oversight

Housing Authority of the SAC and Fox Nation, Shawnee, OK

Published by the Department of Housing and Urban Development, Office of Inspector General on 1998-06-26.

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

                                                     U.S. Department of Housing and Urban Development
                                                     Southwest District Office of Inspector
                                                     General
                                                     1600 Throckmorton, Room 404
                                                     Post Office Box 2905
                                                     Fort Worth, Texas 76113-2905
                                                     (817)978-9309 FAX (817)978-9316
                                                      http://www.hud.gov/oig/oigindex.html




June 26, 1998                                        98-FW-202-1812


MEMORANDUM FOR: Wayne Sims, Administrator
                               Office of Southern Plains
                               Native American Programs, 6IPI


FROM: D. Michael Beard,
          District Inspector General for Audit, 6AGA

SUBJECT: Citizen Complaints
                Comprehensive Grant Program
                Housing Authority of the Sac and Fox Nation
                Shawnee, Oklahoma


       In response to tribal members’ complaints, we have reviewed allegations against officials
of the Housing Authority of the Sac and Fox Nation (the Authority). Our objective was to find
out whether the members have valid complaints and decide whether the complaints justify an in-
depth audit of the Authority’s Comprehensive Grant and Mutual Help housing programs.
Members alleged:

   1. Authority officials wrongly used Comprehensive Grant funds to rehabilitate a mutual help
      house after the homeowner had paid off the house. Also the homeowner was not an
      Indian and the family was not a low or moderate income family.
   2. Officials changed a bid amount so the complainant’s company would not get the contract.
   3. Officials paid an excessive amount to rehabilitate a mutual help house in Tryon,
      Oklahoma.
   4. Officials violated requirements against conflicts of interest by awarding electrical contracts
      to the father of the Authority’s construction manager.
   5. Officials awarded work to contractors who did not have a bond.
   6. Officials use intimidation to control program participants.
   7. Officials ignore the waiting list when assigning families to new houses.

         The review focused on activities of the Authority related to the complaints. To achieve
the objective, we talked to complainants and officials of the Authority and HUD’s Southern Plains
Office of Native American Programs. We reviewed construction and participants' records and
files of the Authority and documents provided by complainants. We reviewed applicable criteria
and the most recent independent auditor report. We also viewed the work on a mutual help house
in Tryon, Oklahoma.

       If you have questions, please call Jerry R. Thompson, Assistant District Inspector General
for Audit.


                                         SUMMARY

Six of the seven allegations are not valid. One is valid, but the matter does not violate HUD
requirements. The Sac and Fox Housing Authority did not require contractors to be bonded for
housing modernization work under the Comprehensive Grant Program. HUD requires
contractors to be bonded when the contract amount is $100,000 or more. However, no housing
modernization contract reached $100,000. We concluded the complaints do not justify an in-
depth audit of the Authority’s programs.


                                       BACKGROUND

The Sac & Fox Nation of Oklahoma created the Authority under the provisions of the laws of the
State of Oklahoma. Until March 1998, the Authority administered Public Housing Programs
authorized under the United States Housing Act of 1937. Since March 1998, the Native
American Housing Assistance and Self-Determination Act of 1996 has authorized the Authority’s
administration of Public Housing Programs. The new regulations separate Indian Housing
Programs from the 1937 Housing Act.

The Authority administers the Mutual Help Homeownership Opportunity Program. Each low-
income family enrolled in the program, and occupying a house under the program, has signed a
lease with an option to purchase the house. During the period of occupancy, the Authority
amortizes the purchase price in accordance with a purchase price schedule. The Authority can
convey title to the homebuyer when the homebuyer has accumulated enough funds in an equity
account to cover the balance of the purchase price. The Authority can complete modernization
work on houses that it subsequently conveys before completion of the work if the Authority
included those houses in its 5-year Comprehensive Grant Plan.

HUD awards grants to the Authority for funding modernization work on Mutual Help houses
under the Comprehensive Grant Program. During the fiscal year ended June 30, 1996, the period
for which the Authority had its most recent single audit completed, the Authority received
$529,806 and expended $589,255 in Comprehensive Grant Program funds.




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                                  RESULTS OF REVIEW

Allegation 1: Authority officials violated Comprehensive Grant Program requirements when they
used grant funds to remodel a Mutual Help house that the homeowner had paid off. Also, the
homeowner was not an Indian and was not a low or moderate income family.

CONCLUSION: The allegation is not valid.

HUD’s Comprehensive Grant Program Guidebook, 7485.3 G, allows housing authorities to
complete modernization work if officials approved the work before they conveyed title to the
homeowner. Officials included all Mutual Help project 90-8 houses in the Authority’s 5 year
plan. The plan included the house. HUD approved funding for the work in 1996. Officials did
not convey title to the homeowner until February 18, 1997. Therefore, officials had not violated
HUD requirements when they used program funds to remodel the house. Also, the homeowner
was Indian and met the income requirements of the program.

Allegation 2: Authority officials violated procurement policy when they changed a bid amount so
that the company of a complainant would not get a contract.

CONCLUSION: The allegation is not valid.

Authority officials had not changed the bid amount. Officials awarded the contract to the second
lowest bidder. The lowest bidder, the complainant’s company, did not get the award because it
did not submit proof of workers’ compensation insurance to the Authority when requested.
HUD’s Guidebook 7485.3 G requires contractors to have the insurance.

Allegation 3: Authority officials paid $22,500 for at most $10,000 of remodeling work on a
Mutual Help house in Tryon, Oklahoma.

CONCLUSION: The allegation is not valid.

We reviewed the modernization work done on the house identified by the complainant. The
Authority paid a comparable price for similar work done on another house by the complainant’s
company. Also, HUD staff in Oklahoma City inspected the completed work on the house and
found no problems.

Allegation 4: Authority officials awarded electrical contracts to the father of the Authority’s
construction manager, which violates the Authority’s conflict-of-interest policy.

CONCLUSION: The allegation is not valid.

We found no evidence of a conflict-of-interest violation. The Authority’s Construction Manager
says he is not related to the contractor. The Construction Manager says, except for his wife and
19 year-old son, he has no relatives in the area. We could not prove otherwise.




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Allegation 5: Authority officials awarded work to contractors who did not have a bond.

CONCLUSION: The allegation is valid, but the contracts did not reach amounts for which HUD
requires contractor bonds.

The Authority officials awarded work to contractors who did not have a bond. However, based
on Title 24, Part 950, Code of Federal Regulations, Section 950.618, and HUD Guidebook
7485.3, Section 10-8, HUD requires housing authorities to use bonded contractors for
Comprehensive Grant construction contracts over $100,000. The Authority did not award
contracts that came close to the amount that would require bonding.

Allegation 6: Authority officials use intimidation to control program participants. Participants
understand that, if they complain, officials will raise the complainer’s rent, evict the trouble
makers from their home, or raise the complainer’s house price.

CONCLUSION: The allegation is not valid.

Since the complainant would not provide names of persons who had unfair rent increases, we
reviewed a sample of rent increases. During Fiscal Year 1997, the Authority had 62 Mutual Help
rent increases. We reviewed the files of 15 participants. The files showed that authority officials
increased rents fairly, based on participant income increases as verified by housing authority staff.

We reviewed the file of one family that authority officials reportedly evicted without cause. The
tenant file showed officials had not evicted the family. The family voluntarily canceled the
agreements and lease with approval of the authority.

We reviewed the files of two families who alleged that officials unfairly raised their house price.
The tenant files showed that officials had not raised the house prices of those families.

Allegation 7: Authority officials ignore the waiting list when assigning families to new houses.

CONCLUSION: The allegation is not valid.

The files of two persons who had complained showed authority officials had not ignored the
waiting list. Officials removed one person from the list because she did not update her
application. If she had stayed on the list she would be seventh in line as of May 7, 1998. Officials
assigned a new house to the other person, but because she had a category 2 preference rating, she
likely had to wait a while to get the house. A category 2 preference means an applicant is an
enrolled tribal member but is not a veteran, handicapped, or elderly, as required for a category 1
preference. Applicants with category 1 preferences are placed ahead of those with category 2
preferences on the waiting list.



                                        DISTRIBUTION


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Secretary's Representative, 6AS
State Coordinator, 6IS
Comptroller, 6AF
Director, Public Housing, 6IPH
Administrator, Office of Southern Plains Native American Programs, 6IPI (4)
Saul N. Ramirez, Jr., Acting Deputy Secretary, SD (Room 10100)
Hal C. DeCell III, A/S for Congressional and Intergovernmental Relations, J (Room 10120)
Karen Hinton, A/S for Public Affairs, W (Room 10132)
Jon Cowan, Chief of Staff, S (Room 10000)
Jacquie Lawing, Deputy Chief of Staff for Programs & Policy, S (Room 10226)
Robert Hickmott, Counselor to the Secretary, S (Room 10234)
Patricia Enright, Sr Advisor to the Secretary for Communication Policy, S (Room 10222)
Gail W. Laster, General Counsel, C (Room 10214)
Saul N. Ramirez, Jr., Assistant Secretary for CPD, D (Room 7100)
Willie Gilmore, Acting Assistant Secretary for Administration, A (Room 10110)
David Gibbons, Director, Office of Budget, ARB (Room 3270)
Art Agnos, Acting Assistant Secretary for Housing, H (Room 9100)
Deborah Vincent, Acting General A/S for Public & Indian Housing, P (Room 4100)
Assistant to the Deputy Secretary for Field Management, SDF (Room 7106)
Assistant to the Secretary for Labor Relations (Acting), SL (Room 7118)
Public Housing ALO, PF (Room 5156) (3)
Chief Financial Officer, F (Room 10164) (2)
Deputy Chief Financial Officer for Operations, FF (Room 10166) (2)
Director, Hsg. & Comm. Devel. Issues, US GAO, 441 G St. NW, Room 2474
 Washington, DC 20548 Attn: Judy England-Joseph
Mr. Pete Sessions, Govt Reform & Oversight Comm., U.S. Congress,
 House of Rep., Washington, D.C. 20515-4305
The Honorable Fred Thompson, Chairman, Comm. on Govt Affairs,
 U.S. Senate, Washington, D.C. 20510-6250
The Honorable John Glenn, Ranking Member, Comm. on Govt Affairs,
        U.S. Senate, Washington, D.C. 20510-6250
Cindy Sprunger, Subcomm. on Gen. Oversight & Invest., Room 212,
        O'Neill House Ofc. Bldg., Washington, D.C. 20515
Inspector General, G
Housing Authority of the Sac and Fox Nation




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