oversight

The Chester Housing Authority, Chester, PA, Did Not Always Ensure That Its Program Units Met Housing Quality Standards

Published by the Department of Housing and Urban Development, Office of Inspector General on 2017-09-28.

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

             Chester Housing Authority,
                    Chester, PA
                  Housing Choice Voucher Program




Office of Audit, Region 3          Audit Report Number: 2017-PH-1007
Philadelphia, PA                                   September 28, 2017
To:            Monica Hawkins, Director, Office of Public Housing, Pennsylvania State Office,
               3APH
               //signed//
From:          David E. Kasperowicz, Regional Inspector General for Audit, Philadelphia
               Region, 3AGA
Subject:       The Chester Housing Authority, Chester, PA, Did Not Always Ensure That Its
               Program Units Met 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 Chester Housing Authority’s Housing Choice
Voucher program.
HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.
The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG website. 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
215-430-6734.
                    Audit Report Number: 2017-PH-1007
                    Date: September 28, 2017

                    The Chester Housing Authority, Chester, PA, Did Not Always Ensure That
                    Its Program Units Met Housing Quality Standards




Highlights

What We Audited and Why
We audited the Chester Housing Authority’s Housing Choice Voucher program because (1) it
recently regained control of its operations after 20 years in receivership, (2) it had 1,566
vouchers and received more than $14.9 million in fiscal year 2016, and (3) we had not audited its
program. Our audit objective was to determine whether the Authority ensured that its Housing
Choice Voucher program units met the U.S. Department of Housing and Urban Development’s
(HUD) housing quality standards.

What We Found
The Authority did not always conduct adequate inspections to ensure that its program units met
housing quality standards. Of 65 program units inspected, 61 did not meet HUD’s housing
quality standards. Further, 22 of the 61 were in material noncompliance with housing quality
standards. The Authority disbursed $44,214 in housing assistance payments and received $2,391
in administrative fees for these 22 units. We estimate that over the next year, if the Authority
does not implement adequate procedures to ensure that its program units meet housing quality
standards, HUD will pay more than $2.6 million in housing assistance for units that materially
fail to meet those standards.

What We Recommend
We recommend that HUD require the Authority to (1) certify, along with the owners of the 61
units cited in this finding, that the applicable housing quality standards violations have been
corrected; (2) reimburse its program $46,605 from non-Federal funds for the 22 units that
materially failed to meet HUD’s housing quality standards; and (3) develop and implement
procedures and controls to monitor the inspection process to ensure that program units meet
housing quality standards.
Table of Contents
Background and Objective......................................................................................3
Results of Audit ........................................................................................................................ 4
          Finding: Housing Quality Standards Inspections Were Inadequate .......................... 4

Scope and Methodology .........................................................................................13

Internal Controls ....................................................................................................15

Appendixes ..............................................................................................................16
          A. Schedule of Questioned Costs and Funds To Be Put to Better Use ...................... 16

          B. Auditee Comments and OIG’s Evaluation ............................................................. 17




                                                                    2
Background and Objective
The Chester Housing Authority was chartered in 1937. The Authority’s mission is to provide
quality, safe, and affordable housing for low- and moderate-income households in a
discrimination-free environment. Today, it manages approximately 2,400 units, including 800
public housing units in 10 developments and nearly 1,600 housing choice vouchers. Its main
office is located at 1111 Avenue of the States, Chester, PA.
In 1989, Authority residents filed a class-action lawsuit alleging that the Authority’s deplorable
conditions had allowed for “de facto demolition” of the area’s public housing. As a result, in
August 1994, a United States District Court judge appointed a receiver to replace the executive
director and oversee the Authority’s operations. In 2005, the judge hired a new executive
director. This executive director continues to serve in this role. On December 31, 2014, the
judge issued an order that returned control of the Authority to its appointed board of
commissioners. The Authority remains governed by a board of commissioners consisting of five
members.

Under the Housing Choice Voucher program, the U.S. Department of Housing and Urban
Development (HUD) authorized the Authority to provide leased housing assistance payments to
1,566 eligible households in fiscal years 2015 and 2016, respectively. HUD authorized the
Authority the following financial assistance for housing choice vouchers for fiscal years 2015
and 2016.

                              Year           Annual budget authority

                              2015                  $14,949,423
                              2016                   14,990,801

As of April 2016, HUD regulations at 24 CFR (Code of Federal Regulations) 982.405(a)
required public housing agencies to perform unit inspections before move-in and at least
biennially. The agency must inspect the unit leased to the family before the term of the lease, at
least biennially during assisted occupancy, and at other times as needed to determine whether the
unit meets housing quality standards.

In 2015, the Authority hired a contractor to perform housing quality standards inspections and
quality control inspections for its Housing Choice Voucher program. The contract was for a 1-
year period with an option to renew the contract for up to two additional 1-year periods. The
contractor provided three inspectors to conduct inspections of the Authority’s Housing Choice
Voucher program units.

Our audit objective was to determine whether the Authority ensured that its Housing Choice
Voucher program units met HUD’s housing quality standards.

                                                3
Results of Audit
Finding: Housing Quality Standards Inspections Were Inadequate
The Authority did not always conduct adequate inspections to enforce HUD’s housing quality
standards. Of 65 program housing units inspected, 61 did not meet HUD’s housing quality
standards, and 22 materially failed to meet HUD’s standards. The Authority’s contracted
inspectors did not identify or report 217 violations that existed at the 22 units when they
conducted their inspections. These conditions occurred because the Authority’s contracted
inspectors who performed housing inspections, including quality control inspections, did not
thoroughly inspect units and the Authority did not adequately monitor the performance of its
inspectors to ensure that its program units met HUD’s standards. As a result, it disbursed
$44,214 in housing assistance payments and received $2,391 in administrative fees for the 22
units that materially failed to meet HUD’s housing quality standards. Unless the Authority
improves its inspection program and ensures that all units meet housing quality standards, we
estimate that it will pay more than $2.6 million in housing assistance for units that materially fail
to meet housing quality standards over the next year.

Housing Units Did Not Always Meet HUD’s Housing Quality Standards
We statistically selected 65 units from a universe of 126 program units that passed an Authority-
administered housing quality standards inspection between October 19, 2016, and February 20,
2017. The 65 units were selected to determine whether the Authority ensured that the units in its
Housing Choice Voucher program met housing quality standards. We inspected the 65 units
between March 27 and April 12, 2017.

Of the 65 housing units inspected, 61 (94 percent) had 441 housing quality standards violations,
including 93 violations that needed to be corrected within 24 hours because they posed a serious
threat to the safety of the tenants. Additionally, 22 of the 61 units (36 percent) were in material
noncompliance with housing quality standards because they had 217 violations that predated the
Authority’s last inspection. These violations were not identified by the Authority’s contracted
inspectors, creating unsafe living conditions. HUD regulations at 24 CFR 982.401 require that
all program housing meet housing quality standards performance requirements, both at the
beginning of the assisted occupancy and throughout the assisted tenancy. The following table
breaks down the 441 housing quality standards violations in the 61 units that failed our
inspections.




                                                  4
          Seq.                                      Number of           Number of         Percentage of
                         Key aspect 1
          no.                                       violations            units              units 2
            1      Structure and materials               154                 45                   69
                      Illumination and
            2                                            114                 46                   71
                          electricity
            3         Smoke detectors                    55                  30                   46
            4        Interior air quality                32                  24                   37
            5         Sanitary facilities                26                  19                   29
                    Food preparation and
            6                                            21                  18                   28
                       refuse disposal
            7               Access                       11                   7                   11
            8        Sanitary condition                   9                   7                   11
            9      Site and neighborhood                  9                   8                   12
           10         Lead-based paint                    7                   4                    6
           11        Space and security                   2                   2                    3
           12       Thermal environment                   1                   1                    2
                             Total                       441

During the audit, we provided our inspection results to the Authority and the Director of HUD’s
Pennsylvania State Office of Public Housing.

The following photographs illustrate some of the violations noted during our housing quality
standards inspections in the 22 units that materially failed to meet HUD standards.




1
    Regulations at 24 CFR 982.401 break down housing quality standards performance and acceptability criteria into
    13 key aspects. Only 12 key aspects are listed in the table because we identified no violations related to the key
    aspect of water supply.
2
    This is the percentage of the 65 sample units that we determined had the identified violations. For example, the
    45 units that had structure and materials violations were 69 percent of the 65 sample units inspected.
                                                          5
Inspection 4: The mud and puddle were identified in the basement near
the water heater. The Authority did not identify this violation during its
November 18, 2016, inspection.




   Inspection 5: The handrail in the basement stairway was missing.
   The Authority did not identify this violation during its
   November 4, 2016, inspection.

                                   6
 Inspection 11: The foundation walls leaked, leaving puddles and
 silt on the basement floor. The Authority did not identify this
 violation during its January 12, 2017, inspection.




Inspection 25: The caulk joint on the bathtub had possible mold. The Authority
did not identify this violation during its December 27, 2016, inspection.




                                  7
Inspection 32: An unsecured electric panel on a basement wall had
no cover on it. The Authority did not identify this violation during
its January 17, 2017, inspection.




     Inspection 34: A drain in the basement leaked on the
     wall and floor. The Authority did not identify this
     violation during its January 18, 2017, inspection.




                                8
     Inspection 38: The smoke detector in the 2nd floor hall
     was installed too low on the wall. The Authority did not
     identify this violation during its November 14, 2016, inspection.




Inspection 49: The boiler flue was corroded next to the chimney and
had a hole in it. The Authority did not identify this violation during its
November 1, 2016, inspection.



                                   9
Inspection 50: An old fuse box on the basement ceiling was used
as a junction box but had no cover plate. The Authority did not
identify this violation during its December 27, 2016, inspection.




Inspection 51: The floor in the basement bathroom vanity was
moisture damaged and collapsed. The Authority did not identify
this violation during its November 28, 2016, inspection.




                                10
                    Inspection 60: A corroded furnace flue had holes in it. The Authority
                    did not identify this violation during its November 1, 2016, inspection.

The Authority Needs To Improve Its Housing Quality Standards Inspection Process
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 did not always do
so because it lacked procedures and controls over the inspection process. Its contracted
inspectors did not thoroughly inspect units and the Authority did not adequately monitor the
performance of its inspectors to ensure that its program units met HUD’s standards. The
following paragraphs provide details.

   •   The inspectors did not thoroughly inspect units. Two of the three contracted inspectors
       that performed inspections for the Authority informed us that they had no prior housing
       inspection experience. They stated that the contractor hired them in October 2016 and
       provided them 16 hours of online training. They stated that they were not aware that
       some deficiencies were violations such as missing handrails and missing covers on
       junction boxes. They also stated that they missed some violations, such as corroded flue
       pipes and leaks in basements. These inspectors inspected 17 of the 22 units (77 percent)
       from our sample that materially failed to meet HUD’s housing quality standards.

   •   At least one of the inspectors who performed quality control inspections did not identify
       all housing quality standards violations in the units. The inspector conducted a quality
       control inspection on 4 units that we also inspected as part of our sample of 65 units.
       Two of the four units passed our inspection. The other two units had at least one
       preexisting violation that was not identified by the inspector who performed the quality
       control inspection.

   •   The Authority did not adequately monitor the performance of its inspectors. Although
       the Authority’s administrative plan addressed the monitoring of its inspection contractor,
       its policy and procedures did not address a methodology for reviewing the contractor’s
       inspections to ensure that its program units met HUD’s housing quality standards. The
                                                    11
       Authority stated that it used the monitoring tools identifed in the administrative plan to
       determine whether a particluar contract deliverable was met, such as operating the call
       center, scheduling inspections, notifying the landlords and tenants of appointments,
       conducting inspections, and entering inspection results into the Authority’s computer
       system. It used self-generated reports to ensure that inspections were completed in a
       timely manner; collect inspection data, such as the date of the last inspection and the last
       passed inspection; and determine the status of inspections (open or closed). It also used
       monthly reports produced by the contractor on call center activity, the total number of
       inspections conducted, and a listing of units with more than 15 deficiencies.

Conclusion
The Authority’s program participants were subjected to housing quality standards violations that
created unsafe living conditions during their tenancy. The Authority did not properly use its
program funds when it inspected and passed program units that did not meet HUD’s housing
quality standards. In accordance with 24 CFR 982.152(d), HUD is permitted to reduce or offset
program administrative fees paid to a public housing agency if it fails to perform its
administrative responsibilities correctly or adequately, such as not enforcing HUD’s housing
quality standards. The Authority disbursed $44,214 in housing assistance payments and received
$2,391 in program administrative fees for 22 units that materially failed to meet HUD’s housing
quality standards. Since the Authority did not develop and implement controls to ensure that all
units meet housing quality standards, we estimate that more than $2.6 million in future housing
assistance payments will be spent for units that are not decent, safe, and sanitary. Our
methodology for this estimate is explained in the Scope and Methodology section of this report.

Recommendations
We recommend that the Director of HUD’s Pennsylvania State Office of Public Housing direct
the Authority to

       1A.    Certify, along with the owners of the 61 units cited in the finding, that the
              applicable housing quality standards violations have been corrected.

       1B.    Reimburse its program $46,605 from non-Federal funds ($44,214 for housing
              assistance payments and $2,391 in associated administrative fees) for the 22 units
              that materially failed to meet HUD’s housing quality standards.

       1C.    Develop and implement procedures and controls to monitor the inspection process
              to ensure that program units meet housing quality standards, thereby ensuring that
              an estimated $2,668,680 in program funds is spent for units that are decent, safe,
              and sanitary.




                                                12
Scope and Methodology
We conducted the audit from September 2016 through August 2017 at the Authority’s offices
located at 1111 Avenue of the States, Chester, PA, and our offices located in Philadelphia, PA.
The audit covered the period January 2015 through August 2016, but was expanded to include
the universe of program units that passed an Authority-administered housing quality standards
inspection during the period October 2016 through February 2017.
To accomplish our objective, we reviewed
   •   Applicable laws, regulations, the Authority’s administrative plan, HUD’s program
       requirements at 24 CFR Part 982, HUD’s Housing Choice Voucher Guidebook
       7420.10G, and other guidance.

   •   The Authority’s inspection reports; computerized databases, including housing quality
       standards inspections, housing quality control inspections, housing assistance payments,
       and tenant data; annual audited financial statements for fiscal years 2014 and 2015;
       policies and procedures; contract for inspection services; and organizational chart.

   •   HUD’s monitoring reports for the Authority.

We also interviewed the Authority’s employees, contracted inspectors, HUD staff, and program
households.

To achieve our audit objective, we relied in part on computer-processed data from the
Authority’s computer system. Although we did not perform a detailed assessment of the
reliability of the data, we did perform a minimal level of testing and found the data to be
adequate for our purposes.

We statistically selected 65 program units to inspect from a universe of 126 program units that
passed an Authority-administered housing quality standards inspection between October 19,
2016, and February 20, 2017. These inspections were conducted by one of the Authority’s three
contracted inspectors. We selected a sample size of 65 units to inspect, based on a 1-sided 95
percent confidence interval and a simulated error rate ranging from 13 to 15 percent in 1 percent
increments and 15 percent to 50 percent in 5 percent increments. We inspected the 65 units
between March 27 and April 12, 2017, to determine whether the Authority’s program units met
housing quality standards. We used statistical sampling because each sampling unit was selected
without bias from the audit population, thereby allowing the results to be projected to the
population. An Authority-contracted inspector accompanied us on all 65 inspections.

We determined that 22 of the 65 units (34 percent) materially failed to meet HUD’s housing
quality standards. We determined that these units were in material noncompliance because they
had 217 violations that existed before the Authority’s last inspection, which created unsafe living

                                                13
conditions. All units were ranked according to the severity of the violations, and we used the
auditor’s judgment to determine the material cutoff.

We estimate, with a 1-sided confidence level of 95 percent, that at least 23.82 percent of the 126
units were in material noncompliance with housing quality standards. By averaging the housing
assistance payments made for substandard housing across all 126 units that passed an Authority
inspection and deducting for a statistical margin of error, we estimate, with a 1-sided confidence
interval of 95 percent, that the amount of monthly housing assistance payment dollars spent on
substandard housing passed by the Authority during the sample period was $178 per unit. We
projected the results to the universe by multiplying the $178 per unit monthly housing assistance
payment for substandard housing by 1,247 (the total number of vouchers that the Authority had
leased up as of February 2017), yielding a total of $222,390 3 per month. Multiplying the
monthly amount of $222,390 by 12 months yields an annual total of more than $2.6 million in
housing assistance payments for substandard housing that passed an Authority inspection. This
amount is presented solely to show the annual amount of program funds that could be put to
better use on decent, safe, and sanitary housing if the Authority implements our
recommendations. While these benefits would recur indefinitely, we were conservative in our
approach and included only the initial year in our estimate.

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.




3
    The actual calculation includes cents; $178.34 multiplied by 1,247 equals $222,389.98 or $222,390 rounded.
                                                        14
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 that
    management has implemented to reasonably ensure that a program meets its objectives.

•   Validity and reliability 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.
•   Compliance with applicable laws and regulations – Policies and procedures that management
    has implemented to reasonably ensure that resource use is consistent with laws and
    regulations.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, the
reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or
efficiency of operations, (2) misstatements in financial or performance information, or (3)
violations of laws and regulations on a timely basis.
Significant Deficiency
Based on our review, we believe that the following item is a significant deficiency:

•   The Authority did not implement procedures and controls to ensure that program units met
    housing quality standards.




                                                  15
Appendixes

Appendix A


           Schedule of Questioned Costs and Funds To Be Put to Better Use
                Recommendation                     Funds to be put
                                    Ineligible 1/  to better use 2/
                     number
                          1B              $46,605
                          1C                                $2,668,680


1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law; contract; or Federal, State, or local
     policies or regulations.

2/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. These amounts include reductions in outlays, deobligation of funds,
     withdrawal of interest, costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     that are specifically identified. In this instance, if the Authority implements our
     recommendations, it will stop incurring program costs for units that are not decent, safe,
     and sanitary and, instead, will spend those funds for units that meet HUD’s standards,
     thereby putting more than $2.6 million in program funds to better use. Once the
     Authority successfully improves its controls, this will be a recurring benefit. Our
     estimates reflect only the initial year of this benefit.




                                             16
Appendix B


             Auditee Comments and OIG’s Evaluation



Ref to OIG
              Auditee Comments
Evaluation




Comment 1




Comment 1

Comment 1



Comment 2




                              17
              Auditee Comments and OIG’s Evaluation




Ref to OIG   Auditee Comments
Evaluation




Comment 3


Comment 4
Comment 5


Comment 6
Comment 7




Comment 6
Comment 8
Comment 9

Comment 10




                            18
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 10

Comment 6


Comment 6

Comment 6




Comment 11




Comment 11




                              19
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 12


Comments 7
and 12


Comment 6



Comment 6




Comment 13
Comment 13

Comment 13
Comment 13




                              20
              Auditee Comments and OIG’s Evaluation




Ref to OIG   Auditee Comments
Evaluation




Comment 6


Comment 14



Comment 6
Comment 6
Comment 3

Comment 2


Comment 15

Comment 16

Comment 17




                            21
                         OIG Evaluation of Auditee Comments


Comment 1   The Authority asserted that we rated 69 of 73 units failed at the moment in time
            the inspection was conducted, without any empirical data to indicate whether a
            condition existed 120 days earlier or was a result of the living conditions, stress
            placed on the properties being lived in, or whether the tenant caused the
            deficiency to the property. The Authority also asserted that our review that
            covered the period March 28 through April 11, 2017, used a data sample of units
            that on average was greater than 120 days since the last full inspection was
            conducted. It also asserted that we acknowledged that the sample was outside of
            HUD's prescribed timeline to obtain a valid sample size, but proceeded without
            regard for the impact on the results of the inspections that in many cases were 5 or
            more months old.

            As shown in the report, we inspected 65 units. Of the 65 units inspected, 61 did
            not meet HUD’s housing quality standards, meaning that they failed our
            inspection because we identified at least one violation, and 22 materially failed to
            meet HUD’s standards. We determined that the 22 units were in material
            noncompliance because they had 217 violations that existed before the
            Authority’s last inspection, which created unsafe living conditions. The average
            time between our inspection and the Authority’s previous inspection was 105
            days, and we performed 27 of the 65 inspections (42 percent) within 90 days. The
            Housing Choice Voucher Program Guidebook, 7420.10G, does in fact require the
            Authority’s sample to be no older than 3 months. However, although this is a
            requirement for public housing authorities under the Section 8 Management
            Assessment program, our audit was not intended to follow the self-assessment
            process under that program. We performed our audit in much greater detail and
            broader scope than a housing authority does in its self-assessment. To obtain a
            representative sample of whether the Authority properly inspected units, we
            statistically selected from a 4-month period or 8 percent (126 passed inspections
            of 1,566 assisted units) of the total units participating in the Authority’s program.
            Also, in conjunction with our inspections, we took photographs of violations,
            interviewed tenants, and reviewed the Authority’s latest inspection reports to help
            us determine whether a housing quality standards violation existed before the last
            passed inspection conducted by the Authority or whether it was identified on the
            last passed inspection conducted by the Authority and was not corrected. As
            indicated by the photographs in the report, some deficiencies were easily
            determined to have existed at the time of the Authority’s inspection. We were
            conservative in our determination of preexisting conditions.

Comment 2   The Authority claimed that the outcomes of our inspections were neither
            indicative of their knowledge of the housing quality standards and local codes nor
            the quality of the Authority-administered inspections. It claimed that the
            outcomes of our inspections were representative of the moment in time inspection

                                             22
            conducted against conditions that existed on the date of the inspection, not 120 or
            more days earlier.

            As shown in the report, we inspected 65 units. Of the 65 units inspected, 61
            failed our inspection because they had at least one violation. We determined that
            the Authority did not observe or report 371 violations which existed at the 61
            units when it conducted its most recent inspection. We were conservative in our
            approach and used our professional knowledge, tenant interviews, and the
            Authority’s latest inspection reports in determining whether a violation existed
            before the last passed inspection conducted by the Authority. In the event that we
            could not reasonably make that determination, we did not categorize the violation
            as preexisting.

Comment 3   The Authority stated that we incorrectly commented at the exit conference that it
            was responsible for units to be in compliance throughout the term of the assisted
            lease. It stated that the owner, not the Authority is responsible for ensuring the
            units meet housing quality standards at all times. We disagree that our comment
            was incorrect and that the Authority is not responsible for ensuring that units meet
            housing quality standards at all times. Regulations at 24 CFR 982.401(a)(3)
            required that all program housing must meet the housing quality standard
            performance requirements both at commencement of assisted occupancy, and
            throughout the assisted tenancy. Owners are responsible for ensuring units meet
            housing quality standards. The Authority is responsible to measure and enforce
            compliance with the standards whenever it inspects a unit including when special
            inspections such as ours are performed.

Comment 4   The Authority asserted that there was no indication that owners were not
            responding to maintenance requests through multiple rounds of tenant surveys.
            We agree that there was no indication that owners were not responding to
            maintenance requests based on the tenant surveys. Although during the exit
            conference the Authority stated that for the last 92 inspections it completed, it
            received an 18 percent response rate on the tenant surveys. However, it provided
            no documentation to support these statements.

Comment 5   The Authority claimed that our audit did not find missed inspections or failure to
            close noted deficiencies or abate housing assistance payments. We agree.
            However, as shown in the report, we found that the Authority did not always
            conduct adequate inspections to enforce HUD’s housing quality standards.

Comment 6   The Authority asserted that our inspection protocol included various inspection
            regulations mingled with personal opinion and ignored the City’s code
            enforcement standards. Contrary to the Authority's assertion, we used HUD
            regulations at 24 CFR 982.401, the Authority's Administrative Plan, HUD’s
            Housing Choice Voucher Program Guidebook 7420.10G, and the City of
            Chester's codified ordinances as the underlying criteria to identify housing quality

                                             23
            standards violations. We performed our inspections accurately and appropriately
            applied HUD's housing quality standards. We did not apply the Uniform Physical
            Condition Standards (UPCS) when inspecting the housing units.

Comment 7   The Authority asserted that City code allowed “open grounds” in homes where it
            previously existed. It also asserted that we set a higher standard. There is a key
            distinction between the acceptability criteria for two-pronged versus three-
            pronged outlets. Two-pronged ungrounded systems and outlets are in fact
            acceptable under housing quality standards as long as the outlet is in proper
            operating condition. However, all of the ungrounded outlets the audit cited as
            violations were three-pronged outlets. We did not test any two-pronged outlets.
            A three-pronged outlet that is not in proper operating condition (e.g., ungrounded)
            and not functioning as designed is a potential hazard and a violation of housing
            quality standards. Regulations at 24 CFR 982.401(f)(2), when referring to outlets
            in both sections (ii) and (iii), specifically state that outlets must be in proper
            operating condition. Although inspections involve some judgment, in no instance
            did we apply a higher standard than was required by HUD regulations.

Comment 8   The Authority asserted that housing quality standards state that any hole in the
            wall greater than 8 inches by 11 inches is a deficiency. It further stated that we
            noted very small holes in the exterior of the building as a failing item.

            We reviewed the regulations at 24 CFR Part 982, the guidance contained in
            HUD’s Housing Choice Voucher Program Guidebook 7420.10G, and the Housing
            Choice Voucher Program inspection form but could not identify criteria that
            defined a hole in a wall greater than 8 inches by 11 inches as a deficiency. The
            standards state that the exterior wall structure and surface must not have any
            serious defects such as serious leaning, buckling, sagging, large holes, or defects
            that may result in air infiltration or vermin infestation. We identified a hole in a
            wall as a violation in only 2 units that we inspected. In one unit, an exterior wall
            was missing a large section of stucco. In the other unit, a hole at the wall base in
            the bathroom had a steel wool plug in it. The tenant stated that the steel wool was
            placed in the hole to prevent vermin from entering the bathroom. These 2 units
            had 10 and 8 total violations respectively.

Comment 9   The Authority asserted housing quality standards state that exterior roof and
            gutter systems should be failed only if there are signs of damage to the interior of
            the home. The Authority claimed that we failed units without regard for this
            standard and used subjective statements such as “may cause” or “could cause” as
            the criteria for citing the deficiencies.

            We reviewed the regulations at 24 CFR Part 982, the guidance contained in
            HUD’s Housing Choice Voucher Program Guidebook 7420.10G, and the Housing
            Choice Voucher Program inspection form but could not identify criteria that
            stated exterior roof and gutter systems should be failed only if there are signs of

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              damage to the interior of the home. We identified violations pertaining to roofs
              and gutters in four units. In one unit we observed blistered paint on the bedroom
              ceiling that may still have water in it from the recent rain, and a roof leak in the
              front bedroom. At one unit we cited the downspout as a violation because it was
              not properly attached. It was very loose and could detach possibly causing injury
              to the tenant or others. At another unit the lack of a gutter allowed water to run
              from the roof into the wall. The second floor window below this section of roof
              had water damage above the window frame and on the window sill. Another unit
              had roof and gutter issues. A downspout was missing. It was evident that a
              downspout had been installed. In this unit we also identified a water stain on the
              ceiling in the second floor dining area. The tenant stated that the roof leaks.
              These 4 units had from 6 to 24 total violations each.

Comment 10 The Authority asserted housing quality standards state that if the inspector notes
           an active leak in the home in the ceiling area, it should be noted as a leaking
           roof. If the damage to the ceiling is not active and poses no danger, then it is
           acceptable. The Authority asserted that if there was a dried water stain on the
           ceiling and no moisture evident, we failed the property.

              We reviewed the regulations at 24 CFR Part 982, the guidance contained in
              HUD’s Housing Choice Voucher Program Guidebook 7420.10G, and the Housing
              Choice Voucher program inspection form but could not identify a reference to
              active leaks in ceilings and stains on ceilings. However, according to the
              inspection form, regarding ceiling condition, severe bulging is a violation. In two
              units we observed a sagging or bulging plaster ceiling caused by prior leaks. In
              one unit we observed loose and peeling wall paint caused by leaks. In one unit
              we observed blistered paint on the bedroom ceiling that may still have water in it
              from the recent rain, and a leaky roof in the front bedroom. In one unit the dining
              area showed signs of a leak on the ceiling. The tenant stated that the roof leaks
              during strong storms. These 5 units had from 6 to 18 total violations each.

Comment 11 The Authority asserted that we failed to consider HUD’s directives in our
           inspection process. It stated that HUD Notice 2015-6 addressed funding
           restrictions and in an effort to ease the burden of costs for public housing agencies
           two options were provided: an agency could perform biennial inspections on
           program units or an agency could use a self-certification program for owners to
           confirm that repairs to the property had been completed and the property was in a
           decent, safe, and sanitary condition on the date of certification. It also stated that
           we evaluated its process based on moment in time inspections without
           considering that it is not responsible for a property complying with housing
           quality standards after an owner has certified that work to address violations has
           been completed.

              We believe that the Authority was referring to PIH Notice 2016-05. This Notice
              states that the biennial inspections provision was put into place to enable public

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              housing agencies to expend (1) relatively fewer resources inspecting units that
              perform consistently well or are typically inspected by more than one oversight
              entity and (2) relatively more resources inspecting other units. Adoption of this
              provision is at the Authority’s discretion. The Notice also states that while the
              biennial inspections provision was intended to offer administrative relief to public
              housing agencies, it was not intended to do so at the expense of decent, safe, and
              sanitary housing. HUD encourages public housing agencies to consider factors,
              such as the record of the unit itself, in deciding whether to employ biennial
              inspections.

              Regulations at 24 CFR 982.401(a)(3) required that all program housing must meet
              the housing quality standard performance requirements both at commencement of
              assisted occupancy, and throughout the assisted tenancy. Our moment in time
              inspections of 65 units showed that 61 did not meet HUD’s housing quality
              standards because they had 441 violations. For 11 of the 65 units that we
              inspected, the most recent action related to the Authority’s last passed inspection
              was a self-certification from the owner that violations identified by the Authority
              were corrected. These self-certifications were included in the inspection
              information that we used to conduct our inspections. Although all 11 of these
              units failed our inspection, none of the violations that we identified in these units
              were violations that the owner had certified were corrected. The Authority needs
              to address the violations that we identified during our inspections. Since we
              determined that the Authority did not observe or report 371 violations which
              existed at the 61 units when it conducted its most recent inspection, the Authority
              should evaluate whether its decision to perform biennial inspections is detrimental
              to ensuring that families have decent, safe, and sanitary housing.

Comment 12 The Authority contended that we did not consider the age of the housing stock
           and its impact on the condition of the housing units. We agree that older housing
           stock presents challenges for the Authority. However, HUD regulations at 24
           CFR 982.401 require that all program housing meet housing quality standards
           performance requirements, both at the beginning of the assisted occupancy and
           throughout the assisted tenancy without regard to the age of the housing stock.

Comment 13 The Authority claimed that for units that passed its initial inspection it was
           reasonable to conclude that the tenant was responsible for cable wires strung
           across the floor, broken windows, slow drains, broken window sashes, broken
           hinges and doors, mold on bathroom sinks and bathmats, washer and dryers
           (owned by the tenant) not properly connected, and broken light fixtures. It also
           stated that electric company meter boxes are not within the responsibility of the
           Authority or its inspector.

              We understand that violations can occur after the last inspection conducted by the
              Authority. We inspected 13 units for which the Authority’s last passed inspection
              was an initial inspection. Two of the units passed our inspection and 11 failed.

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              We considered only 3 of the 11 units to be in material noncompliance with
              housing quality standards. We identified no instances of slow drains, broken
              window sashes, mold, or broken light fixtures in any of the 11 units. We were
              conservative in our approach and used our professional knowledge, tenant
              interviews, and the Authority’s latest inspection reports in determining whether a
              housing quality standards violation existed before the last passed inspection
              conducted by the Authority. In the event that we could not reasonably make that
              determination, we did not categorize the violation as preexisting.

Comment 14 The Authority agreed that wiring in basements and the condition of flue pipes on
           petroleum burning units were violations of housing quality standards and that it
           had already addressed these violations with its inspectors. It stated that it would
           review these areas during future quality control inspections. We commend the
           Authority for recognizing the need for improvement and taking action to improve
           its inspection process. As part of the audit resolution process, HUD will evaluate
           the Authority’s corrective actions to ensure that they satisfy our recommendation.

Comment 15 The Authority stated that according to its analysis, our finding should address
           only 11 units that were in material noncompliance with housing quality standards.
           It also stated that since the 11 units represent less than 1 percent of the total
           funding, it should repay approximately $14,000 to its program. As stated in the
           audit report, we found that 22 units were in material noncompliance with housing
           quality standards. (The Authority included 8 of these 22 units in its determination
           that 11 units should have been addressed in the finding. We did not find the other
           three units in the Authority’s determination to be in material noncompliance with
           housing quality standards.) The Authority disbursed $44,214 in housing
           assistance payments and received $2,391 in program administrative fees for these
           22 units. Since these payments were ineligible, the Authority needs to reimburse
           its program $46,605 ($44,214 for housing assistance payments and $2,391 in
           associated administrative fees). Eight of the 11 that the Authority agreed should
           be in the finding we identified as in material noncompliance. The other three we
           did not consider to be in material noncompliance.

Comment 16 The Authority stated that an initial 30-day timeframe is allowed for corrective
           action by owners and that the timeframe can be extended if requested. It
           contended that our calculation of ineligible housing assistance payments for the
           units that materially failed to meet HUD’s housing quality standards did not
           consider the 30-day timeframe for corrective action. We did consider the 30-day
           timeframe in our calculation. We did not include the first 30 days after the date of
           the Authority’s inspection in our calculation of ineligible housing assistance
           payments.

Comment 17 The Authority’s written response to the audit report included a detailed analysis
           totaling 76 pages to support assertions it made in its written response. Because
           the content of the analysis was addressed in the written response, we did not

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include the analysis in the final report. The detailed analysis is available upon
request.




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