Review of Home Forward, Portland, OR's Compliance With Federal Lobbying Disclosure Requirements and Restrictions

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-09-05.

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

                                             U.S. DEPARTMENT OF
                             HOUSING AND URBAN DEVELOPMENT
                                      OFFICE OF INSPECTOR GENERAL

                                          September 5, 2014
                                                                                           MEMORANDUM NO:

TO:           Laure Rawson
              Director, Office of Public Housing, Portland Field Office, 0EPH

FROM:         David E. Kasperowicz
              Regional Inspector General for Audit, Philadelphia Region, 3AGA

SUBJECT:      Review of Home Forward, Portland, OR’s Compliance With Federal Lobbying
              Disclosure Requirements and Restrictions


We conducted a review of Home Forward (previously named the Housing Authority of Portland,
OR) based on concerns noted during our ongoing internal audit of the U.S. Department of
Housing and Urban Development’s (HUD) oversight of public housing authorities’ compliance
with Federal lobbying disclosure requirements. Our review objective was to determine whether
Home Forward complied with Federal lobbying disclosure requirements and restrictions.

                              METHODOLOGY AND SCOPE

As part of our ongoing internal audit, we reviewed the U.S. Senate Lobbying Disclosure Act
database. The database showed that Ball Janik, LLP, a law firm, received payments from 2006
to 2010 for lobbying activities it conducted for Home Forward. Accordingly, our review covered
transactions that occurred during the period January 1, 2006, through December 31, 2010.

To accomplish our review objective, we communicated with HUD program officials and Home
Forward officials. In addition, we obtained and reviewed the following:

   •   Lobbying certifications relevant to our review for the period 2006 through 2010, and

   •   Invoices and payments for lobbying noted for Ball Janik.

This was a limited scope review. Therefore, it was not performed in accordance with generally
accepted government auditing standards.
                                                   Office of Audit Region 3
                                            The Wanamaker Building, Suite 10205
                                     100 Penn Square East, Philadelphia, PA 19107-3380
                             Visit the Office of Inspector General Web site at www.hudoig.gov.

The U.S. Housing Act of 1937, as amended, initiated the Nation’s public housing program. In
December 1941, the Portland City Council established the Housing Authority of Portland, OR.
In May 2011, the Housing Authority of Portland changed its name to Home Forward. Home
Forward’s main administrative office is located at 135 SW Ash Street, Portland, OR. Home
Forward is governed by a nine-member citizen commission. The commission is charged with
representing the people of the community in making major policy decisions. It is also
responsible for hiring an executive director, who implements the policies and programs it
establishes. Home Forward’s executive director is Steve Rudman. Home Forward serves
approximately 15,000 households in Portland, OR, by providing either rental assistance or
subsidized public housing. Its fiscal year begins on April 1.

Home Forward is a participant in HUD’s Moving to Work Demonstration program. In 1996,
Congress authorized Moving to Work as a HUD demonstration program. This program allowed
certain housing authorities to design and test ways to promote self-sufficiency among assisted
households, achieve programmatic efficiency, reduce costs, and increase housing choice for low-
income households. Congress exempted participating housing authorities from much of the
Housing Act and associated regulations as outlined in their Moving to Work agreements.
Participating housing authorities have considerable flexibility in determining how to use Federal
funds. Home Forward became a participant in the Moving to Work program in 1999. In March
2009, HUD entered into a new Moving to Work agreement with Home Forward. The expiration
date of Home Forward’s new agreement is March 2018.

The Lobbying Disclosure Act requires lobbyists to register with both houses of Congress and
provide quarterly disclosures on lobbying activities conducted for each client (semiannual
disclosures were required before the Act was amended in September 2007). The Act defines
“lobbying activities” as lobbying contacts and efforts in support of such contacts, including
preparation and planning activities; research and other background work that is intended, at the
time it is performed, for use in contacts; and coordination with the lobbying activities of others.
Under the Act, any oral, written, or electronic communication with covered officials regarding
the formulation, modification, or adoption of policy or legislation constitutes a lobbying contact.
Communications relating to the administration or execution of a Federal program or policy are
also included. Covered officials include, among others, members of Congress and executive
officials, such as agency heads and deputies and assistant and deputy assistant secretaries.

The Act requires lobbyists and lobbying firms to provide an estimate of the total income received
for each client, including payments received from other persons or parties for lobbying activities
on behalf of the client in excess of $5,000 quarterly ($10,000 semiannually before the Act was
amended in 2007). Income levels below the threshold must be reflected as $0 for reporting
purposes, and lobbyists must include an explanatory statement. The U.S. Senate Office of Public
Records receives, processes, and maintains information reported by lobbyists and makes the
information available to the public in its Lobbying Disclosure Act database.

                                    RESULTS OF REVIEW

Home Forward failed to disclose lobbying activities during the period 2006 through 2010. Also,
in 2007, it incorrectly certified that it had not used Federal funds for lobbying activities.

Home Forward Failed To Disclose Lobbying as Required

The U.S. Senate Lobbying Disclosure Act database showed that Ball Janik reported that Home
Forward paid it less than $10,000 semiannually from 2006 to 2007 and less than $5,000 quarterly
from 2008 to 2010. Accordingly, these amounts were reported as $0 in the database. Home
Forward provided us a vendor ledger from its accounting system showing that it paid Ball Janik
about $24,000, which included payments related to 49 invoices during the review period. To
estimate how much Home Forward spent on lobbying activities, we initially selected and
requested a sample of 12 invoices totaling about $12,000. Home Forward provided us 26
invoices totaling approximately $19,600. The 26 invoices included the 12 requested. We
reviewed all 26 invoices and determined that Home Forward spent about $4,800 on lobbying
activities during the review period. However, it did not disclose any lobbying activities during
this period.

Based on regulations at 24 CFR (Code of Federal Regulations) Part 87, lobbying activities were
not prohibited; however, disclosure of lobbying activities was required for lobbying related to
Federal programs, and the lobbying expense had to be paid with non-Federal funds. Therefore,
Home Forward should have disclosed the lobbying activities performed by Ball Janik. The
lobbying activities generally included contacts with congressional staffers in connection with its
Moving to Work and other Federal programs. Home Forward did not disclose the lobbying
activities because its officials believed that the expenses were general legal expenses as opposed
to expenses for services that constituted lobbying activities. Sample excerpts from invoices
showing Ball Janik’s lobbying activities on Home Forward’s behalf are shown in appendix C.

Home Forward Improperly Allocated Lobbying Expenses to a Federal Program

Home Forward did not directly pay for its lobbying activities with Federal funds; however, it
improperly allocated about $640 in related expenses as indirect costs to its Moving to Work
program in 2007 and 2008. Although it had allocated lobbying expenses to its Moving to Work
program in 2007, Home Forward incorrectly certified that it had not used Federal funds for
lobbying in 2007. Home Forward improperly charged the lobbying expenses to its program
because it believed they were general legal expenses. In addition, for 2008, it could not
demonstrate that it had certified, as required, that it had not and would not use Federal funds for

According to regulations at 24 CFR Part 87, Federal funds may not be used for lobbying in
connection with any Federal contract, grant, loan, or cooperative agreement or the extension,
continuation, renewal, amendment, or modification of the same. The regulations also require
recipients of more than $100,000 in Federal funds or more than $150,000 in Federal loans to
certify that Federal funds will not be used for lobbying related to Federal programs. Home
Forward’s 2007 certification is shown in appendix D.

Home Forward Took Immediate Corrective Action

As a result of our review, Home Forward took action and provided related documentation to
show that it had reclassified the indirect cost allocation from legal expenses under its Federal
program to lobbying expenses under one of its non-Federal activities. Home Forward also
provided documentation to show that its key officials had received some training on HUD and
City of Portland lobbying rules. However, the training did not cover key information, such as
the definition of lobbying activities as referenced in the Lobbying Disclosure Act. Therefore,
Home Forward needs to ensure that its key officials are fully aware of all the aspects of Federal
lobbying disclosure requirements and restrictions.


We recommend that the Director of HUD’s Portland Office of Public Housing

1A.     Require Home Forward to reimburse its program $643 from non-Federal funds for
        lobbying expenses it improperly allocated to the program. *

1B.     Ensure that responsible Home Forward officials receive comprehensive training in
        lobbying disclosure requirements and restrictions.

1C.     Ensure that all future HUD monitoring of Home Forward covers compliance with Federal
        lobbying disclosure requirements and restrictions.

  Since Home Forward took action related to recommendation 1A, no further action is required regarding this


Appendix A


                                                  Ineligible 1/

                                  1A                 $643

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.

Appendix B


Ref to OIG Evaluation   Auditee Comments

Comment 1

Comment 2

                         OIG Evaluation of Auditee Comments

Comment 1   Home Forward stated that it repaid the $643 that it erroneously allocated to its
            Federal program from non-Federal sources. We verified that Home Forward
            repaid the $643 from non-Federal funds. Therefore, no further action is required
            regarding recommendation 1A.

Comment 2   Home Forward stated that it plans to conduct additional training on the Lobbying
            Disclosure Act. As stated in the report, Home Forward should ensure that the
            training covers all aspects of the Act including, among other things, the definition
            of lobbying activities.

Appendix C


         Note: According to Home Forward, Ball Janik erroneously billed the City of
         Portland for services it provided to Home Forward. The invoice was later
         routed to Home Forward for payment.

Appendix D


         Note: This certification applied to Home Forward’s fiscal year 2007.