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We performed a capital fund administrative capacity review of the Housing Authority of the City of Eloy (Authority) because, despite the Authority’s persistent management problems, HUD awarded the Authority a Public Housing Capital Fund grant of $113,672 under the American Recovery and Reinvestment Act of 2009 (Recovery Act). Our objective was to determine whether the Authority had sufficient capacity to administer its Recovery Act Public Housing Capital Fund grant in accordance with applicable rules and regulations.

We determined the Authority did not, by itself, have the capacity to administer its Recovery Act Public Housing Capital Fund grant in accordance with applicable rules and regulations. HUD’s Office of Public Housing had rated the Authority as troubled for years, and despite intensive technical assistance from HUD, the Authority had been unable to establish sound operational and financial management. As a result, the management of the Authority was in transition as HUD sought to establish an agreement for management assistance between the Authority and another public housing authority. We recommended that HUD seek to establish a management agreement with another housing authority or management entity as soon as possible. We also recommended that HUD require a partnership agreement or contract that would provide additional capacity to manage the Recovery Act grant and that HUD closely monitor all Recovery Act expenditures and deadlines. Without the proposed additional capacity that would be provided by a management agreement and a partnership to administer the Recovery Act projects, the Recovery Act capital fund grant would be at risk for waste, fraud, and abuse.