oversight

Chicago HA, Chicago, IL

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-09-30.

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

            Report 96-CH-201-1815

           Assessment of Progress

          Chicago Housing Authority
               Chicago, Illinois




                 Submitted To:



               Greg Russ, Director,
     Office of Troubled Agency Recovery



                 Submitted By:




                 Dale L. Chouteau
District Inspector General for Audit, Midwest




              September 30, 1996
Executive Summary
We completed a review of the Chicago Housing Author ity. The Secretary of HUD requested the
review to assess the Authority's progress in eliminating its longstanding problems. In order to
establish a foundation of the act ions needed to correct the Authority's problems, we used HUD's
Blueprint for recovery issued shortly after HUD's takeover of the Authority; the Authority's Long-
Term Plan; and its most recent Memorandum of Agreement with HUD. E ach of these documents
laid out strategies and goals designed to increase the effectiveness of the Authority's operations
so that it could be removed from HUD's troubled housing list.

HUD issued its Blueprint for recovery on June 11, 1995. The Housing Authority issued it s
Long-Term Plan on Febr uary 15, 1996, and prepared a draft Memorandum of Agreement dated
June 21, 1996.

Our assessment shows th at the Chicago Housing Authority is improving its operations on many
different fronts. Many of the improvements made so far deal with the Housing Authority' s
operational infrastructure where the impact is not readily noticeable. Nonetheless, th e
improvements ar e necessary as a prelude to more visible changes. Although improvements are
being made, the Chicago Housing Autho rity has much work to do before it will be operationally
sound. Many of the Authority's actions have not been completed o r involve continuing activities.
The Authority needs to periodically assess its action s to assure its initiatives correct the problems
they were designed to address. The Housing Authority needs to make sure the actions it ha s
initiated or planned are adjusted when necessary, and carried through to completion.                I n
addition, the Authority needs to be more diligent and aggressive in pursuing corrective actions
in the areas of security, modernization, work orders, and preventive maintenance.



                                       With some exceptions, the Chicago Housing Auth ority is on
 The Authority Is Making
                                       target in implementing corrective actions relating to :
 Improvements on Many
                                       vacancy reduction and unit turnarounds, funding fo r
 Different Fronts
                                       maintenance and modernization activities, annua l
                                       inspections, housing management functions, admission s
                                       and evictions, rent collections, pro curement and contracting
                                       activities, accounting systems and controls, managemen t
                                       information system, asset management, risk management ,
                                       personnel management, resi dent program delivery systems,
                                       economic development opportunities for residents ,
                                       alternative funding sources, and the Section 8 program.

                                       The exceptions were caused by oversights o r
                                       misunderstandings of the objective of a strategy or goal .
                                       We made recommendations to address the exceptions. The
                                       actions which the Authority is pursuing in the areas liste d
                                       above, should, if completed as planned, significantl y
                                       improve the Authority's operations.


                                                 Page i                            Office of Inspector General
Executive Summary



                              Although the Authority has initiated actions to improve its
  The Authority Needs To
                              security, modernization and housing redevelopment, work
  Be More Diligent and
                              order, and preventive maintenance operations, it needs t o
  Aggressive in Four Areas
                              make significant adjustments in each of the areas before it
                              can have an effective and efficient system that wil l
                              adequately serve the residents.

                              The Authority is pursuing security init iatives to improve the
                              safety and living c onditions of its residents. The initiatives
                              being undertaken are those that have worked at othe r
                              housing authorities and/or were rec ommended by a security
                              consultant. However, the Authority has not establishe d
                              performance standards to periodically assess the results of
                              the security initiatives it is undertaking. Consequently ,
                              although money is being spent on security, and securit y
                              measures are being implemented, the Authority does no t
                              have a means to readily determine wheth er the expenditures
                              and actions are effective.

                              The Authority has also initiated modernization an d
                              redevelopment initiatives based on the HUD Blueprint, its
                              Long-Term Plan, and the Memorandum of Agreement .
                              However, the Authority has not completed a comprehensive
                              physical needs assessment of each development and doe s
                              not have a comprehensive plan for the overal l
                              redevelopment of its properties. The Authority currentl y
                              expects to have a plan completed after the year 2000. We
                              believe this time frame is too far in the future. To ensur e
                              the effective and effic ient use of limited modernization and
                              redevelopment resources, a comprehensi ve plan needs to be
                              developed as soon as possible.

                              The Authority implemented a new work order system o n
                              April 1, 1996. For the first time in many years, th e
                              Authority has a reliable system to track its work orders .
                              And, the news is not good. The new work order syste m
                              shows that the number of backlogged work orders i s
                              steadily increasing at a rate of over 10,000 a month. I t
                              appears that the Authority may not have sufficient staff to
                              address the work orders being received, muc h less eliminate
                              the backlog. The Authority did not have a plan to address
                              the work order problem. Instead, staff were hoping th e
                              problem would go away as modernization an d
                              redevelopment activities progressed. We are not a s


Office of Inspector General            Page ii
                                       Executive Summary



optimistic. The Authority needs to conduct a capabilit y
assessment of its maintenance staff to assess the quantity of
work its staff can accomplish and determine whether it s
maintenance staff level is sufficient to complete the dail y
work orders and address the backlog. Using the results of
the assessment, the Authority needs to develop a plan o f
action to address the increasing number of work orders.

Finally, the Authority has not implemented a
comprehensive preventive maintenance program. Th e
Memorandum of Agreement required this to be done b y
June 30, 1996. Additionally, a preventive maintenanc e
needs assessment for each development and a funding plan
were not developed. The Authority's primary concern was
on regular maintenance activities. However, an effectiv e
preventive maintenanc e program needs to be established to
detect and correct problems earlier, reduce the complexity
of repairs, and ease the staff's workload. An effectiv e
program should also free reso urces for regular maintenance
activities.

We gave the draft observations included in this report to the
Authority's Deputy Executive Directors and the Chief o f
Police during the review. We held an exit conference with
the Authority's Executive Director and his Deputies o n
September 11, 1996. The Authority provided writte n
responses for each observation. The comments ar e
included with each observation.

The recommendations in this report will not be formall y
controlled in HUD's Audits Management System .
Appendix A contains a listing of all the recommendation s
included in the report. We will follow up on th e
recommendations at a l ater date after the Authority has had
an opportunity to further improve its operations.




        Page iii                          Office of Inspector General
Executive Summary




                              THIS PAGE LEFT BLANK INTENTIONALLY




Office of Inspector General                  Page iv
Table of Contents

Executive Summary                                                         i


Introduction                                                              1


Chapters

    1      Security                                                       7

    2      Modernization/Redevelopment of Housing                       17

    3      Work Order System                                            25

    4      Preventive Maintenance                                       31

    5      Vacancy Reduction/Unit Turnaround                            35

    6      Funding for Maintenance and Modernization                    41

    7      Annual Inspections                                           45

    8      Housing Management Functions                                 51

    9      Admissions and Evictions                                     57

    10 Rent Collections                                                 65

    11 Procurement and Contracting                                      69

    12 Accounting Systems and Controls                                  77

    13 Management Information System                                    81




                                Page v           Office of Inspector General
Table of Contents




           14 Asset Management                      85

           15 Risk Management                       91

           16 Personnel                             95

           17 Resident Program Delivery Systems    101

           18 Economic Development Opportunities
              for Residents                        109

           19 Alternative Funding Sources          115

           20 Section 8                            119


Appendices

           A          Recommendations              125

           B          Distribution                 139




Office of Inspector General             Page vi
Introduction
The Chicago Housing Authority was organized in 1937 under the housing laws of the State of
Illinois. The Authority was established to develop, acquire, lease, operate and administer lo w
rent housing programs. A turbulent internal administrative shakeup, that resulted in th e
resignation of the Authority's Board of Commissioners, the Executive Director and other ke y
management staff, left the Authority without a governing board or administrative leadership. As
a result, on May 30, 1995, control of the Authority fell to HUD. While it has control of th e
Authority, HUD has designated Edwin Eisendrath to serve as the Chairman of a five membe r
Executive Advisory Committee. The Executive Advisory Committee serves the function of a
Board of Directors. However, the Chairman has total a utonomy for all decisions. The other four
Committee members serve only in an advisory role. Mr. Eisendrath is also HUD's Illinois State
Office Secretary's Representative. The Authority's Executive Director is Joseph Shuldiner.

The Chicago Housing Authority is the thir d
largest public housing au thority in the Nation.           TOTAL HOUSING UNITS: 55,487
It administers over 55,400 public housin g
units located across the City of Chicago. The            51%                              18%
                                                    28,480 units                          9,822 units
Authority has 42 family residential properties
and 45 senior residential properties that ar e
Federally funded or funded under the City -
State Program. The City-State Program is a                            3%           28%
Section 8 Substantial Rehabilitation Program                           1,489 units  15,696 units
funded by the City and the State. Under th e             Section 8
program, the Authority serves as landlord t o            Scattered Sites
                                                         Family Units
provide housing to qualified applicants .                Senior Units
Approximately 1,489 of the Authority's units
are scattered site houses located throughou t
the city. All of the Authority's 87 properties are Authority, private, or resident managed. The
Authority has over 15,000 units contracted under the Section 8 Certificate and Vouche r
Programs. In Dece mber 1995, the Authority contracted with Quadel Consulting Corporation, a
private firm, to operate and administer its Section 8 Program. The Authority has a tota l
population of over 125,000 tenants. The population faces a multitude of social, economic and
racial problems common to many of the Nation's inner city communities. Relative to other public
housing authorities and public agencies, the Chicago Housing Authority is one of the mos t
difficult and challenging agencies to operate because it has many severely distresse d
developments and an extended scale of operations.




                                                Page 1                           Office of Inspector General
Introduction



The Housing Authority received over $318 mil lion in HUD operating subsidies over the last two
years. HUD also approved the Authority for the following additional funding:




                                Sources of Funding
                                              1993          1994          1995
                    Comprehensive Grant $135,432,295 $155,716,676 $145,090,576
                     HOPE IV                               50,000,000

                     Modernization and         348,975       567,765
                     Lead Based Paint
                    Vancancy Reduction                     30,030,000
                    Program
                     Drug Elimination        5,950,650     9,920,000     10,008,250

                     Grant Program           8,799,765     6,604,174     10,830,011




Since 1992, HUD has given the Authority over $701 million for the above programs.

HUD and the Chicago Housing Authority's management have known about problems at th e
Authority for many years. However, until HUD took control, a concerted effort to mak e
significant improvements was not evident. Historically, the Chicago Housing Authority has been
extremely resistant to take corrective acti ons sought by HUD. The Authority has been subjected
to ineffective management and out-of-control bureaucratic systems, as well as politica l
interference by City officials. The Authority has been classified by HUD as a troubled agency
since HUD began using the troubled publ ic housing authority designation in 1979. As shown in
the following chart, the Authority has consistently scored under 60 percent, the score required
to be classified as a standard performer under the Public Housing Management Assessmen t
Program:




Office of Inspector General                  Page 2
                                                                                       Introduction




                                      PHMAP Scores

                  70%
                  60%
                                                 46.38%            48.69%
                  50%                 45.65%              44.97%

                  40%        33.58%

                  30%
                  20%
                  10%
                              1991     1992      1993     1994     1995
                                               Year

                                                          Authority's Score
                                                          Standard Performer




To address the Authority's problems, the Deputy Ass istant Secretary for Distressed and Troubled
Housing Recovery sent a Blueprint to the Secretary on June 11, 1995; the Authority developed
a Long-Term Strategic Plan dated February 15, 1996; and HUD and the Authority drafted a
Memorandum of Agreement dated June 21, 1996.

The Blueprint identified HUD's goals as: (1) bringing meaningful, positive changes to th e
Authority's residents, and (2) strengthening the Authority in order to provide a safe, decent and
livable environment for its residents. As a result, the Authority has been operationall y
restructured and its top managerial positions have been replaced. The Authority has a ne w
Executive Director, Deputy Executive Director of Operations, Deputy Executive Director o f
Finance and Administration, and Deputy Executive Director of Community Relations an d
Involvement. In addition, the following areas were targeted for improvement: security ;
maintenance; redevelopment; resident programs; the Authority's administration; asse t
management; and building community commitment.

With the change in the Authority's top manageme nt completed, the Authority developed a Long-
Term Strategic Plan to effectively translate the HUD Blueprint into a functional mission-oriented
improvement Plan. The Plan's mission is to ensure the provision of affordable housin g
opportunities in viable communities for lower-income households. The Long-Term Plan's goals
are to: (1) operate a well-managed and effective organization; (2) provide good housin g
management; (3) change the face of public housing; (4) ensure safe liv ing conditions; (5) broaden
educational, economic and recreational opportunities for the resi dents and their communities; and
(5) build positive public awareness and engage overlapping governments.

The Memorandum of Agreement established performance goals for the development of


                                                Page 3                         Office of Inspector General
Introduction



management systems and programs for treating the severely distressed developments. It als o
targeted the following areas for improvement: va cancies; rent collection; unit turnaround; annual
inspection and repair to units and building systems; an d collection of tenant accounts receivable.



                                      The objective of our review was to assess the Chicag o
  Review Objective
                                      Housing Authority's progress in eliminating it s longstanding
                                      problems reported in past reports and reviews.
                                      Our review assessed the actions taken by the Authorit y
  Scope and Methodology
                                      between June 1, 1995, and May 30, 1996. The period was
                                      extended as necessary. We conducted on-site work fro m
                                      May through August 1996. We interviewed HU D
                                      personnel working wit h the Authority, consultants hired by
                                      the Authority, contractors, and the Authority's ow n
                                      personnel to determine the Authority's procedures an d
                                      assess actions taken or scheduled. We tested the accuracy
                                      and/or the effectiveness of: work order system procedures
                                      and status reports; vacancy unit/turnaround trackin g
                                      procedures and reports; inspection procedures; admissio n
                                      procedures; emergency purchase procedures; contractin g
                                      procedures; Section 8 quality control reviews; Section 8
                                      recertification reports; workmen compensation reports ;
                                      information security policy; monitoring procedures fo r
                                      private management contracts; monitoring procedures fo r
                                      the deferred compensation program; and procedures t o
                                      track employee training. To asse ss the progress and quality
                                      of the Authority's actions to address its agreements wit h
                                      HUD and problems identified in past reports and reviews,
                                      we reviewed:

                                     • The June 11, 1995 HUD Blueprint
                                     • The Authority's February 15, 1996 Long-Term
                                 Strategic Plan
                                     • The March 6, 1996 and June 21, 1996 draft
                                 Memoranda of Agreement
                                     • HUD monitoring reports
                                     • Independent Public Accountants reports
                                     • Consultant studies
                                     • Public Housing Management Assessment Program
                                 records
                                     • HUD Office of Inspector General reports
                                     • The Authority's Office of Inspector General reports
                                     • CHAC's Section 8 reports


Office of Inspector General                    Page 4
                                                      Introduction



    • The Authority's Memorandum of Agreement progress
reports
    • The Authority's Fiscal Year 1996 Comprehensive
          Budget
    • The Authority's personnel records
    • The Authority's job descriptions, employee
        qualifications, training records and schedules, and
        training expenditures
    • The Authority's contrac ting and purchasing procedures,
            bid and contract award documents and requisition
          status reports
    • The Authority's inspection records and work orders
    • The Authority's policies and procedures for accounting
            systems, vacancy reduction, rent collection, tenant
          screening, evictions, security, management
        information system, work-orders, and Section 8
    • The Authority's organization chart
    • The Authority's marketing and communication
         initiatives
    • The Authority's management information system
          software modules
    • The Authority's demolition plans, unit rehabilitation
          and project modernization plans and schedules
    • The Authority's vendor payment status reports and
          accounts receivable reports

    We provided a copy of this rep ort to the Executive Director
    of the Chicago Housing Authority.




             Page 5                           Office of Inspector General
Introduction




                              THIS PAGE LEFT BLANK INTENTIONALLY




Office of Inspector General                  Page 6
Chapter 1

                                                       Security
On December 3 0, 1994, Carroll Buracker and Associates issued a report on its public safet y
analysis of the Chicago Housing Authority's Police Department. The assessment showed tha t
violent and drug related crimes concerned the Authority's residents the most. The followin g
analysis of crime data shows that murder, aggravated sexual assault, and aggravated assault are
higher on the Authority's property than in Chicago or other major cities.


                                         HIGH FEAR CRIME RATES
                                A Comparison of Crime Rates in Major Cities, Chicago and
                                            Chicago Housing Authority - 1992
                        10000


                         1000
                                                                                                         3129

                          100
                                                                           239                    1452
                                                  72
                                                                     133                    988
                           10               33
                                       30                      54

                            1
                                         Murder                 Sexual                     Aggravated
                                                                Assault                      Assault
                                                                                 Major Cities
                                                                                 Chicago
                                                                                 Chicago Housing Authority




In 1992, homicides, criminal sexual assau lts and aggravated assaults occurred on the Authority's
properties at rates two to three times that on non-Authority pr operties. Although the situation has
improved, in 1995 the Authority's residents were still twice as likely to face one of these crimes
than other people in Chicago.

HUD's Blueprint, the Authority's Memorandum of Agreement with HU D and its Long-Term Plan
contain goals to maximize service and increase safety on the Authority's properties and t o
significantly reduce annual security costs. The Memorandum of Agre ement and Long-Term Plan
incorporate the recommendations in the Buracker Report.



                                              Measuring security initiatives. The Chicago Housin g
 Observations
                                              Authority's Police Department did not have an adequat e
                                              system to evaluate the success of the security initiatives that
                                              have and will be implemented. In response to a
                                              recommendation in the Buracker report, the Authorit y
                                              established a Research and Development Unit to compil e
                                              and analyze crime statistics for the Authority' s
                                              developments. The Unit also monitors the Authority' s


                                                            Page 7                                              Office of Inspector General
Chapter 1



                              progress in meeting HUD's Blueprint, its Memorandum of
                              Agreement, and Long-Term Plan goals and strategies, and
                              the Buracker Report recommendations. Although th e
                              Authority was monitoring the implementat ion of its security
                              initiatives, it did not identify the performance standard s
                              expected to result from each initiative. Th erefore, there was
                              no reliable or reasonable way to assess the effectiveness of
                              each individual initiative regarding the reduction an d
                              prevention of crime.

                              Before implementing a security initiative, the Authorit y
                              needs to identify its objective and establish realistic criteria
                              that can be used to measure the achievement of th e
                              objective. The Authority also needs to est ablish target dates
                              to evaluate the initiative so that it can assess progress an d
                              pursue those initiatives that have the greatest impact o n
                              reducing crime and maintaining a safe living environment.
                              Realistic measurement criteria would also provide th e
                              Authority's management with a sound basis on which t o
                              make decisions to reduce security costs.

                              We recommend HUD assures the Authority develops
                              procedures and controls to establish and evaluate
                              performance measures for each security initiative
                              undertaken.       Performance measures should be
                              established for each initiative outlined in the Blueprint,
                              Memorandum of Agreement, Long-Term Plan, and the
                              Buracker Report.

                              Although the Authority does not currently have a soun d
                              basis to measure the effectiveness of its initiatives, th e
                              strategies resulting from the Blueprint, Memorandum o f
                              Agreement and Long-Term plan stem from actions tha t
                              have worked at other locations and/or were recommended
                              by an expert security consultant. As a result, most of th e
                              initiatives should help to improve security, although th e
                              extent of the improvement and which initiatives are mos t
                              effective cannot be determined. HUD's Blueprint, th e
                              Memorandum of Agreement, and the Long-Term Pla n
                              initiatives can be divided into the following thirteen areas:
                              tenant patrols; community policing; contract security ;
                              employee hires; resident hires; networking with other la w
                              enforcement agencies; crime statistics; tactical teams ;



Office of Inspector General            Page 8
                                                        Chapter 1



specialized units; internal communication; the reduction of
security costs; house rules; and site-based security.

We reviewed these 13 areas to assess if the Authority was
initiating actions to improve security in accordance wit h
HUD's Blueprint, its Memorandum of Agreement an d
Long-Term plan. The Authority had initiated actions an d
was on target to meet its goal s in 10 of the 13 areas. In two
of the areas the Authority needs to initiate actions if it is to
meet its target dates and in one area HUD needs to tak e
action to provide the Authority a firm goal.

Security initiatives. Following are some examples of the
strategies the Authority has initiated and is on schedule to
meet its target dates:

Tenant patrols. The mission of the Tenant Patrol is t o
enhance the quality of life in the Chicago Housin g
Authority community by assisting in crime reduction an d
building maintenance efforts. The Chicago Housin g
Authority Tenant Patrol is a group of concerned residents.
Tenant Patrol personnel are trained and are governed by a
Code of Conduct. They patrol, observe and report crime ,
and/or physical conditions that are hazardous to the safety
and well being of the community.

The first Tenant Patrol was established in 1989 at a building
in the Cabrini Green Development located at 1230 Nort h
Burling. As of August 26, 1996, the Authority ha s
established 32 Tenant Patrols at 14 of the Authority's 4 2
family developments and 36 Tenant Patrols at 32 of its 45
senior developments. However, not all buildings in thes e
developments had tenan t patrols. For example, the Cabrini
Green Development has 27 buildings; however, there ar e
only six buildings with tenant patrols. There are 54 9
residents participating in Tenant Patrols. During the nex t
quarter, the Authority plans to initiate patrols at Altgel d
Gardens, Leclaire Courts, Madden Park Homes, Odge n
Courts, and Robert Taylor A-1 and A-2.

Community policing. The Chicago Housing Authorit y
Police Department is currently in the process of movin g
from a traditional vehicular patrol/response oriented police
force to a community oriented policing force. Th e


         Page 9                             Office of Inspector General
Chapter 1



                              Authority has decided to reduce its heavy reliance on th e
                              deployment of contract security guards in the lobbies o f
                              buildings.

                              Contract guard security will be replaced by communit y
                              policing teams in the Authority's developments. Th e
                              objective of the community oriented policing strategy is to
                              assign a team of police officers and Authority securit y
                              guards who are trained in community policing concepts to
                              a development. The police and guards will interact wit h
                              residents to gain their confidence and assistance i n
                              identifying perpetrators of crime. Security personnel wil l
                              no longer limit themselves to controlling the lobbies of the
                              buildings.

                              The Community Policing Teams work in conjunction with
                              the development's Tenant Patrol. The Authority ha s
                              implemented community policing at eight famil y
                              developments. The first Community Policing Team wa s
                              established in 1992 at the Ida B. Wells Development.

                              Between January 1996 and May 1996, the Authorit y
                              initiated the community oriented policing strategy a t
                              Altgeld Gardens, ABLA Homes, Cabrini Green, Dearborn
                              Homes, Henry Horner Homes, Ickes, and Robert Taylo r
                              Homes. In September 1996, the Authority plans to initiate
                              community policing at the Hilliard Development.

                              The Community Oriented Policing Strategy in the Long -
                              Term Plan includes initiatives for the construction of "mini-
                              stations". The "mini-stations" have a space for th e
                              temporary detention of offenders and a safe for evidenc e
                              recovery. A "mini-station" w as opened in the Ida B. Wells
                              Development in 1993. In January 1996, "mini-stations "
                              were opened in the Cabrini Green and ABLA Home s
                              Developments. The next development scheduled for th e
                              construction of a "mini-station" is Rockwell Gardens.

                              Contract security. To reduce security costs the Authorit y
                              has started to phase-out contract security guard servic e
                              throughout the developments. Betw een June 1995 and July
                              1996, the Authority has reduced the contract staff b y
                              approximately 50 percent from 900 guards t o
                              approximately 450 guards. Plans are being developed for


Office of Inspector General           Page 10
                                                      Chapter 1



the removal of the remaining contract service guards at all
family developme nts. The Authority's Chief of Police said
the reduction of the contract security force will b e
completed by August 1997.

Site-based security plans. The Authority has not initiated
the Memorandum of Agreement and Long-Term Pla n
strategies for the development of site-based security plans.
The development of site-based security plans was originally
a recommendation in the Buracker report.                Th e
Memorandum of Agreement's target completion date for the
development of all site-based security plans an d
performance measures is December 31, 1997. However ,
the Authority established a target completion date, in it s
Long-Term Plan, of December 31, 1996 for th e
development of site-based security plans at the Cabrin i
Green, Ida B. Wells, Altgeld Gardens, and ABLA Home s
developments. The sec urity plans entail a detailed analysis
of: crime patterns for each development; what patrols are
needed to combat the crime specific to the development ;
equipment needs; and physical improvements needed t o
enhance security measures. Therefore , unless the Authority
immediately begins to develop th e plans, it will not meet its
December 31, 1996 target.

The Authority's Police Department has an Authority-wid e
deployment plan based upon crime patterns and ha s
initiated the Community Oriented Policing Strategy a t
certain family develop ments. However, it is imperative for
the Authority to develop a formalized site-based securit y
plan for each of its developments in order to prioritiz e
initiatives and provide the most effective security at th e
lowest cost.

We recommend HUD assures the Authority
immediately starts to develop site-based security plans
for the Cabrini Green, Ida B. Wells, Altgeld Gardens,
and ABLA Homes developments.

We also recommend HUD monitors the Authority ot
ensure it develops all site-based security plans by
December 31, 1997.




        Page 11                           Office of Inspector General
Chapter 1



                              House rules. The Authority has not initiated th e
                              Memorandum of Agreement and Long-Term Pla n strategies
                              to develop house rules. The Memorandum of Agreement
                              and Long-Term Plan's target completion dates for th e
                              development of house rules is December 31, 1996.

                              House rules establish a code of conduct for residents an d
                              guests to follow. The rules are an extension of the lease ,
                              and provide tenant patrols and Authority police a means to
                              regulate tenants' behavio r before it could get out of control.
                              Violators are subject to fines and in extreme cases can b e
                              evicted. As of August 8, 1996, when we initially inquired
                              about this goal, the responsible personnel for development
                              and implementation were not aware of what the initiativ e
                              entailed or when action would be taken.

                              We recommend HUD assures the Authority develops
                              house rules by December 31, 1996 and immediately
                              begins to enforce the rules.

                              Security costs. The Chicago Housing Authority's security
                              costs increased from $6.8 million in 1988 to an actua l
                              expenditure of over $70 million in 1995 . The 1995 security
                              expenditures supported: approximately 450 contrac t
                              security guards, 300 Authority security guards and 46 0
                              sworn Authority police officers; security and police officer
                              training; and physical and technical security equipment .
                              The following graph details the Authority's securit y
                              e                                                                                             x
                              b
                              1
                              a
                              1 $80,000
                                                                                                                  $73,948

                                 $70,000                                                               $65,482
                                                                                             $58,314
                                 $60,000

                                 $50,000
                                                                                  $41,118
                                 $40,000
                                                                       $29,100
                                 $30,000
                                                             $22,268
                                 $20,000
                                                   $10,476
                                 $10,000
                                               $6,800
                                       $0
                                            1988      1989      1990       1991       1992      1993       1994     1995




Office of Inspector General            Page 12
                                                       Chapter 1




Because escalating security costs have largely been pai d
from Comprehensive Grant funds, the Authority has ha d
less funds to properly maintain and improve it s
developments. As a result, HUD has requir ed security costs
to be reduced; however, since the Memorandum o f
Agreement that contains the reduction goal has not bee n
signed the Authority does not know the amount of funds it
must reduce. The latest draft Memorandum of Agreement
dated June 21, 1996 states that the Chicago Housin g
Authority will cut its security costs by 10 percent per year
for 1997 and 1998. This would amount to approximately a
$12 million total reduction for the two years. On August 2,
1996, the Acting Assistant Secretary for the Office o f
Public and Indian Housing mandated that the Illinois State
Office assure that the cost savings tota l $25 million over the
two year period.

Since the final Memorandum of Agreement could chang e
the $25 million amount, the Auth ority does not have a clear
goal to work towards. The Authority initially determine d
its security costs could be decreased through reductions in
contract guards and administration, Authority securit y
guards and administration, and Authority polic e
administration. T hese tentative reductions for the two year
period totalled appro ximately $12.1 million, the goal in the
June 21, 1996 draft Memorandum. However, in order for
the Authority to effectively address overall security cos t
reductions it needs to have a firm target.


        Page 13                            Office of Inspector General
Chapter 1



                              We recommend HUD completes the Memorandum of
                              Agreement and provides the Authority with a firm
                              funding target so the Authority can make decisions
                              regarding the most effective way to cut costs while
                              maintaining the highest level of security possible.

                              We recommend HUD allows the Authority sufficient
                              time to evaluate its security initiatives in accordance
                              with our first recommendation before requiring
                              adherence to a cost reduction plan.

                              The Chicago Housi ng Authority's Chief of Police provided
  Management's Comments
                              the following comments:

                              Measuring Security Initiatives

                              Agree. The Chica go Housing Authority Police Department
                              has established a methodology to evaluate the effectiveness
                              of each security initiative. However, two of the thirtee n
                              initiatives (Tenant Patrol and House Rules) ar e
                              resident/management driven rather than security driven .
                              The Police Department is presently assisting residen t
                              organizations and management in both areas.

                              Tenant Patrols

                              We agree.

                              Community Policing

                              The Chicago Housing Authority Police Department i s
                              revising its Community Oriented Policing strategy base d
                              upon expected budget cuts. Authority security guards will
                              be deployed as a support component in the revised strategy.

                              Contract Security

                              Contracted guards have been reduced throughout th e
                              Authority. Resident based security employment contracts
                              will delay the total removal of contract guards from family
                              high rise housing until January 1, 1998 . Gradual reductions
                              will occur throughout Fiscal Year 1997.

                              Site-Based Security Plans


Office of Inspector General           Page 14
                                                                               Chapter 1



                         We agree. Site-based security plans for ABLA, Cabrin i
                         Green, Wells and Altgeld are presently in draft form ,
                         pending the firm "target" from HUD which may requir e
                         changes in the plans. Purchasing and Contr acts is preparing
                         a Request for Proposal for a technical assistance provide r
                         (security consultant) to complete physical assessments for
                         site-based security plans.

                         House Rules

                         We agree.       The resident and various managemen t
                         organizations should develop House Rules. The Polic e
                         Department is currently assisting in establishing an d
                         facilitating committee s throughout the Authority to address
                         this issue.

                         We believe the Authority's Chief of Police did not full y
Evaluation of Comments
                         understand the intention of our first recommendation t o
                         measure security initiatives. At the time we completed our
                         review (August 16, 1996), the Authority did not have a
                         methodology to evaluate the effectiveness of each of it s
                         many security initiatives. We div ided the initiatives into 13
                         general areas; however, many more than 13 initiatives have
                         been undertaken. We believe the Authority needs t o
                         develop procedures and controls to establish and evaluat e
                         performance measures for each specific security initiativ e
                         undertaken.




                                 Page 15                           Office of Inspector General
Chapter 1




                              THIS PAGE LEFT BLANK INTENTIONALLY




Office of Inspector General                  Page 16
Chapter 2

                Modernization/Redevelopment of Housing

Previous consultant and independent public accountant reports found problems pertaining to the
modernization/redevelopment of the Chicago Housing Authority's housing. The Authority did
not have a comprehensive and coordinated strategy to address its problems.

HUD's Blueprint dated June 11, 1995, contained a goal that required the Authority to demolish
obsolete high-rise buildings and replace them with less dense, smaller buildings at the Henr y
Horner, Cabrini Green, Lakefront and Washington Park developments. In addition, th e
Authority's Long-Term Plan, dated February 15, 1996, contained a goal to create smaller scale,
less dense housing that is indistinguishable from the broader community. Finally, the draf t
Memorandum of Agreement dated July 21, 1996 between the Authority and HUD co ntained three
goals to: determine the condition of the housing stock; develop plans that incorporat e
development stra tegies into neighborhood revitalization plans; and develop a marketing plan to
support full occupancy in viable buildings and developments.



                                    Comprehensive Plan. Although the Authority plans t o
 Observations
                                    redevelop its Cabrini Green, Henry Horner, Lakefront ,
                                    Washington Park and Clarence Darrow developments; i t
                                    does not have a comprehensive plan for the overal l
                                    redevelopment of the five developments or any of its other
                                    developments. Instead, it has developed plans to addres s
                                    only certain buildings and systems at each site, not th e
                                    entire sites.

                                    Upon completion of its Long-Term Plan the Authority will
                                    have developed a comprehensive physical need s
                                    assessment/development activity plan. However, this plan
                                    will not be available until after the ye ar 2000. Waiting until
                                    2000 to develop a comprehensive development a ctivity plan
                                    is too long since the plan should be the basis for a
                                    systematic method to efficiently use resources for th e
                                    maximum benefit of residents.

                                    In accordance with the Memorandum of Agreement, th e
                                    Authority is planning to complete a viability study with a
                                    20-year cash needs assessm ent and a marketing study. The
                                    20-year cash needs assessment is scheduled to be completed
                                    September 30, 1996 and the mar keting study December 31,
                                    1996. After the Authority complete s the viability study and
                                    marketing plan, it needs to use the results to immediatel y
                                    develop a comprehensive plan that will ensure that th e
                                    stable developments are maintained in good r epair while the



                                            Page 17                            Office of Inspector General
Chapter 2



                              Authority addresses deteriorated conditions at the othe r
                              developments.

                              A comprehensive plan should identify what developments
                              and buildings are viable and what is needed to maintai n
                              their long-term viability. In addition, it should provide a
                              consistent approach to ensure that money is spent t o
                              achieve the greatest return to the Authority. A consultan t
                              report dated October 28, 1994 stated that a comprehensive
                              and coordinated strategy for addressing the needs of th e
                              public housing program is absolutely necessary if th e
                              problems faced by the Authority and the residents it serves
                              are to be addressed.

                              The study stated that due to the extremely high cost o f
                              comprehensive modernization, the Authority chose a
                              piecemeal approach, attacking the most acute problem s
                              first. The Authority's decision to use disproportionat e
                              amounts of modernization money on one or more severely
                              distressed developments forced a lower priority for routine
                              modernization at other develo pments. The end result being
                              the deferral of repairs that, over the long run, will result in
                              higher capital improvements and operating costs.

                              To ensure that the developments achieve long-ter m
                              viability, the Authority also needs to ensure that th e
                              comprehensive plan incorporates the results of th e
                              marketing study scheduled to be completed as part of th e
                              Memorandum of Agreement. For example, the Authorit y
                              is currently rehabilitating three buildings at its Henr y
                              Horner annex. The rehabilitation plans require that th e
                              parking lots be repaired. Howe ver, the plans do not require
                              that there be a parking s pace for each unit. The Authority's
                              long-term objective is to market its units to higher income
                              individuals to obtain a mixed income population. Limited
                              parking could be an impediment to this objective.

                              We recommend that HUD requires the Authority ot
                              develop a comprehensive modernization/redevelopment
                              plan for all of its developments once the viability
                              assessment and marketing plan have been completed.
                              The plan should consider and incorporate the results of
                              the marketing study and viability assessment.
                              Specifically, the plan should identify developments by


Office of Inspector General           Page 18
                                                        Chapter 2



categories such as stable, high-needs and non-viable
developments. In addition, the plan should identify all
planned demolition and rehabilitation by building with
the costs necessary to make the repairs.

Blueprint. HUD's Blueprint for the Authority established
a redevelopment goal to demolish obsolete high-ris e
buildings and replace them with less dense, smalle r
buildings. Specifically, the goal required the Authority to:
demolish five buildings, relocate day care operations an d
begin construction of replacement housing at H enry Horner;
demolish three buildings, complete relocation of residents
and begin construction of replacement housing at Cabrin i
Green; demolish five buildings and begin construction o f
replacement housing at Lakefront; and work with Cit y
officials to identify land for scattered s ite housing and begin
to construct replacement housing at Washington Park.

Although, the Authority has not completed its Blueprin t
goal, it has made significant progress. At Henry Horner ,
the Authority demolished three buildings and HUD ha s
approved the demolition of two more buildings. Th e
additional two buildings will be demolished upon cour t
approval. In addition, three build ings consisting of 98 units
are being rehabilitated and the Authority has started th e
construction of the planned 466 on-site replacemen t
housing units. The first 20 units will be completed b y
December 1, 1996 and all 466 units are scheduled to b e
completed by the fall of 1998.

At Cabrini Green, two buil dings have been demolished and
HUD has approved the demolition of a third in Augus t
1996. The Authority has negotiated with the City t o
redevelop the entire Cabrini Green neighborhood. Th e
initial plans include the demolition of eight buildings with
private developer s constructing 1,400 new residential units
and the Authority constructing 600 to 650 public housin g
units.

Redevelopment of the Lakefront and Washington Par k
developments was delayed because of a lawsuit filed b y
neighborhood residents. The Lakefront and Washingto n
Park developments are in cl ose proximity to each other and



         Page 19                            Office of Inspector General
Chapter 2



                              neighborhood residents su ed to prevent the development of
                              241 family public housing units.

                              On June 3, 1996, the Authority obtained court permissio n
                              to build the replacement housing for Lakefront an d
                              Washington Park. The Habitat Company, the corporation
                              retained to manage an d develop scattered site housing, was
                              appointed to obtain properties for the construction of th e
                              scattered site replacement housing. The court decisio n
                              stated that no more than 150 of the 241 replacement unit s
                              could be built on the Lakefront and Washington Par k
                              properties.

                              The Authority has demolished all t he units (187) planned to
                              be razed at Washingto n Park and has entered into a revised
                              agreement with former Lakefront tenants to demolish four
                              high-rise buildings at Lakefront. However, the Authorit y
                              must now develop specifications and a Request for Proposal
                              before the demolition of the buildings can occur. Based on
                              the agreement, the Authority can not demolish additiona l
                              Lakefront buildings until it enters into binding fundin g
                              agreements with HUD to build replacement housing. The
                              replacement housing has to be first offered to the displaced
                              residents of Lakefront.

                              Long-Term Plan. The Long-Term Plan contains fiv e
                              strategies related to redevelopment. Although the Blueprint
                              contains goals for five develop ments, those for Washington
                              Park were not incorporated in the Long-Term Plan. Th e
                              Deputy Executive Director of Operations said he did no t
                              know why Washington Park was omitted from the Long -
                              Term Plan. However, as previously stated, there is n o
                              comprehensive plan to address all developments. Th e
                              Long-Term Plan is not satisfactory in its elf, since the timing
                              of the comprehensive plan is too far in the future. Th e
                              Long-Term Plan strategies are to: establish and implement
                              plans for redevelopment at Cabrini Green, Henry Horner ,
                              Lakefront and Clarence Darrow; and develop plans tha t
                              blend with neighborhood strategies to replace obsolet e
                              high-rises and other non-viable buildings at othe r
                              developments. The Long-Term Plan strategies hav e
                              targeted milestones with completion dates after December
                              31, 1996. Several of the milestones have schedule d
                              completion dates through the year 2000.


Office of Inspector General           Page 20
                                                      Chapter 2



We recommend that HUD assures the Authority
develops controls to ensure all plans, including the
comprehensive plan to be developed, are consistent.

The Authority has i nitiated actions on the target milestones
scheduled to begin in 1996. Specifically, it has: proceeded
with demolition and relocation of tenants at Cabrini Green
and announced plans t o, with the assistance of the City and
private developers, develop an entire neighborhood ;
performed demolition and i s in the process of rehabilitation
and new construction at Henry Horner; obtained tenan t
approval for demolition and cour t approval for construction
of new units at Lakefront; and started demolition a t
Clarence Darrow. However, the Authority has no t
developed overall redevelopment plans for the Cabrin i
Green, Henry Horner, Lakefront and Clarence Darro w
developments.

The strategy to develop plans t hat blend with neighborhood
strategies to replace obsolete high-rises and other non -
viable buildings at other developments is largely futur e
oriented. Six of the seven milestones are not scheduled to
be completed until after 2000. The seventh milestone, t o
conduct comprehensive community revitalization plans, is
on going and should be completed by the target date o f
March 31, 1997.

Memorandum of Agreement. The Memorandum o f
Agreement has three goals that have future completio n
dates as follows: March 31, 1997 to determ ine the condition
of the housing stock; March 31, 1997 to develop plans that
incorporate development strategies into neighborhoo d
revitalization plans; and December 31, 1996 to develop a
marketing plan to support full occupancy in viabl e
buildings and developments. The Authority has sufficient
time to meet its March 31, 1997 target dates for the first two
goals, however; the Authority will not meet its goal t o
develop a marketing plan to support full occupancy i n
viable buildings and developments by the December 31 ,
1996 target date.

The goal to develop a marketing plan consists of thre e
strategies: (1) complete a marketing study; (2) incorporate



        Page 21                           Office of Inspector General
Chapter 2



                              the study into a capital needs ass essment; and (3) determine
                              which viable developments are marketable, and to whom.

                              Since the marketing plan is to support full occupancy i n
                              viable buildings, it is necessary for the Authority t o
                              determine which units are viable before a marketing plan is
                              developed. As part of the Memorandum of Agreement goal
                              to determine the condition of the housing stock, th e
                              Authority has a strategy to perform a viability assessmen t
                              with a 20-year cash needs forecast. The strategy has a
                              September 30, 1996 target date.

                              As of August 16, 1 996, the Authority was in the process of
                              contracting for a viability assessment an d needs assessment.
                              The Authority intends to use a consultant already unde r
                              contract to complete the study and assessment. Th e
                              Authority requested that the consultant respond to a scope
                              of services by August 16, 1996.

                              Until the response is received and evaluated it is not known
                              how long the assessment will take. The Authority estimates
                              the study will take six weeks. Therefore, the Authority will
                              not have a completed viability assessment by the September
                              30, 1996 target date and will not be able to develop a
                              marketing plan by December 31, 1996. The Deput y
                              Executive Director of Operations said the viabilit y
                              assessment should be completed no later than December 31,
                              1996 and the goal to develop a marketing plan will b e
                              completed by March 31, 1997. The Director said thes e
                              short suspense dates are obtainable since the need s
                              assessment will be prepared by the c ontractor who prepared
                              the previous assessment and is familiar with th e
                              requirements.

                              We recommend that HUD continues to closelywatch the
                              Authority's progress in implementing its modernization
                              and redevelopment efforts. HUD should provide
                              technical assistance to ensure the modernization and
                              redevelopment goals are fully implemented.

                              We recommend that HUD assures the Authority meets
                              the Deputy Executive Director's revised target dates to
                              perform a viability assessment with a 20-year cash



Office of Inspector General           Page 22
                                                                          Chapter 2



                        needs forecast by December 31, 1996 and develop a
                        marketing plan by March 31, 1997.



Management's Comments
                        The Authority's Deputy Executive Director of Operation s
                        said, "We concur with the draft observations and th e
                        associated recommendations. Accordingly, the Chicag o
                        Housing Authority will incorporate the offere d
                        recommendations in our overall planning process."




                               Page 23                        Office of Inspector General
Chapter 2




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Office of Inspector General                  Page 24
Chapter 3

                                Work Order System

Previous consultant, HUD and Chicago Housing Authority Office of Inspector General reports
found problems pertaining to the Chicago Housing Authority's maintenance work orde r
procedures and performance standards.

HUD's Blueprint dated June 11, 1995, required the Authority to standardize and centralize it s
work order system. In addition, the Authority's draft Memorandum of Agreement dated June 21,
1996 contains three goals to: develop and implement a work order control and scheduling system
that will automate preventive and routine maintenance, expedite abatement of emergency work
orders and enhance the Authority's unit turnaround capacity; abate all emergency work order s
within 24 hours; and complete all non-emergency work orders in an average of 30 to 35 days.



                                    Memorandum of Agreement and Blueprint. The
 Observations
                                    Memorandum of Agreement contains twelve, short-ter m
                                    strategies to meet its goals. Of the twelve strategies, th e
                                    Authority has completed the following six:

                                    •   Develop policies and procedures for the work orde r
                                        system.
                                    •   Train staff on entry and close-out procedures fo r
                                        emergency and non-emergency work orders.
                                    •   Determine whether work orders will be taken at a
                                        central location or at all developments.
                                    •   Train housing and maintenance staff on the compute r
                                        system.
                                    •   Train, monitor and evaluate site manager performance.
                                    •   Assess methods of receiving work orders and th e
                                        accuracy of work order close-out.

                                    In addition, the Authority has progressed toward th e
                                    completion of three other strategies that have future target
                                    dates:

                                    •   Implement the work order system module at a site -
                                        based level and in tegrate with central office work order
                                        functions.
                                    •   Train staff on work methods and procedures.
                                    •   Monitor and evaluate the weekly performance an d
                                        productivity of maintenance staff.

                                    Although the Authority has completed six str ategies and has
                                    three strategies in progress, additional work is needed t o



                                            Page 25                           Office of Inspector General
Chapter 3



                              achieve its long-term goals. For exa mple, the Authority did
                              not fully implement the remaining three Memorandum o f
                              Agreement strategies that had completion dates of June 30,
                              1996. The three strategies were:

                              •   Review and revise emergency work order definitions ,
                                  policies and procedures.
                              •   Review, revise and distribute work order definitions ,
                                  policies and procedures.
                              •   Train maintenance superintendents and supervisors t o
                                  schedule and prioritize work orders.

                              Written policies and procedures. The Authorit y
                              developed policies and procedures for its work orde r
                              system. However, the policies and procedures fo r
                              emergency work orders were not sufficient to operate a n
                              effective work orde r system and were not distributed to the
                              appropriate personnel.

                              The policies and procedures did not contain instructions to
                              ensure that emergency conditions cited during Housin g
                              Quality Standards inspections were identifie d and addressed
                              within 24 hours. It is important to have procedures tha t
                              address all emergency conditions so that emergency work
                              orders can be abated within a 24-hour time frame.

                              We contacted thr ee maintenance superintendents to review
                              their copies of the work order procedures. Each of the three
                              superintendents said he did not have any written procedures
                              regarding the new work order s ystem. Because the policies
                              and procedures had not been distributed, some employees
                              did not follow the work order procedures. To close a work
                              order out of the system, the procedures require that th e
                              signatures of the resident and maintenance superintendent
                              appear on each work order. Out of a sample of 10 close d
                              work orders, one was missing the super visor's signature and
                              another was missing the tenant's signat ure or an explanation
                              of why the signature was not obtained. Although it is no t
                              always feasible to obtain the resident's signature, th e
                              procedures stipulate that an explanation is required in lieu
                              of the signature.

                              The Authority was in the process of revising it s
                              maintenance manual to include policies and procedures for


Office of Inspector General           Page 26
                                                     Chapter 3



the new work order system. The Authority plans to hav e
the policies and procedures completed by August 31, 1996.
Written policies and procedures, properly distributed t o
applicable personnel, are especially important with a ne w
system to ensure consistency and adequate control.

We recommend HUD assures the Authority reviews its
work order policies and procedures, develops
procedures to operate the system effectively, and
includes the new procedures in itsmaintenance manual.


We recommend HUD assures the Authority promptly
distributes the revised maintenance manual to all
applicable personnel.

Maintenance superintendent and supervisor training.
In January 1996, the Authority established a class in work
order management. However, only three of over 5 0
maintenance superintendents and s upervisors have attended
the training.     The rest of the superintendents an d
supervisors are scheduled to be trained between July an d
December 1996. In consideration of the many c hanges with
the new system, it is important that all superintendents and
supervisors be expeditiously trained on the new procedures.
Training should enhance customer service and consistency
in work order procedures.

We recommend HUD assures the Authority trains all its
maintenance superintendents and supervisors on work
order procedures by December 31, 1996.

New computerized work order system. The Authorit y
began using a new computerized work order system o n
April 1, 1996. Prior to the implementation of the ne w
system, the Authority did not have a reliable way to trac k
outstanding work orders. The new system when full y
implemented will provide greater account ability and control
over work orders. However, the following problem needs
to be corrected.

The number of outstanding work orders has steadil y
increased since the new system was implemented on April
1, 1996. At the end of April there were 15,075 backlogged


        Page 27                          Office of Inspector General
Chapter 3



                              work orders, 33,607 at the end of May, and 49,441 at th e
                              end of June.

                              Work orders are created by technicians at the Custome r
                              Service Center. Five times daily, technicians cue the work
                              orders to print at the on-site printer of the appropriat e
                              development. However, the work orders were not always
                              received at the developments. Work orders did not always
                              print, printed at the wrong developments, and on-sit e
                              printers jammed because they could not handle larg e
                              numbers of work orders. When the printers jammed, work
                              orders got lost in the system and did not reprint. Th e
                              erroneous distribution of work orders resulted in delays in
                              getting them to the correct locations. The printer problems
                              contributed to the untimely completion of work orders and
                              an increased backlog. The following table summarizes the
                              open work orders by priority code, and shows the number
                              of work orders and average days outstanding.


                                     AGED OUTSTANDING WORK ORDERS
                                         FOR ALL DEVELOPMENTS
                                                AT 6-30-96
                                     Priority          Number of            Average
                                      Code             Work Orders            Days
                                                                           (rounded)
                                   Emergency                    1,113         49
                                     Routine                   27,455         53
                                Annual Inspection              14,276         55
                                      Urgent                    3,446         44
                                 Code Violation                 2,764         60
                                     Missing                      228         55
                                  Extraordinary                    87         24
                                  Maintenance
                                    Preventive                     72         39
                                     TOTAL                     49,441




Office of Inspector General           Page 28
                                                      Chapter 3



Management at the developments did not immediatel y
identify the problem because they did not receive weekl y
reports that gave work order status.

The Authority became aware of the printer problems at the
developments in May 1996 and believed the problem was
a systems problem. The Authority increased the speed o f
the central data bank spooler and purchased a nd installed 16
new printers with larger capacity.

However, these changes did not correct the backlo g
problem. The backlog increased 15,834 in June an d
another 10,221 during July. The large number o f
outstanding work orders should be an immediate concern to
the Authority because it directly correlates to the Publi c
Housing Management Assessment Program and poo r
customer service. If the backlog is not reduced, the average
number of days to complete emergency and routine wor k
orders will increase and the Authority will receive a failing
grade for completion of emergency and routine wor k
orders.

Since the number of backlogged work orders has steadil y
increased, even during the period when adjustments wer e
made, it appears the probl em is not totally systems oriented
and the Authority may not have sufficient staff to addres s
the work orders being received, much less t he backlog. The
Authority, however, did not have a c apability assessment of
its maintenance staff.

Performance standards. As of April 1, 1996, th e
Authority established new performance standards for it s
maintenance personnel. However, due to the recen t
implementation of the work order system, the performance
standards were not being used. The Authority plans t o
implement the new standards in its January 1, 199 7
performance evaluations.

Without an effective method of assessing sta ff performance,
the Authority cannot determine the effectiveness an d
efficiency of its maintenance employees. Furthermore ,
until the Authority implements the performance standard s
and can assess the quantity of work its staff shoul d
accomplish, it cannot determine whether the maintenanc e


        Page 29                           Office of Inspector General
Chapter 3



                              staff level is sufficient to complete the daily work order s
                              and address the backlog.

                              The Authority's Deputy Executive Director of Operation s
                              said he believes the bac klog problem will be resolved upon
                              completion of other initiatives the Authority has undertaken
                              such as, the demolitions and rehabilitations under it s
                              modernization progr ams. As more buildings are renovated
                              and demolished, the number of new work orders shoul d
                              decrease, since there will be fewer units and the units tha t
                              do exist will be in better condition. The reduction of ne w
                              work orders shou ld provide more time for the maintenance
                              staff to address the work order backlog. However, th e
                              Authority has no plan of action i f this is not the case. Since
                              the Authority's main objective should be to provide decent,
                              safe, and sanitary housing for low and moderate incom e
                              persons, the Authority needs to assess its position an d
                              develop a plan of action if it is determined it has a staffing
                              problem.

                              We recommend HUD assures the Authority: (1)
                              develops procedures to distribute weekly activity
                              reports to development managers and for development
                              managers to use the weekly reports to manage their
                              work order backlog; and (2) implements the use of
                              performance standards to monitor staff performance.

                              We recommend HUD and the Authority coordinate ot
                              establish a target date to review the work order backlog,
                              assess staffing needs, and develop a "get well" plan fi
                              the backlog situation will result in less than a passing
                              Public Housing Management Assessment Program
                              grade. This review should be conducted no later than
                              June 30, 1997.

                              The Authority's Deputy Executive Director of Operation s
  Management's Comments
                              said, "We concur with the draft observations and th e
                              associated recommendations. Accordingly, the Chicag o
                              Housing Authority will incorporate the offere d
                              recommendations in our overall planning process."




Office of Inspector General           Page 30
Chapter 4

                              Preventive Maintenance
Previous HUD Office of Inspector General reports showed the Chicago Housi ng Authority lacked
a comprehensive preventive maintenance program.

HUD's Blueprint dated June 11, 1995, required the Authority to establish a summertime painting
and cleanup program, replace the leadership of the operations staff, and implement a preventive
maintenance program. In addition, the Au thority's draft Memorandum of Agreement dated June
21, 1996 contains strategies to: conduct a preventive nee ds assessment for each development and
develop a plan for the funding and repair of deficiencies; determine who will perform the systems
preventive maintenance inspections and repairs; and develop and implement a preventiv e
maintenance schedule.



                                     HUD's Blueprint.       In May 1995, HUD assume d
 Observations
                                     management of the Authority. In June 1995, HUD issued
                                     three preliminary strategies for the Maintenanc e
                                     Department in the Blueprint document. The Authorit y
                                     accomplished two of the three Blueprint strategies.

                                     First, the Authority established summer painting an d
                                     cleanup programs to increase the cleanliness an d
                                     appearance of the buildings and open spaces. Th e
                                     programs are collaborative efforts between the Authority ,
                                     its residents, various City of Chicago departments, an d
                                     volunteers.

                                     Second, the leadership of the Operations Department wa s
                                     replaced in the Fall of 1995. A new Deputy Executiv e
                                     Director of Operations and a Director of Housin g
                                     Management were hired. Due to the condition of th e
                                     buildings and maintenance sy stems, the primary concern of
                                     the new Deputy Executive Director of Operations is t o
                                     address the regular maintenance activities.

                                     The Authority has not accomplished its third goal t o
                                     implement a comprehensive preventive maintenanc e
                                     program. The Authority did implement a preventiv e
                                     maintenance pro gram for its heating systems in May 1996.
                                     However, it does not have preventive maintenanc e
                                     programs for other mechanical systems or the units.

                                     Memorandum of Agreement. Two of the thre e
                                     Memorandum of Agreement strategies should have bee n
                                     completed by June 30, 1996. However only one wa s


                                             Page 31                          Office of Inspector General
Chapter 4



                              accomplished: the Authority has dete rmined which persons
                              will perform the systems preventive maintenanc e
                              inspections and repairs.

                              The Authority did not conduct a preventive maintenanc e
                              needs assessment for each of the devel opments and develop
                              a funding plan for the repair of ma intenance deficiencies by
                              the June 30, 1996 target date. The new Deputy Executive
                              Director of Operations said the primary concern of th e
                              Maintenance Department is to cond uct regular maintenance
                              activities. He said it ha s been taking all of the maintenance
                              staff's time to address work orders. Therefore, until th e
                              work order level ca n be handled, a preventive maintenance
                              program is beyond the Maintenance Department's presen t
                              capabilities.

                              While it is important for the Authority to concentrate it s
                              efforts to address wo rk orders, it is equally important that a
                              preventive maintenance program be developed. A n
                              effective preventive maintenance progra m would detect and
                              correct problems earlier , reduce the number of complicated
                              and compounded repairs, and ease the staff's work orde r
                              load. In addition, the early detection and correction o f
                              problems would reduce repair costs and would provid e
                              increased resources for additional maintenance staff .
                              Therefore, it is important that the Authority implements a
                              preventive maintenance program; however, the progra m
                              cannot be developed until a preventive maintenance needs
                              assessment is completed.

                              The Deputy Executive Director of Operations did no t
                              provide a target date for completing a preventiv e
                              maintenance needs assessment. Instead, he said th e
                              Authority has contracted for an authority-wide viabilit y
                              assessment to be completed by December 31, 1996 .
                              Although a viability assessment will show which buildings
                              and systems are obsolete and which should be maintained,
                              it will not provide the comprehensive information of a
                              preventive maintenance needs assessment. A preventiv e
                              maintenance needs assessment will identify wha t
                              maintenance actions are necessary throughout the year t o
                              adequately maintain systems.




Office of Inspector General           Page 32
                                                                             Chapter 4



                        Until the preventive maintenance needs assessment i s
                        accomplished, the Authority cannot determine the amount
                        of money that will be needed to address the repairs. I n
                        addition, the needs ass essment is necessary to complete the
                        third strategy to develop and implement a preventiv e
                        maintenance schedule by June 30, 1997. Therefore, it i s
                        important that the Authority takes immediate action.

                        We recommend HUD assures that the Authority
                        completes its viability assessment by December 31, 1996
                        and immediately conducts or contracts to have a
                        preventive maintenance needs assessment completed for
                        each development and develops a funding planfor the
                        repair of maintenance deficiencies.

                        We recommend HUD assures that the Authority uses
                        the preventive needs assessment to develop and
                        implement a preventive maintenance schedule by June
                        30, 1997.

                        The Authority's Deputy Executive Director of Operation s
Management's Comments
                        said, "We concur with the draft observations and th e
                        associated recommendations. Accordingly, the Chicag o
                        Housing Authority will incorporate the offere d
                        recommendations in our overall planning process."




                                Page 33                          Office of Inspector General
Chapter 4




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Office of Inspector General                  Page 34
Chapter 5


                    Vacancy Reduction/Unit Turnaround

Previous HUD reviews showed the Chicago Housing Authority did not have an effectiv e
Vacancy Reduction/Unit Turnaround Program. The June 21, 1996 draft Memorandum o f
Agreement between the Authority and HUD said the Authority had an adjusted vacancy rate in
excess of 14 percent, and it averaged 137 days for unit turnaround.

HUD issued a Blueprint dated June 11, 1995 requiring the Authority to accelerate its vacanc y
reduction program. In addition, the Memorandum of Agreement established strategies to: (1 )
repair and re-occupy v acated units within an average of 30 days or less; (2) achieve an adjusted
vacancy rate of four percent or less at a ll developments; and (3) reduce unit turnaround time and
increase the agency-wide occupancy rate.


                                     Blueprint and Memorandum of Agreement. The
 Observations
                                     Authority has implemented a vacancy reduction progra m
                                     and has begun to implement the Blueprint an d
                                     Memorandum of Agreement strategies. However, th e
                                     Authority missed completing three key Memorandum o f
                                     Agreement strategies by the June 30, 1996 target date: (1)
                                     the Authority has no t tracked unit turn-around from date of
                                     vacancy to re-occupancy on a weekly basis; (2 )
                                     implemented an automated reporting system to track vacant
                                     unit turnaround at the development level; or (3) identifie d
                                     and deprogrammed non-dwelling units.

                                     The Authority tracked vacant unit turnaround times fro m
                                     the dates of vacancy to re-occupancy on a monthly basis ,
                                     rather than on a weekly basis. However, due to the length
                                     of time between reporting pe riods, monthly tracking of unit
                                     turnaround does not allow sufficient time to identify an d
                                     correct problems in order to achieve a 30 day uni t
                                     turnaround time.

                                     Unit turnaround time was not tracked on a weekly basi s
                                     because it was difficult and time consuming to gather th e
                                     information. The unit turnaround times were manuall y
                                     calculated for each developmen t using reports generated by
                                     the Authority's main computer s ystem. The reports showed
                                     the total number of vacancy day s during the month, and the
                                     total number of units re-occupied during the month at each
                                     development. However, the reports did not indicate th e
                                     following details: (1) the number of days units were vacant;
                                     (2) the time to repair each unit; or (3) the time it took t o


                                              Page 35                          Office of Inspector General
Chapter 5



                              occupy a unit after it was repaired. Without these details ,
                              the Authority did not have the capability to track each phase
                              of the unit turnaround process. Therefore, when a delay in
                              the unit turnaround process occurred, the Authority had no
                              way to pinpoint which phase of the process caused th e
                              delay.

                              A new computer system, projected to be implemented b y
                              December 31, 1996, should allow the Authority to trac k
                              unit turnaround times on a weekly basis. In addition, th e
                              new system will automatically calculate unit turnaroun d
                              times, and it will generate reports that detail each phase of
                              the unit turnaround process. Furthermore, a reportin g
                              system to track unit turnaround at the development leve l
                              will be implemented in conjunction with the new computer
                              system.

                              On July 16, 1996, the Deputy Executive Director o f
                              Operations said the Authority had identified non-dwelling
                              units at all of the developments except those under private
                              management, and the Authority was currently in the process
                              of identifying the non-dwelling units at the development s
                              under private manag ement. Deprogramming non-dwelling
                              units is an important step in develop ing a realistic picture of
                              the Authority's vacancy rate.

                              We recommend HUD assures the Authority implements
                              weekly tracking of unit turn-around from the date of
                              vacancy to re-occupancy and implements a reporting
                              system to track vacant unit turnaround at the
                              development level by December 31, 1996.

                              We recommend HUD assures the Authority
                              expeditiously identifies and deprograms all non-
                              dwelling units.

                              Repairing and re-occupying vacated units. The
                              Memorandum of Agreement requires the Authorit y to repair
                              and re-occupy vacated units within an average of 30 day s
                              by December 31, 1 997. It is important for the Authority to
                              meet a 30-day average turnaround time to provide th e
                              maximum benefit of its scarce housing re sources to low and
                              moderate income persons.



Office of Inspector General            Page 36
                                                        Chapter 5



The Authority hired a new Deputy Executive Director fo r
Operations in October 1995. The June 21, 1996 draf t
Memorandum of Agreement said the Authority average d
137 days for unit turnaround. This average reflected uni t
turnaround times prior to when the new Deputy Executive
Director was hired. The unit turnaround time consists of :
the time required for repairs, the time a unit is vacant until
repair work begins, and the time required to find a suitable
tenant and reoccupy the unit.

To evaluate the Authority's progress on repairing vacate d
units for occupancy, since hiring t he new Deputy Executive
Director, we selected 341 vacant units for which repai r
work started between November 1995 and June 1996. We
calculated the average time it to ok vacancy reduction teams
to repair the 341 vacant u nits. Since the 341 units included
units that were lo ng-term vacancies, we did not include the
time from when the units were vacated until work began .
We only calculated the time from when work actuall y
started until the units were inspected and accepted by th e
development managers. For the 341 units, it took th e
vacancy reduction teams an average of 36 days to repai r
each unit.

Three factors that contributed to the 36 day average were:
(1) lack of materials; (2) poor planning and scheduling; and
(3) inadequate supervision. For example, at one of th e
developments where vacancy reduction teams initiall y
repaired units, materials needed to complete the repair s
were not available when the teams arrived. As a result, the
teams experienced "down time". In a ddition, poor planning
and scheduling on the part of the Vacancy Reductio n
Department also caused "down time". The vacanc y
reduction teams were not given alternative wor k
assignments while they waited for the needed materials .
Finally, due to inadequate supervision, units completed by
the vacancy reduction teams did not always meet HUD' s
Housing Quality Standards. The vacancy reduction teams
had to do additional repairs to the units th at did not meet the
standards.

The Vacancy Reduction Department has since established
its own warehouse for materials and supplies to alleviate the
lack of materials it was experiencing. In addition, th e


         Page 37                            Office of Inspector General
Chapter 5



                              Vacancy Reduction Department has improved its planning
                              and scheduling procedures in order to minimize "dow n
                              time".     Finally the Vacancy Reduction Departmen t
                              consolidated its vacancy reduction teams to improve th e
                              level of supervision.

                              These actions appear to have helped resolve delays i n
                              repairing vacant units. For example, for units started an d
                              completed during November and December 1995, it too k
                              one development an average of 37 days to repair vacan t
                              units. However, at the same development, it took a n
                              average of only 26 days to repair vacant units started an d
                              completed during May and June 1996. We did not assess
                              whether these actions will assure that units repaired by the
                              vacancy reduction teams meet HUD's Housing Qualit y
                              Standards.

                              We recommend HUD assures the Authority develops
                              procedures to verify that units completed under the
                              Vacancy Reduction Program meet HUD's Housing
                              Quality Standards.

                              To evaluate the Authority's progress on occupying vacan t
                              units that were repaired by the vaca ncy reduction teams, we
                              calculated the average time it took one Developmen t
                              Manager to occupy 13 of the 341 units that were repaire d
                              by the vacancy reduction teams. It took the Development
                              Manager an average of 32 days to occupy a unit.

                              Combining the average repair time with the time t o
                              reoccupy repaired units shows the Authority is significantly
                              exceeding its 30-day goal.

                              The delay in occupying units was caused by a lack o f
                              communication between the Vacancy Reductio n
                              Department, Development Managers and the Occupanc y
                              Department. The Vacancy Reduction Department did not
                              give the Development Managers adv ance notice when units
                              would be completed. Therefore, the units sat empty unti l
                              the Development Managers and the Occu pancy Department
                              could locate tenants to lease the units. Also, the Vacanc y
                              Reduction Department did not coordinate with th e
                              Occupancy Department to plan work to meet the greates t
                              need.


Office of Inspector General           Page 38
                                                       Chapter 5



At one of the developments, the Vacancy Reductio n
Department rehabilitated 49 units, but the Occupanc y
Department did not have anyone on a waiting list. As a
result, 36 of the units had been vacant for at least si x
months. Allowing units to sit vacant increases th e
opportunity for vandalism. As a result of sitting vacant, at
least one unit at another development was vandalized an d
required $1,315 in additional repairs before it could b e
occupied.

After we notified the vacancy reduction staff of th e
communication problem , the staff implemented procedures
to advise Developme nt Managers of the start and projected
completion dates of repair work.             Notifying th e
Development Managers will resolve some of the problem;
however, the Development Managers still need to provide
projected completion dates to the Occupancy De partment so
it can have people screened and ready to occupy the unit s
when they become available. Al so, the Vacancy Reduction
Department needs to coo rdinate its projected work with the
Occupancy Department to ensure there will be a demand for
the completed units.

We recommend that HUD assures the Authority
develops coordination procedures between the Vacancy
Reduction Department, Development Managers, and
the Occupancy Department. The procedures should
ensure units are repaired on the basis of demand and
applicable personnel areaware of projected completion
dates so units can be promptly occupied.

Vacancy Reduction Program goal. It appears the
Authority may not reach the goal under its Vacanc y
Reduction Grant to repair 2,857 units before it runs out of
money. As of May 31, 1996, the Authority had completed
981 or 34 percent of the required units. However, it spent
$13,769,237 or 46 percent of its Vacancy Reduction Grant.
A possible explanation for the difference in the percentage
of units completed and the percentage of dollars spent was
the Vacancy Reduction Department did not prepare cos t
estimates for all of the units it repaired. For example, out of
156 units that were in progress on June 25, 1996, cos t
estimates could not be fou nd for 59. To determine whether
the remaining grant money is sufficient to complete th e


        Page 39                            Office of Inspector General
Chapter 5



                              remaining 1,876 units, the Vacancy Reduction Department
                              needs to prepare a cost estimate on each unit it intends t o
                              repair.

                              The Vacancy Reduction Department developed a revise d
                              implementation schedule that showed the number of units
                              it planned to complete at various developments. Th e
                              schedule, however, did not detail which units would b e
                              completed or contain a cost estimate for each unit .
                              Consequently, we could not assess whether the schedul e
                              was realistic. To provide some assur ance that the Authority
                              will meet its goal to repair 2,857 units before it runs out of
                              money, the Authority needs to implemen t a proper planning
                              and budgeting process for the Vacancy Reduction Grant.

                              We recommend HUD assures the Authority's Vacancy
                              Reduction Department develops a plan that shows how
                              it will complete the 2,857 units required by its Vacancy
                              Reduction Grant. The plan should identify theunits that
                              will be completed, and include the estimated costs for
                              each unit.

                              The Authority's Deputy Executive Director of Operation s
  Management's Comments
                              said, "We concur with the draft observations and th e
                              associated recommendations. Accordingly, the Chicag o
                              Housing Authority will incorporate the offere d
                              recommendations in our overall planning process."




Office of Inspector General           Page 40
Chapter 6

              Funding for Maintenance and Modernization

The Chicago Housing Authority spends a large perc entage of its maintenance and modernization
funding on security. Consequently, t he Authority's maintenance and modernization efforts have
declined. Previous HUD reviews showed the Authority had not spent its l imited maintenance and
modernization funding in a timely manner. As a result, the Authority failed the unexpende d
funds component under the modernization indicator in the Public Housing Managemen t
Assessment Program.

The Authority established a strategy in it s Long-Term Plan, dated February 15, 1996, to develop
a financial plan for funding maintenance and modernization efforts. The purpose of the plan is
to find a way to spend m aintenance and modernization funding for its intended purpose and not
on security. The Long-Term Plan listed four milestones the Authority should achieve throughout
the period of the Plan. The milestones were designed to help the Authority stay on track towards
implementing its strategy. In addition, the June 21, 1996 draft Memorandum of Agreement ,
which the Authority has committed to, listed four strategies the Authority should hav e
implemented by June 30, 1996. The strategies were established to ensure the Authority meets
the Memorandum of Agreement goal to continue to perform well under the modernizatio n
indicator in the Public Housing Management Assessment Program.



                                    Long-Term Plan. The following milestones were listed in
 Observations
                                    the Authority's Lon g-Term Plan: (1) establish a committee
                                    to develop the initial plan; (2) perform a physical need s
                                    assessment of the buildings; (3) prioritize housing needs ;
                                    and (4) target and link up with appropriate resources. The
                                    Authority has begun working towards achieving two of the
                                    milestones, however, it has not started on the other two.

                                    The Authority is in the process of contracting with a firm to
                                    perform the physical needs assessment. The Authorit y
                                    expects to have the physical needs assessment of th e
                                    buildings performed by December 31, 1996. Also, th e
                                    Authority is prioritizing its housing needs. The Authority,
                                    however, has not established a committee to develop th e
                                    initial plan, and it has not begun to target and link up with
                                    appropriate resources.

                                    The milestone to establish a committee to d evelop the initial
                                    plan was scheduled to start in July 1996 and be completed
                                    by March 1997. On July 31, 1996, the Director o f
                                    Redevelopment was unaware of any committee bein g
                                    established. Although the Authority has until March 1997
                                    to establish the committee and develop the initial plan, the



                                             Page 41                          Office of Inspector General
Chapter 6



                              Authority needs to establish a committee as soon a s
                              possible to allow the committee sufficient time to develop
                              the initial plan.

                              The milestone to target and link up with appropriat e
                              resources is not scheduled to start until April 1997, and i s
                              not scheduled to be completed until December 2000.

                              We recommend HUD closely watches the Authority's
                              progress to establish a committee to develop the initial
                              financial plan and to target and link up with
                              appropriate resources. HUD should provide any
                              technical assistance the Authority may require in order
                              to achieve the milestones and implement the strategy.

                              Memorandum of Agreement. To ensure the Authorit y
                              will meet the goal in the Memorandum of Agreement t o
                              continue to perform well under the modernization indicator
                              in the Public Housing Management Assessment Program ,
                              the following strategies were established: (1) identify al l
                              open modernization and capital improvement grants an d
                              programs; (2) ensure that clearly defi ned responsibilities for
                              project implementation schedules and expenditur e
                              schedules exist between the Operations and Financ e
                              Departments; (3) ensure that schedules are maintained i n
                              accordance with HUD regulations; and (4) determine tha t
                              the Authority's modernization and capital improvemen t
                              programs are properly coordinated with the 1996-199 7
                              Comprehensive Grant Program plan. The Author ity met the
                              June 30, 1996 target date for all the strategies except one.

                              The Authority did not properly coordinate modernizatio n
                              and capital improvement programs with the 1996-199 7
                              Comprehensive Grant Program plan . On July 31, 1996, the
                              Director of Redevelopment said the Authority can no t
                              complete this strategy until a viability assessment i s
                              completed. The Authority is in the process of contracting
                              with a firm to perform the viability assessment. Th e
                              assessment is scheduled to be completed by December 31,
                              1996.

                              We recommend HUD assures the Authority completes
                              its viability assessment by December 31, 1996 and
                              immediately coordinates its modernization and capital


Office of Inspector General           Page 42
                                                                             Chapter 6



                        improvement programs      with    its               1996-1997
                        Comprehensive Grant Program plan.

                        Unexpended funds. As stated above, the Authority me t
                        the strategy to identify all open modernization and capita l
                        improvement grants and programs.             However, jus t
                        identifying the open grants and programs does not provide
                        any benefit to the Authority's residents or improve thei r
                        living conditions. Delays in spending the grant mone y
                        result in a lost purchasing power. In addition, the physical
                        condition of the buildings continues to deteriorate, thu s
                        requiring even more money. The foll owing table shows the
                        grants and programs that were over three years old, an d
                        were still open as of April 30, 1996.


                                      PROGRAM         FUNDS UNEXPENDED
                          YEAR         NUMBER            AS OF 4/30/96
                           1992           CGP - 7O1          $4,240,199
                           1992           IL2 - 163          $8,379,297
                           1991           IL2 - 922           $ 135,177
                           1990           IL2 - 921          $1,635,536
                           1990           IL2 - 920           $ 690,837
                           1987           IL2 - 915          $1,801,639
                         TOTAL                               $16,882,685

                        We recommend HUD works closely with the Authority
                        to assure it closes out all of the open modernization
                        programs related to the Comprehensive Improvement
                        Assistance and Comprehensive Grant Programs that
                        are over three years old.

                        The Authority's Deputy Executive Director of Operation s
Management's Comments
                        said, "Regarding the Chicago Housing Authority's Long -
                        Term Plan and Memorandum of Agreement, we concu r
                        with the draft observations and associated r ecommendations
                        and will incorporate same in our overall planning efforts."




                                Page 43                          Office of Inspector General
Chapter 6




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Office of Inspector General                  Page 44
Chapter 7

                                  Annual Inspections

Previous consultant and HUD reviews reported that the frequency and quality of the annua l
Housing Quality Standards inspections performed by the Chicago Housing Authority wer e
inadequate.

The draft Memorandum of Agreement dated June 21, 199 6 contains the following two long-term
goals for the Authority that pertain to the annual inspections of the units and mechanical systems:
(1) ensure that all housing units meet the City of Chicago hous ing code standards; and (2) inspect
100 percent of the housing units and systems annually.



                                      Memorandum of Agreement. The Memorandum o f
 Observations
                                      Agreement contains eleven short-term strategies t o
                                      accomplish its goals. Eight of the eleven strategies had a
                                      June 30, 1996 completion date. The remaining thre e
                                      strategies have future completion dates. Of the eigh t
                                      strategies with June 30, 1996 target dates, the Authorit y
                                      satisfactorily completed the following seven:

                                      •   Revise and adopt City sanitary codes and incorporat e
                                          into HUD's Housing Quality Standards format.
                                      •   Revise the Housing Quality Standards inspection form.
                                      •   Train housing management and other Authority staff on
                                          unit inspections.
                                      •   Train staff on work o rder priorities and which items are
                                          short-term, long-term, and emergencies.
                                      •   Develop and implement procedures for inspecting one-
                                          tenth of units at each development on a monthly basis.
                                      •   Determine if inspections and repairs will be site-based
                                          or a dedicated, central maintenance function.
                                      •   Develop and revise existing reports to track and monitor
                                          unit inspections, inspection work orders, and the time to
                                          complete the work.

                                      The Authority did not complete the eighth strategy t o
                                      develop comprehensive inspection procedures.

                                      Written inspection policies and procedures. The Authority
                                      was in the process of revising its Maintenance Manual t o
                                      include policies and procedures for the annual inspections.
                                      However, the draft copy of the revised Maintenanc e
                                      Manual does not contain specific pro cedures for emergency
                                      situations identified during the annual inspections. I n


                                               Page 45                          Office of Inspector General
Chapter 7



                              addition, the Housing Quality Standards Training Manua l
                              does not include thorough written procedures that th e
                              inspectors need to know. For example, th e manual does not
                              state how to complete the inspection form, how t o
                              adequately describe the problem, or what procedures t o
                              follow when an emergency repair is needed.

                              To determine if the new procedures were being used, w e
                              examined three annual inspection forms. One of the three
                              forms, dated May 24, 1996, descri bed needed repairs for an
                              inoperable smoke detector and a light fixture hangin g
                              without adequate support. The Housing Quality Standards
                              Training Manual identifies a light fixture hanging fro m
                              electrical wiring without firm support as a hazardou s
                              condition. However, a work order to repair a hanging light
                              fixture was not recorded at that unit until June 21, 1996, 28
                              days after the inspection.

                              It is important to have thorough inspection procedure s
                              which address emergency situations becau se the majority of
                              the staff who conduct the annual inspections ar e
                              development clerks, site coordinators, and assistan t
                              managers with little or no maintenance experience .
                              Although the inspectors receive trainin g, written procedures
                              reinforce the information taught, provide a reference source
                              for future use, and help ensure inspectors un derstand that all
                              emergency conditions need to be abated within 24 hours.

                              We recommend HUD assures that the Authority
                              develops   thorough,   comprehensive   inspection
                              procedures and includes the new procedures in the
                              Maintenance Manual and Housing Quality Standards
                              Training Manual.

                              Future Memorandum of Agreement strategies. Three
                              strategies have futur e completion dates. Two strategies are
                              due to be completed on September 30, 1996, and the third
                              strategy is due to be completed December 31, 1996. Th e
                              three strategies pertain to the implementation of a job order
                              contracting system to be used to per form maintenance work
                              and for the annual inspection and repair of the majo r
                              mechanical systems.




Office of Inspector General           Page 46
                                                      Chapter 7



The Authority plans to complete the Request for Proposa l
evaluation process and select a vendor for a job orde r
contracting system by September 30, 1996. However, the
Deputy Executive Director of Operations said there are no
funds remaining in the current year's budget to implement
job order contracting. The Authority is in the process o f
developing a new timetabl e for the implementation of a job
order contracting system for mainte nance activities and will
implement the system once funds are available in the next
fiscal year.

We recommend HUD assures that the Authority
identifies the funds and implements a new timetable for
initiating the job order contracting system. Once the
timetable is complete, HUD should monitor the
Authority to assure that the job order contracting
system is properly implemented.

In connection with our review of the Memorandum o f
Agreement strategies, we determined that several areas not
directly related to a strategy need attention. Annual uni t
inspections were not a ll effective and work orders were not
initiated for all necessary repairs identified by th e
inspections.

Housing Quality Standards inspections. The Authorit y
performs annual Hou sing Quality Standards inspections on
its units and systems. We examined three annual inspection
forms that were completed afte r the new work order system
was implemented on April 1, 1996 and found problem s
with two of the three.

One of the forms, dated May 24, 199 6, showed that the unit
failed in two areas; however, the unit was given an overall
pass rating. The annual inspections are used to assess th e
conditions of the units. When units with violations tha t
should cause it to fail the inspection are passed ,
management does not have an accurate assessment of th e
unit conditions. An accurate assessment is essential t o
determine and plan the long-term modernization needs o f
the Authority.

On the second form, 38 fail conditions were noted .
However, the form did not describe any of the neede d


        Page 47                           Office of Inspector General
Chapter 7



                              repairs. The inspectors' descriptions of the needed repairs
                              are used by technicians at the Customer Service Center t o
                              create work orders. Without a proper description of th e
                              deficiencies, the technicians cannot determine the type o r
                              magnitude of repairs required. Additionally, maintenance
                              superintendents do not have a sound basis to order materials
                              or schedule craft personnel. The revised Maintenanc e
                              Manual recommends that maintenance superintendent s
                              verify the quality of repairs made; however, it does no t
                              require superintendents to verify that the inspections were
                              properly conducted and inspection forms properl y
                              completed. Without proper quality control over th e
                              inspections, the Authority lacks assurance that inspections
                              are properly completed and unit conditions are correctl y
                              rated.

                              We recommend HUD assures the Authority conducts
                              quality control reviews of inspections to ensure the
                              inspections are accurately conducted and inspection
                              forms are properly completed.

                              Housing Quality Standards work orders. The Authority
                              implemented a new, computerized and integrated wor k
                              order system on April 1, 1996 to provide better control and
                              accountability over work orders. The system module s
                              allow the Author ity to monitor the progress of the Housing
                              Quality Standards inspections and the status of th e
                              inspection work orders. However, inspection work orders
                              were not generated for all repairs.

                              As previously stated, three Housing Quality Standard s
                              inspection forms, completed after April 1, 1996 wer e
                              reviewed. One of the three forms, dated May 24, 199 6
                              indicated that repair problems existed in 38 areas at on e
                              unit. A work order history report was obtained of the repair
                              activity at that unit since the new work order system wa s
                              implemented. No work orders were entered into the ne w
                              work order system for any problems or repairs at the unit.

                              A second of the thre e inspection forms, also dated May 24,
                              1996 indicated a hazardous electrical condition at the unit.
                              The work order history report for that unit contained on e
                              work order, dated June 21, for an electrical repair .
                              However, we were not able to determine whether the repair


Office of Inspector General           Page 48
                                                                              Chapter 7



                        was for the problem reported on the inspection for m
                        because the repair was made in a different room.

                        To conduct efficient and effective repairs at the units, it is
                        important for work orders to be generated expeditiously to
                        ensure that repairs are performed time ly. We contacted two
                        development managers concerning the annual inspectio n
                        forms completed after April 1, 1996. Each of the managers
                        said the inspection forms were not sent to the Custome r
                        Service Center so work orders could be written. Instead ,
                        the inspection forms were being held at the developmen t
                        until Customer Services requested them.

                        We recommend HUD assures the Authority promptly
                        evaluates each development to determine if all annual
                        inspection forms, completed after April 1, 1996 were
                        sent to the Customer Service Center to initiate work
                        orders.

                        We recommend HUD assures the Authority implements
                        controls that ensure work orders are written to address
                        deficiencies identified by all future inspections.

                        The Authority's Deputy Executive Director of Operation s
Management's Comments
                        said, "We concur with the draft observations and th e
                        associated recommendations. Accordingly, the Chicag o
                        Housing Authority will incorporate the offere d
                        recommendations in our overall planning process."




                                Page 49                           Office of Inspector General
Chapter 7




                              THIS PAGE LEFT BLANK INTENTIONALLY




Office of Inspector General                  Page 50
Chapter 8

                       Housing Management Functions

Previous HUD and consultant reviews showed the Chicago Housing Authority: had a large and
loosely structured middle management; was unable to implement management controls an d
maintain a system of quality control; and used a highly centralized and controlled system fo r
decision making, which limited its capacity to effectively pursue and realize the benefits of a
more decentralized and site based management structure. These organizational deficiencie s
inhibited the Authority's ability to effectively manage its programs.

To correct the organizational deficiencies, the Authority established a goal in its Long-Term Plan
dated February 15, 1996 to: improv e coordination and accountability between the development-
based operations and the central office; an d provide good housing management. In addition, the
Authority and HUD established two goals in the Memorandum of Agreement, dated June 21 ,
1996, to: improve organizational a ccountability; and streamline housing management efficiency
and effectiveness.


                                     Long-Term Plan. To ensure the Authority met the goal to
 Observations
                                     improve coordination and accountability betwee n
                                     development-based operations and the central office, th e
                                     Authority established the following strategies:           (1 )
                                     implement development-based resource management; (2 )
                                     develop and review uniformed field-based policies an d
                                     procedures; and (3) develop a uniformed propert y
                                     management reporting process. The Authority has unti l
                                     December 31, 2000 to implement these strategies. Base d
                                     on our assessment, the Authority will easily meet this target
                                     date.

                                     Development-based resource management. The Authority
                                     was taking the appropriate steps towards implementing the
                                     development-based resource management strategy .
                                     Specifically, the Authority was in the process of contracting
                                     with a consulting f irm to perform a skills assessment of the
                                     property management staff by January 31, 1997. Th e
                                     assessment will enable the Authority to identify th e
                                     strengths and weaknesses of its property managers.

                                     Also, the Authority plans to have a new computer syste m
                                     installed by December 31, 1996. The new system wil l
                                     connect each development to the central office, thu s
                                     strengthening the communication link between the two .
                                     Finally, the Authority was in the process o f contracting with
                                     an institution to train its staff on the development-base d
                                     budget process by December 31, 1996. The training i s


                                              Page 51                          Office of Inspector General
Chapter 8



                              needed so the Authority can effectively implement th e
                              development-based budget process in fiscal year 1997.

                              Field-based policies and procedures. The Authority wa s
                              also taking appropriate steps towards the development and
                              review of uniform field-based policie s and procedures. The
                              Authority identified and reviewed Authority-wide policies
                              and procedures that impacted housing operations. I n
                              addition, the Authority developed and was implementin g
                              new policies and procedures. For example, the Authorit y
                              developed and implemented a new lease and new tenan t
                              screening procedures (see Chapter 9). The Authority also
                              revised its eviction procedures (see Chapter 9), and was in
                              the process of developing and implementing a ne w
                              maintenance manual (see Chapter 3). The Director o f
                              Housing Management said the Authority will continue t o
                              monitor and evaluate policies and procedures that impac t
                              housing operations, and to develop and implement ne w
                              policies and procedures as necessary.

                              Property management reporting process. The Authority had
                              substantially developed a uniform property managemen t
                              reporting process. The Authority determined that dat a
                              related to the following categories should be reported :
                              tenant accounting, housing eligibility, and work orders .
                              Examples of specific repo rts that will be generated include:
                              tenant accounts receivables, tenant demographics ,
                              outstanding work orders, unit turnaround times, and tria l
                              balances of general ledgers. The Authority's new computer
                              system will collect the relevant data and generate thes e
                              reports. The Authority established monthly, quarterly ,
                              semi-annual, and annual time frames for the reports to b e
                              submitted.

                              We recommend that HUD monitors the Authority's
                              progress in completing its Long-Term Plan strategies to:
                              implement development-based resource management;
                              participate in the development and review of uniform
                              field-based policies and procedures; and develop a
                              uniform property management reporting process.
                              Should the Authority deviate from the Long-Term Plan
                              strategies, HUD should provide technical assistance or
                              take other corrective actions.



Office of Inspector General           Page 52
                                                      Chapter 8



Memorandum of Agreement. The Memorandum o f
Agreement contains two strategies related to a
development-based     resource     management/propert y
management reporting system. The two strategies are :
improve communications and internal reporting betwee n
the site managers and the central office; and create site -
based management implementation plans for eac h
development.

The draft Memorandum of Agreement also incorporates the
Long-Term Plan goal and strategies to provide goo d
housing management into nine major strategies t o
streamline housing management efficiency an d
effectiveness. The strategies are: identify existing majo r
housing functions, establish evaluation procedures an d
criteria, evaluate the functions' cost effectiveness an d
efficiency, do a cost benefit analysis of the functions ,
identify required changes nece ssary to improve the housing
management functions, document the changes necessary to
improve housing management functions, implement th e
changes, develop methods to fill gaps in housin g
management functions, and identify opportunities t o
delegate management functions to the developments.

The Memorandum of Agreement target dates fo r
completing the nine strategies to improve housin g
management ranged from June 30, 1996 to December 31 ,
1997. With the exception of the strategy to delegat e
management activities to the developments, the strategie s
form a series of steps that identify all major housin g
functions needed; measure and evaluate th ose functions that
are in place; and identify and implement needed change s
and improvements.

Communications and site-based m anagement. The strategy
to improve communications and internal reporting has a
June 30, 1997 tar get date. This strategy corresponds to the
Long-Term Plan strategies mentioned above. As state d
previously, the Authority has initiated actions that shoul d
allow it to complete this s trategy on schedule. The strategy
to create site-based management implementation plans has
a target date of December 31, 1997. As of August 26 ,
1996, the Authority had not begun action to complete this



        Page 53                           Office of Inspector General
Chapter 8



                              strategy; however, the Authority has sufficient tim e
                              available to complete the strategy on schedule.

                              We recommend HUD closely watches the Authority's
                              progress in implementing the Memorandum of
                              Agreement strategies to: improve communications and
                              internal reporting between the site managers and the
                              central office; and create site-based management
                              implementation plans for each development. HUD
                              should provide any technical assistance the Authority
                              may require to assure the strategies are implemented on
                              schedule.

                              Improvement of Housing Management Functions. The
                              Memorandum of Agreement required the Authority t o
                              identify all major housing functions by Septem ber 30, 1996.
                              As of August 30, 1996, the Authority identified th e
                              following six areas related to the maintenance housin g
                              function:     custodial, elevators, vacancy preparation ,
                              mechanical, heating plant, and contract maintenance. The
                              Authority is using staff meetings to identify managemen t
                              functions and ways of improving them. Although th e
                              Authority identified the maintenance housing functions by
                              the September 30, 1996 target date, it needs to identif y
                              areas within the other major housing functions such a s
                              occupancy, accounting, security and redevelopment. Th e
                              Director of Operations said the Authority was in the process
                              of identifying other housing functions and that the strategy
                              is on-going and w ill continue after the September 30, 1996
                              target date.

                              It is important for the Authority to identify all areas a s
                              quickly as possible, since the information is required t o
                              accomplish the strategies with later target dates.

                              We recommend HUD and the Authority coordinate ot
                              establish a revised target date to identify all major
                              housing functions and that HUD assures the Authority
                              allocates sufficient resources to accomplish this strategy.

                              The Authority deve loped evaluation criteria for each of the
                              six areas identified under the maintenance function. It also
                              started evaluating the cost effectiveness and efficiency o f
                              the six areas and d oing a cost benefit analysis of two of the


Office of Inspector General           Page 54
                                                     Chapter 8



areas. For example, the Authority established evaluatio n
procedures and criteria for the custodial and heating plan t
functions. It compared the costs associated with performing
the functions in-house to the costs of contracting them t o
private firms. The Authority analyzed: staffing levels ,
salary and other costs, scope of services, and cost s
associated with contracting the functions to private firms .
Evaluating the cost effectiveness and efficiency establishes
a basis for the best performance of the function in-house ,
while a cost benefit analysis compares the Authority's cost
to perform its functions to outside sources.

The completion of the later strategies in the Memorandum
of Agreement all depend on the Authority timel y
identifying all major housing functions, evaluating cos t
effectiveness, and doing a cost benefit analysis. Th e
strategies to identify needed changes, document th e
changes, implement the changes, and develop methods t o
fill gaps in functions due to be completed December 31 ,
1997, depend on the timely completion of the earlie r
strategies.

We recommend that HUD closely monitors the
Authority's progress to meet the housing management
improvement strategies and provides any assistance
necessary to help evaluate the functions, and improve
their effectiveness and efficiency.

Delegation to Developments. The Memorandum o f
Agreement required the Authority to identify opportunities
to delegate management activities to developments by a
June 30, 1996 target date. The Authority identified an d
delegated purchasing functions to all developments an d
delegated management of 23 developments to privat e
managers. In addition, the Authority's Long-Term Pla n
requires site-based management impl ementation plans to be
completed; however, it has not begun to complete thi s
strategy.

On March 1, 1996, the Authority delegated procuremen t
functions related to open purchase orders to th e
developments. The open purchase order system allow s
development personnel to obtain supplies and materials at



        Page 55                          Office of Inspector General
Chapter 8



                              designated hardware stores subject to established dolla r
                              limits.

                              On July 1, 1996, the Authority placed about 8,000 units at
                              23 developments under private management. Fiftee n
                              private firms are in charge of day-to-day operation s
                              including leasing, maintenance, property management and
                              security, along with fiscal management of th e
                              developments.

                              The Authority met its goal of identifying opportunities t o
                              delegate management activities; however this is a poorl y
                              worded strategy. As the Authority continues to change, it
                              needs to identify additional opportunities to delegate to the
                              developments when it makes economical sense.

                              We recommend HUD and the Authority coordinate ot
                              make the strategy a continuing effort.

                              Although the Memorandum of Agreement contains            th e
                              strategy to delegate management activities to             it s
                              developments, it does not have a strategy to review      th e
                              results of its actions in the future to ensure they      ar e
                              effective and achieve the expected results.

                              We recommend that HUD and the Authority coordinate
                              to establish a strategy to review the results of actions
                              taken to delegate responsibilities to the developments.
                              We suggest a review be conducted approximately one
                              year after a responsibility is delegated.

                              The Authority's Deputy Executive Director of Operation s
  Management's Comments
                              said, "We concur with the draft observations and th e
                              associated recommendations. Accordingly, the Chicag o
                              Housing Authority will incorporate the offere d
                              recommendations in our overall planning process."




Office of Inspector General           Page 56
Chapter 9

                            Admissions and Evictions
A previous HUD Office of Inspector General report said the Authority did not admit and evict
tenants in a consistent manner to assure problematic tenants were not allowed into housing o r
were promptly rem oved. The Authority did not: have an adequate written policy; use standard
procedures; and adequately communicate information to development managers. As a result ,
problematic residents were admitted or not evicted which increased related maintenance an d
security costs.

The Authority's draft Memorandum of Agreement with HUD and its Long-Term Plan contai n
goals to improve the Authority's admis sions and evictions procedures. To achieve the goals, the
Authority developed strategies to improve tenant screening, eviction procedures, leas e
procedures, and promote resident responsibility.



                                    Screening procedures. The Authority revised its resident
 Observations
                                    screening procedures in order to provide assurance tha t
                                    persons admitted to it s housing are eligible and are suitable
                                    residents. The procedures were issued on October 16 ,
                                    1995. The Authority's new screening procedures requir e
                                    home visits, landlord verifications, and credit and security
                                    checks. These procedures wer e implemented on March 15,
                                    1996.

                                    The first 100 home visits are being completed by a n
                                    independent contractor. As of June 25, 1996, 88 hom e
                                    visits were completed. The Authority plans to hire tw o
                                    inspectors to conduct home visits. Position description s
                                    have been developed and were approved on July 15, 1996.
                                    Once the positions are included in the Occupancy budget,
                                    the jobs will be p osted. It is unlikely that the two positions
                                    will be filled before the remaining 1 2 contractor inspections
                                    are completed. To ensure new tenants are properl y
                                    screened, the Authority will have to extend its home visi t
                                    contract until the positions are filled.

                                    We recommend HUD assures the Authority fills its
                                    home visit inspector positions as expeditiously as
                                    possible.

                                    We recommend HUD assures the Authority extends its
                                    contract to conduct home visits until it fills the home
                                    visit inspector positions.




                                             Page 57                           Office of Inspector General
Chapter 9



                              The Authority's current waiting lists are unmanageable .
                              The Authority has a registrant pool of approxi mately 30,000
                              applicants. As of July 15, 1996, the Autho rity did not know
                              the eligibility status or interest of i ts registrant pool, but was
                              working to contact each applicant to determine their status.
                              The Authority closed the waiting list pending its review of
                              the 30,000 and the manageability of the list. In addition to
                              the registrant pool, t he Authority prepared certified waiting
                              lists by unit size for eligible applicants that have bee n
                              screened. For example, the certified family waiting lis t
                              contained approximately 1,200 applicants.

                              In order for the screening procedures to be effective, the y
                              must be performed as close to the time of occupancy a s
                              possible so information gathered is current. As of July 15,
                              1996, the Authority was screening all registrant poo l
                              applicants according to the date and time of thei r
                              applications regardless of when they will be offere d
                              housing. Additionally, the Authority had no plans to screen
                              applicants who were on certi fied waiting lists before March
                              15, 1996 and had not been screened according to the ne w
                              procedures. Only 55 applicants on the family waiting lis t
                              have been screened u sing the new procedures and most are
                              toward the end of the waiting list. The Authority place s
                              approximately 172 family applicants in a month; however
                              this not a good gauge on how long a family may have t o
                              wait for housing. For example, families who a re waiting for
                              units at Leclaire Courts, Lake Parc Plac e and Trumball Park
                              Homes can expect to be on the waiting list for one, four and
                              ten years respectively. As a result, many certified waiting
                              list applicants may be offered housing without prope r
                              screening for years to come. When we discussed thi s
                              observation with the Director of Occupancy, he said th e
                              Authority would start screening al l applicants that are being
                              considered for immediate occupancy regardless of any past
                              screening that may have been accomplished.

                              The Authority is wasting staff resources screenin g
                              applicants who may wait for years to be admitted or wh o
                              may not be admitted at all. The determination o f
                              preliminary eligibility should be based upon informatio n
                              and supporting documentation provided by the applicant .
                              There is no need for detailed checks or v erifications until an
                              applicant is being seriously considered for occupancy. For


Office of Inspector General            Page 58
                                                       Chapter 9



most of the applicants who have been screened using th e
new procedures, the results of the third-party verifications,
home visits, credit and security checks will be outdate d
when units become available. Therefore, screening wil l
have to be reaccomplished. To conserve scarce resources,
it is important to screen tenants as close to the projecte d
date of occupancy as possible. Also, in order for th e
Authority to fulfill tightene d standards on selecting suitable
tenants, it is extremely important that all new tenants b e
screened using the new procedures bef ore they are admitted
to a unit.

We recommend HUD assures the Authority develops
procedures that ensure all applicants are screened using
the new screening procedures beforebeing placed in a
unit. The procedures should state that applicants will
not be screened upon initial interview if units are not
available and that screening should be conducted as
close to the time of occupancy as feasible.

Current Occupancy personnel have interpreted th e
Gautreaux Court Decree to allow applicants to continually
refuse offers of housing not of their preference. Th e
applicants' refusals do not change or negatively effect th e
applicants' positions on the waiting list. There is essentially
no limit to the number of times applicants can deny unit s
not of preference or change preferences. As a result ,
applicants may remain on the waiting list for years .
Additionally, our discussions with the Authority' s
Occupancy personnel indicated they were not clea r
concerning the actions to be taken when applicants den y
housing offers of their preference and were confused o n
when applicants are allowed to change their location o f
preference. The s taff did not have a legal opinion to use in
formulating its waiting lists and had not requested one.
To help resolve the waiting list problem, the Authorit y
contracted with Creative Computer Solutions Systems t o
devise and implement a com puterized waiting list. Initially,
the Authority projected the waiting list would be full y
operational on August 1, 1996. However, this target dat e
may not be realistic. As of July 16, 1996, the consultan t
was in the process of converting the data. Additionally, our
discussions with the consultant indicated she was confused
by the terms of the Gautreaux court decree and how it will


        Page 59                            Office of Inspector General
Chapter 9



                              affect the creation of waiting list reports. Once conversion
                              is completed test rep orts need to be run to ensure accuracy.
                              Personnel operating the occupancy program and developing
                              the computerized waiting list need to have a thoroug h
                              understanding of the Gautreaux decree in order to develop
                              and use acceptable waiting lists.

                              We recommend HUD assures the Authority coordinates
                              efforts with HUD's and its legal department to provide
                              a consistent application of the Gautreaux decrees'
                              requirements. Guidelines supporting interpretations
                              should be developed and application of the
                              computerized waiting list should reflect the guidelines.

                              Eviction procedures. It is the Chicago Housin g
                              Authority's policy to no longer tolerate re sidents who do not
                              pay their rent, obey Authority rules, and contribute to their
                              community. Communication and coordination between the
                              Development Management and Tenant Relation s
                              departments has improved since the OIG review that wa s
                              completed on January 14, 1994. The Authority's staff have
                              been trained on the Authority's ev iction procedures for both
                              "delinquent rent" and "for cause" evictions. The Authority
                              is aggressively pursuing resident evictions. For example ,
                              the eviction of substance abusers who qualified for senio r
                              housing because they were considered to be disabled ha s
                              increased, and the in creased emphasis of evictions for non-
                              payment of rent has decreased delinquencies.

                              Effective June 1995, the Authority amended its evictio n
                              policy for senior housing because of changes in HUD' s
                              regulations. Senior housing residents not only includ e
                              senior citizens, but handicapped a nd disabled (drug addicts;
                              alcoholics) individuals. During all of 1995, the Authorit y
                              evicted 41 residents from senior housing. During the first
                              six months of 1996, the Authority has already evicted 3 6
                              residents from senior housing. The majority of thos e
                              evicted were substance abusers.

                              Rent delinquencies have dramatically decreased . Beginning
                              in November 1995, the Authorit y changed its procedures to
                              require hand delivery of the 14-Day Notice of Termination
                              for non-payment of rent. The Authority aggressivel y
                              pursued residents with delinquent balanc es regardless of the


Office of Inspector General           Page 60
                                                     Chapter 9



amount or length of time past due. Cases were filed an d
individuals were prosecuted. These actions sent a stron g
message to residents that they can and will be evicted fo r
non-payment of rent. As a result, the number of 14-Da y
notices generated fell from 1 ,542 in November 1995 to 578
in June 1996.

In connection with improving eviction procedures, th e
Authority developed a strategy to coordinate evictio n
efforts with the Divi sion of Resident Programs. This effort
was needed because of concerns that residents wit h
delinquent rent balances, who were otherwise in goo d
standing, could be evicted without consideration of special
circumstances. For example, a mentally ill resident or a
victim of domestic violence, may face s pecial problems that
could effect their ability to pay their rent timely. Th e
coordination effor ts were implemented informally between
Development Managers and the Au thority's Social Services
Division. Development Managers and the Social Service s
Division work together to refer applicable residents to th e
appropriate agencies for assistance. However, forma l
procedures need to be developed to ensure all manger s
follow the same process and tenants are treated equally.

We recommend HUD assures the Authority develops
procedures for Development Managers and the Social
Services Division to coordinate on potential evictions
and the need for social services.

Lease Procedures. The Authority's resid ential lease details
responsibilities and obligations of the residents an d
describes specific actions which may result in a tenant' s
eviction. The Authority approved a new lease on June 21,
1996. The Authority amended the old lease to include a
provision that allows the Authority to evict residents wh o
have been served four 14-Day Notices of Terminatio n
within a 12-month period. The Authority's prior lease did
not contain a provision limiting the number of Notices o f
Termination received during a year. Also, the lease wa s
changed to require residents between the ages of 7 and 16,
living in the households, to attend school in accordanc e
with the Authority's truancy policy. Leaseholders can b e
evicted if this provision is violated. The new lease wil l



        Page 61                          Office of Inspector General
Chapter 9



                              enable the Authority to hold r esidents more accountable for
                              their actions.

                              The Authority's Memorandum of Agreement established a
                              target date of June 30, 1996 for the lease to be revised .
                              Although the Aut hority met this goal, it did not include the
                              following Public Housing Notice 96-14 provisions, issued
                              on April 1, 1996, in the revised lease: (1) the lease may be
                              terminated if a resident's abuse of alcohol interferes with the
                              health, safety, or right to peaceful enjoyment of th e
                              premises by other residents and employees; and (2 )
                              grievance proceedings may be w aived for any non-criminal
                              activity that interferes with the health, safety, or right t o
                              peaceful enjoyment of the premises by other residents and
                              employees. We informed the Authority's staff of th e
                              omission. The staff said they will amend the lease t o
                              include the provisions.

                              Lease training is mandatory for all Development Managers,
                              including private and resident management staff. Leas e
                              training was conducted by the Tenant Relations Divisio n
                              during the month of July 1996 for all development staff .
                              Resident lease training i s scheduled to be conducted during
                              August and September 1 996. Resident training is optional.
                              The training offered will model the staff's training .
                              Residents who choose not to attend the training, will b e
                              briefed on the lease requirements when they sign a ne w
                              lease.

                              The residential lease wil l be implemented once training has
                              been completed. New residents will be admitted under the
                              requirements of the new lease. The Authority will operate
                              under two leases for approximately one year, since th e
                              Authority cannot require current residents to sign th e
                              revised lease until their annual recertifications.

                              We recommend HUD assures the Authority's lease
                              contains the correct provisions outlined in Public
                              Housing Notice 96-14 and the Authority uses the lease.

                              We recommend HUD assures the Authority completes
                              lease training for all residents by September 30, 1996,
                              and upon approval, uses the lease for all new tenants
                              and for all annual recertifications.


Office of Inspector General           Page 62
                                                                              Chapter 9



                        Resident responsibility. The Chicago Housing Authority
                        has drafted a tenant handbook. The handbook details th e
                        rights, privileges, and responsibilities of the resident. The
                        new handbook has updated telephone numbers and is less
                        cumbersome than the old one. The tenant handbook ha s
                        been approved by the development staff and residen t
                        leaders. As of July 8, 1996, the draft was awaiting th e
                        approval of the Chicago Housing Authority's senior staff .
                        The Long-Term Plan' s target completion date is September
                        30, 1996 for the approval of the handbook. The Authority
                        appears on track to meet this goal.

                        The Authority plans to distribute the new handbook to al l
                        new residents; however, it had no plans to get copies t o
                        current residents. Since the new handbook has revise d
                        information and is less cumbersome, we believe it shoul d
                        be given to all residents.

                        We recommend HUD assures the Authority makes the
                        new handbook available to all residents when they
                        recertify their leases.

                        After the Authority completes the tenant handbook, leas e
                        training, and lease implementation, it plans to develop a
                        site-based resident orientation process and manual. Th e
                        orientation process and manual will inform residents o n
                        their rights and responsibilities; the tenant handbook; th e
                        Authority's rights and responsibilities; lease requirements;
                        house rules; safety and security issues; and procedure s
                        followed when lease violations occur. The Memorandu m
                        of Agreement's target date fo r completion of the orientation
                        manual is September 30, 1996 and December 31, 1996 for
                        the orientation process. The target dates appear realisti c
                        and the Authority has sufficient time to meet these goals.

                        We recommend HUD assures the Authority adoptsa
                        tenant handbook and develops the site-based resident
                        orientation manual by September 30, 1996, and
                        implements a site-based resident orientation process by
                        December 31, 1996.

                        The Authority's Deputy Executive Director of Operation s
Management's Comments
                        said, "We concur with the draft observations and th e
                        associated recommendations. Accordingly, the Chicag o


                                Page 63                           Office of Inspector General
Chapter 9



                              Housing Authority will incorporate the offere d
                              recommendations in our overall planning process."




Office of Inspector General         Page 64
Chapter 10

                                   Rent Collections

HUD's past performance reports showed the Chicago Housing Authority's history in collecting
rents was inadequate. The Authority did not have a col lection agency, and rents were not always
collected. Thus, the Authority lost a source of income. To remedy this, HUD and the Authority
included a goal i n its June 21, 1996 draft Memorandum of Agreement to maintain a six percent
uncollected rent rate at all developments.



                                     Uncollected Rents. The Chicago Housing Authority' s
 Observations
                                     uncollected rent balance has consistently been excessive .
                                     As of December 31, 1995, 9.6 percent of resident dwelling
                                     rents were uncollected. After one quarter under the March
                                     6, 1996 draft Memorandum of Agreement, rent s
                                     uncollected were reduced to 8.2 percent. The Authorit y
                                     used the March 6, 1996 draft Memorandum to monito r
                                     progress for this initiative.

                                     Orientation Programs. To promote and improve th e
                                     timeliness of tenant payments, the Authority ha s
                                     coordinated with various service agencies to conduc t
                                     orientation progr ams for its residents. The Authority had a
                                     Memorandum of Agreement target date of September 30 ,
                                     1996 to begin initiating urban life style programs. Thes e
                                     programs include: managing and supervising children ,
                                     money management, interrelationships in an urban setting,
                                     and community identification and commitment. Th e
                                     Authority met this target date. For example, on May 2 and
                                     June 18, 1996 a local bank made presentations to residents
                                     that covered payment of rents at currency exchanges ,
                                     money managem ent, and credit repair. On April 30, 1996,
                                     a local utility company made a presentation on conserving
                                     energy and establishing budget plans for bill payments .
                                     The orientation programs are an on-going effort that ar e
                                     intended to increase the tenant's skills in managing thei r
                                     financial affairs and their understanding of the importance
                                     of timely payments.

                                     Development of Partnerships. In accordance with th e
                                     Memorandum of Agreement's September 30, 1996 targe t
                                     date, the Authority developed partnerships with variou s
                                     publicly supported service agencies to help preven t
                                     evictions of tenants who have no income, for non-payment
                                     of the minimum rent requirements. HUD now requires all


                                             Page 65                          Office of Inspector General
Chapter 10



                              residents to pay a minim um rent of $25 a month. Based on
                              this requirement, the Authority has approximately 1,50 0
                              tenants who report zero income and will need assistance to
                              make the minimum monthly rent payment.

                              The Authority pursued outreach efforts with socia l
                              services/delegate agencies and received their agreement to
                              help obtain assistance for tenants who can not mee t
                              minimum rental requirements. For example, the Authority
                              established relationships with th e Partner in Human Service
                              Delivery Agency, the Social Security Administration, th e
                              Illinois Department of Public Aid and local churches .
                              These agencies are both publicly and privately funded. The
                              agencies plan to assist persons in obtaining supplementa l
                              income and guidance to meet financial requirements.

                              In August 1996, the Authority started referring all tenant s
                              who apparently have no source of income to the agencies.

                              We recommend HUD assures the Authority continues to
                              develop sources for orientation programs and financial
                              services to assist its tenants to become more self
                              sufficient. HUD should provide assistance in identifying
                              and developing the sources.

                              Collection Agency. In December 1995, the Authorit y
                              advertised for a collection ag ency to provide rent collection
                              services for tenants who no longer reside in the Authority's
                              developments. The first Request For Proposal did no t
                              generate any responses. The Authority advertised again on
                              January 22, 1996. The second request received on e
                              response. Since the Authority had contracted with the firm
                              in the past and was satisfied with its performance, th e
                              Authority executed a contract with the firm on July 11 ,
                              1996.

                              The Authority is in the process of sending out notices t o
                              former tenants regarding their delinquent accounts. Th e
                              notices request the former te nants to make payments within
                              five days or accept a payment plan. Former tenants who do
                              not respond will be referred t o the collection agency. As of
                              August 1, 1996, the Author ity had not referred any cases to
                              the agency. The Authority plans to start referring case s



Office of Inspector General           Page 66
                                                                         Chapter 10



                        after it reviews and processes its August 1996 tenan t
                        accounts receivable report.

                        We recommend HUD assures the Authority establishes
                        controls to ensure all uncollectible accounts are referred
                        each month to the collection agency.

                        The Authority's Deputy Executive Director of Operation s
Management's Comments
                        said, "We concur with the draft observations and th e
                        associated recommendations. Accordingly, the Chicag o
                        Housing Authority will incorporate the offere d
                        recommendations in our overall planning process."




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Office of Inspector General                  Page 68
Chapter 11

                         Procurement and Contracting
Previous HUD, ind ependent public accountant, and consultant reviews of the Chicago Housing
Authority showed the Authority did not have an effective procurement program. Specifically,
the reviews concluded the Authority did not procure items in a timely manner. The Authority
also lacked an adequate contracting process in the past which allowed for favoritism, produc t
substitution, and services not being provided.

The Authority's draft Memorandum of Agreement, dated June 21, 1996, contained strategies to
meet the goal of streamlining, stand ardizing, and automating the procurement process necessary
to maintain a continuous flow of quality, material supplies and services related to outstandin g
work order deficiencies. While the goal specifies problems related to outstanding work orders,
the strategies developed are designed to improve the overall procurement process. HUD' s
Blueprint, dated June 11, 1995, the Authority's Long-Term Plan, dated February 15, 1996, and
the Memorandum of Agreement did not include any goals or strategies relating to the Authority's
contract process.



                                    Memorandum of Agreement strategies. The Authority's
 Observations
                                    Memorandum of Agreeme nt contains strategies to improve
                                    the procurement process. If the Authority follows through
                                    and fully implements the strategies, the Authority wil l
                                    significantly improve the procurement process and it s
                                    timeliness. The Authority is currently on schedule t o
                                    complete improvement of the procurement process b y
                                    March 31, 1997. However, the Authority did not hav e
                                    sufficient control over its procurement proc ess used to abate
                                    emergency conditions and purchases on i ts open supply and
                                    service accounts.

                                    Process to abate emergency conditions.                    The
                                    Memorandum of Agreement required the Authority t o
                                    develop a process to abate emergency conditions by Jun e
                                    30, 1996. The Authority established an unwritten process.
                                    The Maintenance Advisor said each maintenanc e
                                    superintendent is aware of the emergency procuremen t
                                    process; however, the Authority has not included th e
                                    process in its Maintenance Manual. The unwritte n
                                    procedure requires maintenance superintendents to follow
                                    a specific sequence to obtain materials to c orrect emergency
                                    conditions. The superintendents must: (1) check th e
                                    emergency stock room at the development's maintenanc e
                                    office; (2) check the satellite warehouses; (3) check th e
                                    main warehouse; (4) use the open supply and servic e



                                             Page 69                          Office of Inspector General
Chapter 11



                              accounts; or (5) obtain an emergency check to direc t
                              purchase materials from any available supplier.

                              We contacted the maintenance superintendents for th e
                              following developments: (1) Altgeld Gardens; (2) Stateway
                              Gardens; (3) Francis Cabrini Homes; (4) Robert Taylo r
                              Homes B-2; and (5) Ida B. Wells Homes.

                              The maintenance superintendents said they were aware of
                              the procurement process. Because of the conversion to a
                              new computer system, we were unable to determine if the
                              superintendents followed the procurement process. W e
                              could not determine if the items obtained through the open
                              hardware accounts were available in the Authority' s
                              warehouse at the time of purchase. However, we di d
                              identify the purchase of non-emergency items, such as ,
                              landscaping bark and flower s eeds; therefore, it appears not
                              all superintendents followed the correct process.

                              On June 30, 1996, the Authority was in the process o f
                              rewriting its Maintenance Manual.       The revise d
                              Maintenance Manual is scheduled to be completed b y
                              August 1996. It is important that the revised manua l
                              include written procedures to formally outline th e
                              Authority's emergency procurement process. Writte n
                              procedures help eliminate subjectivity and provid e
                              consistency to the process.

                              We recommend HUD assures the Authority establishes
                              written procedures outlining the emergency
                              procurement process and incorporates the procedures
                              in the Maintenance Manual.

                              Open supply and service accounts. In January 1996, the
                              Authority established purchase agreements for ope n
                              hardware accounts with various vendors for it s
                              developments and departments. The accounts wer e
                              established to assist the Authority in procuring emergency
                              items not on hand in its warehouse system. The purchas e
                              agreements detailed the: (1) maximum monthly and annual
                              spending limits; (2) Authority 's staff authorized to purchase
                              items; and (3) discounts the Authorit y should receive on the
                              purchases.



Office of Inspector General           Page 70
                                                    Chapter 11



We reviewed 37 items purchased from two of th e
Authority's vendors during March and April 1996. Th e
items had been approved and forwarded for payment. The
Senior Manager of Finance for Public Housing and Private
Management, and the Director of Housing Manage ment had
responsibility for reviewing and approving the invoices ;
however, they did not require ve rification of the emergency
condition. Instead, they relied on the discretion of th e
purchasing officials. There was no reference on th e
supporting invoices or any attached documentation tha t
showed the items were purchased for emergency purposes.
We attempted to determine the status of the i tems purchased
but could not find any documentation, such as th e
emergency work order or work order number, that showed
the purchases were for emergencies. Items purchase d
through the open supply accounts are generally mor e
expensive than those purchased centrally because th e
purchases are usually in small quantities and not subject to
quantity discounts. Therefore, verification of emergenc y
purchases is necessary to help prevent waste and abuse.

We recommend HUD assures the Authority establishes
procedures and controls to verify that items purchased
through the open hardware accounts are for emergency
purposes.

The Authority stayed within its spending limits, and onl y
authorized personnel purchased items; however, th e
Authority did not receive all of its purchase discounts. The
Senior Manager was not aware discounts were to b e
received because he was not notified of the terms of th e
agreements by the Purchasing and Contracts Departmen t
who established the purchase agreements. However, even
if he was aware of the disco unts, he could not have verified
them, since the vendor invoices did not always disclose the
original price and the discount. Twe nty-one of the 37 items
reviewed were purchased from one vendor . We determined
the Authority did not receive the 5 percent discoun t
required by the purchase agree ments for 18 of the 21 items.
Following are examples of discounts lost:




        Page 71                           Office of Inspector General
Chapter 11




                                  Item          List         Price         Discount
                                                Price        Paid           Lost
                               Steel            $119.99      $119.99        $6.00
                               Bathtub
                               Cordless
                               Drill             46.99         46.99         2.35
                               Padlock           16.99         16.99         1.70

                              For the three items where the Authority did receive it s
                              discount, the list price and the price charged were shown on
                              the charge slips which would ha ve allowed the Authority to
                              verify the discount. Although the total lost discounts w e
                              identified were small, the Authority should have a method
                              to verify the accuracy of discounts. Additionally, as these
                              purchase agreements are used more, the potential loss from
                              foregone discounts will increase. For example, one vendor
                              was providing discounts of between 15.01 and 47.2 5
                              percent depending on the item.

                              One purchase agreement incorrectly showed the Authority
                              was not entitled to a discount. However, the vendor wa s
                              giving the Authority a discount. The vendor had othe r
                              agreements with the Authority to provide supplies at a
                              discount and extended the practice to the open supply and
                              service account. It is important that the purchas e
                              agreements accurately reflect the discounts in order t o
                              protect the Authority's interests and provide managemen t
                              officials correct data for their review of transactions.

                              We recommend HUD assures the Authority implements
                              procedures to notify reviewing officials of the terms of
                              the open supply and service accounts' purchase
                              agreements.

                              We recommend HUD assures the Authority requires its
                              vendors to show discounts received on applicable
                              invoices so the Authority has assurance it is receiving
                              the discounts to which it is entitled.




Office of Inspector General           Page 72
                                                   Chapter 11



We recommend HUD assures the Authority reviews its
purchase agreements to ensure they reflect the correct
discounts.

With the impleme ntation of controls to verify if a purchase
is an emergency and to verify the ac curacy of discounts, we
believe the strategy to identify opportunities for ope n
supply and service accounts will be satisfied.

We recommend HUD closely watches the Authority's
progress in implementing the strategies for improving
the procurement process by March 31, 1997. HUD
should provide any technical assistance the Authority
may require in order to achieve the goal and target
date.

We recommend after all strategies have been
implemented, HUD assures the Authority assesses its
procurement process to ensure the problems the
strategies were created to eliminate have been corrected
or takes actions to make additional changes. This
should be accomplished by September 30, 1997.

Contracting process. In the past, the Authority' s
contracting process was not adequate which allowed fo r
favoritism, product substitution, and services not bein g
provided. For example, the Authority's contracting process
did not, at a minimum, require that bid sheets b e
maintained, contract solicitations be advertised, an d
contract files be maintained. The Authority's failure t o
maintain an adequate contracting process also allowed for
manipulation by former Authority employees.

The Director of Purchasing and Contracts took over th e
Department in July 1994 and initiated actions to correc t
prior contracting proble ms. For example, the Director now
requires that: (1) bid sheets be maintained; (2) contrac t
solicitations be advertised in local and nationa l
publications; and (3) file sheets be maintained for eac h
contract file to ensure necess ary documents are maintained.
HUD's Office of Contractin g conducted a review in August
1995 that included recommendations to improve th e
procurement process. The Authority has not implemented
all of the recommendations because it believes th e


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Chapter 11



                              recommendations have been overcome by the ne w
                              computer system. For example, the Authority has no t
                              established and staffed two Senior Analyst positions. W e
                              were unable to assess the extent to which the new computer
                              system may invalidate the recommendations, since th e
                              Authority only began implementing the purchase orde r
                              module in June 1996. However, because of past problems
                              in the contracting area, it is important for the Authority t o
                              coordinate the resolution of each recommendation wit h
                              HUD.

                              The Blueprint, Lon g-Term Plan, and the Agreement do not
                              contain any goals or strategies relating to the contractin g
                              process. Because of past problems and allegations, w e
                              believe the Authority should include a goal in it s
                              Memorandum of Agreement to develop procedures t o
                              periodically assess the status of its contracting process. A
                              periodic assessment of the Authority's contracting process
                              provides the opportunity to identify and implement actions
                              needed to correct a problem before the problem gets out of
                              control. A periodic assessment also provides HUD an d
                              Authority Management some assurance about the integrity
                              of the system.

                              We recommend HUD coordinates with the Authority to
                              assess the status of the recommendations in HUD's
                              August 1995 review and to ensure HUD agrees with
                              actions or lack of actions taken to correct the problems
                              the recommendations were made to address.

                              We recommend HUD assures the Authority develops
                              procedures to conduct a periodic analysis of its
                              contracting process and initiates actions necessary to
                              improve the process.

                              The Authority's Deputy Executive Director of Finance and
  Management's Comments
                              Management provided the following comments:

                              •   A new policy has been developed which will allo w
                                  Authority operational personne l to purchase any item(s)
                                  at designated hardware stores subject to establishe d
                                  dollar limits.




Office of Inspector General           Page 74
                                                                              Chapter 11



                         •   A new policy has been developed which will allo w
                             operational personnel to use the existing hardwar e
                             accounts to purchase any item(s ) as long as dollar limits
                             are not exceeded.

                         •   Terms of the open supply and service accounts hav e
                             been distributed to reviewing officials.

                         •   All hardware store vendors have been contacted an d
                             told to include retail and discounted prices on al l
                             invoices. Purchasing, Accounts Payable a nd Operations
                             personnel will closely monitor the invoices to ensur e
                             compliance.

                         •   Actions will be taken to assess operations of th e
                             Procurement Department by the due date (Septembe r
                             30, 1997). Estimated completion date: June 30, 1997.

                         •   The Authority will try to facilitate a meeting with th e
                             Illinois State HUD of fice to bring closure to the August
                             1995 review.

                         •   Procedures will be established to ensure a periodi c
                             review of the contracting process is conducted .
                             Estimated completion date: August 31, 1996.

                         The Authority developed a policy to address th e
Evaluation of Comments
                         recommendation to establish written p rocedures that outline
                         the emergency procurement process. The policy give s
                         development managers the flexibility to use blanke t
                         purchase orders to purchase any item subject to dolla r
                         limits. The policy states that the intent of establishin g
                         blanket purchase orders i s not to circumvent the warehouse
                         or the purchasing process. However, the policy does no t
                         outline the process. We believe written procedure s
                         covering emergency purchases sti ll need to be developed to
                         ensure efficient use of resources and to establish a basis to
                         determine if the procurement process is circumvented. The
                         actions the Authority has completed and is planning i n
                         response to our other recommendations should improve its
                         procurement and contracting functions and help to identify
                         potential problems.




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Office of Inspector General                  Page 76
Chapter 12

                      Accounting Systems and Controls
Past reviews conducted by HUD, independent public accountants, and the Chicago Housin g
Authority's Inspector General showed the Authority did not have an effective accounting system
to manage its financial activities. The re views noted that the Authority did not have an adequate
system, policies, procedures, or controls for cash management.

The Authority's Long-Term Plan contains a strategy to impl ement a fully integrated Management
Information System which includes accounting system modules. The Memorandum o f
Agreement between HUD and the Authority contains specific strategies and target dates t o
improve financial accounting and reporting capabilities.



                                     New accounting system. The Authority is taking steps that
 Observations
                                     should enable it to effectively carry out its accounting and
                                     financial functions. The Authority has established a ne w
                                     chart of accounts. The new accounts track operatin g
                                     income and expenses and identify HUD and non-HU D
                                     funding sources. The Authority is converting its presen t
                                     accounting functions to a new integrated computer system
                                     that was developed by Creative Computer Solution s
                                     Systems. Additionally, the Authority is pla nning to develop
                                     and implement a site-based budgeting strategy.
                                     The Authority purchased seven modules that relate to th e
                                     Authority's financial operations.          Additionally, th e
                                     Authority is evaluating the budget preparation and payroll
                                     modules to determine if they will fulfill the Authority' s
                                     requirements or if the Authority needs to acquire different
                                     modules (see Chapter 13 for a discussion of the budge t
                                     preparation and payroll modules that should b e
                                     implemented by December 31, 1996). As of August 1 ,
                                     1996, the Authority has begun using all seven modules and
                                     is in the process of fully implementing them into th e
                                     integrated system. The modules consist of the following :
                                     (1) tenant accounting, (2) purchasing, (3) g eneral ledger, (4)
                                     fixed assets, (5) bank reconciliation, (6) inventory control,
                                     and (7) accounts payable.

                                     The Creative Computer Solutions integrated compute r
                                     system is in use at other housing authorities nationwide .
                                     We contacted two authorities using the system and th e
                                     applicable HUD program office s. The authorities said their
                                     systems consisted of the same modules that are bein g
                                     implemented or being evaluated for implementation at the
                                     Chicago Housing Authority. The authorities and th e


                                              Page 77                           Office of Inspector General
Chapter 12



                              applicable HUD offices said the i ndividual modules formed
                              a complete accounting system. Both said they wer e
                              satisfied with the operation of the system and the reporting
                              products it generated.

                              New policies and procedures. The Authority has draf t
                              policies and procedures for each incremental accountin g
                              function included in its integrated system wit h the exception
                              of the general ledger. The general ledger does not require
                              policies and procedures. After each particular function i s
                              fully implemented, the Authority plans to review the draft
                              policies and procedures, make necessary adjustments, and
                              then issue the final policies and procedures. To evaluate the
                              draft procedures, we reviewed those for fixed assets ,
                              inventory control, tenant accounting, accounts payable and
                              purchasing. The draft procedures appeared to adequatel y
                              cover the necessa ry functions and control areas. However,
                              it is important to issue final procedures that have bee n
                              tailored to each module as soo n as possible after the system
                              is implemented so the system is operated consistently an d
                              can be tested for accuracy.

                              Site-based budgeting strategies. The Memorandum o f
                              Agreement requires the Authority to implement strategie s
                              for a site-based budget. The Authority plans to develo p
                              these strategies after it has selected and implemented a
                              budget module. The target dat e to have a site-based budget
                              is December 31, 1997; therefore, sufficient time should be
                              available to effectively develop the strategies an d
                              implement the site-based budget.

                              We recommend HUD closely follows the Authority's
                              progress in implementing the new accounting system
                              and provides any assistance necessary to ensure the
                              system is fully implemented by December 31, 1996, and
                              that a site-based budget is achieved by December 31,
                              1997.

                              We recommend HUD assures written policies and
                              procedures are issued as quickly as practical after each
                              accounting function is implemented.




Office of Inspector General           Page 78
                                                                         Chapter 12



                        The Authority's Deputy Executive Director of Finance and
Management's Comments
                        Administration said, "I agree with your observations an d
                        recommendations and will be implementing them."




                                Page 79                        Office of Inspector General
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Office of Inspector General                  Page 80
Chapter 13

                       Management Information System

Previous consultant and independent public ac countant reports noted the Authority did not have:
a computer system that was fully responsive to its needs; and a formal information securit y
policy.

The draft Memorandum of Agreement between HUD and the Authority, dated June 21, 199 6
contains a goal to improve the technology capacity of the Aut hority and its staff. The Authority's
Long-Term Plan includes strategies to implement a fully integrated management informatio n
system and to institute a comprehensive computer training program.



                                      Integrated management information system. In August
 Observations
                                      1995, the Authority solicited proposals for an integrate d
                                      management information system. The Authority received
                                      four proposals for the new system. Creative Compute r
                                      Solutions Systems software was selecte d and a contract was
                                      executed in February 1996. The Authority's agreemen t
                                      called for the purchase of the following nine modules: (1)
                                      tenant accounting; (2) purchasing; (3) general ledger; (4 )
                                      fixed assets; (5) bank reconciliation; (6) inventory control;
                                      (7) housing eligibility; (8) accounts payable; and (9 )
                                      maintenance work orders.

                                      The Authority is also considering purchasing the budge t
                                      preparation and payroll modules. However it has som e
                                      concerns with these two modules and plans to do furthe r
                                      investigation before making the decision. The Authority's
                                      Project Manager said the Authority is reviewing these two
                                      modules to determine if they will meet the Authority' s
                                      needs. He said the previous Authority managemen t
                                      purchased a custom software payroll package and th e
                                      Creative Computer Solutions payroll module does no t
                                      appear to have all of the software capabilities of tha t
                                      system. The Authority also has concerns that the budge t
                                      package may not have th e capability to allow the Authority
                                      to move to a decentralized budgeting syst em. To ensure the
                                      integrated management in formation system is implemented
                                      by its December 31, 1996 target date, the Authority needs
                                      to promptly make a determination of which payroll an d
                                      budget modules it will use.

                                      The new Creative Computer Solutions Systems softwar e
                                      uses two common operating systems; therefore, th e



                                              Page 81                           Office of Inspector General
Chapter 13



                              Authority should be able to integrate any new module with
                              relative ease.

                              We found the installation of the nine Creative Compute r
                              Systems software modules was proceeding ahead of th e
                              December 31, 1996 sche duled target date. As of August 1,
                              1996, all of the purchased modules were installed.

                              The Authority's new software package is in use at othe r
                              housing authorities. We contacted two of the authoritie s
                              and they confirmed the so ftware package was effective and
                              reliable. We also contacted the appli cable HUD offices and
                              they said the Creative Computer Solutions softwar e
                              package was a very good product that produced the needed
                              reports and information. Because the impl ementation of the
                              Authority's new software modules were in their infancy, we
                              were unable to evaluate the Authority's use of them .
                              However, the modules appear adequat e and if the Authority
                              properly uses them, it should have an effective dat a
                              processing program.

                              We recommend HUD assures the Authority evaluates
                              and selects the budget and payroll modules
                              immediately, so the modules can be implemented by the
                              December 31, 1996 target date to have a functioning
                              integrated management information system.

                              We recommend HUD assures the Authority establishes
                              controls and procedures to complete the implementation
                              of its integrated management information system by
                              December 31, 1996, and to periodically assess its
                              information needs.

                              Software training. Training was provided on each of the
                              Creative Computer Systems' software modules for th e
                              applicable employees involved with each module. Th e
                              training was conducted by the software manufacturer an d
                              completed in July 1996. The Director of Managemen t
                              Information Systems said additional software training will
                              be an on-going process.

                              The Authority is also in the process of p roviding training on
                              its standardized software. The Authority's standardize d
                              software system includes Windows/Word/Excel/Exchange


Office of Inspector General           Page 82
                                                     Chapter 13



software as well as, numerous adv anced services such as E-
Mail communications and access to the Internet . As of June
1996, the Authority had approximately 600 users on-lin e
and are adding users d aily, with plans of having potentially
over 1,000 users. As of August 1, 1996, the Authority had
trained 363 employees or 51 percent of applicable users .
The training was conducted by experienced in-hous e
instructors. The Project Manager said the standardize d
software training is scheduled to be completed b y
September 30, 1996. The September 30, 1996 completion
date provides the A uthority a buffer to help ensure the new
integrated system will be fully operati onal by December 31,
1996.

It is important for the Authority to ensure all employee s
who use computers receive software training so they ca n
effectively use the new system.

We recommend HUD assures the Authority establishes
controls and procedures to ensure all applicable
employees receive software training by December 31,
1996, the day the new integrated system will be fully
implemented.

Help desk. The Management Informati on System Division
established a help desk for all users. The help desk i s
contacted by one universal phone number and is currently
staffed with one assistant. The Director of Managemen t
Information Systems said he plans to add additiona l
assistants. As of July 18, 1996, the Authority wa s
interviewing candidat es to fill additional assistant positions
at the help desk. A help de sk provides information to users
quickly so they can more effectively use the system, and it
helps eliminate computer down time.

Information security policy.            The Managemen t
Information Systems Division is updating each softwar e
module's policies and procedures to include ne w
information security policies. Th e Authority has contracted
with Creative Computer Solutions Systems to develop and
implement a position based security policy. Currently, the
Authority is using the security policy for its old compute r
system which allows access based on the employees '
department. The new system will limit access based on job


        Page 83                            Office of Inspector General
Chapter 13



                              position and need to know. The policies are scheduled t o
                              be updated by August 31, 1996.

                              Because the revisions of the new policies were in thei r
                              infancy, we were unable t o evaluate them. However, when
                              the new policies are updated with the new securit y
                              measures, they should help prevent unauthorized access to
                              the Authority's system. The Authority has hired Deloitt e
                              and Touche to review the internal controls over its revised
                              policies and procedures.

                              We recommend HUD assures the Authority completes
                              the revisions of its policies and procedures and
                              implements all new security procedures by December
                              31, 1996.

                              The Authority's Deputy Executive Director of Finance and
  Management's Comments
                              Administration said, "I agree with your observations an d
                              recommendations and will be implementing them."




Office of Inspector General           Page 84
Chapter 14

                                  Asset Management
The Chicago Housing Authority includes privatization of the management of its: (1) low ren t
units; (2) pension fund; and (3) deferred compensation program under its asset managemen t
function. In the past, the Authority did not manage i ts asset management function in an effective
and efficient manner. Spe cifically, the Authority did not maintain its developments in a decent,
safe, and sanitary condition. The Authority's pension fund and the deferred compensatio n
program were mismanaged. T he mismanagement resulted in a multi-million dollar diversion of
assets from the Authority 's pension fund and deferred compensation programs. The Authority's
employees who participated in the defe rred compensation program also had not received benefit
statements in over a year.

After HUD took over the Authority, HUD issued a Blueprint, da ted June 11, 1995, that contained
a goal to replace the Authority's existing administrative structure and create a new structure to
effectively manage the A uthority's assets and resources. The Authority's draft Memorandum of
Agreement, dated June 21, 1996, contains a goal to explore alternative a nd innovative approaches
to the Authority's housing programs such as private management.



                                     Blueprint and Memorandum of Agreement. The
 Observations
                                     Blueprint's strategi es are: (1) prepare and release a Request
                                     for Proposal for private management of the senior housing
                                     developments; (2) prepare and release a Request fo r
                                     Proposal for management of the pension fund; and (3 )
                                     outsource the management of the deferred compensatio n
                                     program.       The Agreement's strategy is to pursu e
                                     privatization opportunities for the Authority's publi c
                                     housing stock by turning over 15,000 units to privat e
                                     management entities. The target date for transferring th e
                                     units to private management is December 31, 1996.

                                     The Authority is in the process of implementing th e
                                     strategies contained in the Blueprint and the Agreement .
                                     However, the Authority needs to devote additional attention
                                     to the privatization of public housing units, the pensio n
                                     fund, and the deferred compensation program. Th e
                                     Authority also needs to periodically assess the effectiveness
                                     of its actions after they have been fully implemented. We
                                     believe if the Authority follows through and full y
                                     implements the strategies, the Authority will significantl y
                                     improve its asset management.

                                     Private management of developments. Although the
                                     Blueprint only call ed for the transfer of management of the
                                     senior developments to private f irms, the Authority decided


                                              Page 85                          Office of Inspector General
Chapter 14



                              to also include some family developments. The Authority
                              made this decision in order to include some of its mor e
                              difficult to manage developments in the transfer.

                              On August 7, 1995, the Authority issued a Request fo r
                              Qualifications to identify private management firms tha t
                              possessed the qualifications necessary to manage th e
                              Authority's developments. The Authority received 3 4
                              responses. The Authority evaluated the responses for their
                              technical competence, scope of services, and minorit y
                              status/opportunities to be offered to disadvantage d
                              individuals.

                              The Authority executed contracts with 15 private firms .
                              The private firms took over t he day-to-day operations of 23
                              developments effective July 1, 1 996. The 23 developments
                              contain over 8,000 units as follows:


                                Development (*-Previously under private management.)   Units
                                Scattered Sites-Southwest*                              225
                                Horner Homes                                           1,474
                                Scattered Sites-West*                                   382
                                Ogden Courts*                                           135
                                Harrison Courts*                                        126
                                Maplewood Courts*                                       131
                                9141-9177 South Chicago Avenue                          298
                                Hilliard Senior                                         344
                                Hillard Family                                          346
                                Scattered Sites-Northwest*                              339

                                Lathrop Senior*                                          92
                                Scattered Sites-North Central*                          417

                                Madden Park                                             485
                                1611 South Racine                                       212
                                Rockwell Gardens*                                      1,126

                                150 South Campbell                                      129
                                Archer Courts*                                          147
                                Loomis Courts*                                          126
                                Judge Green Apartments*                                 154
                                Lake Parc Place*                                        284

                                Scattered Sites-Northeast                               381
                                Scattered Sites-Southeast                               425
                                Prairie Courts*                                         324




Office of Inspector General               Page 86
                                                   Chapter 14




Sixteen of the 23 developments consisting of approximately
4,500 units were previously under private management .
The Authority made significant changes in its new private
management contracts to improve the private firms '
accountability for result s. For example, the contracts were
standardized, budget revisions now require approval, th e
firms must use the Authority's new computer system, an d
performance standards have been clarified.

Under the new contracts, private firms operate th e
developments using operating budgets. The firms ar e
initially advanced tw o months operating expenses and then
are moved to a monthly reimbursement. The operatin g
budgets do not include funds for major renovations. Major
renovations are planned a nd budgeted for by the Authority.
For all eleven of the contracts we reviewed, th e
management fees remained essentially the same or wer e
reduced from the previous fees charged. The fee structure
was changed to provide an emphasis on occupying units.

We were unable to evaluate the effectiveness of the ne w
contracts, since they have not been in force a sufficien t
length of time. However, our analysis of the contract' s
terms indicated the changes that em phasize occupying units
and improving accountability should result in bette r
customer service. Although the contracts have bee n
improved, proper monitoring of the private managemen t
firms is essential to ensure performance standards are met.

The Deputy Executive Director of Operations said th e
Authority plans to have another 3,500 units under contract
by September 30, 1996 and the remaining 3 ,500 units under
contract by December 31, 1996.

We recommend HUD assures the Authority monitors
the private management firms to ensure the
developments are maintained in an adequate manner
and according to the management contracts, and that
the Authority takes appropriate action if firms do not
properly manage the developments.

We recommend HUD closely watches the Authority's
progress to privatize 15,000 units by December 31, 1996


        Page 87                          Office of Inspector General
Chapter 14



                              to ensure privatization contracts are providing
                              acceptable housing at a reasonable cost.

                              Monitoring private management contracts. The
                              Authority assigned monitoring responsibility of the private
                              management contracts to its Private Managemen t
                              Administration and its Department of Finance for Publi c
                              Housing/Private Management.

                              The Private Management Administration's responsibilities
                              include physical inspections of the developments' grounds
                              and units, reviewing tenant files for accuracy of renta l
                              calculations, and processing monthly stat us reports from the
                              private firms. The Department of Finance for Publi c
                              Housing/Private Management's responsibilities includ e
                              reviewing and approving payment requests, budge t
                              revisions, and performing audits of the private management
                              contractors.

                              The Private Management Administration and th e
                              Department of Finance for Public Housing/Privat e
                              Management have not established a coordination process to
                              address issues that arise during their monitoring. Effective
                              communication and coordination is important to assur e
                              HUD and the Authority that resou rces are only expended to
                              achieve stated objectives of im proving living conditions for
                              the tenants.

                              We recommend HUD assures the Authority establishes
                              coordination procedures between Private Management
                              Administration and Department of Finance for Public
                              Housing/Private Management for monitoring the
                              private firms.

                              Private management of the pension fund. The Authority
                              issued a Request for Proposa l on August 14, 1995 to obtain
                              an investment consultant for the pension fund. A contract
                              was executed with Bec ker, Burke Associates on October 1,
                              1995 to identify investment management firms to manage
                              the Authority's pension fund.

                              The investment consultant identified four firms for th e
                              Plan's Board of Trustees consideration. The Board o f
                              Trustees selected t wo firms based upon interviews with the


Office of Inspector General           Page 88
                                                    Chapter 14



firms and reviews of their investment strategies. Contracts
were executed with The Burridge Group and The Chicago
Trust Company on December 21, 1995. The Plan's Board
of Trustees will be responsible for monitoring the pension
fund contracts. The investment consultant and the tw o
management firms were providing the services as required
by the contracts. The contractors also provided th e
necessary reports to allow the Trustees to monitor the fund.
Contracting out has impro ved the operations of the pension
fund.

However, the Board of Trustees issued Requests fo r
Proposals on December 22, 1995 to obtain legal ,
accounting, auditing, and actuarial services for the pension
fund. While the Board of Trustees notified the selecte d
firms on January 25, 1996 of the contract awards, th e
Authority has no t executed written contracts with the firms
as of July 11, 1996. The Deputy Executive Director fo r
Finance and Administration said contracts have not bee n
executed because the Authority was focusing its effort s
towards finding a new Plan Administrator and assurin g
pension benefit payments were being issued timely. Th e
former Plan Administrator left the Authority abruptly o n
April 26, 1996. A new Plan Administrator was hired o n
June 19, 1996. Written contracts ar e essential to outline the
necessary services and to protect the Authority's interest.

We recommend HUD assures the Authority executes
contracts with the legal and actuarial firms selected for
award. (Contracts for the accounting and auditing
services were executed on August 8, 1996 after we had
completed our review of this area).

We recommend HUD assures the Authority properly
oversees the contracts awarded for the pension fund
and takes appropriate action if the contractors do not
effectively perform the required services.

Private management of deferred compensation
program. The Authority issued a Request for Proposal on
May 30, 1995 to outsource the def erred compensation plan.
On November 1, 1995, a contract was executed with th e
Public Employees Benefit Service Corporation t o
administer the plan. The firm's responsibilities includ e


        Page 89                           Office of Inspector General
Chapter 14



                              group meetings with the Authority's employees, enrollin g
                              participants in the plan, and issuing quar terly benefit reports
                              to the plan participants. The plan's administrator wa s
                              providing the services and reports as required by th e
                              contract. This has improved the operations of the deferred
                              compensation program.

                              The Authority's Manager of Financial Report ing and Tenant
                              Accounting was responsible for monitoring the deferre d
                              compensation contract; however, the Manager said, with his
                              other duties, he did not have adequate time to monitor the
                              contract. The Manager said he was assigned oversigh t
                              responsibility in June 1994 on a temporary basis, and th e
                              Authority has not reassigned the monitoring responsibility
                              to another staff member. When we brought this to th e
                              Authority's attention, the monitoring of the deferre d
                              compensation contract was reassigned to the Authority' s
                              Human Resources Department. Effec tive monitoring of the
                              contract is important to ensure past problems with th e
                              program do not reoccur.

                              We recommend HUD assures the Authority establishes
                              controls to ensure the deferred compensation contract
                              is adequately monitored and appropriate actions are
                              taken if the firm under contract is not properly
                              managing the deferred compensation program.

                              The Authority's Deputy Executive Director of Finance and
  Management's Comments
                              Administration said, "I agree with your observations an d
                              recommendations and will be implementing them."

                              Regarding private management of developments, th e
                              Authority's Deputy Executive Director of Operations said,
                              "The Chicago Housing Authority concurs with th e
                              observations and associated rec ommendations as stated and
                              will incorporate same in our overall planning efforts."




Office of Inspector General            Page 90
Chapter 15

                                  Risk Management
The Chicago Housing Authority's Risk Management Departm ent is responsible for administering
the workman's compensation program and prote cting the Authority against liability and property
claims. The goal of risk management is to reduce insurance claims and costs. A prior repor t
issued by the Authority's In spector General found the Authority's in-house administration of the
workman's compensation program was not effectively, efficiently, or economically managed .
The program was administered without proper planning, management, staffing, and writte n
policies and procedures. The Authority also lacked a safety program and did not conduct a n
adequate analysis of its insurance coverage.

The HUD Blueprint, dated June 11, 1995, c ontained a goal to replace the existing administrative
structure and create a new structure to manage the Authority's risk. To accomplish this goal ,
HUD established a strategy to investigate the procurement of a third party administrator for the
workman's compensation p rogram. The Authority's Long-Term Plan, dated February 15, 1996,
contained strategies to meet the goal of devoting increased emphasis to risk management. The
Plan set a target date of March 30, 1996 to hire a new program director, and May 30, 1996 t o
develop a safety program. The Authority's draft Memorandum of Agreement, dated June 21 ,
1996, did not contain any goals or strategies relating to risk management.



                                     Private management of the workman's compensation
 Observations
                                     program. The Authority issued a Request for Proposal on
                                     September 29, 1995 to obtain a third party administrator for
                                     the workman's compensation program. A contract wa s
                                     executed with Coresource, Inc. on March 27, 1996 .
                                     Because of the contract, the Authority is reducing it s
                                     workman's compensation staff from six to one. The on e
                                     employee is being retained to assist the Director of Ris k
                                     Management in monitoring the contract.

                                     The contract contains specific perform ance standards which
                                     the firm must abide by when administering the contract .
                                     The performance standards establish a basis for th e
                                     Authority to effectively monitor the firm and hold the firm
                                     accountable for its performance. Because sufficient tim e
                                     has not elapsed since the w orkman's compensation contract
                                     was awarded and the claims were transferred, we wer e
                                     unable to assess the effectiveness of th e contract. However,
                                     we determined the Authority is receiving the monthl y
                                     reports from the firm to monitor the program and is usin g
                                     them to develop ways to reduce claims. For example, the
                                     Authority initiated a training course to instruct employee s
                                     on the proper way to lift heavy materials.



                                             Page 91                           Office of Inspector General
Chapter 15



                              We recommend HUD assures the Authority aggressively
                              monitors the workman's compensation contract and
                              takes appropriate actions if the firm does not properly
                              manage the program.

                              We recommend HUD assures the Authority periodically
                              conducts an analysis to determine if it is more cost
                              effective to contract out the administration of the
                              workman's compensation program versus theAuthority
                              administering the program in-house.

                              Risk management program. The Authority established a
                              target date of March 30, 1996 to hire a Director of Ris k
                              Management to replace the former Director who diverte d
                              funds. On November 20, 1995, the Autho rity hired the new
                              Director. The new Director has an exte nsive background as
                              a risk manager and risk consultant.

                              Safety Program. The Authority established a target dat e
                              of May 30, 1996 to develop a safety program. Th e
                              Authority developed a safety plan on December 1, 199 5
                              and is in the process of implementing the program. Th e
                              program consists of training for employees and resident s
                              and procedures to identify hazards in order to reduc e
                              property and casualty claims against the Authority.

                              The Authority initiated the emp loyee training portion of the
                              safety plan. For example, it has conducted employe e
                              assistance training which deals w ith alcohol and drug abuse
                              problems. The Authority, however has not init iated resident
                              training, although its target date for implementing th e
                              training was March 1996. The resident training wa s
                              delayed because video equipment needed for developin g
                              training materials was not received on time. The Authority
                              received the video equipment in May 1996 and expects to
                              initiate resident training by September 30, 1996. Training
                              residents on safety procedures helps ensure residents wil l
                              take the proper actions in emergency situations and thu s
                              reduce casualty and property losses.

                              We recommend HUD assures the Authority initiates
                              safety training for its residents by September 30, 1996.




Office of Inspector General           Page 92
                                                     Chapter 15



Safety inspections. In June 1996, the Authority hired a
Safety Inspector to coordinate and train developmen t
managers on how to conduct inspections to identify an d
eliminate hazardous conditions at developments. Fo r
example, the Authority determined that a high number of its
claims came from pot holes, fence posts left after fence s
were removed, and defective playground equipment.

The Safety Inspector personally reviewed eac h
developments' parking areas and roads for pot holes an d
reported the problems to the City of Chicago who i s
responsible for corrective action.      The Authorit y
periodically follows up with the City to determine i f
corrective action has been taken.

Development managers were responsibl e for inspecting and
ensuring corrective action was taken regarding the fenc e
post problem and defective playground equipment. Th e
Risk Coordinator who oversees the safety program had the
results of the Safety Inspector's review of the pot holes ;
however, he did not have any information for th e
inspections accomplished by the development managers. It
is important for the Authority to monitor the status o f
inspections at the developments, so it can ensure th e
hazardous conditions have been eliminated.

We recommend HUD assures the Authority develops
procedures to track hazardous conditions until the
conditions are eliminated.

Purchase of Insurance. Because of the emphasis on risk
management, the Authority now purchases insurance more
intelligently and has reduced its insurance premiums. For
example, in March 1996, the Authority did not renew it s
public official liability policy since the Authority was also
covered under another policy. As a result, the Authorit y
was able to save $272,782.

For the first time, the Authority has developed a list of al l
its properties and t heir values. The list is a valuable source
of information for calculating the correct coverage needed
for its insurance programs.




        Page 93                            Office of Inspector General
Chapter 15



                              We believe the actions the Authority has t aken will improve
                              its risk management program; however, the Authority needs
                              to periodically evaluate the results of its actions and tailor
                              the program to meet new conditions. Because of pas t
                              problems, the Authority should develop procedures t o
                              periodically assess its risk management program. A
                              periodic assessment of the Authority's risk managemen t
                              program provides the opportunity to identif y and implement
                              actions needed to correct a problem be fore the problem gets
                              out of control.

                              We recommend HUD assures the Authority develops
                              procedures to periodically assess its risk management
                              program and makes changes to address new conditions.

                              The Authority's Deputy Executive Director of Finance and
  Management's Comments
                              Administration said, "I agree with your observations an d
                              recommendations and will be implementing them."




Office of Inspector General           Page 94
Chapter 16

                                         Personnel
A past consultant review of the Chicago Housing Authority showed the Authority's personne l
function needed improvement. The consultant found the Authority's job descriptions wer e
inaccurate and not useful in hiring personnel or in evaluating performance, employees' salaries
bore little relevance to the market, and performance evaluations were not effective. Additionally,
a basic skills assessment the Authorit y gave to its maintenance employees raised concerns about
the qualifications of the housing management staff and the Authority's recruiting process.

To correct the problems, the Authorit y included strategies in its Long-Term Plan and goals in its
June 21, 1996 draft Memorandum of Agreement with HUD. The documents have simila r
objectives. The Memorandum of Agreement contains goals to assess and develop staff skil l
levels to improve housing management capacity, staff performan ce, and productivity. The Long-
Term Plan has three st rategies to achieve a committed, competent, and professional work force.
The strategies are: (1) provide pro-active training and cross-training for staff and professiona l
development skills; (2) implement an adequate compensation and performance system; and (3)
aggressively recruit skilled workers.



                                     Assessment of management staff skill levels. The
 Observations
                                     Authority reviewed the skills and capabilities of its sit e
                                     managers, maintenance employees, and recruiters.

                                     All site managers' backgrounds wer e reviewed to determine
                                     if they met HUD's cer tification requirements. Thirty-seven
                                     managers did not. Consequently, during the past nin e
                                     months, most of the managers were given certificatio n
                                     training. As of July 15, 1996, only 11 managers remai n
                                     uncertified. The Auth ority mandated that the remaining 11
                                     managers will take certification trai ning in November 1996.

                                     In connection with the new computer system, maintenance
                                     employees were giv en a basic skills assessment. The basic
                                     skills assessment required supervisors and workers to read,
                                     write, and perform math functions at an eighth and sixt h
                                     grade level, respectively. Only 54 percent of the supervisors
                                     and 48 percent of the workers passed.

                                     The Authority also analyzed all 59 maintenance positio n
                                     descriptions and found only 22 of the 59 description s
                                     specifically stated that the employee must be able to read,
                                     write, and comprehend work orders. The Human Resources
                                     Department is in the process of revisin g the job descriptions
                                     to fill this gap. The Human Resources Director said th e
                                     revisions will be comple ted by August 1996. Additionally,


                                              Page 95                          Office of Inspector General
Chapter 16



                              the Authority has compiled a lis ting of various literacy sites
                              around the greater Chicago area and is strongl y encouraging
                              applicable maintenance supervisors and workers to atten d
                              classes to improve their skills. The Authority is currentl y
                              reviewing its options through the unions and its Lega l
                              Department to determine what actions it can take i f
                              employees do not improve their skills.

                              The Authority determined th at it needs to have experienced
                              recruiters to identify and recruit skilled workers. As a
                              result, the skills and capabilities of the Human Resource s
                              staff were assessed. The Authority created new position s
                              and made staffing changes in its Human Resources staff .
                              Job qualifications that contain skill levels for each of th e
                              new Human Resources positions were created. Th e
                              Authority is in the process of creating an annual recruitment
                              strategy. Recruiting sources are being identified an d
                              methods to recruit are being developed to accomplish th e
                              strategy. The Authority-wide revision of job descriptions,
                              that contain expected skill requirements, will assist th e
                              recruiters in identifying qualified candidates for vacancies.

                              The Authority informally assessed its staff's skill level i n
                              other areas. Management has made staffing changes an d
                              replaced personnel as they deemed necessary. Fo r
                              example, in Finance and Administration, five out of eigh t
                              directors were hired within the last six months and there has
                              been a turnover of approximately 50 percent of th e
                              Management Information Systems' staff. However, wit h
                              the exception of the site managers, ma intenance employees,
                              and recruiters, the Authority has not performed a forma l
                              assessment of its staff. It is important for the Authority to
                              have an assessment that includes all its staff so it ha s
                              assurance employees are qualified for the positions they are
                              filling, and can develop training programs where needed.

                              We recommend HUD assures each of the Authority's
                              managers have been certified by the March 31, 1997
                              Memorandum of Agreement target date for assessing
                              and developing staff skill levels.

                              We recommend that HUD assures the Authority
                              develops and implements strategies to address (1) the



Office of Inspector General           Page 96
                                                     Chapter 16



skill level of all its staff, and (2) the issue of staff who do
not meet minimum required skill levels.

We recommend HUD assures the Authority develops an
effective recruiting strategy that properly assesses the
qualifications of potential employees.

For the first time, the Authority has a lso established a group
of core courses to train housing management personnel. A
core course is a required arrangement of fundamenta l
curriculum that combines basic topics to provid e
participants with a common background on variou s
subjects. The Authority developed the curriculum an d
materials for the courses. The Authority implemented a n
employee orientation class to familiarize new staff with the
Authority's policies and procedures. The Authority's 1996
staff training catalog contains 37 courses. For example, the
Authority offers a course entitled "Progressive Discipline"
that provides managers with guidelines to addres s
disciplinary problems. Twenty-two of the courses will b e
taught by instructors from the Human Resource s
Department, two by outside contractors, and the remaining
13 are to be given by Housing Management staff. Because
of recent reductions in staff levels, the Housin g
Management trainers have not been determined.

The Authority also plans to use local real estate trainin g
organizations to provide specialized training that th e
Authority's staff is unqualified to give. For example, th e
Authority plans to have the National Center for Housin g
Management give certification training to its eleve n
managers in November.

If the Authority follows through with i ts planned actions, its
staff should have the means to develop necessary housing
management skills.

We recommend HUD assures the Authority appoints
qualified instructors and implements the courses by the
September 30, 1996 target date established in the
Memorandum of Agreement.

System to track the training. Presently, the Authorit y
keeps track of its employees training with sign-in sheets .


         Page 97                           Office of Inspector General
Chapter 16



                              The employees receive certificates for satisfactor y
                              completion of a training course. However, variou s
                              departments, in addition to Human Resources, give staf f
                              training. The Legal Department provides evictions training,
                              the Management Information Systems De partment provides
                              computer training, and the Purchasing and Contracts' staff
                              provides procurement training. There is no consolidate d
                              record of an individual's training.

                              Sign-in sheets do not provide a convenient record o f
                              training that can be used by managers for plannin g
                              purposes. There w as not a specific order or location for all
                              sign-in sheets. For example, the Authority has n o
                              consolidated record of which managers receive d
                              performance management training. The information wa s
                              only available from staff m emory or research of all training
                              sign-in sheets. An accurat e method to document training is
                              important for budgeting purposes, to prevent unnecessar y
                              duplication of training, and to ensure all personnel have the
                              necessary skills.

                              The Deputy Executive Director of Finance an d
                              Administration said that the Authority plans to implement
                              a computer database to track employee training.

                              We recommend HUD assures the Authority establishes
                              and implements procedures to consolidate the tracking
                              of training received by its employees.

                              Staff performance, productivity and commitment. In
                              1994, the Authori ty commissioned a consultant to study its
                              compensation program, job descriptions, and performance
                              program. The consultant found that the Authority's pa y
                              rates were not relevant to the overall market, jo b
                              descriptions were inaccurate and were not useful in hiring
                              or evaluating performance, and job performance was no t
                              effectively tied to pay.

                              While the compensation study was completed in 1995, the
                              Authority's previous administration did not implement it s
                              recommendations due to bu dgeting difficulties. On June 1,
                              1996, the Authority's new management team began t o
                              implement the study's recommendations.



Office of Inspector General           Page 98
                                                                          Chapter 16



                        The consultant's recommendations regarding pay rates are
                        in the process of being implemented for the Authority' s
                        non-union positions. This action is planned to b e
                        completed by December 31, 1996. For the unio n
                        employees, the consultant's recommended rates hav e
                        received the union's approval and will go into effect o n
                        January 1, 1997.

                        The Authority has revised most of the job descriptions .
                        However, about 60 percent of the job descriptions nee d
                        additional minor revisions due to recent reorganizations in
                        various departments.

                        The Authority's pay for performa nce program requires each
                        of its managers to meet with their staff to review the jo b
                        performance standards and establish expectation levels for
                        each employee's goals and objectives. A merit salar y
                        increase is earned by an employee as a result of jo b
                        performance. Interim performance reviews are currentl y
                        being conducted by the A uthority and should be completed
                        by July 31, 1996. The final performance reviews ar e
                        scheduled for the end of the year.

                        We believe employees' perform ance will improve when the
                        Authority's compensation system and its pay fo r
                        performance syste m are fully implemented. The Authority
                        is on schedule to have the systems fully implemented by its
                        Long-Term Plan target date of March 31, 1997.

                        We recommend that HUD monitors the Authority ot
                        assure it completes the implementation of the
                        compensation system and job descriptions by March 31,
                        1997.

                        The Authority's Deputy Executive Director of Finance and
Management's Comments
                        Administration said, "I agree with your observations an d
                        recommendations and will be implementing them."




                                Page 99                         Office of Inspector General
Chapter 16




                              THIS PAGE LEFT BLANK INTENTIONALLY




Office of Inspector General                  Page 100
Chapter 17

                     Resident Program Delivery Systems
In the past, the Chicago Housing Authority did not conduct an assessment to determine th e
services required by its r esidents. According to HUD's 1995 Recovery Team report, because of
the Authority's size and the limited economic and human resources, the service needs of th e
residents have out-paced the capacity of the Authority's staff.

HUD's Blueprint, dated June 11, 1995, contained strategies to meet the go al of increasing resident
participation in the decisions that affect their lives. The Authority's Long-Term Plan, date d
February 15, 1996, contained strategies to meet the goal of enhancing the resident progra m
delivery systems. The June 21, 1996 draft Memorandum of Agreement did not contain an y
strategies or goals related to resident delivery systems.



                                      Blueprint and Long-Term Plan. The Blueprint's majo r
 Observations
                                      strategies are: (1) establish a system-wide resident planning
                                      process and give residents unprecedented involvement i n
                                      planning the redevelopment of their communities; and (2)
                                      follow through with the State of Illino is and The Woodlawn
                                      Organization to open a transition facility for Authorit y
                                      families in crisis.

                                      The Plan's strategies are: (1) determine and identify issues
                                      and needs involving existing and potential services an d
                                      delegate agencies; (2) ev aluate the effectiveness of existing
                                      and potential service delivery systems; (3) conduct a
                                      cost/benefit analysis of existing and potential servic e
                                      delivery systems; (4) select from existing and potentia l
                                      services and delegate agencies that best meet residents '
                                      needs not currently addressed; (5) monitor the ne w
                                      programs and services; and (6) identify future residen t
                                      needs.

                                      The Authority has met or is on target to meet the Blueprint's
                                      and Plan's strategies except for: (1) determining an d
                                      identifying issues and needs involving existing an d
                                      potential services and del egate agencies; and (2) evaluating
                                      the effectiveness of potential service delivery systems.

                                      Resident Involvement in Planning Process. The
                                      Authority moved t o provide residents more involvement in
                                      the planning process of redeveloping their communities .
                                      On December 18, 1995, the Authority issued a Request for
                                      Qualifications to i dentify urban planners that possessed the
                                      qualifications necessary to work with the residents t o


                                              Page 101                           Office of Inspector General
Chapter 17



                              produce a long-range strategic plan for physical and social
                              service needs in their communities. The plans are t o
                              include: (1) an assessment of the physical design of eac h
                              community; (2) an assessment of available commercia l
                              businesses, recreation facilities, and day care; and (3) a n
                              assessment of soci al service needs and programs necessary
                              to meet those needs.

                              The Authority received eig ht responses and evaluated them
                              based upon the following criteria: (1) specialize d
                              knowledge, experience, and technical competence in th e
                              type of work required; (2) capability to provide the required
                              services on a timely basis; (3) past performance based upon
                              references of former clients serviced; a nd (4) overall quality
                              of the response submitted. All eight firms met th e
                              evaluation criteria. The Authority's Local Advisor y
                              Councils are responsible for selecting an urban planner .
                              The Local Advisory Councils for Henry Horner, ABL A
                              Homes, and Rockwell Gardens selected an urban planne r
                              and the Authority executed the contracts effective May 31,
                              1996. The contracts required the planner to complete th e
                              planning services by July 31, 1996. The Authorit y
                              extended the Henry Horner and ABLA Homes contracts to
                              September 30, 1996 and the Rockwell Gardens contract to
                              September 30, 1997. However, the extensions were no t
                              granted prior to the expiration of the original contract an d
                              were not in writing as required by section 3.03 of th e
                              contracts.

                              The Local Advisor y Councils for Dearborn Homes, Robert
                              Taylor B, Wentworth Gardens, Hilliard Homes, Lathro p
                              Homes, Washington Park, and Trumball Park have als o
                              selected urban planners to assist in the redevelopment o f
                              their communities. The Authority plans to have contract s
                              executed with the urban planners by August 31, 1996. The
                              Deputy Executive Director for Community Relations an d
                              Involvement said the Authority anticipates having th e
                              remaining eight Local Advisory Councils select an urba n
                              planner by December 31, 1996. The Authority needs t o
                              ensure the remaining Councils select an urban planner a s
                              expeditiously as possible so the redevelopment of thei r
                              communities can progress in a timely manner.




Office of Inspector General           Page 102
                                                     Chapter 17



We recommend HUD assures the Authority follows the
requirements of its contracts and ensures all contract
extensions are made before the original contract expires
and are in writing.

We recommend HUD assures the Authority: (1)
executed contracts with the urban planners for
Dearborn Homes, Robert Taylor B, Wentworth
Gardens, Hilliard Homes, Lathrop Homes, Washington
Park, and Trumball Park; and (2) ensures the
remaining eight Local Advisory Councils select an
urban planner as expeditiously as possible but no later
than December 31, 1996.

Development Initiatives Division.              The Authorit y
established a Development Initiatives Division in Augus t
1996 to assist its residents in developing, implementing ,
and monitoring various developmental initiative programs.
The Division will conduct related training on strategi c
planning, homeownership, and Hope VI communit y
services programming related to initiatives for th e
Authority's residents. The Divi sion will also be responsible
for other special projects to im prove the living environment
of residents. The Development Initia tives Division staff are
required to establish policies, procedures, and programs in
coordination with the Authority's executive staff. Th e
policies and procedures will dire ct the Division's operations
in the Resident Development Programs. The Dir ector of the
Development Initiatives Division said the Authority wil l
have written policies and procedures implemented b y
September 30, 1996. The policies and procedures ar e
essential to outline the Authority's commitment to th e
servicing of its residents. Based upon the actions taken by
the Authority to obtain urban planners and establish th e
Development Initiatives Division, resident involvement in
decisions that affect their lives has increased; however, the
Authority needs to continue to find additional ways t o
increase resident involvement.

We recommend HUD assures the Authority established
policies and procedures for its Development Initiatives
Division by September 30, 1996.




        Page 103                           Office of Inspector General
Chapter 17



                              Transition Facility. The Authority followed through with
                              the State of Illinois and The Woodlawn Organization i n
                              establishing a transition facility for families in crisis. Th e
                              facility is the Chicago Holistic Interim Livin g Development.
                              It is operated and partially funded by The Woodlaw n
                              Organization. The remaining funds for the facility ar e
                              provided by the Illinois Department of Children and Family
                              Services, the African America n Leadership Partnership, the
                              Authority, the Museum of Science and Industry, an d
                              Maryville, which is a housing component of the Catholi c
                              Archdiocese. The facility offers counseling, a 24 hou r
                              crisis line, housing assistance, infant and toddler day care,
                              substance abuse and domestic violence intervention, family
                              field trips, extended community transportation, emergency
                              family shelter, and job skills and development placement in
                              order to address the needs of the whole family. As of July
                              8, 1996, the facility had 300 families registered in it s
                              program.

                              The facility initia lly opened on June 21, 1995 in temporary
                              mobile units that offered services on a limited basis. O n
                              December 1, 1995, the facility moved into two renovate d
                              buildings at the Ida B. Wells development that had bee n
                              donated by the Authority. The facility was established i n
                              response to the 17 children found in June 1994 living i n
                              deplorable conditions in t he City of Chicago and the deaths
                              of two children at the Authority's Ida B. Wells and Cabrini
                              Green developments. The Deputy Executive Director o f
                              Community Relations and Involvement said the Authority
                              plans to establish a similar facility at the ABLA Home s
                              development when funding is secured from the State o f
                              Illinois.

                              We recommend HUD assures the Authority establishes
                              a transition facility at the ABLA Homes development
                              when the necessary funding is obtained and explores
                              establishing additional transition facilities at other
                              developments based upon the needs of the residents.

                              Existing/Current Services and Delegate Agencies. On
                              November 15, 1995, the Authority issued a Request fo r
                              Proposal to obtain technical assistance for its curren t
                              resident initiatives programs. The Authority received 1 8
                              responses and evaluated them based upon technica l


Office of Inspector General           Page 104
                                                     Chapter 17



competence, qualifications of key personnel, the proposed
fee to be charged, and minority business enterprise/women
business enterprise participation. The Authority execute d
a contract with E ducational Training and Enterprise Center
effective August 26, 1996 with a completion date o f
December 26, 1996. The Authority' s Community Relations
and Involvement Division is responsible for monitoring the
contract. The contract requ ires the Center to: (1) determine
and identify issues and needs involving existing service s
and delegate agencies; (2) evaluate the effectiveness o f
existing service delivery systems ; (3) conduct a cost/benefit
analysis of service del ivery systems; and (4) identify future
needs. The Authority needs to monitor the contract t o
ensure it and its residents receive the services as required.

Due to the effective date of the contract, the Authority will
not meet its Long-Term Plan's September 30, 199 6
completion date f or determining and identifying issues and
needs involving the existing/current services and delegat e
agencies. The Authority has revised the Plan's completion
date to December 31, 1996. The strategies to: (1) evaluate
the effectiveness of existing service delivery systems; (2 )
conduct a cost/bene fit analysis of service delivery systems;
and (3) identify future needs, have completion dates o f
March 31, 1997, June 30, 1997 and December 30, 200 0
respectively. Since the completion date of the Educational
Training and Enterprise Center contract is December 26 ,
1996, the Authority should co mplete the actions well ahead
of the target dates.

The Deputy Executive Director for Community Relation s
and Involvement said once the Authority receives the report
from the Educational Training and Enterprise Center, th e
Authority will be able to select from the existing service s
and delegate agencies that best meet the residents' needs by
January 31, 1997. The actions taken by the Authorit y
should increase its resident delivery systems.

We recommend HUD assures the Authority monitors
the contract with the Educational Training and
Enterprise Center to ensure it receives the required
services by December 26, 1996.




        Page 105                           Office of Inspector General
Chapter 17



                              We recommend HUD assures the Authority takes
                              appropriate action by January 31, 1997 based upon the
                              Educational Training and Enterprise Center's report.
                              The Authority should only select, for continued use,
                              those existing services and delegate agencies that are
                              shown to best meet its residents' needs.

                              Potential/Future Services and Delegate Agencies. After
                              the Educational Training and Enterprise Center ha s
                              completed its review of the existing/current services an d
                              delegate agencies, the Authority will identif y
                              potential/future s ervices and delegate agencies. The Long-
                              Term Plan's completion dates for identifyin g
                              potential/future services and agencies and evaluating their
                              delivery systems are September 30, 1996 a nd December 31,
                              1996, respectively. The Deputy Executive Director fo r
                              Community Relations and Involvement said the Authority
                              will not meet the Plan's completion dates for these tw o
                              strategies. He said the Authority let these dates slip t o
                              concentrate on resident employment initiatives. Th e
                              Authority revised the completion date s to January 31, 1997.

                              Once the Authority has identified the potential/futur e
                              services and delegate agencies, it plans to conduct a
                              cost/benefit analysis of their delivery systems. The Long-
                              Term Plan's completion date for conducting the analysis is
                              June 30, 1997. The Authority should meet the target date
                              for conducting the cost/benefit analysis of the potentia l
                              services and delegate agencies if it follows through an d
                              completes its other strategies related to exi sting services and
                              agencies. After the analysis is completed, the Authorit y
                              will select the potential services and delegate agencies that
                              best meet the resident s' needs not currently addressed. The
                              potential services and agencies selected should also b e
                              completed by the Plan's target date of September 30, 1997.
                              The Director of Resident Programs is responsible fo r
                              monitoring the potential servic es and delegate agencies that
                              are selected. Based upon the proposed actions, the needs of
                              the residents not addressed should be corrected.

                              We recommend HUD assures the Authority performs
                              the following steps related to potential/future services
                              and delegate agencies: (1) identifies and evaluates their
                              delivery systems by January 31, 1997; (2) conductsa


Office of Inspector General           Page 106
                                                                            Chapter 17



                         cost/benefit analysis of their service delivery systems by
                         June 30, 1997; (3) selects those that best meet the
                         residents' needs not currently addressed by September
                         30, 1997; and (4) monitors services and delegate
                         agencies to ensure the residents' needs are being
                         addressed.

                         The Authority's Deputy Executive Director of Community
Management's Comments
                         relations and Involvement said, " I am in agreement wit h
                         your observations, howe ver, I offer the following comment
                         concerning your recommendation that the Authorit y
                         continue to establish a transition facility at the ABL A
                         Homes development.

                         We recommend that HUD assures the Authority establishes
                         a transition facility at the ABLA Homes dev elopment when,
                         and if, the necessary funding is obtained from the State of
                         Illinois and explore establishing additional transitio n
                         facilities at other developments based upon the needs of the
                         residents.

                         Our recommendat ion regarding a transitional facility at the
Evaluation of Comments
                         ABLA Homes development does not include the word s
                         "and if". We believe our wording establishes a greate r
                         commitment on the part of the Authority to achieve th e
                         objective of the recommendation.




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Chapter 17




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Office of Inspector General                  Page 108
Chapter 18

                   Economic Development Opportunities
                             for Residents
In the past, the Chicago Housi ng Authority lacked a program to provide economic development
assistance to its residents. The Authority has 11 of the 15 poorest census tracts in the Unite d
Stated within its developments. A consultant report issued in October 1994 said the Authority
had a resident unemployment rate of 90 p ercent while 65 percent of its residents wanted to work
and were available for employment. The Authority reestablished the Economic Developmen t
Division in December 1995 to offer residents opportu nities to form small businesses and receive
employment training and placement. The Division had been previously eliminated in January
1995.

The Authority's Long-Term Plan, dated February 15, 1996, contained strategies to meet the goal
of improving economic development opportunities for its residents in and around th e
developments. The Authority's draft Memorandum of Agreement, dated June 21, 1996 ,
contained strategies to meet two goals. The Agreement's goals are to: (1) broaden economi c
development opportu nities for residents which will decrease the percent of rents uncollected by
improving residents' socioeconomic well-being and quality of life; and (2) expand educational,
economic, and recreational opportunities for residents. The HUD B lueprint, dated June 11, 1995,
did not contain any strategies or goals related to resident economic development.



                                    Long-Term Plan and Memorandumof Agreement. The
 Observations
                                    Plan and the Agreement both contain the followin g
                                    strategies: (1) develop joint venture agreements wit h
                                    resident owned companies and local private secto r
                                    businesses; and (2) contract with resident joint ventur e
                                    groups to fulfill the Authority's needs for contracte d
                                    services labor. The Agreement contains the followin g
                                    additional strategies: (1) develop and implement a Section
                                    3 policy statement and guidelines; (2) develop partnership
                                    agreements with government, non-profit, and private sector
                                    agencies to support resident training and employmen t
                                    opportunities; and (3) e valuate the Authority's performance
                                    in meeting residents' needs . The Authority has met or is on
                                    target to meet all of the Plan's and Agreement's strategie s
                                    with the exception of evaluating performance in meetin g
                                    residents' needs.

                                    Joint Venture Agreements.             The Authority ha s
                                    encouraged resid ents to form small businesses with private
                                    sector entities by conducting tenant meetings and trainin g
                                    sessions. The busines ses will provide a variety of services,
                                    such as janitorial and unit rehabilitation, at th e


                                            Page 109                          Office of Inspector General
Chapter 18



                              developments. Since the agreements use residents t o
                              provide the services, they free up the Authority's staff t o
                              complete basic maintenance repairs. A joint ventur e
                              agreement is a contract between the residents and a private
                              sector entity to join resources to provide goods an d
                              services.     The agreement details the duties an d
                              responsibilities of each party. The target date in th e
                              Authority's Memorandum of Agr eement was June 30, 1996
                              to develop joint venture agreements with resident owne d
                              companies and local private sector businesses. Th e
                              Authority met the target date. As of July 31, 1996, ther e
                              were 19 joint venture agreements between residen t
                              businesses and private and non-profit businesses. Th e
                              Authority has projected that the 19 joint venture agreements
                              will create over 500 resident jobs.

                              We recommend HUD assures the Authority continues to
                              emphasize the development ofjoint venture agreements
                              between the resident owned companies and private
                              sector businesses.

                              Joint Venture Contracts. Along with developing join t
                              venture agreements, the Authority established a goal in its
                              Long-Term Plan to execute 25 contracts per year with th e
                              resident owned companies. As of July 31, 1996, th e
                              Authority had executed nine contracts totalling ove r
                              $4,000,000. The cost of the contracts are consistent wit h
                              what the Authority incurred in previous contracts, or would
                              incur if it employed individuals to perform the services .
                              The Authority also has five contracts pending executio n
                              with resident owned businesses. The five contracts should
                              be executed by August 31, 1996. Further, t he Authority has
                              10 more contracts pending execution by t he end of the year.
                              As a result, the Authority is on track to meet its goal in the
                              Long-Term Plan.

                              We recommend HUD assures the Authority works ot
                              expeditiously complete its pending contracts and
                              continues to explore other contracts with the resident
                              owned companies in order to reach the yearly goal of 25
                              contracts.

                              Section 3 Policy.The Authority met the Memorandum o f
                              Agreement target date of April 1996 to develop a Section 3


Office of Inspector General           Page 110
                                                   Chapter 18



policy statement. The policy was i mplemented on May
1, 1996. The policy requires resident hiring to be used on
all of the Authority's construction and service contracts of
$100,000 or more that contain a labor component.

As of July 31, 1996, the Authority had executed 1 9
contracts containing the Section 3 requirement. Th e
contracts require over $400,000 to be spent on residen t
employment and training. The Authority's Contrac t
Compliance Section is responsible for monitoring th e
contractors to ensure they meet the Section 3 requirement.
Contractors that fail to comply with the Authority's Section
3 policy are supposed to have their payments reduced b y
the amount they are required to spend on Section 3
employment and training. As of July 31, 1996 al l
contractors have complied with the Section 3 employment
and training requirements.

The payments retained from contractors not meeting th e
Section 3 requirement will be placed in the Authority' s
Resident Employment Development Initiatives progra m
which develops resident employment opportunities an d
training initiatives. Based upon the implementation of the
Authority's Section 3 policy, the residents should benefi t
from increased employment opportunities. However, th e
Authority needs to monitor the contractors to ensure th e
residents are receiving the intended benefits.

We recommend HUD assures the Authority monitors
the construction and service contractors to ensure: (1)
residents are receiving the employment and training
opportunities as required; or (2) the appropriate
amounts are withheld from contractors for failing o  t
meet the Section 3 requirement.

Partnership Agreements. The Authority has develope d
partnership agreements with various government, non -
profit, and private sector agencies to support its residen t
training and employme nt programs. The agreements detail
the various employment and training programs targete d
towards the Authority's residents. Some of the agencie s
are: (1) the Mayor of the City of Chicago's Office o f
Employment and Training; (2) the State of Illinois '
Department of Public Aid; (3) the Grand Boulevar d


        Page 111                         Office of Inspector General
Chapter 18



                              Federation; (4) the City of Chicago Empowerment Zone ;
                              (5) the Chicago Public Schools; (6) the City of Chicago' s
                              Colleges; (7) United Parcel Service; and (8) the Unite d
                              States Postal Service.

                              For example, the partnership with the Mayor's Office o f
                              Employment and Training will increase employmen t
                              opportunities for residents ages 16 to 24 through a $ 3
                              million grant from the U.S. Department of Labor. Th e
                              Authority will use the grant to open a Resid ent Employment
                              Development Initiative's office at the Ida B. Well s
                              development. The partnership with the Illinois' Department
                              of Public Aid provides the Authority with labor resources.
                              Federal mandates require an increasing number of publi c
                              aid recipients to work in order to recei ve their benefits. The
                              United Parcel Service and United States Posta l Service have
                              each committed to hiring and training 50 and 100 of th e
                              Authority's residents, respectively. We contacted three of
                              the agencies that the Authority has partnership agreements
                              with. The three agencies were very pleased with th e
                              cooperation and success they have had with the Authority.
                              The Authority needs to c ontinue to seek additional partners
                              to improve the tenants economic status.

                              We recommend HUD assures the Authority continues to
                              identify government, non-profit, and private sector
                              agencies to form partnerships that will support the
                              Authority's resident training and employment
                              programs.

                              Evaluating Performance.              The Memorandum o f
                              Agreement target date to evaluate the Authority' s
                              performance in meeting its residents' needs is March 31 ,
                              1997. HUD assumed responsibility for accomplishing this
                              strategy in June 1995 after the tak eover and contracted with
                              Abt Associates for a resident survey. However, HUD has
                              experienced a delay in obtaining approval from the Office
                              of Management and Budget regarding the evaluation form.
                              HUD's Program Design Coordinator expects to have th e
                              survey initiated in September 1996 and completed i n
                              November 1996. As part of the Memorandum o f
                              Agreement strategy a second survey will be conducted a
                              year later to evaluate if the Authority's performanc e
                              improved. HUD plans to complete the second survey i n


Office of Inspector General           Page 112
                                                                            Chapter 18



                         November 1997. Therefore the original target date needs to
                         be adjusted. HUD needs to take immed iate action to ensure
                         the survey is conducted in order for the Authority to act on
                         the results.

                         The Deputy Executive Director for Community Relation s
                         and Involvement suggested that t he Agreement's target date
                         be revised to January 31, 1998. We believe January 31 ,
                         1998 is a reasonable date that gi ves HUD and the Authority
                         time to analyze the results of the surveys.

                         We recommend HUD and the Authority adjust the
                         target date to complete the resident surveys to January
                         31, 1998.

                         We recommend HUD assures the Authority takes
                         appropriate action based upon the results of the
                         surveys.

                         The Authority's Deputy Executive Director of Community
Management's Comments
                         Relations and Involvement said, "I am in agreement wit h
                         your observations, howe ver, I offer the following comment
                         concerning your recommendation that the Authorit y
                         continue to identify government, non-profit, and privat e
                         sector agencies to form partnerships that will support th e
                         Authority's resident training and employment program.

                         HUD should also take on the responsibility of helping th e
                         Authority to identify resources and work to creat e
                         interdepartmental agreements on the Federal level whic h
                         would facilitate Public Housing Authorities access to non-
                         HUD Federal dollars and programs.

                         We agree with the Deputy Executive Director's comment .
Evaluation of Comments
                         Our Chapter on Alternative Funding Sources contains a
                         recommendation for HUD to assist the Authority to locate
                         and obtain alternate private or public funding sources (see
                         page 118).




                                 Page 113                         Office of Inspector General
Chapter 18




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Office of Inspector General                  Page 114
Chapter 19

                          Alternative Funding Sources
In 1995 and 1996 the Chicago Housing Authority received cuts of mor e than $86 million in HUD
funding of operating subsidies and comprehensive grants. As a result, the Authority has found
it increasingly important to pursue assistance and funding from State, local, private, or othe r
Federal sources.

The Authority included goals and strategies in its Lon g-Term Plan, dated February 15, 1996, and
its June 21, 1996 draft Memorandum of Agreement with HUD regarding alternative fundin g
sources. The Plan contains the goal to explore alternative and innovative approaches to th e
Authority's housing problems. T he strategy for this goal is to identify relationships and housing
opportunities with public and private d evelopers and finance agencies. The Agreement contains
the goal to increase working capital for purposes of maintaining cash flow. To accomplish the
Agreement's goal, the Authority's strategy is to research and pursue alternative funding sources
and grants.


                                     Public and Private Developers. The Authority received a
 Observations
                                     $50 million Hope VI grant from HUD in 1994 to pursue a
                                     redevelopment plan at Cabrini Green and the surroundin g
                                     area. To accomplish the plan, the Authority established a
                                     partnership with the City of Chicago. The partnership has
                                     resulted in a plan for a $1 billion redevelopment project. If
                                     the plan is carried out, the Cabrini Green area will b e
                                     reshaped into a mixed-income community.                 Th e
                                     redevelopment is expected to take at least ten years t o
                                     complete. The City of Chicago plans to contribute to th e
                                     partnership by selling 53 acres of its land to privat e
                                     developers.

                                     The Cabrini Green site and the land contributed by the City
                                     will be used as the site for the construction of 2,000 ne w
                                     residential units that combine town houses, single famil y
                                     homes, three-flats, mid-rises, a single-room occupanc y
                                     building, and othe r community support facilities. The plan
                                     calls for private developers, who have yet to be named, to
                                     sell approximately 1,400 units to unassisted individuals ,
                                     with the remaining units to be used for public housing. The
                                     redevelopment plan also envisions public and privat e
                                     developers employing residents during the redevelopment
                                     process. As of August 23, 1996, 297 jobs have bee n
                                     created as a result of the redevelopment plan at Cabrin i
                                     Green. Additionally, the Authority expects another 25 0
                                     jobs to be created.



                                             Page 115                          Office of Inspector General
Chapter 19



                              The Authority plans to use the homeownership program as
                              part of its redevelopment activities. Private banks i n
                              conjunction with FHA insurance funds will be used to turn
                              qualified public housing tenants into homeowners. Th e
                              redevelopment plan also calls for a new elementary an d
                              high school, library, police station, park, shopping center ,
                              and community center. The Authority is planning to pursue
                              similar efforts at its ABLA Homes, Henry Horner, an d
                              Robert Taylor developments.

                              We recommend that HUD monitors the Authority's
                              efforts to pursue housing opportunities with public and
                              private developers and provides necessary assistance to
                              gain full participation and commitment of all parties
                              involved.

                              Funding Sources and Grants. The Authority i s
                              aggressively pursuing funds from sources ou tside HUD. To
                              accomplish this, the Authority created a Gran t
                              Administration Department in June 1996. Previously, the
                              External Affairs Department was responsible for th e
                              Authority's grant application process.          The Gran t
                              Department identifies funds available from various State ,
                              local, Federal, and private agencies for resident initiative s
                              and tenant services. The Grant Department also prepare s
                              and submits grant and continuing funding applications .
                              Obtaining additional funding to support resident initiatives
                              and tenant services allows the Authority to concentrate its
                              resources from HUD on maintenance and operations.

                              In the past, the Authority's primary focus was on obtaining
                              funding from obvious sources, such as HUD's Dru g
                              Elimination Grants. Currently, the Grant Administratio n
                              Department is extending its outreach to obtain funds t o
                              create, maintain, improve, and expand the Authority' s
                              Community Relations and Involvement programs an d
                              services. Examples of the programs and services includ e
                              resident employment and training, child care, and yout h
                              sports and recreation.

                              On July 18, 1996, the Grant Administration Departmen t
                              submitted an application to the U.S. Department of Health
                              and Human Services on behalf of the Authority's residen t
                              organizations. The grant will assist the Communit y


Office of Inspector General           Page 116
                                                      Chapter 19



Relations and Involvement Division to administer a
program to increase resident awareness about nutrition.

The Authority has entered into partnerships with variou s
non-profit      organizations,     resident    managemen t
corporations, and the City of Chicago. These partnerships
are submitting grant requests for over $2.1 million to HUD,
the Center for Disease Control, and the U.S. Department of
Education. The funds will be used to help prevent intimate
partner violence, hate crimes, and help youth at risk. Th e
Authority is also developing a partnership with th e
Muhammad Ali Economic Development Corporation t o
help alleviate vacancy problems by getting privat e
developers to help rehabilitate properties.             Th e
Development Corporation has a goal of raising $1 million
for this effort. The Authority has committed to matchin g
every two dollars raised with one dollar from it s
Comprehensive Grant Program or Vacancy Reductio n
Grant. The Deputy Executive Director for Communit y
Relations and Involvement said, in connection with thi s
program, 20 residents will be hired per development t o
increase the Authority's resident employment and training
initiatives.

Several examples of grants the Authority has recentl y
received include: $4.6 million from the State of Illinois '
Department of Human Services to develop nine child care
centers for day care and Head Sta rt services; and $6 million
from the U.S. Department of Agriculture for a summe r
lunch program. The monies will help alleviate th e
Authority's financial burdens and enable i t to better serve its
residents.

In the past, HUD was not an active participant in helpin g
the Authority locate sources of funding outside of HUD .
The Authority believes that HUD should be more active in
helping them identify alternative funding sources. Th e
Authority did not have a copy of "The Catalog of Federa l
Domestic Assistance." The catalog is a government-wid e
publication of Federal programs, projects, services, an d
activities that provide assistance or benefits. We provided
the 1996 edition of the catalog to the Author ity. In this time
of shrinking resources, it is important for HUD to play a n
active role in assisting public housing authorities obtai n


        Page 117                            Office of Inspector General
Chapter 19



                              alternative sources of funding in order to meet HUD's goal
                              of providing decent, safe and sanitary housing.
                              We recommend that HUD assures the Authority
                              continues to aggressively pursue alternative funding
                              sources.

                              We recommend that HUD assists the Authority to locate
                              and obtain alternate private or public funding sources.

                              The Authority's Deputy Executive Director of Community
  Management's Comments
                              Relations and Involvement said, "I am in agreement wit h
                              your observations."




Office of Inspector General          Page 118
Chapter 20

                                  Section 8 Program
Prior reports issued during 1994 and 1995 by the Chicago Housing Author ity's Inspector General,
independent public accountants, and a c onsultant showed the Authority's Section 8 Program had
many problems. For example, waiting lists were not reliable and the staff lacked knowledge of
the Section 8 requirements.

The HUD Blueprint, dated June 11, 1995, contained a goal to immediately prepare and release
a Request for Proposal t o contract out the operation of the Section 8 Program. On February 15,
1996, the Authority issued a Long-Term Plan that contains a goal to improve the Section 8
delivery network. The target date for the goal is June 30, 1997. The Authority's draf t
Memorandum of Agreement, dated June 21, 1996, did not contain any goals or strategies relating
to the Section 8 Program.



                                     Section 8 Program. HUD issued a Request for Proposa l
 Observations
                                     on June 28, 1995 to obt ain a firm to operate the Authority's
                                     Section 8 Program. Based upon the offers received, HUD
                                     selected Quadel Consulting Corporation to operate th e
                                     Section 8 Program. The A uthority and Quadel entered into
                                     a Letter Agreement on October 1, 1995 whi ch was followed
                                     by a contract on December 1, 1995. Quadel created a
                                     separate corporation called CHAC Inc. to operate th e
                                     Section 8 Program. Quadel is the parent company o f
                                     CHAC. Representatives from HUD and the Authorit y
                                     currently monitor CHAC to resolve problems and ensure it
                                     is meeting the terms of the contract.

                                     Actions taken by CHAC. The strategies in the Authority's
                                     Long-Term Plan are also service requirements of th e
                                     contract. As of June 30, 1996, CHAC has met or is o n
                                     schedule to meet the contract's requirements and the target
                                     dates established in the Long-Term Plan which ar e
                                     discussed below. The target dates range from March 1996
                                     to December 2000. For example, CHAC:

                                     •   Submitted a revised administrative plan on Novembe r
                                         15, 1995 prior to the issuance of the Long-Term Plan .
                                         HUD approved the plan on March 29, 1996. Th e
                                         administrative plan contains the policies and procedures
                                         for operating the Section 8 Program. The target date for
                                         completing this strategy was March 31, 1996.

                                     •   Developed and implemente d a leasing schedule prior to
                                         the issuance of the Long-Term Plan. HUD approve d


                                             Page 119                          Office of Inspector General
Chapter 20



                                  the schedule on January 18, 1996. The schedul e
                                  outlines the Section 8 Program's annual goals.

                              •   Began training its staff in aspects of progra m
                                  administration in November 1995 prior to the issuance
                                  of the Long-Term Plan. CHAC is training its staff on its
                                  computer system, employee appraisals, progra m
                                  requirements, and customer service. CHAC als o
                                  implemented a certification program where al l
                                  occupancy specialists and inspectors must be certified.
                                  Each employee is tested and must pass an exam t o
                                  maintain their position. The target date for completing
                                  this strategy is June 30, 1997.

                              •   Began updating the waiting list which was previousl y
                                  maintained by the Authority. On July 5, 1996, CHAC
                                  mailed approximately 47,000 letters to obtain update d
                                  information from persons on the waiting li st. Responses
                                  are due by August 2, 1996 with the revised waiting list
                                  due to be completed by August 30, 1996.

                              Although the Long-Term Plan does not contain specifi c
                              strategies related to tenant reexaminations and uni t
                              inspections, the contract contains requirements for initia l
                              and periodic inspections of units to enforce complianc e
                              with HUD's Housing Quality Standards. Unde r the terms of
                              the contract, CHAC is required to reexamine and inspec t
                              one-twelfth of the Section 8 units each month startin g
                              March 1, 1996. We found t he required reexaminations and
                              inspections were being completed as required.

                              Tracking of recertifications. CHAC utilized th e
                              Authority's computer system until December 31, 1995, a t
                              which time it converte d to its own computer system. Since
                              that time, CHAC has been unable to use its compute r
                              system to determine if required recertifications have bee n
                              completed. CHAC's Memory Lane System which track s
                              the annual reexaminations and M-track sy stem which tracks
                              the inspection information were not integrated. CHA C
                              immediately remedied the situation using manua l
                              procedures; however, manual procedures are no t as efficient
                              or effective as the automated system. Quadel assigned a
                              computer consultant to coordinate the occupancy an d
                              inspection activities to produce a report that will provid e


Office of Inspector General           Page 120
                                                    Chapter 20



accurate annual recertif ication information. The consultant
expects to produce an accurate report by September 30 ,
1996.

We recommend HUD and the Authority verifies that
CHAC develops a method to produce an accurate
recertification report by September 30, 1996.

Quality control. CHAC needs to improve the accuracy of
its file reviews and inspections. In January 1996, CHA C
was assisted by Abt As sociates to develop a quality control
policy. Abt developed the policy on January 31, 1996 and
CHAC immediately implemented it. The policy include d
an emphasis on tenant file reviews and inspections. Fo r
evaluating Quadel's performance, the contract allows for no
more than: (1) a 5 percent error rate for the calculation o f
tenants' contributions; and (2) a 10 percent error rate o f
units reinspected for Housi ng Quality Standards within two
months of approval.

An error in the calculation of the tenants' contribution s
consists of: an overstatement or an understatement of th e
tenants' income or allowances ; or a mathematical error. An
error of units inspected consists solely of units that ar e
reinspected two months after CHAC's inspection an d
approval which still have an Housing Quality Standar d
violation existing. All errors are required to be corrected.

Abt Associates issued the first quality review report on July
5, 1996 which summarized the weekly review result s
through June 21, 1996.           The weekly reviews ar e
communicated on CHAC's: (1) file review checklists; (2 )
file review forms; (3) case logs; (4) inspection audit logs ;
and (5) quality inspection reports. Abt's report showe d
CHAC exceeded the error rates by approximately 2 0
percent for both file reviews and inspections. Once th e
errors were detected and reported, CHAC corrected th e
deficiencies.

In the past, the Authority did not track the results of it s
quality control reviews. CHAC is now tracking the results
of the quality control reviews that are conducted on a
weekly basis. The weekly reviews showed that CHAC' s
error rates have not decre ased since the review process was


        Page 121                          Office of Inspector General
Chapter 20



                              initiated. As a result, CHAC followed up with its staff ,
                              emphasizing the errors in order to eliminate futur e
                              occurrences, and has provided training to address the major
                              errors. CHAC also used the results when it evaluated it s
                              staff in May 1996. The attention to quality control results
                              should help CHAC to improve its quality.

                              We recommend HUD and the Authority assures CHAC
                              continues to track its quality control reviews and
                              implements appropriate actions to reduce its error
                              rates.

                              Computer terminals. As of June 30, 1996, CHAC did not
                              have sufficient computer terminals to effect ively operate the
                              Section 8 Program. Only 10 computer terminals wer e
                              available to serve a staff of 46. CHAC only had 1 0
                              computers because its staff was not fully trained. CHA C
                              planned on phasing in additional computers as staf f
                              received training. On May 31, 1996, CHAC ordered 3 5
                              new computer terminals. Fifteen of these were delivered on
                              June 15, 1996. As of July 8, 1996, five were installed. The
                              remaining 20 terminals will be delivered, and all terminals
                              will be installed by August 31, 1996.

                              We recommend HUD and the Authority assures CHAC
                              received and installed the 35 computers.

                              We recommend HUD and the Authority assures CHAC
                              fully trains its staff as expeditiously as possible but no
                              later than the June 30, 1997 Long-Term Plan target
                              date.

                              Program effectiveness. Although CHAC is makin g
                              progress to deliver an effective Section 8 Program, th e
                              Long-Term Plan and the Memorandum of Agreement d o
                              not contain an overall goal and target date to evaluate th e
                              program's effectiveness and make necessary adjustment s
                              after the individual goals that are not on-going ar e
                              implemented. The non-continuous strategi es outlined in the
                              Authority's Long-Term Plan consist of the following: (1 )
                              conducting housing assistance opportunities seminars fo r
                              the Authority's staff and tenant groups; (2) developing and
                              implementing an outreach program for new landlords; and
                              (3) pursuing additional funding . These strategies should all


Office of Inspector General           Page 122
                                                                           Chapter 20



                        be implemented by June 30, 1997. An overall assessment
                        of the program after it is implemented is important to give
                        HUD and the Authority assurance the problems that led to
                        the decision to contract out have all been corrected.

                        We recommend HUD and the Authority amend their
                        Memorandum of Agreement to add a strategy to assess
                        the effectiveness of contracting out the Section 8
                        Program and include a target date of December 31,
                        1997 for this action.

                        The Authority's Deputy Executive Director of Operation s
Management's Comments
                        said, "We concur with the draft observations and th e
                        associated recommendations. Accordingly, the Chicag o
                        Housing Authority will incorporate the offere d
                        recommendations in our overall planning process."




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Chapter 20




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Office of Inspector General                  Page 124
                                                                                    Appendix A

Recommendations
Following is a consolidated list of our recommendations to HUD. HUD needs to aggressively
follow the Authority's progress in correcting its problems and:

                                  1A.    Assure the Authority develops procedures an d
 Security
                                         controls to establish and evaluate performanc e
                                         measures for each security initiative undertaken .
                                         Performance measures should be established fo r
                                         each initiative outlined in the Blueprint ,
                                         Memorandum of Agreement, Long-Term Plan, and
                                         the Buracker Report.

                                  1B.    Assure the Authority immediately starts to develop
                                         site-based security plans for the Cabrini Green, Ida
                                         B. Wells, Altgeld Gardens, and ABLA Home s
                                         developments.

                                  1C.    Monitor the Authority to ensure it develops all site-
                                         based security plans by December 31, 1997.

                                  1D.    Assure the Authority develops house rules b y
                                         December 31, 1996 and immediately begins t o
                                         enforce the rules.

                                  1E.    Complete the Memorandum of Agreement an d
                                         provide the Authority with a firm funding target so
                                         the Authority can make decisions regardin g the most
                                         effective way to cut costs while maintaining th e
                                         highest level of security possible.

                                  1F.    Allow the Authority sufficient time to evaluate it s
                                         security    initiatives  in    accordance     wit h
                                         recommendation 1A before requiring adherence to
                                         a cost reduction plan.

                                  2A.    Require the Authority to develop a comprehensiv e
 Modernization/Redevelop
                                         modernization/redevelopment plan for all of it s
 ment of Housing
                                         developments once the viability assessment an d
                                         marketing plan have been completed. The pla n
                                         should consider and incorporate the results of th e
                                         marketing study and viability assessment .
                                         Specifically, the plan should identify developments
                                         by categories such as stable, high-needs and non -
                                         viable developments. In addition, the plan shoul d
                                         identify all planned demoli tion and rehabilitation by


                                          Page 125                          Office of Inspector General
Appendix A



                                    building with the costs necessary to make th e
                                    repairs.

                              2B.   Assure the Authority de velops controls to ensure all
                                    plans, including the comprehensive plan to b e
                                    developed, are consistent.

                              2C.   Continue to closely watch the Authority's progres s
                                    in    implementing its modernization an d
                                    redevelopment efforts. HUD should provid e
                                    technical assistance to ensure the modernization and
                                    redevelopment goals are fully implemented.

                              2D.   Assure the Authority performs a viabilit y
                                    assessment with a 20-year cash needs forecast b y
                                    December 31, 1996 and completes it s Memorandum
                                    of Agreement goal to develop a marketing plan b y
                                    March 31, 1997.

                              3A.   Assure the Authority reviews i ts work order policies
  Work Order System
                                    and procedures, develops procedures to operate the
                                    system effectively, and inc ludes the new procedures
                                    in its Maintenance Manual.

                              3B.   Assure the Authority promptly distributes th e
                                    revised Maintenance Manual to all applicabl e
                                    personnel.

                              3C.   Assure the Authority trains all its maintenanc e
                                    superintendents and supervisors on work orde r
                                    procedures by December 31, 1996.

                              3D.   Assure the Authority: (1) develops procedures t o
                                    distribute weekly activity reports to Developmen t
                                    Managers and for Development Manag ers to use the
                                    weekly reports to man age their work order backlog;
                                    and (2) implements the use of performanc e
                                    standards to monitor staff performance.

                              3E.   Coordinate with the Authority to establish a targe t
                                    date to review the work order backlog, asses s
                                    staffing needs, and develop a "get well" plan if the
                                    backlog situation will result in less than a passin g
                                    Public Housing Management Assessment Program


Office of Inspector General         Page 126
                                                                          Appendix A



                                grade. This review should be conducted no late r
                                than June 30, 1997.

                          4A.   Assure the Authority completes its viabilit y
Preventive Maintenance
                                assessment by December 31, 1996 and immediately
                                conducts or contracts to have a preventiv e
                                maintenance needs assessment completed for eac h
                                development and develops a funding plan for th e
                                repair of maintenance deficiencies.

                          4B.   Assure the Authority uses the preventive need s
                                assessment to develop and implement a preventive
                                maintenance schedule by June 30, 1997.

                          5A.   Assure the Authority implements wee kly tracking of
Vacancy Reduction/Unit
                                unit turn-around from date of vacancy to re -
Turnaround
                                occupancy and implements a reporting system t o
                                track vacant unit turnaround at the developmen t
                                level by December 31, 1996.

                          5B.   Assure the Authority expeditiously identifies an d
                                deprograms all non-dwelling units.

                          5C.   Assure the Authority develops procedures to verify
                                that units completed under the Vacancy Reductio n
                                Program meet HUD's Housing Quality Standards.

                          5D.   Assure the Authority develops coordinatio n
                                procedures between the Vacancy Reductio n
                                Department, Development Managers, and th e
                                Occupancy Department. The procedures shoul d
                                ensure units are repaired on the b asis of demand and
                                applicable personnel are aware of projecte d
                                completion dates so units can be pr omptly occupied.

                          5E.   Assure the Authority's Vacancy Reductio n
                                Department develops a plan that shows how it will
                                complete the 2,857 units required by its Vacanc y
                                Reduction grant. The plan should identify the units
                                that will be completed, and include the estimate d
                                costs for each unit.

Funding for Maintenance   6A.   Closely watch th e Authority's progress in achieving
and Modernization               the milestones and implementing the strategy t o


                                Page 127                          Office of Inspector General
Appendix A



                                    target and link up with appropriate resources. Provide
                                    any technical assistance the Authority may require i n
                                    order to achieve the milestones and implement th e
                                    strategy.

                              6B.      Assure the Authority completes its viabilit y
                                       assessment by December 31, 1996 and immediately
                                       coordinates its modernization and capita l
                                       improvement programs with its 1996-199 7
                                       Comprehensive Grant Program plan.

                              6C.      Work closely with the Authority to assure it closes
                                       out all of the open modernization programs related
                                       to the Comprehensive Improvement Assistanc e
                                       Program and Comprehensive Grant Program that are
                                       over three years old.

                              7A.      Assure the Authority develops thorough ,
  Annual Inspections
                                       comprehensive inspection procedures and includes
                                       the new procedures i n the Maintenance Manual and
                                       Housing Quality Standards Training Manual.

                              7B.      Assure the Authority identifies the funds an d
                                       implements a new timetable for initiating the jo b
                                       order contracting system. Once the timetable i s
                                       complete, monitor the Authority to assure that th e
                                       job order contracting system is properl y
                                       implemented.

                              7C.      Assure the Authority conducts quality contro l
                                       reviews of inspections to ensure the inspections are
                                       accurately conducted and inspection forms ar e
                                       properly completed.

                              7D.      Assure the Authority promptly evaluates eac h
                                       development to determine if all annual inspectio n
                                       forms, competed after April 1, 1 996 were sent to the
                                       Customer Service Center to initiate work orders.

                              7E.      Assure the Authority implements controls tha t
                                       ensure work orders are written to addres s
                                       deficiencies identified by all future inspections.
  Housing Management
  Functions


Office of Inspector General             Page 128
                                                                            Appendix A



  8A.                      Monitor the Authority's progress in completing its Long -
                           Term Plan strategies to: implement development-base d
                           resource management; participate in the development an d
                           review of uniform fi eld-based policies and procedures; and
                           develop a uniform property management reporting process.
                           Should the Authority deviate from the Long-Term Pla n
                           strategies, HUD should pro vide technical assistance or take
                           other corrective actions.

                           8B.    Closely watch the Authority's progress i n
                                  implementing the Memorandum of Agreemen t
                                  strategies to: improv e communications and internal
                                  reporting between the site managers and the central
                                  office; and create site-based managemen t
                                  implementation plans for each development .
                                  Provide any technical assistance the Authority may
                                  require to assure the strategies are implemented on
                                  schedule.

                           8C.    Coordinate with the Authority to establish a revised
                                  target date to identify all major housing function s
                                  and assure the Authority allocates sufficien t
                                  resources to accomplish this strategy.

                           8D.    Closely monitor the Authority's progress to meet the
                                  housing management improvement strategies an d
                                  provide any assistance necessary to help evaluat e
                                  the functions, and improve their effectiveness an d
                                  efficiency.

                           8E.    Coordinate with the Authority to make the strategy
                                  of identifying opportunities to delegate management
                                  activities a continuing effort.

                           8F.    Coordinate with the Authority to establish a strategy
                                  to review the results of actions taken to delegat e
                                  responsibilities to the developments. We suggest a
                                  review be conducted ap proximately one year after a
                                  responsibility is delegated.

                           9A.    Assure the Authority fills its home visit inspecto r
Admissions and Evictions
                                  positions as expeditiously as possible.




                                   Page 129                         Office of Inspector General
Appendix A



                              9B.    Assure the Authority ex tends its contract to conduct
                                     home visits until it fills the home visit inspecto r
                                     positions.

                              9C.    Assure the Authority develops procedures tha t
                                     ensure all applicants are screened using the ne w
                                     screening procedures before being placed in a unit.
                                     The procedures should state that applicants will not
                                     be screened upon initial interview if units are no t
                                     available, and that screening sho uld be conducted as
                                     close to the time of occupancy as feasible.

                              9D.    Assure the Authority coordinates effo rts with HUD's
                                     and its legal department to provide a consisten t
                                     application of the Gautreaux decrees' requirements.
                                     Guidelines supporting interpretations should b e
                                     developed and application of the computerize d
                                     waiting list should reflect the guidelines.

                              9E.    Assure the Authority develops procedures fo r
                                     Development Managers and the Social Service s
                                     Division to coordinate on potent ial evictions and the
                                     need for social services.

                              9F.    Assure the Authority's lease contains the correc t
                                     provisions outlin ed in Public Housing Notice 96-14
                                     and the Authority uses the lease.

                              9G.    Assure the Authority completes lease training for all
                                     residents by September 30, 1996, and upo n
                                     approval, uses the lease for all new tenants and for
                                     all annual recertifications.

                              9H.    Assure the Authority makes the new handboo k
                                     available to all residents when they recertify thei r
                                     leases.

                              9I. Assure the Authority adopts a tenant handbook an d
                                  develops the site-based resident orientation manual by
                                  September 30, 1996, and implements a site-base d
                                  resident orientation process by December 31, 1996.

                              10A. Assure the Authority continues to develop source s
  Rent Collections
                                   for orientation programs and financial services t o


Office of Inspector General          Page 130
                                                                    Appendix A



                     assist its tenants to become more self-sufficient. HUD
                     should provide assistance in identifying and developing
                     the sources.

                  10B.   Assure the Authority establishes controls to ensure
                         all uncollectible accounts are r eferred each month to
                         the collection agency.

                  11A. Assure the Autho rity establishes written procedures
Procurement and
                       outlining the emergency procurement process an d
Contracting
                       incorporates the procedures in the Maintenanc e
                       Manual.

                  11B.   Assure the Authority establishes procedures an d
                         controls to verify that items purchased through th e
                         open hardware accounts are for emergenc y
                         purposes.

                  11C.   Assure the Authority implements procedures t o
                         notify reviewing officials of the terms of the ope n
                         supply and service accounts' purchase agreements.

                  11D. Assure the Authority requires its vendors to sho w
                       discounts received on applicable invoices so th e
                       Authority has assurance it is receiving the discounts
                       to which it is entitled.

                  11E.   Assure the Authority reviews its purchas e
                         agreements to ensure they reflect the correc t
                         discounts.

                  11F.   Closely watch the Authority's progress i n
                         implementing the strategies for improving th e
                         procurement process by March 31, 1997. Provid e
                         any technical assistance the Authority may requir e
                         in order to achieve the goal and target date.

                  11G. Assure after all strategies have been implemented ,
                       the Authority assesses its procurement process t o
                       ensure the problems the strategies were created t o
                       eliminate have been corrected or takes actions t o
                       make additional changes.          This should b e
                       accomplished by September 30, 1997.



                         Page 131                           Office of Inspector General
Appendix A



                              11H. Coordinate with the Author ity to assess the status of
                                   the recommendations in HUD's Au gust 1995 review
                                   and to ensure agreement with actions or lack o f
                                   actions taken to correct the problems th e
                                   recommendations were made to address.

                              11I.   Assure the Authority develops procedures t o
                                     conduct a periodic analysis of its contra cting process
                                     and initiates actions necessary to improve th e
                                     process.

                              12A. Closely follow the Authority's progress i n
  Accounting Systems And
                                   implementing the new accounting system an d
  Controls
                                   provide any assistance necessary to ensure th e
                                   system is fully implemented by December 31, 1996,
                                   and that a site-based budget is achieved b y
                                   December 31, 1997.

                              12B.   Assure written policies an d procedures are issued as
                                     quickly as practical after each accounting functio n
                                     is implemented.

                              13A. Assure the Authority evaluates and selects th e
  Management Information
                                   budget and payroll modules immediately, so th e
  System
                                   modules can be implemented by the December 31,
                                   1996 target date to have a functioning integrate d
                                   management information system.

                              13B.   Assure the Authority establishes controls an d
                                     procedures to complete the implementation of it s
                                     integrated management information system b y
                                     December 31, 1996, and to periodically assess it s
                                     information needs.

                              13C.   Assure the Authority establishes controls an d
                                     procedures to ensure all applicable employee s
                                     receive software training by Decembe r 31, 1996, the
                                     day the new integrated system will be full y
                                     implemented.

                              13D. Assure the Authority completes the revisions of its
                                   policies and procedures and implements all ne w
                                   security procedures by December 31, 1996.



Office of Inspector General           Page 132
                                                                     Appendix A



                   14A. Assure the Authority monitors the privat e
Asset Management
                        management firms to ensure the developments ar e
                        maintained in an adequate manner and according to
                        the management contracts, and that the Authorit y
                        takes appropriate action if firms do not properl y
                        manage the developments.

                   14B.   Closely watch the Authority's progress to privatize
                          15,000 units by December 31, 1996 to ensur e
                          privatization contracts are providing acceptabl e
                          housing at a reasonable cost.

                   14C.   Assure the Authority establishes coordinatio n
                          procedures      between   Private   Managemen t
                          Administration and Department of Finance fo r
                          Public Housing/Private Manag ement for monitoring
                          the private firms.

                   14D. Assure the Authority executes contracts with th e
                        legal and actuarial firms selected for award.

                   14E.   Assure the Authority properly overse es the contracts
                          awarded for the pension fund and takes appropriate
                          action if the contractors do not effectively perform
                          the required services.

                   14F.   Assure the Authority establishes controls to ensure
                          the deferred compensation contract is adequatel y
                          monitored and appropriate actions are taken if th e
                          firm under contract is not properly managing th e
                          deferred compensation program.

                   15A. Assure the Authority aggressively monitors th e
Risk Management
                        workman's compensation contract and take s
                        appropriate actions if the firm does not properl y
                        manage the program.

                   15B.   Assure the Authority periodically conducts a n
                          analysis to determine if it is more cost effective t o
                          contract out the administration of the workman' s
                          compensation program versus the Authorit y
                          administering the program in-house.




                          Page 133                           Office of Inspector General
Appendix A



                              15C.   Assure the Authority initiates safety training for its
                                     residents by September 30, 1996.

                              15D. Assure the Authority develops procedures to trac k
                                   hazardous conditions until the conditions ar e
                                   eliminated.

                              15E.   Assure the Authority develops procedures t o
                                     periodically assess its risk management progra m
                                     and makes changes to address new conditions.

                              16A. Assure each of the Authority's managers have been
  Personnel
                                   certified by the March 31, 1997 Memorandu m
                                   Agreement target date for assessing and developing
                                   staff skill levels.

                              16B.   Assure the Authority develops and implement s
                                     strategies to address: (1) the skill level of all it s
                                     staff, and (2) the issue of staff who do not mee t
                                     minimum required skill levels.

                              16C.   Assure the Authority develops an effectiv e
                                     recruiting strategy that properly assesses th e
                                     qualifications of potential employees.

                              16D. Assure the Authority appoints qualified instructors
                                   and implements the core courses by the September
                                   30, 1996 target date established in th e Memorandum
                                   of Agreement.

                              16E.   Assure the Authority establishes and implement s
                                     procedures to consolidate the tracking of trainin g
                                     received by its employees.

                              16F.   Monitor the Authority to ensure it completes th e
                                     implementation of the compen sation system and job
                                     descriptions by March 31, 1997.

                              17A. Assure the Authority fol lows the requirements of its
  Resident Program
                                   contracts and ensures all contract extensions ar e
  Delivery Systems
                                   made before the original contract expires and are in
                                   writing.




Office of Inspector General          Page 134
                                                                        Appendix A



                       17B.   Assure the Authority: (1) executed contracts wit h
                              the urban planners for Dearborn Homes, Rober t
                              Taylor B, Wentworth Gardens, Hilliard Homes ,
                              Lathrop Homes, Washington Park, and Trumbal l
                              Park; and (2) ensures the remaining eight Loca l
                              Advisory councils select an urban planner a s
                              expeditiously as possible but no later th an December
                              31, 1996.

                       17C.   Assure the Authority established policies an d
                              procedures for its Development Initiatives Division
                              by September 30, 1996.

                       17D. Assure the Authorit y establishes a transition facility
                            at the ABLA Homes development when th e
                            necessary funding is obtained and explore s
                            establishing additional transition facilities at othe r
                            developments based upon the needs of the residents.

                       17E.   Assure the Authority monitors the contract with the
                              Educational Training and Enterprise Center t o
                              ensure it receives the required servic es by December
                              26, 1996.

                       17F.   Assure the Authority takes appropriate action b y
                              January 31, 1997 based upon the Educationa l
                              Training and Enterprise Center's report. Th e
                              Authority should only select, for continued use ,
                              those existing services and delegate agencies tha t
                              are shown to best meet its residents' needs.

                       17G. Assure the Authority performs the following step s
                            related to potential/future services and delegat e
                            agencies: (1) identifies and evaluates their delivery
                            systems by January 31, 1997; (2) conducts a
                            cost/benefit analysis of their service deliver y
                            systems by June 30, 1997; (3) selects those that best
                            meet the residents' ne eds not currently addressed by
                            September 30, 1997; and (4) monitors services and
                            delegate agencies to ensure the residents needs ar e
                            being addressed.
Economic Development
Opportunities for      18A. Assure the Authority continues to emphasize th e
Residents                   development of joint venture agreements betwee n


                               Page 135                         Office of Inspector General
Appendix A



                                 the resident owned companies and private secto r
                                 businesses.

                              18B.   Assure the Authority works to expeditiousl y
                                     complete its pending contracts and continues t o
                                     explore other contracts with the resident owne d
                                     companies in order to reach the yearly goal of 2 5
                                     contracts.

                              18C.   Assure the Authority monitors the construction and
                                     service contractors to ensure: (1) residents ar e
                                     receiving the employment and traini ng opportunities
                                     as required; or (2) the appropriate amounts ar e
                                     withheld from contractors for failing to meet th e
                                     Section 3 requirement.

                              18D. Assure the Authority continues to identif y
                                   government, non- profit, and private sector agencies
                                   to form partnerships that will suppo rt the Authority's
                                   resident training and employment programs.

                              18E.   Coordinate with the Authority to adjust the targe t
                                     date to complete th e resident surveys to January 31,
                                     1998.

                              18F.   Assure the Authorit y takes appropriate action based
                                     upon the results of the surveys.

                              19A. Monitor the Authority's efforts to pursue housin g
  Alternative Funding
                                   opportunities with public and private developers and
  Sources
                                   provide necessary assistance to gain ful l
                                   participation and commitment of all partie s
                                   involved.

                              19B.   Assure the Authority continues to aggressivel y
                                     pursue alternative funding sources.

                              19C.   Assist the Authority to locate and obtain alternat e
                                     private or public funding sources.

                              20A. Coordinate with the Authority to verify that CHAC
  Section 8 Program
                                   develops a method to produce an accurat e
                                   recertification report by September 30, 1996.



Office of Inspector General           Page 136
                                                Appendix A



20B.   Coordinate with the Authority to assure CHA C
       continues to track its quality control reviews an d
       implements appropriate actions to reduce its erro r
       rates.

20C.   Coordinate with the Authority to assure CHA C
       received and installed 35 computers.

20D. Coordinate with the Authority to assure CHAC fully
     trains its staff as expeditiously as possible but n o
     later than the June 30, 1997 Long-Term Plan target
     date.

20E.   Coordinate with the Authority to amend th e
       Memorandum of Agreement to add a strategy t o
       assess the effectiveness of contracting out th e
       Section 8 Program and include a target date o f
       December 31, 1997 for this action.




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Appendix A




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Office of Inspector General                  Page 138
                                                                              Appendix B

Distribution
Director, Office of Troubled Agency Recovery (2)
Secretary's Representative Midwest
Director, Public Housing Division, Illinois State Office (2)
Director Accounting Division, Midwest
Field Controller, Midwest
Assistant General Counsel, Midwest
Public Affairs Officer, Midwest
Assistant to the Deputy Secretary for Field Management, SC (Room 7106)
Acquisitions Librarian, Library, AS (Room 8141)
Deputy Chief Financial Officer for Operations, FO (Room 10166) (2)
Chief Financial Officer, F (Room 10166) (2)
Director, General Management Division, PMG (Room 4216)
Comptroller/Audit Liaison Officer, PF (Room 4122) (3)
Associate General Counsel, Office of Assisted Housing and Community Development, GC
(Room 8162)
Assistant Director in Charge, U.S. GAO, 820 1st St. NE, Union Plaza, Building 2,
 Suite 150, Washington DC, 20002 (2)




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