June 11, 1998 Audit Related
Memorandum No. 98-NY-
202-1805
MEMORANDUM FOR: Joan Spilman, Director, Office of Public Housing, 2CPH
FROM: Alexander C. Malloy, District Inspector General for Audit, 2AGA
SUBJECT: Harrietstown Housing Authority
Low-Rent Housing Program
Saranac Lake, New York
In response to a request from Congressman John M. McHugh, the U. S. Department of
Housing and Urban Development (HUD), New York/New Jersey District, Office of
Inspector General (OIG) performed a limited review of the operations of the Harrietstown
Housing Authority’s (HHA) Low-Rent Housing Program. The purpose of our review
was to determine whether the HHA implemented the recommendations made by the HUD
Buffalo Field Office during a fact-finding review conducted in November 1997, and to
determine if other problems exist. The Buffalo Field Office fact finding review stemmed
from a complaint made by a tenant representative (complainant) to the Board of
Commissioners. We conducted our review during April and May 1998, and we were at
the HHA for six days during the period of April 7, 1998 through April 23, 1998.
Summary
We found that although the HHA initiated some actions to correct the deficiencies
disclosed in the five findings and the three observations contained in the Buffalo Field
Office fact finding report, the HHA has not completely implemented the recommendations
cited in this fact finding report. In addition, during our review, we identified two other
issues and we made appropriate recommendations. One of these issues involves the
HHA’s personnel policy and the other involves the HHA’s modernization coordinator. We
request that you forward this memorandum to the HHA and require it to implement all
recommendations by August 31, 1998. We plan to conduct a follow up visit to the
HHA during the month of October 1998, to verify implementation of the
recommendations.
Should you or your staff have any questions, please call me or William H. Rooney,
Assistant District Inspector General for Audit, at 212-264-8000 extension 3976.
Results
A summary of each of the Buffalo Field Office’s five findings and their three observations,
and our evaluation of the HHA’s actions to implement the recommendations pertaining to
these findings and observations are provided in the following subsections. In addition, we
have noted two other issues, one involving the HHA’s personnel policy and the other
involving the modernization coordinator, that require follow up by the Buffalo Field
Office. These issues are also summarized below.
Buffalo Field Office Finding No. 1: Improper Personal Business Transactions by a
Commissioner with HHA Employees on HHA Property.
Initially, the complainant alledged that a Commissioner sold insurance to the HHA
employees and that these employees felt pressured to buy insurance from the
Commissioner. The Buffalo Field Office directed that the HHA instruct the Commissioner
to cease and desist from any further transactions with employees. Also, the Buffalo Field
Office directed the HHA to describe how it plans to implement and enforce its ethics
policy. The HHA interim Executive director told the Buffalo Field Office that its Board of
Commissioners would adopt a clear and strongly worded resolution requiring full
disclosure of any conflict of interest involving the employees and the Commissioners. Our
review disclosed that subsequent to the Buffalo Field Office’s fact finding review, the
Commissioner in question resigned; however, as of April 23, 1998, the HHA’s Board of
Commissioners had not passed the conflict of interest resolution.
In addition, the complainant alledged that another Commissioner received free fuel oil and
gasoline at a station operated by a fuel company doing business with the HHA. Although
this issue was not specifically addressed by the Buffalo Field Office in its November 1997,
fact finding report, we followed up on this allegation during our review. We did not find
any evidence to substantiate this allegation.
Buffalo Field Office Finding No. 2: Ineligible Expenditures at Board Dinners.
The complainant alledged that the spouses of the Board of Commissioners attended
dinners that were paid for by the HHA. The HHA interim Executive Director told the
Buffalo Field Office that it discontinued the dinners and that a formal resolution would be
presented to the Board of Commissioners stating that HHA funds will not be expended for
meals. Our review disclosed that as of April 23, 1998, the Board had not passed this
resolution.
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Buffalo Field Office Finding No. 3: Commissioners Over Involved in Day to Day
Administration Resulting in a Deteriorating Working Relationship with the
Executive Director and Unclear Lines of Authority with Staff.
The complainant alleged that the Board of Commissioners may have attempted to
undermine the Executive Director and impede the Executive Director from performing the
Executive Director’s duties. The HHA interim Executive Director told the Buffalo Field
Office that each Commissioner would be provided with a copy of Chapter 4 of the
National Association of Housing Redevelopment Officials’ publication regarding the
relationship between the Board of Commissioners and the Executive Director and that the
Commissioners were to exercise their best efforts to comply with the letter and spirit of
the publication.
Based on interviews and an examination of the Board of Commissioners’ minutes and
HHA correspondence, we concluded that the Board of Commissioners, in particular the
Acting Chairperson, is still over involved in certain aspects of the day to day
administration of HHA’s operations. An examination of the Board of Commissioners’
minutes subsequent to the Buffalo Field Office fact finding review showed that the same
type of problems exists. Moreover, HHA correspondence showed that the Acting
Chairperson is conducting business on behalf of the HHA without advising the Executive
Director. For example, the Acting Chairperson contacted the HHA’s insurance agent
regarding a policy that was pending cancellation. The Acting Chairperson requested that
the insurance agent not inform the Executive Director that the Acting Chairperson had
called the agent. As you can see, your Office will have to direct the Acting Chairperson to
stop this type of involvement.
Buffalo Field Office Finding No. 4: Competitive Procurement Documentation
Lacking for Purchases of Materials and Supplies and for Legal and Accounting
Services.
The complainant alledged that purchases for fuel and supplies were made without going
through the competitive bid process. The Buffalo Field Office directed the HHA to
obtain an adequate number of price quotes for all small purchases. The HHA interim
Executive Director told the Buffalo Field Office that the Board of Commissioners will
need to establish clear standards and procedures for procurement. The HHA sent a draft
copy of its proposed procurement policy to the Buffalo Field Office for suggestions and
recommendations. However, as of April 23, 1998, the HHA did not have a Board of
Commissioners approved procurement policy for our evaluation.
Buffalo Field Office Finding No. 5: Board of Commissioners has not Provided for
Residents to be Involved and Participating in the Overall Policy Development and
Direction of Public Housing Operations.
The Buffalo Field Office developed this finding during its fact finding review. It did not
necessarily stem from a specific allegation from the complainant. The Buffalo Field Office
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determined that the HHA must ensure that tenant input is received by the Board of
Commissioners when establishing HHA policy. In the HHA’s March 4, 1998, response to
the Buffalo Field Office, the HHA interim Executive Director noted that the HHA would
enact by-laws regarding the election of members of tenant councils. As of April 23, 1998,
the by-laws had not been enacted.
Buffalo Field Office Observation No. 1: The Town Board of Harrietstown Needs to
Establish Consistent Procedures for Appointing Housing Authority Board
Members.
The Town Board of Harrietstown appears to have implemented the Buffalo Field Office’s
recommendations regarding this observation. Specifically, we were advised by the HHA
interim Executive Director that the Town Board had recently advertised for a HHA
Commissioner vacancy. Members of the Town Board interviewed the potential
candidates; however, no one has been selected and the position has been readvertised.
Buffalo Field Office Observation No. 2: Authority Board Needs to Establish a
Formal Procurement Policy, Including a Section on Ethics.
The HHA interim Executive Director advised the Buffalo Field Office that it would have a
Board of Commissioners approved procurement policy, including a section on ethics.
However, as of April 23, 1998, the Board of Commissioners had not approved a policy.
Buffalo Field Office Observation No. 3: The Executive Director Should Act as the
Contracting Officer for the Authority.
At the March 24, 1998, meeting of the Board of Commissioners, the Commissioners
adopted Resolution Number 1998-March 5 that amended the HHA by-laws to allow the
Executive Director to act as the Contracting Officer for the HHA pursuant to HUD
Procurement Handbook 7460, Chapter 3, Section 2. During our site visit, we observed
that the Executive Director was acting as the Contracting Officer for the HHA.
OIG Issue No. 1: Personnel Policy
The Independent Public Accountant’s (IPA) audit report on the HHA’s operations for
fiscal year ended December 31, 1997, contained a finding that the HHA did not have a
personnel policy. However, subsequent to the IPA report being issued, the finding was
resolved based on the HHA having approved a personnel policy at its January 13, 1998,
Board of Commissioners meeting. During our site visit, we reviewed a draft copy of the
personnel policy that had not been officially approved by the Board. We recommend that
the Buffalo Field Office follow up and require the HHA to issue a final copy of its
personnel policy.
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OIG Issue No. 2: Modernization Coordinator
At its December 1997, Board of Commissioners meeting, the Commissioners voted to
change the employment status of the modernization coordinator from a part time to a full
time employee. Also, the Board approved a $12,000 increase in the modernization
coordinator’s salary retroactive to September 9, 1997. Our review disclosed that the
Board did not have adequate documentation to justify the retroactive increase in salary. In
addition, we found that the Interim Executive Director granted the modernization
coordinator 16 days of paid leave for the period March 7 to March 30, 1998. Our review
of the modernization coordinator’s accumulated time record did not indicate any evidence
that 16 days of leave time had been accrued. We recommend that the Buffalo Field Office
follow up with the HHA and require the HHA to provide justification for the
modernization coordinator’s retroactive salary increase. We also recommend that the
HHA be required to provide justification for granting the modernization coordinator 16
days of paid leave.
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APPENDIX A
(Page 1 of 2)
_______________________________________________________________________
DISTRIBUTION
Secretary's Representative, New York/New Jersey, 2AS
Director, Office of Public Housing, Buffalo Area Office, 2CPH (2)
Field Comptroller, Midwest Field Office, 5AF
CFO, Mid-Atlantic Field Office, 3AFI
Buffalo Area Coordinator, 2CS
Assistant to the Deputy Secretary for Field Policy and Management, SDF
(Room 7106)
Office of Public and Indian Housing, PF (Attention: Comptroller,
Room P8202 L'PI) (5)
(Acting) Assistant to the Secretary for Labor Relations, SL, Rm. 7118
Chief Financial Officer, F (Room 10164) (2)
Deputy Chief Financial Officer for Finance, FF
(Room 10166) (2)
Associate General Counsel, Office of Assisted Housing and
Community Development, CD (Room 8162)
Executive Director, Harrietstown Housing Authority, Saranac Lake, New York
Inspector General, G (Room 8256)
Public Affairs Officer, G (Room 8256)
Counsel to Inspector General, GC (Room 8260)
Internet Coordinator, GAA (Room 8172)
Assistant Inspector General for Audit, GA (Room 8286)
Deputy AIGA, GA (Room 8286)
Director, Research & Planning, GAP (Room 8180)
Director, Financial Audits Division, GAF (Room 8282)
Semi Annual Coordinator, GF (Room 8254)
Central Files, GF, (Attn: Mary E. Dickens, Room 8266) (2)
ASAC, OIG, 2GI Room 3430B
Director, Housing & Community Development Issue Area
US GAO, 441 G Street, NW, Room 2474
Washington, DC 20548
(Attention: Judy England-Joseph)
Subcommittee on General Oversight & Investigations
O'Neill House Office Building - Room 212
Washington, DC 20515
(Attention: Cindy Sprunger)
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APPENDIX A
(Page 2 of 2)
Honorable Pete Sessions
Government Reform & Oversight Committee
Congress of the United States
House of Representatives
Washington, DC 20510-4305
Honorable John Glenn
Ranking Member
Committee on Governmental Affairs
United States Senate
Washington, DC 20510-6250
Honorable Dan Burton
Chairman
Committee on Government Reform & Oversight
House of Representatives
Washington, DC 20515-6143
Honorable Fred Thompson
Chairman
Committee on Governmental Affairs
United States Senate
Washington, DC 20510-6250
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Harrietstown HA Low-Rent Housing Program, Saranac Lake, NY
Published by the Department of Housing and Urban Development, Office of Inspector General on 1998-06-11.
Below is a raw (and likely hideous) rendition of the original report. (PDF)