oversight

The Bellingham Whatcom County Housing Authorities, Bellingham, WA, Generally Complied With American Recovery and Reinvestment Act of 2009 Capital Fund Grant Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2011-10-14.

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

                                                                 Issue Date
                                                                        October 14, 2011
                                                                  
                                                                 Audit Report Number
                                                                          2012-SE-1001




TO:        Harlan Stewart, Director, Office of Public Housing, 0APH

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

SUBJECT: The Bellingham Whatcom County Housing Authorities, Bellingham, WA,
           Generally Complied With American Recovery and Reinvestment Act of 2009
           Capital Fund Grant Requirements


                                   HIGHLIGHTS

 What We Audited and Why

            We audited the Bellingham Whatcom County Housing Authorities to determine
            whether the Authorities’ expenditures for three American Recovery and
            Reinvestment Act of 2009 Public Housing Capital Fund grants were appropriate,
            eligible, and adequately supported and whether the Authorities made related
            procurements in accordance with 24 CFR (Code of Federal Regulations) Part 85
            and Recovery Act requirements. We selected the Authorities because they
            received almost $11 million in Recovery Act Capital Fund grant funds.


 What We Found

            The Authorities generally ensured that Recovery Act Capital Fund expenditures
            for its three grants were appropriate, eligible, and adequately supported and that
            materials and services were properly procured.
What We Recommend


           This report contains no recommendations, and no further action is necessary with
           respect to this report.


Auditee’s Response


           We provided a draft report to the Authorities on October 5, 2011. The Authorities
           chose not to comment.




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                          TABLE OF CONTENTS

Background and Objective                                                     4

Results of Audit
      The Bellingham Whatcom County Housing Authorities Generally Complied   5
      with Recovery Act Capital Fund Requirements

Scope and Methodology                                                        6

Internal Controls                                                            7




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                       BACKGROUND AND OBJECTIVE

Bellingham Whatcom County Housing Authorities

The Housing Authority of the City of Bellingham began operation in 1945 as a municipal
corporation created by the City of Bellingham to provide quality, affordable housing for low-
and moderate-income families, elderly households, and persons with disabilities through
innovative resource development and responsible stewardship of housing and fiscal resources.
The Whatcom County Housing Authority was created by Whatcom County in 1971 to provide
affordable housing for Whatcom County outside the City of Bellingham. The Bellingham
Whatcom County Housing Authorities are administered by the same staff and governed by the
same five-member board of commissioners and have 591 public housing units.

Recovery Act Capital Fund Grants
The American Recovery and Reinvestment Act of 2009 included a $4 billion appropriation for
the Public Housing Capital Fund program, which provides funds annually to public housing
agencies for the development, financing, and modernization of public housing developments and
management improvements. The Recovery Act required $3 billion to be distributed as formula
grant funds with the remaining $1 billion to be awarded through a competitive process.
Competitive grants were issued in the following categories:
   1.   Improvements addressing the needs of the elderly or persons with disabilities;
   2.   Public housing transformation;
   3.   Gap financing for projects that are stalled due to financing issues; and
   4.   Creation of energy efficient, green communities.
The U.S. Department of Housing and Urban Development (HUD) awarded the Housing
Authority of the City of Bellingham a Recovery Act Capital Fund competition grant of more
than $9.9 million and a Recovery Act Capital Fund formula grant of $775,500. HUD also
awarded the Whatcom County Housing Authority a Recovery Act Capital Fund formula grant of
$159,086.
The City of Bellingham is using its competition grant to create energy-efficient, green
communities at its Lincoln Square, Washington Square, and Chuckanut Square public housing
developments. Among the upgrades are a green roof; geothermal water heating; solar panels;
new boilers, refrigerators, and lighting; and water-saving faucets, toilets, and showerheads. The
City used its formula grant to replace the siding and windows on 7 of the 24 units in its Hillside
Homes development and install new equipment sheds with new furnaces and water heaters in the
28 units of its Falls Park Homes development. Whatcom County used its formula grant to install
new siding and windows on the 18 units in its Baycrest Homes development.
Our objective was to determine whether the Authorities’ Recovery Act Capital Fund
expenditures were appropriate, eligible, and adequately supported and whether related
procurements were made in accordance with 24 CFR (Code of Federal Regulations) Part 85 and
Recovery Act requirements.



                                                4
                                RESULTS OF AUDIT

The Bellingham Whatcom County Housing Authorities Generally
Complied With Recovery Act Capital Fund Requirements
We reviewed the procurement records and project files for the three Recovery Act Capital Fund
grants in the table below to determine whether the Authorities’ expenditures were appropriate,
eligible, and adequately supported and whether related procurements were made in accordance
with 24 CFR Part 85 and Recovery Act requirements. We also inspected selected work
performed with grant funds (see Scope and Methodology).

             Grant number         Housing authority      Grant type     Amount
             WA02500000109G       City of Bellingham     Competition    $9,981,511
             WA19S02550109        City of Bellingham     Formula        $ 775,500
             WA19S04150109        Whatcom County         Formula        $ 159,086


Our review determined that the Authorities adequately documented that Recovery Act Capital
Fund expenditures were appropriate, eligible, and supported and that materials and services were
properly procured. Our onsite inspections noted no problems with the material or workmanship.


 Recommendations


              This report contains no recommendations, and no further action is necessary with
              respect to this report.




                                               5
                        SCOPE AND METHODOLOGY

Our audit period covered March 2009 through June 2011. We reviewed all three of the
Authorities’ Recovery Act Capital Fund grants totaling almost $11 million. We performed our
fieldwork between July and September 2011 at the Authorities’ main office at 208 Unity Street,
Bellingham, WA, and selected public housing developments (see below).
To accomplish our objective, we interviewed the Authorities’ staff and reviewed their
procurement records and project files. We also inspected work funded by the Recovery Act
Capital Fund grants.
Sample Selection
We reviewed all architect and general contractor procurement transactions and all draw requests
for the Authorities’ three Recovery Act Capital Fund grants.
Recovery Act Capital Fund Formula Grant Site Inspections
We inspected the siding and window replacement at all 18 buildings at the Baycrest Homes
development and the seven buildings at the Hillside Homes development. We also inspected the
equipment shed exteriors of all 28 units at the Falls Park development and the interiors and
associated new furnaces and water heaters located in 5 sheds on the property. We selected the 5
sheds from a list of 17 units with minor discrepancies noted by the architect on a postjob
inspection.
Recovery Act Capital Fund Competition Grant Site Inspections
We inspected selected work items at Lincoln Square, Washington Square, and Chuckanut Square
based on cost. We inspected the green roof, solar panels, boiler replacement, lighting
improvements, geothermal water heating, individual electric metering of apartments, acoustic
ceiling replacement, and community walkways.
We used HUD’s Line of Credit Control System for background information only and did not
base any conclusions on these data.
We relied on computer-processed data maintained by the Authorities for tracking Capital Fund
activities. Based on our assessment and testing of these data, we concluded that the data were
sufficiently reliable for our objective.
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(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                                6
                              INTERNAL CONTROLS

Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

      Effectiveness and efficiency of operations,
      Reliability of financial reporting, and
      Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.


 Relevant Internal Controls


               We determined that the following internal controls were relevant to our audit
               objectives:

                     The Authorities’ policies implemented to reasonably ensure that Recovery
                      Act Capital Fund projects are managed efficiently and effectively.
                     The Authorities’ policies implemented to reasonably ensure that the
                      Recovery Act Capital Fund program is managed in a manner that is
                      consistent with Recovery Act and HUD requirements.

               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.

               We evaluated internal controls related to the audit objective in accordance with
               generally accepted government auditing standards. Our evaluation of internal
               controls was not designed to provide assurance regarding the effectiveness of the
               internal control structure as a whole. Accordingly, we do not express an opinion on
               the effectiveness of the Authority’s internal control.




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