deficiencies caused by
normal ware and tare of housing units owned by low income owners. The main purpose of the
program is to improve families’ quality of life by creating adequate living conditions and
improving Rio Grande housing stock.

The financial assistance that the Municipality provides will serve to carry substantial
improvements that will remove health and safety hazards to the residents resulting in an
improved quality of life to the low income families of Rio Grande.

Municipality’s Housing Rehabilitation Program Regulations at Section 17(c)

Each housing rehabilitation activity file shall include a detailed description of the requested
improvements and the applicable work specifications.




                                                 38
Appendix D

            SCHEDULE OF PROCUREMENT DEFICIENCIES

                                                                                                                           Missing or
                                                                   No                                          No          inadequate
                                                              independent      No cost      Missing         adequate      specifications
                                Contract                          cost         or price     contract       number of        of services
    Contracted services         number           Amount         estimate       analysis    provisions      quotations        solicited
   Improvements and re-
   construction of a          2007-000045         $455,771                        X
   basketball court
   Purchase and
   installation of water      2009-000027           25,960           X                          X
   heaters and cisterns
   Housing rehabilitation     2008-000250             6,000          X            X             X              X                 X
   Housing rehabilitation     2008-000125             6,000          X            X             X              X                 X
   Housing rehabilitation     2008-000066             6,000          X            X             X              X                 X
   Housing rehabilitation     2008-000062             6,000          X            X             X              X                 X
   Housing rehabilitation     2009-000104             5,999          X            X             X              X                 X
   Housing rehabilitation     2008-000060             5,999          X            X             X              X                 X
   Housing rehabilitation     2007-000285             5,999          X            X             X              X                 X
   Housing rehabilitation     2008-000127             5,998          X            X             X              X                 X
   Housing rehabilitation     2007-000149             5,997          X            X             X              X                 X
   Housing rehabilitation     2009-000123             5,995          X            X             X              X                 X
   Housing rehabilitation     2009-000126             5,994          X            X             X              X                 X
   Housing rehabilitation     2008-000065             5,992          X            X             X              X                 X
   Housing rehabilitation     2009-000053             5,990          X            X             X              X                 X
   Housing rehabilitation     2008-000243             5,990          X            X             X              X                 X
   Housing rehabilitation     2007-000091             5,989          X            X             X              X                 X
   Housing rehabilitation     2007-000101             5,988          X            X             X              X                 X
   Housing rehabilitation     2007-000283             5,986          X            X             X              X                 X
   Housing rehabilitation     2007-000146             5,985          X            X             X              X                 X
   Housing rehabilitation     2007-000100             5,983          X            X             X              X                 X
   Housing rehabilitation     2009-000057             5,982          X            X             X              X                 X
   Housing rehabilitation     2008-000086             5,982          X            X             X              X                 X
   Housing rehabilitation     2009-000062             5,980          X            X             X              X                 X
   Housing rehabilitation     2009-000052             5,980          X            X             X              X                 X
   Housing rehabilitation     2008-000160             5,980          X            X             X              X                 X
   Housing rehabilitation     2007-000096             5,978          X            X             X              X                 X
   Housing rehabilitation     2009-000125             5,975          X            X             X              X                 X
   Housing rehabilitation     2007-000117             5,975          X            X             X              X                 X
   Housing rehabilitation     2007-000094             5,970          X            X             X              X                 X
   Housing rehabilitation     2007-000148             5,967          X            X             X              X                 X
   Housing rehabilitation     2008-000069             5,960          X            X             X              X                 X
   Housing rehabilitation     2009-000121             5,950          X            X             X              X                 X
   Housing rehabilitation     2007-000105             5,949          X            X             X              X                 X
   Housing rehabilitation     2008-000133             5,945          X            X             X              X                 X
   Housing rehabilitation     2007-000102             5,941          X            X             X              X                 X
   Housing rehabilitation     2009-000084             5,940          X            X             X              X                 X
   Housing rehabilitation     2008-000161             5,937          X            X             X              X                 X
   Housing rehabilitation     2008-000112             5,935          X            X             X              X                 X
   Housing rehabilitation     2008-000115             5,932          X            X             X              X                 X
   Housing rehabilitation     2008-000247             5,907          X            X             X              X                 X
   Housing rehabilitation     2009-000061             5,790          X            X             X              X                 X
   Housing rehabilitation     2008-000130             5,737          X            X             X              X                 X
   Housing rehabilitation     2007-000098             4,778          X            X             X              X                 X
             Total                                $731,085          43            43            43             42               42
 * The schedule does not indicate all violations noted during the review. We included only the most frequent and serious violations.




                                                                    39