oversight

City of North Charleston, North Charleston, SC

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-04-30.

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

                                                    U.S. Department of Housing and Urban Development

                                                    District Office of the Inspector General
                                                    Richard B. Russell Federal Building
                                                    75 Spring Street, SW, Room 700
                                                    Atlanta, GA 30303-3388
                                                    (404) 331-3369




April 30, 1996                                       Audit-Related Memorandum
                                                     No. 96-AT-244/255-1813


MEMORANDUM FOR:             Louis E. Bradley, Director, Community Planning and Development
                             Division, 4ED


FROM:      Kathryn Kuhl-Inclan
           District Inspector General for Audit-Southeast/Caribbean District, 4AGA


SUBJECT:         City of North Charleston
                 North Charleston, South Carolina
                 CDBG and HOME Programs


                                            SCOPE

Our limited probe pertained to selected activities of the City's Community Development Block
Grant (CDBG) and HOME programs. We interviewed your staff and the Communit y
Development staff at the City of Nort h Charleston, City or CNC hereafter; reviewed records and
reports in your files on the City's administration of HUD-funded programs; examined selected
records and reports at the CNC for the HUD-funded programs; and reviewed selected financial
records of the Nor th Charleston Housing Corporation (NCHC). The probe was conducted on-
site mainly in August, September and October 1995, with related dis cussions and correspondence
through March 1996.

Our emphasis was on use of funds, procurement and related practices of the City and it s
Community Housing Development Organization (CHDO), which is NCHC. We wanted to see
in general whether these programs' benefits went to intended persons and purposes, instead o f
providing windfalls. The probe was not an audit of any City activities, and our observations are
related to the limited emphasis and scope.

                                         SUMMARY

Our findings and recommendations are in Attachm ent 1. Attachment 2 provides for our findings
the City and HUD comments, which also are summarized and evaluated in Attachment 1
following each finding.
We found that:

      -       The City's senior construction adviso r had controlled contractor selection for HOME
              homeowner-occupied rehab projects, resulting in apparent favoritism and restricted
              competition.

      -       Some construction work was not properly inspected, and as a result the rehab was not
              satisfactory for 7 of 10 inspected homes.

      -       Better eligibility criterion were needed for HOME loans, resulti ng in six HOME loans
              wasting taxpayer-provided funds and creating windfalls to one former owner.


Within 60 days, please give us, for each recomme ndation in Attachment 1 a status report on: (1)
corrective actions taken; (2) the proposed corrective actions and the date to be completed; or (3)
why actions are considered unnecessary. Also, please furnish us copies of any correspondence
or directives issued as a result of this limited probe.

If you have any questions, please contact Ted Drucker, Assistant District Inspector General for
Audit at (404) 331-3369, or our Senior Auditor in Columbia, Rich Pirsig. Please keep in mind
the recent reemphasis for timely management decisions on the recommendations in findings.

We are sending the City's Mayor an informational copy of this report.

Attachments:

      1   -
          Findings and Recommendations
      2   -
          City and HUD Columbia Comments
      3   -
          Results of Inspections
      4   -
          Schedule of Selected HOME Projects with Excess Loan to Value, and
          Debt to Income
      5 - Schedule of Unsupported Costs
      6 - Distribution
                                                                                   ATTACHMENT 1
                                                                                        Page 1 of 7

                                FINDINGS and RECOMMENDATIONS


1.       The Senior-Construction Advisor Controlled Contractor Selection for HOME Homeowner-
         Occupied Rehab Projects.

         Of $1,259,135 in HOME funds awarded through July 21, 1995 for homeowner-occupied
         rehab projects, $885,529 or over 70 percent were awarded to the same contractor: AC E
         Construction Compa ny, Inc. (ACE). Thirty of the 44 homeowner-occupied projects were
         rehabilitated by ACE. Only six of the 30 ACE projects were competitively bid.

         According to information in project files, ACE was se lected by the homeowners. However,
         our discussions with 11 of thes e homeowners confirmed that they only nominally selected
         ACE as the contractor; rather the City's senior-construct ion advisor 1 actually controlled the
         selection and made arrangements for ACE to serve as the contractor. Such action resulted
         in apparent favoritism and restricted competition. Without fair and open competitiv e
         procurement of all HOME projects , the City cannot know that it has obtained construction
         at advantageous costs, and maximized the use of its HOME dollars.

         The CNC Purchasing Manual requires formal competitive bidding procedures to be used
         for all purchases over $5,000, and such competitive bidding practices in the award o f
         federal funds are also required by CFR 85.36. The HOME program regulations do no t
         specifically preclude the use of alternat ive procurement methods; however, common sense
         and prudence dictate proper safeguarding of taxpayer-provided funds.

         Under the CNC's HOME program, its Community Development staff prepared a cos t
         estimate for each proposed homeowner-occupied rehab project. In lieu of competitiv e
         bidding, a homeowner may select any contractor on or eligible for the City's list o f
         approved HOME contractors as long as the bi d from that contractor is within 10 percent of
         the estimate prepa red by the City's construction advisor. The amount of work awarded to
         ACE indicated favoritism or abuse was present, which was confirmed in our subsequen t
         discussions with 11 of the homeowners who used ACE as contractor. Only one of the 11
         homeowners we contacted was given a list of approved contractors and that one selected
         ACE because of prompting from the City's construction advisor. According to nine of the
         11 homeowners, they had no idea that they had a choice in who did the work.

         The method used by CNC to award HOME rehab contracts was subject to abuse because
         the City's construction advisor could co ntrol or affect contractor selection. In addition, the
         same employee prepared the cos t estimates, reviewed the "bids", and was also responsible
         for certifying that the work was satisfactorily completed in accordance with the contrac t
         specifications. (Also, the work by ACE was in some cases not completed in accordance
         with the contract specifications, See Finding 2).




     1
         He became the City Director of Code Enforcement about August 1995.
                                                                        ATTACHMENT 1
                                                                             Page 2 of 7

We were informed during our review that the City was changing its procedures to require
competitive bidding on all HOME rehab projects. B ased on reading the revised Contractor
Guidelines dated April 1995, we believe that those guidelines do not adequately and/o r
clearly spell out: how many bids were required, to whom bids were to be sent, how th e
bids were to be controlled, or any permitted exceptions to competitive bidding for rental
rehab projects where the owner is active in the construction business. Thus they still can
be improved.

Auditee Comments (Summary)

     CNC - The former inspector (senior construction advisor) no longer works in th e
     Community Development Office, and will no longer be performing inspections. (The
     HUD Columbia Field Office, Community Planning and Development Div ision (CPD)
     added that the former inspector no lon ger worked with HUD funded projects.) After
     the HUD monitoring visit in May 1994, the City Council approved makin g
     competitive bids a requ irement for all HOME rehab projects. At least three bids are
     to be required.

     CPD - The City is willing to get the contractor to co mplete "all necessary work" (also
     see Finding 2). The case for possible administrative sanctions ag ainst City staff could
     be weakened because project files contain a document signed by the homeowne r
     saying that he/she chose ACE for the construction company from the City's list o f
     Minimum Criteria contractors. CPD believed OIG suggested award procedures are
     sound.

OIG Evaluations

Neither response referred to administrative or other sanctions to be initiated against th e
former senior-construction advisor or any of the City staff. Also neither responded to some
specific revisions or clarifications for the Contractor Guidelines dated 4/11/95, which we
had suggested.

The current employment status of the former senior-construction advisor should no t
influence whether administrative sanctions are warra nted for the cited conduct. Regardless
of who selected the contractor, the CNC Advisor incorrectly certified documents relate d
to work completed, and/o r uncompleted. These false certifications, in our opinion, justify
administrative sanctions. Despite signed statements to the contrary, it was apparent from
our discussions with indivi dual homeowners that they had not decided the selection of the
contractor. This oral advice by CNC customers is reinforced by the fact that 30 of the 44
homeowner rehab projects in the HOME program were done by th e same contractor, which
indicates undue influence was exercised.
                                                                         ATTACHMENT 1
                                                                              Page 3 of 7

Recommendations

We recommend that you:

1A.   Initiate administrative sanctions against the City's former seni or construction advisor
      and possibly his supervisor both for: i) improperly controlling and/or influencin g
      the selection of construction contractors for homeowner-rehab projects; and ii )
      giving final approval to rehab work not complying with the wo rk write-ups (also see
      Finding 2).

1B.   Have future CNC awards of HOME funds for rehab projects use competitiv e
      bidding (Resolved)

1C.   Require the procedures, i n the CNC Procurement Manual, for the award of HOME
      rehab funds to be more precise on solicitation, control, and evaluation of bids.
                                                                              ATTACHMENT 1
                                                                                   Page 4 of 7

2.   Contract Rehab Projects Were Not Properly Inspected

     Because most HOME rehab projects were awarded to a single contractor (ACE), w e
     considered the quality and completeness of work performed by this contractor. We initially
     inspected five homes rehabilitated by ACE; and concluded that some specified work was
     not completed, and the cost appeared high for certain work. With the assistance of a
     professional engineer assigned to the HUD Georgia State Office, we did more detaile d
     inspections of the work performed by ACE on 10 HOME rehab projects. The inspection
     results are summarized in Attachment 3.

     Based on the results of these more detailed inspections, the quality and cost of the wor k
     performed by ACE varied considerably. Thr ee of the 10 inspected projects generally were
     satisfactory. Seven had from 2 to 8 work items which were overpriced ($10,250), no t
     completed to specifications ($150), or not completed at all ($9,900). In spite of thes e
     deficiencies, the former CNC senior-construction advisor approved the work as bein g
     satisfactorily completed. The City needs to improve its inspection practices to preclude less
     than satisfactory performance by contractors receiving federal funds.

     Auditee Comments (Summary)

            CNC - The City generally ag reed for construction deficiencies on the ten inspected
            properties, except those not clearly required by local codes.

            CPD - Agreement in general was expressed with our suggestions for correctiv e
            actions, except CPD endorsed the City's views on dropping inspection citations not
            required by local codes. In lieu of using an independent inspector as OI G
            suggested, the City should be allowed to use its new rehab inspector.

     OIG Evaluation

     The CNC and CPD proposed or alternative actions are acceptable to the extent specified,
     and we will close the related recommendations (2A and 2C) when advice is received that
     the promised acti ons have been satisfactorily accomplished. However, neither responded
     sufficiently on what will happen for the remaining 20 units done by ACE which were not
     reinspected, or on administrative sanctions which -- we believe -- should be taken against
     the contractor and its employees or affiliates.

     Recommendations

     We recommend that you have the City CPD staff to:

     2A.    Require the contractor (ACE) to correct the deficiencies or reimburse $20,300 for
            the items noted in Attachment 3.

     2B.    Have an inspector independent of the City's HOME program inspect all of th e
            remaining 20 hom eowner units rehabilitated by ACE and determine whether work
            items were over priced, not done, or not fully completed.
                                                                        ATTACHMENT 1
                                                                             Page 5 of 7

2C.   Reimburse the HOME program from non-federal funds for any work no t
      satisfactorily corrected or completed by the contractor, and for the costs of th e
      independent inspections.

2D.   Initiate administrative sanctions against the contractor, its principal officers or any
      successor identity-of-interest company for performance of identified rehab work not
      in compliance with the work write-ups. The administrative sanctions shoul d
      preclude them from doing any new business with HUD funded programs for a
      period of not less than six-months, and unt il ACE has fully reimbursed the City and
      corrected all construction deficiencies.
                                                                          ATTACHMENT 1
                                                                               Page 6 of 7


3.   Better Eligibility Criteria Were Needed for HOME Loans

     We identified six homeowner rehab projects totaling $184,670 arranged by one forme r
     short-term owner, and h aving first mortgages and HOME loans which exceeded their tax-
     appraisal values. Two of thes e same projects have homeowners whose monthly mortgage
     payments require an unreasonable portion of their total income; e.g., 42 and 57 percen t
     respectively of their total income to cover just the mortgage pay ment. The HOME program
     does not have specific requirements for judging the credit capacity of potential HOM E
     borrowers. However, prudent business practice requires that any mortgage loan b e
     supported by property value which protects the lender in the event of default. Lack o f
     adequate income level of the homeowner can lead to default and foreclosure by th e
     mortgage-holders. Without an adeq uate balance between mortgage amounts and a home's
     value, there is undue risk which could result in significant waste of taxpayer-provide d
     funds. Also, the former owner obtained significant windfalls as a result of the first -
     mortgages, which he held, being far in excess of market values.

     Mortgage Loan to Value Excessive -

     Three of the examined homeowner properties (Attachment 4, projects 41, 59, 67) ha d
     mortgage debts, excluding their HOME loan, which exceeded their tax-appraisal value s
     after rehab. Including their HOME loans, all six exceeded values after rehab; however ,
     each received an additional mortgage debt as a result of the HOME Program loan.

     The City's legal counsel recommended for two properties that the CD staff carefull y
     consider whether the City's interests would be adequately protected and whether th e
     property would be over-leveraged if the HOME loan was consummated. The City stil l
     consummated the loans.

     Although the HOME program does not have specific requirements for credit capacity of
     potential HOME borrowers, the general criteria used by HUD with its insurance programs
     provides that there should be a loan-to-value ratio of no more than 98.75 percent.

     Mortgage Debt to Income Excessive -

     The homeowners' income level should be sufficient to adequately meet their monthl y
     mortgage payment. Two of the six projects (see Attachment 4) have homeowners whose
     monthly mortgage payments required an unreasonable portion of their total income; one
     project (#52), which closed in January 1994, had its owner default about February 1995.

     City Permitted Windfalls on Six Properties to the Former Owner -

     The short-term owner purchased run-dow n houses for about $10,000 each. He would find
     low-income persons (LIP) living in public housing, and persuade them to sign purchas e
     contracts for houses, recently bought for about $10,000, for $26,000-$36,000. The dea l
     was contingent upon the LIP applying for and getting a HOME-loan to rehab the house.
                                                                          ATTACHMENT 1
                                                                              Page 7 of 7


He would transport and assist t he individual in applying for the HOME rehab loan. When
the loan was approved, he would close the deal selling the L IP the house at an excess price,
and at the same time the new owner would close a second mortgage deal with HUD for the
HOME loan. The first mortgage was held personally by the former owner at an interest rate
of 12 percent.

In essence, the former owner took advantage of six low-income persons who bough t
dilapidated houses at fixed-up values but taxpayer funds actua lly paid the fix-up costs. The
City permitted the abuses but stopped the practice after we raised the issue.

                                 *    *   *    *    *

Auditee Comments (Summary)

       CNC - Recent revisions to t he City's HOME Homeowner Rehabilitation guidelines
       include 1) the ho meowner is required to have lived in the home for a minimum of
       three (3) years prior to rehab ilitation, and 2) all eligible applications now go before
       a committee for review and approval, as wel l as full City Council. The Community
       Development staff will make a more prudent effort in the future to assure tha t
       rehabilitated properties are not overleveraged.

       CPD - The City's response indicated corrective actions have occurred. The City's
       form of assistance under this program has consisted of 10- year deferred loans which
       are in effect gran ts, if the person continues to reside on the property, which should
       be factored in when assessing the total debt on the property. The City could have
       made grants in these cases. In short, the City did not actually expect that th e
       deferred loans would be repaid, but employed the deferred loan arrangement an d
       mortgage instrument as appropriate financial safeguards.

OIG Evaluation

The actions for future cases are acceptable. They do not however make whole the six cited
homeowners who already have been put at disadvantage, or affect the speculator wh o
received windfalls at the expense of the taxpay ers underwriting the HOME program. Thus
we do not consider CPD's discussion of grants vs loans to be directly relevant.

Recommendation

3A.    We recommend that you coordinate with the Co lumbia HUD Office Chief Counsel,
       and provide guidance to CNC on needed act ions to eliminate from its HOME rehab
       program the six properties involving the short-term sp eculative owner who obtained
       windfalls, or to otherwise obtain appropriate redress from him.
                                                                                          ATTACHMENT 2
                                                                                               Page 1 of 5




*   OIG NOTE - This Attachment is a five-page listing of comments pertaining to the ten properties. It has bee   n
    separately provided.
ATTACHMENT 2
     Page 2 of 5
ATTACHMENT 2
     Page 3 of 5
ATTACHMENT 2
     Page 4 of 5
ATTACHMENT 2
     Page 5 of 5
                                                                   ATTACHMENT 3


                                 RESULTS of INSPECTIONS


                                                   Work Not
Location                             Work Not      Completed    Work Items
Number        Address                Completed     Correctly    Overpriced    Totals
   1       6810 Ward Avenue                                                     $ 0
   2       1779 Disco Street                                                        0
   3       1772 Disco Street          $ 850                                      850
   4       1905 Token Street                                                        0
   5       1902 Norwood Street         4,575                                   4,575
   6       5242 Jury Lane                          $ 50        $ 3,650         3,700
   7       4680 Gaynor Avenue          2,000                                   2,000
   8       3433 Osceola Street           175                                     175
   9       1911 Graham Street          1,550                     6,500         8,050
  10       1922 Norwood Street           750         100           100           950

                                      $ 9,900      $ 150       $ 10,250      $ 20,300
                                                                                   ATTACHMENT 4


                              SCHEDULE of SELECTED HOME PROJECTS
                                   with EXCESS LOAN to VALUE,
                                        and DEBT to INCOME



Excess Loan to Value:

                                           (d)                       (f)                 (g)
                         (c)            Amount of                  Loan to Value        Loan to Value
  (a)                   Amount of       Senior 1st     (e)         Without HOME         With HOME
Project   (b)           HOME Loan       Mortgage      Post-Rehab    Mortgage             Mortgage
Number    Owner          Mortgage         Debt         Value         (d)/(e)            (c)+(d)/(e)
  34        G            $ 29,700        $ 29,000      $ 33,700        86.05%             174.18%

  41         W              34,975           32,000      31,600      101.27%              211.95%

  51         S1             25,000           26,000      29,100       89.35%              175.26%

  52         B              29,995           34,000      34,100       99.71%              187.67%

  59         M              35,000           36,000      33,000      109.09%              215.15%

  67         S2             30,000           34,000      31,300      108.63%              204.47%

                         $ 184,670



Excess Debt to Income:

                                      (c)                (d)
  (a)                                Monthly            Monthly                (e)
Project           (b)                Mortgage           Family           % Mortgage Payment
Number            Owner              Payment            Income            to Income (c)/(d)

  52                    B            $ 349                $ 833                41.88%

  59                    M              370                  646                57.28%
                                                                                                ATTACHMENT 5


                          SCHEDULE OF UNSUPPORTED COSTS



             Finding/Recommendation                                Unsupported Costs 2


                           2A                                           $ 20,300

                           3A                                             184,670




2
    Unsupported amounts do not obviously violate law, contract, or HUD or local agency policies or regulations,
    but warrant being contested for various reasons such as lack of satisfactory documentation and HU D
    approval.
                                                                        ATTACHMENT 6


                                     DISTRIBUTION


Secretary's Representative, 4AS
Comptroller, 4AF
Audit Liaison Officer, 4AFI
Director, Field Accounting Division, 4AFF
Special Agent in Charge, 4AGI
State Coordinator, Columbia, SC, 4ES
Director, Community Planning and Development Division, 4ED
Assistant to the Deputy Secretary for Field Management, SDF, (Room 7106)
Comptroller, Office of Technical Assistance and Management, DOT (Room 7228)
  ATTN: Audit Liaison Officer (3)
Chief Financial Officer, F, Room 10164 (2)
Director, Office of Internal Control and Audit Resolution, FOI (Room 10176) (2)
Associate Director, US GAO, 820 1st St. NE Union Plaza, Bldg. 2, Suite 150,
  Washington, DC 20002, (2)
CNC Mayor R. Keith Summey
OLD VERSION                                                                  ATTACHMENT 2
                                                                                  Page 1 of 3

                              SUMMARY OF COMPLAINTS


The various allegations of mismanagement and irregularities primarily concerned the CNC' s
management of its CDBG Program, but were also related to the North Charleston Housin g
Corporation (NCHC), its CHDO.

     (1)      City Officials misused CDBG funds.
     (2)      Steering of development related contracts to the same contractors.
     (3)      NCHC spent $30,000 on advertising for River Place.
     (4)      City officials did not bid out CDBG legal services.
     (5)      The law firm double billed for some CDBG assisted housing services. Real estate
              closings contracted to cost $600 were billed at $1,200; and
     (6)      NCHC Board was selected from a special interest group.

During our limited review, we found inconclusive evidence to support the allegations made by
the complainant except as discussed below.

                                   RESULTS OF REVIEW

1.   City Officials Misused CDBG Funds .

     This complaint was not specific. As stated in our 5/19/95 memorandum, we discussed this
     concern with Noel Morphis of your staff. He was not aware of CNC misuse of CDB G
     funds.

     Since your staff reviewed CNC's CD programs in May 1994, we did not review the CDBG
     program in depth. Your findings and concerns, outlined in the report dated 6/2/94, were
     cleared on 8/24/94. Based on your reviews of the CNC's grant ee reports for the fiscal years
     ending 6/30/93 and 6/30/94, the CNC's CDBG program activities met eligibilit y
     requirements.

     Based on our limited review of CDBG contracting, competitive procurement usuall y
     existed. You con cluded in your June 2, 1994 monitoring report that in general the CNC's
     procurement actions were handle d in accordance with applicable requirements. However,
     you did recommend corrective action for contractor-procurement fo r housing rehabilitation
     projects. (Also see Item 2 below and Finding 1 in Attachment 1.)

2.   Steering development-related contracts to the same contractors .

     We found inconclusive evidence within the CDBG program for this allegation. A s
     discussed above, CDBG appeared to be competitively procured. However, we did fin d
     problems with the procurement process under the HOME program. You were aware of this
     problem as discussed in your monitoring review memorandum to the CNC dated 6/2/94.
     Our conclusions appear in Finding 1 of Attachment 1.
                                                                               ATTACHMENT 2
                                                                                    Page 2 of 3


3.   NCHC spent $30,000 on advertising for River Place .

     River Place is a market-rate apartment complex owned by the North Charleston Housing
     Authority (NCHA). Until the NCHC hired i ts own executive director in October 1993, the
     NCHA managed the activities of the NCHC.

     We discussed this allegation wi th the Acting ED of the NCHA. She stated that the NCHC
     never expended funds for advertising River Place Apartments. The ED of the NCHC stated
     that he knows of no expenditure of their funds for such purpose after his employment.

     Although not performing a detailed review of accounting records for the NCHA, NCHC
     or River Place, we did scan disbursements from the checking account of the NCHC for the
     periods 7/1/91 to 6/28/94 and did not identify any payments for such purpose.

4.   City officials did not bid out CDBG legal services

     The CNC's general counsel has responsibility for administering the legal matters of th e
     City's CD programs. City Council has adopted policy and ordinances to use their general
     counsel in this capacity. CNC's Purchasing Manual provides that all contracts fo r
     professional services shall be nego tiated by City Council and are specifically exempt from
     formal bid/proposal requirements. The CNC Code of Ordinances provides that Cit y
     Council shall appoint or contract with any attorney to represent the City as legal counsel.
     In addition, the CNC City Council adopted an ordinance dated 8/10/95 which gave th e
     chief legal counsel the authority to retain, appoint or hir e as an independent contractor such
     additional attorney(s) or co-counsel(s) as may be required to provide adequate lega l
     representation for the City.

5.   The law firm double-billed for CDBG-assisted housing services, and Real-estate closings
     contracted to cost $600 were billed at $1,200

     As a result of inquiries by a newspaper reporter and by the CNC finance director, the CNC's
     former legal counsel because of apparent clerical errors adjusted and reimbursed tw o
     invoices submitted by their firm.

     We reviewed records related to the payment for legal services associ ated with CD programs
     and discussed this matter with CNC staff. We found that one invoice in the amount of $360
     was submitted twice by the law firm and was erroneously approved and paid twice b y
     CNC. Another billing in the amount of $350 for a title examination was paid in January
     1993; the CNC was billed and paid $350 for a title search for this property in Sept 93. In
     response to our inquiries, the CD staff has written the former legal counsel, requestin g
     reimbursement of the $360 double billing. In addition, they have requested an explanation
     for billings related to the two title searches for the same property.
                                                                             ATTACHMENT 2
                                                                                  Page 3 of 3


     Upon inquiry, the CNC's CD manager explained t hat there was never any contract with the
     former legal counsel to perform real e state closings for $600 or any other set amount. The
     NCHC did pay a $1,200 annual retainer to the attorney whose firm formerly represented
     the CNC. In addition, in 1990 the NCHC also paid the Gonzales firm $1,900 in one check
     for 5 title searches.

     Except for the double-billing described above, we found no doubled-billings for CDB G
     housing services.

6.   NCHC Board was selected from a special interest group .

     HUD's HOME regulations include requirements on the composition of a Communit y
     Housing Development Organization (CHDO) governing boar d. The NCHC's Board, in our
     opinion, met those requirements.