We audited the Lake View Towers Apartments’ Section 8 housing assistance payments program based on our analysis of risk factors related to multifamily projects in Region 5’s jurisdiction and the activities included in our fiscal year 2019 annual audit plan. Our audit objective was to determine whether the management agent administered the project’s program in accordance with the owner’s contract with the U.S. Department of Housing and Urban Development (HUD) and its own requirements.
The management agent did not always administer the project’s program in accordance with HUD’s and its own requirements. Specifically, it did not always correctly calculate and support housing assistance payments for its program households, obtain and maintain required eligibility documentation, and maintain appropriate waiting lists for the project. As a result, HUD inappropriately paid nearly $57,000 in ineligible and more than $399,000 in unsupported housing assistance. If the management agent does not correct its tenant certification process, HUD could overpay more than $54,000 in housing assistance over the next year. In addition, housing assistance may have been unjustly denied or delayed for eligible applicants on the project’s waiting lists.
We recommend that the Director of HUD’s Chicago Office of Multifamily Housing Programs require the project owner to (1) reimburse HUD for the ineligible housing assistance payments; (2) reimburse the appropriate household for the underpaid housing assistance; (3) support or reimburse HUD for the unsupported housing assistance payments; (4) conduct criminal record background checks; (5) update its waiting lists to include applicable notations; and (6) implement adequate policies, procedures, and controls to address the issues cited in this report.
Recommendations
Housing
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Status2019-CH-1003-001-AOpenClosed$30,037.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Reimburse HUD $30,037 from nonproject funds for the overpayment of housing assistance and utility allowances due to incorrect calculations.
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Status2019-CH-1003-001-BOpenClosed$144.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on Febrero 21, 2020Reimburse the appropriate households $144 from nonproject funds for the underpayment of housing assistance due to incorrect calculations.
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Status2019-CH-1003-001-COpenClosed$159,938.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Support or reimburse HUD $159,938 from nonproject funds for the unsupported payments of housing assistance cited in the finding.
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Status2019-CH-1003-001-DOpenClosed$26,915.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Pursue collection from the applicable household or reimburse HUD $26,915 from nonproject funds for the overpayment of housing assistance due to unreported income.
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Status2019-CH-1003-001-EOpenClosed$54,257.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Implement adequate quality control procedures to ensure that housing assistance payments are appropriately calculated and supported. These procedures and controls should ensure that $54,257 in program funds is appropriately used for future payments.
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Status2019-CH-1003-001-FOpenClosed
Ensure that third-party verifications, such as tax returns provided by the applicant, are from the source by obtaining certified tax returns from the Internal Revenue Service.
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Status2019-CH-1003-001-GOpenClosedClosed on Marzo 26, 2020
Revise its occupancy standards to include policies and procedures to prevent underutilization of the project’s units.
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Status2019-CH-1003-001-HOpenClosed
Ensure that the management agent’s staff is properly trained and familiar with HUD’s and the project’s requirements regarding housing assistance payments calculations.
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Status2019-CH-1003-001-IOpenClosed$239,500.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Conduct criminal record background checks in accordance with the project’s policies and procedures to ensure that adult members of all households, including the 11 households for which HUD made housing assistance payments totaling $239,500, were eligible to participate in the program. If the participants are deemed ineligible, the owner should follow applicable regulations to terminate or modify assistance and reimburse HUD from nonproject funds for those housing assistance payments deemed ineligible.
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Status2019-CH-1003-001-JOpenClosedClosed on Marzo 26, 2020
Review and update the project’s waiting lists to include the missing dates and required notations.
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Status2019-CH-1003-001-KOpenClosedClosed on Abril 24, 2024
Develop and implement adequate procedures and controls to ensure that the project complies with HUD’s requirements and its own policies regarding the management of its waiting lists.
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Status2019-CH-1003-001-LOpenClosedClosed on Abril 24, 2024
Determine whether the households residing in the project’s assisted units received housing in accordance with the program’s requirements and if not, consider a referral to HUD’s Office of Fair Housing and Equal Opportunity.