oversight

The Housing Authority of the City of Annapolis, Maryland, Did Not Comply with HUD and State of Maryland Lead-Based Paint Requirements in a Timely Manner

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-03-06.

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

                                                                 Issue Date
                                                                       March 6, 2009
                                                                 Audit Report Number
                                                                       2009-PH-1006




TO:        William D. Tamburrino, Director, Baltimore Public Housing Program Hub,
            3BPH



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

SUBJECT: The Housing Authority of the City of Annapolis, Maryland, Did Not Comply
          with HUD and State of Maryland Lead-Based Paint Requirements in a Timely
          Manner


                                   HIGHLIGHTS

 What We Audited and Why

             We audited the Housing Authority of the City of Annapolis’ (Authority)
             management of lead-based paint in its public housing units in response to a citizen
             complaint. Our audit objective was to determine whether the Authority complied
             with U.S. Department of Housing and Urban Development (HUD) and State of
             Maryland (State) requirements for inspecting and abating lead-based paint
             hazards in its public housing units.

 What We Found


             The Authority did not comply with HUD and State lead-based paint requirements
             in a timely manner. HUD regulations required the Authority to complete lead-
             based paint inspections by September 15, 2000, and risk assessments by
             March 15, 2002, for all of its public housing units. The Authority did not comply
             with these requirements until April 2004. Further, it did not comply in a timely
             manner with the terms of an agreement with the Maryland Department of the
           Environment obligating it to comply with State lead paint requirements by
           February 2007. On December 31, 2008, the Authority submitted documentation
           to the State as evidence of its compliance with the agreement and the State’s lead
           paint requirements.

What We Recommend


           We recommend that the director of HUD’s Baltimore public housing program hub
           ensure that the documentation the Authority provided to the State in December
           2008 brought the Authority into compliance with State lead paint laws and if it
           did not, reemphasize to the Authority its obligation to comply with the State lead
           paint laws. We also recommend that HUD direct the Authority to develop and
           implement a written policy and procedures for its ongoing maintenance and
           reevaluation program for units with lead-based paint, including maintaining
           supporting documentation.

           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 and HUD officials throughout the
           audit and at an exit conference on February 25, 2009. The Authority provided
           written comments to our draft report on March 3, 2009. The Authority agreed
           with the conclusions in the report. The complete text of the Authority’s response
           can be found in appendix A of this report.




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                          TABLE OF CONTENTS

Background and Objective                                                        4

Results of Audit
      Finding : The Authority Did Not Comply with HUD and State Lead-Based Paint 5
      Requirements in a Timely Manner

Scope and Methodology                                                           9

Internal Controls                                                               10

Appendix

   A. Auditee Comments                                                          12




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                       BACKGROUND AND OBJECTIVE

The Housing Authority of the City of Annapolis (Authority) was founded in 1937 to provide
affordable housing in Annapolis for families who lack the means to purchase or rent housing at
market prices. The Authority’s mission is to achieve excellence in the housing industry by
providing housing opportunities, opportunities for self-sufficiency, and customer satisfaction to
enhance the quality of life for very low-, low-, and moderate-income residents. The Authority is
an independent agency under the direction of a board of commissioners appointed by the mayor.
The chairman of the Authority’s board of commissioners is Howard Pinskey, and the Authority’s
executive director is Eric Brown. The Authority currently owns residential properties with 1,100
family units, housing approximately 3,000 individuals, and currently employs approximately 60
people. Its main administrative office is located at 1217 Madison Street, Annapolis, Maryland.

Regulations at 24 CFR [Code of Federal Regulations] Part 35, Subpart L, contain the procedures
for eliminating, as far as practicable, lead-based paint hazards in public housing owned by the
U.S. Department of Housing and Urban Development (HUD). HUD’s Guidelines for the
Evaluation and Control of Lead-Based Paint Hazards in Housing provide detailed,
comprehensive, technical information on how to identify lead-based paint hazards in housing and
how to control such hazards safely and efficiently. HUD regulations at 24 CFR 35.150 state that
the Authority is not relieved of any responsibility for compliance with state laws, ordinances,
codes, or regulations governing lead paint evaluation and hazard reduction.

Title 26, Code of Maryland Regulation, Department of the Environment, Subtitle 16 – LEAD,
explains the requirements for accreditation and training for lead paint abatement services,
reduction of lead risk in housing, and performing lead abatement services.

Annotated Code of Maryland, Environment Article, Title 6, Subtitle 8, Reduction of Lead Risk
in Housing, governs the reduction of lead risk in Maryland housing. The subtitle provides
detailed, comprehensive, technical information on how to identify lead-based paint hazards in
Maryland housing and how to control such hazards safely and efficiently.

On April 23, 2004, the Authority entered into an agreement with the Maryland Department of the
Environment to address issues related to its noncompliance with State laws governing lead-based
paint in its public housing developments. The agreement was created because the Authority had not
complied with Maryland lead-based paint laws during a State compliance audit in 2003. The
agreement required the Authority to register its public housing properties with the Maryland
Department of the Environment and obtain full risk reduction, limited lead-free, or lead-free
certificates for units in its properties, using accredited contractors and inspectors, by February 1,
2007.

Our audit objective was to determine whether the Authority complied with HUD and State
requirements for inspecting and abating lead-based paint hazards in its public housing units.




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                               RESULTS OF AUDIT

Finding: The Authority Did Not Comply with HUD and State Lead-
Based Paint Requirements in a Timely Manner
The Authority did not meet deadlines for complying with HUD and State lead-based paint
requirements. We could not determine why the Authority failed to comply with the requirements
because the responsible employees no longer worked for the Authority and it had no
documentation to explain the reasons for its noncompliance. Although the Authority failed to
meet prescribed deadlines, it complied with HUD requirements by April 2004 and submitted
documentation to the State on December 31, 2008, as evidence of its compliance with the State’s
requirements.



 The Authority Did Not Comply
 with HUD Requirements in a
 Timely Manner

              The Authority did not meet deadlines for complying with HUD lead-based paint
              requirements. HUD regulations at 24 CFR Part 35, Subpart L, contain the
              procedures for eliminating, as far as practicable, lead-based paint hazards in
              HUD-assisted public housing. The regulation required the Authority to complete
              lead-based paint inspections in its public housing properties by September 15,
              2000, and risk assessments on its public housing properties by March 15, 2002.
              The Authority did not comply with these requirements. We could not determine
              why the Authority failed to comply with the requirements because the responsible
              employees no longer worked for the Authority and the Authority had no
              documentation to explain the reason for its noncompliance.

              The Authority complied with HUD lead-based paint requirements in April 2004.
              It hired a certified lead paint inspection contractor in February 2004 to conduct
              lead-based paint inspections and evaluations in the Authority’s nine public
              housing properties in accordance with chapters 5 and 7 of HUD’s Guidelines for
              the Evaluation and Control of Lead-Based Paint Hazards in Housing. The
              guidelines do not require the Authority to inspect every unit. Rather, they allow
              the Authority to inspect a sample of them. This procedure is less time consuming
              and more cost effective than inspecting all of the units in a given housing
              development. The number of units tested is based on the date of construction and
              the number of units in the development. The contractor completed 275 inspection
              and assessment reports in March and April 2004. We reviewed the 275 inspection
              and assessment reports that the contractor completed and verified that




                                              5
                  The sample of 275 inspections completed by the certified lead paint
                  inspection contractor was appropriate, given the age and size of the
                  developments, in accordance with chapter 7 of the HUD guidelines;
                  The contractor determined that there was lead-based paint at seven of the
                  nine developments but that only one development had lead-based paint
                  levels above the HUD standard for lead-based paint;
                  Based on the initial inspection results, the contractor performed
                  comprehensive inspections of 105 of the 108 units at the development
                  with elevated lead-based paint levels in February 2005, including a
                  reinspection of the 45 units inspected as part of the sample of 275, and
                  issued full risk reduction certificates;
                  The contractor was certified as a lead paint inspection contractor in the
                  State as required by chapter 7 of the HUD guidelines;
                  The final risk assessment reports were formatted in accordance with chapter
                  5 of the HUD guidelines; and
                  The contractor issued risk reduction, limited lead-free, or lead-free
                  certificates in accordance with State code for all occupied units that it
                  inspected.

           HUD regulations at 24 CFR 35.1355 require the Authority to perform lead-based
           paint maintenance and reevaluation activities for units and common areas and on
           exterior surfaces if a lead-based paint inspection indicates that lead-based paint is
           present. In that regard, the Authority informed us that it had instituted a policy
           that upon vacancy, before a unit is leased to another tenant, the Authority would
           perform a visual inspection of the unit and then schedule an assessment by the
           certified lead-based paint contractor. Further, the certified lead-based paint
           contractor provided lead-based paint training to the Authority’s 17 employees
           responsible for managing and monitoring its lead-based paint program. However,
           the Authority had not established its maintenance and reevaluation policy in a
           written document, and it provided limited documentation to demonstrate that it had
           performed the visual inspections and assessments by the lead-based paint contractor
           as it stated. To improve controls and ensure that it meets HUD requirements, the
           Authority needs to develop a written policy and implement procedures for the
           ongoing reevaluation of its units with lead-based paint, including maintaining
           supporting documentation.

The Authority Did Not Comply
with State Lead-Based Paint
Requirements in a Timely
Manner

           In 2003, the Maryland Department of the Environment conducted a compliance
           audit of the Authority’s public housing properties and determined that the Authority
           did not comply with State lead-based paint laws. HUD regulations at 24 CFR
           35.150 state that the Authority is not relieved of any responsibility for compliance

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             with state laws, ordinances, codes or regulations governing lead paint evaluation
             and hazard reduction. HUD had not issued the Authority a waiver to this
             requirement. We could not determine why the Authority failed to comply with
             the State laws because the responsible employees no longer worked for the
             Authority and it had no documentation to explain the reason for its
             noncompliance. As a result, in April 2004, the Authority entered into an agreement
             with the Maryland Department of the Environment to comply with State
             requirements to register and obtain full risk reduction, limited lead-free, or lead-free
             certificates by February 1, 2007, using accredited contractors and inspectors, for
             units in its nine public housing developments. HUD regulations do not require the
             registration and certificates. The Authority failed to comply with the terms of the
             agreement. As of July 2008, the Authority had registered units and obtained full risk
             reduction, limited lead-free, or lead-free certificates, using accredited contractors and
             inspectors, for only seven of its nine public housing developments. This
             noncompliance occurred because the Authority lacked effective leadership.
             Specifically, it operated without an executive director from January to June 2004,
             changed executive directors in April and September 2005, and experienced
             turnover in other managerial positions as well. On July 15, 2008, the Maryland
             Department of the Environment obtained a court order requiring the Authority to
             comply with the terms of the 2004 agreement for the remaining two properties by
             December 31, 2008. On December 31, 2008, the Authority submitted its response
             to the court order, including certifications for the units at one development and a
             statement that it planned to demolish the units at the other development beginning
             in March 2009 as evidence of its compliance with the court order.


Conclusion


             The Authority did not comply with HUD and State lead-based paint requirements
             in a timely manner. Although it failed to meet prescribed deadlines for
             compliance, it complied with HUD requirements by April 2004 and submitted
             documentation to the State as evidence of its compliance with the State’s
             requirements in December 2008. To improve controls, the Authority needs to
             develop and implement a written policy and procedures to ensure that it meets HUD
             requirements for ongoing maintenance and reevaluation of units with lead-based
             paint, including maintaining supporting documentation.




                                                7
Recommendations



          We recommend that the director of HUD’s Baltimore public housing program hub

          1A.     Ensure that the documentation the Authority provided to the State in
                  December 2008 brought the Authority into compliance with State lead
                  paint laws and if it did not, reemphasize to the Authority its obligation to
                  comply with the State lead paint laws.

          1B.     Direct the Authority to develop and implement a written policy and
                  procedures for its ongoing maintenance and reevaluation program for units
                  with lead-based paint, including maintaining supporting documentation.




                                            8
                        SCOPE AND METHODOLOGY

To accomplish our objective, we reviewed

       HUD regulations at 24 CFR Part 35 and its Guidelines for the Evaluation and Control of
       Lead-Based Paint Hazards in Housing.

       The Code of Maryland Regulations, Title 26, Department of the Environment, Subtitle 16 –
       LEAD.

       The Annotated Code of Maryland; Title 6 - Toxic, Carcinogenic, and Flammable
       Substances; Subtitle 8 - Reduction of Lead Risk in Housing.

       The Authority’s April 23, 2004, agreement with the Maryland Department of the
       Environment.

       The July 15, 2008, order from the U.S. Circuit Court for Anne Arundel County.

       The Authority’s administrative plan; accounting records; annual audited financial statements
       for the fiscal years ending June 30, 2005, 2006, and 2007; tenant files; policies and
       procedures; board meeting minutes; and organizational chart.

       275 inspection and assessment reports completed by the Authority’s certified lead paint
       inspection contractor in March and April 2004 to determine whether the lead-based paint
       inspections and evaluations complied with HUD requirements.

We interviewed the director of HUD’s Baltimore public housing program hub, as well as hub
managers and staff; an attorney from the Maryland Office of the Attorney General representing the
Maryland Department of the Environment; the Authority’s executive director, senior managers, and
maintenance staff; and the Authority’s certified lead paint inspection contractor.

We performed our on-site audit work in October 2008 at the Authority’s office located at 1217
Madison Street, Annapolis, Maryland. The audit covered the period January 2004 through August
2008. We expanded the scope of the audit as necessary.

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




                                                9
                              INTERNAL CONTROLS

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

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

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



 Relevant Internal Controls


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

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

                      Relevance and reliability of information – 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 applicable laws and regulations – Policies and
                      procedures that management has implemented to reasonably ensure that
                      resource use is consistent with laws and regulations.

                      Safeguarding of assets and resources – Policies and procedures that
                      management has implemented to reasonably ensure that assets and
                      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.



                                               10
Significant Weaknesses


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

               The Authority did not develop and implement a written policy and procedures to
               ensure that it met HUD requirements for ongoing maintenance and reevaluation
               of units with lead-based paint.




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                 APPENDIX

Appendix A

             AUDITEE COMMENTS




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