We reviewed the U.S. Department of Housing and Urban Development’s (HUD) approval of the Lexington-Fayette Urban County Housing Authority’s Moving to Work (MTW) Demonstration plan and capital funds drawdowns. The review was performed based on risk indicators identified during audits of the Authority’s Rental Assistance Demonstration Program (RAD) conversion and its Section 8 Housing Choice Voucher Program. The objective was to determine whether HUD properly approved the (1) Authority’s exemption from HUD’s third-party requirements for unit inspections in the Authority’s MTW plan for fiscal year 2017 and (2) capital funds drawdowns after the RAD conversion.
HUD improperly approved the (1) Authority’s exemption from HUD’s third-party requirements for unit inspections in the Authority’s MTW plan for fiscal year 2017 and (2) capital funds drawdowns after the Authority’s RAD conversion. Specifically, HUD’s Office of Public Housing Investments’ approval of the Authority’s exemption resulted in the Authority’s failing to comply with HUD’s third-party requirements for an independent entity to conduct unit inspections on the Authority-owned units. HUD’s Louisville, KY, PIH field office improperly approved a drawdown after the Authority’s RAD conversion, resulting in an inappropriate use of the Public Housing Capital Fund program.
We recommend that the Acting Deputy Assistant Secretary for Public Housing Investments to (1) ensure that more than $1.3 million used by the Authority is supported through a valid and retroactive exemption from HUD’s third-party requirements, (2) revise the standard MTW agreement for all existing 39 MTW housing agencies to clearly and specifically support which provision(s) waive the third-party inspection requirements, and (3) ensure that reviews of MTW annual plans are thorough by verifying that the MTW plan accurately identifies the appropriate exemptions as authorized in the MTW agreements. In addition, we recommend that the General Deputy Assistant Secretary for Public and Indian Housing to (1) require the Authority to reimburse its Public Housing Capital Fund program $38,411 from nonproject funds for the inappropriate use of funds for the Section 8 Project-Based Voucher Program units and (2) ensure that the Louisville, KY, PIH field office sends to the Office of Recapitalization any requests it receives for approving capital funds expenditures after the RAD conversion is complete.
Recommendations
Public and Indian Housing
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Status2018-AT-0801-001-AOpenClosed$1,385,791.00Questioned 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.
Closed on Marzo 18, 2019Ensure that $1,385,791 ($1,229,684 in housing assistance payments and $156,107 in associated administrative fees) used by the Lexington-Fayette Urban County Housing Authority is supported through a valid and retroactive exemption from HUD’s third-party requirements. If a retroactive exemption cannot be issued, HUD should follow recovery procedures prescribed in HUD Handbook 2000.06, REV-4.
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Status2018-AT-0801-001-BOpenClosedClosed on Abril 24, 2020
Revise the standard MTW agreement for all existing 39 MTW housing agencies to clearly and specifically support which provision(s) waive the third-party inspection requirements.
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Status2018-AT-0801-001-COpenClosedClosed on Abril 24, 2020
Issue clarifying guidance to all existing 39 MTW housing agencies advising that HUD intended to waive the third-party inspection requirements via attachment C to the standard agreement.
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Status2018-AT-0801-001-DOpenClosedClosed on Abril 24, 2020
Ensure that reviews of MTW annual plans are thorough by verifying that the MTW plan accurately identifies the appropriate exemptions as authorized in the MTW agreements.
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Status2018-AT-0801-001-EOpenClosedClosed on Marzo 18, 2019
Verify that the Office of Public Housing Investments’ approvals of all MTW public housing agencies’ MTW plans’ exemptions from HUD’s third-party requirements were valid and appropriate.
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Status2018-AT-0801-001-FOpenClosed$38,411.00Questioned 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.
Closed on Abril 01, 2020Require the Authority to reimburse its Public Housing Capital Fund program $38,411 from nonproject funds for the inappropriate use of funds for the Section 8 Project-Based Voucher Program units.
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Status2018-AT-0801-001-GOpenClosedClosed on Septiembre 23, 2019
Ensure that the Louisville, KY, PIH field office sends to the Office of Recapitalization any requests it receives for approving capital funds expenditures after the RAD conversion is complete.
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Status2018-AT-0801-001-HOpenClosedClosed on Septiembre 23, 2019
Require the Authority to ensure that capital funds are used in accordance with the program requirements for any future RAD conversions.