OFFICE OF AUDIT
REGION 4
ATLANTA, GA
The Memphis Housing Authority
Memphis, TN
Housing Choice Voucher Program
Housing Quality Standards
2014-AT-1014 SEPTEMBER 30, 2014
Issue Date: September 30, 2014
Audit Report Number: 2014-AT-1014
TO: Marcia E. Lewis, Director of Public Housing, Memphis, TN, 4KPH
//signed//
FROM: Nikita N. Irons, Regional Inspector General for Audit, Atlanta Region, 4AGA
SUBJECT: The Memphis Housing Authority, Memphis, TN, Did Not Always Ensure That Its
Housing Choice Voucher Program Units Met HUD’s Housing Quality Standards
Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) final results of our review of the Memphis Housing Authority’s
Housing Choice Voucher program.
HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.
The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.
If you have any questions or comments about this report, please do not hesitate to call 404-
331-3369.
September 30, 2014
The Memphis Housing Authority, Memphis, TN, Did Not
Always Ensure That Its Housing Choice Voucher
Program Units Met HUD’s Housing Quality Standards
Highlights
Audit Report 2014-AT-1014
What We Audited and Why What We Found
We audited the Memphis, TN, Housing The Authority’s inspections were not adequate for
Authority’s Housing Choice Voucher enforcing HUD’s housing quality standards. Of 90
program as part of the activities in our program units statistically selected for inspection, 77
fiscal year 2014 audit plan. We failed to comply with HUD’s minimum housing
selected the Authority because it had a quality standards, and 58 were in material
large program, receiving about $40 noncompliance with the standards. For the 58 units in
million in yearly funding, and was part material noncompliance, the Authority’s inspectors
of the OIG’s annual audit plan. Our failed to observe or report 443 violations that existed
objective was to determine whether the when they conducted their last inspections. The
Authority’s inspection process excessive violations occurred because the Authority’s
adequately ensured that its units were in quality control inspection program did not effectively
material compliance with housing detect that its inspectors lacked sufficient knowledge
quality standards. of HUD’s housing quality standards and missed
opportunities to improve inspector performance. As a
result, some tenants lived in inadequately maintained
What We Recommend
units, and the Authority disbursed $61,949 in housing
assistance payments and received $6,209 in
We recommend that HUD require the administrative fees for the 58 units in material
Authority to (1) reimburse its program noncompliance with the standards. Unless the
$68,158 ($61,949 for housing assistance Authority improves its inspection program and ensures
payments and $6,209 for administrative that all of its units materially meet minimum housing
fees) from non-Federal funds for the 58 quality standards, we estimate that over the next year,
units that materially failed to meet HUD will pay about $34 million in housing assistance
HUD’s housing quality standards and for units in material noncompliance with the standards.
(2) improve its quality control
inspection program to help ensure that
program units meet housing quality
standards. These measures will better
ensure that $34 million in program
funds will be expended for units that are
decent, safe, and sanitary.
TABLE OF CONTENTS
Background and Objective 3
Results of Audit
Finding: The Authority Did Not Always Ensure That Its Housing Choice 4
Voucher Program Units Met HUD’s Housing Quality Standards
Scope and Methodology 16
Internal Controls 18
Appendixes
A. Schedule of Questioned Costs and Funds To Be Put to Better Use 20
B. Auditee Comments and OIG’s Evaluation 21
2
BACKGROUND AND OBJECTIVES
The United States Housing Act of 1937 established the Federal framework for Government-
owned housing and was amended by the Quality Housing and Work Responsibility Act of 1998.
The Memphis, TN, Housing Authority was established in 1935 by the Tennessee General
Assembly under Chapter 595 of the Private Acts of 1935. The Authority’s mission is to drive
community revitalization through a seamless system of supportive services, affordable housing,
and new business development. The U.S. Department of Housing and Urban Development
(HUD) provides funding for rental subsidies for those tenants eligible for the Section 8 Housing
Choice Voucher program.
The Authority is governed by a seven-member board of commissioners. Board members are
appointed by the mayor and confirmed by city council. The executive director is appointed by
the board and has the responsibility of carrying out board’s policies and the Authority’s day-to-
day operations.
In October 2000, the Authority contracted with Quadel Consulting Corporation to administer all
aspects of its Section 8 Housing Choice Voucher program. The current contract runs through
June 30, 2015. Although the Authority contracted out the administration of its program, it
remained responsible for the implementation and overall performance of the program.
The Authority administers about 6,800 housing choice vouchers. It received more than $203.6
million in program funding for fiscal years 2009 through 2013.
Fiscal year Program funding
2009 $29,517,611
2010 $41,253,704
2011 $46,659,044
2012 $43,759,947
2013 $42,462,932
Total $203,653,238
Our audit objective was to determine whether the Authority’s inspection process adequately
ensured that its units were in material compliance with housing quality standards.
3
RESULTS OF AUDIT
Finding: The Authority Did Not Always Ensure That Its Housing
Choice Voucher Program Units Met HUD’s Housing Quality Standards
The Authority’s inspections were not adequate for enforcing HUD’s housing quality standards.
Of 90 program units statistically selected for inspection, 77 failed to comply with HUD’s
minimum housing quality standards, and 58 were in material noncompliance with the standards.
For the 58 units in material noncompliance, the Authority’s inspectors failed to observe or report
443 violations that existed when they conducted their last inspections. The excessive violations
occurred because the Authority’s quality control inspection program did not effectively detect
that its inspectors lacked sufficient knowledge of HUD’s housing quality standards and missed
opportunities to improve inspector performance. As a result, some tenants lived in inadequately
maintained units, and the Authority disbursed $61,949 in housing assistance payments and
received $6,209 in administrative fees for the 58 units in material noncompliance with the
standards. Unless the Authority improves its inspection program and ensures that all of its units
materially meet minimum housing quality standards, we estimate that over the next year, HUD
will pay about $34 million in housing assistance for units in material noncompliance with the
standards.
Housing Units Did Not Meet
HUD’s Housing Quality
Standards
We statistically selected 90 units from a universe of 1,928 program units that had
passed an Authority housing quality inspection between January 1 and March 31,
2014. The 90 units were selected to determine whether the Authority ensured that
its program units met minimum housing quality standards. We inspected the units
from April 29 to May 21, 2014. The Authority’s supervisory inspector
accompanied us during our inspections and was made aware of the results of each
inspection.
Of the 90 program units inspected, 77 (about 85 percent) failed to meet minimum
housing quality standards (550 individual fail items). Additionally, 58 of the 90
units (about 64 percent) were in material noncompliance with housing quality
standards. We considered these units to be in material noncompliance because
they had at least five health and safety violations or at least one 24-hour violation
that predated the Authority’s last inspection and resulted in unsafe living
conditions. The 58 units had a total of 494 individual fail items, and 443 of those
predated the Authority’s last inspection.
HUD regulations at 24 CFR (Code of Federal Regulations) 982.401(a)(3) require
that all program housing meet housing quality standards performance
4
requirements both at commencement of assistance and throughout the assisted
tenancy. In accordance with regulations at 24 CFR 982.152(d), HUD is permitted
to reduce or offset program administrative fees paid to a public housing authority
if it fails to correctly or adequately perform administrative responsibilities such as
enforcing housing quality standards. The Authority disbursed $61,949 in housing
assistance payments and received $6,209 in program administrative fees for the
58 units that materially failed to meet HUD’s housing quality standards. Based
on the results of the statistical sample of 90 units, we estimate that over the next
year, HUD will pay about $34 million in housing assistance for units in material
noncompliance with the standards unless the Authority takes action to improve its
inspection process. 1
The following table categorizes the 494 housing quality standards violations in
the 58 units that materially failed our housing quality standards inspections.
Type of deficiency Number of violations Number of units Percentage of units 2
Exterior, foundation,
and site conditions 103 42 47%
Doors and door locks 71 39 43%
Windows and window
locks 65 29 32%
Baths, sinks, showers,
toilets, and vents 55 34 38%
Electrical 44 25 28%
Kitchen sinks,
cabinets, stoves,
countertops, and
refrigerators 33 24 27%
Water heaters 30 24 27%
Other 24 18 20%
Interior debris and
unsafe storage 19 18 20%
Stairs, rails, and
porches 17 15 17%
Ceilings and walls 13 11 12%
Floors 11 10 11%
Smoke detectors 9 8 9%
Total 494
In addition, 64 of the 90 units (71 percent) had life-threatening health and safety
violations, which HUD requires to be corrected within 24 hours. Examples of
such health and safety violations included unsecured electrical panel covers,
1
The sampling methodology and calculations are shown in the Scope and Methodology section of this report.
2
Percentage of units with cited housing quality standards fail items for the 90 statistically sample units inspected.
5
improperly wired ground fault circuit interrupters, exposed electrical wiring, and
completely blocked emergency egress.
Throughout the inspection process, we kept the Authority staff aware of the life-
threatening health and safety violations. Regulations at 24 CFR 982.404 require
that owners correct life-threatening defects within no more than 24 hours.
The 58 units that materially failed our housing quality standards inspections had
202 24-hour violations that are categorized in the table below.
Type of Number of 24- Number of units Percentage of
deficiency hour violations units
Security – 50 32 55%
windows and
doors
Fire exits – 45 24 41%
blocked egress
Electrical 42 26 45%
Other interior 33 23 40%
hazards – fire
hazard
Other hazards 23 19 33%
Smoke detectors 9 8 14%
Total 202
Types of Deficiencies
The following photographs illustrate some of the violations noted during housing
quality standards inspections of the 58 units that materially failed to meet HUD’s
housing quality standards.
Exterior, Foundations, and Site Conditions
103 violations were found in the 58 units that materially failed HQS. The
following items are examples of this type of violation: deteriorated or rotted
fascia and siding, missing handrails on exterior steps, and long-term deferred yard
maintenance. The following pictures illustrate some examples.
6
The picture above shows rotted fascia and soffit.
The picture above shows rotted and deteriorated fascia.
The picture above shows an unsecured and damaged crawl space door.
7
The picture above shows a missing exterior handrail on exterior steps.
Doors and Door Locks
71 violations were found in the 58 units that materially failed HQS. The
following items are examples of door and door lock violations: keyed dead-bolt
locks on exterior doors, inadequately installed exterior doors, using interior type
doors for exterior door use, and damaged door frames. The following pictures
show some examples.
The picture above shows an exterior storm door frame pulling away from
the exterior of the unit.
8
The picture above shows an entry door frame severely damaged, not
allowing for adequate unit security.
The picture above shows a keyed dead-bolt lock on an exterior door. If the
tenant cannot find the key, egress is blocked in case of emergency, such as
fire.
Windows and Window Locks
65 violations were found in the 58 units that materially failed HQS. The
following items are examples of window and window lock violations: missing or
broken window locks, keyed window bars, broken windows, and deteriorated or
rotted window frames. The following pictures show examples of window- and
window lock-related violations.
9
The picture above shows a bedroom window screwed shut, blocking egress
from room in the event of emergency, such as fire.
The picture above shows iron bars on the bedroom window, which is locked
with a keyed padlock, potentially blocking egress in case of emergency,
including fire.
10
The picture above shows a broken first floor window lock (missing piece
of lock on window frame).
Bathrooms
55 violations were found in the 58 units that materially failed HQS. The
following items are examples of bathroom violations listed in the table: cracked
or peeling finish on tubs and sink, leaking faucets, inadequately installed faucets,
and excess mold or mildew buildup. The following pictures show examples of
bathroom-related violations.
The picture above shows a severely deteriorated bathroom window frame,
including peeling paint and mold and mildew buildup.
11
The picture above shows a damaged and rusted tub drain with peeling and
chipped tub finish
Electrical
44 violations were found in the 58 units that materially failed HQS. The
following items are examples of electrical violations listed in the table:
inadequately installed electrical outlets, exposed wiring, inoperable ground fault
outlets, and missing cover plates. The following pictures show examples of
electrical-related violations.
The picture above shows an incorrectly installed high-voltage outlet, which
is hanging from its electrical wiring.
12
The picture above shows exposed wiring on an inappropriately installed
electrical outlet.
The picture above shows an incorrectly wired ground fault circuit interrupter.
The Authority Needs To
Improve Its Inspection Process
The Authority’s Quality Control Inspection Program was Ineffective
Although the Authority was performing its supervisory quality control inspections
as required by the regulations and HUD’s housing choice voucher program
guidebook, the results of our audit indicate that the Authority’s quality control
inspection program was ineffective in improving inspector performance. 3
3
HUD regulations at 24 CFR 982.405(b) require public housing agencies to perform supervisory quality control
inspections, and chapter 10 of HUD’s housing choice voucher program guidebook details the methodology for
selecting program units for supervisory quality control inspection.
13
Some units that failed our inspections due to material violations had been passed
by Authority inspectors. Many of the violations that caused these units to fail
existed at the time of the Authority’s inspection. Examples include exposed
wiring, unsecured entry doors, missing window locks, missing or improperly
installed water heater discharge lines, and unacceptable locking mechanisms on
doors and windows. Of the 550 total fail items for the 90 units inspected, 486 (88
percent) existed at the time of the Authority’s last inspection. Several of these
preexisting fail items are shown in the photographs above.
The Authority should use the quality control inspections to provide feedback on
each inspector’s work to determine whether it needs to address individual
performance or general housing quality standards training needs. Strengthening
its quality control program to ensure that its inspection staff is aware of all HUD
requirements with respect to the conditions that represent housing quality
standards violations should effectively improve inspector performance and better
ensure that its units meet housing quality standards.
The Authority Had Taken Action
Because of our audit, the Authority reported that it had taken or planned to take
several actions to improve its housing quality standards inspection program to
better ensure that its units are in material compliance with housing quality
standards. The Authority reported that it
• Sent a notice to all tenants and owners explaining what the Authority
considers life-threatening violations,
• Passed a board resolution officially expanding the list of life-threatening
violations that fail units during housing quality standards inspections,
• Changed the makeup of its inspection staff from three full-time and two part-
time inspectors to five full-time and one part-time inspectors,
• Sent its inspection staff members to both a housing quality standards
inspection refresher course and an advanced course to ensure that they were
up to date on all HUD requirements,
• Began discussions with the City of Memphis’ code enforcement department to
conduct “windshield” surveys of housing choice voucher-assisted properties,
• Planned to instruct the Authority’s compliance department to begin
performing random quality housing quality control inspections to further
ensure compliance, and
• Conducted housing quality standards workshops for both program participants
and owners.
14
Conclusion
The Authority’s failure to ensure that its program units met housing quality
standards subjected some program participants to conditions that presented
undesirable or unsafe living conditions. HUD prohibits housing assistance
payments for units that are not decent, safe, and sanitary. Unless the Authority
continues to improve its inspection program and ensures that all of its units
materially meet minimum housing quality standards, we estimate that over the
next year, HUD will pay about $34 million in housing assistance for units in
material noncompliance with the standards.
Recommendations
We recommend that the Director, Office of Public Housing, Memphis, TN,
require the Authority to
1A. Reimburse the program $68,158 from non-Federal funds ($61,949 for
housing assistance payments and $6,209 for administrative fees) for the 58
units that materially failed to meet HUD’s housing quality standards.
1B. Certify that all health and safety violations cited for the 77 units failing
housing quality standards inspections were corrected within 24 hours, and
that all other violations were corrected within 30 days.
1C Improve its quality control inspection program to allow for the
performance of complete and adequate inspections to ensure that program
units meet housing quality standards, thereby ensuring that $34,024,752 in
program funds is expended for units that are decent, safe, and sanitary.
1D Implement policies and procedures to provide new inspection staff
training on HUD’s HQS requirements, and periodically provide ongoing
training to all inspectors to ensure that they are up to date on all HUD
requirements. In addition, the Authority should use the results of the audit
to supplement the inspectors’ training to help ensure that its units meet
HUD’s housing quality standards.
15
SCOPE AND METHODOLOGY
Our audit objective was to determine whether the Authority’s Housing Choice Voucher
program’s inspection process adequately ensured that its units were in material compliance with
housing quality standards. We performed our fieldwork from January to May 2014 at the
Authority’s office at 700 Adams Avenue, Memphis, TN.
To accomplish our objective, we
• Reviewed Authority housing quality standards inspection reports, housing assistance
payment registers, and tenant files and data and HUD documents related to the
Authority’s program, including program criteria (Federal regulations, HUD handbooks,
and guidebooks and notices);
• Interviewed HUD and Authority staff; and
• Reviewed Authority board minutes, financial records relevant to the program, Section 8
Management Assessment Program reports, and independent public accountant reports for
fiscal years 2011 and 2012.
To achieve our objective, we relied in part on computer-processed data from the Authority’s
computer system. Although we did not perform a detailed assessment of the reliability of the
data, we performed a minimal level of testing and found the data to be adequate for our purposes.
We inspected a statistical sample of 90 program units. The units were selected from a universe
of 1,928 units that passed the Authority’s inspections from January 1 through March 31, 2014.
We selected recently completed inspections to determine whether the Authority’s inspection staff
adequately inspected and correctly passed program units.
Based on the statistical sample of 90, we found that an average of 64.24 percent of our weighted
sample of Section 8 units had material failures. Deducting for a statistical margin of error, we
can say, with a one-sided confidence interval of 95 percent, that 56.03 percent of the units had
material failures. Extrapolating this amount to the monthly count of 6,800 occupied program
rental units yields at least 3,809 units that would have material failures, despite being passed by
Authority inspectors.
Based on the statistical sample of 90 units, we found that a weighted average of $474.32 per unit
went to substandard housing. Deducting for a statistical margin of error, we can say, with a one-
sided confidence interval of 95 percent, that the average amount per unit was $416.97.
Extrapolating this amount to 6,800 units over 12 months yields at least $34 million in housing
assistance paid on substandard housing (funds to be put to better use) that passed a housing
quality standards inspection.
16
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.
17
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
have been implemented to reasonably ensure that procurement, expenditure,
and financial reporting activities are conducted in accordance with applicable
laws and regulations.
• Compliance with applicable laws and regulations – Policies and procedures
that have been implemented to reasonably ensure that payments to vendors
and procurement activities comply with applicable laws and regulations.
• Safeguarding of resources – Policies and procedures that management has
implemented to reasonably ensure that resources are safeguarded against
waste, loss, and misuse.
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.
18
Significant Deficiency
Based on our review, we believe that the following item is a significant deficiency:
• The Authority’s quality control inspection program was ineffective in
improving the inspectors’ performance. (finding).
19
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Funds to be put to
number Ineligible 1/ better use 2/
1A
1B $68,158 $34,024,752
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable by law; contract; or Federal, State, or local
policies or regulations.
2/ 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. In this instance, if the Authority implements our
recommendations, it will stop incurring program costs for units that are not decent, safe,
and sanitary and, instead, will expend those funds for units that meet HUD’s standards,
thereby putting more than $34 million in program funds to better use. Once the Authority
successfully improves its inspection program this will be a recurring benefit. Our
estimate reflects only the initial year of this benefit.
20
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
21
Comment 1
22
23
Comment 2
24
Comment 3
25
26
Comment 4
27
28
29
Comment 5
Comment 6
30
Comment 7
Comment 8
Comment 9
31
Comment 10
32
Comment 9
Comment 11
33
Comment 9
34
35
Comment 12
36
Comment 13
Comment 14
37
38
Comment 15
Comment 16
39
Comment 16
Comment 11
Comment 9
40
41
42
Comment 9
Comment 14
Comment 9
Comment 17
43
Comment 18
44
Comment 18
45
46
47
OIG Evaluation of Auditee Comments
Comment 1 The Authority’s comments state that we gave them only 7 business days to
comment on and respond to the draft report, which was not sufficient time. In our
August 26, 2014 letter transmitting the draft report, we asked the Authority to
provide written comments by September 10, 2014. However, the Authority asked
for extra time during the exit conference and was granted a deadline extension
until September 15, 2014. The Authority had 21 days to provide comments;
therefore, we believe that we provided sufficient time for the Authority to respond
to the draft report.
Comment 2 The Authority’s comments state that it provided information regarding the
efficiency and adequacy of its on-going inspections program, HQS quality control
program, and the Authority’s overall performance, since the draft audit makes no
mention of this information.
OIG’s report gives the Authority credit for performing quality control inspections
as required by the regulations. However, although the Authority performed the
required number of quality control inspections, we questioned the quality of those
inspections and whether the Authority used the results to improve inspector
performance. Improving inspector performance and housing quality is the reason
behind HUD’s requirement for quality control inspections. In our opinion, the
Authority’s quality control inspection process needs to be strengthened
(Recommendation 1C) as an overall part of the Authority’s efforts to provide
program participants with decent, safe, and sanitary housing.
Comment 3 The Authority’s comments state that it has been a high performing agency three
consecutive years and five of the last six years.
The Section Eight Management Assessment Program (SEMAP) is a self-
certifying performance program that does not address the quality of the
Authority’s inspections or the overall quality of the program’s housing stock.
Although a high performing SEMAP score may indicate positive performance for
the factors it assesses, it does not indicate support for the Authority’s assertion
that its inspection program and individual inspections are adequate.
Comment 4 The Authority’s comments state that since the conclusion of the OIG Audit, it has
further strengthened its HQS processes.
OIG’s report acknowledges the actions taken by the Authority to improve its
overall inspection program. We believe those actions are a positive start in
addressing the significant deficiencies outlined in the report and commend the
Authority for taking action. The Authority’s statement that we refused to provide
a written inspection report during the audit is not accurate; the completed
inspection reports were not available during the audit field work. We provided
both the summary section of each inspection report and a criteria key outlining
48
what criteria was used by the HUD OIG inspector during the inspections. We
also provided the staff an explanation of how to locate the criteria used for each
fail item cited in the summaries. The inspection summaries included the HQS
inspection item number (specifying what area was inspected, bedroom, bathroom,
exterior, etc.) and a description of the fail item noted. We believe this is adequate
information to determine what items failed and why. In addition, the Authority’s
supervisory inspector was present at every inspection performed. During or
immediately following the inspections, the supervisory inspector asked questions
regarding our inspection results, took his own photographs of the fail items cited,
and discussed the inspection deficiencies, including the 24-hour violations.
Comment 5 The Authority contends that, due to the passage of time, some of the conditions
noted may not have been present at the time the Authority last inspected the units.
We reviewed the Authority’s latest inspection reports and professional knowledge
and experience was used to determine whether a housing quality standard
violation existed at the time of the Authority’s last inspection. As a practice when
conducting housing quality standard inspections, we are very conservative in our
determination of preexisting conditions. As discussed at the exit conference,
some fail conditions that were originally designated as preexisting during the OIG
HQS inspections were treated as current fail items for reporting purposes (i.e.,
furniture blocking egress of bedroom windows, and missing smoke detector
batteries).
Comment 6 The Authority’s comments state that the door jamb pictured in the report may
easily be the result of domestic violence or a recent break-in. Tenants often try
“make shift” repairs and do not report this kind of damage for fear of repair costs
or loss of deposit.
We removed the photograph of the entry door jamb cited by the Authority in the
comments and as discussed at the exit conference. We removed the photograph
based on the Authority’s contention that the tenant stated that the damage
occurred after the Authority’s latest inspection. This type of deficiency occurred
in multiple units where, based upon our inspections, we had no indications that
the damage occurred after the Authority’s most recent inspection We replaced the
original photograph with a photograph of a similar condition at a different unit.
Comment 7 The Authority’s comments state that, “The 220 volt dryer or range receptacle
could have been knocked off of the conduit recently. It may well have been in
place at the time of the last inspection. We acknowledge the coupling was not up
to code but must also point out that an HQS inspection is not a code inspection.”
Although the Authority states that the coupling was not up to code and states that
an HQS inspection is not a code inspection, it completely ignores the fact that the
receptacle is hanging from its wires and is not securely attached as required.
Rather than trying to inspect via photographs, we relied on the experience of
actually being present during the inspection to make a determination as to whether
49
the violations noted were more than likely present at the time of the Authority’s
latest inspection. We found no evidence to suggest that the fail items occurred
since the Authority’s latest inspection.
Comment 8 The Authority’s comments state that, “One can observe from the picture that there
is some dirt and a small amount of debris surrounding the receptacle box yet the
interior of the box appears to be clean and the receptacle itself appears to be new.
No doubt the missing cover is an HQS defect but the evidence suggests that this
may be the result of a recent repair.”
As stated above, rather than trying to inspect via photographs, we relied on the
experience of actually being present during the inspection to make a
determination as to whether the violations noted were more than likely present at
the time of the Authority’s latest inspection. We also do not agree that the interior
of the receptacle box appears clean. One can see as much dust inside the
receptacle box as can be seen on the floor, and there are no obvious signs of a
recent repair.
Comment 9 The Authority is concerned about what it terms “inconsistencies between the
OIG’s reported deficiencies with HUD’s housing quality standards.” The
regulations can’t address all possible situations where unit deficiencies exist;
hence, the regulations include categories such as “Other Interior Hazards”. As is
our practice, we endeavor to err on the side of tenant safety and the unit meeting
decent and sanitary conditions when performing inspections.
Water Heaters
The Authority’s comments state that, “Hot water heater violations included OIG
comments that stated the violation was “standard in the plumbing housing
industry”. MHA has not adopted standards beyond HQS and should not be held
to other standards.” However, the Authority gives no specific examples of why
OIG’s determination of water heater violations was invalid.
The criteria used included the following found in the HCV program guidebook
page 10-11. The acceptability criteria in the section titled “Water Supply” reads
in part, “Water-heating equipment must be installed safely and must not present
safety hazards to families. Fuel burning equipment must have proper clearance
from combustible materials and be properly vented.” The water heaters in
question did not meet the acceptability criteria. Examples include missing
pressure relief discharge lines, the lines being reduced from ¾’ to ½’ increasing
the possibility of rupture and seriously injuring tenants with scalding water or
steam. In addition, there were instances of combustible materials located near gas
water heaters, and improperly installed or completely missing gas water heater
venting.
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Entry Doors
The Authority’s comments state that, “OIG comments that a main entry hollow
door is not “an acceptable standard in the housing industry, is designed for
interior use only and not HUD approved, or that an acceptable exterior door must
be solid, secure, fire rated and fire retardant.” HQS Section 1.4 does not mention
the type of door that must be used, only that the door have a working lock and is
secure in the frame. Local fire codes also do not mention that an exterior door to
residential units be fire retardant or fire rated.”
The criteria used also included the following found in the HCV program
guidebook page 10-6. The performance requirement under the section “Space and
Security” reads, “The dwelling unit must provide adequate space and security for
the family.” We believe using hollow wooden interior doors as exterior entry
doors does not allow for adequate security. These doors are easily broken and
pulled from their frames. The Authority states that participants’ health and safety
are of paramount importance, yet the Authority appears to be arguing that the use
of insecure hollow wooden interior doors in place of secure exterior entry doors is
acceptable.
Door and Window Locks
The Authority’s comments state that, “Neither HUD guidance nor regulation
prescribe what kind of locks are allowable on exterior doors. Nevertheless,
certain types of locks were cited as violations. Under “tenant preference”, the
guidebook states “The family is also responsible for deciding the acceptability of
the type of door and window locks.” If OIG had used the correct standard in this
area, then the number of OIG’s findings regarding egress from units would be
reduced.”
The housing inspection manual reads in part, “The goal of the Section 8 Existing
Housing Program is to provide decent, safe, and sanitary housing.” (page 2);
“Some criteria focus on health and safety concerns and require the PHA to
determine unit acceptability regardless of the tenant’s possible willingness to
accept any deficient condition.” (page 5); and, “The inspector is required to
exercise good judgment in difficult situations.” (page 9) In the case of the keyed
locks and keyed window bars, there is a danger of the tenants, especially children
and the elderly, being trapped in the unit during a fire if the key(s) can’t be
located. The Authority’s acceptance of such locks exposes the tenants to
unnecessary health and safety hazards and the Authority to potential litigation.
Deferred Yard Maintenance
The Authority’s comments state that, “Though cited as a violation, “deferred yard
maintenance” is not a performance requirement in HQS.”
Criteria used for the fail items cited can be found in HUD’s HCV program
guidebook under “Site and Neighborhood”. The performance requirement reads,
“The site and neighborhood must be reasonably free from disturbing noises and
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reverberations or other dangers to the health, safety, and general welfare of the
occupants.”, and the acceptability criteria reads, “The site and neighborhood may
not be subject to serious adverse natural or manmade environmental conditions,
such as dangerous walks or steps, instability, flooding, poor drainage, septic tank
back-ups or sewer hazards, mudslides, abnormal air pollution, smoke or dust,
excessive noise, vibration, or vehicular traffic, excessive accumulations of trash,
vermin, or rodent infestation, or fire hazards. (page 10-13). Further, HQS item
8.4 asks, “Is the unit free from heavy accumulation of garbage or debris inside
and outside?”, and defines heavy accumulation as “large piles of trash and
garbage, discarded furniture, and other debris (not temporarily stored awaiting
removal that might harbor rodents”, and HQS item 8.10 asks, “Are the site and
immediate neighborhood free from conditions which would seriously and
continuously endanger the health or safety of the residents?” (HUD Form 52580-
A) We believe the fail conditions cited fall within this criteria.
Soffits
The Authority’s comments state that, “The pictures of the soffits in the OIG
report, though cosmetically unappealing, are not necessarily HQS deficiencies if
the unit is dry (rain is not getting inside) and there is no evidence of infestation.
Neither of those conditions was reported by the OIG for those units. HUD’s
Housing Inspection Manual 6.3 Condition of Roofs and Gutters states
“Deterioration that does not affect the interior of the unit should pass…”
HQS item 6.3 covers the soffits, and the description reads in part, “Unsound and
hazardous” means: The roof has serious defects such as serious buckling or
sagging, indicating the potential of structural collapse; large holes or other defects
that would result in significant air or water infiltration.”, and “The gutters,
downspouts and soffits (area under the eaves) shows serious decay and have
allowed the entry of significant air or water into the interior of the structure.” In
this case, the serious decay of the soffits represents long term deferred
maintenance which has allowed entry of significant air, and from the obvious
bulging of the soffit, most likely water, into the interior of the structure. The
infiltration of excess moisture increases the probability of the buildup of mold and
mildew. This type of air and water intrusion is not always visible since it would
most likely begin in the attic and attic insulation.
Comment 10 The Authority’s comments state that, “Although the obligations to maintain
housing at HQS is the owner’s, HUD regulations at 24 CFR 982.405 require
MHA to confirm such compliance at specific points in time, namely, prior to
initial leasing, annually, at other special times as needed, and during quality
control inspections.” The Authority appears to imply that it’s needs only to
ensure that units are in compliance with HQS during required inspections.
However, they also cite the regulations at 24 CFR 982.401(a)(3) which require
that “all program housing must meet the HQS performance requirements both at
commencement of assisted occupancy, and throughout the assisted tenancy.” The
Authority appears to have a misunderstanding of their ongoing responsibility to
ensure that its HCVP units are in compliance with HQS while the unit is
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occupied. The inspection process is the way in which the Authority achieves
keeping its units in compliance at all times. This responsibility exists despite the
inability of inspectors to be there every day.
The Authority further asserts that by inspecting units that were inspected within
the last 90 days, HUD OIG is attempting to apply a more rigorous HQS standard.
However, because all units must be in compliance with HQS throughout assisted
tenancy, the 90 day window is irrelevant. In fact, if the Authority’s inspection
program was effective in ensuring that its units were in compliance with the HQS
requirements cited above, one would expect the results of the OIG re-inspections
to be the best possible representation not only the Authority’s housing stock, but
of the Authority’s inspector’s performance (and by extension, the Authority’s
inspection program), given the relatively minimal passage of time. See also
comment 5.
Comment 11 The Authority disagreed with many of the 24-hour life threatening health and
safety violations we identified. It stated that HUD guidance does not specifically
define emergency fail items, and many of the OIG-identified 24-hour violations
are not defined in the Authority’s administrative plan. We agree that the HUD
guidance does not specifically identify all life threatening health and safety
violations; however, the examples the Authority cited, double keyed locks and
burglar bars on windows, can trap family members within their home in case of
an emergency such as a fire. As recommended in this report, improved policies,
procedures and inspector training will help the Authority’s inspectors identify
such conditions and provide a safer environment for program participants.
Comment 12 The Authority’s comments state that we used an arbitrary definition of five fail
items to categorize a housing unit as being in material noncompliance. Our
determination of materiality was not arbitrary as we only considered units to be in
material noncompliance when they had at least five health and safety violations or
at least one 24-hour violation that predated the Authority’s last inspection and
resulted in unsafe living conditions.
Comment 13 The Authority’s comments state that the amount of funds to be put to better use
and the amounts due to HUD cited in the report are significantly overstated.
Based on the conservative manner in which we identified units considered to be in
material noncompliance, we believe the figure to be reasonable, if not
understated.
Comment 14 The Authority’s comments state that the housing assistance payment amounts
(Recommendation 1A) calculated by the OIG are overstated because our findings
do not reflect standards set forth by HUD, the Memphis Housing Authority
Administrative Plan, and the guiding clarifications and documents. We do not
agree (See Comment 9). Authority officials also assert that the administrative fee
figure used to calculate a portion of ineligible costs was not accurate. During the
audit, we requested the administrative fees paid per unit per month for 2014, and
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the Authority was unable to provide that information. The Authority had the
opportunity to provide the information at the exit conference and in its official
response but did not. As a result, we were forced to use the 2013 reconciled
figure for administrative fees paid per unit per month. If the Authority can
provide HUD with the actual administrative fees paid on behalf of units that were
found to be in material noncompliance with HQS, that figure can be recalculated
and the amount paid back with nonfederal funds adjusted accordingly. However,
when the administrative fee reconciliation for 2014 is performed, if the amount
paid per unit per month is found to be higher, HUD should require those unearned
administrative fees to be repaid.
Comment 15 The Inspection Group, Inc. (TIG) acknowledges that its analysis is based only
upon a review of field notes from the HCV department’s inspections supervisor
who accompanied the OIG inspector and a limited review of the OIG’s
inspections summaries. Although TIG’s analysis was limited as stated above, and
we didn’t have a copy of the Authority’s notes (and none were provided in their
comments to the draft audit report), we attempted to respond to specific
comments and concerns (see comment 9). Since no notes were provided, we were
unable to respond to the more general comments and concerns found in the report.
Comment 16 TIG’s report asserts that HUD OIG overstated the fail items because it did not
follow applicable criteria. We disagree. We provided the Authority citations to
the criteria used during our inspections (HQS requirements, housing inspection
manual requirements, housing choice voucher program handbook requirements,
etc.).
The report asserts that HUD OIG only supplied the Authority with the inspection
summaries rather than a list of all defects. Each inspection summary included a
list of the all fail items cited by HQS item number and a description of the fail
item. The supervisory inspector accompanied us on all inspections and the results
were discussed both during and after the performance of the inspections. In
addition, the Authority’s supervisory inspector took his own pictures of the fail
items cited.
The report contends that the Authority instructed the supervisory inspector not to
be argumentative, and concluded that this prevented him from obtaining sufficient
information for rebuttal or being able to identify what we cited as fail items. As
discussed above, this was not the case.
The report asserts that there is no way to determine what the HUD OIG inspector
cited and why, and which units were in material noncompliance. As discussed
above, we provided a summary of all inspection results which included an HQS
item number, a description of the failure and we also provided citations of the
criteria used to determine that the item was a failure. In addition, we also defined
what constituted a material failure of HQS in the report.
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Comment 17 The Authority’s comments state that it corrected all of the OIG-identified health
and safety violations within 24 hours and all other violations within 30 days. We
commend the Authority for taking actions to improve its program. During the
audit resolution process, the Authority can provide HUD the documentation
showing the corrected violations and the measures it has taken to improve the
quality of its inspections and program.
Comment 18 The Authority’s comments state that it has taken steps to improve the quality of
its inspections and the quality control program. We commend the Authority on its
efforts, and HUD will work with the Authority to ensure that these actions are
adequate to address the report’s recommendations.
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The Memphis Housing Authority, Memphis, TN, Did Not Always Ensure That Its Housing Choice Voucher Program Units Met HUD's Housing Quality Standards
Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-09-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)