We audited the Area Housing Authority of the County of Ventura based on concerns over the Authority's compliance with its annual contributions contract. Our audit objective was to determine whether the Authority fulfilled its Payment-in-Lieu-of-Taxes obligations for its Low Rent Public Housing program and if not, whether applicable funds were used in accordance with HUD requirements. We found that the Authority disregarded its Low Rent Public Housing program's Payment-in-Lieu-of-Taxes obligations to the County of Ventura (County), including the cities of Ojai, Moorpark, Camarillo and Thousand Oaks (Cities), contrary to its consolidated annual contributions contract and cooperation agreements. Specifically, we determined that the Authority discontinued the payment of its Payment-in-Lieu-of-Taxes obligations in 2001 and instead allocated $637,428 in reserves between 2001 and 2007, which it maintained in an interest bearing bank account. Further, we found that the Authority also requested and received additional funding from HUD to make this Payment-in-Lieu-of-Taxes obligation as part of an additional expense incurred for calendar years 2007 and 2008 in the amount of $195,643.

We recommend that HUD require the Authority to comply with HUD's requirements regarding the use of Payment-in-Lieu-of-Taxes funds with the County and the Cities by settling its Payment-in-Lieu-of-Taxes obligations to the County in the amount of $637,428 or reimburse HUD $736,315.