oversight

The Housing Authority of the City of Pittsburgh, Pennsylvania, Did Not Ensure Thats Its Leased Housing Units Met Housing Quality Standards under Its Moving to Work Program

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-01-15.

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

                                                              Issue Date
                                                                    January 15, 2009
                                                              Audit Report Number
                                                                     2009-PH-1003




TO:        James D. Cassidy, Director, Office of Public Housing, Pittsburgh Field Office,
            3EPH



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

SUBJECT:   The Housing Authority of the City of Pittsburgh, Pennsylvania, Did Not Ensure
            That Its Leased Housing Units Met Housing Quality Standards under Its
            Moving to Work Program

                                 HIGHLIGHTS

 What We Audited and Why

           We audited the Housing Authority of the City of Pittsburgh’s (Authority)
           administration of its leased housing under its Moving to Work Demonstration
           (Moving to Work) program as part of our fiscal year 2008 audit plan. This is our
           second audit report issued on the Authority’s program. The audit objective
           addressed in this report was to determine whether the Authority ensured that its
           leased housing units met the U.S. Department of Housing and Urban
           Development’s (HUD) housing quality standards.

 What We Found

           The Authority failed to ensure that its leased program units met housing quality
           standards. Of 66 program units statistically selected for inspection, 62 did not
           meet HUD’s housing quality standards, of which 53 were in material
           noncompliance with housing quality standards. The Authority spent $100,362 in
           program and administrative funds for these 53 units. We estimated that over the
           next year if the Authority does not implement adequate procedures and controls to
           ensure that its program units meet housing quality standards, HUD will pay more
           than $9.3 million in housing assistance on units that materially fail to meet HUD’s
           housing quality standards.

What We Recommend

           We recommend that HUD require the Authority to ensure that housing units
           inspected during the audit are repaired to meet HUD’s housing quality standards,
           reimburse its program for the improper use of $100,362 in program funds for
           units that materially failed to meet HUD’s housing quality standards, and
           implement adequate procedures and controls to ensure that in the future, program
           units meet housing quality standards to prevent an estimated $9.3 million from
           being spent annually on units that materially fail to meet HUD’s housing quality
           standards.

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

Auditee’s Response

           We discussed the report with the Authority during the audit and at an exit
           conference on November 17, 2008. The Authority provided written comments to
           our draft report on November 26, 2008. The Authority disagreed with the
           conclusions in the report. The complete text of the Authority’s response, along
           with our evaluation of that response, can be found in appendix B of this report.




                                            2
                            TABLE OF CONTENTS

Background and Objectives                                                4

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

Scope and Methodology                                                    15

Internal Controls                                                        17

Appendixes

   A. Schedule of Questioned Costs and Funds to Be Put to Better Use     19
   B. Auditee Comments and OIG’s Evaluation                              20




                                             3
                      BACKGROUND AND OBJECTIVES

The Housing Authority of the City of Pittsburgh (Authority) was established as a public
corporation in 1937 under the Housing Authority Law of the Commonwealth of Pennsylvania to
provide decent, safe, and sanitary housing in the most efficient and economical manner. A
seven-member board of commissioners governs the Authority. The mayor of the City of
Pittsburgh appoints the members of the board. The board appoints an executive director to
administer the affairs of the Authority. The current executive director is A. Fulton Meachem, Jr.
He assumed this position in August 2006. The Authority’s main administrative office is located
at 200 Ross Street, Pittsburgh, Pennsylvania.

In 1996, Congress authorized the Moving to Work Demonstration (Moving to Work) program as
a U.S. Department of Housing and Urban Development (HUD) demonstration program.
Congress exempted the participants from many of the Housing Act of 1937 and associated
regulations as outlined in the individual Moving to Work agreements that HUD established with
the program’s participants. In October 1998, the language in the Departments of Veterans
Affairs and Housing and Urban Development and Independent Agencies Appropriations Act of
1999 (Public Law 105-276, 112 Stat. 2461) specifically named and authorized the Authority to
join the demonstration program. In November 2000, HUD signed a five-year Moving to Work
agreement with the Authority. In April 2005, HUD agreed to extend the term of the Authority’s
Moving to Work agreement for one year. In December 2006, HUD agreed to extend for three
years the term of the Authority’s Moving to Work agreement. The expiration date of the
Authority’s current agreement is December 31, 2009.

Under the Section 8 Housing Choice Voucher program, the Authority was authorized to provide
leased housing assistance payments to more than 7,000 eligible families. HUD authorized the
Authority the following financial assistance for housing choice vouchers:

                     Authority fiscal year        Annual budget authority
                            2007                       $42,162,349
                            2008                       $42,474,790
                            Total                      $84,637,139

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

HUD regulations at 24 CFR 982.405(a) require public housing authorities to perform unit
inspections before the initial move-in and at least annually. The authority must inspect the unit
leased to a family before the term of the lease, at least annually during assisted occupancy, and at
other times as needed to determine whether the unit meets housing quality standards.

HUD regulations at 24 CFR 982.453(6)(b) give public housing agencies rights and remedies
against the owner under the housing assistance payments contract, which include recovery of



                                                 4
overpayments, abatement or other reduction of housing assistance payments, termination of
housing assistance payments, and termination of the housing assistance payments contract.

Our audit objective was to determine whether the Authority ensured that its leased housing units
met HUD’s housing quality standards.




                                               5
                                RESULTS OF AUDIT

Finding: Controls over Housing Quality Standards Were Inadequate
The Authority did not adequately enforce HUD’s housing quality standards. Of 66 housing units
selected for inspection, 62 units did not meet HUD’s housing quality standards, and 53 units
materially failed to meet housing quality standards. The Authority’s inspectors did not report
588 violations, which existed at the units when they performed their inspections. The Authority
did not report these violations because it did not implement adequate procedures and controls to
ensure that its program units met HUD’s housing quality standards. As a result, the Authority
spent $100,362 in program and administrative funds for 53 units that materially failed to meet
HUD’s housing quality standards. Unless the Authority implements controls to ensure that
program units meet housing quality standards, it will pay an estimated $9.3 million in housing
assistance for units that materially fail to meet housing quality standards over the next year.



 Housing Units Did Not Meet
 HUD’s Housing Quality
 Standards


              We statistically selected 66 units from unit inspections passed by the Authority’s
              inspectors during the period September 4, 2007, to February 29, 2008. The 66
              units were selected to determine whether the Authority ensured that the units in its
              program met housing quality standards. We inspected the selected units between
              April 15 and April 25, 2008.

              Of the 66 units inspected, 62 (94 percent) had 989 housing quality standards
              violations. Additionally, 53 of the 66 units (80 percent) were considered to be in
              material noncompliance since they had numerous violations that predated the
              Authority’s last inspection and were not identified by the Authority’s inspectors
              creating unsafe living conditions. Of the 62 units with housing quality standards
              violations, 12 units had violations that were noted on the Authority’s previous
              inspection report, and the Authority later passed the units. However, during our
              inspection, it was determined that the violations had not been corrected. The 53
              units had 607 violations (including 19 violations identified by the Authority but
              not corrected) that existed before the Authority’s last inspection report. The
              Authority’s inspectors did not identify or did not report 588 violations that existed
              at the time of their most recent inspections. HUD regulations at 24 CFR 982.401
              require that all program housing meet HUD’s housing quality standards at the
              beginning of the assisted occupancy and throughout the tenancy. The following
              table categorizes the 989 housing quality standards violations in the 62 units that
              failed the housing quality standards inspections.



                                                6
                                                              Number of        Number           Percentage
             Type of violation                                violations       of units          of units
             Structure and materials                             378              58               88%
             Illumination and electricity                        286              54               82%
             Space and security                                  106              37               56%
             Site and neighborhood                                40              21               32%
             Lead-based paint                                     32              12               18%
             Food preparation and refuse disposal                 30              24               36%
             Smoke detectors                                      29              21               32%
             Thermal environment                                  27              21               32%
             Sanitary condition                                   22              14               21%
             Sanitary facilities                                  18              16               24%
             Interior air quality                                  9               9               14%
             Access                                                8               4                6%
             Water supply                                          4               4                6%
             Total                                               989

            We provided our inspection results to the Director of HUD’s Office of Public
            Housing, Pittsburgh field office, and to the Authority during the audit.


Housing Quality Standards
Violations Were Identified

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




            Inspection #36: A handrail needs to be installed on the right-hand side of the steps or


                                                    7
moved to the right-hand side. The storm door swings outside to the right from inside the
unit. This violation was not identified during the Authority’s November 13, 2007, inspection.




Inspection #8: The hot water heater flue is rusted and needs to be replaced. This violation
was not identified during the Authority’s October 10, 2007, inspection.




Inspection #10: There are concrete blocks and an abandoned automobile at the rear of the
dwelling. This violation was not identified during the Authority’s February 20, 2008,
inspection.




                                       8
Inspection #8: The step from the street to the walk, as well as the sidewalk, needs to be
repaired. This violation was not identified during the Authority’s October 10, 2007,
inspection.




Inspection #6: A handrail is missing on the right-hand side of the basement stairs. This
violation was not identified during the Authority’s November 14, 2007, inspection.




                                        9
Inspection #38: The drain tube is missing from the pressure relief valve. This violation
was not identified during the Authority’s November 19, 2007, inspection.




Inspection #42: The concrete steps are chipped and broken. The steps need resurfacing
and a handrail. This violation was not identified during the Authority’s October 31, 2007,
inspection.




                                       10
Inspection #26: The landing at the exit from the rear door is uneven. This violation was
not identified during the Authority’s September 27, 2007, inspection.




Inspection #11: Knockout plugs are missing from the breaker box. This violation was
not identified during the Authority’s November 19, 2007, inspection.




                                      11
           Inspection #53: There are exposed wires in the basement. The wires need to be secured
           in a junction box or disconnected at the breaker box and removed. This violation was not
           identified during the Authority’s January 3, 2008, inspection.


The Authority Did Not
Implement Procedures and
Controls to Ensure Compliance
with HUD’s Housing Quality
Standards

           Although HUD regulations and the Authority’s administrative plan required the
           Authority to ensure that its program units met housing quality standards, it failed
           to do so. The Authority did not report a number of housing quality standards
           violations because it did not implement adequate procedures and controls to
           ensure that it complied with HUD regulations and its administrative plan. HUD
           regulations at 24 CFR 982.401 define HUD’s housing quality standards. Chapter
           8 of the Authority’s administrative plan requires the Authority to inspect its leased
           housing units based upon HUD’s housing quality standards and/or equivalent
           local standards approved by HUD. However, the administrative plan and
           inspection procedures provided by the Authority primarily listed references to the
           regulations rather than detailed instructions for staff to follow when determining
           the nature and extent of violations and deficiencies. The Authority relied on the
           inspectors’ knowledge of housing standards and experience in conducting the
           detailed steps necessary for adequate inspections rather than providing them with
           inspection procedures. This omission resulted in incomplete and inconsistent
           inspection results. For example, the inspectors were not aware that items such as
           inoperable ground-fault circuit interrupter outlets and missing electrical box
           knockout plugs were housing quality standards violations.




                                                 12
             Further, the Authority did not implement an adequate quality control inspection
             program. HUD regulations at 24 CFR 985.3 require public housing authorities to
             conduct quality control inspections on a sample of units under contract during the
             authority’s fiscal year. The purpose of quality control inspections is to ensure that
             each inspector performs complete and accurate inspections. More importantly,
             quality control inspections are performed to ensure that there is consistency
             among the authority’s inspections regarding the application of HUD’s housing
             quality standards. Although the Authority provided examples of quality control
             reviews that it performed, it did not provide documentation to demonstrate that it
             used the inspection results to give inspectors feedback on their performance. The
             Authority needs to develop and implement procedures and controls to ensure that
             its leased housing units meet HUD’s housing quality standards. In this regard, the
             Authority informed us that it is in the process of developing and implementing
             additional procedures and controls to ensure that its leased housing units meet
             HUD’s housing quality standards. The Authority hired a consultant in March
             2008 to perform a minimum of 2,000 inspections and quality control inspections
             and to develop and implement a quality control program that considers and
             incorporates our recommendations and exceeds the minimum standards required
             by HUD for all inspections conducted on a monthly basis.


Conclusion


             The Authority’s program participants were subjected to numerous housing quality
             standards violations which created unsafe living conditions, and the Authority did
             not properly use its program funds when it failed to ensure that units met HUD’s
             housing quality standards as required. In accordance with HUD regulations at 24
             CFR 982.152(d), HUD is permitted to reduce or offset any program
             administrative fees paid to a public housing authority if it fails to perform its
             administrative responsibilities correctly or adequately, such as not enforcing
             HUD’s housing quality standards. The Authority disbursed $93,105 in housing
             assistance payments to owners for the 53 units that materially failed to meet
             HUD’s housing quality standards and received $7,257 in program administrative
             fees for these units.

             If the Authority implements the recommendations in this report to ensure
             compliance with HUD’s housing quality standards, we estimate that $9.3 million in
             future housing assistance payments will be spent on units that are decent, safe, and
             sanitary. Our methodology for this estimate is explained in the Scope and
             Methodology section of this report.




                                              13
Recommendations

          We recommend that the Director of HUD’s Office of Public Housing, Pittsburgh
          field office, direct the Authority to

          1A.     Certify, along with the owners of the 62 units cited in this finding, that the
                  applicable housing quality standards violations have been corrected.

          1B.     Reimburse its program $100,362 from nonfederal funds ($93,105 for
                  housing assistance payments and $7,257 in associated administrative fees)
                  for the 53 units that materially failed to meet HUD’s housing quality
                  standards.

          1C.     Develop and implement procedures and controls to ensure that program units
                  meet housing quality standards, thereby ensuring that $9,304,880 in program
                  funds is expended only on units that are decent, safe, and sanitary.

          1D.     Develop and implement controls to ensure that supervisory quality control
                  inspections are used to provide feedback and training to inspectors under the
                  quality control program.




                                             14
                         SCOPE AND METHODOLOGY

To accomplish our objective, we reviewed

       Applicable laws; regulations; the Authority’s administrative plan; and HUD’s program
       requirements at 24 CFR Part 982, HUD’s Housing Choice Voucher Guidebook 7420.10G,
       and HUD’s Housing Inspection Manual.

       The Authority’s inspection reports, computerized databases including housing quality
       standards inspection data and housing assistance payment data, board meeting minutes,
       organizational chart, correspondence, and Moving to Work agreement and amendments.

       HUD’s monitoring reports for the Authority.

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

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

We statistically selected 66 of the Authority’s leased housing units to inspect from a universe of
2,150 units that passed the Authority’s housing quality standards inspections between
September 4, 2007, and February 29, 2008. We selected 66 units to determine whether the
Authority’s program units met housing quality standards. The sampling criteria used a 90
percent confidence level, 50 percent estimated error rate, and precision of plus or minus 10
percent.

Our sampling results determined that 53 of 66 units (80 percent) materially failed to meet HUD’s
housing quality standards. We determined that the 53 units were in material noncompliance
because they had 607 violations that existed before the Authority’s last inspection report creating
unsafe living conditions. All units were ranked, and we used auditors’ judgment to determine
the material cutoff line.

Based upon the sample size of 66 from a total population of 2,150 units, an estimate of 80
percent (53 units) of the sample population materially failed housing quality standards
inspections. The sampling error is plus or minus 7.93 percent. There is a 90 percent confidence
that the frequency of occurrence of program units materially failing housing quality standards
inspections lays between 72 and 88 percent of the population. This equates to an occurrence of
between 1,556 and 1,896 units of the 2,150 units in the population. We used the most
conservative number, which is the lower limit or 1,556 units.

We analyzed the applicable Authority databases and estimated that the annual housing assistance
payment per recipient in our sample universe was $5,980. Using the lower limit of the estimate
of the number of units and the estimated annual housing assistance payment, we estimate that the
Authority will spend $9,304,880 (1,556 units times $5,980 - the estimated average annual


                                                15
housing assistance payment) annually for units that are in material noncompliance with HUD’s
housing quality 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 recommendations. While these benefits would recur indefinitely, we
were conservative in our approach and only included the initial year in our estimate.

We reviewed the Authority’s process for abating rents. Using documentation supporting the
series of inspections related to the sample of 66 housing units addressed in our housing quality
standards inspections and an additional 25 randomly selected units from the Authority’s
abatement file, we identified only minor issues relating to the Authority’s process for abating
rents, and we reported them to the Authority in a separate letter.

We performed our on-site audit work from February through April 2008 at the Authority’s main
administrative office located at 200 Ross Street, Pittsburgh, Pennsylvania. The audit covered the
period February 1, 2007, through February 29, 2008, but was expanded when necessary to
include other periods.

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




                                                16
                              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 the following internal controls were relevant to our objective:

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

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

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

              We obtained an understanding of the relevant internal controls identified above by
              reviewing the Authority’s administrative plan and interviewing responsible
              Authority employees.

              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.




                                               17
Significant Weakness

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

                  The Authority did not implement detailed procedures for performing
                  inspections and using quality control inspections to improve its inspection
                  program to ensure that its leased housing units met HUD’s minimum
                  housing quality standards.




                                            18
                                   APPENDIXES

Appendix A

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

                    Recommendation                        Funds to be put
                        number            Ineligible 1/   to better use 2/
                           1B              $100,362
                           1C                               $9,304,880



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

2/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. This includes reductions in outlays, deobligation of funds, withdrawal of
     interest subsidy costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     which are specifically identified. In this instance, if the Authority implements our
     recommendations, it will cease to incur program costs for units that are not decent, safe,
     and sanitary and, instead, will expend those funds for units that meet HUD’s standards.
     Once the Authority successfully improves its controls, this will be a recurring benefit.
     Our estimate reflects only the initial year of this benefit.




                                             19
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                         20
Comment 2




            21
Comment 1




            22
Comment 2




Comment 3




            23
Comment 4



Comment 5




            24
Comment 6




Comment 7




            25
Comment 8




Comment 9




Comment 10




             26
Comment 9

Comment 11

Comment 11




             27
28
29
Comment 2



Comment 6


Comment 12



Comment 13



Comment 14




             30
Comment 15




Comment 16


Comment 17




Comment 18




Comment 19




             31
Comment 5


Comment 2




            32
*Please
refer to
comments
14 through
19           *




             *




                 33
*Please
refer to
comments
14 through
19           *




             *




                 34
*Please
refer to
comments
14 through
19           *




             *




                 35
*Please
refer to
comments
14 through
19           *




             *




                 36
                         OIG Evaluation of Auditee Comments

Comment 1   HUD regulations at 24 CFR 982.401 require that all program housing meet
            HUD’s housing quality standards at the beginning of the assisted occupancy and
            throughout the tenancy. Our sampling results determined that 53 of 66 units (80
            percent) materially failed to meet HUD’s housing quality standards. We
            determined that the 53 units were in material noncompliance because they had
            607 violations that existed before the Authority’s last inspection report and
            created unsafe living conditions. All units were ranked, and we used auditors’
            judgment to determine the material cutoff line. We used our professional
            knowledge, tenant interviews, and the Authority’s latest inspection reports in
            conservatively determining whether a housing quality standards violation existed
            prior to the last passed inspection conducted by the Authority or if it was noted on
            the last passed inspection conducted by the Authority and was not corrected.

Comment 2   We did not agree to the Authority’s requests to limit our scope and methodology
            as the Authority has stated in its response to our audit report. As we explained to
            the Authority and its outside attorneys, doing so would have unnecessarily
            restricted our review to a much smaller number of passed inspections (about 900
            passed inspections or only 13 percent of assisted units). In order to more fully
            and objectively evaluate the Authority’s inspection program we selected a random
            sample from a six-month period or approximately 30 percent (2,150 passed
            inspections of about 7,000 assisted units) of units participating in the leased
            housing program. We were conservative in our approach and used our
            professional knowledge, tenant interviews, and the Authority’s latest inspection
            reports in determining whether a housing quality standards violation existed prior
            to the last passed inspection conducted by the Authority or if it was on the last
            passed inspection conducted by the Authority and was not corrected. For
            example, violations such as corroded metal pipes, crumbling concrete steps,
            extensive wood rot, extensive peeling paint and advanced mildew take months to
            develop and were often determined to have existed at the time of the last
            inspection. The photographs shown on pages 7 through 12 of this audit report
            illustrate examples of some of these deficiencies. As stated in the scope and
            methodology section of this audit report, we performed our 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
            objective. We believe that the evidence we obtained provides a reasonable basis
            for our findings and conclusions based on our audit objective.

Comment 3   We selected our sample from those units that passed inspections to be able to
            project, from those units that were found to be acceptable to the Authority’s
            inspectors, how many units it incorrectly passed. We did this because when the
            Authority passes poor units the tenants are negatively impacted. There is no
            negative impact on the tenants if the Authority properly fails units that should in
            fact fail. We commend the Authority for failing the units it did, but if all units are


                                              37
             not adequately inspected, the overall program is not adequate and we are required
             to report this deficiency.

Comment 4 We applaud the Authority for hiring a consultant to reexamine these violations
          and ultimately for taking corrective action as reported in the executive director’s
          cover letter. We are perplexed by many of the cited conclusions of its consultant
          however, because the consultant’s own inspection results provided further
          compelling evidence to corroborate much of our audit conclusions. After we
          conducted our inspections, the Authority had its consultant review all of our
          results and inspect 64 of the same 66 units we had previously inspected. The
          consultant’s inspection results showed that 59 units, or 92 percent, failed showing
          little discrepancy between the contractor’s and our strict interpretation of the
          housing quality standards. We may not have agreed in all interpretations but we
          had roughly the same results.

Comment 5    Our report results reflect consistent application of the criteria. Where differences
             may occur on the individual inspection sheets, our final results are consistent. In
             some instances circumstances dictated increasing a routine failure to a 24-hour
             violation.

Comment 6    We did not assert that all of the violations identified were required to be corrected
             in 24 hours. However, the severity and frequency of 607 violations at 53 units in
             our judgment could adversely affect the safety of the tenants. It is also important
             to note that 40 of these 53 units did in fact have at least one violation that posed
             an immediate threat to the health and safety of the tenants. We immediately
             notified the Authority about each of these 24-hour health and safety issues so that
             it could ensure that they were corrected.

Comment 7    We were conservative in our approach and used our professional knowledge,
             tenant interviews, and the Authority’s latest inspection reports in determining
             whether a housing quality standards violation existed prior to the last passed
             inspection conducted by the Authority or if it was on the last passed inspection
             conducted by the Authority and was not corrected. For example, violations such
             as corroded metal pipes, crumbling concrete steps, extensive wood rot, extensive
             peeling paint and advanced mildew take months to develop and were often
             determined to have existed at the time of the last inspection. We were very
             conservative in our approach and we believe that the evidence we obtained
             provides a reasonable basis for our findings and conclusions based on our audit
             objective. To support our conclusions, we provided copies of all our inspection
             reports and the related photographs to the Authority during the audit.

Comment 8    The Authority’s quality control procedures state that within weeks of quality
             control inspection the housing inspector supervisor is to meet with each inspector
             to discuss any discrepancies between the original inspection and the quality
             control inspection. Documented notes of this meeting are to be added to the
             inspector’s quality control file. The Authority could not provide any evidence


                                              38
              that it followed these procedures. The Authority provided five quality control
              inspection reports on November 14, 2008, after we issued the draft audit report.
              However, this did not provide reasonable assurance that the inspectors were
              receiving appropriate feedback and training according to the Authority’s
              developed procedures.

Comment 9     We chose not to request repayment of housing assistance payments and
              administrative fees on every unit where the Authority missed a housing quality
              standards violation. Instead, we took a more conservative approach and used our
              judgment to require repayment on those units with preexisting deficiencies
              significant enough that we determined they could cause harm to the tenants. As
              explained above, our sample was in accordance with generally accepted
              government auditing standards.

Comment 10 We are encouraged by the Authority’s statement that it is always interested in
           improving its procedures. We attempted to obtain further details on any recent
           improvements it had made and were able to report that the Authority hired a
           consultant in March 2008 to perform a minimum of 2,000 inspections and quality
           control inspections and to develop and implement a quality control program that
           considers and incorporates our recommendations and exceeds the minimum
           standards required by HUD for all inspections conducted on a monthly basis.
           Additionally, we learned that after the audit, citing safety concerns, the Authority
           removed 374 properties from its approved Section 8 housing list. We also learned
           it planned to take other steps to improve its program such as mandatory meetings
           to educate landlords about safety requirements, new education and training for its
           staff and inspectors, and the creation of a reporting hotline for residents with
           problems with their homes. We applaud the Authority for these efforts.

Comment 11 Although we are encouraged by the fact that the Authority asserts that it has taken
           corrective action on this recommendation we disagree that the Authority was
           already in compliance with HUD requirements.

Comment 12 We disagree with the consultant’s assertion that a malfunctioning stove burner is a
           routine failure. HUD’s Housing Choice Voucher Guidebook 7420.10G, states
           that the oven must heat and all burners on the stove or range must work. If a
           tenant turns on a burner and it doesn’t ignite properly escaping gas could cause an
           explosion and fire and possible injury or death to the tenants. We reported these
           items as exigent 24-hour violations to the Authority for immediate correction.
           We are concerned however, that the Authority is apparently accepting this
           improper guidance from its consultant on this serious violation.

Comment 13 There is no evidence to suggest that we have been inconsistent or exceeded
           housing quality standards or that the process improvements recommended as a
           result of our audits will in any way reduce program participation as implied by the
           Authority. Rather these process improvements simply help ensure program
           participants live in decent, safe, and sanitary housing.


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Comment 14 We disagree with the consultant’s assertion that an opened ground outlet is not a
           violation of HUD’s housing quality standards. The regulations at 24 CFR
           982.401(f)(2), when referring to outlets in both sections (ii) and (iii), specifically
           state that outlets must be in proper operating condition. Further, section 10.3 of
           HUD’s Housing Choice Voucher Program Guidebook 7420.10G, discusses
           acceptability criteria for each of 13 housing quality standards performance
           requirements. The acceptability criteria for illumination and electricity
           performance requirements states in part that the public housing agency must be
           satisfied that the electrical system is free of hazardous conditions, including
           improper insulation or grounding of any component of the system. If outlets are
           not functioning as designed they are a potential hazard. For example, tenants
           would have a false sense of security when using electrical appliances by a sink if
           a ground circuit fault interrupter (GFCI) outlet was installed but not working. The
           GFCI is designed to protect people from severe or fatal electric shocks.

Comment 15 In the units we cited, health and safety hazards existed because there were four
           steps; the elevation was more than 30 inches, and the handrails were either
           missing, very loose, or were not the correct heights presenting a safety risk,
           especially to small children living in the units.

Comment 16 We disagree with the consultant’s assertion. When we determined that a specific
           refrigerator door seal was substantially cracked and deteriorated, we reasonably
           concluded the refrigerator was unable to maintain the proper interior temperature.
           HUD’s Housing Choice Voucher Guidebook 7420.10G, section 10.3, states that
           the refrigerator must be of adequate size for the family and capable of maintaining
           a temperature low enough to keep food from spoiling. The guidebook includes an
           example for clarification which states the refrigerator must be able to maintain
           temperature above 32° F, but generally below 40° F to keep food from spoiling.
           The guidebook further states that proper temperatures are difficult to maintain if
           door seals are removed or broken.

Comment 17 The regulations at 24 CFR 982.401(f)(2) state that ceilings, walls, and floors must
           not have any serious defects such as severe bulging or leaning, large holes, loose
           surface materials, severe buckling, missing parts, or other serious damage. We
           reported these violations only in a limited number of instances and when they
           were serious enough to warrant it. For example, the cabinets without knobs or
           pulls that we found were not designed to operate without knobs or pulls and were
           missing key parts needed to function properly. Additionally, we found damage
           where towel bars, closet doors, and toilet paper holders were previously installed
           and a defective toilet seat that created potential safety hazards. The painted
           outlets were not working properly.

Comment 18 We disagree with the consultant’s assertion. According to HUD’s Housing
           Choice Voucher Guidebook 7420.10G, windows and doors must adequately
           protect the unit’s interior from weather. We determined that the windows and
           doors we reported as violations did not adequately protect the tenant from the
           weather.

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Comment 19 We disagree with the consultant’s assertion. According to HUD’s Housing
           Choice Voucher Guidebook 7420.10G, the condition and equipment of interior
           and exterior stairs, halls, porches, and walkways must not present the danger of
           tripping and falling. Together with our certified HUD inspector, we determined
           that the cracked and uneven basement slab we observed was a tripping hazard for
           the tenant.




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