OFFICE OF AUDIT
REGION 2
NEW YORK-NEW JERSEY
New York City Housing Authority,
New York, NY
Housing Choice Voucher Program
Housing Quality Standards
2014-NY-1003 MAY 1, 2014
Issue Date: May 1, 2014
Audit Report Number: 2014-NY-1003
TO: Luigi D’Ancona
Director, Office of Public and Indian Housing, New York, 2APH
//SIGNED//
FROM: Edgar Moore
Regional Inspector General for Audit, New York-New Jersey, 2AGA
SUBJECT: The New York City Housing Authority, New York, NY, 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 New York City Housing Authority’s
administration of its Housing Choice Voucher program to ensure that its units met HUD’s
housing quality standards.
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
212-264-4174.
May 1, 2014
The New York City Housing Authority, New York, NY,
Did Not Always Ensure That Its Housing Choice Voucher
Program Units Met HUD’s Housing Quality Standards
Highlights
Audit Report 2014-NY-1003
What We Audited and Why What We Found
We audited the New York City The Authority did not always ensure that its Housing
Housing Authority’s administration of Choice Voucher program units met HUD’s housing
its Section 8 Housing Choice Voucher quality standards. Of the 119 units inspected, 99 did
program to ensure that its units met the not meet HUD’s housing quality standards. Further,
U.S. Department of Housing and Urban 24 of the 99 units were in material noncompliance with
Development’s (HUD) housing quality HUD standards. The Authority disbursed $85,546 in
standards. We selected the Authority housing assistance payments and received $7,030 in
based on indicators from HUD administrative fees for these 24 units. This condition
monitoring reports, such as the occurred because Authority officials did not
Authority’s overall Section 8 adequately conduct unit inspections and implement
Management Assessment Program procedures and controls to adequately ensure that
performance rating modified to standard program units met housing quality standards. As a
for fiscal years 2009 and 2010. Our result, tenants were subjected to inadequately
objective was to determine whether the maintained units, which created unsafe living
Authority ensured that its Housing conditions. We estimate that over the next year if the
Choice Voucher program units met Authority does not implement our recommendations,
HUD’s housing quality standards. HUD will potentially pay more than $148 million in
housing assistance for units that materially fail to meet
HUD’s housing quality standards.
What We Recommend
We recommend that HUD require the
Authority to (1) immediately certify that
the violations cited for the remaining 41
units have been corrected, (2) reimburse
its program $92,576 from non-Federal
funds, (3) implement procedures and
controls to ensure that program units
meet housing quality standards, (4) seek
HUD approval to incorporate HUD and
local city codes into the Authority’s
Housing Choice Voucher program
inspection checklists and administrative
plan, and (5) increase the quality of unit
inspections conducted daily by the
Authority’s inspectors to help ensure
the identification of 24-hour violations.
TABLE OF CONTENTS
Background and Objective 3
Results of Audit
Finding: The Authority Did Not Always Ensure That Its Housing Choice
Voucher Program Units Met HUD’s Housing Quality Standards 4
Scope and Methodology 19
Internal Controls 21
Appendixes
A. Schedule of Questioned Costs and Funds To Be Put to Better Use 23
B. Auditee Comments and OIG’s Evaluation 24
2
BACKGROUND AND OBJECTIVE
The United States Housing Act of 1937 established the Federal framework for government-
owned affordable housing and was amended by the Quality Housing and Work Responsibility
Act of 1998. The New York City Housing Authority was created in 1934 and provides
affordable housing for low- and moderate-income residents throughout the five boroughs of New
York City. It is the largest public housing authority in the United States. The Authority
administers a Section 8 Housing Choice Voucher program, which it refers to as the citywide
Section 8 Leased Housing Program. 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 board of directors, which oversees the
activities of the Authority, and the board chairperson is appointed by the mayor. The board
meets to vote on contracts, resolutions, policies, motions, rules, and regulations.
The Authority’s portfolio consists of 178,914 units in the public housing program within 2,596
buildings throughout New York City. As of January 1, 2013, the Authority’s Section 8 Housing
Choice Voucher program consisted of 92,561 rented units, of which 1,749 were portability
voucher units located outside New York City. Additionally, there are 225,000 residents in
Section 8 units and 31,436 participating private landlords.
With approval from HUD, the Authority converted certain public housing units, located in 21
State and city developments, to the tenant-based assistance Section 8 Housing Choice Voucher
program. On June 19, 2008, a memorandum of understanding was entered into by the New York
City Department of Housing Preservation and Development and the Authority, setting forth the
mutual understanding for housing quality standards inspection services to be performed by the
Department for the Authority’s units located in these State and city developments. Of the 119
units inspected, 6 were located in these developments.
The following table illustrates the funding authorized by HUD and disbursed by the Authority
for fiscal years 2012 and 2013.
Fiscal year Authorized funds Disbursed funds
2013 $ 936,142,7881 $ 936,142,788
2012 $ 991,054,505 $ 953,333,730
This report is the second of two reports on the Authority’s administration of its Section 8
Housing Choice Voucher program.
The objective of the audit was to determine whether the Authority ensured that its Section 8
Housing Choice Voucher program units met HUD’s housing quality standards.
1
The amount authorized for fiscal year 2013 is as of December 21, 2013. Authorized amounts for fiscal year 2012
consist of calendar months January through December.
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 did not always ensure that its Housing Choice Voucher program units met HUD’s
housing quality standards. Of the 119 program housing units inspected, 99 did not meet HUD’s
housing quality standards, and 24 materially failed to meet HUD’s standards. This condition
occurred because Authority officials did not adequately implement procedures and controls to
ensure that program units met housing quality standards. As a result, the Authority disbursed
$85,546 in housing assistance payments and received $7,030 in administrative fees for the 24
units that materially failed to meet HUD’s housing quality standards. If the Authority does not
implement improved controls to ensure that all units meet housing quality standards, we estimate
that it will pay more than $148 million in housing assistance for units that materially fail to meet
HUD’s standards over the next year.
Housing Units Did Not Meet
HUD’s Housing Quality
Standards
We statistically selected 119 units from a universe of 12,006 program units that
passed an Authority housing quality standards inspection during the period
December 1, 2012, to January 31, 2013. The 119 units were selected to determine
whether the Authority ensured that the units in its Housing Choice Voucher
program met HUD’s housing quality standards. We inspected the 119 units from
April 2 to May 2, 2013.
Of the 119 program units inspected, 99 (83 percent) had 314 housing quality
standards violations. Additionally, 24 of the 99 units (24 percent) were in
material noncompliance with housing quality standards because they had 56
violations, 35 of which predated the Authority’s last inspection and were not
identified by the Authority’s inspectors, creating unsafe living conditions. We
noted all violations in our inspection, however only those that were serious and
we determined were preexisting based on their nature were considered materially
noncompliant.2 The nature of the deficiencies was taken into account in
determining whether violations were preexisting. For example, severely rotted
2
We concluded that a material deficiency exists if (1) the condition causing the deficiency created unsafe living
conditions, (2) the deficiency was a preexisting condition, (3) the condition existed but was not noted in a prior
inspection, or (4) the Authority deferred maintenance that should have failed the unit.
4
wood from water leakage would not occur within a few months. HUD regulations
at 24 CFR (Code of Federal Regulations) 982.401(a)(3) require that all program
housing meet housing quality standards performance requirements both at
commencement of assisted occupancy and throughout the assisted tenancy.
The following table categorizes the 314 housing quality standards violations in
the 99 units that failed our housing quality standards inspections.
Type of deficiency Number of Number of Percentage of
violations units units
Electrical 162 78 66%
Smoke detectors 41 35 29%
Fire exits – blocked 38 38 32%
egress
Mold-mildew 17 17 14%
Windows 13 10 8%
Other hazards 13 13 11%
Interior doors – 11 11 9%
trapping hazard
Other interior 10 9 8%
hazards – fire hazard
ISecurity – doors- 7 7 6%
nwindows
Evidence of 2 2 2%
ainfestation
d Total 314
d
In addition, 77 of the 99 units (78 percent) had life-threatening health and safety
violations, which HUD requires to be corrected within 24 hours. Examples of
such health and safety violations include unsecured covers on fuse boxes, broken
ground fault circuit interrupters, missing breakers in breaker panel boxes, missing
basement smoke detectors, missing covers on electrical outlets and panel boxes
exposing live wiring, and egress to fire escape completely or partially blocked.
Further, 24 of the 77 units materially failed to meet HUD’s housing quality
standards.
We notified officials from the Authority and HUD’s New York Office of Public
Housing of the life-threatening health and safety violations daily throughout our
inspection process. Regulations at 24 CFR 982.404 require that owners correct
life-threatening defects within no more than 24 hours. Authority officials
disagreed that the 24-hour health and safety violations identified were 24-hour
violations. They stated that these violations were routine failures and informed us
that they would issue housing quality standards failed letters and apply the 30-day
cure timeframe to have landlords correct the violations found by our inspections.
We consider nonfunctional smoke and carbon monoxide detectors, blocked
5
secondary egress windows and doors, exposed live wires, missing outlet covers
and switch plates, and inoperable locks on windows and doors with access into
the unit from the street level as life-threatening deficiencies that should be
corrected within no more than 24 hours when found.
The 24 units that materially failed our housing quality standards inspections had
56 24-hour violations that are categorized in the table below.
Number of 24- Number of Percentage of
Type of deficiency hour violations units units
Electrical 19 12 50%
Smoke detectors 18 15 63%
Fire exits – blocked 10 10 42%
egress
Other interior 4 3 13%
hazards – fire hazard
Other hazards 2 2 8%
Windows 1 1 4%
Interior doors – 1 1 4%
trapping hazard
Security – doors- 1 1 4%
windows
Total 56
The following photographs illustrate some of the violations noted during housing
quality standards inspections of the 24 units that materially failed to meet HUD’s
housing quality standards.
6
The picture above shows a hole in the unit ceiling above the bathtub. According
to the tenant, the hole was patched up by the landlord but continued to leak at
times.
Uncapped gas
line exposed
The picture above shows an exposed, uncapped gas line in the kitchen next to an
electrical outlet. This is considered a fire hazard.
7
The picture above shows a hasp and lock on the door of the left front bedroom.
This type of lock is considered a potential trapping hazard. This unit contained
additional violations, such as a smoke detector mounted 27 inches from the
ceiling, which was more than the 12-inch requirement, and an unsecured cover
on the junction box.
The picture above shows an air conditioning unit not properly secured to the
window, which posed a potential falling hazard. Also, there was an open
space between the air conditioning unit and the window frame, which
presented a falling hazard for a child under the age of 6.
8
The picture above shows a ground fault circuit interrupter in the bathroom, which
did not trip because it was painted over. This unit contained additional
violations, such as a light fixture hanging from the wires and not properly
secured to the ceiling; excessive grease on the kitchen stove, walls, and cabinets;
overcircuiting of outlets; and a rear window that would not stay up.
The picture above shows an improperly mounted unit smoke detector. The
smoke detector was mounted 41 inches from the ceiling, which was more than
the 12-inch requirement, and is considered a possible fire hazard.
9
Missing damper on
the boiler flue
The picture above shows a missing damper on the boiler flue in the basement of a
single-family home, which allowed carbon monoxide to reenter the house.
The picture above shows the results of a water leak rotting the wood above the
bathroom window.
10
The picture above shows a missing outlet cover in the unit living room. In
addition, the outlet was not secured to the junction box.
The picture above shows a broken light switch by the entrance to the unit with
exposed contacts in the box. According to the tenant, this switch had been
broken for at least 6 months. The unit was inspected by the Authority on January
24, 2013, and by our inspector on April 25, 2013.
11
Broken prong in outlet
The picture above shows a broken prong sticking out of an outlet in the kitchen.
The broken prong had an electrical current.
The picture above shows possible mold and mildew stains on the unit bathroom
ceiling.
12
The picture above shows a missing cover on the breaker box panel in the kitchen.
A piece of wood was used to cover the exposed wiring in the breaker box, which
presented a potential electrical shock hazard. There was also a 2-year-old child
residing in the house.
The following photograph illustrates a building violation noted during housing
quality standards unit inspections.
The picture above shows an unsecured cover on a disconnect box with exposed
wiring and contacts in the building basement garbage room. The laundry room
for tenants was located in the basement.
13
The Authority Needs To Improve
Its Housing Quality Standards
Inspections
Although HUD regulations at 24 CFR 982.401 and the Authority’s administrative
plan required the Authority to ensure that its program units met housing quality
standards, it failed to do so because it lacked adequate procedures and controls.
Authority procedures require inspectors to use a handheld device preloaded with
Global Bay System software. Inspectors transfer the completed inspection data
electronically from the handheld unit to the Authority’s inspection system. From
this system, inspection reports and notices to tenants, owners, and landlords can
be printed automatically. Authority officials informed us that they followed
HUD’s housing quality standards and selected local New York City building
codes when conducting inspections. However, our review of the Authority’s
inspection reports noted inconsistencies among the inspectors, including not
following HUD’s requirements and selected local city building codes; thus, the
inspections were not uniformly performed. Further, the Authority’s revised
administrative plan, dated January 2011, provided the guidelines and performance
standards for conducting required housing quality standards inspections.
However, the Authority’s administrative plan did not detail the selected local city
building codes that officials said they followed, such as those pertaining to child
window guards and mounting specifications for smoke detectors.
In addition, Authority inspectors were required to inspect 25 units per day. In
comparison, for our inspections, an 8-hour workday allowed for only five to six
units to be properly inspected per day, including travel time, within the five
boroughs of New York City. Each of our inspections took approximately 30
minutes to complete. Based on the amount of time required, the Authority
inspectors would need more than 12 hours per day to sufficiently inspect 25 units.
Therefore, 25 units could not have been properly inspected within an 8-hour
workday. Consequently, Authority inspectors were required to inspect far too
many units within their scheduled work hours and in their haste, did not
thoroughly inspect the units. During our inspections, we were informed by
several tenants that Authority inspectors did not thoroughly walk through units,
going into each room and testing such items as the outlets or windows. As a
result, Authority inspectors missed violations or were not aware that some
deficiencies were violations under HUD requirements, thus creating unsafe living
conditions for the tenants.
There were units that Authority inspectors passed, which failed our inspections
due to material violations. Some of the violations that caused these units to fail
consisted of improperly installed smoke detectors more than 12 inches from the
ceiling, outlets painted and plastered over, missing outlet covers, window guards
blocking access from the window to the fire escape, and no alternative means of
egress from the unit, all of which violated HUD’s standards. The Authority needs
14
to implement standardized procedures and controls to ensure that its inspection
system and administrative plan include HUD’s requirements and local city
building codes so that the uniformity and quality of inspections will be adequate.
Thus, officials should request HUD approval to revise their administrative plan to
include a section on following local city building codes. In addition, the number
of units required to be inspected daily should be reduced to ensure that
inspections can be thoroughly conducted.
Health and Safety Violations
Were Not Corrected in a Timely
Manner
We notified Authority and HUD officials of the 773 units containing life-
threatening health and safety violations that HUD regulations require to be
corrected within 24 hours. For units containing violations, Authority procedures
require that an NE-1 letter, Letter to Owner, be sent to unit owners notifying them
of hazardous conditions, along with an NE-2 form, Certification of Completed
Repairs, which is to be signed by the landlord and tenant upon the correction of
the violations. After we completed our onsite audit work and upon request,
Authority officials provided us with documentation, the NE-1 letters sent to
owners, and the NE-2 forms received from the landlords and tenants, certifying
that the violations for 58 of the 77 units had been corrected.
As detailed below, the health and safety violations were not corrected in a timely
manner. We attribute this deficiency to officials’ not immediately notifying all of
the unit owners about the 24-hour violation and to officials’ belief that some items
identified required a 30-day cure instead of a 24-hour cure. HUD requires life-
threatening health and saftey violations to be corrected within 24 hours. Further,
there was no evidence to support that the violations associated with 23 percent of
the 77 units containing violations had been corrected (see chart on page 17).
Based on our analysis of the NE-1 letters and NE-2 forms, we determined that it
took approximately 14 days for Authority officials to obtain certification from the
owners that the violations had been corrected. As a result, tenants were subjected
to serious health and safety violations for periods much longer than required.
For the 77 units containing health and safety violations, analysis of the NE-1
letters disclosed that the letters for five units were dated 1 day before our
scheduled inspection, causing us to question the accuracy of these dates and
whether officials immediately notified all of the unit owners about the 24-hour
violations. Only the owners associated with 41 of the 77 units were notified
within 1 day after the violations were identified. Further, owners associated with
3
During our inspections, we notified Authority and HUD officials of a total of 76 units containing life-threatening
health and safety violations requiring correction within 24 hours. Upon further analysis of our completed inspection
reports, we identified an additional unit containing health and safety violations. We later notified Authority and
HUD officials that a total of 77 units contained 24-hour violations.
15
8 of the 77 units were notified up to 5 days after we made officials aware of the
violations. A total of 22 of the NE-1 letters were missing dates; thus, there was
no evidence to support when Authority officials notified approximately 29 percent
of the owners. Although the NE-1 letters were sent as a result of our inspections,
the letters stated that Authority staff had inspected the unit and premises. Lastly,
there was no evidence to support that the owner associated with the remaining
unit had been notified of the violations.
Number of
NE-1 letters units Percentage
Mailed 1 day before our
inspection 5 7%
Mailed within
1 day 41 53%
2 days 4 5%
3 days 0 0%
4 days 3 4%
5 days 1 1%
Missing date 22 29%
Missing evidence that owner was
notified of violation 1 1%
Total 77 100%
For the 77 units containing health and safety violations, analysis of the NE-2,
Certification of Completed Repair, forms disclosed that there was no evidence to
support that the violations associated with 25 percent of the 77 units containing
violations had been corrected. Specifically, only 58 of the NE-2 forms (75
percent) were returned to the Authority, signed by both the landlord and tenant,
certifying that the violation had been corrected.
NE-2 forms Number of units Percentage
Signed by landlord 58 75%
and tenant
Missing certifying 1 1%
signatures
Missing evidence that 18 24%
violation had been
corrected
Total 77 100%
Contrary to HUD regulations requiring exigent health and safety violations to be
corrected within 24 hours, it took approximately 14 days for Authority officials to
16
obtain certification from the owners that the violations had been corrected. This
average is based on information obtained from the certified NE-2 forms
associated with 59 of the 77 units containing 24-hour violations.4 For the
remaining 18 units, there was no evidence to support that the violations had been
corrected.
Length of time for Number of units Percentage
violations to be
corrected
Within
24 hours 0 0%
10 days 20 26%
20 days 30 39%
30 days 7 9%
60 days 2 3%
Missing evidence that 18 23%
violation had been
corrected
Total 77 100%
Conclusion
Authority officials did not always ensure that the Authority’s Housing Choice
Voucher program units met HUD’s housing quality standards. This condition
occurred because Authority officials did not adequately implement procedures
and controls to ensure that program units met housing quality standards. As a
result, tenants were subjected to inadequately maintained units, which created
unsafe living conditions. In accordance with HUD 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 adequately perform its
administrative responsibilities, such as not enforcing HUD’s housing quality
standards. The Authority disbursed $85,546 in housing assistance payments and
received $7,030 in program administrative fees for the 24 units that materially
failed to meet HUD’s housing quality standards. If the Authority implements
controls to ensure that all units meet housing quality standards, we estimate that at
least $148 million in future housing assistance payments will be spent for units
that are decent, safe, and sanitary.
4
Using the NE-2 certification forms signed by the landlords and tenants associated with a total of 59 units, we
determined that a cumulative total of 848 days had elapsed after Authority officials notified owners of the violations
(848 days divided by 59 equals 14.3 days).
17
Recommendations
We recommend that the Director of HUD’s New York Office of Public Housing
instruct Authority officials to
1A. Immediately certify, along with the owners of the remaining 41 units (99-
58) cited in this finding that failed our inspections, that the housing quality
standards violations identified in this review have been corrected.
1B. Reimburse HUD $92,576 from non-Federal funds, representing $85,546
for housing assistance payments and $7,030 in associated administrative
fees, for the 24 units that materially failed to meet HUD’s housing quality
standards.
1C. Implement procedures and controls and provide an analysis of the
Authority’s inspection protocol and the means to improve the inspection
process, as well as goal dates for implementing the corrective actions, to
ensure that program units meet housing quality standards, thereby
ensuring that an estimated $148,060,576 in future program funds is
expended for units that are decent, safe, and sanitary.
1D. Request HUD approval to incorporate specific local city building codes into
the Authority’s Section 8 Housing Choice Voucher program administrative
plan.
1E. Customize the Global Bay System inspection checklists to include both
HUD’s requirements and local city building codes approved by HUD,
thereby ensuring that proper inspections are conducted on a uniform basis.
1F. Increase the quality of each inspection by reducing the number of unit
inspections conducted daily by the Authority’s inspectors to ensure that a
thorough inspection is performed that can identify 24-hour violations.
18
SCOPE AND METHODOLOGY
Our audit generally covered the period December 1, 2012, through January 31, 2013, and was
expanded when necessary. We performed our fieldwork from March 14 through July 24, 2013, at
the Authority’s office located at 90 Church Street, New York, NY, and at selected units scattered
throughout the five boroughs of New York City, consisting of the Bronx, Brooklyn, Manhattan,
Queens, and Staten Island.
To accomplish our audit objective, we
Reviewed applicable laws, regulations, HUD handbooks, HUD notices, and the Authority’s
administrative plan.
Obtained an understanding of the Authority’s policies and procedures related to unit
inspections.
Interviewed HUD field office and Authority officials.
Obtained and reviewed the Authority’s unit and building inspection reports and data from
its Siebel computer system.
Evaluated internal controls and reviewed computer controls to identify potential
weaknesses related to our objective. We relied in part on computer-processed data
primarily for obtaining background information on the Authority’s Section 8 Housing
Choice Voucher program. We performed a minimal level of testing and found the data to
be adequate for our purposes.
We selected a statistical sample of 120 of the Authority’s program units to inspect from a
universe of 12,006 program units that passed an Authority-administered housing quality
standards inspection between December 1, 2012, and January 31, 2013. Although 120 units
were initially statistically selected for inspection, we were unable to obtain admittance to one
unit. As a result, for statistical purposes, we could not apply a substitue with the same statisitcal
strata identifier. Therefore, the sample size was reduced to 119 units. We inspected the selected
units between April 2 and May 2, 2013, to determine whether the Authority’s program units met
HUD’s housing quality standards. We performed inspections with a representative from the
Authority. Of the 119 units inspected, 6 were located in State and city developments in which
the New York City Department of Housing Preservation and Development conducted the unit
inspections for the Authority.
We selected a statistical sample of these Section 8 rental units for inspection to assess conformity
to HUD’s housing quality standards. To select these sample units, we systematically selected
these units within a 10-strata sample design. This design allowed us to control for variation in
the size of the housing assistance payment and the type of inspection. Before conducting our
inspections, we tested this sample design with various rates of error to confirm that a reliable
19
answer could be obtained with this sample design and that the confidence intervals, as specified,
would provide an accurate probabilistic projection of units affected and dollar amounts involved.
We calculated the amount of housing assistance payments made to the landlords for the period
between the date on which the unit passed the Authority-administered inspection and our
inspection. Based on the housing assistance subsidies associated with the units we inspected in
our stratified sample, we can say that at least $148 million in housing assistance payments will
be paid over the next year on rental units that do not meet housing quality standards unless the
changes we recommend are made. We computed this number by averaging the housing
assistance payment amounts spent on units with significant housing quality standards failures
across the units we inspected. Units that passed our inspection were included in the average as a
zero dollar finding. Taking the average housing assistance dollars spent on failing units
($201.17), deducting a margin of error and applying it to 12 months of housing assistance
payments over the Authority’s 92,561 rental units, we are 95 percent confident that the amount
of housing assistance subsidies spent on inadequate units amounted to at least $148 million, and
it could be more. Calculations are shown below:
($201.17 - 1.659 X $40.89) × N = $133.3 × 92,561 units X 12 months = $148,060,576 per year
in housing assistance payments that could be put to better use.
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.
20
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:
Program operations – Policies and procedures that management has
implemented to reasonably ensure that a program meets its objectives.
Compliance with laws and regulations – Policies and procedures that
management has implemented to reasonably ensure that resource use is
consistent with laws and regulations.
Safeguarding resources – Policies and procedures that management has
implemented to reasonably ensure that resources are safeguarded against
waste, loss, and misuse.
Reliability and validity of data – Policies and procedures that management
has implemented to reasonably ensure that valid and reliable data are
obtained, maintained, and fairly disclosed in reports.
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 the effectiveness or efficiency of operations, (2) misstatements in
financial or performance information, or (3) violations of laws and regulations on a
timely basis.
21
Significant Deficiency
Based on our review, we believe that the following item is a significant
deficiency:
Authority officials did not implement adequate controls to ensure that
program objectives were met and that they complied with laws and
regulations and safeguarded resources when the Authority’s Housing
Choice Voucher program units did not meet housing quality standards, the
Authority’s inspection checklists and administrative plan did not include
HUD requirements and local city building codes, and inspectors were not
provided adequate time to thoroughly perform inspections (see finding).
22
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Funds to be put
Ineligible 1/
number to better use 2/
1B $92,576
1C $ 148,060,576
_________ ____________
Total $92,576 $148,060,576
1/ Ineligible cost 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 $148 million in program funds to better use. Once the
Authority successfully improves its controls and ensures that inspectors are given
adequate time to perform inspections, this will be a recurring benefit. Our estimate
reflects only the initial year of this benefit.
23
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
24
Ref to OIG Evaluation Auditee Comments
Comment 2
Comment 3
25
Ref to OIG Evaluation Auditee Comments
Comment 4
Comment 5
Comment 6
26
Ref to OIG Evaluation Auditee Comments
Comment 6
Comment 7
Comment 1
Comment 8
Comment 1
27
Ref to OIG Evaluation Auditee Comments
Comment 1
Comment 9
28
Ref to OIG Evaluation Auditee Comments
Comment 9
Comment 1
Comment 1
Comment 10
29
Ref to OIG Evaluation Auditee Comments
Comment 1
30
OIG Evaluation of Auditee Comments
Comment 1 The corrective actions taken by Authority officials are responsive to our
recommendations.
Comment 2 Authority officials contend that due to a considerable lapse in time, some of the
conditions noted by HUD OIG may not have been present at the time the
Authority conducted its inspections and Authority inspectors conduct visual
inspections and do not move furniture or access areas inaccessible to tenants. It
should be noted that in addition to interviewing the tenants and reviewing the
Authority’s latest inspection reports, the HUD OIG appraiser used his
professional knowledge and experience to determine whether a housing quality
standards violation existed before the last inspection conducted by Authority
officials. As shown in the photographs in this report, it is clear that some of the
deficiencies existed at the time of the Authority’s inspections. As is our practice
when conducting housing quality standards audits, we were conservative in our
determination of preexisting conditions. In addition, the HUD OIG appraiser
inspected areas readily accessible and used by the tenants, such as basement
laundry rooms. Areas that were not readily accessible to the tenant were not
inspected, other than to review boiler or elevator certificates. According to the
Housing Choice Voucher program guidebook, Chapter 10-Housing Quality
Standards (HQS), heating system inspections are often required by local or State
authorities, especially for large multifamily buildings. If the heating system has
passed inspection from the inspecting authority within the past 2 years, the
authority may accept this as proof of heating equipment safety. Also, the elevator
servicing the unit must be working safely. A current city or State inspection
certificate suffices to determine the working condition of the elevator.
Comment 3 Authority officials disagree that 77 of the 99 units had 24-hour life threatening
(exigent) health and safety violations because HUD guidance does not
specifically define emergency fail items and allows the Authority to define what
deficiencies will be considered “emergency.” We disagree with the Authority’s
treatment of such violations as routine general health and safety violations.
According to 24 CFR 982.404(a)(3)-Housing Quality Standards (HQS), if a
defect is life threatening, the owner must correct the defect within no more than
24 hours. Therefore, officials should consider reassessing their list of life-
threatening violations.
Comment 4 Authority officials have reduced the number of required inspections to 18-20
inspections per day, and inspections are now scheduled by census tract, block, and
lot numbers, which significantly reduces travel time. The Authority should
provide documentation to HUD to support the implemented changes to its
inspection system. However, the actions of Authority officials are responsive to
our finding.
31
Comment 5 Authority officials agree with the finding that 22 violation notices (NE-1 forms)
were missing send dates. Officials further contend that 21 owners returned the
NE-2 certifications within the required timeframe. However, our review
determined that only 75 percent of the NE-2 certification forms pertaining to the
77 units containing health and safety violations were returned and that it took
approximately 14 days for Authority officials to obtain the certifications from the
owners that the violations had been corrected. Authority officials should certify
to HUD that the housing quality violations identified in this review have been
corrected.
Comment 6 Authority officials assert that the one unit missing the certifying signature on the
NE-1 form was vacant at the time of our inspection and that they were notified via
email of another unit containing violations 10 months after the HUD OIG
inspection. The assertion regarding the vacant unit is false as we did inspect the
unit, and were provided access to the unit by the tenant; thus, the unit was not
vacant. As for the email notification 10 months later regarding the other unit, we
admit that the email somehow fell through the cracks. However, as the Authority
officials state, the unit failed their inspection conducted on February 25, 2014.
We are confident that this report accurately and fairly depicts the conditions we
found in the units when we performed our inspections. We suggest that Authority
officials provide documentation to HUD to support that the owner of the building
was notified of the violations identified during the February 25, 2014,
reinspection and that the repairs were made on March 13, 2014, as claimed.
Comment 7 Authority officials state that we noted 24-hour violations that were not consistent
with their local housing quality standards policy. We disagree with the
Authority’s treatment of such violations as routine general health and safety
violations. As mentioned in comment 3 above, according to 24 CFR
982.404(a)(3)-Housing Quality Standards (HQS), if a defect is life threatening,
the owner must correct the defect within no more than 24 hours.
Comment 8 Authority officials request reconsideration of any reimbursement for the housing
assistance payments and associated administrative fees or a significant reduction
of the stated reimbursement amount based on the corrective actions taken. During
the audit resolution process with HUD, the Authority officials’ request will be
taken into consideration. However, we remind officials that in accordance with
Federal regulations, the Authority must not make any housing assistance
payments for a dwelling unit that fails to meet housing quality standards and that
HUD is permitted to reduce or offset any administrative fees paid to a public
housing authority if it fails to perform its administrative responsibilities correctly
or adequately under the program, such as not enforcing HUD’s housing quality
standards.
Comment 9 Authority officials state that HUD does not require public housing authorities to
inspect for local housing codes and that HUD may grant approval for use of
acceptable criteria variations contained in local housing codes. When we
32
conducted our inspections, Authority officials provided us with the local city
building codes, which were used as part of the unit inspections. We have since
revised recommendation 1D to state that the Authority should be instructed to
request HUD approval to incorporate local city building codes into its
administrative plan, thus ensuring that those adopted local city building codes are
enforced and consistently applied throughout the inspection process.
Comment 10 Authority officials plan to meet with HUD to discuss their inspection protocol and
recommend that audit recommendations 1C and 1G be combined. We have taken
the officials’ recommendation into consideration and have embedded
recommendation 1G into recommendation 1C.
33
The New York City Housing Authority, New York, NY, 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 2014-05-01.
Below is a raw (and likely hideous) rendition of the original report. (PDF)