Provide documentation to support that $658,261 in loan proceeds was used for an eligible NSP2 activity or property or repay the program from non-Federal funds.

Provide documentation to support that $500,000 in NSP funds transferred to the revolving loan fund was used for an eligible NSP2 activity or property or repay the program from non-Federal funds.

Amend the NSP2 action plan to include its revolving loan fund.

Adjust program income calculation methodology to ensure it is in accordance with HUD requirements.

Submit overdue NSP2 quarterly reports to DRGR and update prior reports that did not accurately report program income activity.

Provide adequate documentation to support its administrative and project delivery cost expenditures or repay the program $1,388,545 from non-Federal funds.

Provide supporting documentation to show whether the outstanding liability of $324,478 is correctly classified as an NSP2 liability. If not, HUD should ensure that NHSLA corrects its NSP2 cost reimbursement summary for the 12 months ending June 30, 2018, to reclassify the expenses to a non-NSP2 program. Such funds would be considered funds to be put to better use.

Obtain training to ensure that it understands NSP2 regulations and requirements related to payroll allocation for its administrative and project delivery costs and program income calculation methodology to ensure it properly computes the amount it is allowed to charge for administrative costs.

Support the reasonableness of the South Gate contract or repay NSP2 $856,692 from non-Federal funds.

Implement its procurement controls to ensure that it is able to locate and maintain the complete procurement documents for at least 3 years after the closeout of NSP1 and NSP3 in compliance with its own procedures and HUD regulations.

Provide the required documents to support $161,131 in NSP1 and $109,525 in NSP3 funds for expenses for acquisition, rehabilitation, and administration. If the City cannot provide the required documents, it should repay the U.S. Treasury from non-Federal funds.

Obtain technical assistance from HUD to ensure that it is able to manage the programs and comply with program regulations before processing future expenses related to NSP1 and NSP3 projects and activities.

Follow its NSP procedures and HUD regulations to complete and submit its future NSP1 and NSP3 HUD quarterly performance reports and annual single audit reports within the required timeframes until the closeout of the respective programs or until HUD is assured that these reports are consistently submitted on time.

Follow its own procedures and HUD regulations to post the missing 21 NSP1 and 22 NSP3 HUD quarterly performance reports, as of June 30, 2019, on its official website; and, post the future NSP1 and NSP3 HUD quarterly performance reports on its website until the closeout of the respective programs or until HUD is assured that these reports are consistently posted on its website.

Obtain technical assistance from HUD to ensure that the City is able to submit its quarterly performance reports and annual single audit reports on time and post the performance reports on its website to comply with program regulations.

Develop and implement an action plan that includes sufficient policies, procedures, and controls that address households living in multifamily housing units having a sufficient supply of safe drinking water […]

Status

In April 2022, HUD created draft standard operating procedures to address lead in the water of its multifamily housing units. On May 11, 2023, HUD published its National Standards for the Physical Inspection of Real Estate (NSPIRE) regulations that addressed lead in the water. Further, on June 30, 2023, HUD published its Implementation of National Standards for the Physical Inspection of Real Estate Administrative Procedures, which requires property owners and agents to provide information about water supply providers and water safety alerts, if applicable, prior to the commencement of a Real Estate Assessment Center (REAC) inspection. As a result, the Office of Multifamily Housing is revising its procedures and consulting with the Office of Lead Hazard Control and Healthy Homes (OLHCHH). As of February 2025, the OIG was waiting for additional information from the Office of Multifamily Housing demonstrating whether it has addressed the recommendation.

Analysis

To fully address this recommendation, the Office of Multifamily Housing must provide evidence of an action plan that includes its procedures that address households living in multifamily units to ensure that they have a sufficient supply of safe drinking water.

Implementation of this recommendation will enable HUD to have sufficient oversight and control activities in place to ensure households living in multifamily housing have a sufficient supply of safe drinking water.

Ensure that the 55 developments without sufficient support for an exemption either support the exemption status or complete the required lead-based paint inspections and provide the documentation to the appropriate field office.

Ensure that the remaining 244 developments’ exemption status is properly supported.

Ensure that the 382 potentially noncompliant developments are reported in its response tracking system and reviewed for compliance with the Lead Safe Housing Rule.

Complete, within 30 days of the issuance of this audit report, the review for preventing duplication of benefits associated with its 2008 CDBG-DR grant and pursue appropriate remedies for any instances of noncompliance found.