The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Jefferson County Housing Authority (Authority) based on concerns that there were irregularities in its disposition process.  The objective of our audit was to determine whether the Authority followed HUD disposition procedures and used its sales proceeds properly.

The Authority did not follow required disposition procedures and did not use its sales proceeds properly.  It did not follow HUD procedures regarding sale requirements, the use of sales proceeds, distribution of the remaining project reserves, the placement of Section 8 tenants, reporting its use of sales proceeds, and the sale of units to an affiliated nonprofit entity.

We recommend that HUD require the Authority to (1) recover more than $6.4 million in ineligible costs associated with its disposition process from non-Federal sources, (2) place the correct number of Section 8 tenants into units purchased, (3) submit required reports, and (4) implement conflict-of-interest restrictions.  In addition, we recommend that HUD refer the Authority to the Departmental Enforcement Center for appropriate administrative and civil actions if necessary.