Issue Date
December 21, 2010
Audit Report Number
2011-LA-1005
TO: Maria Cremer, Acting Director, Office of Community Planning and
Development, San Francisco, Region IX, 9AD
FROM: Tanya E. Schulze, Regional Inspector General for Audit, Region IX, 9DGA
SUBJECT: The City and County of San Francisco, CA, Did Not Always Ensure That
Homelessness Prevention and Rapid Re-Housing Funds Were Used as Required
HIGHLIGHTS
What We Audited and Why
We audited the City and County of San Francisco (City) because its grant of more than
$8.7 million was one of the largest Homelessness Prevention and Rapid Re-Housing
Program (HPRP) grants in the State of California. Our objective was to determine
whether the City disbursed HPRP funding in accordance with program requirements.
What We Found
The City paid for HPRP services for ineligible participants and participants whose
eligibility was not supported. It also paid for ineligible activities. We reviewed 31 case
files and found that 4 participants were ineligible and 10 did not have adequate
documentation to support eligibility. We also identified 17 additional participants that
the City had reviewed during monitoring whose eligibility was not adequately supported.
Thus, we questioned the City‟s use of more than $63,000 in HPRP funds.
What We Recommend
We recommend that the Acting Director of the San Francisco Office of Community
Planning and Development require the City to (1) reimburse the program $8,820 from
non-Federal funds for the ineligible participants and activities and determine and
reimburse any amounts that have been spent since our review for these participants; (2)
provide supporting documentation for participants‟ eligibility or reimburse its program
accounts $31,172 for participants reviewed who lacked adequate documentation and
determine and reimburse any amounts that have been spent since our review for these
participants; (3) provide supporting documentation for participants‟ eligibility or
reimburse its program accounts $23,016 based on the City‟s monitoring review and
determine and reimburse any amounts that have been spent since our review for these
participants; (4) develop and implement procedures to ensure that its subgrantees verify
and document participant eligibility in accordance with HPRP requirements; and (5)
develop and implement effective monitoring procedures to ensure, at a minimum, that
reviews are timely, deficiencies and corrections are clearly documented, and any
reimbursements for ineligible participants or participants whose eligibility cannot be
determined are repaid to the program.
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 the Authority a draft report on November 24, 2010, and held an exit
conference with the Department‟s officials on December 3, 2010. The Authority
provided written comments on December 8, 2010. It generally disagreed with our report.
The complete text of the auditee‟s response, along with our evaluation of that response,
can be found in appendix B of this report.
2
TABLE OF CONTENTS
Background and Objective 4
Results of Audit
Finding : The City Paid for Ineligible and Unsupported HPRP Services 5
Scope and Methodology 9
Internal Controls 11
Appendixes
A. Schedule of Questioned Costs 12
B. Auditee Comments and OIG‟s Evaluation 13
C. Schedule of Noncompliant Cases Per Subgrantee 27
D. Summary of Expenditures for Files Reviewed 28
E. Criteria
29
3
BACKGROUND AND OBJECTIVE
The Homelessness Prevention and Rapid Re-Housing Program.
The Homelessness Prevention and Rapid Re-Housing Program (HPRP) is a new program under
the U.S. Department of Housing and Urban Development‟s (HUD) Office of Community
Planning and Development. It was funded under the American Recovery and Reinvestment Act
of 2009 (Recovery Act) on February 17, 2009. Congress has designated $1.5 billion for
communities to provide financial assistance and services to either prevent individuals and
families from becoming homeless or help those who are experiencing homelessness to be
quickly re-housed and stabilized. HPRP funding was distributed based on the formula used for
the Emergency Shelter Grant program.
The City and County of San Francisco, CA.
HUD allocated program funds for communities to provide financial assistance and services to
either prevent individuals and families from becoming homeless or help those who are
experiencing homelessness to be quickly re-housed and stabilized. HUD used its Emergency
Shelter Grant formula to allocate program funds to metropolitan cities, urban counties, and
States. On July 31, 2009, HUD entered into a grant agreement with the City and County of San
Francisco (City) for more than $8.7 million in program funds. The agreement was pursuant to
the provisions under the Homelessness Prevention Fund, Division A, Title XII, of the Recovery
Act. The City is responsible for ensuring that each entity that administers all or a portion of its
program funds or receives all or a portion of its program funds to carry out activities fully
complies with the program requirements. On October 1, 2009, the City entered into subgrant
agreements with six nonprofit entities to carry out the program. The six nonprofit subgrantees
were Catholic Charities CYO, Holy Family Day Home, Tenderloin Housing Clinic, Hamilton
Family Center, Larkin Street Youth Center, and Eviction Defense Collaborative.
Mayor’s Office of Housing and Human Services Agency.
Two departments within the City, the Mayor‟s Office of Housing and the Human Services
Agency entered into a memorandum of understanding to oversee and administer the program
funds awarded to the City. According to this memorandum of understanding, the Mayor‟s Office
of Housing is the primary point of contact between the City and HUD for submitting required
reports and drawing down program funds. The Human Services Agency is responsible for the
day-to-day program administration, which includes coordination and monitoring of subgrantees,
ensuring the eligibility of program participants and program expenditures, and quarterly
reporting of participant data to HUD.
Our objective was to determine whether the City disbursed HPRP funds in accordance with
program requirements.
4
RESULTS OF AUDIT
Finding: The City Paid for Ineligible and Unsupported HPRP Services
The City paid for HPRP services for ineligible participants, ineligible activities, and participants
whose eligibility was not supported. This condition occurred because the City did not review
eligibility documentation when approving payments to the subgrantees or establish effective
monitoring procedures to ensure that the documentation was in the subgrantees‟ files.
Consequently, it spent more than $63,000 on services for ineligible participants and participants
for whom eligibility was not supported.
HPRP Funds Were Used for
Ineligible Participants and
Ineligible Activities
We reviewed 31 case files out of 130 for the period selected and found that the City paid
$8,320 for HPRP services for 4 ineligible participants. The ineligible participants are
discussed below.
Two participants were documented by the subgrantees as undocumented immigrants. In
one case, the participant had provided and the subgrantee included in the case file a
notice to appear in removal proceedings because he was “an alien present in the United
States who was not admitted or paroled.”1 In the other case, the subgrantee wrote in the
participant‟s case notes that the two adults in the household “are monolingual Spanish
speaking undocumented immigrants.” In accordance with Title IV of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996, no entity that receives
funds under HPRP may knowingly provide HPRP assistance to an alien who is not a
qualified alien.
One participant was not eligible for assistance because he was not at imminent risk of
becoming homeless. When he applied and was approved for assistance, he was not
behind in his rent and was not threatened with eviction, but the subgrantee approved the
payment of rental subsidies for 4 months.
One participant did not meet the City‟s income requirement because his income exceeded
30 percent of area median income ($23,750). The subgrantee did not correctly annualize
the participant‟s gross annual income. It miscalculated the participant‟s gross annual
income by taking income of $950 for a 2-week period, multiplying it by 2 to arrive at a
monthly income of $1,900, and then multiplying by 12 for an annual total of $22,800.
1
The subgrantee made the assistance payment for this ineligible participant (client C3 in appendix D). However, it
had not submitted an invoice to the City requesting reimbursement for this payment as of October 6, 2010.
Therefore, the $8,320 in ineligible costs does not include the assistance payment made for this participant.
5
The correct calculation is $950 multiplied by 26 2-week pay periods annually, which
equals $24,700. The income was understated by $1,900; therefore, the City made
ineligible payments for this participant. The subgrantee also failed to show that this
participant was at imminent risk of becoming homeless. In three other cases, annual
income was incorrectly calculated, but the participants met requirements when income
was calculated correctly.
We also found two payments totaling $1,033 for ineligible activities, although they
assisted eligible participants. In one case, the subgrantee did not obtain adequate
confirmation from the landlord of the back rent owed and, consequently, overpaid by
$500. In the other case, the subgrantee provided $533 in assistance for a partial month‟s
rent, although the participant‟s file showed that the City also provided rental assistance
for the same period through another program.2 HPRP requirements do not allow rental
assistance payments to be made for the same period and for the same cost types when
assistance is provided through another housing subsidy program (see appendix D for a
listing of funds spent per case).
The Subgrantees Did Not
Always Adequately Support
Participants’ Eligibility
The City paid for HPRP services totaling $31,172 for 10 participants whose eligibility
was not supported. Each of the four subgrantees visited provided assistance without
adequate documentation of participant eligibility. For example, 7 of the 31 files reviewed
did not include documentation or verification that the participant was imminently at risk
of becoming homeless.
Case files did not contain adequate documentation of income verification and/or financial
documentation. Subgrantees did not always ask all adult household members whether
they had income. When subgrantees calculated annual income based on only one part-
time pay stub, the files did not show an attempt to determine whether it was
representative of the usual hours worked.
Although pay stubs or Social Security letters showed direct deposit to bank accounts,
case workers often failed to ask for bank statements and wrote in the file that the
participants had “no bank account.” When files did include bank statements, it did not
appear that case workers considered the information they contained. In one case, the
recent bank statement showed deposits exceeding the income shown on the pay stubs the
participant provided. If the deposits to the bank account were an indication of true
income, the participant exceeded the City‟s income eligibility requirement (see appendix
2
The subgrantee made the assistance payment on behalf of the participant for this ineligible activity. However, it
had not submitted an invoice to the City requesting reimbursement for this payment as of October 6, 2010.
Therefore, the assistance payment of $533 was not included as part of the ineligible costs computation.
6
C for a full listing of cases of noncompliance and appendix D for a listing of funds spent
per case).
All Assistance Payments Made
by One Subgrantee Were
Unsupported
We selected 4 of 6 subgrantees to visit. While we were doing fieldwork, the City issued
its monitoring report for one subgrantee that we did not select for our case file reviews
and disclosed significant deficiencies in eligibility documentation. The City had
reviewed files for all 17 of the subgrantee‟s participants assisted as of July, 2010. The
City suspended this subgrantee from accepting new participants and instructed the
subgrantee‟s supervisory staff to review all case files and correct all deficiencies in
documentation of eligibility, income, and financial assistance. Monitoring findings
included, “Insufficient documentation of why the assistance that was provided was
needed, or explanation of how the level of assistance was calculated; inconsistent
compliance with documentation of the „but for‟ rule to determine eligibility - that the
client would be homeless but for receiving HPRP assistance; missing or inconsistent
income verification for the primary client; missing or inconsistent documentation of
income for each household member; multiple forms in one file with information that was
contradictory, including the need for assistance, amount of assistance provided, intake
and discharge dates, and family composition and ethnicity; and no evidence of
habitability inspections being conducted prior to occupancy when assistance was used to
move clients into a new unit.”
The City did not document or maintain specific records showing the deficiencies found
for individual case files during monitoring reviews. A City official told us that the City
reviewed the files for corrective action and found that the subgrantee had improved its
file documentation. For closed cases, it was not possible to obtain better documentation,
but for the ongoing cases, the City was able to add to the files. The City could not
support the eligibility of the assistance to the subgrantee‟s 17 participants; therefore, we
questioned the $23,016 in services paid for these participants.
The City Needs To Improve
Subgrantee Monitoring
The subgrantees began assisting participants in October 2009; however, the City
performed its first onsite monitoring reviews in July 2010. When the City reviewed
participant case files during monitoring, it did not detect significant deficiencies relating
to eligibility for five of its six subgrantees, nor could the City provide documentation
showing which files were reviewed or the results for each file. Based on the results of
our case file reviews, the City needs to improve procedures to ensure that HPRP funds
are only used to assist participants for whom eligibility is documented.
7
Conclusion
The City did not always ensure that HPRP funds were used as required. We attribute the
deficiencies to the City‟s failure to develop procedures to ensure that subgrantees
determined and documented participant eligibility in accordance with program
requirements and inadequate monitoring. Although the City identified significant
deficiencies in the eligibility documentation for one subgrantee during monitoring, it did
not find significant eligibility problems when it monitored the other five subgrantees. We
found that all subgrantees needed better oversight.
Eligibility criteria and documentation requirements were published in Federal Register
Notice FR-5307-N-01 and HUD provided guidance on how to meet the requirements on
its website. (see appendix E)
Recommendations
We recommend that the Acting Director of the HUD San Francisco Office of Community
Planning and Development
1A. Require that the City reimburse the program $8,820 from non-Federal funds for
the ineligible participants and activities and determine and reimburse any amounts
that have been spent since our review for these participants.
1B. Require that the City either provide supporting documentation for participants‟
eligibility or reimburse its program accounts $31,172 for participants reviewed
who lacked adequate documentation and determine and reimburse any amounts
that have been spent since our review for these participants.
1C. Require that the City either provide supporting documentation for participants‟
eligibility or reimburse its program accounts $23,016, based on the City‟s
monitoring review, and determine and reimburse any amounts that have been
spent since our review for these participants.
1D. Require the City to develop and implement procedures to ensure that its
subgrantees verify and document participant eligibility in accordance with HPRP
requirements.
1E. Require the City to develop and implement effective monitoring procedures to
ensure, at a minimum, that reviews are timely, deficiencies and corrections are
clearly documented, and any reimbursements for ineligible participants or
participants whose eligibility cannot be determined are repaid to the program.
8
SCOPE AND METHODOLOGY
We performed our onsite audit work at the City‟s office and selected subgrantee offices in San
Francisco, CA, between July and September 2010. The audit generally covered the period
September 1, 2009, through June 30, 2010. We expanded our audit period as necessary.
To accomplish our objective, we interviewed HUD staff, grantee staff, and subgrantee staff
responsible for program execution. We also reviewed
Applicable HUD requirements, including the Recovery Act; the Revised HPRP Notice,
Redline with Corrections, issued June 8, 2009; and program guidance issued by HUD;
The City‟s substantial amendment to the consolidated plan/2008 action plan for HPRP;
The HPRP grant agreement between HUD and the City;
The memorandum of understanding between the Mayor‟s Office of Housing and the
Human Services Agency;
The subgrant agreements between the City and its six nonprofit subgrantees;
The City‟s accounting policies and procedures for subgrantee reimbursement requests
and program funds drawdowns;
The City‟s policies and procedures for subgrantee program monitoring and fiscal
monitoring;
The City‟s and subgrantees‟ disbursement records; and
Subgrantee participant case files.
Between January 1 and June 30, 2010, the City disbursed nearly $1.5 million in HPRP funds.
During our survey, we reviewed $120,714 in program expenditures (8 percent of total HPRP
funds disbursed), which included financial assistance provided to participants by three
subgrantees, data collection expenses, and administrative expense. For each of these 3
subgrantees, we selected 4 participant files for review for a total of 12 participant files. Although
inconsistencies and errors were found in these participant case files, the City and subgrantees
contended that issues were found only because these files were from the early days of the
program before HUD provided guidance. The City and subgrantees insisted that procedures and
documentation had improved in more recent participant case files.
By August 31, 2010, the City had disbursed more than $1.8 million in HPRP funds. In the audit
phase, we revisited the three subgrantees and added a fourth subgrantee. The fourth subgrantee
was added because it was the only subgrantee that provided rapid re-housing assistance. We
reviewed an additional $42,952 in financial assistance provided to 19 more participants whose
program entry dates were from 2 recent months between May and July 2010. For each of the
four subgrantees, we selected the greatest of 20 percent of new participant entries for the 2-
month period or four participants to review. With the additional 19 participant files selected, we
reviewed a total of 31 case files.
9
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 objective.
10
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 control was relevant to our audit objective:
Controls to ensure that subgrantees follow applicable laws and regulations with
respect to the eligibility of HPRP participants and activities.
We assessed the relevant control 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.
Significant Deficiency
Based on our review, we believe that the following item is a significant deficiency:
The City did not have adequate controls in place to ensure that its subgrantees
followed Federal requirements for the eligibility of HPRP participants (see
finding 1).
11
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
Recommendation Ineligible 1/ Unsupported 2/
number
1A $8,820
1B $31,172
1C $23,016
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. These costs consist of HPRP funds used to assist ineligible participants and
activities.
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. These costs consist of HPRP funds used to assist participants whose eligibility was
not supported by appropriate documentation.
12
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
13
Comment 1
14
Comment 1 & 2
Comment 3
Comment 4
15
Comment 5
Comment 6
Comment 7
16
Comment 8
Comment 9
17
Comment 10
Comment 11
Comment 12
18
Comment 13
Comment 14
Comment 15
19
Comment 15
20
Comment 15
Comment 16
21
Comment 16
Comment 17
Exhibits made available upon request
22
OIG Evaluation of Auditee Comments
Comment 1 The 2009 and 2010 guidance for assessing the risk of homelessness (as quoted by
the City in its response to this audit) are essentially the same.3 In both of the
quotes cited by the City, the key is determining if the applicant has other housing
options or has financial resources or support networks to obtain immediate
housing or remain in current housing. Both the March 2010 citation the City
quoted above, and the revised HPRP notice from June, 2009, state that the
assistance is specifically for " individuals and families who are homeless or would
be homeless but for this assistance." Regarding the requirement to assess and
document an applicant's risk of homelessness, the 2009 HPRP Notice also stated:
"Grantees are responsible for verifying and documenting the individuals’
risk of homelessness that qualifies them for receiving rental assistance."
Comment 2 During the audit, OIG reviewed 31 case files (see appendix D). In addition,
recommendation 1C refers to 17 files that the City reviewed during its monitoring
of Larkin Street Youth Services.
Comment 3 We evaluated the reasons the City gave for disagreeing with questioned costs and
did not find that the additional information provided warranted any changes to the
amounts questioned. Additional documentation obtained after audit field work
was complete can be provided during the audit clearance process. The City's case
by case comments and OIG's evaluation are below.
Comment 4 Holy Family Day Home - Client A4: It was the City's decision to set an annual
income requirement that was lower than the one established by HUD. Once a
limit was established, it should have been applied equally to all applicants. In this
case, the file showed a miscalculation of income, not a decision to make an
exception.
Comment 5 Tenderloin Housing Clinic - Client D3: As noted above, the requirement to verify
and document the risk of homelessness existed from program inception. The file
did not contain such documentation and the individual was current on his rent.
The case file showed that the client initially applied for HPRP assistance in
November 2009 when he asked for assistance paying his December rent. The
other subgrantee said it could not help and referred him to Tenderloin Housing
clinic. When he applied for help from Tenderloin in December, his December
rent was paid without HPRP assistance, providing an indication he may have had
other resources
Comment 6 Catholic Charities CYO - Client B6: OIG found three deficiencies in this case
file. First, there was nothing in the file that actually documented the niece's
residence in the aunt's former apartment, or her imminent risk of becoming
3
The HPRP Notice was revised and reissued on June 8, 2009, in advance of the City's October, 2009, start of HPRP
program assistance.
23
homeless. The niece's name was not on the arson report. Second, both the aunt
and the niece had bank accounts, evidenced by the income documentation
obtained by the caseworker, who did not obtain or review the bank statements to
determine if the participants had financial resources to pay the security deposit.
The caseworker wrote "No bank account" in the file. Therefore, eligibility was not
supported. Finally, although there was no direct effect on income eligibility, the
subgrantee incorrectly calculated annual income. The subgrantee did not rely on
the Section 8 calculation worksheet; it relied on only one pay stub which was for
a one-week pay period. The subgrantee took the $269.23 earned by the niece in 1
week and multiplied it by 2, incorrectly arriving at $538.46 monthly earned
income and $6,461.52 annual income. The correct calculation would have been
$269.23 per week multiplied by 52 weeks = $13,999.96. Added to the aunt's
$929 monthly SSI the correct annual income was $25,147.96.
Comment 7 Catholic Charities CYO - Client B7: Documentation of bank accounts can be
provided to HUD during the process of clearing the findings. We do not agree
that the grantee can rely on an assumption that assets should have been verified by
another agency that also provided assistance. We also noted that case notes said
this client was spending $50 per month on internet and sending $50 to assist a
relative in another country.
Comment 8 Catholic Charities CYO - Client B8: The City's argument that the Section 8 rent
computation sheet from the household's last annual recertification shows the son
has no income is not acceptable. We do not agree that the grantee can rely on an
assumption that income should have been verified by another agency that also
provided assistance. Further, the Section 8 recertification in the HPRP case file
was dated 14 months before participants' HPRP intake month. There is no
indication in the client file to show the caseworker asked if the 21-year-old had
any income at intake.
Comment 9 Catholic Charities CYO - Client B10: We questioned the $590 back rent payment
in December, 2009, because the file, including case notes, did not show any
indication the amount of back rent owed was verified. The only documentation in
the file was two letters from a prospective landlord the first stating that back rent
owed to a prior landlord was $248, the second stating the amount was $590.
Through our own research, we found the judgment was for $248. We also found
that the applicant did not move into the apartment that she had applied for,
although she was approved for move-in. She was still “couch surfing” when she
returned for additional assistance in May 2010. In addition, the file did not show
that employment income was verified in December 2009. Shredding prior
documentation when new documentation is obtained months later would not be an
acceptable practice and it is not a practice we saw in any other files we reviewed
or in the subgrantees procedures. Documentation can be provided to HUD during
the clearance process.
24
We did not question the provision of a security deposit in May 2010.
Comment 10 Holy Family Day Home - Client A1: We reviewed the copy of the stipulated
agreement and, as a result decreased the count of cases where risk of
homelessness was not documented. However, this case is still unsupported
because annual income was inadequately verified. The participant had two part-
time jobs and provided pay stub covering a six-week period. Pay stubs were
provided from 1 job for the first 2 weeks, 2 jobs for the second 2 weeks and 1 job
for the third 2 weeks. There was no explanation in the file regarding the periods
with documentation from only one job. Further, the recent bank statement in the
file showed deposits for the month that significantly exceeded the documented
income. If the bank deposits were a true indication of income, this participant
would not be eligible for HPRP assistance.
Comment 11 Holy Family Day Home - Client A2: Participants were ongoing Section 8 tenants.
The file did not indicate why they had to move or that they were at risk of
homelessness. There were no case notes in the file. Under the 2009 HPRP
Notice, grantees (or subgrantees) were responsible for verifying and documenting
the individuals' risk of homelessness.
Comment 12 Holy Family Day Home - Client A3: We agree that this participant was low
income; however, we did not see verification or documentation of risk of
homelessness in the file. We did not see the landlord letter referred to in the
City's response to the audit. The file also showed that the participant was
approved in April 2009 for rental subsidy from the City through another program
but had never received it. The case worker explained that the participant had not
received the subsidy because he failed to come in for required case
management/counseling sessions. As a result, at the end of October 2009, he was
four months behind on his rent.
Comment 13 Holy Family Day Home - Client A5: Without looking at the bank statements, the
grantee can only guess that the applicant does not have undisclosed income or
assets. Verification and documentation is required.
Comment 14 Tenderloin Housing Clinic - Client D4: The letter from the employer was hand-
carried by the participant and there is no way of knowing who filled it out and
signed it. Nothing in the case notes or the file indicated that the caseworker
contacted the employer directly. Therefore, income was inadequately verified.
Regarding the letter in Spanish, the auditor translated it and agrees that the
landlord wrote that she would evict if she did not receive the back rent.
Comment 15 Regarding Larkin Street Youth Services, City officials told us that they had
reviewed 17 files during monitoring in July 2010, although only 13 of the cases
had been submitted to the City for reimbursement. Regarding the eight cases the
City said it has determined met eligibility and documentation requirements,
support may be provided to HUD during the process of clearing the findings.
25
Comment 16 We do not dispute any of the City's comments about it's HPRP monitoring
procedures; however, the results of the audit show that subgrantees did not ensure
that participants and assistance payments were eligible and supported.
Comment 17 HUD provided guidance and tools for monitoring, but not comprehensive
procedures, which are the grantee's responsibility. The City's monitoring did not
result in any findings of unsupported or ineligible payments for the four
subgrantees we visited and reviewed, and the City had no record of specific
unsupported payments made by Larkin Street, although it deemed deficiencies to
be significant and suspended intake of new clients. Therefore, we concluded that
detailed procedures are needed to ensure that results of each individual case file
review, including deficiencies, are documented and appropriate action is taken for
ineligible or unsupported payments.
26
Appendix C
SCHEDULE OF NONCOMPLIANT CASES PER SUBGRANTEE
Number of case Total
files per
subgrantee
Deficiencies A B C D
1 Assistance provided to undocumented 1 1 2
immigrants
2 Did not show imminent risk of becoming 3 3 6
homeless
3 Participant was not at imminent risk of 1 1
becoming homeless
4 Participant exceeded the City‟s income limit 1 1
5 Errors in calculating annual income 2 2 4
6 Lack of income verification for primary 1 1 1 1 4
participant
7 Lack of income verification for other adult(s) 1 2 3
in household
8 No verification of bank accounts for 1 4 5
participants who had bank accounts
9 Amount of back rent not verified by landlord 1 1
10 No housing inspection 1 1
11 Housing inspection was 9 months before 1 1
move-in
12 Did not show risk of utility shutoff 1 1
13 Overpayment to landlord 1 1
14 HPRP rental subsidy given for the same 1 1
period that rental subsidy was provided by
the City through another program
KEY: A – Holy Family Day Home; B – Catholic Charities CYO; C – Hamilton Family
Center; D – Tenderloin Housing Clinic
27
Appendix D
SUMMARY OF EXPENDITURES FOR FILES REVIEWED
Amounts paid by the City as of 10/6/10
Amount Paid by
Subgrantee Client invoiced the City Eligible Ineligible Unsupported
Subgrantee A A1 2,440.40 Yes - - 2,440.40
A2 1,641.00 Yes - - 1,641.00
A3 1,807.56 Yes - - 1,807.56
A4 1,520.00 Yes - 1,520.00 -
A5 9,300.00 Yes - - 9,300.00
A6 196.00 Yes 196.00 - -
A7 2,748.00 Yes 2,748.00 - -
A8 221.00 Yes 221.00 - -
Total for subgrantee A 19,873.96 19,873.96 3,165.00 1,520.00 15,188.96
Subgrantee B B1 1,813.00 Yes 1,813.00 - -
B2 2,107.25 Yes 2,107.25 - -
B3 1,526.00 Yes 1,526.00 - -
B4 1,332.90 Yes - - 1,332.90
B5 6,521.31 Yes 6,521.31 - -
B6 1,823.00 Yes - - 1,823.00
B7 7,011.60 Yes - - 7,011.60
B8 2,226.00 Yes - - 2,226.00
B9 3,600.00 Yes - 3,600.00 -
B10 1,790.00 Yes 1,200.00 - 590.00
B11 4,495.31 Yes 3,995.31 500.00 -
Total for subgrantee B 34,246.37 34,246.37 17,162.87 4,100.00 12,983.50
Subgrantee C C1 2,700.00 Partial 1,350.00 - -
C2 2,133.00 No - - -
C3 1,780.00 No - - -
C4 2,501.73 No - - -
Total for subgrantee C 9,114.73 1,350.00 1,350.00 - -
Subgrantee D D1 1,880.00 Yes 1,880.00 - -
D2 778.00 Yes 778.00 - -
D3 3,200.00 Yes - 3,200.00 -
D4 3,000.00 Yes - - 3,000.00
D5 2,956.98 No - - -
D6 586.41 Yes 586.41 - -
D7 1,083.00 Yes 1,083.00 - -
D8 - No - - -
Total for subgrantee D 13,484.39 10,527.41 4,327.41 3,200.00 3,000.00
Total dollars reviewed for
the four subgrantees 76,719.45 65,997.74 26,005.28 8,820.00 31,172.46
28
Appendix E
CRITERIA
A. The Recovery Act became Public Law 111-5 on February 17, 2009. The Recovery Act
establishes the Homelessness Prevention Fund. The homelessness prevention portion of
the Recovery Act falls under Title XII – Transportation and Housing and Urban
Development, and Related Agencies.
B. HUD Federal Register Notice FR-5307-N-01 advised the public of the allocation formula
and allocation amounts, the list of grantees, and requirements for the Homelessness
Prevention Fund, hereafter referred to as the “Homelessness Prevention and Rapid Re-
Housing Program (HPRP),” under Title XII of the Recovery Act.
The notice included the following:
Grantees are responsible for verifying and documenting the individuals‟ risk of
homelessness that qualifies them for receiving rental assistance. HUD requires
grantees and/or subgrantees to evaluate and certify the eligibility of program
participants at least once every 3 months for all persons receiving medium-term
rental assistance.
Grantees and subgrantees should carefully assess a household‟s need and
appropriateness for HPRP. If the household needs more intensive supportive
services or long-term assistance or if a household is not at risk of homelessness,
grantees and subgrantees should work to link them to other appropriate available
resources.
In order to receive financial assistance or services funded by HPRP, individuals
and families must at least meet the following minimum criteria:
Have at least an initial consultation with a case manager or other authorized
representative who can determine the appropriate type of assistance to meet
their needs. HUD encourages communities to have a process in place to refer
persons ineligible for HPRP to the appropriate resources or service provider
that can assist them.
Be at or below 50 percent of area median income.
Be either homeless or at risk of losing their housing and meet both of the
following circumstances: (1) no appropriate subsequent housing options have
been identified and (2) the household lacks the financial resources and support
networks needed to obtain immediate housing or remain in its existing
housing.
29
Grantees are responsible for ensuring that HPRP amounts are administered in
accordance with the requirements of this notice and other applicable laws. Each
grantee is responsible for ensuring that its subgrantees carry out the HPRP eligible
activities in compliance with all applicable requirements.
Each grantee and subgrantee must keep any records and make any reports
(including those pertaining to race, ethnicity, gender, and disability status data)
that HUD may require within the timeframe required.
Grantees are responsible for monitoring all HPRP activities, including activities
that are carried out by a subgrantee, to ensure that the program requirements
established by this notice and any subsequent guidance are met.
Organizations providing rental assistance with HPRP funds will be required to
conduct initial and any appropriate follow-up inspections of housing units into
which a program participant will be moving.
C. HUD‟s Web site (HUDHRE.info) provided guidance for HPRP grantees. Regarding
assistance to undocumented immigrants, HUD wrote: “Can HPRP funds be used to assist
illegal immigrants?” HUD then provided the following answer:
“In accordance with Title IV of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, an alien (a person who is not a U.S. citizen or national) may
be eligible for assistance under HPRP only if he or she is a „qualified alien‟ (defined in 8
U.S.C. [United States Code] 1641). This means that no entity that receives funds under
HPRP may knowingly provide HPRP assistance to an alien who is not a qualified alien.
“The law requires all state and local governments that directly administer HPRP
assistance to first verify that an alien is a qualified alien before using HPRP funds to
assist him or her. Nonprofit organizations that administer HPRP assistance are not
required, but may, verify that an alien is a qualified alien in order to provide him or her
with HPRP assistance.”
30
The City and County of San Francisco, CA, Did Not Always Ensure That Homelessness Prevention and Rapid Re-Housing Funds Were Used as Required
Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-12-21.
Below is a raw (and likely hideous) rendition of the original report. (PDF)