oversight

The Housing Authority of the County of Cook, Chicago, IL, Needs to Improve Its Controls Over Its Administration of Section 8 Housing Assistance Payments to Its Nonprofit Units

Published by the Department of Housing and Urban Development, Office of Inspector General on 2011-02-07.

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

                                                                  Issue Date
                                                                          February 7, 2011
                                                                   
                                                                  Audit Report Number
                                                                          2011-CH-1005




TO:         Steven E. Meiss, Director of Public Housing Hub, 5APH


FROM:       Ronald Farrell, Acting Regional Inspector General for Audit, 5AGA

SUBJECT: The Housing Authority of the County of Cook, Chicago, IL, Needs To Improve
           Its Controls Over Its Administration of Section 8 Housing Assistance
           Payments to Its Nonprofit Units

                                    HIGHLIGHTS

 What We Audited and Why

             We audited the Housing Authority of the County of Cook’s (Authority) nonprofit
             development activities. The audit was part of the activities in our fiscal year 2010
             annual audit plan. We selected the Authority’s nonprofit development activities
             based on a citizen’s complaint forwarded to our office from the County of Cook,
             IL’s Office of the Independent Inspector General. Our objective was to
             determine whether the Authority administered its Section 8 housing assistance
             payments to its nonprofit’s units in accordance with the U.S. Department of
             Housing and Urban Development’s (HUD) requirements and the Authority’s
             Section 8 administrative plan.

 What We Found

             The Authority’s administration of its Section 8 Housing Choice Voucher program
             (program) housing assistance payments to its nonprofit instrumentality’s,
             Turnstone Development (Turnstone), units was inadequate. The Authority failed
             to collect more than $30,000 in housing assistance payments made to an incorrect
             program landlord.
           The Authority also miscalculated Program housing assistance payments for its
           project-based vouchers allocated to 21 Turnstone units, resulting in the
           underpayment of more than $10,000 in housing assistance to 21 households.
           Further, the Authority failed to recover housing assistance payments made for
           four Program households after they were deceased, resulting in more than $4,000
           in overpayments to Turnstone units.

           We informed the Authority’s executive director and the Director of HUD’s
           Chicago Office of Public Housing of minor deficiencies through a memorandum,
           dated February 2, 2011.


What We Recommend

           We recommend that the Director of HUD’s Chicago Office of Public Housing
           require the Authority to (1) reimburse its program more than $30,000 from non-
           Federal funds for the housing assistance payments owed by an incorrect program
           landlord, (2) reimburse the 21 program households more than $10,000 from
           program funds for the underpayment of housing assistance, and (3) reimburse its
           program more than $4,000 from non-Federal funds for the housing assistance
           payments made for deceased households.

           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 and supporting schedules to the Director of
           HUD’s Chicago Office of Public Housing and the Authority’s executive director
           during the audit. We provided our discussion draft audit report to the Authority’s
           executive director, its board chairman, and HUD’s staff during the audit. We held
           an exit conference with the executive director on January 7, 2011.

           We asked the executive director to provide written comments on our discussion draft
           audit report by January 14, 2011. The executive director provided written
           comments, dated January 14, 2011. The director partially agreed with our findings
           and recommendations. The complete text of the written comments, except for the 70
           pages of supporting documentation that were not necessary for understanding the
           director’s comments, along with our evaluation of that response, can be found in
           appendix B of this report. We provided the Director of HUD’s Chicago Office of
           Public Housing with a complete copy of the Authority’s written comments plus the
           70 pages of supporting documentation.




                                            2
                            TABLE OF CONTENTS

Background and Objective                                                                4

Results of Audit
      Finding 1: The Authority Failed to Collect Housing Assistance Payments Made to
                 an Incorrect Program Landlord                                         6

      Finding 2: The Authority Miscalculated Housing Assistance Payments for Its
                 Section 8 Project-Based Vouchers                                      8

      Finding 3: The Authority Failed to Recover Housing Assistance Payments for
                 Deceased Program Households                                           10

Scope and Methodology                                                                  13

Internal Controls                                                                      15

Appendixes
   A. Schedule of Questioned Costs and Funds To Be Put to Better Use                   17
   B. Auditee Comments and OIG’s Evaluation                                            18
   C. Federal Requirements and Authority’s Program Administrative Plan                 25




                                             3
                      BACKGROUND AND OBJECTIVE

The Housing Authority of the County of Cook (Authority) was established in 1946 as a
municipal corporation. It is responsible for promoting adequate and affordable housing,
economic opportunity, and a suitable living environment free from discrimination. The
commissioners created the Authority because Cook County was experiencing population growth
but did not have sufficient housing to meet the need. The Authority initially focused on
improving existing housing conditions, but with the 1949 U.S. Housing Act, it was given aid to
construct and maintain housing for low-income families. By 1953, the Authority had programs
in many Cook County suburban communities including Robbins, Chicago Heights, and Summit.
By 1961, public housing senior residences were also underway. As the need for affordable
housing increased, the Authority continued to build and maintain its public housing units.

The Authority is governed by a six-member board of commissioners appointed by the Cook
County board president and confirmed by the full board for 5-year terms. The Authority’s
executive director, appointed by the board of commissioners, is responsible for executing the
policies established by the board of commissioners. As of November 2010, the Authority
managed more than 2,000 public housing units and nearly 12,000 Section 8 Housing Choice
Voucher program vouchers.

Turnstone Development (Turnstone), an Illinois 501(c)(3) nonprofit corporation that serves as an
instrumentality of the Authority, was created on October 8, 1998. It is responsible for providing
new, affordable housing opportunities for families and the elderly throughout suburban Cook
County. Turnstone is governed by a five-member board of commissioners that consists of four
Authority board commissioners and the Authority’s executive director. Turnstone has an
ownership interest in eight developments that receive Section 8 housing assistance payments
from the Authority. The Authority made Program housing assistance payments of nearly $4.1
million from November 2002 through February 2010 for 228 of the 877 Turnstone units located
in the eight developments.

We conducted walkthrough observations of 16 Turnstone units receiving housing assistance
payments from 4 developments on June 2 and 3, 2010. The units passed an annual housing
quality standards inspection conducted by the Authority within 31 to 79 days from the dates we
conducted the walkthrough observations. The 16 Turnstone units passed the review of our
appraiser.

The citizen complaint forwarded to our office from the County of Cook’s Office of the
Independent Inspector General alleged that Turnstone’s funds were being commingled with the
Authority’s funds and the Authority was using Turnstone’s procured vendors without following
the appropriate procurement policies. We reviewed Turnstone’s financial records and randomly
selected 30 transactions (15 cash receipts and 15 cash disbursements) from its general ledgers.
We determined that Turnstone adequately maintained the 30 transactions separate from the
Authority’s financial records and bank accounts. Additionally, we randomly selected six
vendors that the Authority shared with Turnstone and determined that the Authority followed




                                                4
HUD’s procurement requirements in contracting with the vendors. Based on these results, we
determined that the commingling of funds and procurement areas did not warrant further review.

Our objective was to determine whether the Authority administered its Section 8 housing
assistance payments to Turnstone’s units in accordance with the U.S. Department of Housing
and Urban Development’s (HUD) requirements and the Authority’s Section 8 administrative
plan.




                                              5
                                RESULTS OF AUDIT

Finding 1: The Authority Failed to Collect Housing Assistance
           Payments Made to an Incorrect Program Landlord
The Authority failed to collect housing assistance payments electronically deposited into the
bank account of an incorrect program landlord. The housing assistance payments were not
collected because the Authority failed to enforce the repayment agreement that was drafted for
the incorrect program landlord. As a result, the Authority was owed more than $30,000 in
housing assistance payments.


 Housing Assistance Payments
 Owed to the Authority Were
 Not Collected

              The Authority electronically deposited housing assistance payments totaling
              $58,456 on October 1, October 15, and November 1, 2008, for 44 program
              households residing in the Thomas Place development, rental property in which
              Turnstone has an ownership interest, into the bank account of an incorrect
              program landlord who was not the owner of Thomas Place. This error occurred
              because the Authority’s staff mistakenly entered the landlord’s bank account
              information into its computer system as the bank account for the owner of the
              Thomas Place development. Thomas Place’s property manager notified the
              Authority in November 2008 that it had not received housing assistance payments
              for October and November 2008. Once the Authority became aware of this issue,
              it paid Thomas Place for the $58,456 in housing assistance that it did not receive
              and instructed its financial institution to recall the housing assistance which was
              mistakenly paid to the incorrect program landlord. However, when an attempt
              was made to reverse the electronic transfer of funds, the $58,456 in housing
              assistance payments made to the landlord had been moved out of the account.

              The Authority’s former chief financial officer drafted a repayment agreement
              which stipulated that the incorrect program landlord would make a lump sum
              payment of $15,000 to the Authority by June 30, 2009. In addition, the Authority
              would withhold the landlord’s monthly housing assistance payment for a program
              unit and the landlord would make an additional monthly repayment of $500
              beginning July 1, 2009. As of December 2010, the landlord had not signed the
              repayment agreement. The landlord made a lump sum payment of $10,000 in
              August 2009 and had not made any monthly payments. The Authority withheld
              monthly housing assistance payments totaling $18,022 owed to the landlord from
              April 2009 through October 2010. As of December 2010, the Authority was
              owed $30,434 from the landlord ($58,456 minus $10,000 minus $18,022). On
              December 30, 2010, the Authority notified the landlord indicating that unless the



                                               6
             landlord made an additional payment of $15,000 and entered into a repayment
             agreement by January 15, 2011, the Authority would proceed to file a formal
             complaint for the amount owed.

Conclusion

             As a result of the Authority’s failure to enforce a repayment agreement, the
             Authority was owed more than $30,000 in housing assistance payments.

Recommendation


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

             1A.    Pursue collection of the remaining $30,434 of inappropriate housing
                    assistance from the program landlord. If the landlord fails to repay, the
                    Authority should reimburse its program the applicable amount from non-
                    Federal funds.




                                              7
Finding 2: The Authority Miscalculated Housing Assistance Payments
               for Its Section 8 Project-Based Vouchers
The Authority miscalculated housing assistance payments for 21 of its 40 Section 8 project-
based vouchers allocated to the Whistler Crossing and Wisdom Village developments, rental
properties in which Turnstone has an owner interest. The miscalculated housing assistance
payments were made because the Authority’s staff was not familiar with HUD’s requirements
regarding the calculation of housing assistance payments for project-based vouchers. As a result,
the Authority underpaid more than $10,000 in housing assistance for 21 households.


 The Authority Miscalculated
 Housing Assistance Payments
 for Its Project-Based Vouchers

              We reviewed the housing assistance payment calculations for the Authority’s 40
              Section 8 project-based households. The Authority made housing assistance
              payments totaling $330,456 for the 40 households from July 2007 through
              February 2010. Our review was limited to the information in the Authority’s
              household files.

              For the 40 households, the Authority calculated housing assistance payments by
              subtracting the total tenant payment from the lower of the payment standard for
              the family or the gross rent. This formula is required by HUD for calculating
              housing assistance payments for tenant-based vouchers, not project-based
              vouchers. The instruction booklet to the form HUD-50058 indicates that for
              project-based vouchers, housing assistance payments are calculated by subtracting
              the total tenant payment from the gross rent. Therefore, the payment standard
              does not impact the calculation of housing assistance payments for project-based
              vouchers. As a result, the Authority miscalculated housing assistance payments
              and made underpayments totaling $10,688 to 21 of its 40 households.

 An Incorrect Section of the
 Form HUD-50058 Was Used by
 the Authority

              The miscalculations of housing assistance payments for the Section 8 project-
              based vouchers occurred because Authority staff used section 12 (section used to
              calculate for tenant-based vouchers) rather than section 11 (section used to
              calculate for project-based vouchers). According to the Authority’s executive
              director, the miscalculations were made because staff was not familiar with all of
              the requirements applicable for project-based vouchers since they make up a
              small percentage of the Authority’s Section 8 program.



                                               8
The Authority Corrected the
Issue


             We informed the Authority’s executive director on June 16, 2010, that the
             incorrect section of the form HUD-50058 was used for the calculation of the
             Authority’s Section 8 project-based vouchers. The Authority’s executive director
             issued a memorandum to the Authority’s staff on June 17, 2010, instructing that it
             use section 11 of the form HUD-50058 when calculating the housing assistance
             payments for project-based vouchers. We performed searches in HUD’s Public
             and Indian Housing Information Center database for the 40 project-based
             vouchers on June 30, 2010, and determined that as of June 25, 2010, the Authority
             was using section 11 of the form HUD-50058 to calculate the housing assistance
             payments for its Section 8 project-based vouchers.

Conclusion


             As a result of using the incorrect section of the form HUD-50058 to calculate
             housing assistance payments for the Authority’s Section 8 project-based vouchers,
             the Authority underpaid more than $10,000 in housing assistance for 21
             households. The 21 households subsequently overpaid $10,688 for their rent.

Recommendation

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

             2A.    Reimburse the 21 households cited in this finding $10,688 from its Section
                    8 program for the underpayment of housing assistance.




                                             9
Finding 3: The Authority Failed to Recover Housing Assistance
           Payments Made for Deceased Program Households
The Authority failed to recover housing assistance payments made for four program households
for the month(s) following the households’ date of death. This condition occurred because the
Authority lacked adequate procedures and controls to ensure that it appropriately followed
HUD’s requirements regarding the payment of housing assistance for deceased households. As a
result, it overpaid more than $4,000 in housing assistance.


 Housing Assistance Payments
 Were Improperly Provided for
 Deceased Program Households


              We reviewed the Social Security numbers of the 264 program households
              receiving program housing assistance payments from May 2007 through February
              2010 that resided in Turnstone’s units to determine whether payments were made
              for deceased households. The Social Security numbers for nine households were
              associated with deceased individuals. For five households, the Authority made
              housing assistance payments for the month(s) following the households’ date of
              death, which resulted in the overpayment of $7,273 in housing assistance. HUD’s
              regulations only allow housing assistance payments to be made to the owner
              while the family is residing in the contract unit.

 The Authority Lacked
 Adequate Procedures and
 Controls


              The overpayment of housing assistance occurred because the Authority lacked
              adequate procedures and controls to ensure that it appropriately followed HUD’s
              requirements regarding the payment of housing assistance for deceased
              households.

              The Authority was notified of the program household’s date of death for four of
              the five households. The Authority did not recover the housing assistance
              payments for three of the four households since it considered these units in which
              the households resided in to be project-based units and made vacancy housing
              assistance payments to owners of the developments for up to 2 months following
              the program households’ date of death. However, these units were not project-
              based since the developments housing the three units did not receive a HUD-
              approved subsidy layering review and a project-based housing assistance
              payments contract was not executed for these developments. In October 2008,
              HUD denied a waiver for the subsidy layering review and instructed the Authority
              to issue tenant-based vouchers. The Authority notified the landlords and tenants


                                              10
             of the change in February 2009. Therefore, the owners of the three units were not
             entitled to the vacancy loss payments. For the fourth household, the Authority
             properly terminated the household’s contract once it became aware of the
             household’s death. However, it did not make an entry in its financial records to
             recover the appropriate overpayments.

             For the fifth remaining household, the household’s date of death was April 25,
             2010. However, the Authority was not notified of the program household’s death
             and made housing assistance payments from May 2010 thru October 2010.
             Public and Indian Housing Notice 2010-19 (effective on May 17, 2010) requires
             public housing agencies to monitor the deceased tenants report in HUD’s
             Enterprise Income Verification system on a monthly basis in order to ensure that
             public housing agencies are aware of potential housing assistance errors. A
             deceased tenants report generated on September 29, 2010 (generated by auditors)
             identified the household as deceased.

             The Authority did not monitor the deceased tenants report in HUD’s Enterprise
             Income Verification system. As a result of this audit, the Authority recouped the
             $2,514 in housing assistance payments that was overpaid for the fifth household
             on December 8, 2010. Additionally, the Authority’s executive director issued a
             memorandum to the Authority’s staff on December 22, 2010, instructing it to
             generate the deceased tenants report on a monthly basis to avoid housing
             assistance payments subsequent to the date of death.

Conclusion


             As a result of the Authority’s failure to comply with HUD’s requirements, it
             improperly paid housing assistance. Specifically, it paid $7,273 in housing
             assistance after program households’ dates of death.

Recommendations

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

             3A.    Reimburse its program $4,759 from non-Federal funds for the improper
                    payment of housing assistance for four deceased households cited in this
                    finding.

             3B.    Implement adequate procedures and controls to ensure that housing
                    assistance paid for deceased households is recovered from the applicable
                    program landlords.




                                             11
3C.   Monitor the deceased tenants report in HUD’s Enterprise Income
      Verification system on a monthly basis in order to identify potential
      housing assistance errors.




                               12
                        SCOPE AND METHODOLOGY

To accomplish our objective, we reviewed

      Applicable laws; regulations; the Authority’s Program administrative plan; HUD’s program
       requirements at 24 CFR Parts 85, 982, and 983; Public and Indian Housing Notice 2010-19;
       and HUD’s Public and Indian Housing Information Center database.

      The Authority’s and Turnstone’s accounting records, annual audited financial statements for
       fiscal years 2006 through 2009, program household files, program housing assistance
       payments register, board meeting minutes, by-laws, computerized databases, and
       organizational charts.

      HUD’s files for the Authority.

We also interviewed the Authority’s and Turnstone’s employees and HUD staff.

Finding 2

We reviewed housing assistance calculations for 100 percent of the Authority’s 40 project-based
households that received housing assistance from July 1, 2007 through February 28, 2010. Our
review was limited to the information in the Authority’s household files.

Finding 3

We ran the Social Security numbers for the 264 Section 8 program households receiving housing
assistance payments from May 2007 through February 2010 that resided in Turnstone’s units
through the Social Security Administration’s death index. Our search revealed that the Social
Security numbers for nine of the households were associated with deceased individuals. We
compared the date of deaths of the nine households to the last month in which housing assistance
had been paid for as indicated in the Authority’s housing assistance payments register. This
review revealed that for five households, the Authority made housing assistance payments for the
month(s) following their date of death.

We used Authority-generated reports from their housing assistance payments register to
determine that from November 2002 through February 2010, the Authority paid nearly $4.1
million in housing assistance to 228 Turnstone units. We compared the monthly housing
assistance payments identified in the Authority’s register to the monthly housing assistance
payments calculated in the form HUD-50058 for 50 of the 228 Turnstone units. The monthly
housing assistance payments in the register matched the amounts in the form HUD-50058 for all
50 Turnstone units. Therefore, we concluded that the data was reliable.

We performed our on-site audit work between April and October 2010 at the Authority’s central
office located at 175 West Jackson Boulevard, Suite 350, Chicago, IL. The audit covered the
period January 1, 2008, through February 28, 2010, but was expanded when necessary.


                                               13
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 and appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                               14
                              INTERNAL CONTROLS
Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about 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
                      management has implemented to reasonably ensure that a program meets
                      its objectives.

                     Reliability of financial reporting - 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 applicable laws and regulations - Policies and
                      procedures that management has implemented to reasonably ensure that
                      resource use is consistent with laws and regulations.

               We assessed the relevant controls identified above.

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




                                                 15
Significant Deficiency

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

                 The Authority lacked adequate procedures and controls to ensure
                  compliance with Federal requirements regarding the payment of housing
                  assistance for deceased households (see finding 3).

Separate Communication of
Minor Deficiencies

            We informed the Authority’s executive director and the Director of HUD’s
            Chicago Office of Public Housing of minor deficiencies through a memorandum,
            dated February 2, 2011.




                                             16
                                  APPENDIXES

Appendix A

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

                  Recommendation                        Funds to be put
                      number            Ineligible 1/   to better use 2/
                        1A                    $30,434
                        2A                                      $10,688
                        3A                      4,759
                       Totals                 $35,193           $10,688


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

2/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. These amounts include reductions in outlays, deobligation of funds,
     withdrawal of interest, costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     that are specifically identified.




                                            17
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Ref to OIG Evaluation   Auditee Comments




                         18
Ref to OIG Evaluation   Auditee Comments




Comment 1




                         19
Ref to OIG Evaluation   Auditee Comments




Comment 2
Comment 3




                         20
Ref to OIG Evaluation   Auditee Comments




Comment 4




Comment 5




                         21
Ref to OIG Evaluation   Auditee Comments




                         22
Ref to OIG Evaluation   Auditee Comments




Comment 2
Comment 3




                         23
                         OIG Evaluation of Auditee Comments

Comment 1   We made changes to finding one to reflect the Authority’s letter dated December
            30, 2010 which requested payment from the landlord for the amount owed.

Comment 2   The Authority provided letters addressed to the 21 households as well as adjusting
            accounting entries which in its view supports that the households were reimbursed
            for their overpaid rent portion. However, since the Authority did not provide
            documentation that the checks were cashed, we still considered the overpaid rent
            to be a questionable cost.

Comment 3   We made changes to finding two to reflect the appropriate overpaid household
            rent. Overpaid rent changed from $10, 714 to $10,688.

Comment 4   The Authority argued that housing assistance payments made for three households
            following the households’ date of death were considered vacancy loss payments
            under the project based voucher program and therefore, eligible. HUD’s
            regulations at 24 CFR 982.352(b) state that the housing assistance payments
            contract may allow for vacancy payments to the owner extending from the
            beginning of the first calendar month after the move-out month for a period not
            exceeding 2 full months following the move-out month. However, the units these
            three households resided in were not project-based since the developments
            housing the units did not receive a HUD-approved subsidy layering review and a
            project-based housing assistance payments contract was not executed for these
            developments. Therefore, we still considered the payments made for the three
            households subsequent to the date of death as ineligible.

Comment 5   We made changes to finding three to reflect the appropriate overpaid housing
            assistance that needs to be recovered. Overpaid housing assistance changed from
            $7,273 to $4,759 based on the $2,514 that was recouped by the Authority.




                                            24
Appendix C

      FEDERAL REQUIREMENTS AND THE AUTHORITY’S
            SECTION 8 ADMINISTRATIVE PLAN

Finding 1
Section 14-II.C of the Authority’s Section 8 administrative plan states that when the Authority
determines that a Section 8 owner has committed program abuse, the Authority may require the
owner to repay excess housing assistance.

Part B7(a)4 of the tenant-based voucher housing assistance payments contract states that housing
assistance shall only be paid to the owner while the family is residing in the owner’s contract
unit during the term of the housing assistance payments contract.

Part B7(f) of the tenant-based voucher housing assistance payments contract states that if the
public housing agency determines that the owner is not entitled to housing assistance payment,
the public housing agency, in addition to other remedies, may deduct the amount of overpayment
from any amounts due to the owner.

Finding 2
HUD’s regulations at 24 CFR 983.351(c) state that the housing assistance payment by the public
housing agency to the owner for a project-based contract unit leased to a family is the rent to
owner minus the tenant rent (total tenant payment minus the utility allowance).

HUD’s regulations at 24 CFR 982.505(b) state that the public housing agency shall make a
monthly based housing assistance payment for tenant-based vouchers on behalf of the family that
is equal to the lower of (1) the payment standard minus the total tenant payment or (2) the gross
rent minus the total tenant payment.

Section 14-II.D of the Authority’s Section 8 administrative plan states that the Authority must
reimburse a family for any underpayment of housing assistance, regardless of whether the
underpayment was the result of staff-caused error or owner program abuse.

Finding 3
HUD’s regulations at 24 CFR 982.311(a) states that housing assistance payments are made to the
owner in accordance with the terms of the housing assistance payments contract. Housing
assistance may only be paid to the owner during the lease term and while the family is residing in
the unit.

HUD’s regulations at 24 CFR 983.55(b) state that the public housing agency may not enter an
agreement or a housing assistance payments contract until HUD or an independent entity


                                                25
approved by HUD has conducted a required subsidy-layering review and determined that
project-based voucher assistance is in accordance with HUD subsidy-layering requirements.

HUD’s regulations at 24 CFR 983.351(a)(1) state that during the term of the housing assistance
payments contract, the public housing agency shall make housing assistance payments to the
owner in accordance with the terms of the housing assistance payments contract. The payments
shall be made for the months during which a contract unit is leased to and occupied by an
eligible family.

HUD’s regulations at 24 CFR 983.351(a)(2) state that except for discretionary vacancy payments
in accordance with 24 CFR 983.352, the public housing agency may not make any housing
assistance payment to the owner for any month after the month when the family moves out of the
unit (even if the household goods or property are left in the unit).

HUD’s regulations at 24 CFR 983.351(b) state that each month the public housing agency shall
make housing assistance payment to the owner for each contract unit that complies with the
housing assistance quality standards and is leased to and occupied by an eligible family in
accordance with the housing assistance payments contract.

HUD’s regulations at 24 CFR 983.352(b)(1) state that at the discretion of the public housing
agency, the housing assistance payments contract may provide for vacancy payments to the
owner extending from the beginning of the first calendar month after the move-out month for a
period not exceeding 2 full months following the move-out month.

Section 13-II.E of the Authority’s Section 8 administrative plan states that if the family moves
out of the assisted unit, the owner is entitled to keep the housing assistance payment for the
month when the family moves out.




                                                26