OFFICE OF AUDIT
REGION 5
CHICAGO, IL
Pontiac Housing Commission
Pontiac, MI
Section 8 Housing Choice Voucher Program
2014-CH-1009 SEPTEMBER 12, 2014
Issue Date: September 12, 2014
Audit Report Number: 2014-CH-1009
TO: Willie C. Garrett, Director of Public Housing, 5FPH
//signed//
FROM: Kelly Anderson, Regional Inspector General for Audit, Chicago Region, 5AGA
SUBJECT: The Pontiac Housing Commission, Pontiac, MI, Did Not Always Administer Its
Section 8 Housing Choice Voucher Program in Accordance With HUD’s and Its
Own Requirements
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 Pontiac Housing Commission’s
Section 8 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 me at
(312) 353-7832.
September 12, 2014
The Pontiac Housing Commission, Pontiac, MI, Did Not
Always Administer Its Section 8 Housing Choice Voucher
Program in Accordance With HUD’s or Its Own
Requirements
Highlights
Audit Report 2014-CH-1009
What We Audited and Why What We Found
We audited the Pontiac Housing The Commission did not always administer its Family
Commission’s Section 8 Housing Self-Sufficiency program in accordance with HUD’s
Choice Voucher program based on our and its own requirements. Specifically, it did not (1)
analysis of risk factors relating to the correctly calculate participants’ escrow balances, (2)
housing agencies in Region 5’s1 ensure that participants’ files contained required
jurisdiction. Our objective was to documentation, and (3) ensure that its coordinator
determine whether the Commission effectively managed the program. As a result, the
complied with Federal, State, or its own Commission (1) overpaid nearly $107,000 in escrow
requirements regarding its Family Self- disbursements, (2) overfunded participants’ escrow
Sufficiency program and conflicts of accounts by more than $53,000, and (3) underfunded
interest. participants’ escrow accounts by more than $6,500. In
addition, HUD and the Commission lacked assurance
that more than $177,000 in program and coordinator
What We Recommend
funds was used appropriately.
We recommend that HUD require the Further, the Commission did not ensure that it
Commission to (1) reimburse its complied with HUD’s and the State of Michigan’s
program more than $160,000 due to requirements regarding conflicts of interest. As a
overpaid escrow disbursements and result, HUD and the Commission lacked assurance that
credits; (2) reimburse its program more than $47,000 in housing assistance payments was
participants whose escrow accounts used appropriately.
were understated by more than $6,500;
(3) support or reimburse its program
nearly $40,000 for the unsupported
family self-sufficiency escrow
disbursements and credits; (4) support
or reimburse HUD more than $137,000
for the unsupported coordinator funds;
and (5) support or reimburse its
program more than $47,000 for its
conflicts of interest.
1
Region 5 includes the States of Illinois,
Indiana, Michigan, Minnesota, Ohio, and
Wisconsin.
TABLE OF CONTENTS
Background and Objective 3
Results of Audit
Finding 1: The Commission Did Not Always Administer Its Family Self-Sufficiency
Program in Accordance With HUD’s and Its Own Requirements 5
Finding 2: The Commission Did Not Follow HUD’s and the State of Michigan’s
Requirements Regarding Conflicts of Interest 12
Scope and Methodology 15
Internal Controls 17
Appendixes
A. Schedule of Questioned Costs and Funds To Be Put to Better Use 19
B. Auditee Comments and OIG’s Evaluation 20
C. Federal and the Commission’s Requirements 24
2
BACKGROUND AND OBJECTIVE
The Pontiac Housing Commission was established in June 1948 by the City of Pontiac, MI, to
provide decent, safe, sanitary, and affordable housing and create opportunities for self-
sufficiency and economic independence for eligible low- and moderate-income residents of
Oakland County. The Commission’s primary funding source is the U.S. Department of Housing
and Urban Development (HUD) under the regulation of the State of Michigan’s Act 18 of 1933.
A five-member board of commissioners is appointed by the mayor of Pontiac to serve a 5-year
term. The board is responsible for the overall policy and direction of the Commission. The
Commission’s executive director is appointed by the board of commissioners and is responsible
for providing general supervision and carrying out the Commission’s day-to-day operations.
The Commission administers the Section 8 Housing Choice Voucher program funded by
HUD. The Section 8 program provides assistance to low- and moderate-income individuals seeking
decent, safe, and sanitary housing by subsidizing rents with owners of existing private housing. As
of June 11, 2014, the Commission had 530 units of its authorized 770 vouchers under contract,
and the annual housing assistance payments totaled more than $2.6 million in program funds.
The Family Self-Sufficiency program promotes the development of local strategies to coordinate
public and private resources that help Housing Choice Voucher program participants and public
housing tenants obtain employment that will enable participating families to achieve economic
independence. The Family Self-Sufficiency program is administered by public housing agencies
with the help of program coordinating committees. The program coordinating committees
usually consist of representatives of local government, employment and job training agencies,
welfare agencies, nonprofit providers, local businesses, and assisted families. Supportive
services most commonly provided to program participants are child care, transportation,
education, and job training. The major components of the program include a contract of
participation between the public housing agency and the family, an individual training and
services plan for each participating family member, and an interest-bearing escrow account.
The program establishes an escrow account for each family that is funded by the Housing Choice
Voucher program’s housing assistance payments. The family’s annual income, earned income,
and family rent when the family begins the program are used to determine the amount credited to
the escrow account based on increases in earned income. The full amount of the escrow account
in excess of any amount owed to the public housing agency becomes available to the family
when it has fulfilled its obligations under the contract and has certified that no family member is
receiving welfare assistance. From December 2008 to June 2014, the Commission reported
escrow deposits totaling $425,678 in HUD’s Voucher Management system.
HUD provided grant funding to public housing agencies to pay the salaries and benefits of its
Family Self-Sufficiency program staff through its notices of funding availability for fiscal years
2012 and 2013 for the Housing Choice Voucher Family Self-Sufficiency program. All recipients of
funding under these notices must administer the program in accordance with HUD at 24 CFR (Code
of Federal Regulations) Part 984 and must comply with Housing Choice Voucher program
requirements, notices, and guidebooks.
3
The Commission was designated as troubled in its 2011, 2012, and 2013 Section Eight
Management Assessment Program ratings. It also was designated as troubled in its Public
Housing Assessment System ratings. As a result of its troubled status, HUD entered into a
recovery agreement with the Commission to improve its ratings. In addition, HUD contracted
with the Nelrod Company to provide technical assistance to the Commission. However, this
technical assistance did not specifically address the Commission’s Family Self-Sufficiency
program.
Our objective was to determine whether the Commission complied with Federal, State, or its
own requirements regarding its Family Self-Sufficiency program and conflicts of interest.
Specifically, we wanted to determine whether the Commission (1) accurately computed Family
Self-Sufficiency escrow credits for its program participants, maintained the appropriate
eligibility documentation, and appropriately used its Family Self-Sufficiency program
coordinator grant funds and (2) followed HUD’s and the State of Michigan’s conflict-of-interest
requirements.
4
RESULTS OF AUDIT
Finding 1: The Commission Did Not Always Administer Its Family
Self-Sufficiency Program in Accordance With HUD’s and Its Own
Requirements
The Commission did not always administer its Family Self-Sufficiency program in accordance
with HUD’s requirements and its own program action plan. Specifically, it did not (1) correctly
calculate participants’ escrow balances, (2) ensure that participants’ files contained required
documentation, and (3) ensure that its coordinator effectively managed the program. The
noncompliance occurred because the Commission lacked sufficient policies and procedures and
an adequate quality control process to ensure that HUD’s regulations, its own action plan, and
Family Self-Sufficiency program procedures were followed. Further, it failed to exercise proper
supervision and oversight of its program coordinator. As a result, the Commission overpaid
nearly $107,000 to its program graduates, overfunded participants’ accounts by more than
$53,000, and underfunded participants’ accounts by more than $6,500. It also funded or
disbursed more than $212,000 in program funds to participants without proper supporting
documentation and could not support that more than $137,000 in coordinator grant funds was
properly used.
The Commission Made
Inaccurate Escrow Calculations
The Commission did not correctly calculate the escrow balances for all five of its
Family Self-Sufficiency program graduates. The five graduates’ participant files
contained one or more of the following errors:
Three participants had the incorrect amount of family rent at program
commencement used in their escrow credit calculations.
Two participants were eligible to graduate early during the term of their
contracts yet remained on the program and continued to earn escrow
credits.
Two participants had the incorrect amount of earned income at program
commencement used in their escrow credit calculations.
Two participants had escrow credits misapplied.
One participant received escrow credits, although earned income during
the current examination did not exceed earned income at program
commencement.
One participant had the incorrect amount of current earned income used in
the escrow credit calculation.
One participant received escrow credits after her graduation date.
5
One participant was allowed to remain in the program and continued to
receive escrow credits for more than 9 years, although the maximum term
limit is 7 years.
As a result of the Commission’s calculation errors, it overpaid $106,924 in escrow
disbursements to the five graduates.
When the Commission switched from its former software provider HAB, Inc.’s
Housing Management System to its current software provider Housing Data
Systems in April 2013, it discovered for its current participants many of the errors
indicated above for its five graduates. Therefore, the Commission requested that
Housing Data Systems determine the accuracy of the escrow account balances for
its 20 current program participants and make adjustments as needed.2 After the
Commission adjusted the escrow balances for its 20 current participants, we
determined that 18 were still inaccurate. The 18 files contained 1 or more of the
following errors:
6 participants had escrow account balances that failed to include interim
disbursements that were previously paid.
5 participants were eligible to graduate early during the term of their
contracts yet remained on the program and continued to earn escrow
credits.
5 participants had baseline figures that were more than 120 days old. File
documentation for these participants indicated that the family’s income at
program commencement had increased from that in the examination used
to establish the baseline figures.
3 participants had incorrect escrow credits posted to their accounts.
3 participants had the incorrect amount of earned income at program
commencement used in their escrow credit calculations.
2 participants had the incorrect amount of family rent at program
commencement used in their escrow credit calculations.
In addition, for five participants, the Commission was not able to provide detailed
subsidiary ledgers identifying each escrow credit, interest, and other activity that
occurred in the escrow accounts. Therefore, we were unable to identify the type
of error. However, based on our calculations, the participants’ balances were not
accurate. As a result of the Commission’s miscalculations, 15 participants’
escrow accounts were overfunded by $53,559, and 3 participants’ escrow
accounts were underfunded by $6,541.
2
Despite the discovery of the escrow account errors for its current participants, the Commission failed to determine
the accuracy of the escrow disbursements that were made to its five graduates.
6
The Commission Failed To
Maintain Required
Documentation
The Commission lacked required documentation3 to support escrow
disbursements totaling $137,858 and escrow account balances totaling $74,464
for its 5 Family Self-Sufficiency program graduates and 20 current participants.
The 25 files were missing 1 or more of the following documents:
All 25 of the individual training and services plans failed to include the
required final goal to seek and maintain suitable employment during the
audit period.
18 current participants were missing annual reports of their escrow
account balance for the 2012 calendar year, and 2 of these participants
were missing the annual report for the 2013 calendar year.
4 graduates were missing documentation showing that all goals indicated
on their individual training and services plans were completed before they
graduated.
2 graduates and 1 current participant were missing documentation of their
extension requests and approvals.
2 current participants were missing the required goal to be independent
from welfare assistance at least 1 year before the expiration of the contract
of participation on their individual training and services plans.
1 current participant file was missing the contract of participation and
individual training and services plan.
The Commission added the goal to seek and maintain suitable employment for 13
of the 20 current participants after we notified it of the required goal during the
audit. As a result, the unsupported escrow balance for its current participants was
reduced from $74,464 to $39,178.
The Commission’s Coordinator
Did Not Properly Oversee the
Program
The Commission failed to maintain an effective program. HUD awarded the
Commission grants totaling more than $188,000 under its Housing Choice
Voucher Family Self-Sufficiency Coordinator program from 2012 through 2014.
According to HUD’s notice of funding availability, these funds were made
available to pay the salaries and fringe benefits of the Commission’s coordinator
with the stipulation that the Commission administer its Family Self-Sufficiency
program in accordance with HUD’s regulations at 24 CFR 984 and comply with
program requirements, notices, and guidebooks.
3
24 CFR 984.303 and 984.305 and the Commission’s program action plan
7
However, contrary to HUD’s requirements, the Commission’s coordinator failed
to ensure that (1) required documentation was maintained for its participants, (2)
participants’ escrows were calculated appropriately, (3) annual escrow credit
reports were provided, or (4) participants met the graduation requirements before
disbursement of the final escrow balance.
The Commission used $137,347 of the funds from April 2012 through March
2014 to pay the salary and benefits of its program coordinator. Because the
Commission’s coordinator failed to effectively manage the program, the
Commission could not support that it properly used the grant funds. If the
Commission does not implement adequate procedures and controls regarding its
Family Self-Sufficiency program, we estimate that it could inappropriately use
$50,877 ($188,224 - $137,347) in grant funds over the next year.
The Commission Lacked
Adequate Procedures and
Controls
The Commission lacked sufficient policies and procedures and an adequate
quality control process to ensure that HUD’s regulations, its own action plan, and
Family Self-Sufficiency program procedures were followed. It also failed to
exercise proper supervision and oversight of its program coordinator.
The Commission’s program coordinator knew that program participants needed to
obtain and maintain employment to become self-sufficient. However, the
program coordinator did not require this as a goal if participants were already
employed when they started the program. Therefore, the goal to seek and
maintain employment was not enforced on the individual training and services
plans as required by the contract of participation.
Participants that met graduation requirements continued in the program because
the Commission allowed a 6-month grace period, similar to the 180-day period
the Section 8 program provides to households after they no longer receive housing
assistance.4 This grace period was provided to program participants in case they
lost their job or their circumstances changed and they still needed assistance to
become self-sufficient. However, HUD’s regulations at 24 CFR 984.303(g) state
that the contract is considered to be complete when 30 percent of the monthly
adjusted income exceeds the applicable fair market rent. Further, the
Commission’s Family Self-Sufficiency program action plan implied that an
individual could participate in the program for 10 years, which is contrary to
HUD’s maximum contract term of 7 years (according to 24 CFR 984.303(c)).
4
24 CFR 982.455
8
The Commission could not confirm who performed quality control functions for
its Family Self-Sufficiency program. Although the program coordinator said that
the Commission’s public housing and Housing Choice Voucher program manager
performed this task, the current program manager said that she had not performed
this task since she joined the Commission in October 2013. The Commission also
could not support that the former program manager performed quality control
functions.
The Commission’s fee accountant, who monitored the financial aspect of its
Family Self-Sufficiency program, failed to identify the inaccurate escrow
disbursements or escrow account balances. Further, the Commission’s program
coordinator relied on both its previous and current software program providers to
calculate its escrow credits and account balances. However, the Commission’s
previous software program inflated the participants’ escrow credits because it did
not always incorporate earned income and family rent at program commencement
in the calculations, among other discrepancies. The current software program did
not always (1) incorporate interim disbursements in the escrow account balances
or (2) ensure that the appropriate baseline figures were used in the escrow credit
calculations.
In March 2009, HUD performed a review that identified five findings regarding
the Commission’s administration and oversight of its Family Self-Sufficiency
program. As a result, HUD recommended that all of the Commission’s staff
members review and receive training on HUD policies, regulations, and the notice
of funding availability covering the Family Self-Sufficiency program coordinators
grant to ensure an understanding of program guidelines and compliance.
However, three of the deficiencies identified during our audit had been identified
by HUD. These deficiencies included a failure to (1) issue annual statements to
its program participants regarding their escrow account balances, (2) notify
participants of program extension approvals, and (3) establish interim goals to
become independent from welfare assistance at least 1 year before the contract
expired.
Conclusion
The noncompliance described above occurred because the Commission lacked
sufficient policies and procedures and an adequate quality control process to
ensure that HUD’s regulations, its own action plan, and Family Self-Sufficiency
program procedures were followed. It also failed to exercise proper supervision
and oversight of its program coordinator. As a result, it (1) funded or disbursed
$212,3225 ($137,858 + $74,464) in escrow payments for 20 program participants
and 5 program graduates without proper documentation, (2) overpaid escrow
disbursements to graduates by $106,924, and (3) overfunded $53,559 and
underfunded $6,541 in program participants’ escrow accounts. Further, because
5
This amount was rounded.
9
the Commission failed to maintain an effective program, it could not support that
it properly used its 2012 and 2013 coordinator grant funds totaling $137,347.
If the Commission does not implement adequate procedures and controls
regarding its Family Self-Sufficiency program, we estimate that it could
inappropriately use $50,877 in grant funds over the next year.
Recommendations
We recommend that the Director of HUD’s Detroit Office of Public Housing
require the Commission to
1A. Reimburse its Housing Choice Voucher program $106,924 from non-
Federal funds for the overpayment of its Family Self-Sufficiency program
graduates’ escrow disbursements cited in this finding.
1B. Reimburse its Housing Choice Voucher program $53,559 for the
overfunding of its Family Self-Sufficiency program participants’ escrow
accounts.
1C. Reimburse the appropriate Family Self-Sufficiency program participants’
escrow accounts $6,541 from its Section 8 Housing Choice Voucher
program funds for the underfunded escrow accounts cited in this finding.
1D. Support the escrow disbursements to its program graduates totaling $30,934
or reimburse its Housing Choice Voucher program from non-Federal funds
for the unsupported disbursements cited in this finding.6
1E. Support the escrow account balances for its current program participants
totaling $9,040 or reimburse its Housing Choice Voucher program for the
unsupported escrow credits cited in this finding.7
1F. Support the time spent correctly administering its Family Self-Sufficiency
program or reimburse HUD from non-Federal funds the appropriate portion
of the $137,347 in coordinator grant funds received for fiscal years 2012 and
2013 that was incorrectly paid.
1G. Implement adequate policies, procedures, and controls to ensure that
program participants’ files are properly maintained, their escrow accounts
are properly calculated, and their escrow funds are properly disbursed to
prevent $50,877 in Family Self-Sufficiency program coordinator grant funds
from being spent contrary to Federal requirements.
6
The actual unsupported amount was $137,858. However, $106,924 of that amount was included in
recommendation 1A as an ineligible cost, thus reducing the amount in recommendation 1D to $30,934.
7
The actual unsupported escrow balance was $39,178. However, $30,138 of that amount was included in
recommendation 1B as an ineligible cost, thus reducing the amount in recommendation 1E to $9,040.
10
1H. Ensure that the parties responsible for administering and monitoring the
Family Self-Sufficiency program are knowledgeable of both the Section 8
program and the Family Self-Sufficiency program, including HUD’s and its
own program requirements.
We recommend that the Director of HUD’s Detroit Office of Public Housing
1I. Renegotiate its remediation agreement with the Commission to address the
cited deficiencies.
11
Finding 2: The Commission Did Not Always Follow HUD’s and the
State of Michigan’s Requirements Regarding Conflicts of Interest
The Commission did not ensure that its staff and board members disclosed conflicts of interest in
accordance with Federal and State requirements. This condition occurred because the
Commission lacked procedures and controls to ensure compliance with applicable requirements.
As a result, more than $47,000 was paid to relatives and board members without proper
disclosure and approval.
The Commission Lacked
Documentation To Ensure That
Conflicts of Interest Were
Properly Disclosed
Contrary to HUD’s regulations at 24 CFR 982.161(a) and (b), and section
125.658 of the State of Michigan Act, the Commission did not ensure that its staff
and board members disclosed conflicts of interest. Of the Commission’s five-
member board of commissioners, two board members either participated or had
relatives who participated in the Commission’s Section 8 program during the
audit period. Specifically, the board president had a relative who participated in
the program, and the board vice president was a landlord in the program. The
Commission’s board of commissioners is responsible for the overall policy and
direction of the Commission. The board president presides at all meetings of the
Commission and submits recommendations or other information at each meeting
concerning the business, affairs, and policies of the Commission, and the board
vice president performs the duties of the board president in the absence or
incapacity of the board president. The housing assistance payments improperly
received for the tenant and the landlord totaled $24,465.
As of December 2013, the Commission’s two Housing Choice Voucher program
specialists had three relatives who participated in the program. The three relatives
were tenants and received $16,475 in housing assistance payments during the
audit period. The responsibilities of the Commission’s specialists included
conducting eligibility interviews, verifying income, performing rent
reasonableness determinations, preparing housing assistance payments contracts,
updating information, and other duties.
Further, the Commission’s quality control inspector had two relatives who
participated in the program during the audit period. These two relatives were
tenants and received $6,413 in housing assistance payments during the audit
period. The Commission’s quality control inspector inspects and evaluates the
quality of the housing quality standards inspections. Therefore, this individual
has decision-making responsibilities similar to those of the Commission’s housing
quality standards inspector, who is responsible for conducting inspections and
12
determining the condition of program-assisted units to ensure that the units
comply with HUD’s housing quality standards and other established codes and
recommending abatement actions.
The conflict-of-interest prohibition can be waived by HUD, but the Commission
is required to (1) disclose the interests of its board members and staff to HUD,8
(2) submit waiver requests to HUD, and (3) wait to execute the housing assistance
payments contracts until HUD approves the waiver.9 However, neither written
waiver requests to HUD nor written approval from HUD was maintained by the
Commission for any of the conflicts of interest identified. Further, HUD was not
aware of any of these conflicts of interest.
The following table summarizes the housing assistance payments made to the
board of commissioners’ and staff’s relatives during the audit period.
Summary of conflicts of interest
Housing assistance payments
Relatives who
Classification Landlord were tenants Total
Board of
commissioners $20,542 $3,923 $24,465
Housing choice
voucher specialists $0 $16,475 16,475
Inspectors $0 $6,413 6,413
Totals $20,542 $26,811 $47,353
The Commission’s Procedures
and Controls Had Weaknesses
The Commission lacked adequate procedures and controls to ensure that it
followed HUD’s and the State of Michigan’s requirements regarding conflicts of
interest. The executive director said that he was aware of only one conflict of
interest involving the board vice president, who was a landlord in the program.
He said that this relationship was discussed with HUD and as a result, this board
member abstained from voting on all program matters. Although the
Commission’s board meeting minutes confirmed that the board vice president
abstained from voting on all program matters, the Commission could not provide
documentation showing that it submitted a written waiver request to HUD or that
it received HUD’s written approval regarding this conflict of interest.
Further, although the Commission’s code of conduct and ethics policy required its
employees, officers, and commissioners to immediately disclose any financial,
personal or other interest that could directly or indirectly compromise the
performance of their duties, the policy did not require written disclosures.
8
24 CFR 982.161(b); annual contributions contract, section 515; and form HUD-52641, part B, section 13
9
HUD’s Housing Choice Voucher Guidebook, 7420.10G, section 11.2
13
The Commission’s assistant to the executive director and its public housing and
Housing Choice Voucher program manager were aware of conflicts of interest
that existed among its staff, yet HUD’s and the State of Michigan’s requirements
were not enforced. For example, the assistant was aware that the quality control
inspector and one of the specialists had relatives on the program. The assistant
said that the quality control inspector, who was previously the Commission’s
housing quality standards inspector, had inspected his relatives’ assisted units
because he was the only inspector at the time. The assistant further said the
specialists were monitored to ensure that they did not process or handle their
relatives’ files. In addition, the public housing and Housing Choice Voucher
program manager was aware that one of the specialists had relatives in the
program; therefore, the specialist did not process their files. However, the
Commission was unable to provide documentation showing that it submitted a
written waiver request and received approval from HUD before executing the
respective housing assistance payments contracts. The assistant further said that
staff members were not required to disclose in writing any participation in the
Commission’s program by either themselves or their family members.
Conclusion
The Commission lacked adequate procedures and controls to ensure that it
complied with HUD’s and the State of Michigan’s conflict of interest
requirements. Further, its policies and procedures did not require its employees to
disclose potential conflicts of interest in writing. As a result, more than $47,000
was paid to relatives and board members without proper disclosure and approval.
Recommendations
We recommend that the Director of HUD’s Detroit Office of Public Housing
require the Commission to
2A. Support its waiver request and the applicable approval from HUD to
waive its conflict of interest requirements or reimburse HUD $47,353 for
the housing assistance payments disbursed while the conflicts of interest
existed.
2B. Revise its code of conduct and ethics policy to require its board members
and employees to disclose in writing whether they participate or have
relatives who participate in its program.
2C. Implement adequate procedures and controls to ensure that it follows
HUD’s, the State of Michigan’s, and its own requirements for program
conflicts of interest.
14
SCOPE AND METHODOLOGY
We performed our onsite audit work between December 2013 and May 2014 at the
Commission’s office located at 132 Franklin Boulevard, Pontiac, MI. The audit covered the
period April 1, 2012, through October 31, 2013, but was expanded as necessary.
To accomplish our objective, we reviewed
Applicable laws; HUD’s program requirements at 24 CFR Parts 5, 982, and 984; HUD
public and Indian housing notices; and HUD’s Housing Choice Voucher Guidebook,
7420.10.
The Commission’s program administrative plans from 2011 through 2014; personnel
policy; internal control policy; accounting records; annual audited financial statements
for fiscal years 2011, 2012, and 2013; general ledgers; program household files;
computerized databases; policies and procedures; board meeting minutes for April 2012
through October 2013; organizational chart; program annual contributions contract with
HUD; and recovery agreement with HUD. Assessment of the reliability of the data in the
Commission’s system was limited to the data sampled, which were reconciled to
Commission’s records.
HUD’s files for the Commission.
We also interviewed the Commission’s employees and HUD staff.
Finding 1
We reviewed all of the Commission’s 20 Family Self-Sufficiency program participants with
escrow account balances as of March 31, 2014. We also reviewed all of the five program
graduates with an escrow disbursement between April 1, 2012, and October 31, 2013. The 25
files were reviewed to determine whether the Commission (1) maintained the required
documentation in the participants’ files, (2) correctly maintained the participants’ escrow account
balances, and (3) made the correct escrow disbursement. Based on the results of these reviews,
we determined whether the Commission appropriately used its coordinator grant funds. Because
the Commission was unable to provide detailed subsidiary ledgers identifying each escrow
credit, interest, and other activity that occurred in the escrow accounts, the review was performed
for each participant’s duration on the Family Self-Sufficiency program. Our review was limited
to the information maintained by the Commission in its participants’ files and in HUD’s Public
and Indian Housing Information Center system.
Finding 2
We reviewed all of the Commission’s commissioners and employees who held a position in
formulating policy and making decisions with respect to the program that could present a conflict
of interest. We reviewed the board members’ and employees’ possible relationships with
15
relatives, business associates, and close friends in LexisNexis Accurint.10 The housing
assistance payments history report and the landlord report were reviewed to determine whether
board members; employees; and their potential relatives, business associates, and close friends
received assistance on the program from March 1 through December 31, 2013. The employees
were interviewed to ensure that the relationships were accurate. Our review was limited to (1)
the information maintained by LexisNexis Accurint, (2) the housing assistance payments history
report, (3) the landlord report, and (4) the employees interviewed.
We relied in part on data maintained by the Commission. Although we did not perform a
detailed assessment of the reliability of the data, we performed a limited level of testing and
found the data to be adequately reliable for our purposes.
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 provided a reasonable basis for our findings
and conclusions based on our audit objective.
10
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services.
16
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
management has implemented to reasonably ensure that a program meets its
objectives.
Reliability of financial reporting – Policies and procedures that management
has implemented to reasonably ensure that valid and reliable data are
obtained, maintained, and fairly disclosed in reports.
Compliance with applicable laws and regulations – Policies and procedures
that management has implemented to reasonably ensure that resource use is
consistent with laws and regulations.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does
not allow management or employees, in the normal course of performing their
assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
impairments to effectiveness or efficiency of operations, (2) misstatements in
financial or performance information, or (3) violations of laws and regulations on a
timely basis.
17
Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:
The Commission did not comply with HUD’s or its own requirements in
the administration of its Family Self-Sufficiency program (see finding 1).
The Commission lacked adequate procedures and controls to ensure
compliance with applicable requirements regarding conflicts of interest (see
finding 2).
Separate Communication of
Minor Deficiencies
We informed the Commission’s executive director and the Director of HUD’s
Detroit Office of Public Housing of minor deficiencies through a memorandum,
dated September 12, 2014.
18
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Unsupported Funds to be put
Ineligible 1/
number 2/ to better use 3/
1A $106,924
1B 53,559
1C $6,541
1D $30,934
1E 9,040
1F 137,347
1G $50,877
2A $47,353
Totals $160,483 $224,674 $57,418
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/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
or activity that cannot be determined eligible 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.
3/ Recommendations that funds be put to better use are estimates of amounts that could be
used more efficiently if an 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. The
funds to be put to better use categorized in recommendation 1C include underpaid escrow
credits that should be credited to the Family Self-Sufficiency program participants’
escrow accounts. The funds to be put to better use categorized in recommendation 1F
reflect the remaining balance of the Commission’s 2013 Family Self-Sufficiency program
coordinator grant funds from April through December 2014.
19
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
Comment 2
Comment 3
20
Ref to OIG Evaluation Auditee Comments
Comments 1
and 4
Comment 5
21
OIG Evaluation of Auditee Comments
Comment 1 The Commission contends that The Nelrod Company performed an extensive
comprehensive review of its Family Self-Sufficiency program. Further, due to the
great work of its staff and sound policies and procedures, the Commission’s
section eight management assessment program score was 80 percent for fiscal
year 2014. We acknowledge that the Commission received a score of 80 percent
for its Section 8 program. According to HUD’s regulations at 24 CFR 985.3(o),
the two family self-sufficiency components assessed through HUD’s Section 8
Management Assessment Program are determining (1) whether the public housing
agency had enrolled families in the program as required and (2) the extent of
progress in supporting family self-sufficiency, as measured by the percent of
current participants with progress reports that have escrow account balances.
Further, The Nelrod Company’s assessment indicated that the Commission’s
Family Self-Sufficiency program met the criteria to receive maximum points for
the section eight management assessment program based on the two components,
as mentioned above. However, neither The Nelrod Company’s assessment, nor
the family self-sufficiency component of the Section 8 Management Assessment
Program include an evaluation of whether (1) participants’ escrow credits were
calculated correctly and (2) required eligibility documentation was maintained.
Our audit objective and results, as indicated in finding 1, concluded that the
Commission did not adequately administer its Family Self-Sufficiency program in
these areas.
Comment 2 The Commission contends that it had already (1) identified that participants’
escrow accounts were overstated, (2) changed software systems, and (3)
contracted the new software system provider to obtain the correct data to obtain a
true and accurate escrow balance for all its Family Self-Sufficiency program
participants before the audit. The audit report acknowledged that the Commission
identified that the escrow account balances for its current participants were
overstated when it switched software providers; therefore, it adjusted the
participants’ balances. However, the calculation errors disclosed in the audit
report were based on the participants’ escrow account balances after the
Commission completed its adjustments. Therefore as indicated in the report,
despite the Commission’s adjustments, the escrow account balances for 18 of its
20 current participants were still inaccurate.
Comment 3 The Commission contends that it provided documentation, with its written
response, to substantiate that many of the deficiencies identified in the report in
regards to the overstated escrow accounts had been corrected. We disagree. The
Commission did not provide adequate documentation to show that (1) the escrow
account balances were corrected or (2) required documentation was obtained to
mitigate the errors identified in the audit report. Specifically, the Commission’s
reconciliation and forfeiture report did not identify (1) the source of the funds and
(2) which participant escrow account that the funds were being applied to. In
22
addition, the Commission’s status report still reflected incorrect escrow account
balances for current participants.
As discussed in the audit report, receipt of the coordinator grant funds was
contingent on the Commission administering its Family Self-Sufficiency program
in accordance with HUD’s regulations and requirements. However as detailed in
the audit report, the Commission and its coordinator did not always properly
administer its program.
Further, since the Commission executed a remediation agreement with HUD
regarding its Family-Self Sufficiency program, which included contracting with
an acceptable entity to act as contract administrator for its Family Self-
Sufficiency program, we revised recommendation 1I to address the deficiencies
cited in finding one.
Comment 4 The Commission disagrees with the report’s recommendation for reimbursement
of the coordinator grant funds. As discussed in the audit report, receipt of the
coordinator grant funds was contingent on the Commission administering its
Family Self-Sufficiency program in accordance with HUD’s requirements.
However as detailed in the audit report, the Commission did not effectively
monitor its coordinator to ensure its Family Self-Sufficiency program was
administered in accordance with HUD’s requirements. Therefore, the
recommendation for reimbursement of the coordinator grant funds is appropriate.
Comment 5 The Commission contends that full disclosure regarding the Commission’s
conflicts of interest was provided during a meeting with its new board and field
office representatives. As indicated in the audit report, HUD requires that the
Commission submits a request for a waiver from its conflicts of interest
requirement. During the course of the audit, the Commission indicated that it did
not submit a request for a waiver to HUD. Further, HUD was not aware that the
Commission had any conflicts of interest. However based on the Commission’s
code of conduct and ethics policy, that it provided with its written response; we
adjusted the finding and recommendation 2B as necessary.
23
Appendix C
FEDERAL AND THE COMMISSION’S REQUIREMENTS
Finding 1
Sections III.C.1 of HUD’s 2012 and 2013 notices of funding availability for the Housing Choice
Voucher Family Self-Sufficiency program state that the purpose was to provide funding to public
housing agencies to pay the salaries and benefits of its Family Self-Sufficiency program staff.
Section III.C.2.a.1 of the 2012 notice and section III.C.5.a of the 2013 notice state that “all
recipients of funding under the notice must administer the Family Self-Sufficiency program in
accordance with HUD regulations and requirements in 24 CFR Part 984 and must comply with
Housing Choice Voucher program requirements, notices, and guidebooks.”
Section III.C.4.b of the 2013 notice state that “applicants found by HUD to have capacity or past
performance challenges that call into question the ability of the public housing agency to
properly administer an effective Housing Choice Voucher Family Self-Sufficiency program may
be placed on high risk (according to 24 CFR 85.12) and required, at time of award, to enter into a
remediation agreement with the HUD field office, which may include contracting with an entity
acceptable to the HUD field office to act as contract administrator for the program.”
Regulations at 2 CFR Part 225, appendix B, section 16, state that “fines, penalties, damages, and
other settlements resulting from violations (or alleged violations) of, or failure of the
governmental unit to comply with, Federal, State, local, or Indian tribal laws and regulations are
unallowable except when incurred as a result of compliance with specific provisions of the
Federal award or written instructions by the awarding agency authorizing in advance such
payments.”
Regulations at 24 CFR 85.43 state that “if a grantee or subgrantee materially fails to comply with
any term of an award, whether stated in a Federal statute or regulation, an assurance, in a State
plan or application, a notice of award, or elsewhere, the awarding agency may take one or more
of the following actions, as appropriate in the circumstances: (1) temporarily withhold cash
payments pending correction of the deficiency by the grantee or subgrantee or more severe
enforcement action by the awarding agency; (2) disallow (that is, deny both use of funds and
matching credit for) all or part of the cost of the activity or action not in compliance; (3) wholly
or partly suspend or terminate the current award for the grantee’s or subgrantee’s program; (4)
withhold further awards for the program; or (5) take other remedies that may be legally
available.”
Regulations at 24 CFR 85.51 state that “the closeout of a grant does not affect: (a) The Federal
agency’s right to disallow costs and recover funds on the basis of a later audit or other review or
(b) The grantee’s obligation to return any funds due as a result of later refunds, corrections, or
other transactions.”
24
Regulations at 24 CFR 984.303(a) state that each family selected to participate in the Family
Self-Sufficiency program must enter into a contract of participation with the authority that
operates the program in which the family will participate. The contract of participation must be
signed by the head of the participating family.
Regulations at 24 CFR 984.303(b)(1) state that the contract of participation, which incorporates
the individual training and services plan(s), must be in the form prescribed by HUD and should
set forth the principal terms and conditions governing participation in the program, including the
rights and responsibilities of the participating family and of the authority and the services to be
provided to and the activities to be completed by the head of the participating family and each
adult member of the family who elects to participate in the program. Paragraph(b)(2) states that
the individual training and services plan, incorporated into the contract of participation, must
establish specific interim and final goals by which the public housing authority and the family
may measure the family’s progress toward fulfilling its obligations under the contract of
participation and becoming self-sufficient. For each participating family self-sufficiency family
that is a recipient of welfare assistance, the public housing authority must establish as an interim
goal that the family become independent from welfare assistance and remain independent from
welfare assistance at least 1 year before the expiration of the term of the contract of participation,
including any extension.
Regulations at 24 CFR 984.303(b)(4) state that the head of the family self-sufficiency family
must be required under the contract of participation to seek and maintain suitable employment
during the term of the contract and any extension thereof. Although other members of the family
self-sufficiency family may seek and maintain employment during the term of the contract, only
the head of the family is required to seek and maintain suitable employment.
Regulations at 24 CFR 984.303(d) state that the authority must, in writing, extend the term of the
contract of participation for a period not to exceed 2 years for any program participant that
requests, in writing, an extension of the contract, provided that the authority finds that good
cause exists for granting the extension. The family’s written request for an extension must
include a description of the need for the extension. As used in this paragraph, “good cause”
means circumstances beyond the control of the program family, as determined by the authority,
such as a serious illness or involuntary loss of employment. Extension of the contract of
participation will allow the program family to continue to have amounts credited to the family’s
program account in accordance with section 984.304.
Regulations at 24 CFR 984.303(g) state that the contract of participation is considered to be
completed and a family’s participation in the Family Self-Sufficiency program is considered to
be concluded when one of the following occurs: (1) the family has fulfilled all of its obligations
under the contract of participation on or before the expiration of the contract term, including any
extension, or (2) 30 percent of the monthly adjusted income of the family equals or exceeds the
published existing housing fair market rent for the size of the unit for which the family qualifies
based on the authority’s occupancy standards. The contract of participation will be considered
completed and the family’s participation in the program concluded on this basis even though the
25
contract term, including any extension, has not expired and the family members who have
individual training and services plans have not completed all the activities in their plans.
Regulations at 24 CFR 984.305(a)(2) state that “during the term of the contract of participation,
the Authority should credit periodically, but not less than annually, to each family’s family self-
sufficiency account, the amount of the family self-sufficiency credit determined in accordance
with paragraph (b) of this section. Paragraph (a)(3) states that each authority will be required to
make a report, at least once annually, to each participant on the status of the participant’s
account. At a minimum, the report will include
i. The balance at the beginning of the reporting period,
ii. The amount of the family’s rent payment that was credited to the account during the
reporting period,
iii. Any deductions made from the account for amounts due the authority before interest is
distributed,
iv. The amount of interest earned on the account during the year, and
v. The total in the account at the end of the reporting period.”
Regulations at 24 CFR 984.305(b) state that “for purposes of determining the family self-
sufficiency credit, “family rent” for the rental voucher program is 30 percent of adjusted monthly
income. The family self-sufficiency credit must be computed as follows: For family self-
sufficiency families who are very low-income families, the family self-sufficiency credit should
be the amount which is the lesser of 30 percent of current monthly adjusted income less the
family rent, which is obtained by disregarding any increases in earned income (as defined in
section 984.103) from the effective date of the contract of participation, or the current family rent
less the family rent at the time of the effective date of the contract of participation. For family
self-sufficiency families who are low-income families but not very low-income families, the
family self-sufficiency credit should be the amount determined according to paragraph (b)(1)(i)
of this section but must not exceed the amount computed for 50 percent of median income.
Family self-sufficiency families who are not low-income families must not be entitled to any
family self-sufficiency credit. The public housing authority should not make any additional
credits to the family self-sufficiency family’s account when the family has completed the
contract of participation, as defined in section 984.303(g), or when the contract of participation is
terminated or otherwise nullified.”
HUD’s Family Self-Sufficiency Program Contract of Participation (Form HUD-52650), Family
Self-Sufficiency Escrow Account, states that “the housing authority will establish a family self-
sufficiency escrow account for the family. A portion of the increases in the family’s rent
because of increases in earned income will be credited to the family self-sufficiency escrow
account in accordance with HUD requirements. The family’s annual income, earned income,
and family rent when the family begins the Family Self-Sufficiency program will be used to
determine the amount credited to the family’s family self-sufficiency escrow account because of
future increases in earned income.”
The Family Self-Sufficiency Program Contract of Participation, Housing Authority
Responsibilities, states that the housing authority is required to establish a family self-sufficiency
26
escrow account for the family, invest the escrow account funds, and give the family a report on
the amount in the family self-sufficiency escrow account at least once a year. The housing
authority should determine which, if any, interim goals must be completed before any family
self-sufficiency escrow funds may be paid to the family and pay a portion of the family self-
sufficiency escrow account to the family if it determines that the family has met these specific
interim goals and needs the funds from the family self-sufficiency escrow account to complete
the contract. The housing authority should determine whether the family has completed this
contract and pay the family the amount in its family self-sufficiency escrow account if the family
has completed the contract and the head of the family has provided written certification that no
member of the family is receiving welfare assistance.
The Family Self-Sufficiency Program Contract of Participation, Completion of the Contract of
Participation, states that completion of the contract occurs when the housing authority
determines that (1) the family has fulfilled all of its responsibilities under the contract or (2) 30
percent of the family’s monthly adjusted income equals or is greater than the fair market rent
amount for the unit size for which the family qualifies.
The Family Self-Sufficiency Program Contract of Participation, Housing Authority Instructions
for Executing the Family Self-Sufficiency Contract of Participation, Family Self-Sufficiency
Escrow Account, states that the income and rent numbers to be inserted on page 1 may be taken
from the amounts on the last reexamination or interim determination before the family’s initial
participation in the Family Self-Sufficiency program unless more than 120 days will pass
between the effective date of the reexamination and the effective date of the contract of
participation. If it has been more than 120 days, the housing authority must conduct a new
reexamination or interim redetermination.
The Family Self-Sufficiency Program Contract of Participation, Housing Authority Instructions
for Executing the Family Self-Sufficiency Contract of Participation, Individual Training and
Services Plan, states that the contract must include an individual training and services plan for
the head of the family. One of the interim goals for families receiving welfare assistance is to
become independent of welfare assistance for at least 12 consecutive months before the end of
the contract. Any family that is receiving welfare assistance must have this included as an
interim goal in the head of the family’s individual training and services plan. The final goal
listed on the individual training and services plan of the head of the family must include getting
and maintaining suitable employment specific to that individual’s skills, education, and job
training and the available job opportunities in the area.
HUD’s Family Self-Sufficiency Escrow Account Credit Worksheet (form HUD-52652),
Instructions for Completing the Family Self-Sufficiency Escrow Account Credit Worksheet,
states that an escrow credit must be determined at each reexamination and interim determination
occurring after the effective date of the contract of participation while the family is participating
in the Family Self-Sufficiency program.
The Commission’s family self-sufficiency action plan states that regarding contract amendments,
contracts will be extended for up to 2 years in cases in which the families are unable to complete
27
their goals due to circumstances beyond their control, such as illness, death in the family,
pregnancy, sudden layoff, etc.
Finding 2
Regulations at 24 CFR 982.161(a) state that neither the public housing agency nor any of its
contractors or subcontractors may enter into any contract or arrangement in connection with the
tenant-based programs in which any of the following classes of persons has any interest, direct or
indirect, during tenure or for 1 year thereafter: (1) any present or former member of the public
housing agency (except a participant commissioner); (2) any employee of the public housing
agency or any contractor, subcontractor, or agent of the public housing agency, who formulates
policy or who influences decisions with respect to the programs; (3) any public official, member
of a governing body, or State or local legislator, who exercises functions or responsibilities with
respect to the programs; or (4) any member of the Congress of the United States.
Regulations at 24 CFR 982.161(b) state that any member of the classes described in paragraph
(a) of this section must disclose his or her interest or prospective interest to the public housing
agency and HUD.
Regulations at 24 CFR 982.161(c) state that the conflict-of-interest prohibition under this section
may be waived.
Section 515 of the Commission’s annual contributions contract states that “neither the local
Authority nor any of its contractors or their subcontractors should enter into any contract,
subcontract, or arrangement in connection with any project or any property included or planned
to be included in any project, in which any member, officer, or employee of the local authority;
any member of the governing body of the locality in which the project is situated; any member of
the governing body of the locality in which the authority was activated; or any other public
official of such locality or localities, who exercises any responsibilities or functions with respect
to the project during his or her tenure or for 1 year thereafter, has any interest, direct or indirect.
If any such present or former member, officer, or employee of the local authority or any such
governing body member or such other public official of such locality or localities involuntarily
acquires or acquired before the beginning of his or her tenure any such interest and if such
interest is immediately disclosed to the local authority, the local authority, with the prior
approval of the Government, may waive the prohibition contained in this subsection, provided
that any such present member, officer, or employee or the local authority should not participate
in any action by the local authority relating to such contract, subcontracts, or arrangement.”
Form HUD-52641, Housing Assistance Payments Contract, part B, section 13, states, “‘Covered
individual’ means a person or entity who is a member of any of the following classes: (1) Any
present or former member or officer of the public housing agency (except a commissioner who is
a participant in the program) or (2) Any employee of the public housing agency, or any
contractor, sub-contractor or agent of the public housing agency who formulates policy or who
influences decisions with respect to the program. A covered individual may not have any direct
or indirect interest in the housing assistance payments contract or in any benefits or payments
under the contract (including the interest of an immediate family member of such covered
28
individual) while such person is a covered individual or during one year thereafter. ‘Immediate
family member’ means the spouse, parent (including a stepparent), child (including a stepchild),
grandparent, grandchild, sister or brother (including a stepsister or stepbrother) of any covered
individual. The owner certifies and is responsible for assuring that no person or entity has or will
have a prohibited interest, at execution of the housing assistance payment contract, or at any time
during the contract term. If a prohibited interest occurs, the owner must promptly and fully
disclose such interest to the public housing agency and HUD. The conflict-of-interest
prohibition under this section may be waived by the HUD field office for good cause.”
HUD’s Housing Choice Voucher Guidebook, 7420.10G, section 11.2, states that before
“executing a housing assistance payments contract and processing the housing assistance
payments, the public housing agency must determine that the owner of the assisted unit is
eligible to participate in the program. The term “owner” may include a principal or other
interested party. Public housing agencies must not approve housing assistance payments
contracts in which any of the following parties have a current interest or will have an interest for
1 year thereafter: (1) a present or former member or officer of the public housing agency, except
a participant commissioner, and (2) an employee of the public housing agency or any contractor,
subcontractor, or agent of the public housing agency who formulates policy or influences
decisions. HUD may waive the conflict-of-interest requirements for good cause. Public housing
agencies must submit waiver requests to the HUD field office. The waiver request should
include the following:
(1) A complete statement of the facts of the case.
(2) Analysis of the specific conflict-of-interest provision of the housing assistance payments
contract and justification as to why the provision should be waived.
(3) Analysis of and statement of consistency with State and local laws. The local HUD
office, the public housing agency, or both parties may conduct this analysis. Where
appropriate, an opinion by the State’s attorney general should be obtained.
(4) An opinion by the local HUD office as to whether there would be an appearance of
impropriety if the waiver were granted.
(5) A statement regarding alternative existing housing available for lease under the Housing
Choice Voucher program or other assisted housing if the waiver is denied.
(6) If the case involves a public official or member of the governing body, an explanation of
his or her duties under State or local law, including reference to any responsibilities
involving the Housing Choice Voucher program.
(7) If the case involves employment of a family member by the public housing agency or
assistance under the program for an eligible public housing agency employee, an
explanation of the responsibilities and duties of the position, including any related to the
Housing Choice Voucher program.
(8) If the case involves an investment on the part of a member, officer, or employee of the
public housing agency, a description of the nature of the investment, including disclosure
divesture plans.
The public housing agency must not execute the housing assistance payments contract until the
HUD field office makes a decision on the waiver request.”
29
The Commission’s program administrative plan, dated February 2014, states that administration
of the program and the function and responsibilities of the Commission’s staff must comply with
the Commission’s personnel policy, the fair housing regulations, HUD regulations and notices,
the program administrative plan, and applicable standard operating procedures. All Federal,
State, and local housing laws must be followed.
The Commission’s program administrative plan, dated December 2012, states that the
administration of the program and the functions and responsibilities of the Commission’s staff
must comply with the Commission’s personnel policy and HUD’s program regulations, when
applicable, as well as Federal, State, and local fair housing laws and regulations.
State of Michigan Act 18 of 1933, section 125.658, states that no member of the housing
commission or any of its officers or employees should have any interest, directly or indirectly, in
any contract for property, materials, or services to be acquired by the commission.
30
The Pontiac Housing Commission, Pontiac, MI, Did Not Always Administer Its Section 8 Housing Choice Voucher Program in Accordance With HUD's and Its Own Requirements
Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-09-12.
Below is a raw (and likely hideous) rendition of the original report. (PDF)