Issue Date
January 14, 2011
Audit Report Number
2011-AT-1003
TO: Michael A. Williams, Director, Office of Public Housing, Greensboro, NC,
4FPH
//signed//
FROM: James D. McKay, Regional Inspector General for Audit, Atlanta Region,
4AGA
SUBJECT: The Housing Authority, City of Wilson, NC, Mismanaged Its Section 8 Program
HIGHLIGHTS
What We Audited and Why
We audited the Housing Authority of the City of Wilson’s (Authority) Section 8
Housing Choice Voucher program. We elected to perform the audit after finding
indicators of Section 8 deficiencies during our review of the Authority’s capacity
to administer capital funds awarded under the American Recovery and
Reinvestment Act of 2009 (Audit Report 2010-AT-1007).
Our objective was to determine whether the Authority complied with U.S.
Department of Housing and Urban Development (HUD) requirements for
administering its Housing Choice Voucher program, including its special Section
8 programs comprised of a Family Self Sufficiency program and a
homeownership program.
What We Found
The Authority failed to comply with many of HUD’s Section 8 program
requirements. It mismanaged its program funds, improperly selected tenants for
assistance, improperly terminated tenants, made improper housing assistance
payments, and had other areas of noncompliance. By not establishing and
following basic internal controls the Authority incurred $109,778 in ineligible
costs and made $14,568 in unsupported payments. In addition, some families
may have been unnecessarily removed from the program and HUD lacked
assurance that the Authority’s resources were efficiently and effectively used to
benefit its Section 8 tenants.
Our inspection of 23 units showed that none met minimum housing quality
standards and 6 were in material noncompliance. In addition, the Authority failed
to ensure that quality control inspections were performed in accordance with
HUD requirements. This condition occurred because the Authority’s
management did not implement adequate controls to ensure that its program units
met the required standards. As a result, tenants lived in units that were not decent,
safe, and sanitary, and the Authority made housing assistance payments for units
that did not meet standards.
The Authority mismanaged two special Section 8 programs, its Family Self
Sufficiency and homeownership programs, established to help participants self-
improve. It did not maintain accurate accountability of participant funds or
comply with HUD’s administrative requirements for its Section 8 Family Self-
Sufficiency program. It also did not ensure that it complied with administrative
requirements for its Section 8 homeownership program. As a result, the Authority
paid ineligible self-sufficiency and homeownership expenses, and family self-
sufficiency participants did not reap the full benefits of the program. These
deficiencies occurred because the Authority did not follow its own procedures or
consistently provide trained and capable staff familiar with the program
requirements.
What We Recommend
We recommend that the Director of the Greensboro Office of Public Housing
require the Authority to follow its existing controls as well as develop and
implement additional controls where needed to ensure that it complies with all
Section 8 program requirements. These controls must be designed to ensure that
HUD housing assistance funds are efficiently and effectively used;
Tenants are properly selected for and removed from the program;
Housing assistance payments are properly made;
Housing units comply with HUD’s housing quality standards;
Rents to owners are abated when necessary;
Requirements for the Family Self-Sufficiency and homeownership
programs are complied with; and
A competent and well-trained staff is maintained.
2
The Authority must repay $109,778 in ineligible expenses from non-Federal
funds and provide documentation showing that $14,568 in unsupported expenses
was eligible or repay that amount from non-Federal funds.
For each recommendation without a management decision, please respond and
provide status reports in accordance with HUD Handbook 2000.06, REV-3.
Please furnish us copies of any correspondence or directives issued because of the
audit.
Auditee’s Response
We discussed the findings with the Authority and HUD officials during the audit.
We provided the draft report to the Authority on November 17, 2010, and
discussed the findings with Authority officials at an exit conference on December
2, 2010. The Authority provided its written comments on December 10, 2010.
Authority officials agreed with parts of the report but disagreed with some of our
conclusions and recommendations.
The complete text of the Authority’s response, along with our evaluation of that
response, can be found in appendix B of this report.
3
TABLE OF CONTENTS
Background and Objectives 5
Results of Audit
Finding 1: The Authority Mismanaged Its Section 8 Program 6
Finding 2: Tenants Lived in Units That Were Not Decent, Safe, and Sanitary 14
Finding 3: The Authority Mismanaged Its Special Section 8 Programs 20
Scope and Methodology 24
Internal Controls
26
Appendixes
A. Schedule of Questioned Costs 28
B. Auditee Comments and OIG’s Evaluation 29
C. Criteria 41
4
BACKGROUND AND OBJECTIVES
The Housing Authority of the City of Wilson (Authority) was established in 1953 pursuant to the
North Carolina Housing Authority’s Law. Its primary objective is to maintain a stock of good,
affordable housing to meet the needs of its citizens while providing an environment in which
families can live, raise their children, and feel safe. The Authority’s records are located at 213
Broad Street, Wilson, NC.
A five-member board of commissioners appointed by the mayor of Wilson governs the
Authority. Mr. Thomas Eatmon is the chairman of the board, and Mr. Edward Jagnandan has
been the executive director since January 22, 2007.
The Authority receives U.S. Department of Housing and Urban Development (HUD) funds to
administer approximately 550 units funded under the Housing Choice Voucher program. It uses
the funds to provide rental assistance to eligible Wilson families. HUD’s Greensboro, NC,
Office of Public Housing oversees the Authority. HUD provided funds for the Authority’s
program as follows:
Fiscal Year Amount
2008 $2,030,256
2009 $2,285,101
2010 $2,101,958
Total $6,417,315
Our objective was to determine whether the Authority complied with U.S. Department of
Housing and Urban Development (HUD) requirements for administering its Housing Choice
Voucher program, including its special Section 8 programs comprised of a Family Self
Sufficiency program and a homeownership program.
5
RESULTS OF AUDIT
Finding 1: The Authority Mismanaged Its Section 8 Program
The Authority mismanaged its Section 8 Housing Choice Voucher program. The Authority
Mismanaged its program funds,
Improperly selected tenants for assistance,
Improperly terminated tenants,
Made improper housing assistance payments,
Failed to comply with all lease requirements, and
Did not maintain a housing assistance payments register.
The Authority also failed to comply with HUD’s housing quality standards requirements and the
requirements for its Family Self Sufficiency and homeownership programs. These deficiencies
are presented separately in findings 2 and 3 of this report. This noncompliance occurred because
Authority management failed to establish and follow basic internal controls needed to ensure
compliance with program requirements. As a result, the Authority spent $88,511 on ineligible
items and made $14,568 in unsupported payments. In addition, some families may have been
unnecessarily removed from the program, and HUD lacked assurance that the Authority’s
resources were efficiently and effectively used to benefit its Section 8 tenants.
The Internal Control System
Was Deficient
Management failed to exercise its responsibility to establish appropriate internal
controls in the form of adequate policies and procedures and ensure that they were
followed. Financial administration standards at 24 CFR (Code of Federal
Regulations) 85.20 require the Authority to maintain effective control and
accountability of assets. Missing or ineffective controls created an environment
resulting in or contributing to the significant areas of noncompliance detailed in
this report. Examples of the kind of internal control deficiencies encountered
during the audit included
Existing controls that were not followed by staff,
Nonexistent written procedures for some functions,
Inadequately trained staff,
An ineffective information system,
Excessive staff turnover,
Lack of effective communication between staff functions, and
Lack of proper staff supervision.
6
In response to our questions during the audit, Authority staff tended to place
blame for deficiencies on such factors as the use of temporary staff, excessive
workloads, information system deficiencies, human error, or a lack of
communication between functions. Such factors present control challenges but
should be managed through implementation of an effective internal control
system.
The Authority Mismanaged Its
Program Funds
The Authority mismanaged funds for its 550 unit program. It failed to perform
the required program analysis and monitor its spending. As a result, the number
of families receiving assistance fluctuated widely due to overutilization or
underutilization, and some families may have been removed from the program
unnecessarily.
During 2008, the Authority overutilized it program by spending $272,245 more in
housing assistance than its annual program budget authority permitted. As a
result, the Authority terminated 113 families as of December 31. The following
year it maintained as few as 361 of its 550 baseline units under lease, resulting in
underutilization of its funds. In response to the underutilization, the Authority
conducted a large lease-up effort during the second half of 2009, which added 189
families to the roster by December 2009. However, it still remained, on average,
underutilized for the year. As of September 30, 2010, the Authority was once
again overutilizing available funding.
The Authority failed to follow HUD requirements and its own administrative plan
which required it to maintain a system to ensure that it would be able to make
housing assistance payments for all participants within the amounts agreed to
under its annual contributions contract. HUD Guidebook 7420.10G, chapter 24,
details the methodology the Authority should have used to analyze its program to
ensure the maximum use of available funds. The Authority’s administrative plan
required staff to compare its annual budget authority to the annual total housing
assistance payment needs on a monthly basis. The total housing assistance
payment needs for the calendar year should have been projected by establishing
the actual housing assistance payment costs year to date.
Not performing the required financial analysis of its program appears to have
contributed to widely fluctuating utilization of the program and the termination of
such a large number of families from a small program. Management
acknowledged that the program analysis had not been performed in accordance
with the administrative plan but attributed the Authority’s utilization problems to
a lack of communication between the finance and Section 8 departments and
inconsistent funding from HUD. However, the current chief financial officer
agreed that too many families had been removed from the program. She stated
that it should have been necessary to terminate assistance for only about 20
7
families, instead of 113, if previous staff had correctly performed the analysis and
used the available funding. HUD had been monitoring the Authority since April
2010 to ensure that no more families would have to be forcibly removed from the
program.
Applicants Were Improperly
Selected for Assistance
The Authority maintained multiple waiting lists, failed to include required
information on its waiting list, and failed to properly advertise its waiting list.
This occurred because the Authority failed to follow the applicable requirements
for maintaining its waiting list and selecting applicants, and failed to adequately
supervise temporary workers. As a result, during 2009, the Authority improperly
granted housing assistance to at least 46 recent applicants, when other eligible
applicants had been waiting several years.
The regulations (24 CFR 982.204) required the Authority to maintain and select
applicants from a single waiting list. Instead, it selected applicants from two
separate spreadsheets it had developed based on waiting list openings occurring
during 2007 and 2009. In addition, of the 365 entries on the 2009 waiting list, 99
(27 percent) did not include all required information. HUD regulations (24 CFR
982.204(b)) require that, for each tenant, the family unit size, date/time of
application, qualification for local preference, and the family’s ethnic designation
be documented on the waiting list. The Authority also failed to follow its own
policy when advertizing the opening of its program waiting list. Although its
administrative plan required a 14-day advance notice, the Authority advertised the
opening of its program waiting list only 1 week before accepting applications on
July 13, 2009.
The housing director stated that when a lease-up effort began at the end of 2009,
the intention was to give first priority to the 113 families forcibly removed from
the program in December 2008. The next selections were to be families from the
2007 waiting list, followed by selections from the 2009 waiting list. However,
Authority records showed that the staff selected at least 46 applicants from the
2009 list before selecting from the 2007 list. The housing director blamed the
deficiencies on mistakes made by temporary workers and insufficient time for
consolidating the waiting lists. However, it is management’s responsibility to see
that staff has the written procedures and supervision necessary to ensure that the
HUD requirements are met.
8
Termination of Assistance
Procedures Were Not Followed
Review of 9 of the 69 tenant assistance terminations occurring between January
2009 and July 2010 showed that the Authority failed to properly follow its
procedures in eight cases. Specifically, termination letters did not contain all of
the required information, tenants were not always given a proper informal appeal
hearing, and files did not contain proper documentation.
The administrative plan required that specific information be included in the
termination of assistance letters sent to families. The Authority included all of the
required information except for a statement permitting the family an informal
hearing to protest the decision and a copy of the hearing procedures.
The Authority’s policy stated that informal hearings were required to be
conducted by a person or persons approved by the Authority, other than the
person who made or approved the decision or a subordinate of the person who
made or approved the decision. The Authority designated an outside individual as
its informal hearing officer but failed to consistently follow other procedures. For
example, two tenants’ files showed that the informal hearings had been conducted
by Authority management in violation of the procedure. When asked why the
hearing officer was not used for these cases, the program manager was unable to
tell us. Another file showed that a tenant sent two letters and called requesting an
informal hearing; however, the hearing was not granted and the tenant was
removed from the program. In another case, a tenant who had been given a
termination letter for missing scheduled inspections provided the Authority an
appeal letter requesting an informal hearing. The hearing was not granted, but the
tenant was not removed from the program. In the resulting confusion, the tenant’s
unit did not pass inspection for more than a year because the inspector thought
that the tenant’s assistance had been terminated.
The tenants’ files did not always contain all termination-of-assistance information
required by the administrative plan. Two of the files did not contain
documentation indicating the reason for termination. Another file showed that the
tenant had requested in writing to be removed from the program but contained no
follow-up documentation. As outlined in the Authority’s policy, staff should have
sent a confirmation notice to the family and the owner within 10 days of the
family’s request but no later than the termination effective date.
The Authority’s administrative plan contained adequate policies and procedures
for the termination process; however, staff had either disregarded the procedures
or been unaware of them. As a result, the Authority has not provided HUD
assurance that it treated all tenants fairly or in a consistent manner.
9
Assistance Payments Were
Improper
The Authority sometimes made housing assistance payments to landlords without
having a properly executed housing assistance payments contract, without
verifying the owner’s eligibility, without inspecting or passing the unit, and
without making a determination that the rent was reasonable.
We reviewed 86 unexecuted housing assistance payments contracts where the
Authority paid $85,675 in ineligible housing and utility assistance payments.
HUD regulations (24 CFR 982.305(c)(2)) state that the Authority may not make a
housing assistance payment to the owner until the housing assistance payments
contract has been executed. In addition, of the 86 contracts, 11 remained
unexecuted more than 60 days after the beginning of the lease period. HUD
requires (24 CFR 982.305(c)(1)) that housing assistance payments contracts
remaining unexecuted within 60 calendar days from the beginning of the lease
term be voided. We provided this information to management during the review
so that the Authority could execute new contracts and stop the ineligible
payments. The Authority was successful in executing new contracts, but the
$56,211 already paid under the unexecuted contracts was ineligible.
None of 17 tenant files we reviewed contained verification of owner eligibility
before their participation in the program. Chapter 11 of HUD Handbook
7420.10G states that the owner’s eligibility must be verified before the execution
of a housing assistance payments contract. Without a verification of eligibility
the Authority had no way of knowing whether it had contracted with ineligible
owners. The Authority’s program manager confirmed that owner eligibility had
not been verified. Following our inquiries, Authority staff successfully verified
the eligibility of all owners participating in the program.
Of 17 tenant files we reviewed, five showed that the Authority paid housing
assistance for units that had not passed a housing quality standards inspection.
HUD regulations (24 CFR 982.305(a)) prohibit the execution of a housing
assistance payments contract before a satisfactory housing quality standards
inspection. For example, one tenant received housing assistance payments
beginning in December 2009, when the unit did not pass inspection until February
2010. The Authority made $2,836 in ineligible payments for the five units.
In 5 of 17 cases, the Authority failed to follow HUD’s requirements for
determining rent reasonableness. The regulations (24 CFR 982.507) require that
housing authorities determine that the rent is reasonable before approving leases.
The regulations and the Authority’s administrative plan explain the process for
determining rent reasonableness through a survey of comparable unassisted units.
For these families, the Authority had no basis for assuring HUD that funds were
not wasted on inflated rents or that families were not inappropriately restricted as
to where they could live.
10
The Authority’s administrative plan contained all the needed policies and
procedures for ensuring housing assistance payments were proper. However, staff
were either unaware of the correct procedures or chose to ignore them.
Management stated that some of the contracts were unexecuted because they had
“fallen through the cracks” during the recent lease-up effort. It is management’s
responsibility to ensure that staff is aware of the proper procedures and follow
them.
Lease Requirements Were Not
Followed
The Authority sometimes failed to provide HUD-required tenancy addendums to
tenants, failed to retain copies of leases in the files, and failed to ensure lease
terms ran concurrently with housing assistance payment contracts.
None of the 17 files reviewed contained documentation showing that the
Authority provided form HUD-52641-A (tenancy addendum) to the tenants or
that it was included as part of the tenants’ lease with the owner as required. The
tenancy addendum contains specific terms explaining the rights and obligations of
all parties to a housing assistance payments contract that must prevail over any
other provisions of the lease. The housing manager stated that she understood
that the tenancy addendum was required but was not sure whether it had been
provided to tenants. After we brought the matter to management’s attention, the
Authority mailed all program participants a copy of the tenancy addendum and
instructed them to retain it as part of their lease agreement.
The Authority failed to retain a copy of the lease between the owner and the
tenant in 7 of 17 cases. HUD regulations (24 CFR 982.158(e)) require that the
Authority retain a copy of the executed lease during the term of each assisted
lease and for at least 3 years thereafter. When we questioned the Authority about
this matter, staff was able to obtain leases from the landlords for four of the seven
tenants. The Authority made $14,568 in unsupported payments on behalf of the
three tenants still lacking leases as of April 1, 2010.
For 10 of 17 tenants, the Authority failed to ensure that housing assistance
payments contract terms ran concurrently with lease terms. HUD requires (24
CFR 982.309(b)(1)) that the term of the housing assistance payments contract
begin on the first day of the lease term and end on the last day of the lease term.
The Authority’s administrative plan also included this requirement. The
Authority’s housing director stated that the Authority was trying to correct the
problem.
The Authority’s administrative plan contained adequate policies and procedures
for ensuring the lease requirements were met. However, management had not
ensured that staff had complied with the policies and procedures. Management
11
either blamed the problems on the workload caused by the recent large lease-up
effort or could offer no explanation.
Housing Assistance Payment
Register Was Not Maintained
The Authority failed to maintain a housing assistance payment register as required
by the regulations (24 CFR 982.158(a) and HUD Handbook 7420.10G (chapter
11.11)). The Authority’s independent public accountant’s 2008 audit report also
disclosed this deficiency. The register is used to record data necessary for making
and tracking housing assistance payments and adjustments made to owners each
month. Since no housing assistance payment register was maintained, Authority
staff was unable to provide us with an accurate number of housing units under
contract. The housing director stated that the housing management system did not
provide for such a register.
Conclusion
Mismanagement of the Authority’s program resulted in significant deficiencies
across the Section 8 program. Management must begin to take meaningful action
immediately to bring its program into an acceptable level of compliance with
HUD’s requirements. It must improve its controls to ensure that existing written
policies and procedures are followed and new ones are created and implemented
where needed. It must maintain a capable, adequately trained, and well-
supervised staff. Taking these measures will better assure HUD that its funding is
efficiently and effectively used, tenants are fairly selected for assistance and fairly
removed when necessary, assistance payments are eligible, and other program
requirements are met.
Recommendations
We recommend that the Director of HUD’s Greensboro, NC, Office of Public
Housing require the Authority to
1A. Conduct utilization projections as outlined in the Authority’s administrative
plan to determine whether there is adequate funding to issue vouchers or
continue to fund current participants.
1B. Consolidate and purge its waiting list and include all required information.
1C. Implement existing policies and make any necessary adjustments to its Section
8 administrative plan to ensure that tenants from the waiting list are selected in
the correct order and the opening of its waiting list is advertised according to
its administrative plan.
12
1D. Implement existing procedures to ensure that termination letters include the
required information, tenants are given a hearing after an appeal has been
requested, and impartial appointed hearing officers are used.
1E. Document the applicable tenant files with all of the required information
detailing the termination of assistance process.
1F. Develop and implement controls to ensure
1. Housing assistance payments contracts are executed before housing
assistance payments are made,
2. Landlords are properly screened for eligibility and files are properly
documented,
3. Assisted units pass housing quality standards inspections before the
commencement of housing assistance payments,
4. Rent reasonableness studies are performed before a lease is approved
and files are properly documented.
1G. Repay its Housing Choice Voucher program from non-Federal funds $88,511
for housing assistance payments without a properly executed housing
assistance contract and housing assistance payments made prior to units
passing housing quality standards inspections.
1H. Develop and implement controls to ensure
1. Tenants are provided a copy of the tenancy addendum,
2. Tenant files are properly documented with an executed lease,
3. Terms for leases and housing assistance payment contracts run
concurrently.
1I. Provide adequate documentation or repay $14,568 spent on housing assistance
payments for tenants whose files did not contain an executed copy of the lease.
1J. Maintain a housing assistance payments register in accordance with the
requirements.
13
Finding 2: Tenants Lived in Units That Were Not Decent, Safe, and
Sanitary
Our inspection of 23 units showed that none met minimum housing quality standards and 6 were
in material noncompliance. In addition, the Authority failed to ensure that quality control
inspections were performed in accordance with HUD requirements. This noncompliance
occurred because the Authority’s management did not implement adequate controls to ensure
that its program units met the requirements. As a result, tenants lived in units that were not
decent, safe, and sanitary, and the Authority made housing assistance payments for units that did
not meet standards. The Authority paid property owners $14,119 in housing assistance for the 6
units in material noncompliance and $3,481 for 11 units for which it should have abated the
housing assistance payments.
The Authority’s Units Did Not
Meet HUD’s Housing Quality
Standards
We inspected a sample of 23 units from 545 program units under contract as of
March 2010 for compliance with HUD’s housing quality standards. An Authority
inspector accompanied us on the inspections and generally agreed with our
results. None of the inspected units met minimum housing quality standards. We
provided copies of our inspection forms to the Authority so that it could ensure
that the property owners corrected all deficiencies.
HUD regulations (24 CFR 982.401(a)(3)) require that assisted units meet housing
quality standards both at commencement of assisted occupancy and throughout
the assisted tenancy.
The 23 units had a total of 164 housing quality standards violations, and 6 units
were in material noncompliance with housing quality standards because they had
one or more material deficiencies that existed at the time of the Authority’s
previous inspection. The Authority paid property owners $14,119 in housing
assistance for the six units in material noncompliance. The following table lists
the most frequently occurring deficiencies.
14
Type of Number of Number Percentage
deficiency deficiencies of units of units
Electrical hazards 31 15 65
Walls 17 11 48
Windows 16 12 52
Exterior surfaces 16 10 43
Floors 13 8 35
Stairs, handrails,
porches 13 10 43
Electrical violations were the most frequently occurring deficiency. Of the 23
failing units, 15 had one or more such deficiencies. Examples of deficiencies
are shown below.
Exposed wiring on an exterior light fixture that the Authority failed
to report during its previous inspection.
15
Hole in wall at electrical outlet and exposed wiring not in conduit that the
Authority failed to report on its previous inspection.
Evidence of a roach infestation that the Authority failed to report
on its previous inspection.
Rotting soffit that the Authority failed to report on its previous inspection.
16
Tripping hazard caused by unsecured carpet on front porch/steps.
Leaking bathroom ceiling patched with tape by tenant.
The Authority Had Not
Implemented Adequate Internal
Controls
Authority management had not placed appropriate emphasis on housing quality
standards requirements. The Authority’s written procedures for quality control
inspections were inadequate in some areas and not properly followed in others. In
addition, the inspectors had received only limited training.
HUD requires (24 CFR 982.405(b)) that authorities conduct supervisory quality
control inspections. HUD Guidebook 7420.10G further requires that authorities
conduct quality control housing quality standards inspections of a sample of
Section 8 units under contract at the end of the authority’s previous fiscal year.
The sample must include all types of inspections, a cross section of
neighborhoods where program units are located, and inspections completed by all
inspectors. The Authority did not design its inspection sample to meet these
requirements. In addition, it did not adequately document the inspection results or
use them to improve inspector performance or housing quality.
17
All 11 of the quality control inspections reviewed had deficiencies related to
consistency with the previously completed housing quality standards inspection,
completeness, or both. For example, quality control inspection forms sometimes
Lacked complete tenant or unit information;
Failed to indicate that all of the unit’s rooms had been inspected;
Indicated the presence of windows when the Authority inspector indicated
that no window existed; and
Failed to note that the identified deficiencies were emergency issues
requiring repair within 24 hours.
Authority officials attributed the inconsistencies and incompleteness of the quality
control inspections to human error.
The Authority had no written policies or procedures detailing how the results of
the quality control inspections were to be used and did not use the inspection
results to improve housing quality. Quality control inspections are an essential
tool for ensuring that housing is decent, safe, and sanitary. They can be used to
determine formal or informal training needs and provide timely feedback to the
inspectors to improve the quality of future inspections and, thus, the level of
compliance with the standards.
The Authority had 1 inspector for its 545 program units. When the inspector was
unable to inspect all of the units as required, another Authority employee was
assigned to perform some of the inspections. The inspector told us that he had
received no training since 2004 and was not a certified inspector. An employee
who sometimes assisted the inspector had received some housing quality
standards training about 20 years ago. The Authority sent the inspector to
housing quality standards inspection training during the audit after we inquired
about the lack of recent training.
The Authority Did Not Always
Abate Housing Assistance
Payments as Required
Based on our review of 38 tenant files, the Authority paid $3,481 for 11 units for
which it should have abated the housing assistance payments. HUD requires (24
CFR 982.404(a)(3)) landlords to repair nonhazardous deficiencies within 30 days
and emergency items within 24 hours. If the landlord fails to make the required
repairs on a timely basis, the Authority is required to abate the housing assistance
payment. This condition occurred because the Authority lacked specific written
procedures detailing the rent abatement process. While the Authority’s
administrative plan addressed its abatement policy generally, it did not have the
specific procedures that Authority staff needed to ensure compliance.
18
Conclusion
Because Authority management did not place sufficient emphasis on housing
quality standards requirements and did not implement adequate internal controls,
(1) HUD funds were used to make housing assistance payments for units that
were in material noncompliance with standards, (2) quality control inspections
were not completed in accordance with the requirements, and (3) rents were not
abated as required. Management must provide tenants the opportunity to live in
decent, safe, and sanitary conditions by implementing appropriate policies and
procedures and ensuring that they are followed.
Recommendations
We recommend that the Director of the Greensboro Office of Public Housing
require the Authority to
2A. Repay its Housing Choice Voucher program $14,119 from non-Federal
funds for housing assistance payments made for units that were in material
noncompliance with housing quality standards.
2B. Repay its Housing Choice Voucher program $3,481 from non-Federal
funds for housing assistance payments made to owners that were
delinquent in completing required repairs.
2C. Inspect the 23 units that did not meet minimum housing quality standards
to verify that the landlords took appropriate corrective actions to make the
units decent, safe, and sanitary. If appropriate actions were not taken, the
Authority should abate the rents or terminate the contracts.
2D. Develop and implement an internal control plan and make any necessary
adjustments to its Section 8 administrative plan and/or any other Authority
policies or procedures to better ensure that (1) its units meet HUD’s
housing quality standards, (2) supervisory quality control housing quality
standards inspections are properly performed, and (3) rents are abated as
required.
2E. Perform a special inspection of a representative sample of its units to
determine the extent of housing quality standards noncompliance. The
Authority should report the results of these inspections to you, along with
an explanation of how the results were used to develop its new internal
control plan.
19
Finding 3: The Authority Mismanaged Its Special Section 8 Programs
The Authority mismanaged its Family Self Sufficiency and homeownership programs
established to help participants self-improve. The Authority did not maintain accurate
accountability of participant funds or comply with HUD’s requirements for the Section 8 Family
Self-Sufficiency program. It also did not ensure that it complied with administrative
requirements for the Section 8 homeownership program. The Authority paid monthly mortgage
assistance without a signed statement of home ownership obligations and did not correctly
calculate monthly mortgage subsidies. These deficiencies occurred because the Authority did
not follow its own procedures or consistently provide trained and capable staff familiar with the
program requirements. As a result, the Authority paid $3,667 in ineligible self-sufficiency and
home ownership expenses, and family self-sufficiency participants did not reap the full benefits
of the program
The Family Self-Sufficiency
Program Was Mismanaged
The Authority did not administer the Section 8 Family Self-Sufficiency program
in accordance with the regulations (24 CFR Part 984) and the family-self
sufficiency action plan contained within its administrative plan. HUD
implemented the program to assist families in obtaining employment and breaking
the cycle of reliance on government assistance. Housing authorities rely on
community partnerships through which opportunities and supportive services such
as job readiness training, parenting skills, and homeownership classes are made
available to families that volunteer to participate. Participating families enter into
a contractual agreement with the Authority for up to 5 years.
We reviewed the files for 4 of the 12 participants and found that the Authority did
not maintain accurate accountability of participant funds and comply with
administrative requirements. The Authority’s files did not show that any of the
participants received the appropriate support needed to aid them in becoming self-
sufficient. There was little documentation for provision of supportive services or
follow-up on the goals outlined in individual training and services plans. This
condition occurred because Authority staff was inadequately trained and not
familiar with program requirements. Consequently, the participants did not reap
the full benefits of the program.
Inaccurate Accountability of Participant Funds
The Authority did not maintain accurate accountability of participant funds. The
Authority was required to maintain an escrow account for each participant, track
fund increases and decreases and beginning and ending balances, and record
participant funds held by the Authority in the bank.
20
For the four files in our sample, the Authority did not correctly calculate Self-
Sufficiency program credits for two participants. Participants earn credits when
their income increases, thus increasing their share of the rent and decreasing the
Federal contribution. Credits earned allow the participant’s escrow account
balance to increase. The Authority used an incorrect income amount for one
participant and the incorrect initial tenant’s rent share for the other participant.
This error caused one participant’s account to be overfunded by $783 and the
other’s to be underfunded by $114.
The Authority did not have an accurate accounting of participant funds deposited
in the bank. After the computer system maintaining the escrow accounts failed,
the resident services coordinator and chief financial officer each kept an unofficial
record of the participants’ funds on deposit. However, the unofficial amounts did
not reconcile to each other or to the bank balance. For example, the coordinator’s
record showed a $22,902 balance as of December 31, 2009, whereas the bank
records reported that the balance was $39,073, a difference of $16,171. The
Authority did not detect this discrepancy because it did not implement an alternate
reconciliation control method, such as requiring the staffs to coordinate.
The Authority did not maintain escrow accounts for all participants or adjust the
escrow accounts for changes in participation. The Authority’s escrow accounts
showed only one of the four current participants reviewed. We also found $3,742
in the subsidiary ledger for a participant who had died. Regulations require that
such funds be moved from the escrow account to the Authority’s Section 8
general fund.
The Authority did not provide any of the four participants with meaningful annual
escrow account reports. None of the 2008 or 2009 annual escrow reports showed
activity in the accounts as required by the regulations and the Authority’s
administrative plan. The reports only showed end-of-year balances. Without
reports showing the increases and decreases to the fund balances, participants
would be unable to measure their success in the program or alert the Authority to
inaccuracies.
Noncompliance With Program Administration Requirements
The Authority did not maintain complete case management files. We reviewed
the four files and found that case managers did not always document monthly
contacts and the results of the meetings as required by the Authority’s
administrative plan. The participant files and correspondence stored in the
Authority’s computer system noted that meetings were held and new ones
scheduled but contained little regarding individual goals, milestones, and the
status of measures taken to assist the participants to become self-sufficient.
The Authority did not consistently enforce the requirement (24 CFR
984.303(b)(4)) that the head of household seek and maintain suitable employment
while in the program. In January of 2010, the Authority established a work search
form for unemployed individuals to record employment search efforts. The form
21
stated that failure to meet the requirement could cause a denial of escrow funds or
termination from the program. One participant had not submitted the work search
form since March 2010, and another with periods of unemployment had also not
submitted the form.
Inadequately Staffed Program
The Authority’s Self-Sufficiency program had gone through frequent periods of
short staffing since it began in November of 2007. As of September 30, 2010, the
program was being managed by the resident services coordinator. For the 8
months before her October 2009 appointment, the position was vacant. The
coordinator had no prior experience when she was hired but attended training in
November 2009 and February 2010. She was responsible for administering the
Self-Sufficiency programs for both public housing and Section 8 until June 2010
when the Authority hired a full-time coordinator for the Section 8 Self-
Sufficiency program. That full-time coordinator resigned in August 2010, leaving
the resident services coordinator to once again manage both the public housing
and Section 8 programs. Over the course of the audit, both coordinators stated
that they were not fully aware of all of the Self-Sufficiency program
requirements.
The Section 8 Homeownership
Program Was Mismanaged
The Authority did not ensure that Section 8 homeownership program
administrative requirements were met. The homeownership program allowed the
Authority to provide monthly mortgage assistance to Section 8 families that were
eligible to purchase a home under the terms of the program. The Authority’s
Section 8 administrative plan contained procedures for its homeownership
program, but staff did not always follow them.
We reviewed the files for all three participants in the Authority’s homeownership
program and found that none of the statements of home ownership obligations
specifying the participant’s responsibilities were signed before the participant
received assistance as required. One participant received monthly mortgage
assistance for more than 7 months before signing the statement. The $3,667 that
the Authority paid before having signed statements was ineligible.
Authority staff did not correctly calculate the monthly mortgage subsidies for two
of the three program participants. The Authority’s administrative plan required it
to use a form to document the monthly subsidy calculation for mortgage principal
and interest, homeowner’s insurance, property taxes, repair reserves, and utility
allowance. We recalculated the subsidies and found that one participant had been
underpaid $309 and another had been overpaid $234. We were unable to compare
our calculations to the Authority’s calculations because staff did not prepare the
required forms for two of the three participants. After we showed Authority staff
22
our calculations, the staff correctly recalculated the subsidies and reimbursed the
underpaid participant.
Conclusion
The Authority mismanaged its Family Self Sufficiency and homeownership
programs because it failed to maintain effective control over the programs.
Authority management must act immediately to improve its program compliance
by ensuring that the controls in its Section 8 administrative plan are followed. It
must also ensure that these programs are run by well-supervised, knowledgeable
staff. Taking these measures will better ensure that the Authority can help
participants fully achieve self-improvement through meaningful employment and
home ownership.
Recommendations
We recommend that the Director of HUD’s Greensboro, NC, Office of Public
Housing require the Authority to
3A. Strengthen internal controls of the Family Self-Sufficiency program by
providing adequate training to staff responsible for administering the program,
implementing existing written policies, and developing written procedures as
needed to ensure that participants are provided appropriate supporting services
as required and the files are documented.
3B. Implement written policies and procedures for the Section 8 homeownership
program to ensure that the statement of home ownership obligations is
executed before paying mortgage assistance and monthly subsidies are
correctly calculated.
3C. Recalculate escrow credits and maintain an accurate subsidiary ledger for all
active family self-sufficiency participants to ensure that correct credits are set
aside.
3D. Reconcile corrected escrow balances to the family self-sufficiency bank
account and remove any excess funds to the appropriate general fund to be
used for program expenses.
3E. Repay the Section 8 program $3,667 in ineligible Section 8 homeownership
program mortgage assistance payments from non-Federal funds.
23
SCOPE AND METHODOLOGY
Our objective was to determine whether the Authority complied with U.S. Department of
Housing and Urban Development (HUD) requirements for administering its Housing Choice
Voucher program, including its special Section 8 programs comprised of a Family Self
Sufficiency program and a homeownership program.
To accomplish our objective, we reviewed
Financial management regulations at 24 CFR 85.20, program regulations at 24 CFR Parts
982 and 984, HUD Guidebook 7420.10G, Rental Integrity Monitoring Guide, HUD’s
amended annual contributions contract with the Authority, and HUD’s Greensboro Office of
Public Housing’s correspondence and files pertaining to the Authority.
The Authority’s policies and procedures manuals, program-assisted units, program
participants’ files, program applicants’ files, housing assistance payments, utility assistance
payments, family self-sufficiency action plan, family self-sufficiency files, Section 8
homeownership program participant files, Authority-reported data in the Public and Indian
Housing Information Center, board minutes, staffing assignments, job descriptions, and
organizational charts.
We also interviewed the Authority’s employees and HUD’s Greensboro staff involved with
oversight of the Authority. We selected several non-statistical samples as described below. The
results from these samples pertain only to the items sampled and were not projected to the universe
as a whole.
We selected a non-statistical sample of 15 program participant files for general review from a
universe of 545 program participants as of March 2010. We chose 11 participant files from among
those participants who first received assistance during 2009, 1 from 2007, and 3 from 2008. As the
review progressed, we found indicators of deficiencies in two more participant files and expanded
our sample to 17 participant files.
The Authority had a total of 545 program participants at the time of our housing quality standards
sample selection. We selected a non-statistical sample of 26 program units for inspection. The first
17 were randomly selected using a random number generator, and 9 were a non-statistical selection
based on information obtained during the audit. Three tenants were removed from our sample due
to their termination from the program. We inspected the remaining 23 units for housing quality
standards compliance.
We selected a sample of 15 tenant files to evaluate the Authority’s compliance with abatement
requirements. A non-statistical random sample of 10 tenant files was selected from a universe of 31
tenants having potentially unabated rent. The 31-tenant universe identified using computer-assisted
auditing techniques had housing quality standards inspections with pass dates greater than 30 days
following the original inspection date. The remaining five of the sample were a non-statistical
selection from the housing quality standards inspections that we conducted.
24
We selected a non-statistical sample of nine tenant files to test for compliance with termination
procedures from a universe of 69 tenants that the Authority reported to have been terminated
between January 2009 and July 2010. The sample was designed to ensure terminated tenants’
files were selected from each quarter or represented each Housing Choice Voucher manager’s
tenure at the Authority during our audit period. We added an additional file to the sample that was
not included in the universe but was found during a cursory test for timely housing quality standards
requirements.
We selected a sample of four Family Self-Sufficiency program participants from the universe of 22
participants. All four tenants were a non-statistical selection designed to ensure that the reviewed
participants had gone through a reexamination and had escrow credits calculated.
The Authority had three Section 8 homeownership program participants during our audit scope. We
reviewed files for all three participants.
All electronic data relied upon during the review were tested during the performance of the
various review steps. We found a significant portion of the electronic data to be unreliable. For
example, the Authority did not maintain a housing assistance payment register or a complete and
accurate listing of tenants and provided outdated information to HUD’s Public and Indian
Housing Information Center due to the unreliability of its housing management software and the
information it contained.
We performed our onsite work from March 2010 through September 2010 at the Authority’s office
located at 213 Broad Street, Wilson, NC. The audit covered the period January 1, 2008, through
June 30, 2010, and was expanded as determined necessary.
We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence
to provide a reasonable basis for our findings and conclusions based on our audit objectives. We
believe that the evidence obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
25
INTERNAL CONTROLS
Internal control is a process adopted 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 financial 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
objectives:
Program operation – Policies and procedures that management has
implemented to reasonably ensure that a program meets its objectives.
.
Reliability of data – Policies and procedures that management has implemented
to reasonably ensure that valid and reliable data are obtained, maintained, and
fairly disclosed in reports.
Compliance with 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.
26
Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:
The Authority did not have controls for effective Section 8 administration
(findings 1-3).
The Authority did not have internal controls in place to ensure that Section 8
units met housing quality standards (finding 2).
The Authority did not have controls for effective administration of its Family
Self Sufficiency and homeownership programs (finding 3).
27
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
Recommendation
number Ineligible 1/ Unsupported 2/
1G $88,511
1I $14,568
2A 14,119
2B 3,481
3E 3,667 _______
Total $109,778 $14,568
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable 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 clarification
of departmental policies and procedures.
28
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
29
Comment 1
Comment 2
30
Comment 3
Comment 4
31
Comment 5
32
Comment 6
33
Comment 7
34
Comment 8
Comment 9
Comment 10
35
36
Comment 11
Comment 12
37
OIG Evaluation of Auditee Comments
Comment 1 We acknowledged a decrease in program performance during the Authority’s
lease up effort to attain full utilization of its program funding. However, we also
noted deficiencies during our review that existed prior to this leasing period. The
Authority did not maintain a Housing Assistance Payments register, provide
tenancy addendums to participants, or perform background checks on landlords
prior to the lease up effort to attain full utilization.
Comment 2 HUD did not approve the removal of 113 families from the program as the
Authority’s response states. HUD regulations and the Authority’s administrative
policy dictate that the Authority may terminate the Housing Assistance Payment
contract if the Authority determines, in accordance with HUD requirements, that
funding under the consolidated Annual Contributions Contract (annual budget
authority and restricted reserves) is insufficient to support continued assistance for
families in the program. The use, or non-use, of unrestricted reserves
(administrative fee reserves) for housing assistance is at the sole discretion of the
Authority. Authority management provided HUD field office staff with
documentation, prior to the release of the 113 families, indicating the Authority
had over $190,000 in administrative fee reserves. The field office suggested that
the Authority utilize all reserves before terminating assistance to the families but
the Authority chose not to do so.
Comment 3 The Authority states that its quality control inspections are done annually.
However, the Authority should conduct quality control inspections on a quarterly
basis as required by the Housing Choice Voucher Guidebook and its
Administrative plan.
Comment 4 The Authority states that prior to the excessive workload and high turnover of
staff, all termination letters contained the required information. Our review of
termination letters from this period showed that they lacked the basis for the
termination as well as information regarding the hearing process. The more
recent letters appeared to address these requirements but still failed to include the
hearing process procedures.
Comment 5 The new policies and procedures the Authority claims to have implemented to
address funds utilization, as well as any actions taken to address other
recommendations in the report, will be evaluated by the HUD Greensboro field
office as part of the recommendation clearance process. The administrative plan
should be updated to reflect any new procedures that cause a conflict with the
current plan.
Comment 6 In addition to the termination letter revisions claimed by the Authority, the letters
should also provide tenants with an outline of the Authority’s hearing process as
required by its Section 8 Administrative Plan.
38
Comment 7 OIG disagrees with the Authority’s request that it not be required to repay
$88,435 in ineligible costs paid owners without an executed housing assistance
payment contract. HUD regulations allow housing authorities to pay owners from
the beginning of the lease term if the contract is executed within 60 days.
Although there was a massive lease up effort, 60 days should have been ample
time to properly execute the contracts. In addition, although the Authority stated
that it had inspected the units before families moved in, we found that the
Authority had paid rents for at least 3 of the 86 units before they had passed
inspection.
Comment 8 The lease documentation provided by the Authority was not sufficient to address
all of the findings included in our recommendation 1I. The Authority should
provide the leases with the additional documentation identified in the report to the
HUD Greensboro field office in order to clear the entire recommendation.
Comment 9 The Authority’s statement that it inspects all assisted units annually is not correct
based on our audit work. For example, OIG inspected the unit located at 1601-F
Pecan Court, Wilson, NC 27893 on March 11, 2010. The agency’s latest
inspection of that unit was performed on January 16, 2009, nearly 14 months
earlier. We also found other instances of units not being inspected annually.
The Authority argued that some of OIG identified deficiencies were not housing
quality standards violations. For example, the Authority claimed that ant
infestations are not housing quality standards violations. The ant infestation in
the subject unit was severe and, in our opinion, meets the definition of evidence of
infestation on the HUD housing quality standards inspection checklist.
The Authority also claimed that OIG identified items that the Authority had also
identified and properly addressed during its previous inspection. The Authority
stated that, “Deficiencies can happen between inspections even when they have
been corrected previously.” While this statement is true, OIG purposely took a
conservative position. As stated in the report, “…units were in material
noncompliance with housing quality standards because they had one or more
material deficiencies that existed at the time of the Authority’s previous
inspection.” As such, the deficiencies cited as being material noncompliant
during the OIG inspections were not adequately addressed by the Agency as
claimed.
The Authority stated, “The inspector revisits each unit for re-inspection to ensure
all repairs are corrected.” We assume that the Authority meant to say “…to
ensure all repairs are made.” OIG cited several deficiencies that were present at
the time of the Authority’s previous inspection but remained uncorrected, thus we
do not agree that the Authority has always ensured that all repairs were made. For
example, OIG cited a leak in the bathroom ceiling of a unit. The tenant stated that
the leak had not been fixed even though the unit had been inspected by the
Authority and the leak was present at the time of the inspection. The leak was not
39
only present during the Authority’s latest inspection performed on October 22,
2009, but was a problem dating back more than two years (the same deficiency
was cited in the inspection performed on December 15, 2008).
The Authority’s response attempts to make the case that either it followed proper
procedures in identifying deficiencies and ensuring that they were adequately
addressed, or that the deficiencies cited by OIG somehow occurred during the
time from the Agency’s last inspection to the date of the OIG inspection. We
disagree with the Authority’s claims and its request that it not be required to repay
the ineligible costs attributable to units in material noncompliance with housing
quality standards.
Comment 10 The documentation the Authority submitted for the repayment of $3,481 in
ineligible housing assistance payments made to owners that were delinquent in
completing required repairs was not sufficient to close recommendation 2B. The
photocopy of the check showed that it was written from the Authority’s general
fund; thus, there was no evidence to show a non-Federal source of funds as
required by the recommendation. The Authority must provide acceptable
evidence of repayment to the Greensboro field office in order to clear the
recommendation.
Comment 11 The documentation the Authority submitted for the repayment of $3,667 in
ineligible homeownership program mortgage assistance payments was not
sufficient to close recommendation 3E. The photocopy of the repayment check
showed that it was written from the Authority’s general fund; thus, there was no
evidence to show a non-Federal source of funds as required by the
recommendation. The Authority must provide acceptable evidence of repayment
to the Greensboro field office in order to clear the recommendation.
Comment 12 We concluded that the Section 8 homeownership program was mismanaged
because the Authority generally failed to follow HUD’s administrative
requirements for all 3 program participants. Although we agree that the monthly
mortgage subsidy was miscalculated for only 2 participants, we believe that level
of noncompliance is significant since the entire program consisted of only 3
participants.
40
Appendix C
CRITERIA
Finding 1
24CFR85.20(b)(3)
Effective control and accountability must be maintained for all grant and
subgrant cash, real and personal property, and other assets. Grantees and
subgrantees must adequately safeguard all such property and must assure
that it is used solely for authorized purposes.
WHA Admin Plan: 16-VIII.B
The WHA will determine whether there is adequate funding to issue
vouchers, approve moves to higher cost units and areas, and continue
subsidizing all current participants by comparing the WHA’s annual
budget authority to the annual total HAP needs on a monthly basis. The
total HAP needs for the calendar year will be projected by establishing the
actual HAP costs year to date. To that figure, the WHA will add
anticipated HAP expenditures for the remainder of the calendar year.
Projected HAP expenditures will be calculated by multiplying the
projected number of units leased per remaining months by the most
current month’s average HAP. The projected number of units leased per
month will take into account the average monthly turnover of participant
families. If the total annual HAP needs equal or exceed the annual budget
authority, or if the WHA cannot support the cost of the proposed subsidy
commitment (voucher issuance or move) based on the funding analysis,
the WHA will be considered to have insufficient funding.
24CFR982.204(f)
A PHA must use a single waiting list for admission to its Section 8 tenant-
based assistance program. However, the PHA may use a separate single
waiting list for such admissions for a county or municipality.
24CFR982.204(b)
The PHA must maintain information that permits the PHA to select
participants from the waiting list in accordance with the PHA admission
policies. The waiting list must contain the following information for each
applicant listed: (1) applicant name; (2) family unit size; (3) date and time
of application; (4) qualification for any local preference; and (5) racial or
ethnic designation of the head of household.
24CFR982.206(a)(1)
When the PHA opens a waiting list, the PHA must give public notice that
families may apply for tenant-based assistance. The public notice must
state where and when to apply.
41
WHA Admin Plan: 4-II.C
The WHA [Authority] will announce the reopening of the waiting list at
least 14 days prior to the date applications will first be accepted. If the list
is only being reopened for certain categories of families, this information
will be contained in the notice.
WHA Admin Plan 16-III.C
Informal hearings will be conducted by a person or persons approved by
the WHA, other than the person who made or approved the decision or a
subordinate of the person who made or approved the decision.
HUD 7420.10G 15.4
Upon making a decision to terminate assistance, the PHA must give both
the owner and the family written notice of termination that states: (1)
reason for the termination; (2) effective date of the termination, and (3)
family’s right to request a hearing.
WHA Admin Plan 16-III.C
The WHA must schedule and send written notice of the informal hearing
to the family within 10 business days of the family’s request.
24CFR982.305(c)(2)
The PHA may not pay any housing assistance payment to the owner until
the HAP contract has been executed.
24CFR982.305(c)(1)
The PHA must use best efforts to execute the HAP contract before the
beginning of the lease term. The HAP contract must be executed no later
than 60 calendar days from the beginning of the lease term.
24CFR982.305(a)
The PHA may not give approval for the family of the assisted tenancy, or
execute a HAP contract, until the PHA has determined that all the
following met program requirements: (1) the unit is eligible; (2) the unit
has been inspected by the PHA and passes HQS [housing quality
standards]; (3) the lease includes the tenancy addendum; (4) the rent to
owner is reasonable; and (5) at the time a family initially receives tenant-
based assistance for occupancy of a dwelling unit, and where the gross
rent of the unit exceeds the applicable payment standard for the family, the
family share does not exceed 40 percent of the family’s monthly adjusted
income.
24CFR982.306(a)
The PHA must not approve an assisted tenancy if the PHA has been
informed that the owner is debarred, suspended, or subject to a limited
denial of participation.
42
24CFR982.507(a)(1)
The PHA may not approve a lease until the PHA determines that the initial
rent to owner is a reasonable rent.
HUD 7420.10G 11.2
Prior to executing a HAP contract and processing housing assistance
payments, the PHA must determine that the owner of the assisted unit is
eligible to participate in the Housing Choice Voucher Program.
24CFR982.162(a)
The PHA must use program contracts and other forms required by HUD
headquarters, including: (1) the consolidated ACC [annual contributions
contract] between HUD and the PHA; (2) the HAP contract between the
PHA and the owner; and (3) the tenancy addendum required by HUD
(which is included both in the HAP contract and in the lease between the
owner and the tenant).
24CFR982.308(f)(2)
All provisions in the HUD-required tenancy addendum must be added
word-for-word to the owner’s standard form lease that is used by the
owner for unassisted tenants. The tenant shall have the right to enforce the
tenancy addendum against the owner, and the terms of the tenancy
addendum shall prevail over any other provisions of the lease.
24CFR982.158(e)
During the term of each assisted lease, and for at least three years
thereafter, the PHA [public housing agency] must keep: (1) a copy of the
executed lease; (2) the HAP [housing assistance payments] contract; and
(3) the application from the family.
24CFR982.309(b)(1)
The term of the HAP contract begins on the first day of the lease term and
ends on the last day of the lease term.
24CFR982.158(a)
The PHA must maintain complete and accurate accounts and other records
for the program in accordance with HUD requirements, in a manner that
permits a speedy and effective audit. The records must be in the form
required by HUD, including requirements governing computerized or
electronic forms of record-keeping.
Finding 2
24CFR982.401(a)(3)
All program housing must meet the HQS performance requirements both
at commencement of assisted occupancy, and throughout the assisted
tenancy.
43
24CFR982.405(b)
The PHA must conduct supervisory quality control HQS inspections.
HUD 7420.10G 10.9
In addition to monitoring SEMAP [Section Eight Management
Assessment Program] compliance, quality control inspections provide
feedback on inspectors’ work, which can be used to determine if
individual performance or general HQS training issues need to be
addressed.
24CFR982.404(a)(3)
The PHA must not make any housing assistance payments for a dwelling
unit that fails to meet the HQS, unless the owner corrects the defect within
the period specified by the PHA and the PHA 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 PHA-approved extension).
HUD 7420.10G 10.7
The PHA must abate HAP payments to owners who do not comply with
notifications to correct HQS deficiencies with the specified time period:
24 hours or 30-days depending on the nature of the deficiency. For valid
reasons, the PHA may extend the time period. Placement of abatement
must occur by the first of the month following expiration of the notice.
Except in the case of life threatening violations requiring corrections
within 24 hours, the owner must receive 30-day written notification of the
abatement. Therefore, it is important that PHAs include the 30-day notice
to abate in the original violations notice.
WHA Admin Plan: 8-II.G
The WHA will make all HAP abatements effective the day after the WHA
specified correction period (including any extension).
Finding 3
24CFR984.303(b)(4)
The head of the FSS [Family Self-Sufficiency program] family shall be
required under the contract of participation to seek and maintain suitable
employment during the term of the contract and any extension thereof.
Although other members of the FSS family may seek and maintain
employment during the term of the contract, only the head of the FSS
family is required to seek and maintain suitable employment.
44
24CFR984.305(a)(2)(i)
The total of the combined FSS account funds will be supported in the
PHA accounting records by a subsidiary ledger showing the balance
applicable to each FSS family. During the term of the contract of
participation, the PHA shall credit periodically, but not less than annually,
to each family’s FSS account.
24CFR984.305(a)(3)
Each PHA will be required to make a report, at least once annually, to
each FSS family on the status of the family’s FSS account. At a
minimum, the report will include: (i) the balance at the beginning of the
reporting period; (ii) the amount of the family’s rent payment that was
credited to the FSS account, during the reporting period; (iii) any
deductions made from the account for amounts due the PHA before
interest is distributed; (iv) the amount of interest earned on the account
during the year; and (v) the total in the account at the end of the reporting
period.
24CFR984.305(f)(2)(ii)
FSS account funds forfeited by the FSS family will be treated as program
receipts for payment of program expenses under the PHA budget for the
applicable Section 8 program, and shall be used in accordance with HUD
requirements governing the use of program receipts.
HUD 7420.10G 23.4
The contract lists the family’s current annual income, the amount of
earned income, included in the annual income and the family’s total tenant
payment when the family begins its FSS participation. During the term of
the contract, increases in earned income and total tenant payment are
compared to the amounts listed in calculating escrow credits.
24CFR982.633(c)
Before commencement of homeownership assistance, the family must
execute a statement of family obligations in the form prescribed by HUD.
In the statement, the family agrees to comply with all family obligations
under the homeownership option.
24CFR982.635(a)
While the family is residing in the home, the PHA shall pay a monthly
homeownership assistance payment on behalf of the family that is equal to
the lower of: (1) the payment standard minus the total tenant payment; or
(2) the family’s monthly homeownership expenses minus the total tenant
payment.
45
WHA Admin Plan 18-III.E
The sales contract/purchase agreement must provide for two home
inspections. The first inspection will be completed by the Housing
Authority to certify that the home has passed the housing quality standards
inspection. The second inspection needs to be completed by an
independent inspector. The sales contract/purchase agreements must state
that the purchaser is not obligated to pay for repairs unless the repairs are
approved by the Authority.
46
The Housing Authority, City of Wilson, NC, Mismanaged Its Section 8 Program
Published by the Department of Housing and Urban Development, Office of Inspector General on 2011-01-14.
Below is a raw (and likely hideous) rendition of the original report. (PDF)