oversight

The Fairmont-Morgantown Housing Authority, Fairmont, WV, Did Not Always Ensure That Its Program Units Met Housing Quality Standards and That It Accurately Calculated Housing Assistance Payment Abatements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2018-02-16.

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

         Fairmont-Morgantown Housing
            Authority, Fairmont, WV
                  Housing Choice Voucher Program




Office of Audit, Region 3          Audit Report Number: 2018-PH-1002
Philadelphia, PA                                    February 16, 2018
To:            Russell DeSouza, Acting Director, Office of Public Housing, Baltimore Field
               Office, 3BPH
               //signed//
From:          David E. Kasperowicz, Regional Inspector General for Audit, Philadelphia
               Region, 3AGA
Subject:       The Fairmont-Morgantown Housing Authority, Fairmont, WV, Did Not Always
               Ensure That Its Program Units Met Housing Quality Standards and That It
               Accurately Calculated Housing Assistance Payment Abatements


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 Fairmont-Morgantown Housing Authority’s
housing quality standards inspection program. This is the second of two reports to be issued on
the Authority.
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: 2018-PH-1002
                    Date: February 16, 2018

                    The Fairmont-Morgantown Housing Authority, Fairmont, WV, Did Not
                    Always Ensure That Its Program Units Met Housing Quality Standards and
                    That It Accurately Calculated Housing Assistance Payment Abatements



Highlights

What We Audited and Why
We audited the Fairmont-Morgantown Housing Authority’s Housing Choice Voucher program
because (1) we received a complaint alleging that the Authority did not follow program
requirements, (2) the Authority administered 1,117 vouchers and received more than $5.2 million in
funding for fiscal year 2016, and (3) we had not audited its program. Our audit objectives were 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 and
abated housing assistance payments as required. This is the second of two reports issued on the
Authority’s program.

What We Found
The Authority did not always conduct adequate inspections to ensure that its program units met
housing quality standards, and it did not always accurately calculate housing assistance payment
abatements. Of 68 program units inspected, 63 did not meet HUD’s housing quality standards.
Further, 22 of the 63 were in material noncompliance with HUD’s standards. The Authority
disbursed $27,737 in housing assistance payments and received $1,489 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 $1.2 million in housing assistance for units that materially fail to meet HUD’s
standards. Additionally, the Authority did not always accurately calculate housing assistance
payment abatements for units that failed its inspections. It incorrectly calculated the abatement
amount for 13 of 37 units reviewed. As a result, HUD made ineligible housing assistance
payments totaling $3,822 that should have been abated, and unit owners did not receive $267 in
housing assistance payments that should not have been abated.

What We Recommend
We recommend that HUD require the Authority to (1) certify, along with the owners of the 63
units cited in this finding, that the applicable housing quality standards violations have been
corrected; (2) reimburse its program $29,226 from non-Federal funds for the 22 units that
materially failed to meet HUD’s housing quality standards; (3) develop and implement
procedures and controls to monitor the inspection process to ensure that program units meet
HUD’s standards; (4) reimburse its program $3,822 for payments that should have been abated;
and (5) reimburse five owners $267 for excess payments that it improperly abated.
Table of Contents
Background and Objectives ....................................................................................3

Results of Audit ........................................................................................................4
         Finding: Housing Quality Standards Inspections Were Inadequate and
         Abatement Amounts Were Not Always Accurately Calculated ................................... 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 Objectives
The Fairmont-Morgantown Housing Authority is a quasi-governmental agency that administers the
Housing Choice Voucher program for four counties in West Virginia: Marion, Monongalia,
Preston, and Taylor. This program provides rental assistance to low-income families, the elderly,
and the disabled to enable them to afford decent, safe, and sanitary housing in the private market
through Federal funds from the U.S. Department of Housing and Urban Development (HUD). A
five-member board of commissioners governs the Authority. The Authority’s offices are located at
103 12th Street, Fairmont, WV.
Under the Section 8 Housing Choice Voucher program, HUD authorized the Authority to provide
tenant-based leased housing assistance payments to 1,117 eligible households in fiscal years 2016
and 2017. HUD authorized the Authority the following financial assistance for housing choice
vouchers for fiscal years 2016 and 2017.

                                Year            Annual budget authority
                                2016                    $5,218,631
                                2017                     5,954,270


As of January 1, 2017, 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.
The Authority’s program staff performs inspections of the Authority’s Housing Choice Voucher
program units.
Our audit objectives were to determine whether the Authority ensured that its Housing Choice
Voucher program units met HUD’s housing quality standards and abated housing assistance
payments as required.




                                                   3
Results of Audit

Finding: Housing Quality Standards Inspections Were Inadequate
and Abatement Amounts Were Not Always Accurately Calculated
The Authority did not always conduct adequate inspections to enforce HUD’s housing quality
standards. Of 68 program housing units inspected, 63 did not meet HUD’s housing quality
standards, and 22 materially failed to meet HUD’s standards. The Authority’s program staff did
not identify or report 348 violations that existed at the 22 units when conducting inspections.
Also, the Authority did not always accurately calculate housing assistance payment abatements.
These conditions occurred because the Authority’s staff failed to follow HUD’s requirements
and policies and procedures in the Authority’s administrative plan and was not always aware of
requirements. As a result, the Authority disbursed $27,737 in housing assistance payments 1 and
received $1,489 in administrative fees 2 for the 22 units that materially failed to meet HUD’s
housing quality standards. Additionally, it did not abate payments totaling $3,822 for units that
did not meet housing quality standards and made excessive abatements totaling $267. Unless the
Authority improves its inspection program and ensures that all units meet housing quality
standards, we estimate that it will pay more than $1.2 million in housing assistance over the next
year for units that materially fail to meet housing quality standards.

Housing Units Did Not Always Meet HUD’s Housing Quality Standards
We statistically selected 68 units from a universe of 260 program units that passed an Authority-
administered housing quality standards inspection between April 4 and August 4, 2017. These
68 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 68 units from
September 11 to September 21, 2017.

Of the 68 units inspected, 63 (93 percent) had 678 housing quality standards violations, including
131 violations that needed to be corrected within 24 hours because they posed a serious threat to
the safety of the tenants. 3 Additionally, 22 of the 63 units (35 percent) were in material
noncompliance with housing quality standards because they had 348 violations that predated the
Authority’s last inspection. These violations were not identified by Authority staff, 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


1
    The total questioned amount for each housing unit was based on the days between the Authority’s inspection and
    our inspection, multiplied by the daily housing assistance payment.
2
    The total questioned amount for each housing unit was based on the months between the Authority’s inspection
    and our inspection, multiplied by the Authority’s monthly administrative fee. Since the Authority’s program
    staff spends about 40 percent of its time on inspections and the rest of its time on other program tasks, we
    prorated the reported administrative fees to reflect this relationship.
3
    We provided a list of the 24-hour violations to the Authority daily at the end of our inspections. The Authority
    took appropriate action to correct the 24-hour violations as we identified them.


                                                          4
occupancy and throughout the assisted tenancy. The following table breaks down the 678
housing quality standards violations by key aspect type in the 63 units that failed our inspections.


               Seq.                                     Number of         Number         Percentage
                              Key aspect 4
               No.                                      violations        of units 5      of units 6

                 1      Structure and materials                250            56               82
                 2        Interior air quality                 115            40               59
                 3      Site and neighborhood                   81            37               54
                           Illumination and                     55            27               40
                 4
                               electricity
                 5         Smoke detectors                     53             30               44
                 6        Space and security                   43             18               26
                         Food preparation and                  27             22               32
                 7
                            refuse disposal
                 8               Access                        23             17               25
                 9        Sanitary condition                   14             12               18
                10         Sanitary facilities                 10              8               12
                11       Thermal environment                    7              5                7
                                  Total                        678


During the audit, we provided our inspection results to the Authority and the Director of HUD’s
Baltimore 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’s standards.




4
    Regulations at 24 CFR 982.401 categorize housing quality standards performance and acceptability criteria into
    13 key aspects. Only 11 key aspects are listed in the table because we identified no violations related to key
    aspects of water and lead-based paint.
5
    This is the number of units, out of the 68 we inspected, where we found violations for each key aspect. We
    included violations of the Authority’s requirement for window screens as part of the interior air quality aspect.
6
    This is the percentage of units we inspected where we found violations for each key aspect. For example, 56
    units, or 82 percent, of the 68 units inspected had structure and materials violations.


                                                           5
Inspection 42: There was possible mold and mildew on the wall behind the
stove. The tenant stated that this had been cleaned and repainted several times
but kept returning. The Authority did not identify this violation during its
May 8, 2017, inspection.




Inspection 55: There was a torn refrigerator seal. The Authority did not identify
this violation during its June 24, 2017, inspection.




                                        6
Inspection 64: There was an improper extension cord outlet connection. The
extension cord ran through the wall of the closet to provide a receptacle. The
Authority did not identify this violation during its June 13, 2017, inspection.




Inspection 25: The sewer cleanout in the basement was open and covered with
pasteboard. Water and sewage were bubbling up. The Authority did not
identify this violation during its May 17, 2017, inspection.




                                         7
Inspection 39: An improperly sloped furnace pipe prohibited fumes from
venting properly. The Authority did not identify this violation during its
April 7, 2017, inspection.




Inspection 39: This is an additional photo showing the improper slope of the
furnace pipe. Because the pipe was not properly sloped, harmful fumes from the
furnace could be prevented from exiting the building.




                                        8
Inspection 34: There was a cutting hazard. The washing machine was missing
its top, exposing sharp edges. The Authority did not identify this violation
during its April 4, 2017, inspection.




Inspection 12: The refrigerator door did not close properly. The Authority did
not identify this violation during its April 12, 2017, inspection.




                                       9
               Inspection 71: The smoke detector was not properly mounted. Smoke detectors
               should be no less than 4 inches from the ceiling but no more than 12 inches from
               the ceiling. It was 20 inches from the ceiling. The Authority did not identify
               this violation during its May 18, 2017, inspection.




               Inspection 54: The compressor unit was mounted on a metal support attached to
               the unit’s exterior wall. The support had sharp edges and corners. The
               Authority did not identify this violation during its April 4, 2017, inspection.

The Authority’s Housing Quality Standards Inspection Process Was Not Effective
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
meet those standards. The Authority’s inspection process was not effective because its staff (1)
did not thoroughly inspect units and (2) was unaware that some deficiencies were housing
quality standards violations.



                                                      10
The Authority’s staff did not thoroughly inspect units. Staff members did not identify obvious
violations, such as improperly connected flue pipes, exposed sewage, missing covers on junction
boxes, and missing window screens. Staff members did not determine whether windows had
screens as required. The staff stated that they were unaware of the Authority’s requirement for
windows to have screens.
The Authority’s staff lacked training. The Authority primarily trained its six program staff that
were involved with inspections through on the job training. The on the job training was not
effective. The Authority began taking corrective action to improve its housing quality standards
program during the audit by providing an outside contractor training session to its program staff 7
in August 2017.

The Authority Did Not Always Properly Abate Housing Assistance Payments
We selected 37 units participating in the program during the period January 1, 2016, to August 4,
2017, to determine whether the Authority properly calculated abatement amounts. The Authority
incorrectly calculated the abatement amount for 13 of the 37 units. Regulations at 24 CFR
982.404(a) require the Authority to ensure that the housing units and premises are maintained in
accordance with HUD’s housing quality standards and if not, the Authority is required to abate
housing assistance payments to the owners until requirements are met. Section 10.6 of HUD’s
Housing Choice Voucher Guidebook 7420.10G requires the Authority to provide written
notification to the owner of the deadline for making repairs. It also states that abatements must
begin on the first of the month following the determination that the housing quality standards
violations were not corrected within the Authority-specified period for making repairs. Section
12.7 of the Authority’s administrative plan states that the Authority will end the abatement the
day the unit passes inspection. Additionally, Section 10.9 of Guidebook 7420.10G states the
housing authorities should have policies and procedures for receiving and processing requests
from owners requesting additional time to make repairs, including the conditions under which
extensions will be granted.
The Authority did not properly abate housing assistance payments for nine units totaling $3,314
because it did not have (1) documentation to support its extension of the deadlines, including
written notification to the owner, and (2) policies and procedures stating the conditions under
which Authority staff could grant extensions of time for owners to make repairs. Further, the
Authority did not fully abate payments for four units totaling $508 when owners completed
repairs after the deadline. As a result, the Authority made ineligible housing assistance payments
totaling $3,822 for the 13 units. Finally, the Authority made excessive abatements totaling $267
on payments to five owners because it did not use the correct number of days in its abatement
calculation. These conditions occurred because the Authority lacked policies and procedures for
granting extensions and staff were unaware of the requirements for properly abating payments.

Conclusion
The Authority’s program participants were subjected to housing quality standards violations that
created unsafe living conditions. The Authority did not properly use its program funds when it


7
    Eight employees attended the training including all six program staff (the manager and five clerks) as well as the
    Authority’s current executive director and a housing rehabilitation specialist.


                                                           11
inspected and passed program units that did not meet HUD’s housing quality standards and its
own requirements. 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 $27,737 in housing assistance payments and received
$1,489 in program administrative fees for 22 units that materially failed to meet HUD’s housing
quality standards. In addition, it did not always correctly calculate housing assistance payment
abatements, which resulted in its making ineligible payments totaling $3,822 and excessive
abatements totaling $267. Since the Authority did not develop and implement controls to ensure
that all units met housing quality standards, we estimate that more than $1.2 million in 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 Baltimore Office of Public Housing require the
Authority to
       1A.    Certify, along with the owners of the 63 units cited in this finding, that the
              applicable housing quality standards violations have been corrected.
       1B.    Reimburse its program $29,226 from non-Federal funds ($27,737 for housing
              assistance payments and $1,489 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 ensure that program units
              meet housing quality standards and inspectors are adequately trained to perform
              inspections, thereby ensuring that an estimated $1,241,550 in program funds is
              spent for units that are decent, safe and sanitary.
       1D.    Reimburse its program $3,822 from non-Federal funds for housing assistance
              payments that should have been abated.
       1E.    Reimburse five owners $267 for the excess housing assistance payments it abated.
       1F.    Develop and implement policies and procedures to ensure that extensions granted
              to owners to make repairs after failed inspections comply with HUD regulations.
       1G.    Develop and implement controls to ensure that abatements are properly calculated
              and procedures in its administrative plan are followed.
       1H.    Train its staff on the proper abatement of housing assistance payments.




                                                 12
Scope and Methodology
We conducted the audit from April 2017 through January 2018 at the Authority’s office located
at 103 12th Street, Fairmont, WV, and our office located in Pittsburgh, PA. The audit covered
the period January 1, 2016, through April 15, 2017, but was expanded through August 2017 to
include (1) the universe of program units that passed an Authority-administered housing quality
standards inspection and (2) housing assistance payment abatements processed by the Authority,
as noted below.

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 and abatements, housing assistance payments, and tenant data;
       audited financial statements for fiscal years 2015 and 2014; and other program records.

   •   HUD’s monitoring reports for the Authority.

We also interviewed Authority employees, HUD staff, and program participants.

To achieve our audit objectives, 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 68 program units to inspect from a universe of 260 program units that
passed an Authority-administered housing quality standards inspection between April 4 and
August 4, 2017. These inspections were performed by the Authority’s program staff. We
selected a sample size of 68 units to inspect, based on a one-sided confidence level of 95 percent
and a likelihood of error range from 10 to 50 percent. We inspected the 68 units from September
11 to September 21, 2017, to determine whether the 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
employee accompanied us on 67 of 68 inspections. We provided the results of the 68 inspections
to the Authority for action during the audit.

We determined that 22 of the 68 units (32 percent) materially failed to meet HUD’s housing
quality standards. We determined that these units were in material noncompliance because they
had 348 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 one-sided confidence level of 95 percent, that at least 23 percent of the 260
units were in material noncompliance with housing quality standards. By averaging the housing
assistance payments made for substandard housing across all 260 units that passed an Authority
inspection and deducting for a statistical margin of error, we estimate, with a one-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 $96 per unit.
We projected the results to the universe by multiplying the $96 per unit monthly housing
assistance payment for substandard housing by 1,081 (the total number of vouchers that the
Authority had leased up as of August 2017), yielding a total of $103,463 8 per month.
Multiplying the monthly amount of $103,463 by 12 months yields an annual total of more than
$1.2 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 reviewed a total of 37 units to determine whether the Authority correctly abated housing
assistance payments. For the period April 4 to August 4, 2017, the Authority inspected units and
failed 100 of them. We reviewed 12 of the 100 units because the Authority did not reinspect
them for more than 30 days. We also reviewed the 25 abatements that the Authority made
during the period January 1, 2016, to August 4, 2017. Although this sample of 37 units did not
allow us to project the results to the population, it was sufficient to meet the 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 findings
and conclusions based on our audit objectives.




8
    The actual calculation includes cents; $95.71 multiplied by 1,081 equals $103,462.51 or $103,463 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 objectives:

•   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 program participants comply with program 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 Deficiencies
Based on our review, we believe that the following items are significant deficiencies:

•   The Authority did not implement procedures and controls to ensure that program units met
    housing quality standards.
•   The Authority did not implement controls to ensure that it accurately calculated housing
    assistance payment abatements.



                                                  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              $29,226
                          1C                                $1,241,550
                          1D                3,822
                          1E                                        267

                        Totals             33,048            1,241,817



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 $1.2 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. Also, the Authority will use $267 in
     program funds to reimburse owners for days when their units complied with housing
     quality standards.




                                               16
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               17
              Auditee Comments and OIG’s Evaluation



Ref to OIG
             Auditee Comments
Evaluation




Comment 1




Comment 2
Comment 3




                             18
              Auditee Comments and OIG’s Evaluation




Ref to OIG   Auditee Comments
Evaluation




Comment 4




Comment 5




Comment 6




Comment 4
Comment 2




                             19
              Auditee Comments and OIG’s Evaluation




Ref to OIG   Auditee Comments
Evaluation




Comment 7


Comment 8


Comment 7



Comment 9
Comment 10
Comment 11




                             20
                         OIG Evaluation of Auditee Comments


Comment 1   The Authority disagreed that 63 of the 68 units that we inspected failed inspection
            as a result of it not properly inspecting units. It believes that a more accurate
            statement is that units failed to meet housing quality standards at the time of our
            inspections. It asserted that there is not always evidence provided that units did
            not initially meet the standards especially relating to extension cords, bugs,
            weather seals, and other items that can change over time. It also noted that often
            times during initial inspections, the units are empty. It asserted that a significant
            amount of the violations that we identified were beyond its control and were
            caused by either the tenant or landlord.
            As stated in the audit report, we inspected 68 units and 63 of them failed our
            inspection. The existence of a single violation, regardless of the cause, resulted in
            the unit failing our inspection. We determined that 22 of the 63 units were in
            material noncompliance with housing quality standards because they had 348
            violations that predated the Authority’s last inspection, meaning that the
            Authority’s inspectors did not identify them during their inspections. We were
            conservative in our approach and used our professional knowledge, tenant
            interviews, the Authority’s latest inspection reports, and the facts and
            circumstances surrounding violations in determining whether they existed before
            the last passed inspection conducted by the Authority. Some violations were
            easily determined to have existed at the time of the Authority’s inspection. In the
            event that we could not reasonably make a determination of when a violation
            occurred, we did not categorize it as preexisting. HUD regulations require that all
            program units meet housing quality standards performance requirements at the
            beginning of the assisted occupancy and throughout the assistance tenancy. All
            violations that we identified during our inspections need to be corrected.
Comment 2   The Authority agreed that there is room for improvement in its program but
            maintained that housing quality standards inspections are subjective and that our
            inspector’s conclusions were sometimes above housing quality standards
            regulations, such as electrical conditions and neighborhood conditions. We
            appreciate the Authority’s acknowledgement that it can improve its program.
            Although inspections involve some judgment, in no instance did we apply a
            higher standard than was required by HUD regulations. We used the applicable
            HUD regulations and the requirements in the Authority’s administrative plan as
            our criteria for conducting our inspections.
Comment 3   The Authority stated that its service area has a number of older communities and
            its participants decide to live in older, more rural homes. It asserted that its
            inspectors consider neighborhood conditions on properties immediately adjacent
            to a unit, whereas, our inspector would consider homes several lots away. It
            asserted that we subjectively considered homes several lots away in identifying 81
            neighborhood condition violations.



                                              21
            We agree that an older housing stock presents challenges for the Authority. HUD
            regulations at 24 CFR 982.401(l) require the site and neighborhood to be free
            from dangers to the health, safety and general welfare of the occupants, including
            items such as: adverse environmental conditions that are either natural or
            manmade such as dangerous walks or steps; poor drainage; sewage hazards;
            excessive accumulations of trash; and fire hazards. The Authority’s assertion that
            we subjectively considered homes several lots away in identifying 81
            neighborhood condition violations is inaccurate. All of the violations that we
            categorized as site and neighborhood violations were either on the properties
            where the units we inspected were located or the immediately adjacent lot owned
            by the same landlord. All of the violations were in common areas accessible to all
            tenants. For example, these were the most common types of violations we found:
            16 violations at a community center in an apartment complex; 15 violations
            related to sidewalks around properties; 14 violations at shared laundry facilities in
            apartment complexes; 12 violations related to the accumulation of trash on
            properties; and 10 violations related to the condition of shared refuse containers.
Comment 4   The Authority stated that it stresses on the job training supplemented through
            classroom training from industry contractors. All staff have received additional
            training from an industry contractor and received certificates of completion. It
            has also modified its administrative plan and has scheduled regular staff training
            times for administrative plan reviews. As stated in the audit report, during the
            audit, the Authority began taking corrective action to improve its program by
            providing outside contractor training to its staff in August 2017. In addition to
            that training, the Authority should use the results of this audit to train its staff. As
            part of the audit resolution process, HUD will evaluate the Authority’s corrective
            actions to determine whether they satisfy the recommendation.
Comment 5   The Authority acknowledged some documentation issues in a few instances and
            stated that it will adjust its administrative plan to alleviate the issue. As part of
            the audit resolution process, HUD will evaluate the Authority’s corrective actions
            to determine whether they satisfy the recommendation.
Comment 6   The Authority indicated that it has begun taking corrective action and will work
            with HUD for clarity as needed. As part of the audit resolution process, HUD
            will work with the Authority and evaluate its corrective actions to determine
            whether they satisfy the recommendation.
Comment 7   The Authority indicated that it will take action to address the recommendation.
            As part of the audit resolution process, HUD will evaluate the Authority’s
            corrective actions to determine whether they satisfy the recommendation.
Comment 8   The Authority stated that it has implemented quality control measures to ensure
            that abatements are properly calculated and procedures in its administrative plan
            are followed. We commend the Authority for being proactive. As part of the
            audit resolution process, HUD will evaluate the Authority’s corrective actions to
            determine whether they satisfy the recommendation.


                                                22
Comment 9      The Authority stated that during interviews and meetings with the auditors, the
               finding and recommendations were described as typical of other programs across
               the country. Our audits generally identify problems with enforcing housing
               quality standards. The extent of the problems is affected by the condition of the
               housing stock and management’s ability to deal with its challenges. Our audit
               reports frequently include findings with ineligible costs because auditees did not
               enforce HUD’s housing quality standards.
Comment 10 The Authority stated that housing quality standards inspections are subjective in
           nature and that industry training contractors offer varying opinions on issues
           related to housing quality standards. We agree that some judgment is involved.
           In addition to the training it has already provided to its staff, the Authority should
           use the results of this audit to train the staff.
Comment 11 The Authority objected strongly to the inclusion of photos in the report because it
           could jeopardize the confidentiality and privacy of the program participants. We
           routinely include photos in our final reports to illustrate the violations we noted
           during our inspections. However, in response to the Authority’s concern, for the
           final report, we removed five photos and redacted a photo that were in the draft
           report.




                                                23