oversight

HUD Can Improve Its Oversight of Public Housing Agencies' Section 8 Project-Based Voucher Programs

Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-11-16.

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

                                                                Issue Date
                                                                       November 16, 2010
                                                                 
                                                                Audit Report Number
                                                                       2011-CH-0001




TO:         Donald J. Lavoy, Deputy Assistant Secretary for Field Operations, PQ


FROM:       Heath Wolfe, Regional Inspector General for Audit, 5AGA

SUBJECT: HUD Can Improve Its Oversight of Public Housing Agencies’ Section 8 Project-
           Based Voucher Programs

                                   HIGHLIGHTS

 What We Audited and Why

             We audited the U.S. Department of Housing and Urban Development’s (HUD)
             oversight of public housing agencies’ Section 8 Project-Based Voucher programs
             (program). The audit was part of the activities in our fiscal year 2010 annual
             audit plan and our strategic plan to help HUD resolve its major management
             challenges. Our objective was to determine whether HUD had adequate oversight
             of public housing agencies’ programs to ensure that program funds were used in
             accordance with HUD’s requirements.

 What We Found

             HUD’s Office of Public and Indian Housing lacked complete and accurate
             information to adequately monitor its program.

             HUD’s Office of Public and Indian Housing also did not adequately monitor the
             addition of new projects to its program. It did not implement adequate procedures
             and controls to ensure that its program was operated according to its and the
             public housing agencies’ requirements.

             We informed HUD’s Deputy Assistant Secretary for Field Operations of a minor
             deficiency through a memorandum, dated November 16, 2010.
What We Recommend


           We recommend that HUD’s Deputy Assistant Secretary for Field Operations
           provide additional guidance to public housing agencies to ensure accurate
           reporting by agencies of their information in HUD’s Public and Indian Housing
           Information Center, the Voucher Management System, and the agencies’ plans.
           The reporting requirements should include requiring agencies to certify to the
           accuracy of their information reported to HUD. In addition, the Deputy Assistant
           Secretary should (1) issue specific guidance to its field offices so they can ensure
           that the program’s reporting requirements are adequately monitored and (2)
           implement adequate monitoring procedures and controls for the oversight of its
           program to ensure that public housing agencies select and adequately document
           only eligible projects and use program funds in accordance with program
           requirements.

           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 our review results, supporting schedules, and discussion draft audit
           report to HUD’s Deputy Assistant Secretary for Field Operations during the audit.
           We held an exit conference with the Deputy Assistant Secretary on November 2,
           2010.

           We asked the Deputy Assistant Secretary for Field Operations to provide
           comments on our discussion draft audit report by November 15, 2010. As of 5:00
           p.m. Eastern time on November 16, 2010, the Deputy Assistant Secretary for
           Field Operations had not provided any written comments to our discussion draft
           audit report.




                                             2
                           TABLE OF CONTENTS

Background and Objective                                                        4

Results of Audit
      Finding 1: HUD Did Not Have Complete Program Information Needed To
                 Adequately Monitor Its Program                                 6

      Finding 2: HUD Did Not Ensure That Program Units Were Properly Managed    9

Scope and Methodology                                                          12

Internal Controls                                                              14

Appendix
   A. HUD’s Requirements                                                       16




                                         3
                       BACKGROUND AND OBJECTIVE

The Section 8 Project-Based Voucher program (program) was initially enacted in 1998 as part of
the statutory merger of the certificate and voucher tenant-based assistance programs.

Project-based assistance is rental assistance for eligible families who live in specific housing
developments or units. A public housing agency has the option to use a portion (up to 20 percent)
of its available tenant-based voucher funds for project-based rental assistance. There are no
appropriations for this program, and the U.S. Department of Housing and Urban Development
(HUD) does not allocate funding for project-based voucher assistance. Instead, funding for
project-based vouchers comes from funds already obligated by HUD to a public housing agency
under its annual contributions contract. The public housing agency pays the owner the
difference between 30 percent of family income and the gross rent for the unit. Under the tenant-
based Housing Choice Voucher program, the public housing agency issues an eligible family a
voucher, and the family selects a unit of its choice. If the family moves out of the unit, the
contract with the owner ends, and the family can move with continued assistance to another unit.

Under the Project-Based Voucher program, a public housing agency enters into an assistance
contract with the owner for specific units and for a specified term. The public housing agency
refers families from its waiting list to the project owner to fill vacancies. Because the assistance
is tied to the unit, a family that moves from the project-based unit does not have a right to
continued housing assistance. However, after 12 months of continued assistance, the family is
eligible for a tenant-based voucher when one becomes available. The public housing agency and
the owner execute a housing assistance payments contract or an agreement to enter into a
housing assistance payments contract.

The public housing agency and the owner execute a housing assistance payments contract for a
15-year term that is dependent on available funding under the public housing agency’s annual
contributions contract with HUD. The housing assistance payments contract establishes the
initial rents for the units and the contract term and describes the responsibilities of the public
housing agency and the owner. Housing assistance payments contracts can be renewed subject
to available funding. The public housing agency must adopt a written policy for selection of
units to which assistance will be attached and must publicly advertise that it will accept owner
proposals for the program.

In 2000, Congress substantially revised the program. Specifically, Section 232 of the 2001
Appropriations Act (Act) revised the provisions of the United States Housing Act of 1937 that
govern the authority of a public housing agency to designate a portion of its available tenant-
based voucher funds for project-based assistance. Consistent with legislative intent, it was also
HUD’s objective to make the program more flexible and workable and to help public housing
agencies, project owners, and eligible families in need of housing take immediate advantage of
the new statutory features.

HUD issued a Federal Register notice on January 16, 2001, which provided guidance on the
changes and requirements of the Act for eligible families, public housing agencies, project


                                                 4
owners, and other interested members of the public. It included guidance stating that public
housing agencies could also use project-based assistance in existing units. Previously, project-
based assistance was only to be used in rehabilitated or newly constructed units.

HUD issued its final rule for the program, effective November 14, 2005, which replaced the
project-based certificate regulations with the comprehensive new Project-Based Voucher
program. The rule was based on the statutory authorities enacted in 1998 and 2000. The final
rule implemented the program.

On November 24, 2008, HUD issued a notice that provided information about the applicability to
HUD’s public housing and Section 8 tenant-based voucher and Project-Based Voucher programs
of certain provisions of the Housing and Economic Recovery Act of 2008. This notice (1)
provided an overview of key provisions that affected HUD’s public housing programs, (2)
identified those provisions that were self-implementing and required no action on the part of
HUD for participants to commence taking action to be in compliance and those provisions that
required implementing regulations on the part of HUD, and (3) advised of efforts underway
within HUD to further facilitate compliance with the new law, including rules and guidance that
may be necessary or appropriate.

Our objective was to determine whether HUD had adequate oversight of public housing
agencies’ programs to ensure that program funds were used in accordance with HUD’s
requirements.




                                                5
                                 RESULTS OF AUDIT

Finding 1: HUD Did Not Have Complete Program Information Needed
               To Adequately Monitor Its Program
HUD’s Office of Public and Indian Housing did not have complete and accurate information
about its program because public housing agencies did not comply with HUD’s requirements and
their respective program administrative plans when reporting information regarding program
participation. Incomplete and inaccurate information was transmitted because HUD did not
provide specific guidance to field offices regarding how to monitor the program and to public
housing agencies regarding how to report their participation in the program. As a result, HUD
missed an opportunity to obtain the information necessary to fully monitor up to 20 percent of its
Housing Choice Voucher program funding which could be as much as $3.27 billion, but
currently stands at more than $385 million, or nearly 2.4 percent, based on current participation
as reported by agencies’ responses to our survey.



 Public Housing Agencies Did
 Not Report Complete and
 Accurate Program Information

               HUD’s Office of Public and Indian Housing lacked adequate monitoring
               requirements to ensure that public housing agencies reported complete and accurate
               information in HUD’s Public and Indian Housing Information Center (PIC) and
               Voucher Management System and their agency plans. HUD relies on agencies to
               submit accurate, complete, and timely data in its systems to administer, monitor, and
               report on the management of its Housing Choice Voucher program.

               We obtained a key management indicators report from PIC to determine the total
               number of program vouchers reported by public housing agencies. The agencies
               reported 32,404 program vouchers and 3,465 Section 8 project-based certificates
               for a nationwide total of 35,869 program vouchers and certificates.

               We reviewed the Voucher Management System submissions as of May 31, 2010,
               to determine whether agencies reported their use of program vouchers and/or
               certificates in the section called “the number of vouchers covered by Project-
               Based Agreements to enter into Housing Assistance Payments Contracts and
               Housing Assistance Payments Contracts.” According to the Voucher
               Management System, 242 public housing agencies reported 33,330 program
               vouchers and/or certificates.

               We reviewed the public housing agency plans (plan) for the 2,480 public housing
               agencies that participated in the Section 8 Housing Choice Voucher program to



                                                 6
           determine whether they also participated in the program. We determined that 309
           of the agencies reported in their plan that they used or intended to use program
           vouchers.

           We compared the public housing agencies’ survey responses to the information
           reported in PIC and the Voucher Management System (see Scope and
           Methodology section of this audit report) and determined that

                 341 agencies used 52,446 program vouchers and/or certificates, 16,500
                  (146 percent) more than reported in PIC and 19,000 (157 percent) more
                  than reported in the Voucher Management System;

                 257 of the 341 agencies (75 percent) did not correctly report their use of
                  program vouchers and/or certificates in the Voucher Management System;
                  and

                 227 of the 341 agencies (67 percent) did not correctly report their use of
                  program vouchers and/or certificates in PIC.

HUD’s Monitoring Procedures
and Controls Had Weaknesses

           The Voucher Management System supports the information management needs of
           the program and management functions performed by HUD’s Financial
           Management Division, Financial Management Center, and Real Estate Assessment
           Center. The Voucher Management System’s primary purpose is to monitor and
           manage public housing agencies’ use of vouchers. It collects public housing agency
           data that enable HUD to accurately fund, obligate, and disburse funding in a timely
           manner based on actual public housing agency use. The Voucher Management
           System is a critical data system that is used for a variety of major functions,
           including budget formulation, utilization analysis, and funding allocations.
           Therefore, accuracy of the data is extremely important.

           HUD’s Deputy Assistant Secretary for Field Operations said that there was no
           HUD database that specifically listed the public housing agencies that participated
           in the program. He said that HUD also planned to obtain information from the
           public housing agencies to determine how many participated in the program and
           how many units were on the program. Going forward, HUD plans to require
           public housing agencies to notify its field offices of their intent to use program
           vouchers.

           The Deputy Assistant Secretary also said that HUD must do a better job of
           relaying program requirements to the public housing agencies. As of July 2010,
           HUD’s Office of Public and Indian Housing was working to issue a Federal
           Register notice with new guidance that would implement changes to the program


                                            7
             in conjunction with the Housing and Economic Recovery Act. HUD believed that
             this guidance would be more informative and useful for agencies than its existing
             guidance. It was also considering issuing a public and Indian housing (PIH)
             notice and possibly a new chapter in its Housing Choice Voucher Guidebook for
             the program.

             HUD’s Deputy Assistant Secretary said that HUD’s main program monitoring
             focus would be the agencies’ record keeping and financial reporting. He said that
             HUD’s intention was to have more distinct guidance on the program.

             The incorrect reporting by the public housing agencies in their agency plans
             occurred because HUD did not appropriately review the plans.

             If HUD’s Deputy Assistant Secretary successfully implements distinct program
             guidance to its field offices and public housing agencies, the opportunity exists
             for more accurate and updated information in PIC and the Voucher Management
             System and improved oversight of the program.

Conclusion

             As a result of the needed improvements to HUD’s oversight of public housing
             agencies’ program information reporting, HUD lacked complete and accurate
             information regarding the use of potentially up to 20 percent ($3.27 billion) of its
             Housing Choice Voucher program funding.

Recommendations

             We recommend that HUD’s Deputy Assistant Secretary for Field Operations

             1A. Provide additional guidance to public housing agencies to ensure accurate
                 reporting by agencies of their information in PIC, the Voucher Management
                 System, and the agencies’ plans. The reporting requirements should include
                 requiring agencies to certify to the accuracy of their information reported to
                 HUD.

             1B. Issue specific guidance to its field offices so they can ensure that the
                 program’s reporting requirements are adequately monitored.




                                               8
Finding 2: HUD Did Not Ensure That Program Units Were Properly
                            Managed
HUD’s Office of Public and Indian Housing did not implement adequate procedures and controls
to ensure that public housing agencies operated their programs according to HUD’s and their
respective requirements. Additionally, HUD did not provide specific guidance to its field offices
so they could monitor the program. This weakness occurred because HUD did not put an
emphasis on the program since it was such a small part of the overall Section 8 program. As a
result, HUD lacked assurance that more than $16 million in program funds was used in
accordance with its program requirements.


 Public Housing Agencies Did
 Not Properly Manage Their
 Programs

              We issued nine audit reports on seven public housing agencies within Region V
              between March 2007 and June 2010. We determined the seven agencies lacked
              documentation to support the eligibility of the projects’ units. Examples of
              missing documentation included (1) environmental reviews, (2) proper rent
              reasonableness, (3) housing quality standards inspections, (4) deconcentration of
              poverty reviews, and (5) subsidy-layering reviews. Overall, for their respective
              programs, all seven agencies paid more than $14.3 million in housing assistance
              and utility allowances, and the associated administrative fees for units where the
              supporting documentation to determine the eligibility to receive assistance was
              not available and/or appropriate. Specific details for only program violations for
              five of the agencies are provided below.

                     The Columbus Metropolitan Housing Authority (Columbus) administered
                      its program contrary to HUD’s requirements. Columbus did not perform
                      environmental reviews for 586 units, failed to conduct housing quality
                      standards inspections for 86 units before entering into the housing
                      assistance payments contracts, inappropriately paid more than $149,000 in
                      housing assistance for 24 units not identified in its housing assistance
                      payments contracts, and underpaid more than $103,000 in housing
                      assistance for 116 program households. The underpayments occurred
                      when Columbus failed to use the correct section of the HUD Form 50058
                      and charged the households more than the program’s maximum limit of 30
                      percent of their monthly adjusted income (see Office of Inspector General
                      (OIG) audit report # 2007-CH-1004, issued March 17, 2007).

                     The Indianapolis Housing Agency (Indianapolis) could not provide
                      documentation showing that it complied with HUD’s requirements for the
                      selection and approval of its 11 projects receiving program assistance as of
                      April 2008, including a project in which it had an identity of interest. As a


                                                9
       result, Indianapolis could not support that payment of $2.4 million for any
       of the 11 projects was eligible for program assistance (see OIG audit
       report #2009-CH-1002, issued January 23, 2009).

      The Public Housing Agency of the City of Saint Paul (Saint Paul) was
       unable to provide documentation showing that it conducted initial
       inspections before executing housing assistance payments contracts to
       support more than $1.3 million in housing assistance and utility allowance
       payments. Additionally, it did not obtain subsidy-layering reviews for 10
       projects. However, the subsidy-layering reviews were not conducted
       because HUD’s headquarters Office of Public Housing and Voucher
       Programs incorrectly advised HUD’s Minneapolis Office of Public
       Housing and Saint Paul that subsidy-layering reviews were not required
       for new construction and rehabilitation projects unless tax credits were
       involved (see OIG audit report #2009-CH-1015, issued September 25,
       2009).

      The DuPage Housing Authority (DuPage) was unable to support the use of
       more than $3.4 million in housing assistance payments and inappropriately
       paid more than $33,000 in housing assistance. It also did not comply with
       HUD’s requirements in determining appropriate contract rents for program
       units and overpaid more than $260,000 in housing assistance.

       Further, DuPage did not comply with HUD’s requirements and its
       program administrative plan regarding the selection of program
       households. Instead of administering a waiting list for its program, it
       allowed the program projects to select the households and did not perform
       quality control reviews of the selection process. As a result, it
       inappropriately paid more than $188,000 in housing assistance and was
       unable to support the use of more than $57,000 in housing assistance
       payments (see OIG audit report # 2010-CH-1008, issued June 15, 2010).

      The Michigan State Housing Development Authority (Michigan State)
       lacked documentation to support its selection and approval of its program
       projects. As a result, it was unable to support more than $1 million in
       housing assistance and utility allowance payments and that $84,509 in
       administrative fees that it received were appropriately earned (see OIG
       audit report #2009-CH-1019, issued September 30, 2009).

Five of the agencies audited did not properly calculate housing assistance and
utility payments. In addition, we identified problems with supporting household
eligibility. Problems in these areas would indicate problems across the entire
Section 8 Housing Choice Voucher program. For these five agencies, we
identified more than $2.2 million in questioned costs.




                                10
HUD Did Not Dedicate
Adequate Resources to the
Program


             Michigan State contacted HUD’s Detroit Office of Public Housing before our
             audits and requested assistance in the administration of its program. The Detroit
             office planned to provide training to Michigan State and its staff, but it cancelled
             the training due to budget constraints.

             HUD’s General Deputy Assistant Secretary for Public and Indian Housing said
             that HUD had not established requirements or issued guidance to its field offices
             regarding the monitoring of the program.

             The former Associate Deputy Assistant Secretary for Public Housing and
             Voucher Programs said that HUD did not monitor or require the field offices to
             monitor the program because it was such a small aspect of the Section 8 Housing
             Choice Voucher program. However, as mentioned in finding 1, HUD lacked
             complete and accurate information needed to determine the program’s actual size
             while being aware that up to 20 percent of the housing choice voucher funding
             could be used for the program.


Conclusion

             The deficiencies in HUD’s program were significant and demonstrated a lack of
             effective program oversight. As a result, HUD lacked assurance that more than
             $16 million in program funds was used in accordance with its program
             requirements based upon the results of our nine previously mentioned audits (see
             Scope and Methodology section of this audit report for the calculation).

Recommendation


             We recommend that HUD’s Deputy Assistant Secretary for Field Operations

             2A. Implement adequate monitoring procedures and controls for the oversight of
                 its program to ensure that public housing agencies select and adequately
                 document only eligible projects and use program funds in accordance with
                 program requirements.




                                              11
                        SCOPE AND METHODOLOGY

To accomplish our objective, we reviewed applicable laws; HUD’s regulations at 24 CFR (Code
of Federal Regulations) Parts 903, 908, 982, and 983; PIH Notices 2005-29 and 2007-29; HUD
Handbook 7460.7; Housing Choice Voucher Guidebook 7420.10; the Voucher Management
System User Manual; Section 232 of Public Law 106-377, dated January 16, 2001; the Project-
Based Voucher Program Final Rule, dated October 13, 2005; the Project-Based Voucher
Program Federal Register notice, dated November 24, 2008; form HUD-50058; HUD’s public
housing agency plan review process; and the Rental Integrity Monitoring Review Guide and
requirements.

We also interviewed HUD’s staff.

Finding 1

PIH Notice 2010-5 states that the Housing Choice Voucher program budget for calendar year
2010 is $18,184,200,000. Of the more than $18 billion, $16,339,200,000 is allocated to housing
assistance payments renewals. The program allows agencies to use up to 20 percent of their
housing assistance payments funding or $3,267,840,000 ($16,339,200,000 times 20 percent).

We surveyed the 2,480 (100 percent) Section 8 public housing agencies to determine whether
they participated in the program, reported their program households separately in PIC, reported
their program vouchers appropriately in the Voucher Management System, and reported the use
or intent to use program vouchers in their agency plans. We received 1,434 responses (58
percent) out of the 2,480 public housing agencies surveyed. Of the 1,434 responses, 341 public
housing agencies responded that they participated in the program using 52,446 program
vouchers.

We determined the current dollar amount of funding for the program by using the average
housing assistance payment according to PIC ($612) times the reported units in the program
(52,446) times 12 months ($385,163,424). This is 2.4 percent of the voucher program funding
and nearly 12 percent of the maximum allowable Project-Based Voucher program funding.

We reviewed 100 percent of the public housing agencies that participated in HUD’s Housing
Choice Voucher program to determine whether they also participated in the program. To do this,
we obtained a key management indicators report in PIC to determine the total number of
program vouchers reported by public housing agencies. The agencies reported 32,404 Section 8
housing choice vouchers and 3,465 Section 8 project-based certificates in PIC nationwide for a
total of 35,869 program vouchers and certificates.

We reviewed HUD’s Voucher Management System submissions as of May 31, 2010, to
determine whether agencies reported the use of program vouchers and/or certificates in the
section called “the number of vouchers covered by Project-Based Agreements to enter into
Housing Assistance Payments contracts and Housing Assistance Payments Contracts.” We
determined that 242 agencies reported 33,330 program vouchers and/or certificates in the system.


                                               12
We reviewed the public housing agencies’ agency plans for the 2,480 agencies that participated
in the Section 8 Housing Choice Voucher program to determine whether the agencies also
participated in the program. We determined that 309 of the agencies reported that they used or
intended to use program vouchers in their plan.

We compared the information reported in PIC, the Voucher Management System, and approved
agency plans.

We relied on computer-processed data contained in PIC, the Voucher Management System, and
the public agencies’ plans.

Finding 2

We conducted external audits of the programs of the following public housing agencies:
Columbus Metropolitan Housing Authority, Indianapolis Housing Agency, Portage Metropolitan
Housing Authority, Public Housing Agency of the City of Saint Paul, Grand Rapids Housing
Commission, Michigan State Housing Development Authority, and the DuPage Housing
Authority.

The external audits contained the following questioned costs regarding the program:

                                                                 Questioned
                               Audit report #                       costs
                  2007-CH-1004 (Columbus, OH)                     $1,271,537
                  2009-CH-1002 (Indianapolis , IN)                 2,420,200
                  2009-CH-1003 (Portage, OH)                         915,775
                  2009-CH-1015 (Saint Paul, MN)                    1,401,547
                  2009-CH-1016 (DuPage, IL) Phase 1                  445,272
                  2009-CH-1019 (State of Michigan) Phase 1         1,132,200
                  2010-CH-1003 (Grand Rapids, MI)                  3,293,123
                  2010-CH-1008 (DuPage, IL) Phase 2                4,724,105
                  2010-CH-1007 (State of Michigan) Phase 2           963,740
                                   Total                         $16,567,499

We performed our audit work from April through July 2010 at HUD headquarters and HUD’s
Columbus field office. The audit covered the period January 1, 2008, through March 31, 2010,
but was expanded when necessary to include other periods.

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.




                                              13
                              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
               objective:

                  Effectiveness and efficiency of operations – Policies and procedures that the
                   audited entity has implemented to provide reasonable assurance that a program
                   meets its objectives, while considering cost effectiveness and efficiency.

                  Reliability of financial reporting – Policies and procedures that management has
                   implemented to provide reasonable assurance regarding the reliability of
                   financial reporting and the preparation of financial statements in accordance with
                   generally accepted accounting principles.

                  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.




                                                 14
Significant Deficiency


            Based on our review, we believe that the following item is a significant deficiency:

                  HUD lacked adequate procedures and controls to ensure that public housing
                   agencies accurately reported the use of program funds and assurance that the
                   agencies used program funds in accordance with HUD’s and their program
                   requirements (see findings 1 and 2).

Separate Communication of a
Minor Deficiency

            We informed HUD’s Deputy Assistant Secretary for Field Operations of a minor
            deficiency through a memorandum, dated November 16, 2010.




                                             15
Appendix A

                              HUD’s REQUIREMENTS

Finding 1
HUD’s regulations at 24 CFR 908.101 state that the purpose of this part is to require public
housing agencies that operate public housing; Indian housing; or Section 8 rental certificate,
rental voucher, and moderate rehabilitation programs to electronically submit certain data to
HUD for those programs. These electronically submitted data are required for forms HUD-
50058, Family Report, and HUD-50058-FSS, Family Self-Sufficiency Addendum. Applicable
program entities must retain the form HUD-50058 during the term of each assisted lease and for
at least 3 years thereafter to support billings to HUD and to permit an effective audit.

PIH Notice 2005-29 states that public housing agencies must enter data for project-based
vouchers into section 11 of the Family Report, form HUD-50058. The public housing agency
must also continue entering information on families receiving project-based certificate assistance
in section 11 of the Family Report, form HUD-50058. Public housing agencies must submit
these data in PIC for the affected families.

PIH Notice 2007-29 states that HUD continues to place great importance on the data it receives
from agencies in its housing information center. HUD relies on agencies to submit accurate,
complete, and timely data to administer, monitor, and report on the management of the Housing
Choice Voucher program. Agencies that administer Housing Choice Voucher programs must
submit 100 percent of family records to PIC via form HUD-50058, Family Report. HUD relies
on the information entered into its housing information center as it is the official system for
tracking and accounting for family characteristics, income, rent portions, and other occupancy
factors. Pursuant to 24 CFR 982.152(d), HUD may reduce or offset any administrative fee to an
agency in an amount determined by HUD if the agency fails to perform its administrative
responsibilities. Agencies subject to sanctions because their reporting rates fell below 95 percent
may have their monthly administrative fee reduced or offset in an amount determined
appropriate by HUD. In determining whether and to what extent HUD will reduce or offset the
administrative fees, HUD will consider such factors as the magnitude of the deficient reporting
rate and the number of months that the reporting deficiency persists. All sanctioned funds will
be permanently recaptured and will not be returned to the agency once its reporting rate is in
compliance. HUD will assess all agencies administering Housing Choice Voucher programs
quarterly, effective with the submission of the March 31, 2008, management system data. HUD
verifies five of the Section Eight Management Assessment Program indicators with data agencies
provide to the center on the form HUD-50058.

HUD’s management system user manual requires the public housing agencies to use form HUD-
52681-B for reporting voucher uses and expenses. The “Other Activities” section of the form
HUD-52681-B contains a section in which to report the number of vouchers that are covered by
program housing assistance payments contracts and agreements to enter into housing assistance
payments contracts. This number is defined as the total number of vouchers that the public


                                                16
housing agency has withheld from leasing to be available for program housing assistance
payments contracts when executed and the total number of vouchers in use under a program
housing assistance payments contract.

HUD’s regulations at 24 CFR 903.12(b) state that for streamlined annual plans for fiscal years in
which the 5-year plan is also due, the streamlined annual plan of the small agency shall consist of
the information including whether the agency wishes to use the Project-Based Voucher program.
The streamlined annual plan of the small agency must also include a statement of the projected
number of project-based units and general locations and how project basing would be consistent
with its agency plan.

HUD’s regulations at 24 CFR 903.12(c)(2) state that streamlined annual plans for all other fiscal
years must include a determination of whether the agency wishes to use the Project-Based
Voucher program and a statement of the projected number of project-based units and general
locations and how project basing would be consistent with its agency plan.

HUD’s regulations at 24 CFR 903.25 state that an agency must comply with the rules, standards,
and policies established in the plans. To ensure that an agency is in compliance with all policies,
rules, and standards adopted in the plan approved by HUD, HUD shall, as it deems appropriate,
respond to any complaint concerning agency noncompliance with its plan. If HUD should
determine that an agency is not in compliance with its plan, HUD will take whatever action it
deems necessary and appropriate.

HUD’s public housing agency plan review process states that HUD field offices review the
agency plans to determine completeness, consistency, and compliance. The field offices use an
agency plan checklist as the official review record for the agency’s plan. If the reviewer
determines that any section of the plan is not in compliance with the three standards, he or she
must identify and explain which of the three criteria for disapproval apply in the spaces provided
in the checklist. One of the components of the agency plan checklist is the use of Section 8
project-based vouchers. If the reviewer determines that the agency plan conforms to the three
statutory standards of completeness, consistency, and compliance, the public housing director or
HUD director will approve the agency plan. A plan will be automatically approved if HUD does
not disapprove it within the 75-day timeframe. If after reviewing an agency plan, the public
housing director determines that the agency plan does not comply with any of the three statutory
standards, the director will disapprove the agency plan. The public housing director may
disapprove an agency plan for technical or substantive deficiencies.




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