oversight

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)

                                                                  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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