oversight

The Orange County Housing Authority, Santa Ana, CA, Did Not Adequately Monitor Its Contractors' Performance of HUD's Housing Quality Standards Inspections

Published by the Department of Housing and Urban Development, Office of Inspector General on 2016-05-13.

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

     Orange County Housing Authority,
             Santa Ana, CA
    Housing Choice Voucher Program, Housing Quality
             Standards – Mobility Out Units




Office of Audit, Region 9    Audit Report Number: 2016-LA-1005
Los Angeles, CA                                    May 13, 2016
To:            Marcie P. Chavez, Director, Los Angeles Office of Public Housing, 9DPH
               //SIGNED//
From:          Tanya E. Schulze, Regional Inspector General for Audit, 9DGA
Subject:       The Orange County Housing Authority, Santa Ana, CA, Did Not Adequately
               Monitor Its Contractors’ Performance of HUD’s Housing Quality Standards
               Inspections




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 Orange County Housing Authority’s
monitoring of its contractors’ performance of housing quality standards inspections of Housing
Choice Voucher program-funded mobility out housing units.
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
213-534-2471.
                    Audit Report Number: 2016-LA-1005
                    Date: May 13, 2016

                    The Orange County Housing Authority, Santa Ana, CA, Did Not Adequately
                    Monitor Its Contractors’ Performance of HUD’s Housing Quality Standards
                    Inspections



Highlights

What We Audited and Why
We audited the Orange County Housing Authority’s monitoring of its contractors’ performance
of housing quality standards inspections of its mobility out units due to inadequacies identified in
another review of the Authority’s Housing Choice Voucher program’s housing quality standards.
The Authority contracted out the administration and housing quality standards inspections for its
mobility out housing units, Housing Choice Voucher program-funded housing units located in
jurisdictions of the public housing agencies of Anaheim and Garden Grove. Our objective was
to determine whether the Authority monitored its contractors’ performance of housing quality
standards inspections in accordance with U.S. Department of Housing and Urban Development
(HUD) rules and requirements.

What We Found
The Authority did not adequately monitor its contractors’ performance of HUD’s housing quality
standards inspections. Of the 21 mobility out housing units inspected, 12 were in material
noncompliance with HUD standards. For those units, the Authority’s contractors’ inspectors
failed to report 84 deficiencies that existed when they conducted their last inspections. This
condition occurred because the Authority did not have formal written monitoring policies and
procedures and lacked a quality control process to monitor its contractors’ performance of
inspections to ensure that mobility out housing units complied with housing quality standards.
As a result, some tenants lived in housing that did not meet HUD standards, and the Authority
disbursed $52,215 in housing assistance payments for these 12 mobility out housing units.

What We Recommend
We recommend that the Director of HUD’s Los Angeles Office of Public Housing require the
Authority to (1) reimburse its program $52,215 from non-Federal funds for the 12 Housing
Choice Voucher program-funded mobility out housing units that materially failed to meet HUD
standards, (2) certify that the identified failed housing quality standards deficiencies have been
corrected for the units cited, (3) develop and implement formal written monitoring policies and
procedures to ensure that contracted inspections of mobility out housing units meet HUD
standards, and (4) develop and implement a quality control process to ensure that contracted
inspections of mobility out housing units are monitored for compliance with HUD standards.
Table of Contents
Background and Objective......................................................................................3

Results of Audit ........................................................................................................5
         Finding: The Authority Did Not Adequately Monitor Its Contractors’
         Performance of HUD’s Housing Quality Standards Inspections ................................. 5

Scope and Methodology .........................................................................................11

Internal Controls ....................................................................................................12

Appendixes ..............................................................................................................14
         A. Schedule of Questioned Costs .................................................................................. 14

         B. Auditee Comments and OIG’s Evaluation ............................................................. 15

         C. Criteria ....................................................................................................................... 26

         D. Summary of Questioned Costs for Materially Noncompliant Mobility Out
            Housing Units ............................................................................................................ 31




                                                                     2
Background and Objective
The U.S. Department of Housing and Urban Development (HUD) designated the Orange County
Housing Authority as a public agency in 1971 and authorized it to provide housing assistance for
low-income families, including families with children, the elderly, and people with disabilities,
residing within the 31 cities and unincorporated areas of Orange County, CA, excluding the cities of
Santa Ana, Garden Grove, and Anaheim, which have their own public housing agencies. The
Authority’s mission is to provide safe, decent, and sanitary housing conditions for very low-income
families and manage resources efficiently.
The Housing Choice Voucher program’s goal is to provide safe, decent, and sanitary housing at an
affordable cost to low-income families. To accomplish this goal, program regulations set forth
basic housing quality standards, which all housing units must meet before assistance can be paid on
behalf of a family and at least biennially throughout the term of the assisted tenancy. The standards
define standard housing and establish the minimum criteria necessary for the health and safety of
program participants (appendix C).
HUD is moving from housing quality standards to uniform physical condition standards for public
housing agencies to use when inspecting program-funded housing units.
The Authority is a division within Orange County Community Services, which administers
federally funded programs to provide monthly rental assistance to qualified tenants in privately
owned rental housing. It is divided into three sections under the direction of a division manager as
follows: Occupancy and Residency Section, Rental Assistance Section, and Special Housing
Programs.
The Special Housing Programs section is an administrative unit responsible for implementing and
reporting requirements for specialized HUD programs and works in collaboration with outside
agencies in coordinating interjurisdictional transfers for tenants moving between housing
authorities under the provisions of portability and mobility.
In December 2012, the Authority executed a memorandum of agreement with the public housing
agencies of the cities of Anaheim and Garden Grove for a 5-year period from December 1, 2012, to
November 30, 2017. These public housing agencies executed this agreement to promote mobility
and freedom of choice for low-income families seeking housing assistance under the Housing
Choice Voucher program. The agreement is intended to simplify, facilitate, and improve
interjurisdictional administration of the program by eliminating often-cumbersome procedures that
would otherwise be necessary under portability requirements. The agreement authorizes these
contractors, the Anaheim and Garden Grove Housing Authorities, to administer program vouchers
on behalf of the Authority. Tenants receiving housing assistance payments from the Authority who
reside in the cities of Anaheim or Garden Grove are termed mobility out tenants but remain the
responsibility of the Authority.




                                                  3
In 2015, the Authority administered about 10,622 program-funded housing units and disbursed
more than $114 million in funding to provide housing assistance to eligible participants. As of
October 2015, the audit universe consisted of 884 monthly occupied program-funded mobility
out units administered by the Authority.
The objective of the audit was to determine whether the Authority monitored its contractors’
performance of housing quality standards inspections in accordance with HUD rules and
requirements.




                                                 4
Results of Audit

Finding: The Authority Did Not Adequately Monitor Its
Contractors’ Performance of HUD’s Housing Quality Standards
Inspections
The Authority did not adequately monitor its contractors’ performance of HUD’s housing quality
standards inspections. Of the 21 units inspected, 17 failed to meet HUD’s minimum standards,
and 12 1 were in material noncompliance with the standards. For the 12 units in material
noncompliance, the Authority’s contractors’ inspectors failed to report 84 deficiencies that
existed when they conducted their last inspection. These deficiencies occurred because the
Authority did not have formal written monitoring policies and procedures and lacked a quality
control process to monitor its contractors’ performance of inspections to ensure that program-
funded mobility out housing units complied with housing quality standards. As a result, some
tenants lived in units that did not meet HUD standards, and the Authority disbursed $52,215 in
housing assistance payments for the 12 units in material noncompliance with the standards.

Housing Quality Standards Not Met
We inspected 21 2 units statistically selected from a sampling frame of 163 units that had passed
the Authority’s contractors’ housing quality standards inspections between July 1 and October
31, 2015. The 21 units were selected to determine whether the Authority monitored its
contractors’ inspection performance to determine whether units met minimum housing quality
standards. We performed the inspections within 3 to 6 months after the Authority’s contractors
performed their inspections.
Contrary to 24 CFR (Code of Federal Regulations) 982.401(a)(3) (appendix C), 12 of the 21
units inspected (57 percent) failed and were in material noncompliance with housing quality
standards. These units were in material noncompliance for having at least three deficiencies,
which created living conditions that were not decent, safe, and sanitary for tenants. The 12 units
had a total of 84 deficiencies (appendix D).
Contrary to the administrative plans of the Authority’s contractors, the Anaheim and Garden
Grove Housing Authorities (appendix C), the units identified had deficiencies, such as (1)
conditions that jeopardized the security of the housing unit, including the locking of windows
and doors; (2) electrical problems or conditions that could result in shock or fire; and (3)
conditions that threatened public safety.


1
    An additional 5 of the 21 units failed but were not materially compliant. The remaining four units passed with
    no deficiencies.
2
    Our methodology for the statistical sample is explained in the Scope and Methodology section of this audit
    report.




                                                          5
The following table lists the top 3 deficiencies identified among the 12 units that were materially
noncompliant with HUD standards.

                                                                     Number of       Number of
                         Type of deficiency
                                                                     deficiencies      units

                    Security of unit windows                              25              6
       Unsafe operating conditions of heating and electrical
                                                                          14              9
                           equipment
          Security of unit doors (interior and exterior)                  13              7

Types of Deficiencies
The following photographs illustrate some of the deficiencies noted during housing quality
standards inspections of the 12 units that materially failed to meet HUD standards. Most of the
common deficiencies were categorized as security of unit windows, unsafe operating conditions
of heating and electrical equipment, and security of unit doors (interior and exterior).
Security of Unit Windows
A total of 25 deficiencies were found in 6 units that materially failed to meet HUD’s housing
quality standards.




The picture above shows a unit with window conditions involving a deteriorated, damaged, and
rotting window frame and an improper weather-tight seal. In addition, the window did not have



                                                 6
an interior locking device. This unit had two other windows with these same deficiencies. HUD
regulation 24 CFR 982.401(d)(1) and HUD Handbook 7420.10, Housing Choice Voucher
Guidebook, section 10.3, state that the unit must provide space and security for the family. The
contractor’s administrative plan states that window sashes must be in good condition, solid and
intact, and properly fitted to the window frame; damaged or deteriorated sashes must be
replaced; and windows must be weather-stripped as needed to ensure a weather-tight seal.
Lastly, the administrative plan states that any condition that jeopardizes the security of the unit is
considered to be a life-threatening condition. These conditions could jeopardize the security of
the tenant and resulted in a failed inspection.

Unsafe Operating Conditions of Heating and Electrical Equipment
A total of 14 deficiencies were found in 9 units that materially failed to meet HUD’s housing
quality standards.




The picture above shows an improper installation of the vent system to the unit’s water heater.
The vent system was installed with the use of standard duct tape, causing damage to the tube and
allowing exhaust gases to enter the unit. HUD regulation 24 CFR 982.401(e)(2)(i) states that the
system must be in proper operating condition. HUD Handbook 7420.10G, section 10.3, defines
“improper operating condition” as any condition that may be unsafe, such as broken or damaged
source vents, flues, or exhausts; gas or oil lines that create a potential fire hazard; or threats to
health and safety. The contractor’s administrative plan considers any electrical problem or
condition that could result in shock or fire and natural gas or fuel oil leaks and fumes to be life-


                                                   7
threatening conditions. These operating conditions of the water heater, which used heat and
electricity, created a potential fire hazard and threat to the tenant’s health and safety and,
therefore, resulted in a failed inspection of the unit.

Security of Unit Doors (Interior and Exterior)
A total of 13 deficiencies were found in the 7 units that materially failed to meet HUD’s housing
quality standards.




The picture above shows a main entry door of a unit that has a split door frame with excess holes
and a missing striker plate for the locking mechanism. HUD regulations 24 CFR 982.401(d)(1)
and 24 CFR 982.401 (d)(2)(iv); and HUD Handbook 7420.10G, section 10.3, state that the unit
must provide adequate space and security for the family, the exterior doors of the unit must be
lockable, and door surfaces (including door frames) must be in sufficient condition to support the
installation and proper operation of door locks. The contractor’s administrative plan states that
all exterior doors must be weather-tight to avoid any air or water infiltration. The administrative
plan also states that all exterior doors must be lockable, have no holes, have all trim intact, and


                                                 8
have a threshold. In addition, lack of security for the unit is considered an emergency repair
item. These conditions could jeopardize the security of the tenant and resulted in a failed
inspection.
Lack of Written Monitoring Policies and Procedures
The Authority did not have formal written monitoring policies and procedures in place to ensure
the monitoring of its contractors. As part of its memorandum of agreement, the Authority
initiated a request for its contractors to perform inspections of mobility out housing units using
their own resources. Once an inspection was completed, the contractor would provide the
Authority the inspection reports. The Authority maintained an internal list of inspection requests
and updated the list once inspections were completed to include results of inspections or
reinspections. Although the Authority kept track of and recorded inspection requests and results,
this practice did not ensure that it adequately monitored its contractors’ performance of housing
quality standards inspections. The agreement did not discuss the monitoring of its contractors;
specifically, it lacked written policies and procedures to show how the Authority adequately
reviewed the inspection reports and ensured that housing quality standards were met. As a
result, the Authority did not monitor its contractors to ensure that inspections met HUD
standards. Further, the lack of formal written monitoring policies and procedures allowed the
contractors to inspect and pass program-funded mobility out housing units that should not have
passed.
Lack of Quality Control Process
The Authority did not perform quality control inspections on its program-funded mobility out
housing units. A quality control inspection is a reinspection of randomly selected housing units
by a supervisor or other qualified individual to ensure that housing inspections were conducted
correctly and uniformly. The Authority conducted quality control inspections only on units
inspected by its own inspectors. Since the mobility out housing unit inspections were conducted
by the Authority’s contractors, they were not included in the random selection of quality control
inspections. As a result, mobility out housing units were not selected for quality control
inspections to determine whether the Authority’s contractors’ inspections were conducted
correctly and uniformly to ensure that program-funded mobility out housing units met HUD
standards.

Conclusion
The deficiencies described above occurred because the Authority did not have formal written
policies and procedures in place to monitor its contractors’ performance of housing quality
standards inspections. In addition, the Authority did not have a quality control process in place
to ensure that contractors conducted inspections that complied with HUD standards. These
conditions allowed tenants to live in units that were not safe, decent, and sanitary. As a result,
the Authority spent $52,215 in housing assistance payments on 12 program-funded mobility out
housing units (appendix D) that were in material noncompliance.




                                                 9
Recommendations
We recommend that the Director of the Los Angeles Office of Public Housing require the
Authority to

       1A. Reimburse its program $52,215 from non-Federal Funds for the 12 units that
           materially failed to meet HUD’s housing quality standards.
       1B. Certify that the identified failed housing quality standards items have been corrected
           for the units cited in this report or take appropriate administrative action.
       1C. Develop and implement formal written monitoring policies and procedures to ensure
           that contracted inspections of mobility out housing units meet HUD standards.
       1D. Develop and implement a quality control process to ensure that contracted
           inspections of mobility out housing units are monitored for compliance with HUD
           standards.




                                                10
Scope and Methodology
We performed our audit work at the Authority’s office in Santa Ana, CA, from December 17,
2015, to February 19, 2016. Our review covered the period July 1, 2014, to October 31, 2015,
and was expanded as necessary.
To accomplish our objective, we

   •   Reviewed and analyzed the Authority’s policies, procedures, internal controls, and
       financial records relating to the program and monitoring of its contractors;

   •   Reviewed applicable HUD regulations and requirements;

   •   Reviewed HUD’s monitoring reports, annual plan, consolidated annual contributions
       contract, and administrative plans of the Authority and its contractors;

   •   Reviewed files, including housing quality standards inspection reports, housing
       assistance payment registers, and tenant files and data;

   •   Conducted onsite inspections of the Housing Choice Voucher program-funded mobility
       out units; and

   •   Interviewed Authority staff.
As of October 2015, the audit universe consisted of 884 monthly occupied program-funded
mobility out units administered by the Authority. We inspected a stratified systematic sample of
21 units that were selected from a sampling frame of 163 monthly occupied program-funded
mobility out units that passed the Authority’s contractors’ inspections from July 1 through
October 31, 2015. A stratified systematic approach was used to help control for potential
differences in housing stock across zip code locales. We selected recently completed inspections
to determine whether the Authority’s contractors’ inspection staff adequately inspected and
correctly passed program-funded mobility out units. Due to the low threshold of the inspection
results, we did not project estimated costs to the universe of program-funded mobility out units.
Based on the 21 inspected units, we found that 12 of the units had housing quality standards
deficiencies but passed an Authority contractor’s inspection.
We relied in part on data maintained by the Authority. We performed an assessment of the
reliability of the data and found the data to be reasonably reliable for our audit objective.
We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective(s). We believe that the evidence obtained provides a reasonable basis for our finding
and conclusion based on our audit objective.



                                                 11
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 program operations – Policies and procedures implemented to
    ensure effective and efficient operations of the Authority’s monitoring of its contractors’
    performance of housing quality standards inspections.

•   Reliability of financial information – Policies and procedures implemented to reasonably
    ensure that valid and reliable information is obtained, maintained, and fairly disclosed in its
    housing quality standards inspection reports.

•   Compliance with applicable laws and regulations – Policies and procedures implemented to
    ensure that housing quality standards inspections are consistent with applicable HUD
    requirements.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, the
reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or
efficiency of operations, (2) misstatements in financial or performance information, or (3)
violations of laws and regulations on a timely basis.




                                                  12
Significant Deficiency
Based on our review, we believe that the following item is a significant deficiency:

•   The Authority did not have formal written monitoring policies and procedures to ensure that
    its contractors performed inspections in compliance with HUD’s housing quality standards
    (finding).




                                                 13
Appendixes

Appendix A


                             Schedule of Questioned Costs
                            Recommendation
                                               Ineligible 1/
                                number
                                    1A            $52,215

                                  Total           $52,215



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.




                                             14
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               15
Comment 1




Comment 2




Comment 3




            16
Comment 4




Comment 5




            17
Comment 6




            18
19
                            OIG Evaluation of Auditee Comments


Comment 1 We acknowledge the Authority’s and its contractors’ commitment to the safety of
          tenants in program-funded units. However, the lack of written monitoring policies
          and procedures and a quality control process resulted in units that failed inspections.
          While the Authority’s contractors conducted reinspections, the units did not meet
          HUD standards and caused potential health and safety issues for the tenants at the
          time of our inspections. We are aware that the standards are different among the
          agencies and considered that when conducting our inspections. Overall, we
          determined that the units did not pass the inspections and meet HUD standards.

             Although no tenants have been harmed by unsafe conditions, the Authority and its
             contractors are responsible for ensuring that units meet HUD standards to minimize
             the risk of harm. If the Authority develops and implements formal written
             monitoring policies and procedures and a quality control process for its inspections
             conducted by contractors, it will ensure that units meet HUD standards. We
             encourage the Authority work with HUD during the audit resolution process to
             ensure recommendations are adequately addressed.

Comment 2 The administrative plans for the contracted agencies establish the criteria for which
          deficiencies are considered life threatening and the need for correction within 24
          hours of an inspection. In addition, HUD rules and requirements provided
          guidelines for determining whether the deficiencies were considered to be life-
          threatening conditions that must be corrected within 24 hours of an inspection. We
          determined a unit was materially deficient if there were at least three deficiencies
          identified that created living conditions that were not decent, safe, and sanitary for
          tenants.

             We understand that deficiencies may occur after an inspection; however, the
             Authority and its contractors are responsible for ensuring that units meet HUD
             standards to minimize risk of harm to tenants. In addition, cited deficiencies that
             may have occurred after an inspection were not the only determining factor of a
             materially deficient unit. We cited other deficiencies that factored into our
             determination of whether the unit materially failed HUD standards.

             We reviewed and considered the Authority’s attachment A about specific
             deficiencies identified for failed units and detailed comments provided for the 84
             deficiencies during a meeting on April 14, 2016. We cited conditions that were
             potential health and safety issues that did not meet HUD standards and therefore
             determined the condition a deficiency that factored into the unit’s failure to meet
             HUD standards. The 84 deficiencies identified among 12 units resulted in a
             reimbursement of $52,215 funded for housing assistance payments.

             Please see comment 6 for responses related to attachment A.



                                                 20
Comment 3 We commend the Authority for being proactive in addressing the identified housing
          quality standards deficiencies and appreciate its promptness in updating us on
          outstanding issues.

Comment 4 We commend the Authority for taking the lead to develop formal written
          monitoring policies and procedures and collaborate with its contractors and board
          of commissioners.

Comment 5 We commend the Authority for taking the initiative to develop a quality control
          process and update its current contract to reflect these changes.

Comment 6 We reviewed attachment A and determined that the deficiencies did not meet HUD
          standards.

            We disagree with the Authority’s comment about not providing supportive
            evidence. During the inspections, we asked present tenants if they had any issues
            with their units. We also reviewed the Authority’s most recent inspection reports.
            These inspection reports did not identify unresolved deficiencies and, therefore, the
            units had passed inspections. While tenant-caused deficiencies can occur after an
            inspection, the Authority and its contractors are responsible for ensuring that units
            meet HUD standards. We cited conditions that were potential health and safety
            issues that did not meet HUD standards and therefore determined the condition a
            deficiency that factored into the unit’s failure to meet HUD standards.

            We reviewed and considered the Authority’s assessment of the units in question.
            We summarized the common deficiencies cited in items 1 to 3. We addressed
            deficiencies for specific units in items 4 to 9.

            1) Although the family is responsible for deciding the acceptability of the type of
               locks for doors and windows, the Authority must ensure that the security of the
               unit is adequate. HUD regulation 24 CFR 982.401(d)(1) and HUD Handbook
               7420.10, section 10.3, state that the unit must provide adequate space and
               security for the tenants. HUD regulation 24 CFR 982.401(d)(iii) and HUD
               Handbook 7420.10, section 10.3, provide information on the type of acceptable
               window locks within a unit. Further, the contractors’ administrative plans
               consider a unit to be fails if the security of the unit is jeopardized. The improper
               locking mechanisms were makeshift window repair locks, which did not meet
               HUD standards because they did not provide adequate unit security for the
               tenant. As a result, we disagree with the Authority’s assessment and consider
               these items to be deficiencies that factored into the units’ failure to meet HUD
               standards.

            2) We acknowledge that tenant-caused deficiencies factored into some units failing
               inspections and in some cases may have occurred after contractors’ inspections.



                                                21
   However, the Authority and its contractors are responsible for ensuring that
   units meet HUD standards. HUD Handbook 7420.10, section 10.3, discusses
   improper operating conditions, which include proper clearance from
   combustible material. In addition, the contractors’ administrative plans consider
   units to be fails if conditions exist that are potential health and safety issues for
   the tenants. At the time of our inspection, we cited the storage of personal items
   as a deficiency because of unsafe conditions, such as fire or other threats, within
   the unit, which are potential health and safety issues for the tenants. As a result,
   we disagree with the Authority’s assessment and consider these items to be
   deficiencies that factored into the units’ failure to meet HUD standards.

3) HUD Handbook 7420.10, section 10.3, discusses improper operating conditions,
   which include all conditions that may be considered unsafe for the tenant. In
   addition, the contractors’ administrative plans consider units to be fails if
   conditions exist that are potential health and safety issues for the tenants.
   During our inspections, we cited the accumulation of lint and debris as a
   deficiency because it is a fire hazard, which is a potential health and safety issue
   for the tenants. As a result, we disagree with the Authority’s assessment and
   consider these items to be deficiencies that factored into the units’ failure to
   meet HUD standards.

4) We disagree. We cited two issues related to the storage of personal items
   because they were potential hazards to the tenants’ health and safety. Please
   refer to item 2 above for the specific requirement regarding these deficiencies.
   In the case of unit 1, the tenants stored personal items near the stove vent and
   water heater, which could harm the tenants. While the tenants corrected the
   items during our inspections, we considered them to be deficiencies that
   factored into the unit’s failing because they were not the only determining factor
   of a materially deficient unit. We cited other deficiencies that factored into our
   determination of whether the unit materially failed HUD standards.

   We cited four issues related to incorrect window locks because of the lack of
   adequate security for the unit, which jeopardized the tenant’s safety. Please
   refer to item 1 above for the specific requirement regarding this deficiency. As
   a result, we identified these four issues as deficiencies that factored into the
   unit’s failure to meet HUD standards.

   We cited the issue related to incorrect tape used on the stove vent because it was
   not heat-resistant tape, creating unsafe conditions that could become a potential
   fire hazard for the tenant. HUD Handbook 7420.10, section 10.3, discusses
   improper operating conditions, which include all conditions that may be unsafe
   and create a potential health and safety issue for the tenant. In addition, the
   contractor’s administrative plan considers units to be fails if conditions exist
   that are potential health and safety issues for tenants. As a result, we identified




                                    22
   this issue as a deficiency that factored into the unit’s failure to meet HUD
   standards.

   We cited the issue related to the missing striker plate on the unit door because
   the circumstances did not provide adequate security for the unit, which
   jeopardized the tenant’s safety. HUD regulation 24 CFR 982.401(d)(1) and
   HUD Handbook 7420.10, section 10.3, state that the unit must provide adequate
   space and security for the tenant. In addition, the contractor’s administrative
   plan states that all exterior doors must be weather-tight to avoid any air or water
   infiltration to the unit. The doors must be lockable, have no holes, have all trim
   intact, and have a threshold, or the unit is considered to be a fail since the
   security of the unit is jeopardized. As a result, we identified this issue as a
   deficiency that factored into the unit’s failure to meet HUD standards.

5) We disagree. We identified four deficiencies that caused unit 3 to be in material
   noncompliance with HUD standards. We cited two issues related to storage of
   personal items because of improper operating conditions that create potential
   health and safety issues for the tenant. Please refer to item 2 above for the
   specific requirement regarding these deficiencies. As a result, we identified
   these two issues as deficiencies that factored into the unit’s failure to meet HUD
   standards.

6) We disagree. We identified four deficiencies for unit 5 and five deficiencies for
   unit 6 that caused them to be in material noncompliance with HUD standards.
   We cited the issues related to incorrect tape used on the stove vent because it
   was not heat-resistant tape, creating unsafe conditions that could be a potential
   fire hazard for the tenant. HUD Handbook 7420.10, section 10.3, discusses
   improper operating conditions, which include all conditions that may be unsafe
   and create a potential health and safety issue for the tenant. In addition, the
   contractor’s administrative plan considers units to be fails if conditions exist
   that are potential health and safety issues for the tenants. As a result, we
   identified these two issues as deficiencies that factored into the unit’s failure to
   meet HUD standards.

   We cited the issue related to lint accumulation because it could be a potential
   health and safety issue. Please refer to item 3 above for the specific requirement
   regarding this deficiency. As a result, we identified this issue as a deficiency
   that factored into the unit’s failure to meet HUD standards.

7) We disagree. We cited two issues related to inoperable emergency hallway
   lights because they created a potential health and safety issue for the tenant.
   HUD Handbook 7420.10, section 10.3, discusses illumination and electricity,
   which must be adequate to support the health and safety of the occupants. In
   addition, the contractor’s administrative plan considers units to be fails if
   conditions exist that are potential health and safety issues for the tenants. The



                                    23
   emergency lights cited during our inspection were near the unit and should be
   operable at all times. During a repeat visit to inspect the unit, the same
   emergency lights were inoperable. As a result, we identified this issue as a
   deficiency that factored into the unit’s failure to meet HUD standards.

   We cited the issue related to lint accumulation because it could be a potential
   health and safety issue for the tenant. Please refer to item 3 above for the
   specific requirement regarding this deficiency. As a result, we identified this
   issue as a deficiency that factored into the unit’s failure to meet HUD standards.

8) We disagree. We identified four deficiencies that caused unit 9 to be in material
   noncompliance with HUD standards. We cited the two issues related to the use
   of a double-keyed deadbolt on the unit door because it did not provide adequate
   security for the unit. The double-keyed deadbolt could deprive egress in the
   time of an emergency if the key were misplaced. HUD regulation 24 CFR
   982.401(d)(1) and HUD Handbook 7420.10, section 10.3, state that the dwelling
   unit must provide adequate space and security. In addition, the contractor’s
   administrative plan states that the use of double-keyed deadbolt locks is
   prohibited in any door that is intended to provide egress from the unit and
   consider units to be fails if the security of the unit is jeopardized. During our
   inspection, the tenant informed us that the double-keyed deadbolts were present
   before the initial move-in 3 years ago. As a result, the Authority is responsible
   for correcting the deficiency.

9) We disagree. We identified five deficiencies that caused unit 10 to be in
   material noncompliance with HUD standards. We cited the three issues related
   to improper window locks because the lack of adequate security for the unit
   jeopardized the tenant’s safety. Please refer to item 1 above for the specific
   requirement regarding this deficiency. As a result, we identified these three
   issues as deficiencies that factored into the unit’s failure to meet HUD
   standards.

   We cited the issue related to the hollow front entry door because it was not
   fireproof and, therefore, did not provide adequate security for the unit. HUD
   regulation 24 CFR 982.401(d)(1) and HUD Handbook 7420.10, section 10.3,
   state that the unit must provide adequate space and security for the tenant. In
   addition, the contractor’s administrative plans considers units to be fails if
   security is jeopardized. As a result, we identified this issue as a deficiency that
   factored into the unit’s failure to meet HUD standards.

   We cited the issue related to incorrect tape used on the stove vent because it was
   not heat-resistant tape, creating unsafe conditions that could become a potential
   fire hazard for the tenant. HUD Handbook 7420.10, section 10.3, discusses
   improper operating conditions, which include all conditions that may be unsafe
   and create a potential health and safety issue for the tenant. In addition, the



                                    24
contractor’s administrative plans considers units to be fails if conditions exist
that are potential health and safety issues for the tenants. As a result, we
identified this issue as a deficiency that factored into the unit’s failure to meet
HUD standards.




                                 25
Appendix C
                                             Criteria

The following sections of 24 CFR Part 982, HUD Handbook 7420.10G, the Authority’s
contractors’ administrative plans, the Authority’s memorandum of agreement, and the
consolidated annual contributions contract were relevant to our review of the Authority’s
housing quality standards inspections of mobility out housing units.

24 CFR Part 982 – Section 8 Tenant Based Assistance Housing: Housing Choice Voucher
Program
24 CFR 982.305(a), Program requirements. The PHA [public housing agency] may not give
approval for the family of the assisted tenancy, or execute a HAP [housing assistance payments]
contract, until the PHA has determined that all the following meet program requirements:

   (1) The unit is eligible;

   (2) The unit has been inspected by the PHA and passes HQS [housing quality standards];

24 CFR 982.401(a)(3). All program housing unit meet the HQS performance requirements both
at commencement of assisted occupancy, and throughout the assisted tenancy.

24 CFR 982.401(a)(4)(i). In addition to meeting HQS performance requirements, the housing
must meet the acceptability criteria stated in this section unless variations are approved by HUD.

24 CFR 982.404(a), Owner obligations.
   (1) The owner must maintain the unit in accordance with HQS.

   (2) If the owner fails to maintain the dwelling unit in accordance with HQS, the PHA must
       take prompt and vigorous action to enforce the owner obligations. PHA remedies for
       such breach of the HQS include termination, suspension or reduction of housing
       assistance payments and termination of the HAP contract.

   (3) The PHA must not make any housing assistance payments for a dwelling unit that fails to
       meet the HQS, unless the owner corrects the defect within the period specified by the
       PHA and the PHA verifies the correction. If a defect is life threatening, the owner must
       correct the defect within no more than 24 hours. For other defects, the owner must
       correct the defect within no more than 30 calendar days (or any PHA-approved
       extension).




                                                 26
HUD Handbook 7420.10, Housing Choice Voucher Program Guidebook, Chapter 10,
Housing Quality Standards
10.2. Housing Quality Standards General Requirements
At least annually, it is the responsibility of the PHA to conduct inspections of units to determine
compliance with HQS prior to the execution of the entire term of the assisted lease. Inspections
may be completed by PHA staff or by contract personnel.

10.3. Performance Requirements and Acceptability Standards
Each of the 13 HQS performance requirements and acceptability criteria are listed in this
section of the HUD Handbook.

Space and Security
Performance Requirement

   •    The dwelling unit must provide adequate space and security for the family

Acceptability Criteria

    •   Dwelling unit windows that are accessible from the outside must be lockable

    •   Exterior doors to the unit must be lockable

Unit windows located on the first floor, at the basement level, on a fire escape, porch, or other
outside space that can be reached from the ground and that are designed to be opened must have
a locking device.

Doors leading to the outside and common hallways, fire escapes, and porches or otherwise
accessible from the ground must have locks. No specific type of lock is required.

Window and door surfaces (including the door frame) must be in sufficient condition to support
the installation and proper operation of window and door locks.

Thermal Environment
Acceptability Criteria

   •    The heating and/or air conditioning system must be in proper operating condition

Improper operating conditions, including all conditions that may be unsafe, such as broken or
damage source vents, flues, exhausts, gas or oil lines that create a potential fire hazard or threats
to health and safety are not permitted. Heating unit safety devices must be present, and the
heating equipment must have proper clearance from combustible materials and location of oil
storage tanks.




                                                   27
Water Supply
Water-heating equipment must be installed safely and must not present any safety hazards to
families. All water heaters must be free of leaks, have temperature/pressure relief valves, and a
discharge line. Fuel burning equipment must have proper clearance from combustible materials
and be properly vented.

Orange County Housing Authority, Administrative Plan, Housing Choice Voucher
Program, Adopted January 27, 2015
The cities of Anaheim and Garden Grove each operate their own Housing Authority and are not
within the jurisdiction of Orange County Housing Authority.

To facilitate tenant moves between Housing Authority (HA) jurisdictions and to reduce
administrative burdens of the portability process, the Anaheim, Garden Grove and the Orange
County Housing Authorities entered into a Mobility Agreement (MOA).

This provision enables eligible program participants with a Housing Choice Voucher issued by
their initial HA in Anaheim, Garden Grove, or Orange County, to move into another HA
operating within the County of Orange, under modified portability procedures.

Tenants requesting to move under the provisions governing Mobility are identified as Mobility
tenants. Families continue to receive direct services from the initial HA where they first received
their HCV [Housing Choice Voucher program] voucher; however unit inspections and rent
determinations are conducted and approved by the agency with authority to administer the HCV
program in the area where the unit is located.

Anaheim Housing Authority, Administrative Plan, Section 8 Housing Choice Voucher
Program, Adopted July 1, 2015
Chapter 8, Housing Quality Standards and Rent Reasonableness Determinations
8-I.B. Additional Local Requirements

Clarifications of HUD Requirements
As permitted by HUD, Anaheim Housing Authority [Authority’s contractor] has adopted the
following specific requirements that elaborate on HUD standards and clarifications of HUD
requirements.

Windows
Windows sashes must be in good condition, solid and intact, and properly fitted to the window
frame. Damaged or deteriorated sashes must be replaced.

Windows must be weather-stripped as needed to ensure a weather-tight seals.

Doors
All exterior doors must be weather-tight to avoid any air or water infiltration, be lockable with
no interior key lock, have no holes, have all trim intact, and have a threshold.




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8.I.C. Life Threatening Conditions [24 CFR 982.404(a)]

   •    Any condition that jeopardizes the security of the unit

   •    Any electrical problem or condition that could results in shock or fire

   •    Conditions that present the imminent possibility of injury

Garden Grove Housing Authority, Administrative Plan, Revised May 28, 2013
Chapter 12, Housing Quality Standards and Inspections
G. Acceptability Criteria and Exceptions to HQS
The GGHA [Authority’s contractor] adheres to the acceptability criteria in the program
regulations with the additions described below.

Doors

   •    All exterior doors must be weather-tight to avoid any air or water infiltration. They must
        be lockable, have no holes, have all trim intact, and have a threshold.

H. Emergency Repair Items
The following items are considered of an emergency nature and must be corrected within 24
hours of notice by the inspector:

   •    Lack of security for the unit

Memorandum of Agreement
Recitals
   Whereas, the three jurisdictions covered by the PHAs entering into this MOA are located
   within the geographic boundaries of the County of Orange. These PHAs desire to execute
   this MOA to promote mobility and freedom of choice for low-income families seeking
   housing assistance under the Housing Choice Voucher (HCV) Program. This MOA is also
   intended to simplify, facilitate and improve inter-jurisdictional administration of the Housing
   Choice Voucher (HCV) Program by eliminating often-cumbersome procedures that would be
   necessary under Portability requirements.

I. Inter-jurisdictional Program Administration
A. The PHAs entering into this MOA hereby authorize each of the other PHAs entering into this
    MOA to administer the Housing Choice Voucher (HCV) Program within the Host PHA’s
    jurisdictional boundaries, subject to the terms of this MOA.

II. PHA Administrative Plans – General Rule
The Parties recognize that their respective Administrative Plans may not be identical in all
respects and therefore, the Parties agree that, except as set forth in this MOA, the Administrative
Plan of the Issuing PHA shall govern administration of a Voucher issued by that PHA, regardless


                                                  29
of the PHA jurisdiction in which it is used. The exceptions to this general rules include the
following: Payment Standards, Utility Allowances, Rent Reasonableness Standards, and
Housing Quality Standards as referenced in Section III, Paragraphs B., C., and D. below.

III. Rules Regarding Payment Standards, Utility Allowances, Rent Reasonableness Standards,
     and Housing Quality Standards (HQS)
     A. General Provisions
        It is hereby agreed that whenever a Voucher issued by an issuing PHA is to be used in
        another PHA’s jurisdiction, the standards of the Host PHA’s Payment Standards, Utility
        Allowances, Rent Reasonableness Standards, and Housing Quality Standards will apply.
        Documentation completed by the Host PHA will verify that standards have been met and
        comply with HUD requirements.

Consolidated Annual Contributions Contract
10. HUD Requirements

   a. The HA must comply, and must require owners to comply, with the requirements of the
      U.S. Housing Act of 1937 and all HUD regulations and other requirements, including any
      amendments or changes in the law or HUD requirements.

   b. The HA must comply with its HUD-approved administrative plan, and HUD-approved
      program funding applications.

   c. The HA must use the program forms required by HUD.

   d. The HA must proceed expeditiously with the programs under this consolidated ACC
      [annual contributions contract].

11. Use of Program Receipts

a. The HA must use program receipts to provide decent, safe, and sanitary housing for eligible
   families in compliance with the U.S. Housing Act of 1937 and all HUD requirements.
   Program receipts may only be used to pay program expenditures.




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Appendix D
    Summary of Questioned Costs for Materially Noncompliant Mobility Out Housing Units

                           Housing unit        Number of deficiencies              Total 3
                                1                      10                          $4,180
                                2                       8                          $2,454
                                3                       4                          $2,108
                                4                       7                          $4,124
                                5                       4                          $3,519
                                6                       5                          $2,864
                                7                       5                          $3,895
                                8                       4                          $7,016
                                9                       4                          $3,858
                               10                       5                          $4,160
                               11                      22                         $10,425
                               12                       6                          $3,612
                               Totals                       84                    $52,215




3
    The total questioned amount for each program-funded mobility out unit is based on months between the
    Authority’s contractors’ inspection and our inspection, multiplied by the monthly housing assistance payment.




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