oversight

Columbus Metropolitan HA, Columbus, OH

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-12-18.

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

                                                                      Issue Date

                                                                           December 18, 1996
                                                                      Audit Case Number

                                                                           97-CH-204-1003




TO:            David M. Kellner, Director, Public Housing Division, Ohio State Office


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


SUBJECT:       Columbus Metropolitan Housing Authority
               Rehabilitation of Lincoln Park Apartments
               Comprehensive Improvement and Assistance Program
               Comprehensive Grant Program
               Columbus, Ohio


We completed an audit of the Columbus Metropolitan Housing Authority's rehabilitation of Lincoln
Park Apartments. We performed the audit at the request of the Ohio State Office, Public Housing
Division. Our audit objectives were to determine whether: the Authority followed Federal
procurement procedures in awarding the rehabilitation contract; the work was performed in a
workmanlike manner and in accordance with the specifications; and, the cost of change orders was
reasonable.

The Authority followed Federal procurement procedures in awarding the contract. The Columbus
Metropolitan Housing Authority's rehabilitation of Lincoln Park Apartments was not in a
workmanlike manner and in accordance with specifications. The staff of HUD's Ohio State Office's
Multifamily Housing Division inspected the contractor's work and estimated the cost of defective
work at $414,898. The cost of change orders were within reason.

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

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




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97-CH-204-1003                   Page ii
Executive Summary
We completed an audit of the Columbus Metropolitan Housing Authority's rehabilitation of Lincoln
Park Apartments. Our audit objectives were to determine whether: the Authority followed Federal
procurement procedures in awarding the rehabilitation contract; the work was performed in a
workmanlike manner and in accordance with the specifications; and, the cost of change orders was
reasonable.

The Authority followed Federal procurement procedures in awarding the contract. The Columbus
Metropolitan Housing Authority's rehabilitation of Lincoln Park Apartments was not in a
workmanlike manner and in accordance with specifications. The cost of change orders were within
reason.



                                    The Columbus Metropolitan Housing Authority's
 Rehabilitation was not
                                    rehabilitation of Lincoln Park Apartments was substandard.
 completed in a
                                    The rehabilitation work was not completed in a workmanlike
 workmanlike manner or in
                                    manner and in accordance with the contract work
 accordance with
                                    specifications. Multifamily Housing Division staff from
 specifications
                                    HUD's Ohio State Office estimated the cost of the defective
                                    work at $414,898.

                                    The defective work included sod incorrectly installed for
                                    $196,675; bricks installed with the unfinished side facing
                                    outward or discolored for $95,000; plumbing fixtures loose
                                    for $27,500; brick planters not reinforced, mulched and
                                    capped for $26,663; doors incorrectly installed and hardware
                                    missing for $20,945; exterior concrete expansion and control
                                    joints missing for $20,700; tiles defective and wall base
                                    moldings loose for $20,169; and, other defective work for
                                    $7,246. Neither the Authority nor the general contractor
                                    provided the necessary inspections needed to ensure quality
                                    rehabilitation work. Furthermore, tenants were living in units
                                    that were unsanitary and hazardous.

                                    We are making several detail recommendations to correct the
 Recommendations
                                    deficiencies reported. We recommend that HUD's Ohio State
                                    Office's Public Housing Division inspect the interiors of units
                                    not included in our sample to determine whether the
                                    rehabilitation work in these units was performed in a skillful,
                                    workmanlike manner and in accordance with the
                                    specifications. We also recommend the Division require the
                                    Authority to correct defective work at no additional cost. The
                                    Division should periodically monitor the Authority's progress


                                             Page iii                                 97-CH-204-1003
Executive Summary



                    in correcting the defective work. The Ohio State Office's
                    Public Housing Division should consider taking sanctions
                    against the contractor.

                    If the general contractor does not make the required repairs,
                    the Authority should (1) contract for the repairs or services
                    and back-charge the cost to the general contractor, (2)
                    consider alternate solutions for the defective work, for
                    example, extending the warranties. The Authority's future
                    monitoring of rehabilitation contracts should ensure work is
                    correctly performed.

                    We discussed our finding with the Authority's Executive
                    Director during the audit and provided him the draft finding.
                    We also provided a copy of the draft finding to the Ohio State
                    Office. We held an exit conference with Authority officials on
                    November 12, 1996. The Authority provided written
                    comments to the finding and recommendations. Excerpts
                    from the comments are included in the finding with our
                    evaluation and in Appendix B in their entirety.




97-CH-204-1003               Page iv
Table of Contents

Management Memorandum                                             i


Executive Summary                                                iii


Introduction                                                      1


Finding

          Rehabilitation of Lincoln Park Apartments
           Was Substandard                                        3


Internal Controls                                               29


Follow Up On Prior Audits                                       31


Appendices

    A     Layout of Lincoln Park                                33

    B     Authority Comments                                    35

    C     Distribution                                          49




                              Page v                  97-CH-204-1003
Table of Contents




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97-CH-204-1003                      Page vi
Introduction
The Columbus Metropolitan Housing Authority was organized on May 8, 1934, pursuant to Section
1078-1 to 1078-41 of the General Code of Ohio, as revised by Section 3735.27 of the Revised Code,
effective October 1, 1953. The Authority is governed by a five-member Board of Commissioners.
The Executive Director has the overall responsibility for fulfilling the goals and objectives established
by the Board of Commissioners. Dennis Guest was the Executive Director. The Authority's books
and records were located at 960 East Fifth Avenue, Columbus, Ohio.

The Authority, as of October 31, 1996 owned 4,400 low-income units in 30 projects. Lincoln Park
was built in 1941 and had 33 rowhouses with 346 family units. After rehabilitation Lincoln Park will
have 29 buildings and 292 units. The rehabilitation included the project's interior and exterior. The
contract was signed on September 3, 1992 for $8,996,505. The Authority approved 22 change
orders as of September 6, 1996 for $2,804,609, bringing the total cost of the rehabilitation to
$11,801,114.

The Authority funded the rehabilitation of Lincoln Park Apartments with Comprehensive
Improvement Assistant Program funds from 1987 through 1991 and Comprehensive Grant Program
funds from 1992 and 1993.

On October 28, 1994, the Authority terminated the contract with the general contractor because of
the Authority's dissatisfaction with the contractor's work and the length of construction delays. The
Authority and the contractor agreed to a reinstatement effective November 23, 1994. At about the
same time, the Authority terminated the contract of the original architect and, in January 1995 hired
another firm.



                                        Our audit objectives were to determine whether: the
 Audit objectives
                                        Authority followed Federal procurement procedures in
                                        awarding the rehabilitation contract; the work was performed
                                        in a workmanlike manner and in accordance with the
                                        specifications; and, the cost of change orders was reasonable.

                                        To achieve the objectives, we reviewed HUD Regulations,
 Audit scope and
                                        HUD handbooks and administrative requirements. We
 methodology
                                        interviewed HUD and the Authority's staff to obtain
                                        information about awarding of the contracts. We reviewed
                                        files at HUD's Ohio State Office to obtain information on the
                                        rehabilitation funding and HUD's review of the rehabilitation
                                        work. We reviewed files at the Authority to obtain
                                        information about awarding the contracts, inspecting and
                                        supervising rehabilitation work, reviewing change orders and
                                        settling disputes. We also interviewed the Authority's



                                                  Page 1                                    97-CH-204-1003
Introduction



                 attorney, architects and a sub-contractors to obtain
                 information regarding the contractor's performance.
                 To evaluate the quality of the rehabilitation, we requested the
                 staff of HUD's Ohio State Office's Multifamily Housing
                 Division to inspect the rehabilitation work. We accompanied
                 the Division's inspectors. HUD's Ohio State Office hired an
                 independent contractor to determine whether the general
                 contractor properly reinforced the concrete and masonry work
                 and installed sod according to the specifications.

                 The audit covered the period August 1, 1992, about the time
                 the bid process started for Lincoln Park Apartments, through
                 March 31, 1996. We expanded the coverage as necessary.
                 We performed the on-site audit work between April 1996 and
                 November 1996.

                 We conducted our audit in accordance with generally accepted
                 government auditing standards.




97-CH-204-1003            Page 2
                                                                                               Finding




 Rehabilitation of Lincoln Park Apartments Was
                   Substandard
The Columbus Metropolitan Housing Authority's rehabilitation of Lincoln Park Apartments was
substandard. The rehabilitation work was not completed in a workmanlike manner and in accordance
with the contract work specifications. Neither the Authority nor the general contractor provided the
tight inspection and supervision needed to ensure quality rehabilitation work. HUD's Ohio State
Office's Multifamily Housing Division staff estimated that correcting the defective work would cost
$414,898. Furthermore, tenants were living in units that were unsanitary and hazardous.



                                      The Authority's contract with the general contractor states
 Contract requirements
                                      that the contractor shall furnish all labor, material, equipment
                                      and services and complete all work in strict accordance with
                                      the drawings and specifications. The contract specifications
                                      require the contractor to correct, repair, restore and cure any
                                      damage resulting from any defects, omission or failure in
                                      workmanship and materials. The general conditions of the
                                      contract also state that all work shall be performed in a skillful
                                      and workmanlike manner.

                                      At our request, Construction Analysts from the Multifamily
 35 percent of units and all
                                      Housing Division of HUD's Ohio State Office inspected
 exterior work were
                                      Lincoln Park Apartments to determine the quality of the
 inspected
                                      rehabilitation and the cost of correcting the defective work.
                                      The Multifamily staff inspected the interior of all 103 units in
                                      sectors Ia and IIa, about 35 percent of the project's 292 units.
                                      In addition, they inspected the exteriors of all buildings and all
                                      land improvements in sectors I through IV. Sector V was not
                                      included because the Authority had not yet accepted the
                                      contractor's work in the sector. An independent contractor
                                      inspected the brick planter boxes, patio slabs, porches and
                                      sidewalks with a magnometer for reinforcement steel and wire
                                      mesh. A magnometer is an instrument that uses magnetic
                                      fields to detect iron and steel. Another independent contractor
                                      inspected the sod to determine whether the sod was installed
                                      in accordance with the specifications.
 Estimated cost to correct
                                      The Construction Analysts identified defective external and
 defective work was
                                      internal work totaling $414,898. The defects affected virtually
 $414,898


                                               Page 3                                      97-CH-204-1003
Finding



     all aspects of the rehabilitation including the sod, brick work, plumbing, electrical and carpentry.
     The $414,898 includes only defective rehabilitation work. The Construction Analysts did not
     cite corrective work needed because of poor maintenance.

                                        The following table shows the defective work and the
                                        estimated cost to fix it.


                                                           Description of        Estimated Cost
                                                           Defective Work         to Correct
                                             Sod was incorrectly installed           $196,675
                                             Bricks were laid wrong side out           95,000
                                             Plumbing fixtures were loose              27,500
                                             Brick planters were not
                                             reinforced, mulched and capped            26,663
                                             Doors were improperly installed
                                             and hardware was missing                  20,945
                                             Exterior concrete expansion and
                                             control joints were missing               20,700
                                             Tiles were defective and
                                             wall base moldings were
                                             loose                                     20,169
                                             Safety valves, electrical
                                             outlets and wiring were
                                             hazardous                                  6,596
                                             Other                                       650
                                                Total                                $414,898


                                        The lawns throughout sectors I through IV were barren and
 Sod was incorrectly
                                        brown; weeds were abundant. The lawns also had wide
 installed
                                        cracks throughout because the grass had not grown
                                        sufficiently to join the squares of sod. Furthermore, the
                                        squares of sod had not blended with the underlying base and
                                        could be pulled up intact. These conditions were confirmed
                                        by inspections made by an independent contractor, HUD's
                                        Ohio State Office's staff and Ohio State University's Plant and
                                        Pest Diagnostic Clinic.

                                        The lawns were laid in the summer of 1994, fall of 1995,
                                        spring, summer and fall of 1996. Similar conditions existed
                                        regardless of when the sod was laid.




97-CH-204-1003                                    Page 4
                                                                                      Finding



                                  The pictures below show lawns that were typical throughout
                                  Lincoln Park.




This sod at this location
was laid in Summer 1994.
Sod laid on stony surface
will not sustain a healthy
growth. The lawn had
numerous bare areas
where sod had died.




                                  Sector Ia, between Building 1770 and Building 630




Sod was installed in Fall 1995.




                                  Sector IIa




                                           Page 5                               97-CH-204-1003
Finding




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97-CH-204-1003                   Page 6
                                                                                       Finding




Sod was installed Spring 1996.




                                 Sector IIb



                                 The sod was defective because the subcontractor did not
                                 prepare the underlying base, as required before laying the sod.
                                 The specifications required the contractor to loosen four
                                 inches of ground and remove all sticks, roots, rubbish, stones
                                 over 1-1/2 inches and other extraneous matter. Without
                                 proper preparation, the grass will not root and will eventually
                                 die. We and HUD's Ohio State Office's staff lifted the sod at
                                 different locations and found the underlying base littered with
                                 stones and other debris.




Sod was installed July 1996.




                                 Sector III




                                          Page 7                                   97-CH-204-1003
Finding




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97-CH-204-1003                   Page 8
                                                                                            Finding




                                      The Authority was aware of sod problems since May 1995.
                                      The Ohio State University's Plant and Pest Diagnostic Clinic
                                      analyzed the sod in sector I. The sod in sector I was the only
                                      sod laid at the time of the University's analysis. The
                                      University concluded that the soil was not correctly prepared.

                                      Sod will not root, let alone sustain a healthy growth on
                                      unloosened soil loaded with stones and debris. The HUD
                                      Ohio State Office's staff recommended that the sod be
                                      completely removed, the underlying base properly prepared
                                      and new sod laid. The estimated cost in the contract for the
                                      sod was $196,675.

                                      An estimated 5 to 10 percent of the bricks in the new storage
 Bricks laid wrong side out
                                      sheds and brick planters boxes were laid the wrong side out or
                                      were discolored. The masonry specifications stated that the
                                      flat finished side of the bricks should face outward. The
                                      contractor, however, installed the brick with the unfinished
                                      side outward. In addition, some of the bricks had an ashy
                                      residue. The bricks that were laid wrong side out or were
                                      discolored present no structural problem. However, the
                                      Authority paid for rehabilitation work properly completed.
                                      HUD's Constructions Analysts estimated the cost to correct
                                      the defective brick work was $95,000.




Ashy residue on bricks could
not be removed by scrubbing or
power washing.




                                      Unit #1745J

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                                               Page 9                                   97-CH-204-1003
Finding




                                    Bathroom and kitchen plumbing fixtures in 75 units were not
 Bathroom and kitchen
                                    correctly installed. The specifications stated plumbing fixtures
 fixtures were loose
                                    were to be installed in accordance with manufacturer's
                                    instructions. Bathroom sinks were not secured to base
                                    cabinets and toilets were loose and leaking. Faucets in both
                                    the bathrooms and kitchens were loose. The loose plumbing
                                    fixtures prevented proper caulking and caused leaks. The
                                    estimated cost to correct the bathroom and kitchen plumbing
                                    fixtures was $27,500.




The picture shows a bathroom
sink which was not secured to the
base cabinet. We lifted the
sink to show that it was not
secure. Sinks not caulked and
not attached to base cabinets
may cause leaks and rotting in
time.




                                    Unit #640J

                                    Brick planter boxes were not reinforced and mulched as
 Brick planter boxes were
                                    required. An independent contractor using a magnometer
 not reinforced and
                                    determined that reinforcing bars were either not installed or
 mulched, and patio wall
                                    improperly installed in 42 of 138 planter boxes through sectors
 caps were not correctly
                                    I through IV. Without correctly installed reinforcing bars, the
 installed
                                    planter boxes are likely to crack, especially in freezing
                                    temperatures.




97-CH-204-1003                               Page 10
                                          Finding




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                Page 11                97-CH-204-1003
Finding



                                The contractor also did not prepare, mulch and fertilize the
                                soil in the brick planters, as provided by the specifications.
                                The Ohio State Office's staff observed a contractor's employee
                                discarding debris in the planter boxes. The Ohio State Office's
                                staff also said that dirt in front of the units was used to fill the
                                planters, rather than using the specified soil composition.
                                Further, tenants complained that their planter boxes were full
                                of construction debris hidden under a shallow layer of dirt.
                                Without proper soil preparation and mulching, rapid
                                evaporation and uncontrolled weed growth will occur. The
                                lack of initial fertilizer adversely affects plant growth.




The picture shows a typical
brick planter at Lincoln Park
Apartments. The planter box
was not mulched, prompting
weed growth.




                                Unit #640B

                                Patio wall caps were not correctly installed. The architect
                                designed the wall caps so that water would move away from
                                the patios. The contractor installed the wall caps backwards.
                                The water drained towards the patios and caused water to
                                pool, which can cause slipping hazards in the wintertime.

                                The Authority was aware that the wall caps were facing the
                                wrong direction. The Authority decided to accept these wall
                                caps because it would take 6 to 8 weeks to obtain the correct
                                caps. Furthermore, the Authority did not view the additional
                                water on the patios as a significant problem. The Authority
                                also was concerned that while waiting for the correct wall
                                caps the vacant units would be vandalized. The Ohio State
                                Office's staff estimated the cost to correct the planter boxes
                                and patio wall caps was $26,663.




97-CH-204-1003                           Page 12
                                          Finding




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                Page 13                97-CH-204-1003
Finding




Defective wall caps add water
to patios. The condition may
cause slipping hazards in
winter when water freezes.




                                Unit #674C


                                Doors in 17 units were incorrectly installed or missing
 Doors were incorrectly
                                hardware or stops. The specifications provided for installation
 installed and hardware was
                                in accordance with the manufacturer's instructions. The metal
 missing
                                doors were misaligned so they were difficult to open, and the
                                deadbolts did not match the cutouts. The wood doors were
                                installed at an angle and would not close completely. As a
                                result, the doors were difficult to operate. The Ohio State
                                Office's staff estimated the cost of correcting the defective
                                work at $20,945.

                                Concrete expansion and control joints were not installed in 48
 Concrete expansion joints
                                locations in sectors I and II. The specifications required the
 were missing
                                contractor to install expansion joints between abutting
                                concrete curbs, structures, walks and other fixed objects
                                unless other wise indicated. Because of missing expansion and
                                control joints, the concrete was likely to crack prematurely,
                                settle unevenly and become a tripping hazard. The Ohio State
                                Office's staff estimated that correcting the defective work
                                would cost $20,700.

                                Defective and broken floor tiles and loose wall moldings were
 Tiles were defective and
                                typical in the apartments. Floor tiles were cracked, did not
 broken, and wall base
                                correctly meet door thresholds and contained bumps where
 moldings were loose
                                the subfloor had not been cleaned prior to laying the floor
                                tiles. The specifications state that unsatisfactory work, such
                                as damaged flooring materials, shall be corrected. The
                                specifications also require moldings to be tightly bonded to the
                                surface.


97-CH-204-1003                           Page 14
                                          Finding




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                Page 15                97-CH-204-1003
Finding



                                The defective and broken tiles and loose wall moldings can
                                cause unsanitary conditions by trapping germs and preventing
                                a thorough floor cleaning, particularly in bathrooms and
                                kitchens. The Ohio State Office's staff estimated the repair
                                cost of the defective tile and loose wall moldings was $20,169.




Loose wall moldings may cause
unsanitary conditions. Wall
moldings were loose in most
units.




                                Unit #660E

                                Hot water valves, electrical outlets and wiring were
 Safety valves, electrical
                                hazardous. The hot water heaters were located in the first-
 outlets and wiring were
                                floor furnace rooms. None of the hot water safety valves
 hazardous
                                were piped to floor drains as required by the specifications.
                                Thus, any surges in pressure or temperature could make the
                                valves pop off, burn tenants and flood apartments.

                                Electrical outlets and wiring were hazardous. Electrical
                                outlets were not properly recessed or secured in 27 units in
                                sector I as required. In addition, electrical wiring in 23
                                storage sheds was encased with plastic sheeting. This was a
                                hazard because the sheeting was susceptible to damage,
                                exposing bare wire. The wiring was required to be encased by
                                conduit. The Ohio State Office's staff estimated the cost to
                                correct the defective safety valves, electrical outlets and the
                                electrical wiring was $6,596.




97-CH-204-1003                           Page 16
                                          Finding




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                Page 17                97-CH-204-1003
Finding




Wiring encased in plastic
sheeting on wall surface was
in violation of electrical
code and was a hazard. The
wiring should have been encased
in conduit.


                                  Unit #684A


                                  Other defects consisted of anchor bolts connecting roofs to
 Other defective work
                                  the storage sheds were missing for two units and paint was
                                  peeling on handrails. Because the roofs were not secured to
                                  the building, a strong wind could cause an uplift and blow the
                                  roof off the storage buildings. Paint on iron handrails peeled
                                  because the handrails were not prepared before painting. The
                                  handrails were not cleaned, primed and painted with two
                                  finishing coats as provided by the paint specifications. As a
                                  result of the peeling paint, the handrails were likely to rust.
                                  The Office estimated that the repairs would cost $650.

                                  The Ohio State Office's Construction Analysts observed that
                                  the construction procedures in process in sectors III, IV and
                                  V did not follow the specifications. Thus the interior defects
                                  found in sectors I and II probably exist in sectors III, IV and
                                  V.

                                  Based on HUD's Ohio State Office's staff inspections and the
 The Authority did not
                                  defective work, we conclude that the Authority and the
 provide supervision
                                  general contractor did not closely supervise the rehabilitation
                                  work as it progressed. The HUD Construction Analysts said
                                  that based on poor workmanship and non-compliance with
                                  specifications, they concluded that the Authority did not
                                  closely oversee the work of the general contractor. Also, the
                                  general contractor had not monitored subcontractors' work.




97-CH-204-1003                             Page 18
                                                                            Finding



                      The Authority was aware that the rehabilitation work did not
                      meet specifications. The Authority's inspectors, prior to our
                      inspections, told us they reported defective work. Our
                      inspectors confirmed the defective work which included patio
                      wall cap drainage problems, missing reinforcement bars,
                      improperly installed doors and warped floor tiles. Further,
                      Ohio State University's Plant and Pest Diagnostic Clinic told
                      the Authority in May 1995 that the soil was not properly
                      prepared. In addition, on July 17, 1996, the Authority's
                      second architect informed the Authority that sod preparation
                      did not meet specifications. The sod, he said, had been
                      installed on top of gravel beds and large rocks.

                      Initially, the Authority had assigned two inspectors to inspect
                      the rehabilitation work. The Authority reassigned the two
                      inspectors because of budget limitations and lack of seniority
                      of the inspectors. The Authority had one other inspector
                      oversee Lincoln Park rehabilitation. The inspectors reassigned
                      by the Authority were aware that rehabilitation work at
                      Lincoln Park was not in accordance with the specifications.

                      The first architect did not provide on-site inspections. The
                      architect said the Authority did not hire him to inspect the
                      rehabilitation work. However, the architect's contract showed
                      that the architect was hired for on-site inspections. The
                      Authority did not enforce the inspection requirements. The
                      second architect hired stated that he spent at least 20 hours a
                      week verifying the work of the general contractor.

                      The second architect told us that the general contractor did
                      not adequately monitor the work performed by the
                      subcontractors, and they did not have the skills to produce
                      quality work. The general contractor was responsible for
                      acceptance of its subcontractors work. The general
                      contractor, however, did not closely supervise them and
                      inspect their work. HUD's Ohio State Office's Construction
                      Analyst said the general contractor was not monitoring
                      subcontractors' work. The architect told us subcontractors
                      told him they did not have to follow the specifications, if the
                      general contractor was not.

Lack of supervision      As a result of the Authority and general contractor not
resulted in poor         closely overseeing the rehabilitation, work was not
workmanship              completed in accordance with the specifications.


                               Page 19                                  97-CH-204-1003
Finding



                       Furthermore, tenants were living in units that were unsanitary
                       and hazardous.




Authority Comments     Sod samples for sector Ia and Ib had been tested by the Ohio
                       State University, Plant and Pest Diagnostic Clinic. The results
                       confirmed that the quality of sod is in compliance with the
                       requirements in the specifications.

                       Approximately 10 to 15 percent of the sod in sector IIa and
                       IIb is not germinating properly. The majority of this non-
                       germinating sod is found at various spots around the buildings.
                       Most of lawns in the court yards of sector II show proper
                       germination.

                       The sod in court yards and around buildings in sectors III
                       through V show signs of proper germination. The project
                       architect and Authority's staff were aware of most of the
                       problems such as rocks (larger than 1.5" in diameter), weeds,
                       and some open seams at the time of the sod installation and
                       had instructed the contractor several times in the progress
                       meetings to make corrections and to de-weed as required in
                       the specifications. Most of those problems have been
                       corrected accordingly.

                       The reason for the deterioration of lawns in sector I at this
                       time, more than two years after the initial installation is
                       somewhat difficult to identify. Furthermore, these lawns had
                       lived through the entire 12-month construction warranty
                       period. It is suggested that the Authority should make all
                       necessary corrections through the future landscaping
                       maintenance work for all the sod on sector I.

                       In the spring of 1997, the Authority will exercise its right to
                       demand the contractor to repair and/or replace all deteriorated
                       sod in sectors II through V. The Authority may either demand
                       an additional bond from the contractor for this work or place
                       an amount of $21,500 in escrow.

OIG Evaluation of         We did not question the type or quality of sod the
Authority's Comments      Authority installed. The problems with the sod were
                          caused by incorrect soil preparation.


97-CH-204-1003                  Page 20
                                                                                             Finding



   Pictures we took during October 1996 showed the sod was dead in the courtyards and around
   the buildings in all sectors. HUD's Ohio State Office inspectors said all of the sod had to be
   replaced because of incorrect soil preparation.

                                    Sod in Sectors III through V was installed during 1996. Most
                                    of the problems had not been corrected. As of October 1996
                                    the lawns had open seams, weeds, and dead sod. Sod installed
                                    on stones and debris will not maintain a healthy growth.

                                    The Authority said it could correct the sod problems in sector
                                    I with a future landscaping contract. The Authority should
                                    hold the contractor responsible for correctly preparing the soil
                                    in Sector I.

                                    The $21,500 the Authority proposed be deposited into an
                                    escrow is not adequate. Construction analyst for the HUD
                                    Ohio State Office estimated that it would cost $196,675 to
                                    replace the sod.



Authority Comments                  The bricks being laid wrong side out primarily occurred in
                                    sector I construction. The Authority's staff was aware of this
                                    poor quality of workmanship in 1993 and had rejected a total
                                    of seven brick walls and instructed the contractor to replace
                                    with new walls in sector I. A small number of these bricks
                                    mixed in several walls were allowed to stay. The project
                                    architect and the Authority's staff paid special attention in this
                                    matter from sectors II through V to prevent it from re-
                                    occurring.

                                    In July of 1996, the architect and the Authority's staff
                                    observed the discoloration. The brick manufacturer/ supplier
                                    explained that ...once the moisture content in the brick reduces
                                    to a degree, this discoloration will not occur.
                                    Poor workmanship of brick walls was one of the reasons for
                                    the contract termination.

                                    With respect to the efflorescence in the bricks, an amount of
                                    $15,000 from the contract (approximately 5% of the original
                                    contract value for sectors II through V waterproofing and
                                    tuck-pointing work) is proposed to be placed in an escrow
                                    account until this work is complete in the Spring of 1997.




                                             Page 21                                     97-CH-204-1003
Finding



OIG Evaluation of      HUD's Ohio State Office's inspections showed that bricks
Authority's Comments   were laid facing the wrong direction throughout sectors I
                       through IV. Their inspections of sector I was performed after
                       the Authority accepted sector I. The inspection showed that
                       5 to 10 percent of the bricks were still facing the wrong
                       direction. We did not inspect the bricks in sector V, since the
                       Authority had not yet accepted the contractor's work.

                       HUD's Ohio State Office's staff advised us they will have to
                       wait until the winter to see if the reduction of the moisture
                       content of the brick corrects the bricks' discoloration.

                       Based on the Ohio State Office's estimate of $95,000 to
                       correct the defective brick work, the $15,000 the Authority
                       proposes to escrow for the defective bricks is not adequate.


Authority Comments     Most of [the plumbing] fixtures were observed in sector Ia
                       units. Furthermore, the report also identified a small number
                       of these fixtures in sectors Ib and IIa apartment units. The
                       Authority has already instructed the contractor to correct
                       these items under their contract warranty service agreement in
                       October of 1996.

                       Since all the defective fixtures preliminary identified in the
                       report have already been corrected no remedial action and/or
                       withholding of any contract amount will be proposed.

OIG Evaluation of      HUD's Ohio State Office's staff inspection showed that
Authority's Comments   fixtures were loose in units in sectors I and II, the sectors in
                       which we inspected interior units. The Authority should
                       correct the sinks in all the units we identified. HUD's Ohio
                       State Office, Public Housing Division should inspect the units
                       to determine whether the sinks have been repaired.




97-CH-204-1003                  Page 22
                                                                              Finding




Authority Comments     The exterior inspection report provided by HUD auditors and
                       Geotechnical Consultants, Inc. indicated that several planter
                       boxes and walls were lacking vertical rebars. However, the
                       attached pictures #1 and #2 [see page 44] show the existence
                       of vertical rebars in the planter boxes and walls for building
                       675 and 645, two of the buildings identified with missing
                       rebars in the report. These pictures have demonstrated the
                       conscious effort from the architect and the Authority's staff to
                       ensure the proper installation of the rebars of these walls.

OIG Evaluation of      The first picture does not show any reinforcing bars. The
Authority's Comments   second picture shows reinforcing bars installed in the patio
                       walls in back of the units. The brick planters were in front of
                       the units. Therefore, the pictures do not support the
                       Authority's assertions that the Authority ensured the proper
                       installation of reinforcing bars in the planter walls.


Authority Comments     The concrete wall caps were normally installed at the last
                       stage of construction prior to the acceptance of the buildings.
                       By the time that we realized wrong re-cast concrete caps had
                       been ordered and delivered, the construction activities in
                       sector IIa were about 95% completion. The amount of water
                       draining into the patios from this 12" wide cap was minimal.
                       Some patios with pooling water were caused by improper
                       slope of patio and they had been corrected by installing weep
                       holes on the bottom of the walls to allow water draining out
                       to the back yard.

                       Improper mulching and soil preparation primarily occurred in
                       sector I. Again, this was a part of the reasons that their
                       contract was terminated after sector Ib. Excessive weeds in
                       the planter boxes was attributed to insufficient maintenance
                       staff for landscaping maintenance work.

                       It is recommended that the Authority should require a five
                       years extended warranty from the contractor for all planter
                       boxes and walls in sectors II and III...[and] acquire a credit
                       amount of $7,500 for not correcting the pre-cast concrete
                       caps facing the wrong way.




                                Page 23                                   97-CH-204-1003
Finding



                       The Authority will take care of re-mulching and de-weeding
                       of planter boxes in sector I through future landscaping
                       maintenance.

OIG Evaluation of      The Authority's statement that the work in sector IIa was 95
Authority's Comments   percent complete is not a valid reason for accepting the wall
                       caps facing the wrong direction. HUD's Ohio State Office
                       should inspect the units to determine whether the weep holes
                       corrected the problem of pooling water on the patios.

                       Our inspectors determined that the incorrect mulching and soil
                       preparation occurred throughout sectors I through IV and not
                       just in sector I as asserted by the Authority. Excessive weeds
                       in the planters are attributable to improper mulching and soil
                       preparation resulting in rapid evaporation and uncontrolled
                       weed growth.

                       The five-year extended warranty for brick planters and walls
                       should be obtained for the entire site not just sectors II and
                       III.

                       The $7,500 credit the Authority proposed would cover the
                       cost to repair wall caps facing the wrong direction and for not
                       mulching the soil in the brick planters.



Authority Comments     Most of [the problems with the doors and the missing
                       hardware] occurred in sector I units according to the
                       preliminary interior inspection report provided earlier. Some
                       of these units in sector Ia were vandalism damages. These
                       doors and frames have been either corrected or replaced in
                       June of 1996. All the apartment entry doors in sectors II and
                       up that were either misaligned or improperly installed had
                       been repaired an/or replaced by the contractor through our
                       punch out inspection process.

                       All defective doors and frames in sector I and II have been
                       corrected or replaced. Therefore, no remedial action and any
                       credit amount for this finding will be recommended.

OIG Evaluation of      HUD's Ohio State Office's staff inspected doors only in
Authority's Comments   sectors I and II. Problems with doors were found in 17 units
                       located in both sectors. HUD's Ohio State Office's architect
                       said only one door had been damaged because of vandalism,


97-CH-204-1003                  Page 24
                                                                                            Finding



   and we did not include it in the units we cited. Some metal doors were misaligned, deadbolts did
   not match the cut-out, and wood doors were installed at an angle. HUD's Ohio State Office
   Public Housing Division should inspect the units cited to ensure the doors were corrected.



Authority Comments                   Exterior concrete work in sector I was also a part of the
                                     reasons for their contract termination after sector Ib.
                                     According to the reinstatement agreement, the contractor
                                     provided extended five years warranty on all exterior concrete
                                     sidewalks and patios in sector I in lieu of replacing all
                                     concrete. At the site visit with all parties on November 13,
                                     1996, it was observed that some concrete sidewalks and patios
                                     were cracking due to either earth settlement or abuse by
                                     vehicles. Also, there were some control joints in concrete not
                                     in place according to the contract in some units of sector II
                                     and III. Most of the concrete expansion joints were in place.

                                     All defective concrete observed in sector I that are under the
                                     contractor's 5-year extended warranty will be repaired and/or
                                     replaced by the contractor. The Authority will inform the
                                     contractor to saw cut those missing control joints in the
                                     concrete patios for the entire project. An amount of $5,000
                                     is recommended to be withheld and to be placed into the
                                     escrow account until this work is done.

OIG Evaluation of                    The Authority's proposed actions do not go far enough. The
Authority's Comments                 Authority should correct all locations in all sectors where
                                     expansion joints are missing. Concrete that does not have
                                     expansion joints will likely crack prematurely, settle unevenly,
                                     and become a tripping hazard. The contractor's extended five-
                                     year warranty should include all sectors where deficiencies
                                     were noted. The escrow account should include $20,700, the
                                     amount estimated by our inspectors to be the cost to correct
                                     the deficiencies.


Authority Comments                   In sector Ia units, many floor tiles and wall base moldings
                                     were damaged either by the vandalism or by residents
                                     occupying units for the past two years. All these defective,
                                     broken tiles and wall base moldings... have been repaired
                                     and/or replaced by the contractor.




                                              Page 25                                   97-CH-204-1003
Finding



                                      Any damaged tiles and wall base molding in the future will be
                                      repaired and/or replaced either by the contractor through the
                                      construction warranty service or by the Authority maintenance
                                      staff.

OIG Evaluation of                     The deficiencies HUD's Ohio State Office's staff cited were
Authority's Comments                  caused by defective work. HUD's Ohio State Office should
                                      inspect the units to determine whether the damaged tiles and
                                      loose moldings have been corrected.

                                      Any tiles or wall based molding damaged during installation or
                                      incorrectly installed should be corrected by the contractor.



Authority Comments                    The hot water heaters in the first floor furnace room were
                                      installed according to the manufacturer's recommendation. It
                                      complies with the recommendation and it has been approved
                                      by City Inspectors.

                                      All electrical outlets and wiring in sector I were inspected by
                                      HUD inspectors during or right after lead abatement activities.
                                      Most of the defects were caused by vandalism. They all have
                                      been repaired and/or replaced by the contractor prior to the
                                      re-occupancy of units in June of 1996.

                                      In July, HUD inspectors inspected 23 storage sheds in sectors
                                      III and IV prior to the completion of the air conditioning
                                      wiring. In September and October, the contractor enclosed all
                                      electrical wires and A/C lines with metal protective guards and
                                      plywood ceilings.

                                      Since all these defects have been corrected,... no remedial
                                      action and no withholding of any credit will be recommended.

OIG Evaluation of                    The contract specifications require the water heaters to be
Authority's Comments                 piped to the floor drains. The Authority did not address the
                                     issue of specifications in its comments. Because the hot
                              water heater valves were not piped to the floor drains as required by
the specifications, any surge in pressure or temperature could cause the valves to pop off and
endanger the tenants and flood the apartment.

                                      HUD's Ohio State Office should inspect the electrical outlets
                                      and wiring to ensure the deficiencies have been corrected.




97-CH-204-1003                                 Page 26
                                                                         Finding



Recommendations   We recommend that the Director, Public Housing Division,
                  HUD Ohio State Office:

                  1A.    Inspects the interiors of units in sectors II, III, IV and
                         V to determine whether the rehabilitation work in
                         these units was performed in a skillful and
                         workmanlike manner and in accordance with the
                         specifications.

                  1B.    Requires the Authority to correct any work not
                         completed according to the specifications and in a
                         workmanlike manner at no further cost to HUD. If
                         the general contractor does not make the repairs the
                         Authority should (1) contract for the repairs or
                         services and back-charge the amount to the general
                         contractor, (2) consider alternate solutions for the
                         defective work, for example, extending the warranties
                         and obtaining a letter of credit from the general
                         contractor.

                  1C.    Periodically monitors the Authority's progress in
                         correcting the defective work.

                  1D.    Considers imposing administrative sanctions against
                         the general contractor and subcontractors to the full
                         extent of the law.

                  We also recommend that the Director, Public Housing
                  Division, Ohio State Office, requires the Columbus
                  Metropolitan Housing Authority to:

                  1E.    Monitor future rehabilitation contracts to ensure work
                         is performed in accordance with the specifications and
                         in a professional workmanlike manner.




                          Page 27                                     97-CH-204-1003
Internal Controls
In planning and performing our audit, we considered internal control systems of the Columbus
Metropolitan Housing Authority to determine our auditing procedures and not to provide assurance
on internal controls. Internal controls consist of the plan of organization, methods, and procedures
adopted by management to ensure that resources use is consistent with laws, regulations, and policies;
that resources are safeguarded against waste, loss, and misuse; and that reliable data are obtained,
maintained, and fairly disclosed in reports.



Relevant internal controls             We determined that the following internal controls were
                                       relevant to our objectives:

                                       •   Management philosophy and operating style;

                                       •   Accounting system and controls;

                                       •   Segregation of duties;

                                       •   Management monitoring method;

                                       •   Policies and procedures.

                                       We assessed all the relevant controls identified above.

Significant weaknesses                 It is a significant weakness if internal controls do not give
                                       reasonable assurance that resource use is consistent with laws,
                                       regulations, and policies; that resources are safeguarded
                                       against waste, loss, and misuse; and that reliable data are
                                       obtained, maintained, and fairly disclosed in reports.

                                       Based on our review, the following items are significant
                                       weaknesses:

                                       •   Management monitoring method. The lack of effective
                                           monitoring by the Authority resulted in the Authority's
                                           acceptance of substandard work. HUD's Ohio State
                                           Office's Multifamily Housing Division staff estimated that
                                           it would cost $414,898 to correct the substandard work
                                           (see Finding).




97-CH-204-1003                                  Page 28
                                       Internal Controls




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                Page 29                     97-CH-204-1003
Follow Up on Prior Audits
An OIG audit of the Columbus Metropolitan Housing Authority's Comprehensive Improvement
Assistance Program (89-CH-202-1001) was completed October 21, 1988. The findings related to
HUD approval of costs, indirect costs, procurement methods, sole source procurement, and
contractor's payroll. All findings were closed.




97-CH-204-1003                             Page 30
                                 Follow Up On Prior Audits




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                Page 31                        97-CH-204-1003
                                                                      Issue Date

                                                                           December 18, 1996
                                                                      Audit Case Number

                                                                           97-CH-204-1003




TO:            David M. Kellner, Director, Public Housing Division, Ohio State Office


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


SUBJECT:       Columbus Metropolitan Housing Authority
               Rehabilitation of Lincoln Park Apartments
               Comprehensive Improvement and Assistance Program
               Comprehensive Grant Program
               Columbus, Ohio


We completed an audit of the Columbus Metropolitan Housing Authority's rehabilitation of Lincoln
Park Apartments. We performed the audit at the request of the Ohio State Office, Public Housing
Division. Our audit objectives were to determine whether: the Authority followed Federal
procurement procedures in awarding the rehabilitation contract; the work was performed in a
workmanlike manner and in accordance with the specifications; and, the cost of change orders was
reasonable.

The Authority followed Federal procurement procedures in awarding the contract. The Columbus
Metropolitan Housing Authority's rehabilitation of Lincoln Park Apartments was not in a
workmanlike manner and in accordance with specifications. The staff of HUD's Ohio State Office's
Multifamily Housing Division inspected the contractor's work and estimated the cost of defective
work at $414,898. The cost of change orders were within reason.

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

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




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97-CH-204-1003                   Page ii
Executive Summary
We completed an audit of the Columbus Metropolitan Housing Authority's rehabilitation of Lincoln
Park Apartments. Our audit objectives were to determine whether: the Authority followed Federal
procurement procedures in awarding the rehabilitation contract; the work was performed in a
workmanlike manner and in accordance with the specifications; and, the cost of change orders was
reasonable.

The Authority followed Federal procurement procedures in awarding the contract. The Columbus
Metropolitan Housing Authority's rehabilitation of Lincoln Park Apartments was not in a
workmanlike manner and in accordance with specifications. The cost of change orders were within
reason.



                                    The Columbus Metropolitan Housing Authority's
 Rehabilitation was not
                                    rehabilitation of Lincoln Park Apartments was substandard.
 completed in a
                                    The rehabilitation work was not completed in a workmanlike
 workmanlike manner or in
                                    manner and in accordance with the contract work
 accordance with
                                    specifications. Multifamily Housing Division staff from
 specifications
                                    HUD's Ohio State Office estimated the cost of the defective
                                    work at $414,898.

                                    The defective work included sod incorrectly installed for
                                    $196,675; bricks installed with the unfinished side facing
                                    outward or discolored for $95,000; plumbing fixtures loose
                                    for $27,500; brick planters not reinforced, mulched and
                                    capped for $26,663; doors incorrectly installed and hardware
                                    missing for $20,945; exterior concrete expansion and control
                                    joints missing for $20,700; tiles defective and wall base
                                    moldings loose for $20,169; and, other defective work for
                                    $7,246. Neither the Authority nor the general contractor
                                    provided the necessary inspections needed to ensure quality
                                    rehabilitation work. Furthermore, tenants were living in units
                                    that were unsanitary and hazardous.

                                    We are making several detail recommendations to correct the
 Recommendations
                                    deficiencies reported. We recommend that HUD's Ohio State
                                    Office's Public Housing Division inspect the interiors of units
                                    not included in our sample to determine whether the
                                    rehabilitation work in these units was performed in a skillful,
                                    workmanlike manner and in accordance with the
                                    specifications. We also recommend the Division require the
                                    Authority to correct defective work at no additional cost. The
                                    Division should periodically monitor the Authority's progress


                                             Page iii                                 97-CH-204-1003
Executive Summary



                    in correcting the defective work. The Ohio State Office's
                    Public Housing Division should consider taking sanctions
                    against the contractor.

                    If the general contractor does not make the required repairs,
                    the Authority should (1) contract for the repairs or services
                    and back-charge the cost to the general contractor, (2)
                    consider alternate solutions for the defective work, for
                    example, extending the warranties. The Authority's future
                    monitoring of rehabilitation contracts should ensure work is
                    correctly performed.

                    We discussed our finding with the Authority's Executive
                    Director during the audit and provided him the draft finding.
                    We also provided a copy of the draft finding to the Ohio State
                    Office. We held an exit conference with Authority officials on
                    November 12, 1996. The Authority provided written
                    comments to the finding and recommendations. Excerpts
                    from the comments are included in the finding with our
                    evaluation and in Appendix B in their entirety.




97-CH-204-1003               Page iv
Table of Contents

Management Memorandum                                             i


Executive Summary                                                iii


Introduction                                                      1


Finding

          Rehabilitation of Lincoln Park Apartments
           Was Substandard                                        3


Internal Controls                                               29


Follow Up On Prior Audits                                       31


Appendices

    A     Layout of Lincoln Park                                33

    B     Authority Comments                                    35

    C     Distribution                                          49




                              Page v                  97-CH-204-1003
Table of Contents




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97-CH-204-1003                      Page vi
Introduction
The Columbus Metropolitan Housing Authority was organized on May 8, 1934, pursuant to Section
1078-1 to 1078-41 of the General Code of Ohio, as revised by Section 3735.27 of the Revised Code,
effective October 1, 1953. The Authority is governed by a five-member Board of Commissioners.
The Executive Director has the overall responsibility for fulfilling the goals and objectives established
by the Board of Commissioners. Dennis Guest was the Executive Director. The Authority's books
and records were located at 960 East Fifth Avenue, Columbus, Ohio.

The Authority, as of October 31, 1996 owned 4,400 low-income units in 30 projects. Lincoln Park
was built in 1941 and had 33 rowhouses with 346 family units. After rehabilitation Lincoln Park will
have 29 buildings and 292 units. The rehabilitation included the project's interior and exterior. The
contract was signed on September 3, 1992 for $8,996,505. The Authority approved 22 change
orders as of September 6, 1996 for $2,804,609, bringing the total cost of the rehabilitation to
$11,801,114.

The Authority funded the rehabilitation of Lincoln Park Apartments with Comprehensive
Improvement Assistant Program funds from 1987 through 1991 and Comprehensive Grant Program
funds from 1992 and 1993.

On October 28, 1994, the Authority terminated the contract with the general contractor because of
the Authority's dissatisfaction with the contractor's work and the length of construction delays. The
Authority and the contractor agreed to a reinstatement effective November 23, 1994. At about the
same time, the Authority terminated the contract of the original architect and, in January 1995 hired
another firm.



                                        Our audit objectives were to determine whether: the
 Audit objectives
                                        Authority followed Federal procurement procedures in
                                        awarding the rehabilitation contract; the work was performed
                                        in a workmanlike manner and in accordance with the
                                        specifications; and, the cost of change orders was reasonable.

                                        To achieve the objectives, we reviewed HUD Regulations,
 Audit scope and
                                        HUD handbooks and administrative requirements. We
 methodology
                                        interviewed HUD and the Authority's staff to obtain
                                        information about awarding of the contracts. We reviewed
                                        files at HUD's Ohio State Office to obtain information on the
                                        rehabilitation funding and HUD's review of the rehabilitation
                                        work. We reviewed files at the Authority to obtain
                                        information about awarding the contracts, inspecting and
                                        supervising rehabilitation work, reviewing change orders and
                                        settling disputes. We also interviewed the Authority's



                                                  Page 1                                    97-CH-204-1003
Introduction



                 attorney, architects and a sub-contractors to obtain
                 information regarding the contractor's performance.
                 To evaluate the quality of the rehabilitation, we requested the
                 staff of HUD's Ohio State Office's Multifamily Housing
                 Division to inspect the rehabilitation work. We accompanied
                 the Division's inspectors. HUD's Ohio State Office hired an
                 independent contractor to determine whether the general
                 contractor properly reinforced the concrete and masonry work
                 and installed sod according to the specifications.

                 The audit covered the period August 1, 1992, about the time
                 the bid process started for Lincoln Park Apartments, through
                 March 31, 1996. We expanded the coverage as necessary.
                 We performed the on-site audit work between April 1996 and
                 November 1996.

                 We conducted our audit in accordance with generally accepted
                 government auditing standards.




97-CH-204-1003            Page 2
                                                                                               Finding




 Rehabilitation of Lincoln Park Apartments Was
                   Substandard
The Columbus Metropolitan Housing Authority's rehabilitation of Lincoln Park Apartments was
substandard. The rehabilitation work was not completed in a workmanlike manner and in accordance
with the contract work specifications. Neither the Authority nor the general contractor provided the
tight inspection and supervision needed to ensure quality rehabilitation work. HUD's Ohio State
Office's Multifamily Housing Division staff estimated that correcting the defective work would cost
$414,898. Furthermore, tenants were living in units that were unsanitary and hazardous.



                                      The Authority's contract with the general contractor states
 Contract requirements
                                      that the contractor shall furnish all labor, material, equipment
                                      and services and complete all work in strict accordance with
                                      the drawings and specifications. The contract specifications
                                      require the contractor to correct, repair, restore and cure any
                                      damage resulting from any defects, omission or failure in
                                      workmanship and materials. The general conditions of the
                                      contract also state that all work shall be performed in a skillful
                                      and workmanlike manner.

                                      At our request, Construction Analysts from the Multifamily
 35 percent of units and all
                                      Housing Division of HUD's Ohio State Office inspected
 exterior work were
                                      Lincoln Park Apartments to determine the quality of the
 inspected
                                      rehabilitation and the cost of correcting the defective work.
                                      The Multifamily staff inspected the interior of all 103 units in
                                      sectors Ia and IIa, about 35 percent of the project's 292 units.
                                      In addition, they inspected the exteriors of all buildings and all
                                      land improvements in sectors I through IV. Sector V was not
                                      included because the Authority had not yet accepted the
                                      contractor's work in the sector. An independent contractor
                                      inspected the brick planter boxes, patio slabs, porches and
                                      sidewalks with a magnometer for reinforcement steel and wire
                                      mesh. A magnometer is an instrument that uses magnetic
                                      fields to detect iron and steel. Another independent contractor
                                      inspected the sod to determine whether the sod was installed
                                      in accordance with the specifications.
 Estimated cost to correct
                                      The Construction Analysts identified defective external and
 defective work was
                                      internal work totaling $414,898. The defects affected virtually
 $414,898


                                               Page 3                                      97-CH-204-1003
Finding



     all aspects of the rehabilitation including the sod, brick work, plumbing, electrical and carpentry.
     The $414,898 includes only defective rehabilitation work. The Construction Analysts did not
     cite corrective work needed because of poor maintenance.

                                        The following table shows the defective work and the
                                        estimated cost to fix it.


                                                           Description of        Estimated Cost
                                                           Defective Work         to Correct
                                             Sod was incorrectly installed           $196,675
                                             Bricks were laid wrong side out           95,000
                                             Plumbing fixtures were loose              27,500
                                             Brick planters were not
                                             reinforced, mulched and capped            26,663
                                             Doors were improperly installed
                                             and hardware was missing                  20,945
                                             Exterior concrete expansion and
                                             control joints were missing               20,700
                                             Tiles were defective and
                                             wall base moldings were
                                             loose                                     20,169
                                             Safety valves, electrical
                                             outlets and wiring were
                                             hazardous                                  6,596
                                             Other                                       650
                                                Total                                $414,898


                                        The lawns throughout sectors I through IV were barren and
 Sod was incorrectly
                                        brown; weeds were abundant. The lawns also had wide
 installed
                                        cracks throughout because the grass had not grown
                                        sufficiently to join the squares of sod. Furthermore, the
                                        squares of sod had not blended with the underlying base and
                                        could be pulled up intact. These conditions were confirmed
                                        by inspections made by an independent contractor, HUD's
                                        Ohio State Office's staff and Ohio State University's Plant and
                                        Pest Diagnostic Clinic.

                                        The lawns were laid in the summer of 1994, fall of 1995,
                                        spring, summer and fall of 1996. Similar conditions existed
                                        regardless of when the sod was laid.




97-CH-204-1003                                    Page 4
                                                                                      Finding



                                  The pictures below show lawns that were typical throughout
                                  Lincoln Park.




This sod at this location
was laid in Summer 1994.
Sod laid on stony surface
will not sustain a healthy
growth. The lawn had
numerous bare areas
where sod had died.




                                  Sector Ia, between Building 1770 and Building 630




Sod was installed in Fall 1995.




                                  Sector IIa




                                           Page 5                               97-CH-204-1003
Finding




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97-CH-204-1003                   Page 6
                                                                                       Finding




Sod was installed Spring 1996.




                                 Sector IIb



                                 The sod was defective because the subcontractor did not
                                 prepare the underlying base, as required before laying the sod.
                                 The specifications required the contractor to loosen four
                                 inches of ground and remove all sticks, roots, rubbish, stones
                                 over 1-1/2 inches and other extraneous matter. Without
                                 proper preparation, the grass will not root and will eventually
                                 die. We and HUD's Ohio State Office's staff lifted the sod at
                                 different locations and found the underlying base littered with
                                 stones and other debris.




Sod was installed July 1996.




                                 Sector III




                                          Page 7                                   97-CH-204-1003
Finding




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97-CH-204-1003                   Page 8
                                                                                            Finding




                                      The Authority was aware of sod problems since May 1995.
                                      The Ohio State University's Plant and Pest Diagnostic Clinic
                                      analyzed the sod in sector I. The sod in sector I was the only
                                      sod laid at the time of the University's analysis. The
                                      University concluded that the soil was not correctly prepared.

                                      Sod will not root, let alone sustain a healthy growth on
                                      unloosened soil loaded with stones and debris. The HUD
                                      Ohio State Office's staff recommended that the sod be
                                      completely removed, the underlying base properly prepared
                                      and new sod laid. The estimated cost in the contract for the
                                      sod was $196,675.

                                      An estimated 5 to 10 percent of the bricks in the new storage
 Bricks laid wrong side out
                                      sheds and brick planters boxes were laid the wrong side out or
                                      were discolored. The masonry specifications stated that the
                                      flat finished side of the bricks should face outward. The
                                      contractor, however, installed the brick with the unfinished
                                      side outward. In addition, some of the bricks had an ashy
                                      residue. The bricks that were laid wrong side out or were
                                      discolored present no structural problem. However, the
                                      Authority paid for rehabilitation work properly completed.
                                      HUD's Constructions Analysts estimated the cost to correct
                                      the defective brick work was $95,000.




Ashy residue on bricks could
not be removed by scrubbing or
power washing.




                                      Unit #1745J

                            (THIS PAGE LEFT BLANK INTENTIONALLY)


                                               Page 9                                   97-CH-204-1003
Finding




                                    Bathroom and kitchen plumbing fixtures in 75 units were not
 Bathroom and kitchen
                                    correctly installed. The specifications stated plumbing fixtures
 fixtures were loose
                                    were to be installed in accordance with manufacturer's
                                    instructions. Bathroom sinks were not secured to base
                                    cabinets and toilets were loose and leaking. Faucets in both
                                    the bathrooms and kitchens were loose. The loose plumbing
                                    fixtures prevented proper caulking and caused leaks. The
                                    estimated cost to correct the bathroom and kitchen plumbing
                                    fixtures was $27,500.




The picture shows a bathroom
sink which was not secured to the
base cabinet. We lifted the
sink to show that it was not
secure. Sinks not caulked and
not attached to base cabinets
may cause leaks and rotting in
time.




                                    Unit #640J

                                    Brick planter boxes were not reinforced and mulched as
 Brick planter boxes were
                                    required. An independent contractor using a magnometer
 not reinforced and
                                    determined that reinforcing bars were either not installed or
 mulched, and patio wall
                                    improperly installed in 42 of 138 planter boxes through sectors
 caps were not correctly
                                    I through IV. Without correctly installed reinforcing bars, the
 installed
                                    planter boxes are likely to crack, especially in freezing
                                    temperatures.




97-CH-204-1003                               Page 10
                                          Finding




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                Page 11                97-CH-204-1003
Finding



                                The contractor also did not prepare, mulch and fertilize the
                                soil in the brick planters, as provided by the specifications.
                                The Ohio State Office's staff observed a contractor's employee
                                discarding debris in the planter boxes. The Ohio State Office's
                                staff also said that dirt in front of the units was used to fill the
                                planters, rather than using the specified soil composition.
                                Further, tenants complained that their planter boxes were full
                                of construction debris hidden under a shallow layer of dirt.
                                Without proper soil preparation and mulching, rapid
                                evaporation and uncontrolled weed growth will occur. The
                                lack of initial fertilizer adversely affects plant growth.




The picture shows a typical
brick planter at Lincoln Park
Apartments. The planter box
was not mulched, prompting
weed growth.




                                Unit #640B

                                Patio wall caps were not correctly installed. The architect
                                designed the wall caps so that water would move away from
                                the patios. The contractor installed the wall caps backwards.
                                The water drained towards the patios and caused water to
                                pool, which can cause slipping hazards in the wintertime.

                                The Authority was aware that the wall caps were facing the
                                wrong direction. The Authority decided to accept these wall
                                caps because it would take 6 to 8 weeks to obtain the correct
                                caps. Furthermore, the Authority did not view the additional
                                water on the patios as a significant problem. The Authority
                                also was concerned that while waiting for the correct wall
                                caps the vacant units would be vandalized. The Ohio State
                                Office's staff estimated the cost to correct the planter boxes
                                and patio wall caps was $26,663.




97-CH-204-1003                           Page 12
                                          Finding




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                Page 13                97-CH-204-1003
Finding




Defective wall caps add water
to patios. The condition may
cause slipping hazards in
winter when water freezes.




                                Unit #674C


                                Doors in 17 units were incorrectly installed or missing
 Doors were incorrectly
                                hardware or stops. The specifications provided for installation
 installed and hardware was
                                in accordance with the manufacturer's instructions. The metal
 missing
                                doors were misaligned so they were difficult to open, and the
                                deadbolts did not match the cutouts. The wood doors were
                                installed at an angle and would not close completely. As a
                                result, the doors were difficult to operate. The Ohio State
                                Office's staff estimated the cost of correcting the defective
                                work at $20,945.

                                Concrete expansion and control joints were not installed in 48
 Concrete expansion joints
                                locations in sectors I and II. The specifications required the
 were missing
                                contractor to install expansion joints between abutting
                                concrete curbs, structures, walks and other fixed objects
                                unless other wise indicated. Because of missing expansion and
                                control joints, the concrete was likely to crack prematurely,
                                settle unevenly and become a tripping hazard. The Ohio State
                                Office's staff estimated that correcting the defective work
                                would cost $20,700.

                                Defective and broken floor tiles and loose wall moldings were
 Tiles were defective and
                                typical in the apartments. Floor tiles were cracked, did not
 broken, and wall base
                                correctly meet door thresholds and contained bumps where
 moldings were loose
                                the subfloor had not been cleaned prior to laying the floor
                                tiles. The specifications state that unsatisfactory work, such
                                as damaged flooring materials, shall be corrected. The
                                specifications also require moldings to be tightly bonded to the
                                surface.


97-CH-204-1003                           Page 14
                                          Finding




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                Page 15                97-CH-204-1003
Finding



                                The defective and broken tiles and loose wall moldings can
                                cause unsanitary conditions by trapping germs and preventing
                                a thorough floor cleaning, particularly in bathrooms and
                                kitchens. The Ohio State Office's staff estimated the repair
                                cost of the defective tile and loose wall moldings was $20,169.




Loose wall moldings may cause
unsanitary conditions. Wall
moldings were loose in most
units.




                                Unit #660E

                                Hot water valves, electrical outlets and wiring were
 Safety valves, electrical
                                hazardous. The hot water heaters were located in the first-
 outlets and wiring were
                                floor furnace rooms. None of the hot water safety valves
 hazardous
                                were piped to floor drains as required by the specifications.
                                Thus, any surges in pressure or temperature could make the
                                valves pop off, burn tenants and flood apartments.

                                Electrical outlets and wiring were hazardous. Electrical
                                outlets were not properly recessed or secured in 27 units in
                                sector I as required. In addition, electrical wiring in 23
                                storage sheds was encased with plastic sheeting. This was a
                                hazard because the sheeting was susceptible to damage,
                                exposing bare wire. The wiring was required to be encased by
                                conduit. The Ohio State Office's staff estimated the cost to
                                correct the defective safety valves, electrical outlets and the
                                electrical wiring was $6,596.




97-CH-204-1003                           Page 16
                                          Finding




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                Page 17                97-CH-204-1003
Finding




Wiring encased in plastic
sheeting on wall surface was
in violation of electrical
code and was a hazard. The
wiring should have been encased
in conduit.


                                  Unit #684A


                                  Other defects consisted of anchor bolts connecting roofs to
 Other defective work
                                  the storage sheds were missing for two units and paint was
                                  peeling on handrails. Because the roofs were not secured to
                                  the building, a strong wind could cause an uplift and blow the
                                  roof off the storage buildings. Paint on iron handrails peeled
                                  because the handrails were not prepared before painting. The
                                  handrails were not cleaned, primed and painted with two
                                  finishing coats as provided by the paint specifications. As a
                                  result of the peeling paint, the handrails were likely to rust.
                                  The Office estimated that the repairs would cost $650.

                                  The Ohio State Office's Construction Analysts observed that
                                  the construction procedures in process in sectors III, IV and
                                  V did not follow the specifications. Thus the interior defects
                                  found in sectors I and II probably exist in sectors III, IV and
                                  V.

                                  Based on HUD's Ohio State Office's staff inspections and the
 The Authority did not
                                  defective work, we conclude that the Authority and the
 provide supervision
                                  general contractor did not closely supervise the rehabilitation
                                  work as it progressed. The HUD Construction Analysts said
                                  that based on poor workmanship and non-compliance with
                                  specifications, they concluded that the Authority did not
                                  closely oversee the work of the general contractor. Also, the
                                  general contractor had not monitored subcontractors' work.




97-CH-204-1003                             Page 18
                                                                            Finding



                      The Authority was aware that the rehabilitation work did not
                      meet specifications. The Authority's inspectors, prior to our
                      inspections, told us they reported defective work. Our
                      inspectors confirmed the defective work which included patio
                      wall cap drainage problems, missing reinforcement bars,
                      improperly installed doors and warped floor tiles. Further,
                      Ohio State University's Plant and Pest Diagnostic Clinic told
                      the Authority in May 1995 that the soil was not properly
                      prepared. In addition, on July 17, 1996, the Authority's
                      second architect informed the Authority that sod preparation
                      did not meet specifications. The sod, he said, had been
                      installed on top of gravel beds and large rocks.

                      Initially, the Authority had assigned two inspectors to inspect
                      the rehabilitation work. The Authority reassigned the two
                      inspectors because of budget limitations and lack of seniority
                      of the inspectors. The Authority had one other inspector
                      oversee Lincoln Park rehabilitation. The inspectors reassigned
                      by the Authority were aware that rehabilitation work at
                      Lincoln Park was not in accordance with the specifications.

                      The first architect did not provide on-site inspections. The
                      architect said the Authority did not hire him to inspect the
                      rehabilitation work. However, the architect's contract showed
                      that the architect was hired for on-site inspections. The
                      Authority did not enforce the inspection requirements. The
                      second architect hired stated that he spent at least 20 hours a
                      week verifying the work of the general contractor.

                      The second architect told us that the general contractor did
                      not adequately monitor the work performed by the
                      subcontractors, and they did not have the skills to produce
                      quality work. The general contractor was responsible for
                      acceptance of its subcontractors work. The general
                      contractor, however, did not closely supervise them and
                      inspect their work. HUD's Ohio State Office's Construction
                      Analyst said the general contractor was not monitoring
                      subcontractors' work. The architect told us subcontractors
                      told him they did not have to follow the specifications, if the
                      general contractor was not.

Lack of supervision      As a result of the Authority and general contractor not
resulted in poor         closely overseeing the rehabilitation, work was not
workmanship              completed in accordance with the specifications.


                               Page 19                                  97-CH-204-1003
Finding



                       Furthermore, tenants were living in units that were unsanitary
                       and hazardous.




Authority Comments     Sod samples for sector Ia and Ib had been tested by the Ohio
                       State University, Plant and Pest Diagnostic Clinic. The results
                       confirmed that the quality of sod is in compliance with the
                       requirements in the specifications.

                       Approximately 10 to 15 percent of the sod in sector IIa and
                       IIb is not germinating properly. The majority of this non-
                       germinating sod is found at various spots around the buildings.
                       Most of lawns in the court yards of sector II show proper
                       germination.

                       The sod in court yards and around buildings in sectors III
                       through V show signs of proper germination. The project
                       architect and Authority's staff were aware of most of the
                       problems such as rocks (larger than 1.5" in diameter), weeds,
                       and some open seams at the time of the sod installation and
                       had instructed the contractor several times in the progress
                       meetings to make corrections and to de-weed as required in
                       the specifications. Most of those problems have been
                       corrected accordingly.

                       The reason for the deterioration of lawns in sector I at this
                       time, more than two years after the initial installation is
                       somewhat difficult to identify. Furthermore, these lawns had
                       lived through the entire 12-month construction warranty
                       period. It is suggested that the Authority should make all
                       necessary corrections through the future landscaping
                       maintenance work for all the sod on sector I.

                       In the spring of 1997, the Authority will exercise its right to
                       demand the contractor to repair and/or replace all deteriorated
                       sod in sectors II through V. The Authority may either demand
                       an additional bond from the contractor for this work or place
                       an amount of $21,500 in escrow.

OIG Evaluation of         We did not question the type or quality of sod the
Authority's Comments      Authority installed. The problems with the sod were
                          caused by incorrect soil preparation.


97-CH-204-1003                  Page 20
                                                                                             Finding



   Pictures we took during October 1996 showed the sod was dead in the courtyards and around
   the buildings in all sectors. HUD's Ohio State Office inspectors said all of the sod had to be
   replaced because of incorrect soil preparation.

                                    Sod in Sectors III through V was installed during 1996. Most
                                    of the problems had not been corrected. As of October 1996
                                    the lawns had open seams, weeds, and dead sod. Sod installed
                                    on stones and debris will not maintain a healthy growth.

                                    The Authority said it could correct the sod problems in sector
                                    I with a future landscaping contract. The Authority should
                                    hold the contractor responsible for correctly preparing the soil
                                    in Sector I.

                                    The $21,500 the Authority proposed be deposited into an
                                    escrow is not adequate. Construction analyst for the HUD
                                    Ohio State Office estimated that it would cost $196,675 to
                                    replace the sod.



Authority Comments                  The bricks being laid wrong side out primarily occurred in
                                    sector I construction. The Authority's staff was aware of this
                                    poor quality of workmanship in 1993 and had rejected a total
                                    of seven brick walls and instructed the contractor to replace
                                    with new walls in sector I. A small number of these bricks
                                    mixed in several walls were allowed to stay. The project
                                    architect and the Authority's staff paid special attention in this
                                    matter from sectors II through V to prevent it from re-
                                    occurring.

                                    In July of 1996, the architect and the Authority's staff
                                    observed the discoloration. The brick manufacturer/ supplier
                                    explained that ...once the moisture content in the brick reduces
                                    to a degree, this discoloration will not occur.
                                    Poor workmanship of brick walls was one of the reasons for
                                    the contract termination.

                                    With respect to the efflorescence in the bricks, an amount of
                                    $15,000 from the contract (approximately 5% of the original
                                    contract value for sectors II through V waterproofing and
                                    tuck-pointing work) is proposed to be placed in an escrow
                                    account until this work is complete in the Spring of 1997.




                                             Page 21                                     97-CH-204-1003
Finding



OIG Evaluation of      HUD's Ohio State Office's inspections showed that bricks
Authority's Comments   were laid facing the wrong direction throughout sectors I
                       through IV. Their inspections of sector I was performed after
                       the Authority accepted sector I. The inspection showed that
                       5 to 10 percent of the bricks were still facing the wrong
                       direction. We did not inspect the bricks in sector V, since the
                       Authority had not yet accepted the contractor's work.

                       HUD's Ohio State Office's staff advised us they will have to
                       wait until the winter to see if the reduction of the moisture
                       content of the brick corrects the bricks' discoloration.

                       Based on the Ohio State Office's estimate of $95,000 to
                       correct the defective brick work, the $15,000 the Authority
                       proposes to escrow for the defective bricks is not adequate.


Authority Comments     Most of [the plumbing] fixtures were observed in sector Ia
                       units. Furthermore, the report also identified a small number
                       of these fixtures in sectors Ib and IIa apartment units. The
                       Authority has already instructed the contractor to correct
                       these items under their contract warranty service agreement in
                       October of 1996.

                       Since all the defective fixtures preliminary identified in the
                       report have already been corrected no remedial action and/or
                       withholding of any contract amount will be proposed.

OIG Evaluation of      HUD's Ohio State Office's staff inspection showed that
Authority's Comments   fixtures were loose in units in sectors I and II, the sectors in
                       which we inspected interior units. The Authority should
                       correct the sinks in all the units we identified. HUD's Ohio
                       State Office, Public Housing Division should inspect the units
                       to determine whether the sinks have been repaired.




97-CH-204-1003                  Page 22
                                                                              Finding




Authority Comments     The exterior inspection report provided by HUD auditors and
                       Geotechnical Consultants, Inc. indicated that several planter
                       boxes and walls were lacking vertical rebars. However, the
                       attached pictures #1 and #2 [see page 44] show the existence
                       of vertical rebars in the planter boxes and walls for building
                       675 and 645, two of the buildings identified with missing
                       rebars in the report. These pictures have demonstrated the
                       conscious effort from the architect and the Authority's staff to
                       ensure the proper installation of the rebars of these walls.

OIG Evaluation of      The first picture does not show any reinforcing bars. The
Authority's Comments   second picture shows reinforcing bars installed in the patio
                       walls in back of the units. The brick planters were in front of
                       the units. Therefore, the pictures do not support the
                       Authority's assertions that the Authority ensured the proper
                       installation of reinforcing bars in the planter walls.


Authority Comments     The concrete wall caps were normally installed at the last
                       stage of construction prior to the acceptance of the buildings.
                       By the time that we realized wrong re-cast concrete caps had
                       been ordered and delivered, the construction activities in
                       sector IIa were about 95% completion. The amount of water
                       draining into the patios from this 12" wide cap was minimal.
                       Some patios with pooling water were caused by improper
                       slope of patio and they had been corrected by installing weep
                       holes on the bottom of the walls to allow water draining out
                       to the back yard.

                       Improper mulching and soil preparation primarily occurred in
                       sector I. Again, this was a part of the reasons that their
                       contract was terminated after sector Ib. Excessive weeds in
                       the planter boxes was attributed to insufficient maintenance
                       staff for landscaping maintenance work.

                       It is recommended that the Authority should require a five
                       years extended warranty from the contractor for all planter
                       boxes and walls in sectors II and III...[and] acquire a credit
                       amount of $7,500 for not correcting the pre-cast concrete
                       caps facing the wrong way.




                                Page 23                                   97-CH-204-1003
Finding



                       The Authority will take care of re-mulching and de-weeding
                       of planter boxes in sector I through future landscaping
                       maintenance.

OIG Evaluation of      The Authority's statement that the work in sector IIa was 95
Authority's Comments   percent complete is not a valid reason for accepting the wall
                       caps facing the wrong direction. HUD's Ohio State Office
                       should inspect the units to determine whether the weep holes
                       corrected the problem of pooling water on the patios.

                       Our inspectors determined that the incorrect mulching and soil
                       preparation occurred throughout sectors I through IV and not
                       just in sector I as asserted by the Authority. Excessive weeds
                       in the planters are attributable to improper mulching and soil
                       preparation resulting in rapid evaporation and uncontrolled
                       weed growth.

                       The five-year extended warranty for brick planters and walls
                       should be obtained for the entire site not just sectors II and
                       III.

                       The $7,500 credit the Authority proposed would cover the
                       cost to repair wall caps facing the wrong direction and for not
                       mulching the soil in the brick planters.



Authority Comments     Most of [the problems with the doors and the missing
                       hardware] occurred in sector I units according to the
                       preliminary interior inspection report provided earlier. Some
                       of these units in sector Ia were vandalism damages. These
                       doors and frames have been either corrected or replaced in
                       June of 1996. All the apartment entry doors in sectors II and
                       up that were either misaligned or improperly installed had
                       been repaired an/or replaced by the contractor through our
                       punch out inspection process.

                       All defective doors and frames in sector I and II have been
                       corrected or replaced. Therefore, no remedial action and any
                       credit amount for this finding will be recommended.

OIG Evaluation of      HUD's Ohio State Office's staff inspected doors only in
Authority's Comments   sectors I and II. Problems with doors were found in 17 units
                       located in both sectors. HUD's Ohio State Office's architect
                       said only one door had been damaged because of vandalism,


97-CH-204-1003                  Page 24
                                                                                            Finding



   and we did not include it in the units we cited. Some metal doors were misaligned, deadbolts did
   not match the cut-out, and wood doors were installed at an angle. HUD's Ohio State Office
   Public Housing Division should inspect the units cited to ensure the doors were corrected.



Authority Comments                   Exterior concrete work in sector I was also a part of the
                                     reasons for their contract termination after sector Ib.
                                     According to the reinstatement agreement, the contractor
                                     provided extended five years warranty on all exterior concrete
                                     sidewalks and patios in sector I in lieu of replacing all
                                     concrete. At the site visit with all parties on November 13,
                                     1996, it was observed that some concrete sidewalks and patios
                                     were cracking due to either earth settlement or abuse by
                                     vehicles. Also, there were some control joints in concrete not
                                     in place according to the contract in some units of sector II
                                     and III. Most of the concrete expansion joints were in place.

                                     All defective concrete observed in sector I that are under the
                                     contractor's 5-year extended warranty will be repaired and/or
                                     replaced by the contractor. The Authority will inform the
                                     contractor to saw cut those missing control joints in the
                                     concrete patios for the entire project. An amount of $5,000
                                     is recommended to be withheld and to be placed into the
                                     escrow account until this work is done.

OIG Evaluation of                    The Authority's proposed actions do not go far enough. The
Authority's Comments                 Authority should correct all locations in all sectors where
                                     expansion joints are missing. Concrete that does not have
                                     expansion joints will likely crack prematurely, settle unevenly,
                                     and become a tripping hazard. The contractor's extended five-
                                     year warranty should include all sectors where deficiencies
                                     were noted. The escrow account should include $20,700, the
                                     amount estimated by our inspectors to be the cost to correct
                                     the deficiencies.


Authority Comments                   In sector Ia units, many floor tiles and wall base moldings
                                     were damaged either by the vandalism or by residents
                                     occupying units for the past two years. All these defective,
                                     broken tiles and wall base moldings... have been repaired
                                     and/or replaced by the contractor.




                                              Page 25                                   97-CH-204-1003
Finding



                                      Any damaged tiles and wall base molding in the future will be
                                      repaired and/or replaced either by the contractor through the
                                      construction warranty service or by the Authority maintenance
                                      staff.

OIG Evaluation of                     The deficiencies HUD's Ohio State Office's staff cited were
Authority's Comments                  caused by defective work. HUD's Ohio State Office should
                                      inspect the units to determine whether the damaged tiles and
                                      loose moldings have been corrected.

                                      Any tiles or wall based molding damaged during installation or
                                      incorrectly installed should be corrected by the contractor.



Authority Comments                    The hot water heaters in the first floor furnace room were
                                      installed according to the manufacturer's recommendation. It
                                      complies with the recommendation and it has been approved
                                      by City Inspectors.

                                      All electrical outlets and wiring in sector I were inspected by
                                      HUD inspectors during or right after lead abatement activities.
                                      Most of the defects were caused by vandalism. They all have
                                      been repaired and/or replaced by the contractor prior to the
                                      re-occupancy of units in June of 1996.

                                      In July, HUD inspectors inspected 23 storage sheds in sectors
                                      III and IV prior to the completion of the air conditioning
                                      wiring. In September and October, the contractor enclosed all
                                      electrical wires and A/C lines with metal protective guards and
                                      plywood ceilings.

                                      Since all these defects have been corrected,... no remedial
                                      action and no withholding of any credit will be recommended.

OIG Evaluation of                    The contract specifications require the water heaters to be
Authority's Comments                 piped to the floor drains. The Authority did not address the
                                     issue of specifications in its comments. Because the hot
                              water heater valves were not piped to the floor drains as required by
the specifications, any surge in pressure or temperature could cause the valves to pop off and
endanger the tenants and flood the apartment.

                                      HUD's Ohio State Office should inspect the electrical outlets
                                      and wiring to ensure the deficiencies have been corrected.




97-CH-204-1003                                 Page 26
                                                                         Finding



Recommendations   We recommend that the Director, Public Housing Division,
                  HUD Ohio State Office:

                  1A.    Inspects the interiors of units in sectors II, III, IV and
                         V to determine whether the rehabilitation work in
                         these units was performed in a skillful and
                         workmanlike manner and in accordance with the
                         specifications.

                  1B.    Requires the Authority to correct any work not
                         completed according to the specifications and in a
                         workmanlike manner at no further cost to HUD. If
                         the general contractor does not make the repairs the
                         Authority should (1) contract for the repairs or
                         services and back-charge the amount to the general
                         contractor, (2) consider alternate solutions for the
                         defective work, for example, extending the warranties
                         and obtaining a letter of credit from the general
                         contractor.

                  1C.    Periodically monitors the Authority's progress in
                         correcting the defective work.

                  1D.    Considers imposing administrative sanctions against
                         the general contractor and subcontractors to the full
                         extent of the law.

                  We also recommend that the Director, Public Housing
                  Division, Ohio State Office, requires the Columbus
                  Metropolitan Housing Authority to:

                  1E.    Monitor future rehabilitation contracts to ensure work
                         is performed in accordance with the specifications and
                         in a professional workmanlike manner.




                          Page 27                                     97-CH-204-1003
Internal Controls
In planning and performing our audit, we considered internal control systems of the Columbus
Metropolitan Housing Authority to determine our auditing procedures and not to provide assurance
on internal controls. Internal controls consist of the plan of organization, methods, and procedures
adopted by management to ensure that resources use is consistent with laws, regulations, and policies;
that resources are safeguarded against waste, loss, and misuse; and that reliable data are obtained,
maintained, and fairly disclosed in reports.



Relevant internal controls             We determined that the following internal controls were
                                       relevant to our objectives:

                                       •   Management philosophy and operating style;

                                       •   Accounting system and controls;

                                       •   Segregation of duties;

                                       •   Management monitoring method;

                                       •   Policies and procedures.

                                       We assessed all the relevant controls identified above.

Significant weaknesses                 It is a significant weakness if internal controls do not give
                                       reasonable assurance that resource use is consistent with laws,
                                       regulations, and policies; that resources are safeguarded
                                       against waste, loss, and misuse; and that reliable data are
                                       obtained, maintained, and fairly disclosed in reports.

                                       Based on our review, the following items are significant
                                       weaknesses:

                                       •   Management monitoring method. The lack of effective
                                           monitoring by the Authority resulted in the Authority's
                                           acceptance of substandard work. HUD's Ohio State
                                           Office's Multifamily Housing Division staff estimated that
                                           it would cost $414,898 to correct the substandard work
                                           (see Finding).




97-CH-204-1003                                  Page 28
                                       Internal Controls




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                Page 29                     97-CH-204-1003
Follow Up on Prior Audits
An OIG audit of the Columbus Metropolitan Housing Authority's Comprehensive Improvement
Assistance Program (89-CH-202-1001) was completed October 21, 1988. The findings related to
HUD approval of costs, indirect costs, procurement methods, sole source procurement, and
contractor's payroll. All findings were closed.




97-CH-204-1003                             Page 30
                                 Follow Up On Prior Audits




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                Page 31                        97-CH-204-1003
                               Appendix A

Layout of Lincoln Park




                     Page 33   97-CH-204-1003
                 (THIS PAGE LEFT BLANK INTENTIONALLY)




97-CH-204-1003                   Page 34
                               Appendix B

Authority Comments




                     Page 35   97-CH-204-1003
Appendix B




97-CH-204-1003   Page 36
          Appendix B




Page 37   97-CH-204-1003
Appendix B




97-CH-204-1003   Page 38
Appendix B




             Page 39   97-CH-204-1003
                           Appendix B




97-CH-204-1003   Page 40
Appendix B




             Page 41   97-CH-204-1003
                           Appendix B




97-CH-204-1003   Page 42
                                                         Appendix B




Picture #1: Planter walls construction at building 675




Picture #2: Garden walls construction at building 645



                       Page 43                           97-CH-204-1003
Appendix B




97-CH-204-1003   Page 44
          Appendix B




Page 45   97-CH-204-1003
Appendix B




97-CH-204-1003   Page 46
                                                                               Appendix C

Distribution
Secretary's Representative Midwest
Director, Public Housing Division, Ohio State Office (2)
Director, Multifamily Housing Division, Ohio State Office (2)
State Coordinator, Ohio State Office (2)
Director, Field Accounting Division, Midwest
Field Controller, Midwest
Assistant General Counsel, Midwest
Public Affairs Officer, Midwest
Assistant to the Deputy Secretary for Field Management, SDF (Room 7106)
Acquisitions Librarian, Library AS (Room 8141)
Deputy Chief Financial Officer for Finance, FF (Room 10164) (2)
Chief Financial Officer, F (Room 10166) (2)
Director, General Management Division, PMG (Room 4216)
Comptroller/Audit Liaison Officer, PF (Room 4122) (3)
Assistant Director in Charge, U.S. GAO 820 1st St. NE, Union Plaza, Building 2, Suite 150,
Washington D. C. 20002 (2)




                                          Page 47                              96-CH-204-1003