oversight

Chicago HA, Chicago, IL

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-08-08.

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

                                                 U. S. Department of Housing and Urban Development
                                                 Office of Inspector General for Audit, Midwest
                                                 77 West Jackson Boulevard, Room 2646
                                                 Chicago, Illinois 60604-3507




AUDIT RELATED MEMORANDUM
                                           96-CH-201-1810
August 8, 1996


MEMORANDUM FOR:    Richard B. Kruschke, Director of Public Housing, Illinois
            State Office


FROM:         Dale L. Chouteau, District Inspector General for Audit, Midwest

SUBJECT:      Chicago Housing Authority
              Follow-up Review of Maintenance Operations
              Chicago, Illinois


We completed a review of the Chicago Housing Authority's maintenance operations. The review
objective was to assess the Chicago Housing Authority's progress in improving its maintenance
operations since our last audit. The previous audit of the Authority's maintenance operations was
performed in 1993 and audit report number 94-CH-201-1013 was issued on January 14, 1994.


We determined what corrective actions have been implemented; what corrective actions are
planned, but not yet implemented; and the time frame to implement planned actions. We also
conducted a limited inspection of units at the Ida B. Wells King Drive Walkups development.
Our audit covered the period of January 1, 1994 to March 31, 1996. Our audit scope did not
include determining whether the Authority's housing stock met HUD's Housing Quality
Standards.

                                           Summary

The Authority has made progress towards addressing some of the severe problems which have
adversely affected its maintenance operations for many years. The Authority has improved its
maintenance operations in the following areas and has set goal dates for implementing
improvements in other areas of its maintenance operations. The Authority has:

   •   Improved its internal communications systems.
                                                                   Audit Related Memorandum


    •   Implemented revised tenant screening and eviction procedures.

    •   Modified its system for accounting and tracking the inventory of materials and supplies.

    •   Centralized its system for delivering materials and supplies from the Central Warehouse
        to its developments.

    •   Increased the use of maintenance mechanics for routine maintenance.

    •   Established and ensured that staffs follow procedures for voiding and deleting work
        orders.

    •   Complied with HUD requirements in classifying and reporting work order activity.

At the time of our review, the Authority had not yet fully implemented its new integrated
computer system for tracking maintenance work orders and inventory of materials and supplies.
The Authority was in the very early stages of establishing a preventive maintenance program.
Also, the Authority had not fully trained resident "screening panels" or adequately defined
restrictions relating to the maintenance mechanic position. There were also problems related to
plastering and tiling work at the Ida B. Wells King Drive Walkups development.

Although all of the recommendations in our previous audit report have not been implemented,
we are recommending that the recommendations in the previous report be administratively
closed. Where appropriate, we have repeated, in this memorandum, some of our previous
recommendations, modified others, and added new recommendations to address conditions found
during our current review. We will track the recommendations included in this memorandum in
the Department's Automated Audit Management System.

We presented our draft memorandum to the Housing Authority's Deputy Executive Director for
Operations. We held an exit conference with the Deputy Executive Director for Operations on
May 24, 1996. The Authority provided us with written comments to our audit results and
recommendations. We included excerpts from the comments with each audit issue. Appendix
A contains the complete comments.

Within 60 days, please give us, for each recommendation made in this memorandum, a status
report on: (1) the corrective action taken; (2) the proposed corrective action and the date to be
completed; or (3) why the action is considered unnecessary. Also, please furnish us with copies
of any correspondence or directives issued because of the audit.

Should your staff have any questions, please have them contact me at (312) 353-7832.




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Appendices:

   A - Auditee Comments
   B - Report Distribution




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                                          Background

The Chicago Housing Authority was organized in 1937 under the housing laws of the State of
Illinois to build and operate public housing in Chicago for persons whose incomes are insufficient
to obtain "decent, safe, and sanitary dwellings" in the private market. The Authority's Executive
Director is Joseph Shuldiner.

The Authority administers over 55,400 units at 42 family developments and 45 elderly
developments. The majority of the developments are Authority-managed; however, some
developments are privately managed or resident-managed. The Authority has been designated
by HUD as a "troubled" public housing agency since HUD began using the "troubled"
designation in 1979.

The Chicago Housing Authority has a resident population exceeding 125,000 which face a
multitude of social, economic, and racial problems common to many of the nation's inner city
communities. A turbulent internal administrative shakeup, which resulted in the resignation of
the Authority's Chief Operating Officer and Board of Directors, left the Authority without a
governing board or administrative leadership. In June 1995, HUD assumed management of the
Authority.

The following table summarizes the Chicago Housing Authority's maintenance expenditures for
1994 and 1995 at Authority managed, resident managed, and privately managed developments:


                             Category                   1994          1995

                 Labor                            $35,762,169      $36,108,327
                 Materials                             5,475,850    8,102,979
                 Contract Costs                    12,804,222      14,407,310
                 Extraordinary Maintenance             1,308,215      993,121

                 Total Maintenance Costs          $55,350,456      $59,611,737

The Authority's records relating to this review were at the Chicago Housing Authority's
Headquarters, the Housing Management Division, the Customer Service Offices, its Legal
Offices, the developments, and at the Authority's Central Warehouse.

Our review of the Authority's Maintenance Operations included an on site review at seven of the
Authority's developments. These developments represented a cross section of the Authority's
activities. These developments comprised 5,591 units of the Authority's units. The following
table lists the developments we reviewed:



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                 Development Type     Development Name      Number of Units

                 CHA Managed          Madden Park Homes           486
                 CHA Managed          Wentworth Gardens           422
                 CHA Managed           Stateway Gardens         1,644
                 CHA Managed          Cabrini W. Green B.         968
                 Privately Managed     Rockwell Gardens         1,135
                 Resident Managed    Dearborn Homes, RMC          800
                 Elderly             Kenmore Apartments           136
                 Total Units                                    5,591

We also performed limited inspections of units at the Ida B. Wells King Drive Walkups, a
privately managed development consisting of 464 units.




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Review Results

                           1. Internal Communications System

Finding 1 in our previous audit report disclosed that the Authority did not have an effective
internal communication system to ensure its policies and procedures were clearly transmitted to
and understood by Development Managers and Maintenance Superintendents. As a result:
Development Managers did not consistently interpret and implement the Authority's tenant
screening and eviction policies and procedures; work order procedures were not standardized or
consistently followed by the Development Managers; work order benchmarks were not used by
Maintenance Superintendents to measure the performance of maintenance staffs; Development
Managers and Maintenance Superintendents generally misunderstood the duties and
responsibilities of the maintenance mechanic position; and Maintenance Superintendents did not
review completed work orders. We recommended the Authority ensure that its communication
system transmits information to appropriate persons and contains a feedback mechanism to verify
information was received and properly understood by development personnel.

To determine and assess the corrective actions taken by the Authority to improve its internal
communications system, we interviewed various Authority staff, including either the
Development Manager or Assistant Manager from seven developments and the respective
Maintenance Superintendents. We also reviewed the Authority's Maintenance Manual; various
policies and procedures; and assorted memoranda.

The Authority was ensuring that its communications system transmitted policies and procedures
to appropriate personnel. For example:

   •   All seven of the Development Managers or Assistant Managers we interviewed were
       familiar with the Authority's Tenant Selection and Assignment Plan and felt that
       admissions policies and procedures were adequately communicated by the Authority's
       Occupancy Department.

   •   All seven of the Development Managers or Assistant Managers we interviewed said they
       were familiar with the Authority's eviction policies and procedures. They also said
       communications with the Authority's Office of General Counsel's Tenant Relations
       Division was good.

   •   The Authority developed a Maintenance Manual which standardized work order
       procedures. These standardized procedures were consistently followed at all seven
       developments we visited.

   •   At all seven of the developments we visited, the development representatives said they
       were aware of the Authority's work order benchmarks. However, in most cases they were
       not used because they were considered too generous. During our audit, the Authority




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        issued new benchmarks to development managers and maintenance superintendents on
        March 30, 1996.

    •   At all seven of the developments we visited, the development representatives understood
        the job duties which could be assigned to maintenance mechanics.

Communication of policies, procedures, training, and other matters was done through Inter-Office
Memoranda to Development Managers from various Authority offices, including Housing
Management, General Counsel, and the Building and Grounds Department. The Authority also
implemented the following procedures to verify that information was received and properly
understood by the Development Managers:

    •   Monthly General Managers and Senior Housing Managers meetings were conducted with
        the Assistant Director of Housing Management.

    •   Weekly meetings were conducted by the General Managers with their Development
        Managers, or their Senior Housing Manager.

    •   Weekly meetings were conducted by the Development Managers with their Local Area
        Council Building Presidents.

    •   Occasional meetings were conducted by the Director of Housing Management with
        development staff.

All of the above meetings, while having a formal agenda, also had an open forum, which
encourages questions and answers.

Representatives from all seven developments we visited said that generally if they had a question
or misunderstanding with the Authority's policies or procedures, they could simply telephone or
E-mail the respective office's representative to resolve their questions. The Development
Managers also said that since HUD took over the Authority in June 1995, the Authority's
communication system had improved significantly. The Development Managers attributed this
improvement to the new management's emphasis on the importance of good communication.

Auditee Comments

The Authority did not provide any comments related to this issue.


Recommendation

We recommend that the Director of Public Housing, Illinois State Office:

1A.     Close the Recommendations in Finding 1 of OIG Audit Report Number 94-CH-201-1013.


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                       2. Tenant Screening and Eviction Procedures

Finding 2 in our previous audit report disclosed that the Authority lacked effective tenant
screening and eviction procedures. We recommended that the Authority: (a) clearly
communicate and train Development Managers on its tenant screening policies and procedures;
(b) determine the economic benefit of using resident screening panels that can influence the
tenant screening process; (c) determine the economic benefit of performing pre-tenant screening
housekeeping inspections and credit checks on all prospective residents; (d) consistently apply
the Authority's comprehensive written eviction policy at all developments; and (e) inform
Development Managers of the eviction policy and train them in coordination procedures with the
Authority's Office of General Counsel.

Tenant Screening

To determine and assess the corrective actions taken by the Authority with regard to its tenant
screening policies and procedures, we interviewed appropriate Authority personnel, including the
Authority's Occupancy Director and representatives from seven different developments.
Additionally, we reviewed the Authority's tenant screening policies and new screening
procedures. We discussed these procedures with development staffs to determine whether they
satisfactorily understood and complied with the procedures.

Communication between the Authority's Occupancy Department and the developments regarding
tenant screening policies and procedures has improved since our last audit. However, the
Authority had not instructed all resident screening panels on the procedures for accepting or
rejecting residents, and it had not instructed development personnel in regard to "Restrictions on
Assistance to Noncitizens".

The Authority has standardized the screening process whereby all screening procedures are being
performed by the Occupancy Department. We were advised by the Authority's Deputy Executive
Director for Operations that the resident screening panels at developments had an advisory role
regarding the suitability of prospective residents and they provided prospective residents with
information about the development. However, he said the final decision regarding accepting or
rejecting prospective residents is made by the Authority's Occupancy Department. In making its
final decision, the Authority's Occupancy Department will follow up on suitability
recommendations made by the development's screening panel.

The Authority has not analyzed or determined the viability of using screening panels at all
developments because of other priorities. Three of the seven developments we visited had
resident screening panels because the resident organizations initiated them. Two of these panels
were unsure of their authority for accepting or rejecting prospective residents. The third
development's resident screening panel felt it had full authority for accepting or rejecting
prospective residents. The remaining four developments we visited did not have resident
screening panels. The Development Managers at these four developments either felt that resident


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screening panels were not currently feasible or believed that all screening procedures should be
performed by the Occupancy Department.

None of the representatives from the seven developments we visited had been instructed or
apprised of the "Restrictions on Assistance to Noncitizens", commonly referred to as the "alien
rule", which pertains to certifications and recertifications of residents. As a result, residents who
are ineligible due to alien rule restrictions, may be recertified for housing assistance by the
Authority's development personnel. The Authority planned to train development personnel on
the "alien rule" restrictions in June 1996.

The Authority instituted new screening procedures that became fully effective for all
developments on March 15, 1996. The Authority added home visits and credits checks to its
previous screening procedures. These procedures were being performed by the Occupancy
Department and included the following verifications:

    •   Eligibility
    •   Security and background checks
    •   Payment history for utility charges
    •   Prior landlord history
    •   Credit checks

Because of the limited time elapsed since the addition of home visits and credit checks to the
screening procedures, we were not able to determine whether the Occupancy Department was
using the new procedures.

Auditee Comments

The Chicago Housing Authority will develop a pamphlet which will provide directions for each
"Resident Screening Panel". The pamphlet will provide them with the obligations and authorities
as a screening panel. This pamphlet will be developed by August 1, 1996 and will be a
companion to the new lease. In addition, we will be scheduling training on the new restrictions
on Assistance to Noncitizens. This training will occur at our Occupancy Department during the
month of June, 1996. The Chicago Housing Authority has developed a new tenant screening
policy which is in effect and being utilized by the Occupancy Department.


Evictions

To determine and assess the corrective actions taken by the Authority with regard to its eviction
policy, we interviewed appropriate Authority personnel, including legal staff in the Authority's
Office of General Counsel's Tenant Relations Division and representatives from seven
developments. We reviewed the Authority's policies and procedures for both "rent delinquency"
and "for cause" evictions. We also discussed the Authority's eviction policy with development
staff to determine whether they understood the policy and complied with it.


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The Authority was consistently applying its comprehensive written eviction policy. All seven
development representatives we interviewed said communications and coordination with the
Tenant Relations Division were good to excellent. Moreover, these representatives said they felt
adequately trained on the Authority's eviction policies and procedures for both "delinquent rent"
and "for cause" evictions.

Since HUD took over management of the Authority in June 1995, the Authority's Associate
General Counsel for Tenant Relations has implemented or will implement the following
procedures:

   •   The 14-day lease termination notices for non-payment of rent were being hand-delivered
       by the Authority's Legal Department rather than sent by mail. Delivery of the notices by
       personal service provides evidence of actual receipt by the tenant and facilitates legal
       enforcement by the Courts. This notice is now automatically prepared by the Authority's
       Tenant Accounting Department rather than by development staff.

   •   The ten-day lease termination notices requiring residents to make necessary payment
       arrangements to have their gas and/or electric service restored were also being hand-
       delivered by the Authority's Legal Department rather than sent by mail. Again, delivery
       of the notices by personal service provides evidence of actual receipt by the tenant and
       facilitates legal enforcement by the Courts. Additionally, a procedure by which utility
       allowances will be paid directly to the utility companies was being established.

   •   The Authority was using third year law students supervised by experienced attorneys to
       process non-jury delinquent rent eviction cases. These law students supplemented the
       Authority's full time attorneys.

   •   A new attorney was hired in March, 1996, and another attorney was to be hired
       imminently. Also, an office manager will be hired shortly to deal solely with evictions.
       All three new hires will be used to expedite and handle more "for cause" eviction cases.

   •   A motion for an extraordinary writ from the Illinois Supreme Court has been filed
       regarding rulings from two judges in the eviction courts. These two judges were of the
       opinion that the Authority could not carry out evictions using its own police force, a
       practice which was more cost effective and efficient than using the Sheriff's Department.
       The extraordinary writ is not an appeal, but rather, is a request to change a court order.
       While awaiting resolution from the higher court, the Authority is continuing to carry out
       eviction orders from judges who recognize the Authority's right to do so. Eviction orders
       from the judges prohibiting the Authority's evictions are being performed by the Sheriff's
       Department.

The Authority also implemented two changes to facilitate rent collections, which should reduce
the amount of non-payment of rent eviction cases:



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      •   Under the Protected Payee Program, the Illinois Department of Public Aid deducted rent
          payments from the welfare benefits for rent delinquent residents. The amount deducted
          was the monthly rent plus a portion of any prior arrearage. A change was made in
          November 1995 whereby residents could no longer voluntarily get off the program as they
          did in the past.

      •   The Authority began deducting rent payments from payroll checks of residents who are
          also Authority employees and delinquent in their rent payments.

Representatives from the seven developments we visited said the newly implemented eviction
procedures were effective and helpful in their eviction efforts.

Auditee Comments

The Authority did not provide any comments related to this issue of our draft audit memorandum.

Recommendations

We recommend that the Director of Public Housing, Illinois State Office:

2A.       Close the Recommendations in Finding 2 of OIG Audit Report 94-CH-201-1013.

2B.       Assure that the Authority analyzes and determines the viability of using resident screening
          panels at all developments.

2C.       Assure that the Authority clearly communicates and trains Development Managers on its
          resident screening policies and procedures (this recommendation is repeated from our
          previous audit report). In particular, the Authority needs to instruct all Development
          Managers and resident "screening panels" on the precise authority the screening panels
          have in regard to accepting or rejecting residents; and implement training to development
          personnel on "Restrictions on Assistance to Noncitizens".




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                                3. Preventive Maintenance

Finding 3 in our previous audit report disclosed that the Authority lacked a preventive
maintenance program. We recommended that the Authority: (a) continue its efforts to implement
a preventive maintenance test program at Robert Taylor Homes; (b) use the results of the test
program to establish and incrementally implement a plan for initiating preventive maintenance
procedures at all of its developments; and (c) develop and implement preventive maintenance
procedures to maintain major renovations being conducted under the Comprehensive Grant or
other programs.

To assess and determine the corrective actions taken by the Authority with regard to its
preventive maintenance procedures, we conducted interviews with the Authority's development
management and maintenance staffs, and we reviewed the Authority's Maintenance Manual. We
also analyzed the proposed strategies outlined in the Authority's June 21, 1996 draft
Memorandum of Agreement with HUD to determine what steps the Authority will take to
implement its preventive maintenance procedures.

The Authority has taken little action to improve its preventive maintenance program. None of
the recommendations from our previous audit report were implemented. In fact, the Authority's
preventive maintenance test program at Robert Taylor Homes was discontinued in 1994. HUD's
Office of Public Housing, Illinois State Office, advised that HUD funding was not approved for
the test program.

Because the Authority is classified by HUD as troubled, it submitted a draft Memorandum of
Agreement to HUD dated June 21, 1996. To address deficiencies in its preventive maintenance
program, the Authority set forth the following strategies:

   •   Determine who will perform systems preventive maintenance inspections and repairs
       (Target Date - June 1996).

   •   Conduct a preventive maintenance needs assessment for each development and develop
       a plan for the funding and repair of deficiencies (Target Date - June 1996).

   •   Develop and implement procedures for contracting out the annual inspection of major
       systems and the use of job order contracts to repair major system deficiencies in no more
       than 30 days (Target Date - September 1996).

   •   Develop and implement a preventive maintenance schedule (Target Date - June 1997).

The Authority has not met the June 1996 target date for determining who will perform systems
preventive maintenance inspections and repairs or conducting the developments' needs
assessments. By September 30, 1996, the Authority plans to have established a preventive
maintenance program for its heating plants and elevators.



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The Authority's Director of Housing Management said the preventive maintenance needs
assessments discussed in the draft Memorandum of Agreement will only be underway (not
completed) by September 30, 1996. The preventive maintenance schedule to be developed will
encompass the results of the preventive maintenance needs assessment to be done at each
development. The needs assessment is required because of differences in building designs, age,
and conditions.

Under the Gautreaux court order, all newly constructed housing units of the Authority must be
managed by private management firms. Therefore, preventive maintenance for the newly
constructed units will be performed by the private management firms.

Auditee Comments

Due to the severe condition of the building structures and systems, the Chicago Housing
Authority's maintenance staff has not concentrated on developing a preventive maintenance
program. We will develop new target dates for conducting a preventive maintenance needs
assessment and develop an applicable schedule. Providing adequate funds are available, we will
utilize job order contracts to repair major system deficiencies. We have initiated a preventive
maintenance program for the Heating Systems which will go into effect at the end of the heating
season, 1996.

Recommendations

We recommend that the Director of Public Housing, Illinois State Office:

3A.     Close all of the Recommendations in Finding 3 of OIG Audit Report 94-CH-201-1013.

3B.     Assure that the Authority establishes a preventive maintenance program, including target
        dates, to meet the June 30, 1997 draft Memorandum of Agreement target date.

3C.     Assure that the Authority requires private management firms to implement a preventive
        maintenance program for all newly constructed housing units under their management.




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                   4. Providing Maintenance Staffs With Materials
               Needed to Complete Maintenance Tasks From Work Orders

Finding 4 in our previous audit report disclosed that the Authority did not ensure that the
maintenance staffs at its developments had adequate materials to complete maintenance tasks
generated by work orders. We recommended that the Authority: (a) take action to correct the
problems identified in the Authority's Inspector General report dated May 6, 1993 on the
centralized warehouse; (b) establish procedures to control and reconcile all materials requisition
forms; (c) establish inventory reorder points for maintenance materials, vehicle parts, and
supplies; (d) establish procedures to periodically reconcile all inventories to supporting records;
(e) implement procedures to help safeguard materials by restricting storage area access to
individuals who can be held accountable; (f) purge the warehouse and development inventories
of obsolete or unneeded items; and, (g) establish procedures that require inventory items to be
periodically analyzed, and redistributed or purged from the computer system as necessary.

To determine and assess the corrective actions taken by the Authority to improve the availability
of materials needed by its maintenance staffs to adequately complete their tasks from outstanding
work orders, we interviewed the Central Warehouse manager and dispatcher; the Customer
Service Manager; the Director of Procurement; the Assistant Director of Management
Information Systems; the Development Manager or Assistant Development Manager from seven
developments; and, the Maintenance Superintendents from the same seven developments. We
reviewed the Authority's policies and procedures for providing materials and supplies to
maintenance staffs. Additionally, we observed the Authority's inventory system and attended a
training session on the Authority's new order entry system for work orders.

The Authority has corrected or is in the process of correcting the deficiencies identified in the
Authority's Inspector General report dated May 6, 1993 on the centralized warehouse. The
Authority eliminated the use of manual materials requisition forms by automating the process of
ordering materials and supplies from its Central Warehouse; established procedures to reconcile
physical inventories to supporting records; and restricted storage area access to individuals who
can be held accountable. The Authority is still in the process of purging its inventory of obsolete
or unneeded inventory items. The Authority's new integrated computer system will contain
inventory reorder points and will identify overstocked and unused items.
The Authority's warehouse system is comprised of a Central Warehouse and 29 satellite
warehouses located at various developments. The clerks at the satellite warehouses are
accountable to the Central Warehouse. Only the satellite warehouse clerks have access to the
satellite warehouses. At the time of our previous audit, the satellite warehouses were accountable
to the Development Managers and multiple development employees had access to the satellite
warehouses. Placing the satellite warehouses solely under the control of the satellite warehouse
clerks reduced the possibility of unauthorized withdrawals of materials and supplies from the
satellite warehouses.

Generally, the Maintenance Superintendents at the developments we visited said they no longer
had problems with the availability of supplies and materials needed for completing work order


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tasks. Each satellite warehouse maintains its own supplies. The satellite warehouses are linked
to the Central Warehouse by computer. The supplies and materials that each satellite warehouse
has on hand are entered into the Authority's computerized inventory system. When a satellite
warehouse runs low on supplies or materials, the satellite warehouse clerk orders the supplies or
materials via computer from the Central Warehouse. Previously, development maintenance staffs
ordered supplies and materials in person from the Central Warehouse using a material requisition
form. Through the on-line method of ordering materials and supplies, the satellite warehouses
know if needed materials or supplies are in stock at the Central Warehouse.

We verified that the Authority's December 31, 1995 physical inventory of the materials and
supplies had been posted to the Authority's accounting system. We observed that the Central
Warehouse had security guards posted at each entrance and they maintained a sign in sheet for
persons coming into the Warehouse. The Warehouse also had video cameras at various locations
that were monitored by responsible staff. The Central Warehouse and satellite warehouses had
restricted access to materials and supplies.

The Authority has established procedures to purge its Central Warehouse's and satellite
warehouses' inventories of obsolete or unneeded items. The Authority's Central Warehouse has
identified and segregated obsolete inventory items valued at $1.5 million. The Authority's
Purchasing Department is in the process of disposing of the items.

On April 1, 1996, the Authority started using a new integrated computer system to enter
maintenance work orders. This integrated system will also be used to account for the inventory
of maintenance supplies and materials. On June 1, 1996, the Authority went on-line with the new
inventory system. It also established new inventory re-order points on this system. The new
integrated computer system should result in greater control and accountability over the inventory
of materials and supplies.

Auditee Comments:

The Chicago Housing Authority is in the process of implementing an inventory survey and this
information will be directly loaded in to the new integrated computer system. The new system
and survey will be based upon the bar-code system. We are also deleting old inventory and
unneeded inventory items. The physical inventory will assist us in further identifying those
items.

Recommendations

We recommend that the Director of Public Housing, Illinois State Office:

4A.     Close all of the Recommendations in Finding 4 of OIG Audit Report 94-CH-201-1013.

4B.     Assure that the Authority purges the warehouse and development inventories of obsolete
        or unneeded items (this recommendation is repeated from our previous report).


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4C.   Assure that the Authority takes a physical inventory of materials and supplies; enters the
      physical inventory data into its new integrated computer system; and properly implements
      the integrated work order and inventory systems.




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             5. Delivery Procedures Of Materials Needed For Work Orders

Finding 5 in our previous audit report disclosed that the Authority did not have an efficient
method to deliver materials and supplies from the Central Warehouse to its developments. We
recommended that the Authority: (a) properly analyze, evaluate, and document the number of
delivery drivers needed for the warehouse delivery system; and (b) adjust the number of full-
time drivers to the minimum required to effectively accomplish the mission according to the
analyses performed.

To determine and assess the corrective actions taken by the Authority for the delivery of materials
and supplies needed to complete work orders, we interviewed various Authority staff, including
the Director and Assistant Director of Housing Management; the Warehouse Manager and
Dispatcher; the Director of Procurement; the Manager or Assistant Manager from seven
developments; and, the Maintenance Superintendent and/or the satellite warehouse clerk from
the same seven developments. We reviewed the Authority's current policies and procedures for
the delivery of materials and observed the Authority's computerized inventory system and new
integrated computer system as they related to delivery of materials needed to complete work
orders.

The Authority has taken the necessary actions to correct the deficiencies cited in our previous
audit report.

Authority-managed developments no longer pick up materials at the Authority's Central
Warehouse. Rather, the Central Warehouse delivers requested materials to the 29 satellite
warehouses located at or near most of the developments. Using the Central Warehouse to deliver
materials and supplies allows the development maintenance staffs to spend more time on actual
maintenance work. Generally, the Development Managers we interviewed said they were
satisfied with the effectiveness and timeliness of the delivery system.

When the Central Warehouse began delivering materials to the developments about two years
ago, it used 25 drivers. Because of increased private management of Authority developments and
the fact that the drivers' role was reduced to servicing only satellite warehouses, the Authority's
delivery system has become more efficient and the Authority has reduced the number of drivers
to meet its actual needs to 14 drivers.

Auditee Comments

The Authority did not provide any comments related to this issue of our audit memorandum.

Recommendation

We recommend that the Director of Public Housing, Illinois State Office:

5A.    Close the Recommendations in Finding 5 of OIG Audit Report Number 94-CH-201-1013.


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                             6. Maintenance Mechanic Position

Finding 6 in our previous audit report disclosed that the Authority did not fully use its
maintenance mechanic (generalist) position. We recommended that the Authority: (a) reconcile
the differences between the Authority's maintenance mechanic job qualifications, job description,
and the union contract regarding the use of power tools; (b) verify that development Maintenance
Superintendents use of maintenance mechanics is consistent with the Authority's plans and
policies; (c) develop a plan to increase the number of maintenance mechanics at Authority
developments to perform routine maintenance; and (d) stop the practice of using craftsmen to
perform routine maintenance at the Authority's developments.

To determine and assess the corrective actions taken by the Authority to improve its use of the
maintenance mechanic positions, we interviewed various Authority staff including the Director
and Assistant Director of Housing Management, the Housing Management Contract
Administrator, the Assistant Director for Site Maintenance Services, and the Development
Manager or Assistant Manager from seven developments and the respective Maintenance
Superintendents. We reviewed the Authority's current policies and procedures for the use of
maintenance mechanics and we reviewed current work orders. We also reviewed the
maintenance mechanic's job description and current union contract.

The Authority's Maintenance Superintendents are using maintenance mechanics in accordance
with the Authority's plans and policies. Also, the Authority hired additional maintenance
mechanics as of January 1996. Craftsmen do not perform routine maintenance at the Authority's
developments. However, the Authority needs to reconcile the differences between the Authority's
Maintenance Manual and job description regarding the duties of maintenance mechanics.

The Authority's Maintenance Manual was not consistent with the maintenance mechanics' job
description in regards to the maintenance mechanics' duties. The Authority's Maintenance
Manual described 38 neutral duties that a maintenance mechanic could do. The Maintenance
Manual stated that maintenance mechanics could use power tools of up to 1/2 horsepower but
were restricted to using hand tools for rodding drains. Conversely, the Authority's job description
required maintenance mechanics to have the ability to use power rodding equipment. Therefore,
the Maintenance Manual and job description were inconsistent regarding the use of power tools
and the rodding of drains.

We visited seven developments and found that the Maintenance Superintendents assigned most
work orders to maintenance mechanics. However, if the work order was too difficult for them,
it was properly assigned to craftspersons such as carpenters, electricians, glazers, painters, etc.
The Maintenance Superintendents no longer assigned routine maintenance tasks to craftspersons.
The developments' use of maintenance mechanics for routine maintenance is generally in
accordance with the Authority's Maintenance Manual, except for allowing the use of power
rodding equipment.




                                              Page 21                                  96-CH-201-1810
Audit Related Memorandum



At the time of our previous audit, the Authority had 63 maintenance mechanics on its
maintenance staff. By the end of 1995, the Authority had reduced the number of maintenance
mechanics to 52 because of increased private management of developments. However we
verified that the Authority increased the number of maintenance mechanics to 80 as of January
1996 in order to reduce the backlog of routine maintenance work orders.

Auditee Comments

The Chicago Housing Authority has increased the number of maintenance mechanic positions
from 52 to 86 during the 1996 fiscal year.

The Chicago Housing Authority is engaged in collective bargaining with the applicable unions
which are restricting the uses of the skills of the maintenance mechanics. We are hopeful that
this new venture will be more flexible than the contract which is presently in force. Appendix
A to the present contract severely limits the neutral duties and excludes the use of equipment
above one-half horse power. If we can conclude the bargaining, we will reconcile the differences
between the Authority's Maintenance Manual and the job description.


Recommendations

We recommend that the Director, Office of Public Housing, Illinois State Office:

6A.     Close out the Recommendations in Finding 6 of OIG Audit Report Number 94-CH-201-
        1013.

6B.     Assures that the Authority reconciles the differences between the Authority's maintenance
        mechanic job qualifications, job description, and the union contract regarding the use of
        power tools (this recommendation is repeated from our previous report). In particular, the
        Authority needs to reconcile the differences between the Authority's Maintenance Manual
        and job description regarding the duties of maintenance mechanics.




96-CH-201-1810                                Page 22
                                                                    Audit Related Memorandum



                                   7. Voiding Work Orders

Finding 7 in our previous audit report disclosed that the Authority did not always properly void
or account for voided work orders. We recommended that the Authority: (a) clarify work order
voiding procedures so they are logical and easily understood; (b) ensure its managers
consistently follow the work order voiding procedures; (c) verify that Development Managers
adequately and consistently document justifications for voiding work orders; and (d) amend its
procedures to include a requirement to verify work completion or the existence of a duplicate
work order before a work order is voided.

To determine and assess the corrective actions taken by the Authority to properly void work
orders, we interviewed various Authority staff including the Housing Management Contract
Administrator, the Manager or Assistant Manager from seven developments, and the
Maintenance Superintendents at the seven developments. We reviewed the Authority's current
policies and procedures for voiding work orders, and the work order logs from seven
developments. We attended a training session on the Authority's new integrated computer system
and reviewed documentation on the new system's work order procedures.

The Authority's Development Managers were generally following the Authority's work order
procedures and documenting justifications for voiding work orders. The Authority's work order
voiding procedures require verifying that work has been completed, or verifying the existence
of a duplicate work order before a work order can be voided. However, at two of the seven
developments we visited, maintenance staffs could void work orders if the resident requesting
the work was not at home on three separate dates.

The Authority's Maintenance Manual defined the procedures for voiding work orders. The
Authority no longer allows work orders to be voided solely on the basis of time elapsed since the
work order was written or if the resident is not at home on three separate dates. The current
procedures require maintenance personnel to verify that work has been completed before a work
order can be voided. The current procedures also state that a work order can be voided when
there is a duplicate work order for the same job.

On April 1, 1996, the Authority implemented its new integrated computer system. Development
Managers and Maintenance Superintendents from Authority-managed developments were trained
on the new work order system. The work order system was the first software package activated
on the new integrated computer system. We attended one of the training sessions to become
familiar with its use and to determine what concerns the development staffs had regarding this
software package. The development staffs had no concerns with the new system.

The system should eliminate almost all duplicate work orders because all work orders should be
entered into the new integrated computer system. Under the new system, when a resident calls
in a work order request, the Customer Support Technician at the Customer Service Center will
be able to review previously issued work orders for the particular unit to see if a work order for
the same item of work was still outstanding. In order for a work order to be voided for reasons


                                              Page 23                                 96-CH-201-1810
Audit Related Memorandum



other than duplication, the developments must provide written justification to the Customer
Service Center as outlined in the Authority's Maintenance Manual. The written justification
includes notating that the work was completed by the resident or showing evidence that the work
was completed by the maintenance staff, such as the number of the work order upon which the
work was completed.

If properly implemented, the new integrated computer system should properly identify and
account for voided work orders. Because of the limited time elapsed between the implementation
of the new integrated computer system and the conclusion of our audit field work, we were not
able to determine whether work orders were being properly voided under the new system.

Auditee Comments

The new computer work order system, when completely operational, will show which work
orders have been requested and, through the development of a unit history, will substantially
reduce the need to void work orders. All work orders input into the system must be accounted
for through closed out requests. At this time, work order reports are generated weekly in order
to monitor the request activity.


Recommendations

We recommend that the Director of Public Housing, Illinois State Office:

7A.     Close the Recommendations in Finding 7 of OIG Audit Report Number 94-CH-201-1013.

7B.     Assure that the Authority ensures that its development managers consistently follow the
        Authority's work order voiding procedures (this recommendation is repeated from our
        previous report). In particular, the Authority needs to ensure that work orders are not
        voided because the resident was not at home when maintenance staff attempted to
        accomplish the requested work.

7C.     Assure that the Authority properly implements its new integrated computer system for
        voiding and deleting work orders.




96-CH-201-1810                               Page 24
                                                                   Audit Related Memorandum



                 8. Classifying Work Orders and Reporting Work Order
                             Performance Information to HUD

Finding 8 in our previous audit report disclosed that the Authority did not provide HUD with
accurate and reliable Public Housing Management Assessment Program information. We
recommended that the Authority: (a) include all work orders, except cyclical work orders, to
calculate outstanding work orders for the Public Housing Management Assessment Program
report; (b) revise the Authority's work order classification for non-routine work orders to agree
with HUD's definition and ensures that Development Managers consistently apply the criteria;
(c) ensure that Development Managers review for accuracy and reconcile the weekly and
monthly work order performance reports; and (d) ensure that Development Managers write work
orders for all Housing Quality Standards inspection deficiencies and include them on the monthly
work order performance reports.

To determine and assess the corrective actions taken by the Authority for classifying work orders
and accurately reporting work order performance information to HUD, we interviewed various
Authority staff including the Director of Housing Management; the Housing Management
Contract Administrator; the Development Manager or Assistant Manager from seven
developments; and the Maintenance Superintendents from the seven developments. We reviewed
monthly and weekly work order reports and work order logs from the seven developments, and
the Authority's November 1995 Maintenance Performance Report. We also traced monthly work
order reports at the seven developments we visited to work orders or daily work order recaps.
We reviewed the latest Public Housing Management Assessment Program confirmatory review
performed by the Authority's staff, the Authority's new integrated computer system, and its
current policies and procedures for classifying and reporting work order performance. We also
attended a training session on the new integrated computer system as it applied to work order
processing.

The Authority took all necessary actions to correct the deficiencies cited in our previous audit
report. However, the Authority recently implemented an integrated computer system to prepare
work orders from Housing Quality Standards inspections and to classify and report all work order
activity. Because the system was recently implemented, it needs to be monitored to assure that
work orders are prepared for all Housing Quality Standards violations and that the system's
classification and reporting of work orders still meet HUD requirements.

The Authority had new policies and procedures for classifying and reporting its work orders. It
no longer used the classification of non-routine maintenance work orders on its report to HUD.
The Authority's criteria for the classification of work orders now agrees with HUD's definition.


During the Authority's last internal confirmatory review of the Public Housing Management
Assessment Program indicators, the Authority reviewed 20 developments' work order procedures.
During its review, the Authority's monitoring team found no problems with the classification and
reporting of work orders. We traced the November 1995 monthly and weekly work order reports


                                             Page 25                                 96-CH-201-1810
Audit Related Memorandum



for each of the twenty developments included in the internal confirmatory review to the
Authority's Maintenance Performance Report; we found that the Maintenance Performance
Report was accurate.

The monthly work order reports at the seven developments we visited were also accurate and
properly supported. Moreover, the Development Managers reviewed and reconciled the weekly
and monthly work order reports.

Beginning April 1, 1996, the Authority started using its Customer Service Center to generate all
new work orders via its computer system. The system will be able to summarize the work order
reporting in compliance with HUD requirements. Private and resident-managed developments
report monthly work order performance using a computer program provided by the Authority.
The developments will send reports of Housing Quality Standards inspections to the Customer
Service Center for preparation of work orders. Previously, these work orders were prepared by
development staffs.

If properly implemented, the new integrated computer system should properly classify and report
work order activity, and prepare work orders for Housing Quality Standards deficiencies.
Because of the limited time elapsed since the implementation of the new integrated computer
system, we were not able to determine whether work orders were being properly classified and
reported under the new system.

Auditee Comments

The new computer system requires that work orders be classified upon entry into the system.
Work orders are classified (prioritized) as follows:

      •   Emergency
      •   Urgent
      •   Routine
      •   Prevention
      •   Extraordinary Maintenance
      •   Annual Inspection

Recommendations

We recommend that the Director of Public Housing, Illinois State Office:

8A.       Close the Recommendations in Finding 8 of OIG Audit Report Number 94-CH-201-1013.

8B.       Monitor the Authority's integrated computer system once it is fully implemented to assure
          that its classification of work orders and reporting of work orders are in compliance with
          HUD requirements.



96-CH-201-1810                                  Page 26
                                                                 Audit Related Memorandum



8C.   Monitor the Authority's integrated computer system once it is fully implemented to assure
      that the Customer Service Center prepares work orders for Housing Quality Standards
      deficiencies.




                                            Page 27                                96-CH-201-1810
Audit Related Memorandum




                  (THIS PAGE LEFT BLANK INTENTIONALLY)




96-CH-201-1810                    Page 28
                                                                    Audit Related Memorandum



       9. Plastering and Tiling Deficiencies At Ida B. Wells King Drive Walkups

Subsequent to the conclusion of our field work, we were made aware of unit deficiencies at the
Ida B. Wells King Drive Walkups development. This development is managed by The
Woodlawn Organization.

We inspected ten units and interviewed the tenants to ascertain whether work orders were acted
upon by the maintenance staff in a timely manner. Generally, we found that maintenance work,
other than plastering and tiling work, was satisfactorily completed. The tenants were for the most
part satisfied with the maintenance staff and felt the work orders were responded to in a timely
manner. Many of the physical deficiencies we observed were items which the tenants had not
reported to the maintenance staff.

The Woodlawn Organization did not follow the Authority's policy for writing work orders. The
Woodlawn Organization personnel said they did not write work orders for non-emergency
plastering or tiling work requested by tenants. They also did not write work orders for non-
emergency plastering or tiling deficiencies identified during annual Housing Quality Standards
inspections. Rather, units requiring plastering or tiling work were placed on a listing of work to
be performed.

The Development Manager said work orders for plastering and tiling work were not written
because this work was not considered to be of high priority in relation to other maintenance tasks
at the development. The Woodlawn Organization personnel said plastering and tiling work was
normally contracted out and there was inadequate funding available to immediately complete all
required work. By not writing work orders for all required work, required plastering and tiling
work does not appear on the development's reports of outstanding work orders. Therefore, the
Authority and HUD receive misleading information with regard to the backlog of maintenance
work at the development.

Auditee Comments

Tiling - Of the 16 units identified during the review, 11 units have been completed. The
remaining five units are scheduled to be completed by July 15, 1996. Plastering - of the ten units
originally cited by HUD, all ten have been completed. Additionally, another 13 have been
completed for a total of 24 units in which plastering requirements have been satisfied.


Recommendations

We recommend that the Director of Public Housing, Illinois State Office:

9A.    Assure that the Authority requires development staffs to write work orders for all required
       work at all of the Authority's developments.



                                              Page 29                                 96-CH-201-1810
Audit Related Memorandum



9B.     Assure that the Authority and The Woodlawn Organization develop a plan for completing
        required plastering and tiling work at the Ida B. Wells King Drive Walkups development.




96-CH-201-1810                               Page 30
                                                                                     Appendix A

Auditee Comments

May 24, 1996

Mr. Alan Samuelson
Assistant District Inspector General for Audit
Department of Housing and Urban Development
Office of Inspector General
77 W. Jackson Blvd., Suite 2646
Chicago, Illinois 60604-3806

RE: IG Maintenance Audit Draft

Dear Mr. Samuelson:

Attached in response to the Maintenance Audit Draft are comments which reflect the Chicago
Housing Authority's position on each issue contained in the draft report. The report accurately
reflects the Chicago Housing Authority's maintenance operation as found by the auditors during
their visit and generally the recommendations are sound.

We have made substantial improvements in the overall delivery of service to the residents of
Chicago Housing Authority, however, we do recognize that we have only begun to develop the
program that should be in place.

I would like to thank your team for exhibiting a professional and friendly approach to this audit.
It certainly made our staff feel both comfortable and cooperative throughout the time that your
staff was present at the Chicago Housing Authority.

If you have any comments regarding our responses to the recommendations,
please contact me at (312)567-1831.

Sincerely,

John Nelson, Jr.
Deputy Executive Director, Operations


Attachment




                                              Page 31                                 96-CH-201-1810
Appendix A



AUDIT RESPONSES

Recommendation 2:

The Chicago Housing Authority will develop a pamphlet which will provide directions for each
"Resident Screening Panel". The pamphlet will provide them with the obligations and authorities
as a screening panel. This pamphlet will be developed by August 1, 1996 and will be a
companion to the new lease. In addition, we will be scheduling training on the new restrictions
on Assistance to Noncitizens. This training will occur at our Occupancy Department during the
month of June, 1996. The Chicago Housing Authority has developed a new tenant screening
policy which is in effect and being utilized by the Occupancy Department.

Recommendation 3:

Due to the severe condition of the building structures and systems, the Chicago housing
Authority's maintenance staff has not concentrated on developing a preventive maintenance
program. We will develop new target dates for conducting a preventive maintenance needs
assessment and develop an applicable schedule. Providing adequate funds are available, we will
utilize job order contracts to repair major system deficiencies. We have initiated a preventive
maintenance program for the Heating Systems which will go into effect at the end of the heating
season, 1996.

Recommendation 4:

The Chicago Housing Authority is in the process of implementing an inventory survey and this
information will be directly loaded in to the new integrated computer system. The new system
and survey will be based upon the bar-code system. We are also deleting old inventory and
unneeded inventory items. The physical inventory will assist us in further identifying those
items.

Recommendation 5:

The Chicago Housing Authority has increased the number of maintenance mechanic positions
from 52 to 86 during the
1996 fiscal year.

Recommendation 6:

The Chicago Housing Authority is engaged in collective bargaining with the applicable unions
which are restricting the uses of the skills of the maintenance mechanics. We are hopeful that
this new venture will be more flexible than the contract which is presently in force. The
Appendix A to the present contract severely limits the neutral duties and excludes the use of
equipment above one-half horse power. If we can conclude the bargaining, we will reconcile the
differences between the Authority's Maintenance Manual and the job description.


96-CH-201-1810                              Page 32
                                                                                  Appendix A



Recommendation 7:

The new computer work order system, when completely operational, will show which work
orders have been requested and, through the development of a unit history, will substantially
reduce the need to void work orders. All work orders input into the system must be accounted
for through closed out requests. At this time, work order reports are generated weekly in order
to monitor the request activity.

Recommendation 8:

The new computer system requires the work orders are classified upon entry into the system.
Work orders are classified (prioritized) as follows:

   Emergency
   Urgent
   Routine
   Prevention
   Extraordinary Maintenance
   Annual Inspection




                                            Page 33                                96-CH-201-1810
Appendix A



May 29,1996

Mr. Alan Samuelson
Assistant District Inspector General for Audit
Department of Housing and Urban Development
Office of Inspector General
77 W. Jackson Blvd., Suite 2646
Chicago, Illinois 60604-3806

RE: IG Maintenance Audit Draft

Dear Mr. Samuelson:

Listed below in response to the Maintenance Audit Draft are additional
comments which reflect the Chicago housing Authority's position on the plastering and tile
replacement at the Wells community. Please accept my apologies for the oversight of this item
in the initial response.

    Recommendation 9: Tiling - Of the sixteen (16) units identified during the review, eleven (11)
    units have been completed. The remaining five (5) units are scheduled to be completed by
    July 15, 1996. Plastering - of the ten (10) units originally cited by HUD, all ten have been
    completed. Additionally, another thirteen (13) have been completed for a total of twenty-four
    units in which plastering requirements have been satisfied.

Again, I would like to thank your team for exhibiting a professional and friendly approach to this
audit. It certainly made our staff feel both comfortable and cooperative throughout the time that
your staff was present at the Chicago Housing Authority.

If you have any comments regarding our response to recommendation 10,
please contact me at (312) 567-1831.

Sincerely.

John Nelson, Jr.
Deputy Executive Director, Operations




96-CH-201-1810                                Page 34
                                                                            Appendix B

Distribution
Secretary's Representative, Midwest
Director, Office of Public Housing, HUD Illinois State Office (2)
Assistant General Counsel for the Midwest
Field Controller, Midwest
Director, Accounting Division, Midwest
Public Affairs Officer, Midwest
Assistant to the Secretary for Field Management, SC (Room 7106)
Acquisition Librarian, Library, AS (Room 8141)
Chief Financial Officer, F (Room 10166) (2)
Deputy Chief Financial Officer for Operations, FO (Room 10166) (2)
Public and Indian Housing-Comptroller/Audit Liaison Officer, PF (Room 4122)(3)
Associate General Counsel, Office of Assisted Housing and Community Development, GC
(Room 8162)
Director, General Management Division, PMG (Room 4216)
Assistant Director in Charge, U.S. GAO, 820 lst St NE, Union Plaza Bldg. 2, Suit 150,
Washington, DC, 20002




                                         Page 35                             96-CH-201-1810