oversight

The Portage Metropolitan Housing Authority, Ravenna, Ohio, Improperly Operated Its Section 8 Housing Choice Voucher Program

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-01-28.

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

                                                                Issue Date
                                                                         January 28, 2009
                                                                Audit Report Number
                                                                         2009-CH-1003




TO:         Thomas S. Marshall, Director of Public Housing Hub, 5DPH


FROM:       Heath Wolfe, Regional Inspector General for Audit, 5AGA

SUBJECT: The Portage Metropolitan Housing Authority, Ravenna, Ohio, Improperly
           Operated Its Section 8 Housing Choice Voucher Program

                                   HIGHLIGHTS

 What We Audited and Why

             We audited the Portage Metropolitan Housing Authority’s (Authority) Section 8
             Housing Choice Voucher program (program) under its Moving to Work
             Demonstration program. The audit was part of the activities in our fiscal year
             2008 annual audit plan. We selected the Authority based upon our analysis of
             risk factors relating to the housing agencies in Region V’s jurisdiction. Our
             objective was to determine whether the Authority administered its program
             according to the U.S. Department of Housing and Urban Development’s (HUD)
             requirements. This is the second of two audit reports on the Authority’s program.
 What We Found

             The Authority inappropriately administered its program. Its administration of its
             Project-Based Voucher program and its controls over program unit housing
             inspections were inadequate. It failed to properly select owners, approve program
             units, execute contracts, and monitor the operations of its Project-Based Voucher
             program. As a result, it paid nearly $349,000 in improper housing and utility
             assistance, was unable to support nearly $300,000 in housing and utility
             assistance, and received more than $65,000 in improper Section 8 administrative
             fees. We estimate that over the next 12 months, the Authority will spend more
             than $200,000 in program funds for inappropriate housing assistance and utility
             allowance payments and Section 8 administrative fees.
           Of the 58 program units selected for inspection, 42 did not meet minimum
           housing quality standards, and 32 had material violations that existed before the
           Authority’s previous inspections. The violations existed because the Authority
           lacked adequate controls to ensure that the inspections performed by its
           contractor, Housing Authority Services, were adequate. As a result, more than
           $38,000 in program funds was spent on units that were not decent, safe, and
           sanitary. Based on our statistical sample, we estimate that over the next year,
           HUD will pay more than $1 million in housing assistance on units with material
           housing quality standards violations.We informed the Authority’s executive
           director and the Director of HUD’s Cleveland Office of Public Housing of minor
           deficiencies through a memorandum, dated January 27, 2009.


What We Recommend

           We recommend that the Director of HUD’s Cleveland Office of Public Housing
           require the Authority to reimburse its program from nonfederal funds for the
           improper use of more than $450,000 in program funds; provide documentation or
           reimburse its program nearly $300,000 from nonfederal funds for the unsupported
           payments cited in this audit report; and implement adequate procedures and
           controls to address the findings cited in this audit report to prevent more than $1.2
           million from being spent on housing that is not eligible for program assistance or
           decent, safe, and sanitary.

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

Auditee’s Response

           We provided our review results and supporting schedules to the Director of
           HUD’s Cleveland Office of Public Housing and the Authority’s executive director
           during the audit. We provided our discussion draft audit report to the Authority’s
           executive director, its board chairman, and HUD’s staff during the audit. We held
           an exit conference with the executive director on January 6, 2009.

           We asked the executive director to provide comments on our discussion draft audit
           report by January 26, 2009. The executive director provided written comments,
           dated January 26, 2009, and generally agreed with our findings. The complete text
           of the written comments, along with our evaluation of those comments, can be found
           in appendix B of this report.



                                             2
                            TABLE OF CONTENTS

Background and Objectives                                                             5

Results of Audit
      Finding 1: The Authority Inappropriately Administered Its Section 8 Project-
                 Based Voucher Program                                                6

      Finding 2: The Authority’s Section 8 Units Did Not Meet HUD’s Housing Quality
                 Standards                                                            12

Scope and Methodology                                                                 18

Internal Controls                                                                     20

Appendixes
   A. Schedule of Questioned Costs and Funds to Be Put to Better Use                  22
   B. Auditee Comments and OIG’s Evaluation                                           23
   C. Federal Requirements and the Authority’s Administrative Plan                    28




                                             3
                      BACKGROUND AND OBJECTIVES

The Portage Metropolitan Housing Authority (Authority) was created in 1968 pursuant to
Section 3735.27 of the Ohio Revised Code to provide safe and sanitary housing to low-income
families in the Ravenna, Ohio area. In 1977, the Authority began administering federal housing
programs, beginning with the Section 8 rental housing assistance program, and expanded its
jurisdiction to include all of Portage County. The Authority is a political subdivision of the State
of Ohio and is governed by a five-member board of commissioners appointed for five-year terms
by local elected officials. The Authority’s executive director is appointed by the board of
commissioners and is responsible for coordinating established policy and carrying out the
Authority’s day-to-day operations.

In 1996, Congress authorized the Moving to Work Demonstration (Moving to Work) program as
a demonstration program under the U.S. Department of Housing and Urban Development
(HUD). The Authority was accepted into the program on March 15, 1999, when HUD’s
Assistant Secretary for Public and Indian Housing signed the Authority’s Moving to Work
agreement (agreement). Moving to Work allows certain housing authorities to design and test
ways to promote self-sufficiency among assisted families, achieve programmatic efficiency,
reduce costs, and increase housing choice for low-income households. Congress exempted the
participants from much of the Housing Act of 1937 and associated regulations, but only as
authorized in its agreement. The Authority’s agreement outlines alternate funding, reporting,
occupancy, and rent structure policies for its Section 8 Housing Choice Voucher program
(program).

As of December 2008, the Authority had 1,521 units under contract with annual housing
assistance payments totaling more than $8.5 million in program funds.

This is the second of two audit reports on the Authority’s program. Our objectives were to
determine whether: (1) the Authority administered its Section 8 Project-Based Voucher program
according to HUD’s and its requirements, and (2) the Authority’s unit inspections were sufficient
to detect housing quality standards violations and provide decent, safe, and sanitary housing to
its residents. The first audit report (report number 2008-CH-1011, issued on June 30, 2008)
included three findings. The objectives of the first audit were to determine whether the
Authority (1) accurately calculated housing assistance and utility allowance payments, (2)
maintained required documentation to support household eligibility, (3) appropriately verified
whether reported zero-income households had income, and (4) properly enforced HUD’s housing
quality standards.




                                                 4
                                RESULTS OF AUDIT

Finding 1: The Authority Inappropriately Administered Its Section 8
                  Project-Based Voucher Program
The Authority administered its Section 8 Project-Based Voucher program contrary to HUD’s
requirements, its agreement with HUD, and its Section 8 administrative plan. The problems
occurred because the Authority failed to exercise proper supervision and oversight of its project-
based program and lacked adequate procedures and controls to ensure that HUD’s and its
requirements were appropriately followed. As a result, the Authority inappropriately paid nearly
$349,000 in housing assistance and utility allowances and was unable to support its use of nearly
$300,000 in housing assistance and utility allowances. We estimate that over the next 12 months
the Authority will improperly spend more than $203,000 in program funds for its project-based
program.


 The Authority Inappropriately
 Administered its Project-Based
 Voucher Program

               The Authority inappropriately administered its project-based program when it
               failed to ensure that the following requirements were followed before approving
               and contracting units for housing assistance:

               •   Select units for participation that were eligible for project-based voucher
                   assistance,
               •   Properly evaluate project proposals,
               •   Conduct subsidy layering reviews,
               •   Perform an analysis to demonstrate how the projects would assist low-income
                   people without unduly concentrating them,
               •   Ensure that environmental reviews were conducted,
               •   Conduct housing quality standards inspections, and
               •   Conduct rent reasonableness determinations.

               The Authority paid $348,690 ($318,649 in housing assistance plus $30,041 for
               utility allowances) for inappropriate units between June 2005 and July 2008. The
               Authority paid assistance for

               •   24 units that were in multifamily housing projects that exceeded HUD’s limit
                   of 25 percent of the projects’ total units,
               •   22 units that were not under a housing assistance payments contract, and
               •   18 units that were not eligible housing types according to HUD’s regulations.

                                                5
           It also incorrectly contracted to assist units that were not available to house
           families due to ongoing construction and units occupied by families that were not
           eligible for project-based voucher assistance.

The Authority Did Not Properly
Evaluate Project Proposals

           The Authority violated HUD’s regulations and its administrative plan when
           soliciting proposals for project-based voucher assistance. It failed to provide broad
           public notice of its request for project-based voucher proposals, thereby excluding
           owners from submitting proposals. The Authority only sent requests for proposals
           to agencies selected by the Authority’s previous executive director. Additionally,
           the request for proposals did not require owners to provide sufficient information to
           determine their eligibility.

           The Authority also failed to select project-based voucher owners according to its
           agreement with HUD, its administrative plan, and HUD’s requirements. Its
           administrative plan and/or the agreement stated that it would verify the ownership
           of projects, select nonprofit owners that provided supportive services to their
           residents, and verify the eligibility of owners before approving project-based
           voucher assistance. However, the Authority failed to verify

           •   Ownership of the projects,
           •   Nonprofit status of project owners, and
           •   Owners provided supportive services to families.

           As a result, the Authority contracted with four project owners that operate as for-
           profit entities. It also contracted with the wrong owner for three of 10 housing
           assistance payments contracts. Although these ineligible owners were affiliated
           with eligible, nonprofit entities, the Authority did not obtain a management
           agreement or other form of statement from an eligible owner that allowed the
           affiliated company to operate the projects.

           In addition, the supportive services offered by three project owners were not
           targeted to the populations living at the projects and/or did not provide families
           with services that were not already available in the community. The Authority
           failed to completely meet one of its Project-Based Voucher program’s purposes,
           to assist the special-needs populations of its community when contracting with the
           owners of three projects.

           The Authority failed to properly evaluate proposed projects before approving and
           contracting to provide project-based assistance for 130 units. Specifically, it
           failed to


                                             6
           •   Evaluate proposed projects according to HUD’s site selection standards,
               which included ensuring that projects were not located in areas of
               concentrated poverty;
           •   Conduct subsidy layering reviews to ensure that projects did not receive
               excess government assistance;
           •   Conduct environmental reviews to ensure that projects were not located in
               areas prohibited by environmental laws; and
           •   Perform housing quality standards inspections of units to ensure that they
               were decent, safe, and sanitary.

           The Authority also did not follow HUD’s requirements and its administrative plan
           when determining the contract rents for project-based units. It failed to ensure
           that

           •   108 units had a rent reasonableness determination before executing a housing
               assistance payments contract for set rent amounts,
           •   82 units had rent reasonableness studies conducted that compared an adequate
               number of comparable units,
           •   82 units had gross rents that did not exceed HUD-imposed limits, and
           •   24 units obtained HUD’s approval of rents charged at a project already
               receiving federal subsidies.

The Authority Executed
Improper and Invalid Program
Contracts


           The Authority failed to properly execute the housing assistance payments
           contracts for its 10 project-based projects when it

           •   Used the incorrect HUD contract form for 10 contracts,
           •   Incorrectly executed six contracts up to two and one-half years after the
               contract effective date to replace the tenant-based voucher contracts
               incorrectly used to lease units,
           •   Did not state the date of the contract execution for four contracts,
           •   Used invalid terms for four contracts, including start dates for housing
               assistance payments that preceded the contract approval date, and
           •   Executed one invalid contract for units that did not exist at the time of contract
               execution.

           After realizing that it had executed tenant-based voucher contracts for its project-
           based voucher projects, the Authority contacted a neighboring housing authority
           for assistance. As a result, the Authority again executed incorrect contracts with
           its project owners that lacked all of the required project-based voucher provisions.
           The correct HUD form was available from HUD since September 2001 and was

                                             7
            provided via electronic communication by HUD’s Cleveland Office of Public
            Housing to all housing authorities in Ohio.

            Contrary to HUD’s requirements and the contract’s provisions, the Authority also
            executed changes to its project contracts that lacked the signatures of both an
            Authority official and the project owner when making contract changes, such as
            adding and removing units.

            From November 2002 to June 2008, the Authority executed 10 project-based
            housing assistance payments contracts with 6 owners to assist 130 housing units.
            As of July 2008, the Authority was providing project-based assistance to 105
            units.


The Authority Did Not
Adequately Monitor Its Project-
Based Voucher Program

            The Authority violated HUD’s regulations and its housing assistance payments
            contracts when it failed to properly lease and monitor the occupancy of its
            project-based contract units. During the five-year contract term of its 10 project-
            based contracts, the Authority monitored the occupancy of program units only
            three times. During this time, it allowed contract units to remain vacant and/or
            house unassisted households for six months to three years without removing the
            units from the program.

            The Authority’s program manager said that the Authority could not control lease-
            up rates despite existing provisions in HUD’s regulations and its program
            contracts that require it to refer eligible tenants for lease-up and to enforce owner
            obligations to monitor vacancies. According to internal electronic
            communication, the Authority was not aware of the requirements until March
            2008, more than five years after it initiated its project-based program. Although it
            notified the owners of its right to remove vacant units from a program contract, it
            did not enforce the owner’s obligations to notify it of all vacancies.

            The Authority also improperly leased program units to households with a tenant-
            based voucher for periods of one and one-half to five years. When its program
            manager appointed an assistant manager to oversee its project-based program in
            September 2007, the Authority improved its monitoring process, removing from
            the program 23 units that housed families with a tenant-based voucher and 19
            units that housed unassisted families. As of August 2008, the Authority continued
            to lease three program units to households with tenant-based vouchers, and four
            units had remained vacant for 7 to 30 months, well beyond HUD’s recommended
            allowance of 120 days.



                                              8
Conclusion


             According to the Authority’s administrative plan, it elected to operate a Project-
             Based Voucher program to assist the special needs population of its community.
             However, the Authority failed to fully achieve this goal by allowing its projects to
             have high vacancy rates and assist households that were not appropriate or did not
             have defined special needs. It also disbursed $646,868 in housing assistance and
             utility allowance payments for units that were not properly determined
             appropriate or were inappropriate for project-based voucher assistance.
             Additionally, it executed incorrect and invalid housing assistance payments
             contracts with owners and approved projects without evaluating whether the units
             were appropriate for project-based voucher assistance.

             Between January 1, 2007, and July 31, 2008, the Authority received $65,055 in
             Section 8 administrative fees while inappropriately administering its Section 8
             Project-Based Voucher program. In accordance with 24 CFR [Code of Federal
             Regulations] 982.152(d), HUD may reduce or offset any administrative fee to a
             public housing authority, in the amount determined by HUD, if the public housing
             authority fails to perform its administrative responsibilities correctly or
             adequately under the program. Given the Authority’s substantial noncompliance
             with HUD’s requirements, we recommend that HUD pursue reimbursement of the
             administrative fees related to the operation of its Project-Based Voucher program.

             The Authority should implement adequate procedures and controls to ensure
             compliance with all requirements for the operation of its Project-Based Voucher
             program to prevent $203,852 in program funds from being spent over the next 12
             months for units that do not meet the program’s requirements. Our methodology
             for this estimate is explained in the Scope and Methodology section of this audit
             report.

Recommendations

             We recommend that the Director of HUD’s Cleveland Office of Public Housing
             require the Authority to

             1A.    Reimburse its program $348,690 ($318,649 in housing assistance plus
                    $30,041 for utility allowances) from nonfederal funds for the improper
                    payments cited in this finding.

             1B.    Provide supporting documentation or reimburse its program $298,178
                    from nonfederal funds for the housing assistance and utility allowance
                    payments related to the projects lacking evidence of an environmental
                    review and a subsidy layering review.

                                              9
1C.    Reimburse its program $65,055 from nonfederal funds for the Section 8
       administrative fees received related to its inadequate program operations
       cited in this finding.

1D.    Execute the correct housing assistance payments contracts for existing
       structures.

1E.    Remove inappropriate project-based voucher units from its housing
       assistance payments contracts.

1F.    Remove units from its housing assistance payments contracts that house
       inappropriate families.

1G.    Terminate its housing assistance payments contracts at term-end for
       projects not meeting the requirements of its agreement with HUD or revise
       its agreement to allow the projects to receive assistance under its program.

1H.    Evaluate current projects for compliance with federal requirements
       regarding site standards, subsidy layering, and environmental standards.

1I.    Implement adequate procedures and controls to ensure compliance with all
       applicable requirements for the operation of its Project-Based Voucher
       program to prevent $203,852 in program funds from being spent over the
       next 12 months for units that do not meet the program’s requirements.

We also recommend that the Director of HUD’s Cleveland Office of Public
Housing

1J.    Require the Authority to obtain HUD’s approval before contracting for any
       additional project-based program assistance until the Authority substantially
       improves its program administration to ensure compliance with applicable
       requirements based upon the information cited in this finding, absent
       sufficient documentation that may be provided by the Authority.




                                 10
Finding 2: The Authority’s Section 8 Units Did Not Meet HUD’s
                     Housing Quality Standards
The Authority failed to maintain program units in compliance with HUD’s and its housing
quality standards. Of the 58 program units statistically selected for inspection, 42 did not meet
minimum housing quality standards, and 32 had material violations that existed before the
Authority’s previous inspections. The violations existed because the Authority lacked adequate
procedures and controls to ensure that the inspections performed by its contractor, Housing
Authority Services, were adequate. As a result, more than $35,000 in program funds was spent
on units that were not decent, safe, and sanitary. Based on our statistical sample, we estimate
that over the next year, HUD will pay more than $1 million in housing assistance on units with
material housing quality standards violations.


 HUD’s Housing Quality
 Standards Were Not Met


               The Authority contracted with Housing Authority Services in 2003 to perform
               housing quality standards inspections of its program units. From the 409 program
               units that passed the inspections performed by the contractor between January 15
               and March 31, 2008, we statistically selected 58 units for inspection by using data
               mining software. The 58 units were inspected to determine whether the Authority
               ensured that its program units met HUD’s and its housing quality standards. Our
               appraiser inspected the 58 units between April 28 and May 8, 2008.

               Of the 58 units inspected, 42 (72 percent) failed to comply with housing quality
               standards with a total of 259 violations, and 217 (83 percent) of the violations
               predated the contractor’s last inspections. In addition, 32 units were considered to
               be in material noncompliance. Materially failed units were those units with one or
               more health and safety violations that predated the Authority’s most recent
               inspection reports, or a unit with a violation that was identified but not corrected at
               the time of the Authority’s most recent inspection report. The following table
               categorizes the 259 housing quality standards violations in the 58 units.




                                                 11
                                                             Number of
                               Category of violations        violations
                        Electrical hazard                        53
                        Window condition                         43
                        Wall condition                           20
                        Security                                 19
                        Exterior surfaces                        13
                        Interior stairs                          12
                        Other interior hazards                   11
                        Stove                                    10
                        Sink                                     9
                        Floor condition                          8
                        Smoke detector                           8
                        Roof and gutters                         5
                        Safety of heating equipment              5
                        Stairs/rails/porches                     5
                        Ceiling condition                        4
                        Foundation                               3
                        Lead-based paint                         3
                        Refrigerator                             3
                        Sewer connection                         3
                        Water heater                             3
                        Tub                                      3
                        Chimney                                  2
                        Electricity                              2
                        Garbage and debris                       2
                        Interior air quality                     2
                        Site conditions                          2
                        Toilet                                   2
                        Ventilation                              2
                        Adequacy of heating equipment            1
                        Lead-based paint-exterior surfaces       1
                                        Total                   259

           We provided our inspection results to the Authority’s executive director on July 9,
           2008, and the Director of HUD’s Cleveland Office of Public Housing on July 29,
           2008.

Electrical Hazards Were Noted


           Fifty-three electrical hazard violations were present in 20 of the Authority’s units
           inspected. These defects included exposed electrical wiring, improperly wired
           outlets, and broken outlet covers. The following picture is an example of an
           electrical-hazard.


                                              12
 Unit #2248: Broken
 outlet near kitchen
 floor poses a risk of
 electrocution.




Wall-Related Violations Were
Noted


                Twenty wall-related violations were present in 13 of the Authority’s program
                units inspected. The following items are examples of wall-related violations
                listed in the table: holes in walls, large gaps between doors and walls that allow
                air and vermin infiltration, and missing or damaged door knobs and jambs. The
                following picture is an example of a wall-related violation.

  Unit #864: A one-inch
  gap under the living
  room door to the
  outside allows air and
  vermin infiltration.




                                                 13
Security Violations Were Noted

                Nineteen security violations were present in 10 of the Authority’s program units
                inspected. The security violations included missing or broken window and door
                locks. The following picture is an example of a security violation.

   Unit #2709: The only
   lockable door on the
   rear of the house can
   be pushed open after it
   is locked because the
   latch bolt was installed
   backwards.




Adequate Procedures and
Controls Were Lacking


                The housing quality standards violations existed because the Authority lacked
                adequate procedures and controls over its program unit inspections. Its inspection
                contractor, Housing Authority Services, also lacked adequate controls to ensure
                that it met its contract requirements to inspect program units in accordance with
                HUD’s and the Authority’s housing quality standards.

                The Authority contracted with Housing Authority Services in November 2003,
                but it failed to communicate the results of its yearly quality control inspections to
                the contractor until December 2007 after we informed the Authority of
                deficiencies with its contractor’s inspections. At that time, it reported that 90
                percent of the units had failed its quality control inspections, and 68 violations
                had been missed by the contractor at the last regular inspections. Because of its
                past failures to provide timely corrective feedback to the contractor, the Authority
                allowed the contractor to conduct a number of inadequate inspections without
                penalty for violating the contract. As a result, households resided in units that
                were not decent, safe, and sanitary.

                After the Authority notified the contractor of its inadequate inspections, the
                contractor failed to make improvements, which we determined during our 58
                inspections. The contractor’s deputy director admitted that the contractor had not
                                                 14
             conducted internal quality control inspections to monitor staff performance or
             verify that improvements were made. After the results of our inspections were
             shared with the Authority and its contractor, the contractor’s deputy director said
             that the contractor would begin conducting internal quality control inspections.

             We cited the Authority’s inadequate controls over the timeliness of the
             contractor’s inspections in our first audit report (see finding 3 in report #2008-
             CH-1011).

Conclusion


             The Authority’s households 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 and its housing quality standards. In accordance
             with 24 CFR 982.152(d), HUD is permitted to reduce or offset any program
             administrative fees paid to a public housing agency if it fails to enforce HUD’s
             housing quality standards. The Authority disbursed $35,116 in housing assistance
             payments for the 32 units that materially failed to meet HUD’s housing quality
             standards and received $3,041 in Section 8 administrative fees.

             If the Authority implements adequate procedures and controls over its unit
             inspections to ensure compliance with HUD’s and its housing quality standards,
             we estimate that HUD will avoid spending $1,022,304 in future housing
             assistance payments on units that are not 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 HUD’s Cleveland Office of Public Housing
             require the Authority to

             2A. Certify, along with the owners of the 42 program units cited in this finding,
                 that the applicable housing quality standards violations have been repaired.
                 If the necessary repairs have not been made, the Authority should abate
                 housing assistance payments to landlords as appropriate.


             2B. Reimburse its program $38,157 ($35,116 in housing assistance payments
                 plus $3,041 in associated Section 8 administrative fees) for the 32 units that
                 materially failed to meet HUD’s and its housing quality standards.




                                              15
2C. Implement adequate procedures and controls to ensure that all units meet
    HUD’s and its housing quality standards to prevent $1,022,304 in program
    funds from being spent on units that are in noncompliance with the
    standards.


2D. Implement adequate procedures and controls to ensure that the results of its
    quality control inspections are consistently provided to its inspection
    contractor to prevent recurring inspection deficiencies.




                                16
                         SCOPE AND METHODOLOGY

To accomplish our objectives, we reviewed

•   Applicable laws and regulations; HUD’s program requirements at 24 CFR Parts 982 and 983;
    HUD’s housing assistance payments contracts for new construction and rehabilitation and
    existing housing; Federal Register Notice, Volume 66, Number 10, dated January 16, 2001--
    Revisions to PHA [public housing agency] Project-Based Assistance Program -- Initial
    Guidance; and the June 27, 2007, memorandum from HUD to Moving to Work agencies.

•   The Authority’s accounting records, organizational chart, program household files, internal
    program reference files, program annual contributions contract with HUD, Moving to Work
    agreement and amendments effective from March 1999 through March 2006, program
    administrative plan and amendments effective October 2006 through August 2008, and
    contracts with its inspection contractor and project-based voucher owners.

We also interviewed the Authority’s employees, HUD staff, program households and landlords,
and the inspection contractor.

Finding 1

We identified 38 units that inappropriately housed project-based assisted families as of July
2008, determined the total amount of the housing assistance and utility allowance payment made
to each family in July 2008 ($15,052) and multiplied the total monthly amount by 12 months
($180,624). We then multiplied the 38 units by the average administrative fee received in 2008
for project-based assisted units ($50.94) and by 12 months ($23,228).

We estimate that over the next 12 months, the Authority will spend $203,852 ($180,624 plus
$23,228) in program funds for inappropriate housing assistance and utility allowance payments
and Section 8 administrative fees. This estimate is presented solely to demonstrate the annual
amount of program funds that could be put to better use on eligible project-based voucher
housing if the Authority implements our recommendation. While these benefits would recur
indefinitely, we were conservative in our approach and only included the initial year in our
estimate.

Finding 2

We statistically selected 58 of the Authority’s program units from the 409 tenant-based program
units that passed inspection by the Authority’s inspection contractor between January 15 and
March 31, 2008, using data mining software. The 58 units were inspected to determine whether
the Authority ensured that its program units met HUD’s and its housing quality standards. Our
sampling criteria used a 90 percent confidence level with a 50 percent estimated error rate and
precision level of plus or minus 10 percent.


                                                17
Our sampling results determined that 32 of 58 units (55 percent) materially failed to meet HUD’s
housing quality standards. Materially failed units were those units with one or more health and
safety violations that predated the Authority’s most recent inspection reports, or a unit with a
violation that was identified but not corrected at the time of the Authority’s most recent
inspection report. All units were ranked, and we used auditors’ judgment to determine the
material cutoff point.

Reports from HUD’s Voucher Management System for the 12-month period April 2007 to
March 2008 showed that the Authority’s average monthly housing assistance payment was $463.
Projecting our sampling results of the 32 units that materially failed to meet HUD’s housing
quality standards and/or the Authority’s housing standards to the population indicates that 226
units or 55.17 percent of the population contains the attributes tested (would materially fail to
meet HUD’s housing quality standards and/or the Authority’s housing standards). The sampling
error was plus or minus 9.95 percent. In other words, we are 90 percent confident that the
frequency of occurrence of the attributes tested lies between 45.22 and 65.12 percent of the
population. This equates to an occurrence of between 184 and 266 of the 409 units in the
population.

   •   The lower limit is 45.22 percent times 409 units equals 184 units that materially failed to
       meet HUD’s housing quality standards and/or the Authority’s housing standards.
   •   The point estimate is 55.17 percent times 409 units equals 226 units that materially failed
       to meet HUD’s housing quality standards and/or the Authority’s housing standards.
   •   The upper limit is 65.12 percent times 409 units equals 266 units that materially failed to
       meet HUD’s housing quality standards and/or the Authority’s housing standards.

Using the lower limit of the estimate of the number of units and the average housing assistance
payment, we estimate that the Authority will annually spend $1,022,304 (184 units times $463
average payment times 12 months) for units that materially failed to meet HUD’s housing quality
standards and/or the Authority's housing standards. This estimate is presented 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 recommendation. While these benefits
would recur indefinitely, we were conservative in our approach and only included the initial year
in our estimate.

We performed our on-site audit work between April and October 2008 at the Authority’s program
office located at 2832 State Route 59, Ravenna, Ohio. The audit covered the period January 1,
2007, through March 31, 2008, but was expanded as necessary.

We performed our review 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
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.



                                               18
                              INTERNAL CONTROLS

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

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

              •   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 management 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 that the following item is a significant weakness:

           •   The Authority lacked adequate procedures and controls to ensure compliance
               with HUD’s requirements and its administrative plan regarding managing the
               day-to-day operations of its program, including the operation of its project-
               based program and housing unit conditions (see findings 1 and 2).




                                            20
                                    APPENDIXES

Appendix A

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

          Recommendation                                               Funds to be put
              number             Ineligible 1/        Unsupported 2/   to better use 3/
                 1A                    $348,690
                 1B                                        $298,178
                 1C                      65,055
                 1I                                                           $203,852
                 2B                      38,157
                 2C                                                          1,022,304
                Totals                 $451,902            $298,178         $1,226,156


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.

3/   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. These amounts include 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 that are specifically identified. In these instances, if the Authority
     implements recommendations 1I and 2C, it will cease to incur program costs for units
     that are not eligible or decent, safe, and sanitary and, instead, will expend those funds in
     accordance with HUD’s requirements. Once the Authority successfully improves its
     procedures and 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




                         22
Ref to OIG Evaluation   Auditee Comments




                         23
Ref to OIG Evaluation   Auditee Comments



Comment 1




Comment 2




Comment 3




                         24
Ref to OIG Evaluation   Auditee Comments




Comment 3




                         25
                         OIG Evaluation of Auditee Comments

Comment 1   We disagree with the Authority’s position that the supportive services offered and
            accepted satisfies the requirements of 24 CFR 983.56. In fact, 24 CFR 983.56(b)
            requires that in order to be excepted from the 25 percent limit, housing authorities
            must identify the types of supportive services that would qualify a family for the
            exception, require the family and the housing authority to sign a statement of
            family responsibility, and require the housing authority to monitor the family’s
            receipt of the supportive services during its tenancy in the project-based unit.

Comment 2   The Authority followed only part of its administrative plan when it disregarded
            the requirement to advertise in the local newspaper, which excluded potential
            owners from submitting proposals. Its planned revisions to its administrative plan
            should improve the solicitation of proposals process if fully implemented.

Comment 3   The Authority’s proposed actions should greatly improve its program operations
            if fully implemented.




                                             26
Appendix C

      FEDERAL REQUIREMENTS AND THE AUTHORITY’S
                ADMINISTRATIVE PLAN

Finding 1
The Moving to Work Demonstration agreement, effective March 15, 1999, article 1, section A,
states that the agreement supersedes the terms and conditions of the annual contributions
contracts and the provisions of the United States Housing Act of 1937 (1937 Act) and HUD
requirements to the extent necessary for the Authority to implement its Moving To Work
demonstration as approved by HUD in this agreement. All authorizations contained in the
agreement are for the length of the demonstration only, unless otherwise specified. Except as
necessary to implement the Authority’s activities described in the statement of authorizations,
the Authority is subject to the requirements of the annual contributions contracts, the 1937 Act,
and other HUD requirements. Article III, section A, states that the definition of default is the use
of funds subject to the agreement for a purpose other than authorized by the agreement;
noncompliance with legislative, regulatory, or other requirements applicable to the agreement;
other material breach of the agreement; or a material misrepresentation in the Moving To Work
plan submission by the Authority shall be a default under the agreement. Section C states that
the corrective or remedial actions HUD may require or order under the agreement for Authority
default include, but are not limited to the following: canceling or revising the affected activities,
revising the budget for activities as necessary, and substituting other eligible activities;
prohibiting payment or reimbursement for any Moving To Work demonstration activities or for
those activities affected by the default; and requiring reimbursement by the Authority to HUD
for amounts used improperly. Section 2, part D(3), states that subject to applicable federal
procurement rules, to save the administrative burden of processing and reviewing applications
annually, the Authority may project-base up to 15 percent of its Section 8 certificates and
vouchers for a five-year term to non-profit providers that own rental housing and provide
supportive services.

The housing assistance payments contract for new construction and rehabilitation, part 2, section
10(b), states that the owner must promptly notify the housing authority of any vacancy in a
contract unit. After receiving the owner notice, the housing authority shall make every
reasonable effort to refer a sufficient number of families for the owner to fill the vacancy. The
owner must rent vacant contract units to eligible families on the housing authority waiting list
referred by the housing authority. The housing authority and the owner must make reasonable
good faith efforts to minimize the likelihood and length of any vacancy. If vacancies occur, the
housing authority may give notice to the owner amending exhibit A of the housing assistance
payments contract to reduce the number of contract units by subtracting the number of contract
units (by number of bedrooms) that have been vacant for a period of 120 or more days since
owner notice of vacancy. These provisions are also present in the housing assistance payments
contract for existing housing, part 2, section 9(b). Section 14, states that if HUD determines that
the housing authority has failed to comply with the housing assistance payments contract, or has
                                                 27
failed to take appropriate action to HUD’s satisfaction or as directed by HUD for enforcement of
the housing authority’s rights under the housing assistance payments contract, HUD may assume
the housing authority’s rights and obligations under the housing assistance payments contract
and may perform the obligations and enforce the rights of the housing authority under the
housing assistance payments contract. Section 15 states the circumstances in which an owner is
in default under the housing assistance payments contract. The housing authority’s rights and
remedies under the housing assistance payments contract include recovery of overpayments,
termination or reduction of housing assistance payments, and termination of the housing
assistance payments contract. These provisions are also present in the housing assistance
payments contract for existing housing, part 2, sections 13 and 14. Section 26 states that the
agreement to enter into a housing assistance payments contract and the housing assistance
payments contract, including the exhibits, is the entire agreement between the housing authority
and the owner. No changes in the housing assistance payments contract may be made except in
writing, signed by both the owner and a housing authority official. These provisions are also
present in the housing assistance payments contract for existing housing, part 2, section 24.

Federal Register Notice, Volume 66, Number 10, dated January 16, 2001, states that the notice
remains in effect until the new project-based voucher changes in law have been fully
implemented through a new regulation and that HUD will issue a new required housing
assistance payments contract for the project-based voucher program as implemented by the
notice. Section II permitted housing authorities to enter into housing assistance payments
contracts that attach project-based voucher assistance to existing housing units that fully meet the
Housing Choice Voucher program housing quality standards as required by 24 CFR 983.104(c),
effective September 15, 1999, through October 12, 2005, which required housing agencies to
inspect each proposed project-based voucher unit to determine that they fully complied with
HUD’s housing quality standards before executing a housing assistance payments contract.
Effective October 13, 2005, 24 CFR 983.103(b), 983.204(a), and 983.57(b) requires that all units
pass a housing quality standards inspection before contract approval.

Section II, part L, of the notice states that if no eligible family rents a vacant unit within 120 days
(commencing on the first day of the month when the vacancy occurs), the housing authority may
terminate its commitment to make any additional housing assistance payments for the unit for the
balance of the housing assistance payments contract term. The housing authority may use the
amounts so saved to provide other voucher assistance. Regulations at 24 CFR 983.254, effective
October 13, 2005, require the owner to promptly notify the housing authority of any vacancy or
expected vacancy in a contract unit. After receiving the owner notice, the housing authority
must make every reasonable effort to refer promptly a sufficient number of families for the
owner to fill such vacancies. The housing authority and the owner must make reasonable good
faith efforts to minimize the likelihood and length of any vacancy. If any contract units have
been vacant for a period of 120 or more days since owner notice of vacancy (and
notwithstanding the reasonable good faith efforts of the housing authority to fill such vacancies),
the housing authority may give notice to the owner amending the housing assistance payments
contract to reduce the number of contract units by subtracting the number of contract units (by
number of bedrooms) that have been vacant for such period.



                                                  28
Section II, part B, of the notice requires that public housing authorities follow 24 CFR 983.51
when advertising the availability of project-based assistance to projects that may have more than
25 percent program units. Regulations at 24 CFR 983.51, effective April 30, 1998, through
October 12, 2005, require that the housing authority follow its written selection policy that is
approved by HUD. The housing authority must advertise in a newspaper of general circulation
that the housing authority will accept applications for assistance for existing housing projects.
The advertisement must be published once a week for three consecutive week,; specify an
application deadline of at least 30 days after the date the advertisement is last published, specify
the number of units the housing authority estimates that it will be able to assist under the funding
the housing authority is making available for this purpose, and state that only applications
submitted in response to the advertisement will be considered. The housing authority
advertisement must also state the housing authority’s selection policies. The owner’s application
also must contain required information, as stated in paragraph (d). These requirements changed
effective October 13, 2005, in 24 CFR 983.51, which no longer required HUD approval of the
housing authority’s selection policy and applied the requirements to all project proposals. The
housing authority must provide broad public notice of the opportunity to offer project-based
proposals for consideration and broad notice of the selection of proposals and must not limit
proposals to explicitly or practically preclude owner submission of proposals for project-based
housing on different sites. The housing authority must follow its selection procedures outlined in
its administrative plan.

Section II, part E, of the notice requires that a contract for project-basing under the voucher
program be consistent with the goals of deconcentrating poverty and expanding housing
opportunities and that all new project-based assistance agreements or housing assistance
payments contracts be for units in census tracts with poverty rates of less than 20 percent unless
HUD specifically approves an exception. Regulations at 24 CFR 983.57(b), effective October
13, 2005, state that a housing authority may not select a proposal for existing, newly constructed,
or rehabilitated project-based voucher housing on a site or enter into an agreement or housing
assistance payments contract for units on the site, unless the housing authority has determined
that project-based assistance for housing at the selected site is consistent with the goal of
deconcentrating poverty and expanding housing and economic opportunities. Paragraph (d) also
requires that a site for existing or rehabilitated housing meet certain site and neighborhood
standards, as listed in the CFR.

Section II, part F, of the notice states that a housing authority may not enter into a housing
assistance payments contract or other binding commitment to provide project-based voucher
assistance for more than 25 percent of the units in any one building, except for single-family
dwellings and projects for elderly families and disabled families. In accordance with existing
program use single-family dwellings refer to one to four family dwellings. Effective October 13,
2005, 24 CFR 983.56 extended these requirements but expanded the exception for projects to
house over 25 percent project-based units to units housing families receiving supportive services.
Paragraph (b) requires the housing authority to identify the types of supportive services that
would qualify a family for the exception, requires the family and the housing authority to sign a
statement of family responsibility, and requires the housing authority to monitor the family’s
receipt of the supportive services during its tenancy in the project-based unit.

                                                29
Section II, part I, of the notice requires the housing assistance payments contract to establish
gross rents (rent to owner plus the allowance for tenant-paid utilities) that do not exceed 110
percent of the established fair market or any HUD-approved exception payment standard for the
area where the housing is located. Effective October 13, 2005, 24 CFR 983.301(b) states that
except for certain tax credit units as provided in paragraph (c) of this section, the rent to owner
must not exceed the lowest of (1) an amount determined by the housing authority, not to exceed
110 percent of the applicable fair market rent (or any exception payment standard approved by
the Secretary of HUD) for the unit bedroom size minus any utility allowance; (2) the reasonable
rent; or (3) the rent requested by the owner. Part I also states that the determination of whether
rent is reasonable in relation to comparable units shall be governed by 24 CFR 983.256.
Effective October 12, 2005, 24 CFR 983.256 states that a housing authority may not enter an
agreement to enter into a housing assistance payments contract until the housing authority
determines that the initial rent to owner under the housing assistance payments contract is a
reasonable rent and that rents must be compared with rents of at least three comparable
unassisted units. Effective October 13, 2005, 24 CFR 983.303(d) also requires housing agencies
to conduct rent reasonableness reviews using three comparable unassisted units.

HUD regulations at 24 CFR 983.2(a) state that Part 982 is the basic regulation for the tenant-
based voucher program. However, paragraph (b) and (c) of this section describe the provisions
that do not apply to the project-based program. The rest of Part 982 applies to the project-based
program. Regulations at 24 CFR 982.152(d) are applicable to the project-based program based
upon its exclusion in either paragraph (b) or (c).

HUD regulations at 24 CFR 983.151, effective April 30, 1998, to October 12, 2005, state that the
housing authority must enter into a housing assistance payments contract with the owner in the
form prescribed by HUD for assistance provided under the part 983. Paragraph (d) states that the
effective date of the housing assistance payments contract may not be earlier than the date of the
housing authority inspection and acceptance of the unit(s). Regulations at 24 CFR 983.202(a),
effective October 13, 2005, also required that the housing assistance payments contract be in the
form required by HUD headquarters.

HUD regulations at 24 CFR 983.206(a), (b), and (c), effective October 13, 2005, state the
requirements for making housing assistance payments contract amendments to add or substitute
contract units. A contract may be amended during the three-year period immediately following
the execution date of the housing assistance payments contract to add additional project-based
voucher contract units in the same building.

HUD regulations at 24 CFR 983.151(e), effective April 30, 1998, to October 12, 2005, state that
after commencement of the housing assistance payments contract term, the housing authority
must make the monthly housing assistance payments in accordance with the housing assistance
payments contract for each unit occupied under lease by a family. Effective October 13, 2005,
24 CFR 983.202(b)(2) and 983.351(a)(1) expand the requirement to specify that a housing
authority must pay housing assistance for contract units leased and occupied by eligible families
during the housing assistance payments contract term.



                                                30
HUD regulations at 24 CFR 983.152(a), effective July 3, 1995, to October 12, 2005, state that
the owners must lease all assisted units under a housing assistance payments contract to eligible
families. Leasing of vacant, assisted units to ineligible tenants is a violation of the housing
assistance payments contract and grounds for all available legal remedies, including suspension
or debarment from HUD programs and reduction of the number of units under the housing
assistance payments contract as set forth in paragraph (b) of this section. Once the housing
authority has determined that a violation exists, the housing authority must notify the HUD field
office of its determination and the suggested remedies. At the direction of the HUD field office,
the housing authority must take the appropriate action. Regulations at 24 CFR 983.253(a) and
983.254(a)(2), effective October 13, 2005, also state that the owner must lease contract units
only to eligible families selected and referred by the housing authority from the housing
authority waiting list.

HUD regulations at 24 CFR 983.7(b), effective April 30, 1998, to October 12, 2005, state that
the Authority cannot pay assistance to a Section 236 project (insured or noninsured) or a unit
subsidized with Section 236 rental assistance payments. Regulations at 24 CFR 983.54(e),
effective October 13, 2005, removed this requirement to allow assistance to be attached to
projects subsidized with Section 236 interest reduction payments.

HUD regulations at 24 CFR 983.203(b), effective September 15, 1999, to October 12, 2005, state
that before a housing authority selects a specific unit to which assistance is to be attached, the
housing authority must determine whether the unit is occupied and if occupied, whether the
unit’s occupants are eligible for assistance. If the unit is occupied by an eligible family
(including a single person) and the housing authority selects the unit, the family must be afforded
the opportunity to lease that unit or another appropriate size, project-based assisted unit in the
project without requiring the family to be placed on the waiting list. A housing authority may
not select a unit or enter into an agreement with respect to a unit if the unit is occupied by
persons who are not eligible for participation in the program. These requirements were also
provided in 24 CFR 983.53(d), effective October 13, 2005.

HUD regulations at 24 CFR 983.257(b), effective from July 3, 1995, through October 12, 2005,
required housing agencies to only approve or assist a project in accordance with HUD
regulations and guidelines designed to ensure that participants do not receive excessive
compensation by combining HUD program assistance with assistance from other federal, state or
local agencies or with low-income housing tax credits, according to 42 U.S.C. [United States
Code], 3545(d) and 3545 note.

HUD regulations at 24 CFR 983.55(a), (b), and (c), effective October 13, 2005, require that a
housing authority not enter into a housing assistance payments contract until HUD or an
independent entity approved by HUD has conducted any required subsidy layering review and
determined that the project-based voucher assistance is in accordance with HUD subsidy
layering requirements.

HUD regulations at 24 CFR 983.11(b), effective July 3, 1995, through October 12, 2005, and
983.58(d), effective October 13, 2005, require compliance with HUD’s environmental
regulations. Housing agencies may not enter into housing assistance payments contracts unless
                                                31
an environmental review has been completed and HUD has approved the environmental
certification or it was determined that the project was exempt from environmental laws.

HUD regulations at 24 CFR 983.253(b), effective July 3, 1995, through October 12, 2005, state
that for housing authority-owned project-based certificate units or project-based certificate units
financed with a HUD-insured multifamily mortgage, the initial rents must be approved by HUD.
HUD regulations at 24 CFR 983.53(a)(7), effective October 13, 2005, state that the Authority
may not attach or pay project-based voucher assistance for units in transitional housing.

HUD regulations at 24 CFR 983.302(b), effective October 13, 2005, state that the housing
authority may not approve and the owner may not receive any increase of rent to owner until and
unless the owner has complied with all requirements of the housing assistance payments
contract, including compliance with the housing quality standards. The owner may not receive
any retroactive increase of rent for any period of noncompliance.

HUD regulations at 24 CFR 983.202, effective April 30, 1998, through October 12, 2005, state
that the regulations at 24 CFR 982.452 apply to owners. The owner is also responsible for
performing all of the owner responsibilities under the housing assistance payments contract,
providing the housing authority with a copy of any termination of tenancy notification, and
offering vacant, accessible units to a family with one or more members with a disability
requiring accessibility features of the vacant unit and occupying an assisted unit not having such
features. These requirements are also stated at 24 CFR 983.208, effective October 13, 2005.

HUD Regulations at 24 CFR 982.452, effective May 14, 1999, state that the owner is responsible
for performing all of the owner’s obligations under the housing assistance payments contract and
the lease and preparing and furnishing to the housing authority information required under the
housing assistance payments contract.

HUD regulations at 983.209(c), effective October 13, 2005, state that by execution of the
housing assistance payments contract, the owner certifies that at such execution and at all times
during the term of the housing assistance payments contract, each contract unit for which the
owner is receiving housing assistance payments is leased to an eligible family referred by the
housing authority, and the lease is in accordance with the housing assistance payments contract
and HUD requirements.

The Authority’s administrative plan states the following:

Chapter 21, Introduction, states that in accordance with the March 1999 Moving to Work
agreement, the Authority has been granted authority to implement a Section 8 project-based
program for non-profit owners of rental housing. The purpose of this feature is to increase the
supply of rental units and to assist the special needs populations of the county.

Chapter 21, section A, states that to be eligible for participation, the nonprofit must be based in
Portage County and predominately serve Portage County residents. The nonprofit owner must
make a commitment to provide both housing and supportive services to the residents to receive
the Section 8 project-based commitment from the Authority.
                                                 32
Chapter 21, Section B, states that the Authority and the owner will execute a housing assistance
payments contract for a five-year term that is dependent upon the Authority’s commitment for
Section 8 funding from HUD. The housing assistance payments contract establishes the initial
rents, term, and responsibilities of the Authority and the owners. Housing assistance payments
contracts can be adjusted annually based on HUD regulations.

Chapter 21, part C, states that rents will be set based upon market comparables and may not
exceed 110 percent of the published existing fair market rents. All standard Section 8 program
requirements, including but not limited to client Section 8 eligibility, housing quality standards
compliance, rent reasonableness, and fair housing requirements, will apply to project-based
owners.

Chapter 21, part D, states that outreach efforts will be targeted to all Portage County nonprofits
owning rental housing, based on the Yellow Pages directory published by Portage County First
Call for Help. Outreach will consist of letters to each known local nonprofit that is potentially
eligible to participate and also through newspaper notices in the Record-Courier.

Chapter 21, section E, states that proposals will be solicited by the Authority using a format
developed by the Authority. The nonprofit owner will be required to provide documentation of
eligibility for the program, ownership of the housing, eligibility of clients for Section 8, and
supportive services to be offered.

Finding 2
HUD’s regulations at 24 CFR 982.152(d) state that HUD may reduce or offset any
administrative fee to a public housing authority in the amount determined by HUD, if the
authority fails to perform its administrative responsibilities correctly or adequately under the
program, such as not enforcing HUD’s housing quality standards.

HUD’s regulations at 24 CFR 982.305(a) state that the public housing authority may not give
approval for the family of the assisted tenancy or execute a housing assistance contract until the
authority has determined that the following meet program requirements: (1) the unit is eligible,
and (2) the unit has been inspected by the authority and meets HUD’s housing quality standards.

HUD’s regulations at 24 CFR 982.401 require all program housing to meet HUD’s housing
quality standards performance requirements both at commencement of assisted occupancy and
throughout the tenancy.

HUD’s regulations at 24 CFR 982.404 require owners of program units to maintain the units in
accordance with HUD’s housing quality standards. If the owner fails to maintain the dwelling
unit in accordance with HUD’s housing quality standards, the authority must take prompt and
vigorous action to enforce the owner’s obligations. The authority’s remedies for such breach of
housing quality standards include termination, suspension, or reduction in housing assistance
payments and termination of the housing assistance payments contract. The authority must not
make any housing assistance payments for a dwelling unit that fails to meet housing quality
                                                 33
standards unless the owner corrects the defect within the period specified by the authority and
the authority verifies the correction. If a defect is life threatening, the owner must correct the
defect within 24 hours. For other defects, the owner must correct them within 30 calendar days.

The Authority’s administrative plan requires the following:

Chapter 10, section B, states that the Authority follows the acceptability criteria in the program
regulations, HUD Inspection Booklet, and the housing codes for the City of Kent, Ravenna, and
the Village of Windham. The Authority has additions to HUD’s housing quality standards for
the following categories: walls, windows, doors, sinks, security, bedrooms, modifications, and
infestation.

Chapter 10, section D, states that the following items are considered of an emergency nature and
must be corrected by the owner or tenant (whoever is responsible) within 24 hours of notice by
the inspector:

-   Lack of security for the unit,
-   Natural gas leak or fumes,
-   Electrical problem which could result in shock or fire,
-   No running hot water,
-   Broken glass where someone could be injured, and
-   Obstacle which prevents tenant’s entrance or exit.

The contract and addendum between Housing Authority Services (contractor) and the Authority,
effective July 1, 2006, states that Housing Authority Services will perform and complete all of
the work required for completion of housing quality standards inspections, in strict accordance
with the following “scope of work” in which the specifications are incorporated.

Scope of Work:

•    Annual housing quality standards inspections, part 4, states that the contractor will conduct
     the physical inspection in accordance with housing quality standards, all applicable federal,
     state, local, and the Authority’s standards.
•    Initial housing quality standards inspections, part 4, states that the contractor will conduct the
     physical inspection in accordance with housing quality standards, all applicable federal, state,
     local, and the Authority’s standards.
•    Independent contractor status, part 6, states that the contractor agrees and represents that all
     individuals performing work under this agreement will have received all required training
     and possess all required certifications.




                                                  34