oversight

The Housing Authority of the City and County of San Francisco, CA, Did Not Effectively Operate Its Housing Choice Voucher Housing Quality Standards Inspections

Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-08-31.

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

                                                                    Issue Date
                                                                            August 31, 2010
                                                                    Audit Report Number
                                                                             2010-LA-1015




TO:         Stephen Schneller, Director, San Francisco Office of Public Housing, 9APH



FROM:       Tanya E. Schulze, Regional Inspector General for Audit, Region IX, 9DGA

SUBJECT: The Housing Authority of the City and County of San Francisco, CA, Did Not
         Effectively Operate Its Housing Choice Voucher Housing Quality Standards
         Inspections

                                     HIGHLIGHTS

 What We Audited and Why

      We audited the Housing Authority of the City and County of San Francisco’s (Authority)
      Section 8 housing quality standards inspections of Housing Choice Voucher program
      (voucher)-funded housing units. We performed the audit of the Authority’s inspection
      practices due to its low Section 8 Management Assessment Program scores, which
      include housing quality standards inspections, for which it had received a score of zero in
      recent years. The objective of the audit was to determine whether the Authority
      conducted its housing quality standards inspections in accordance with U.S. Department
      of Housing and Urban Development (HUD) rules and regulations.


 What We Found

      The Authority did not conduct its housing quality standards inspections of voucher-
      funded housing units in accordance with HUD rules and regulations. Of the 65 housing
      units statistically selected for inspection, 58 did not meet housing quality standards, and
      46 of those units had material deficiencies. Based on our sample, we estimate that over
     the next year, HUD will pay more than $11.4 million in housing assistance for housing
     units with material housing quality standards deficiencies.


What We Recommend

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

        •   Repay HUD $279,136 in expended housing assistance payments for housing units
            that were deemed materially deficient;
        •   Establish and implement policies, procedures, and controls regarding its
            inspection process to prevent more than $11.4 million in HUD funds from being
            spent on housing units with material housing quality standards deficiencies; and
        •   Verify that the applicable owners have taken appropriate corrective action
            regarding the housing quality standards deficiencies identified during our
            inspections or take enforcement action.

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

Auditee’s Response


     We provided a draft report on August 5, 2010, and held an exit conference with Authority
     officials on August 13, 2010. The Authority provided its written comments on August
     20, 2010. It generally agreed with our 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 Objective                                                 4

Results of Audit
        Finding: Voucher-Funded Housing Units Did Not                    5
                  Meet Housing Quality Standards

Scope and Methodology                                                    13

Internal Controls                                                        15

Appendixes

   A.   Schedule of Questioned Costs and Funds To Be Put to Better Use   17
   B.   Auditee Comments and OIG’s Evaluation                            18
   C.   Schedule of Ineligible Housing Units                             24
   D.   Schedule of Category of Deficiencies                             26
   E.   Schedule of OIG Inspection Results
                                                                         27
   F.   Schedule of Housing Units With Unsupported Inspection Reports
   G.   Housing Quality Standards Rules and Regulations                  30
                                                                         31




                                             3
                      BACKGROUND AND OBJECTIVE

The Housing Authority of the City and County of San Francisco (Authority) is a public body
organized in 1938 under the laws of the State of California for the purpose of engaging in the
development, acquisition, leasing, and administration of low-cost housing for individuals
meeting criteria established by the U.S. Department of Housing and Urban Development (HUD).
The Authority is the oldest housing authority in California and the 17th largest public housing
agency in the country. The mission of the Authority is to provide safe, sanitary, affordable, and
decent housing to very low-income families, senior citizens, and persons with disabilities. The
governing body is its board of commissioners, composed of seven members appointed by the
mayor of the City and County of San Francisco (City and County). The mayor has the authority
to appoint the board but not to remove members from office. The board of commissioners
appoints an executive director to lead the Authority’s workforce of more than 358 employees in
various executive, administrative, and craft occupations. In addition, the Authority is fiscally
independent of the City and County and is not considered a component unit of the City and
County as the board independently oversees the Authority’s operations.

In 2009, the Authority owned at least 6,262 public housing units, of which at least 2,027 were
designated for senior/disabled tenants. It also administered at least 7,409 housing choice
vouchers, also known as Section 8 vouchers, and at least 2,521 other federally subsidized
housing assistance vouchers. In 2009, the Authority received more than $90 million in voucher
funding to provide housing assistance to eligible participants seeking affordable housing.

The objective of the audit was to determine whether the Authority conducted its housing quality
standards inspections in accordance with HUD rules and regulations.




                                                4
                                RESULTS OF AUDIT

Finding: Voucher-Funded Housing Units Did Not Meet Housing
               Quality Standards
The Authority did not ensure that its inspection of Housing Choice Voucher program (voucher)-
funded housing units met HUD’s housing quality standards. This condition was due to a lack of
management oversight. There were also inadequate policies, procedures, and controls to ensure
that all voucher-funded housing units met HUD’s housing quality standards. As a result, more
than $279,000 in program funds was spent on housing units that were not decent, safe, and
sanitary. In addition, the Authority spent more than $39,000 in program funds on housing units
that lacked the required inspection reports, showing that inspections had been conducted. Based
on our statistical sample, we estimate that over the next year, if the Authority does not improve
its inspection policies, procedures, and controls, HUD will pay more than $11.4 million in
housing assistance on housing units with material housing quality standards deficiencies.



 HUD’s Housing Quality
 Standards Not Met

       From the 1,255 housing units inspected and passed by the Authority from September 1
       through November 30, 2009, we statistically selected 65 units for inspection by using
       data mining software. We inspected the 65 units to determine whether the voucher-
       funded housing units complied with HUD’s rules and regulations. Our inspections took
       place between January 25 and April 23, 2010.
       Of the 65 housing units inspected, 58 (89 percent) had 516 housing quality standards
       deficiencies, including 352 deficiencies that predated the Authority’s previous
       inspections. Of the 58 units that failed our inspection, 46 had 341 deficiencies considered
       materially noncompliant with HUD’s rules and regulations. Each materially deficient
       housing unit had health and safety deficiencies, with more than two deficiencies that
       predated the Authority’s previous inspections and/or at least one deficiency that would
       have affected household members in the following categories:

           •   Seniors over the age of 65,
           •   Disabled (regardless of age), and
           •   Children under the age of 12.

       As a result, the Authority spent $279,136 in housing assistance payments on 46 units that
       were materially deficient and failed to comply with HUD’s rules and regulations.
       Appendix C details the complete list of associated incurred ineligible costs.



                                                   5
    The following table categorizes the 10 most common types of deficiencies found among
    the 58 housing units. Appendix D details the complete list of deficiencies found during
    our inspections.

             Categories of deficiencies       Number of        Number of housing
                                              deficiencies       units affected
           Electrical hazards                     108                  45
           Window conditions                       46                  28
           Water heaters                           31                  21
           Security                                31                  21
           Smoke detectors                         30                  23
           Safety of heating equipment             29                  19
           Garbage and debris                      26                  18
           Stove or range with oven                22                  14
           Wall conditions                         18                  13
           Electricity                             18                   8

    Appendix E details the results of our inspections and the issues found in each of the
    housing units.


Types of Deficiencies


    The following are examples of some of the types of deficiencies found during our
    inspections.
                                          Electrical Hazards
    We identified 108 electrical deficiencies in 45 housing units inspected. Examples of
    electrical deficiencies included inoperative or missing ground fault circuit interrupters
    (GFCI) in updated or remodeled bathrooms and kitchens, reversed polarity in electrical
    outlets, and exposed wiring. The following pictures are examples of electrical
    deficiencies found in the housing units inspected.




                                              6
  Missing GFCI outlet in updated bathroom of housing unit.   Reversed electrical polarity throughout housing unit posing
                                                             potential safety hazards for occupant using electrical items
                                                             such as oxygen machine.

                                                Window Conditions
We identified 46 window condition deficiencies in 28 housing units inspected. Examples
of these deficiencies included windows with missing locks, windows painted shut, and
windows that did not lock properly. The following pictures are examples of window
condition deficiencies found in the housing units inspected.




         Exposed insulation at top of window.                  Affixed window side safety lock not removable hindering
                                                               tenant’s ability to access the adjacent fire escape in the event
                                                               of an emergency.



                                                    Water Heaters
We identified 31 water heater deficiencies in 21 housing units inspected. Examples of
these deficiencies included missing required earthquake straps, improperly blocked
pressure relief valve discharge, gas valves painted shut hampering an individual’s ability
to easily turn on and off the gas in the event of an emergency, and the accumulation of
personal items within close proximity of the water heater. The following pictures are
examples of water heater deficiencies found in the housing units inspected.




                                                        7
     Water heater with improperly blocked pressure relief valve.              Gas valve painted shut hampering the ability to open/close
                                                                              in the event of emergencies.


                                                                   Security
     We identified 31 security deficiencies in 21 housing units inspected. Examples of these
     deficiencies included a fully exposed rear entry that allowed tenants from the lower and
     upper housing units to freely enter the second floor tenant’s housing unit, improper
     hollow door used as a main entry to the housing unit, and missing door striker. The
     following pictures are examples of security deficiencies found in the housing units
     inspected.




        Missing door striker to rear entrance of housing               Missing door to abandoned room located adjacent to occupied
        unit.                                                          housing unit resulting in potential fire and safety hazard.




Inadequate Policies,
Procedures, and Controls

                               Written Inspection Policies and Procedures Lacking

     The Authority did not have established written policies and procedures for inspectors to
     use when conducting inspections to ensure that housing units met required housing

                                                                   8
quality standards. There was a HUD-approved Section 8 voucher administrative plan
with information on housing quality standards inspections; however, Authority
management acknowledged that there were no formal policies and procedures in place for
conducting inspections of voucher-funded housing units. The lack of formal policies and
procedures resulted in a lack of consistency and compliance in conducting housing
quality standards inspections.

                Written Quality Control Policies and Procedures Lacking

The Authority did not have established written quality control policies and procedures in
place when conducting quality control reviews of its housing quality standards
inspections. Authority management acknowledged that there were no formal policies and
procedures in place. The lack of written policies and procedures resulted in the
Authority’s not conducting quality control reviews as required by HUD. This condition
was evident during our review of 11 previous quality control housing quality standards
inspections to determine whether the Authority had conducted its reviews in accordance
with HUD rules and regulations. All 11 of the housing unit inspections that the Authority
conducted quality control reviews had failed our quality control inspections, with more
than 90 deficiencies identified. Eight of these housing units were materially deficient.
Five of the reviews were classified as “no shows” in which tenants were unavailable for
their scheduled inspections. However, there was no documentation to show that the
Authority conducted follow-up reviews.

                     Unreliable Inspection and Quality Control Data

We were not able to determine the data reliability between the Authority’s housing
quality standards inspections and quality control inspections database and the respective
housing quality standards inspections and quality control inspection reports. The
database was not consistent with individual inspection reports and quality control reports.
For example, the Authority’s database had at least 95 housing units with inspection dates
more than one year old. Management stated that the inspections were conducted but the
data were not entered into its computer system. We reviewed of 10 of the 95 inspections
to verify management’s statement that the inspections in question were conducted. The
Authority could not provide us four of the requested inspection reports, while the
remaining six reports showed inspections were conducted. However, the six inspection
reports showed dates that were different than shown in the database.

The Authority also did not maintain accurate and complete quality control records.
Specifically, we requested the quality control log for the period October 1, 2008, to
December 31, 2009. However, the Authority was only able to provide us with records for
October 1 to November 30, 2008, and February 1 to September 30, 2009. The Authority
acknowledged that it could not find the requested documents.




                                         9
                                Missing Inspection Reports

The Authority was unable to provide the most recent 2009 inspection reports for 31 of the
65 (48 percent) housing units. As a result, we were unable to determine whether it had
conducted inspections of the 31 units. In addition, we were unable to determine whether
it had conducted inspections of these housing units within HUD’s required period of 1
year after the previous inspection of the housing units. The Authority acknowledged that
it could not find the requested inspection reports. HUD requires completed and
documented inspections of all voucher-funded housing units during initial move-ins, as
well as on an annual basis afterward. The Authority incurred $39,018 in unsupported
costs for 7 of the 31 housing units’ missing inspection reports.

Appendix F details the complete list of unsupported costs spent on the seven housing
units that were missing inspection reports. The remaining 24 housing units were
considered materially deficient and were determined to be ineligible housing that was not
safe, decent, and sanitary. Appendix C details the complete list of ineligible costs for the
46 housing units that were materially deficient and failed our inspections.

                            Late Inspections of Housing Units

Of the 65 statistically sampled housing quality standards inspections, 13 (20 percent)
were not conducted within HUD’s required period of one year after the previous
inspections. For example, the Authority did not conduct its most recent annual inspection
of a housing unit until 401 days after the previous annual inspection. Therefore, the
Authority was 36 days late (401 actual inspection days minus 365 days required by HUD)
in conducting its required annual inspection of the housing unit. Inspections of voucher-
funded housing units must be conducted within the required period to ensure timely
processing and payment of housing assistance. The Authority must conduct its
inspection within one year of the housing unit’s previous inspection to ensure compliance
with HUD’s rules and regulations.

                          Acknowledgement of Problems
The Authority acknowledged problems associated with its housing quality standards
inspections. It stated that its inspection department was “self-managed” without
requirements or controls. Further, it stated that the prior program manager in charge of
the inspections was part of the problem. Authority management also stated that the
department was not well managed, without tools, policies, procedures, controls, or
oversight in place to ensure that housing quality standards inspections complied with
HUD rules and regulations. The Authority also acknowledged that before January 2010,
“Section 8 and inspections were not a priority,” as it was focusing on other matters such
as settling multiple lawsuits and improving its public housing department. Since January
2010, it had begun implementing corrective actions toward improving the inspections
department. The corrective actions included the hiring of a new program manager; the
drafting and implementation of new policies, procedures, and controls for conducting
inspections and quality control reviews; addressing the deficiencies identified during our


                                         10
    inspections; and conducting inspections training in the areas of local building codes and
    housing quality standards compliance. It should be noted that these corrective actions did
    not occur until we brought these problems to the Authority’s attention.


Conclusion

    The housing quality standards deficiencies existed because the Authority failed to
    exercise proper supervision and oversight of its housing unit inspections. It also lacked
    adequate policies, procedures, and controls to ensure that its housing unit inspections
    complied with HUD’s rules and regulations. The Authority’s failure to comply with
    HUD’s rules and regulations placed tenants as well as HUD funds at significant financial
    and legal risk. In addition, tenants residing in these housing units were subjected to
    potential health- and safety-related deficiencies, and the Authority did not properly use its
    program funds when it failed to ensure that housing units complied with HUD rules and
    regulations. If the Authority implements adequate policies, procedures, and controls
    regarding its housing unit inspections to ensure compliance with HUD’s rules and
    regulations, we estimate that more than $11.4 million in future housing assistance
    payments will be spent on housing units that are decent, safe, and sanitary. Our
    calculation for this estimate is explained in the Scope and Methodology section of this
    report.

  Recommendations

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

    1A. Certify that the applicable property owners have taken appropriate corrective action
        for the housing quality standards deficiencies identified during our inspections or
        take enforcement action. If appropriate actions are not taken, the Authority should
        abate the rents or terminate the housing assistance payments contracts with the
        noncompliant property owners.

    1B. Repay HUD $279,136 from non-Federal funds for the 46 housing units that
        materially failed to comply with HUD’s rules and regulations.

    1C. Provide support, in the form of an inspection report, showing that it conducted
        inspections for the seven housing units with missing inspection reports or repay
        HUD $39,018 from non-Federal funds.

    1D. Ensure that all inspections and quality control reviews are conducted and completed
        within the required period in accordance with HUD rules and regulations. These
        inspections and quality control reviews should be accurate, complete, and
        documented in accordance with HUD rules and regulations.


                                             11
1E. Establish and implement an adequate record-keeping system for all inspections and
    quality control reviews to ensure accurate, consistent, and complete documentation
    in accordance with HUD rules and regulations.

1F. Establish and implement adequate written policies, procedures, and controls
    regarding its inspections to ensure that all housing units comply with applicable
    HUD rules and regulations and ensure that inspectors follow the same process for all
    types of inspections to prevent more than $11,420,400 in program funds from being
    spent on housing units that are in material noncompliance with the HUD rules and
    regulations.

1G. Establish and implement adequate written policies, procedures, and controls
    regarding its quality control, including but not limited to proper follow-up
    procedures for failed quality control inspections and written guidelines for corrective
    action for inspectors who repeatedly overlook deficiencies.

1H. Ensure that all inspections personnel have the necessary training, knowledge, and
    equipment to ensure that inspections and quality control reviews are conducted in
    accordance with HUD rules and regulations.
1I. Seek technical assistance from HUD’s San Francisco Office of Public Housing in
    addressing the above-mentioned recommendations and ensuring compliance with
    HUD rules and regulations.




                                        12
                        SCOPE AND METHODOLOGY

We performed onsite work at the Authority's main office at 440 Turk Street, San Francisco, CA,
from December 1, 2009, to April 23, 2010. We reviewed the Authority’s Section 8 housing
quality standards inspections of voucher-funded housing units during the period October 1, 2008,
to November 30, 2009, and expanded to other periods as needed.

To accomplish the audit objective, we

   •   Reviewed applicable HUD rules, regulations, and guidance.
   •   Obtained relevant background information pertaining to the Authority.
   •   Reviewed Authority policies and procedures related to housing quality standards
       inspections.
   •   Interviewed relevant Authority and HUD personnel.
   •   Reviewed relevant HUD monitoring/reporting records.
   •   Conducted onsite reviews of statistically selected housing units.

We statistically selected 65 of the Authority’s HUD voucher-funded housing units to inspect
from the 1,255 housing units inspected and passed from September 1 through November 30,
2009. We used data mining software to obtain our sample. The 65 housing units were selected
to determine whether voucher-funded housing units met HUD’s housing quality standards. Our
sampling criteria used a 90 percent confidence level with a 50 percent estimated error rate and
precision level of plus or minus 10 percent.

Our sampling results determined that 45 of the 65 housing units (71 percent) materially failed to
meet HUD’s housing quality standards. Materially failed housing units were those considered to
have health and safety deficiencies with more than two deficiencies that predated the Authority’s
previous inspections and/or at least one deficiency that would have affected household members
in the following categories:

   •   Seniors over the age of 65,
   •   Disabled (regardless of age), and
   •   Children under the age of 12.

Based on data provided by the Authority, the average monthly housing assistance payment for
1,255 housing units was $1,228 ($18,498,060 yearly housing assistance payments divided by
15,060 housing units (1,255 housing units times 12 months)). Projecting our sampling results of
the 65 housing units that materially failed to meet HUD’s housing quality standards to the
population indicated that 888 housing units or 70.77 percent of the population contained the
attributes tested (would materially fail to meet HUD’s housing quality standards). The sampling
error was plus or minus 9.01 percent. Therefore, we are 90 percent confident that the frequency
of occurrence of the attributes tested lies between 61.76 and 79.78 percent of the population.
This frequency equated to an occurrence of between 775 and 1,001 of the 1,255 housing units in
the population.


                                               13
   •   The lower limit is 61.76 percent times 1,255 housing units equals 775 housing units that
       materially failed to meet HUD’s housing quality standards.
   •   The point estimate is 70.77 percent times 1,255 housing units equals 888 housing units
       that materially failed to meet HUD’s housing quality standards.
   •   The upper limit is 79.78 percent times 1,255 housing units equals 1,001 housing units
       that materially failed to meet HUD’s housing quality standards.

Using the lower limit of the estimate of the number of housing units and the average housing
assistance payment, we estimated that the Authority would annually spend $11,420,400 (775
housing units times $1,228 monthly average payment times 12 months) for housing units that
materially failed to meet HUD’s housing quality standards. This estimate was presented solely
to demonstrate the annual amount of program funds that could be put to better use for 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 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.




                                              14
                              INTERNAL CONTROLS

Internal control is a process adapted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

   •   Effectiveness and efficiency of operations,
   •   Reliability of program fund reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls 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:

               •   Effectiveness and efficiency of operations – Policies, procedures, and controls
                   that management has implemented to reasonably ensure effective and efficient
                   operations of its housing quality standards inspections.
               •   Reliability of program fund reporting – Policies, procedures, and controls that
                   management has implemented to reasonably ensure that valid and reliable
                   program fund reporting is 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.

               We assessed the relevant controls identified above.

               A deficiency in internal control exists when the design or operation of a control does
               not allow management or employees, in the normal course of performing their
               assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
               impairments to effectiveness or efficiency of operations, (2) misstatements in
               financial or performance information, or (3) violations of laws and regulations on a
               timely basis.




                                                 15
Significant Deficiencies


             Based on our review, we believe that the following items are significant
             deficiencies:

             •   The Authority lacked policies, procedures, and controls to ensure that housing
                 quality standards inspections were conducted in compliance with HUD rules
                 and regulations (see finding).




                                             16
                                       APPENDIXES

Appendix A

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

          Recommendation          Ineligible 1/        Unsupported 2/   Funds to be put
              number                                                    to better use 3/
                1B                     $279,136
                1C                                        $39,018
                1F                                                        $11,420,400
               Totals                  $279,136           $39,018         $11,420,400


1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity that
   the auditor believed was not allowed by law; contract; or Federal, State, or local policies or
   regulations.

2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program or
   activity when we cannot determine eligibility at the time of the audit. Unsupported costs
   require a decision by HUD program officials. This decision, in addition to obtaining
   supporting documentation, might involve a legal interpretation or classification of
   departmental policies and procedures.

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




                                                  17
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




COMMENT 1




                         18
19
COMMENT 2




COMMENT 3




            20
21
22
                         OIG Evaluation of Auditee Comments

Comment 1   We acknowledge the Authority’s agreement with the finding and efforts to
            implement corrective action. We appreciate their time and resources devoted to
            eliminating the deficiencies noted in our report.

Comment 2   Based on the significant material deficiencies found during our audit, we believe
            that it is appropriate that the Authority should repay HUD the funds paid for
            housing units that were not in compliance with HUD rules and regulations. As
            stated in 24 CFR 982.305(a), the Authority may not give approval for the family
            of the assisted tenancy or approve a housing assistance contract until the authority
            has determined that the following requirements are met: (1) the housing unit is
            eligible, (2) the unit has been inspected by the housing authority and meets
            HUD’s housing quality standards, and (3) the rent to the owner is reasonable. In
            addition, 24 CFR 982.401(a)(3) requires all program-funded housing units to meet
            the housing quality standards both at commencement of assisted occupancy and
            throughout the assisted tenancy. This was not the case for the 46 housing units
            that the Authority paid $279,136 in housing assistance payments to landlords
            participating in the housing choice voucher program. As stated in the report, the
            Authority’s failure to inspect the housing units in accordance with HUD rules and
            regulations did not ensure that tenants resided in safe, decent and sanitary living
            conditions. Nevertheless, this is our recommendation to HUD and can be further
            addressed during the audit resolution process.

Comment 3   We believe that it is appropriate that the Authority should address
            recommendation 1C accordingly or repay HUD the $39,018 in housing assistance
            payments for failing to maintain accurate and complete records of its housing
            quality standards inspections. As part of the consolidated annual contributions
            contract with HUD, the Authority must maintain complete and accurate books of
            account and records for its housing choice voucher program. In addition, the
            inspection reports are an important document for tracking the inspection results of
            voucher-funded housing units during the initial move-ins, as well as on an annual
            basis afterward. Without these documents, there is no assurance that the
            Authority conducted the required inspections of the voucher-funded housing
            units. Nevertheless, this is our recommendation to HUD and can be further
            addressed during the audit resolution process.




                                             23
Appendix C

          SCHEDULE OF INELIGIBLE HOUSING UNITS

Housing   Authority inspection    OIG inspection    Period elapsed      Monthly         Total
  unit           date                  date             between         housing
number                                                Authority's      assistance
                                                    inspection and      payment
                                                    OIG's inspection
                                                      (in months)
                                                           (a)            (b )      (a) times (b)
  1       September 16, 2009     March 31, 2010            6           $2,130.00     $12,780.00
  2       September 25, 2009     January 27, 2010          4           $1,727.00      $6,908.00
  3         October 9, 2009      March 30, 2010            5           $1,103.00      $5,515.00
  4        November 3, 2009      March 22, 2010            4            $174.00        $696.00
  5        September 3, 2009       April 1, 2010           6           $1,706.00     $10,236.00
  6        November 4, 2009      March 29, 2010            4           $1,027.00      $4,108.00
  7         October 20, 2009     March 25, 2010            5           $1,066.00      $5,330.00
  8         October 22, 2009       April 2, 2010           5           $1,876.00      $9,380.00
   9      November 13, 2009      March 31, 2010            4            $860.00       $3,440.00
  10        October 13, 2009     March 25, 2010            5           $1,798.00      $8,990.00
  11       November 6, 2009      March 25, 2010            4           $1,212.00      $4,848.00
  12        October 9, 2009        April 1, 2010           5           $1,948.00      $9,740.00
  13      November 23, 2009      January 27, 2010          2           $1,738.00      $3,476.00
  14       September 3, 2009       April 1, 2010           6           $1,627.00      $9,762.00
  15        October 7, 2009        April 5, 2010           5           $2,041.00     $10,205.00
  16      November 10, 2009      March 22, 2010            4           $1,724.00      $6,896.00
  17      September 24, 2009       April 6, 2010           6            $781.00       $4,686.00
  18        October 21, 2009     March 29, 2010            5           $1,193.00      $5,965.00
  19      September 10, 2009     March 30, 2010            6           $1,177.00      $7,062.00
  20        October 14, 2009     March 30, 2010            5           $2,244.00     $11,220.00
  21      September 14, 2009     March 29, 2010            6           $1,064.00     $ 6,384.00
  22       November 5, 2009        April 2, 2010           4           $1,798.00      $7,192.00
  23      September 10, 2009     January 27, 2010          4           $1,306.00      $5,224.00
  24        October 14, 2009     March 24, 2010            5            $411.00       $2,055.00
  25      September 23, 2009       April 5, 2010           6           $1,441.00      $8,646.00
  26      November 13, 2009      March 29, 2010            4           $1,270.00      $5,080.00
  27        October 21, 2009     March 25, 2010            5           $1,488.00      $7,440.00
  28      September 25, 2009       April 9, 2010           6           $1,217.00      $7,302.00
  29      September 23, 2009     January 26, 2010          4           $1,383.00      $5,532.00


                                            24
Housing   Authority inspection   OIG inspection     Period elapsed      Monthly         Total
  unit           date                 date              between         housing     (a) times (b)
number
                                                      Authority's      assistance
                                                    inspection and      payment
                                                    OIG's inspection       (b )
                                                      (in months)
                                                           (a)
  30      September 30, 2009     January 26, 2010           3           $934.00       $2,802.00
  31       November 6, 2009      March 24, 2010             4          $1,662.00      $6,648.00
  32        October 5, 2009      January 26, 2010           3          $1,418.00      $4,254.00
  33      September 14, 2009     January 28, 2010           4           $399.00       $1,596.00
  34      September 15, 2009     January 26, 2010           4          $1,457.00      $5,828.00
  35       November 6, 2009        April 6, 2010            5          $1,660.00      $8,300.00
  36       September 2, 2009     March 24, 2010             6           $811.00       $4,866.00
  37        October 5, 2009      March 22, 2010             5          $1,010.00      $5,050.00
  38      September 23, 2009     January 28, 2010           4          $1,887.00      $7,548.00
  39      September 15, 2009     January 26, 2010           4           $836.00       $3,344.00
  40      September 15, 2009     January 28, 2010           4          $1,495.00      $5,980.00
  41      September 14, 2009     March 30, 2010             6          $1,181.00      $7,086.00
  42        October 6, 2009      March 23, 2010             5           $954.00       $4,770.00
  43       November 6, 2009      January 28, 2010           2          $1,212.00      $2,424.00
  44        October 7, 2009      March 23, 2010             5           $928.00       $4,640.00
  45        October 21, 2009     January 28, 2010           3          $1,972.00      $5,916.00
  46       November 2, 2009      January 28, 2010           2           $993.00       $1,986.00
                                    Total                                           $ 279,136.00




                                            25
Appendix D

         SCHEDULE OF CATEGORY OF DEFICIENCIES

        Categories of deficiencies          Number of      Number of housing units
                                            deficiencies         affected
  Electrical hazards                            108                  45
  Window condition                               46                  28
  Water heater                                   31                  21
  Security                                       31                  21
  Smoke detectors                                30                  23
  Safety of heating equipment                    29                  19
  Garbage and debris                             26                  18
  Stove or range with oven                       22                  14
  Wall condition                                 18                  13
  Electricity                                    18                   8
  Other interior hazards                         17                  11
  Ceiling condition                              15                  12
  Condition of stairs, rail, and porches         13                   9
  Condition of exterior surfaces                 12                   8
  Floor condition                                11                   8
  Site and neighborhood conditions               11                   6
  Fire exits                                      8                   5
  Fixed wash basin or lavatory in unit            8                   5
  Interior air quality                            8                   5
  Condition of roof/gutters                       7                   6
  Plumbing                                        7                   5
  Tub or shower in unit                           6                   6
  Ventilation/cooling                             5                   4
  Sewer connection                                5                   4
  Evidence of infestation                         4                   3
  Refrigerator                                    3                   3
  Adequacy of heating equipment                   3                   3
  Flush toilet in enclosed room in unit           3                   3
  Elevators                                       3                   2
  Other potentially hazardous features            3                   1
  Interior stairs and common halls                2                   1
  Sink                                            2                   1
  Living room present                             1                   1
                     Total                      516


                                           26
Appendix E

            SCHEDULE OF OIG INSPECTION RESULTS

 Housing   Total number        Total       Was the     Did the    Was the      Were there    Were the
   unit          of         number of      housing     housing   inspection      missing     housing
 number     deficiencies   preexisting       unit        unit       of the     documents       unit’s
                           deficiencies   materially   pass or     housing      related to     data
                                          deficient?     fail?    unit late?        the      reliable?
                                                                                 housing
                                                                                   unit?
   1            44             41           Yes        Failed        ?             Yes          No
   2            38             29           Yes        Failed        ?            Yes           No
   3            30             27           Yes        Failed        ?            Yes           No
   4            30             24           Yes        Failed        ?            Yes           No
   5            22             16           Yes        Failed       No             No          Yes
   6            28             14           Yes        Failed       No             No          Yes
   7            18             13           Yes        Failed        ?            Yes           No
   8            21             11           Yes        Failed       Yes            No          Yes
    9           13             11           Yes        Failed        ?            Yes           No
   10           13              9           Yes        Failed        ?            Yes           No
   11           11              9           Yes        Failed        ?            Yes           No
   12           10              8           Yes        Failed        ?            Yes           No
   13           14              7           Yes        Failed       No             No          Yes
   14           13              7           Yes        Failed        ?            Yes           No
   15           9               7           Yes        Failed        ?            Yes           No
   16           8               7           Yes        Failed       No             No          Yes
   17           7               7           Yes        Failed        ?            Yes           No
   18           15              5           Yes        Failed        ?            Yes           No
   19           9               5           Yes        Failed       Yes            No          Yes
   20           8               5           Yes        Failed        ?            Yes           No
   21           6               5           Yes        Failed        ?            Yes           No
   22           6               5           Yes        Failed       No             No          Yes
   23           6               5           Yes        Failed       No             No          Yes
   24           8               4           Yes        Failed       Yes            No          Yes
   25           7               4           Yes        Failed       No             No          Yes
   26           7               4           Yes        Failed        ?            Yes           No
   27           4               4           Yes        Failed       Yes            No          Yes
   28           4               4           Yes        Failed       No             No          Yes
   29           4               4           Yes        Failed       Yes            No          Yes
   30           4               4           Yes        Failed        ?            Yes           No



                                                  27
Housing   Total number        Total       Was the     Did the    Was the      Were there      Were
  unit          of         number of      housing     housing   inspection      missing        the
number     deficiencies   preexisting       unit        unit       of the     documents     housing
                          deficiencies   materially   pass or     housing      related to     unit’s
                                         deficient?     fail?    unit late?   the housing     data
                                                                                  unit?     reliable?
  31           9               3           Yes        Failed       No              No          Yes
  32           9               3           Yes        Failed        ?            Yes          No
  33           6               3           Yes        Failed       Yes            No          Yes
  34           4               3           Yes        Failed        ?            Yes          No
  35           3               3           Yes        Failed        ?            Yes          No
  36           3               3           Yes        Failed       Yes            No          Yes
  37           3               3           Yes        Failed        ?            Yes          No
  38           3               3           Yes        Failed       No             No          Yes
  39           5               2           Yes        Failed       No             No          Yes
  40           5               2           Yes        Failed       No             No          Yes
  41           3               2           Yes        Failed        ?            Yes          No
  42           2               2           Yes        Failed        ?            Yes          No
  43           8               1           Yes        Failed       Yes            No          Yes
  44           1               1           Yes        Failed        ?            Yes          No
  45           1               1           Yes        Failed       No             No          Yes
  46           1               1           Yes        Failed       No             No          Yes
  47           7               2            No        Failed       No             No          Yes
  48           5               2            No        Failed       Yes            No          Yes
  49           4               2            No        Failed        ?            Yes          No
  50           3               1            No        Failed        ?            Yes          No
  51           2               1            No        Failed        ?            Yes          No
  52           2               1            No        Failed        ?            Yes          No
  53           1               1            No        Failed       Yes            No          Yes
  54           1               1            No        Failed       Yes            No          Yes
  55           3               0            No        Failed       No             No          Yes
  56           2               0            No        Failed        ?            Yes          No
  57           2               0            No        Failed       No             No          No
  58           1               0            No        Failed       Yes            No          Yes
  59           0               0            No        Passed        ?            Yes          No
  60           0               0            No        Passed       No             No          Yes
  61           0               0            No        Passed       Yes            No          Yes
  62           0               0            No        Passed        ?            Yes          No
  63           0               0            No        Passed       No             No          Yes
  64           0               0            No        Passed       No             No          Yes
  65           0               0            No        Passed       No             No          Yes




                                                 28
Note:

•   7 of the 65 housing units passed OIG’s inspection and were highlighted in orange.
•   46 of the 65 housing units failed OIG’s inspection with material deficiencies and were
    highlighted in blue.
•   12 of the 65 housing units failed OIG’s inspection without material deficiencies and were
    highlighted in white.
•   31 of the 65 housing units had missing inspection reports, resulting in OIG’s being unable to
    determine whether the Authority conducted its housing quality standards inspection of the
    housing unit within HUD’s required period of 1 year from the previous inspection. These
    housing units were denoted with "?". However, we considered seven of the housing units
    with unsupported inspection reports as unsupported questioned costs. The remaining 24
    housing units were considered ineligible questioned costs due to their being materially
    deficient.

                             Overall summary of results
        Total deficiencies                                              516
        Total deficiencies for materially deficient housing units       483
        Total preexisting deficiencies                                  352
        Total preexisting deficiencies for materially deficient         341
        housing units
        Total number of failed housing units                            58
        Total number of materially deficient housing units              46
        Total number of late inspections                                13
        Total number housing units with missing inspection reports      31
        Total number of housing units with unreliable documents         32




                                             29
Appendix F

              SCHEDULE OF HOUSING UNITS WITH
              UNSUPPORTED INSPECTION REPORTS

  Housing    Authority      OIG          Period elapsed between        Monthly        Total
    unit    inspection   inspection     Authority's inspection and     housing
  number       date         date       OIG's inspection (in months)   assistance
                                                    (a)                payment
                                                                          (b )     (a) times (b)
    49       9/4/2009    4/6/2010                   7                 $1,117.00     $7,819.00
    50      9/10/2009    3/31/2010                  6                 $1,118.00     $6,708.00
    51      11/13/2009   4/23/2010                  5                  $857.00      $4,285.00
    52      10/6/2009    3/30/2010                  5                  $852.00      $4,260.00
    56      9/22/2009    3/26/2010                  6                 $1,116.00     $6,696.00
    59      10/21/2009   3/31/2010                  5                  $520.00      $2,600.00
    62      10/14/2009   3/22/2010                  5                 $1,330.00     $6,650.00
                                      Total                                        $39,018.00




                                              30
Appendix G

                      HOUSING QUALITY STANDARDS
                        RULES AND REGULATIONS

The following sections of HUD rules and regulations were relevant to our review of the
Authority’s housing quality standards inspections of voucher-funded housing units.

Regulations at 24 CFR (Code of Federal Regulations) 982.158 state that program accounts and
records require the housing authority to maintain “complete and accurate accounts and other
records” for the Housing Choice Voucher program in accordance with HUD program
requirements that would allow a speedy and effective audit.

Regulations at 24 CFR 982.305(a) state that the public housing authority may not give approval
for the family of the assisted tenancy or approve a housing assistance contract until the authority
has determined that the following requirements are met: (1) the housing unit is eligible, (2) the
unit has been inspected by the housing authority and meets HUD’s housing quality standards,
and (3) the rent to the owner is reasonable.

Regulations at 24 CFR 982.401(a)(3) state that all program housing must meet the housing
quality standards performance requirements both at commencement of assisted occupancy and
throughout the assisted tenancy.

Regulations at 24 CFR 982.401(a)(4)(i) state that in addition to meeting housing quality
standards performance requirements, the housing must meet the acceptability criteria stated in
this section [a(4)] unless variations are approved by HUD.

Regulations at 24 CFR 982.404(a) state that (1) the owner must maintain the unit in accordance
with housing quality standards; (2) if the owner fails to maintain the dwelling unit in accordance
with housing quality standards, the housing authority must take prompt and vigorous action to
enforce the owner obligations (remedies for such breach of the housing quality standards include
termination, suspension or reduction of housing assistance payments, and termination of the
housing assistance payments contract); and (3) the housing authority must not make any housing
assistance payments for a dwelling unit that fails to meet the housing quality standards unless the
owner corrects the defect within the period specified by the authority and the authority verifies
the correction. If a defect is life threatening, the owner must correct the defect within no more
than 24 hours. For other defects, the owner must correct the defect within no more than 30
calendar days (or any authority-approved extension).

Consolidated Annual Contributions Contract

Paragraph 10(a), HUD Requirements, states that the housing authority must comply and must
require owners to comply with the requirements of the U.S. Housing Act of 1937 and all HUD
regulations and other requirements, including any amendments or changes in the law or HUD

                                                31
requirements; paragraph 10(b) states that the housing authority must comply with its HUD-
approved administrative plan and HUD-approved program funding applications; paragraph 10(c)
states that the housing authority must use the program forms required by HUD; and paragraph
10(d) states that the housing authority must proceed expeditiously with the programs under this
consolidated annual contributions contract.

Paragraph 11(a), Use of Program Receipts, states that the housing authority must use program
receipts to provide decent, safe, and sanitary housing for eligible families in compliance with the
U.S. Housing Act of 1937 and all HUD requirements. Program receipts may only be used to pay
program expenditures.

Paragraph 14, Program Records, states that (a) the housing authority must maintain complete and
accurate books of account and records for a program. The books and records must be in
accordance with HUD requirements and must permit a speedy and effective audit and (b) the
housing authority must furnish HUD such financial and program reports, records, statements,
and documents at such times, in such form, and accompanied by such supporting data as required
by HUD.




                                                32