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Because of concerns identified by the U.S. Department of Housing and Urban Development’s (HUD) Office of Public Housing, we performed a review of the Housing Authority of the City of Lockney.  HUD alleged that the Authority’s previous executive director had a conflict-of-interest and received ineligible payments.  Our objectives were to determine whether the Authority operated its public housing in accordance with HUD requirements and whether HUD had valid concerns.  Specifically, we wanted to determine whether the Authority (1) properly hired its previous director, (2) properly collected and accounted for its rental receipts, and (3) paid only eligible and supported costs.  We also reviewed the board of commissioners’ oversight and compliance with Texas State law. 

Generally, the Authority properly collected and accounted for its low-rent public housing receipts.  However, HUD had valid allegations concerning the Authority’s hiring of and payments to the previous director.  The Authority also did not operate its public housing programs in accordance with regulations and other requirements, including State law.  Specifically, the Authority (1) allowed a conflict-of-interest by hiring the board chairman’s daughter as its director; (2) paid ineligible and unsupported amounts to employees; (3) improperly used public housing funds for all of its administrative expenses; and (4) used its credit cards for unsupported and duplicative charges.  Further, the Authority’s board failed to provide oversight and prevent mismanagement.  These conditions occurred because the board and its directors knowingly violated requirements and did not implement policies.  As a result, the Authority mismanaged its annual public housing funding of $46,950, including exhausting available low-rent public housing program funds and its cash reserves.  The Authority also paid $37,506 in questioned costs.  In addition, the board failed to prevent the conditions identified in this report and lacked a record of its decisions and actions.

We recommend that the Director of HUD’s Fort Worth Office of Public Housing require the Authority to adopt policies and procedures covering its operations.  If the Authority properly implements the recommendation, it should ensure that its public housing funding of at least $46,950 will be put to better use for the next 12 months.  In addition, we recommend that the Director of Public Housing require the Authority to support or repay questioned costs totaling $37,506.