Issue Date
December 17, 2009
Audit Report Number
2010-BO-1003
TO: Donna J. Ayala, Director, Office of Public Housing, Boston Hub, 1APH
FROM: for John A. Dvorak, Regional Inspector General for Audit, Boston Region,
1AGA
SUBJECT: The State of Massachusetts, Department of Housing and Community
Development, Boston, MA Properly Administered Its Section 8 Project-
Based Voucher Program
HIGHLIGHTS
What We Audited and Why
We audited the Section 8 Project-Based Voucher program operated by the State of
Massachusetts, Department of Housing and Community Development (DHCD),
as part of our annual audit plan.
Our objective was to determine whether the DHCD properly administered its
Project-Based Voucher program in compliance with U.S. Department of Housing
and Urban Development (HUD) requirements.
What We Found
The DHCD generally administered its program in compliance with HUD
requirements. Our audit testing determined that the DHCD’s contracts with
administering agencies were properly administered, tenants were eligible
participants, and the rental units were eligible under the program. In addition,
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tenant rental and housing assistance payments were calculated correctly, rental
units were inspected for compliance with housing quality standards, and the
DHCD sufficiently monitored its administering agencies.
What We Recommend
This report contains no recommendations, and no action is necessary
Auditee’s Response
An exit conference was held with the DHCD on December 9, 2009. This report
did not require a response from the auditee.
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TABLE OF CONTENTS
Background and Objective 4
Results of Audit 6
Scope and Methodology 9
Internal Controls 10
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BACKGROUND AND OBJECTIVES
The Department of Housing and Community Development (DHCD) is a department of the State
of Massachusetts. Its mission is to strengthen cities, towns, and neighborhoods to enhance the
quality of life of Massachusetts residents. The DHCD operates 55 different programs to promote
(1) safe, decent, and affordable housing opportunities; (2) the economic vitality of communities;
and (3) sound municipal management. Our audit focused on the Section 8 Project-Based
Voucher program, which was operated by the DHCD’s Bureau of Rental Assistance.
The DHCD operates a Housing Choice Voucher program with more than 18,000 units governed
by an annual contributions contract and Moving to Work Demonstration program agreement.
The Section 8 Housing Choice Voucher program allows public housing authorities, such as the
DHCD, to use 20 percent of their annual contributions contract for housing assistance payment
contracts with third parties to provide funding for units in specific buildings. When this type of
housing assistance payment is tied to a specific building, the associated vouchers are called
project-based vouchers. Project-based vouchers are a subset of Housing Choice Voucher
program. The DHCD received Section 8 Housing Choice Voucher program funding totaling
more than $635 million during the period July 1, 2006, to June 30, 2009, of which it could have
used up to 20 percent, or $127 million, for project-based vouchers. The DHCD oversees the
management of 717 project-based vouchers.
Generally, tenant-based vouchers allow very low-income families to lease safe, decent, and
affordable privately owned rental housing. Project-based vouchers, as a general rule, follow the
same regulations as those for the Housing Choice Voucher program. Under the Project-Based
Voucher program, a public housing agency (such as the DHCD) may use amounts provided
under an annual contributions contract for the Housing Choice Voucher program to enter into a
housing assistance payments contract that is assigned to a particular project or building. Tenant-
based vouchers, by contrast, are assigned to a family and stay with the family should it move to
another apartment.
While project-based vouchers are a subset of the Housing Choice Voucher program, there are
differences between the two voucher types. Some of these differences are
• Provisions on issuance or use of a voucher. A project-based voucher may only be used at
the assigned project.
• Provisions on portability. Project-based vouchers are not portable and remain with the
project, not with the family should it move to an apartment in another project. However,
tenant families in good standing may apply for a standard (tenant-based) voucher after
completing 1 year with the project-based voucher.
• Project-based vouchers are not to be used in shared housing, cooperative housing,
manufactured home space rental, or the homeownership option of the program.
Our primary objective was to determine whether the DHCD operated its Section 8 Project-
Based Voucher program in an efficient and effective manner and in accordance with HUD
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guidelines and requirements. Specifically, we concentrated on examining the DHCD’s
operating environment and controls over operations for the program.
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RESULTS OF AUDIT
The DHCD generally administered the Section 8 Project-Based Voucher program in compliance
with HUD’s requirements. Our review did not identify any significant deficiencies in the areas
of contracts with administering agencies, eligibility of units, eligibility of tenants, the calculation
of tenant rent and housing assistance payments, the inspection of units to ensure compliance with
housing quality standards, or the monitoring of its regional administering agencies.
The Program’s Budget
Authority Was Limited
Under the Section 8 Project-Based Voucher program, authority for the program is
limited to 20 percent of the amount of budget authority in the Section 8 tenant-
based program. Congressional funding provides HUD authority for the Section 8
tenant-based program. HUD uses a formula to assign budget authority to each
housing authority, such as the DHCD (for the Commonwealth of Massachusetts).
The DHCD complied with this requirement by correctly limiting the number of
project-based vouchers each year although the budget authority changed each
year.
The DHCD Used Regional
Administering Agencies
The DHCD used nine regional administering agencies to administer its project-
based vouchers. Each agency managed the Section 8 tenancy in a specific
geographic area within the State. Each agency had a contract with DHCD that
specified its duties and responsibilities, and that incorporated 24 CFR (Code of
Federal Regulations), Part 982 Section 8 tenant-based assistance, the Housing
Choice Voucher program, and the 24 CFR Part 983 Project-Based Voucher
program as criteria for administering the vouchers. These agencies confirmed the
eligibility of tenants, calculated housing assistance payments, and ensured that
housing quality standards were met. The authorized units in the contracts
represented all housing choice vouchers including the subset of the project-based
vouchers. We examined the contracts for the nine regional administering
agencies, and each contract had a defined scope, defined geographic locations,
and a defined period. The authorized units in each contract represented all
housing choice vouchers, and the project-based vouchers did not follow separate
requirements.
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The DHCD Provided Assistance
for Eligible Units
We verified that the DHCD did not provide Project-Based Voucher program
assistance for ineligible units. Projects generally went through several reviews
because the projects generally received multiple sources of funds and the project
was required to meet multiple groups of criteria.
Tenants Were Eligible and
Rents Were Correctly
Calculated
We examined a random sample of 12 tenant families at three of the administering
agencies. The sample tenant files contained sufficient and relevant evidence to
support the eligibility of families and the calculation of the family’s portion of the
rent and applicable housing assistance payment.
Housing Quality Standards
Were Maintained
Housing quality standards identify performance and acceptability criteria for these
key aspects of housing quality:
• Sanitary facilities,
• Food preparation and refuse disposal,
• Space and security,
• Thermal environment,
• Illumination and electricity,
• Structure and materials,
• Interior air quality,
• Water supply,
• Lead-based paint,
• Access,
• Site and neighborhood,
• Sanitary condition, and
• Smoke detectors.
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For our sample tenant families, we confirmed that the units were appropriately
inspected by qualified personnel to ensure that the units met housing quality
standards. Units were inspected before the tenancy and annually thereafter.
Contract Administrators Were
Properly Monitored
The DHCD monitored the performance of its administering agencies through
review of the Voucher Management System and Public Housing Information
Center delinquency reports. These reviews included the use of funding, leasing of
units, and evaluation of inspection reports. Some of the agencies owned the
properties that they administered. When the agency owned the property, the
DHCD required the agency to hire a third party to conduct the inspections for
housing quality standards. When the DHCD had concerns with the performance
of an agency, the DHCD took action to ensure that performance was improved to
an acceptable level.
Conclusion
Our review found no significant deficiencies with the operations of project-based
vouchers at the DHCD.
Recommendations
There are no recommendations based on our review, and no action is necessary.
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SCOPE AND METHODOLOGY
We performed an audit of the Project-Based Voucher program, a subset of the Housing Choice
Voucher program, operated by the DHCD. Our fieldwork was completed at the DHCD’s offices at
100 Cambridge Street, Boston, MA, and at three contract agencies’ offices: (1) Community
Teamwork, Inc. at 167 Dutton Street, Lowell, MA, (2) South Shore Housing Development
Corporation, 169 Summer Street, Kingston MA and (3) HAP, Inc, 322 Main Street, Springfield
MA. Our audit generally covered the period July 1, 2006, to June 30, 2009. To accomplish our
audit objective, we
• Reviewed applicable enabling legislation, Code of Federal Regulations, Federal Register
Notices, Public and Indian Housing Handbooks, Public and Indian Housing Notices.
• Reviewed the DHCD’s administration plan, Moving-to-Work agreements, annual financial
statements and HUD monitoring reports to gain an understanding of the DHCD’s program
financial resources, operational environment, and internal controls.
• Reviewed standard reports from the Voucher Management System, Public Housing
Information Center, and the Line of Credit Control Subsystem to gain an understanding of
the DHCD’s program financial resources, voucher usage, and operational environment.
• Evaluated the internal controls and conducted tests to determine whether specific controls
were functioning as intended.
• Interviewed key personnel at the DHCD and at three administering agencies for procedures,
patterns, and performance
• Reviewed applicable land records from the sample counties in Massachusetts to determine
ownership of apartments that received project based vouchers.
• Tested a random sample of 12 tenant families for eligibility of families, calculation of
housing assistance payments, and HQS inspection of units. These 12 families received
$30,243 in housing assistance payments during our audit period. The total amount of
housing assistance payments to the department for the Housing Choice Voucher Program
during this period was $635,068,834.
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.
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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
objective:
• Properly administering contracts with administering agencies,
• Ensuring that tenants and rental units were eligible,
• Correctly calculating tenant rent and housing assistance payments,
• Ensuring that minimum housing quality standards were met, and
• Properly monitoring the performance of contract program administrators.
We assessed the relevant controls identified above.
A significant weakness exists if management controls do not provide reasonable
assurance that the process for planning, organizing, directing, and controlling
program operations will meet the organization’s objectives.
Significant Weaknesses
Based on our review, we did not identify any significant internal control weaknesses.
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The State of Massachusetts, Department of Housing and Community Development, Boston, MA Properly Administered Its Section 8 Project Based Voucher Program
Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-12-17.
Below is a raw (and likely hideous) rendition of the original report. (PDF)