oversight

Telephone: (206) 220-5360       http://www.hud.gov/offices/oig/                         Fax: (206) 220-5162



                                                         U.S. Department of Housing and Urban Development
                                                         Office of Inspector General
                                                         Region X Office of Audit
                                                         909 First Avenue
                                                         Suite 126
                                                         Seattle, WA 98104



                                                                              MEMORANDUM NO:
                                                                              2010-SE-1801


April, 21 2010


MEMORANDUM FOR:              Harlan Stewart, Director, Region X, Office of Public Housing, 0APH

            //signed//
FROM:       Ronald J. Hosking, Regional Inspector General for Audit, 0AGA

SUBJECT:         Seattle Housing Authority’s Capacity To Administer Recovery Act Funding
                 Under the Capital Fund Program

                                        INTRODUCTION

In accordance with our goal to review funds provided under the American Recovery and
Reinvestment Act of 2009 (Recovery Act), we conducted a capacity review of Seattle Housing
Authority’s (Authority) capital fund to determine whether there was evidence that the Authority
lacked the capacity to adequately administer its Recovery Act funding in accordance with
requirements.

                                METHODOLOGY AND SCOPE

Our review of the Authority was limited to gaining an understanding of internal controls over the
administration of Recovery Act funds. To meet our objective, we reviewed Recovery Act
documentation and funding agreements. We interviewed Authority management and staff and
briefly reviewed Authority documentation such as policies and procedures, organizational charts,
and the U.S. Department of Housing and Urban Development’s (HUD) remote review. Our
review of this documentation was limited to our stated objective and should not be considered a
detailed analysis of the Authority’s internal controls or operations.

                                         BACKGROUND

The Authority was created in 1939 for the acquisition, development, modernization, operation,
and administration of public housing programs. The primary purpose of the Authority is to
provide safe, decent, sanitary, and affordable housing to low-income and elderly families in
Seattle, WA. The programs are administered through HUD under provisions of the U.S.
Housing Act of 1937, as amended.
 Telephone: (206) 220-5360     http://www.hud.gov/oig/oigindex.html          Fax: (206) 220-5162



The Recovery Act, signed into law on February 17, 2009, provided $4 billion for the Public
Housing Capital Fund. The funding was to be used for capital and management activities for
public housing agencies as authorized under Section 9 of the U. S. Housing Act of 1937 as
amended. The Recovery Act required that $3 billion of these funds be distributed by the same
formula used for amounts made available in fiscal year 2008. The remaining $1 billion was to be
awarded on a competitive basis. Under the formula program, housing agencies were required to
give priority consideration to the rehabilitation of vacant rental units and prioritized projects that
were already underway or included in the 5-year capital fund plans.

The Authority was awarded $45 million from the Recovery Act; $17 million was its proportional
share of the $3 billion formula grant, and $28 million was part of the $1 billion competitive
grant. The Authority allocated the grants as follows:

       $3.1 million to fund the construction of Tamarack Place, an 86-unit low-income
        apartment building located in Rainier Vista next to the Rainier Vista Boys and Girls
        Club;
       $10.3 million to fund the infrastructure at Rainier Vista North to build sewers, electrical
        systems, streets, and sidewalks to prepare for the construction of additional low-income
        housing in the community;
       $10 million to fund Rainier Vista North Phase III to complete construction of additional
        low-income housing;
       $8 million to fund the Lake City Village Apartments, increasing the use of green features;
       $10 million to help fund rehabilitation of Denny Terrace to increase energy conservation
        to the highest possible level and replace and update major building systems that had
        reached the end of their useful life; and
       $3.5 million to the Bell Tower rehabilitation project to provide new windows for the
        building, waterproof the exterior, and correct water line problems.

                                     RESULTS OF REVIEW

We did not find evidence that the Authority lacked the capacity to adequately administer its
Recovery Act funding. Based on our limited review, the Authority

       Had written policies and procedures for standard procurement,
       Had adequate controls for Recovery Act procurement,
       Had an adequate staffing plan,
       Had a plan for the use of funds that had been reviewed and approved by HUD,
       Had obligated the formula grant and was progressing toward timely obligation of
        competitive grants, and
       Had properly reported information on Recovery.Gov including adequately supporting the
        number of jobs created and retained.




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 Telephone: (206) 220-5360   http://www.hud.gov/oig/oigindex.html        Fax: (206) 220-5162



                                   AUDITEE COMMENTS

We provided the Authority with the draft memorandum on March 19, 2010. We explained that the
Authority’s comments were not necessary, but if it chose to provide comments, we requested that
they be provided within 7 days. The Authority declined an exit conference and had no comments
since the report has no findings or recommendations,

                                   RECOMMENDATIONS

Based on the results of the capacity review, this memorandum contains no recommendations.




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