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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Adams County Housing Authority based on concerns that the Authority did not follow HUD regulations in the use of its disposition sales proceeds.  The objectives of our audit were to determine whether the Authority placed the required number of Section 8 voucher holders into its Terrace Gardens units and appropriately spent its disposition sales proceeds.

The Authority did not place the required number of Section 8 voucher holders into its Terrace Gardens units.  The Authority was required to make at least 20 percent, or 36, of its units available to Section 8 families.  However, it placed only 15 Section 8 families into Terrace Gardens. In addition, the Authority inappropriately purchased four vacant lots using its disposition sales proceeds.  During 2008 and 2009, the Authority purchased four vacant lots located in Westminster, CO totaling more than $1.2 million.  However, it did not receive HUD approval before acquiring the lots.

We recommend that HUD require the Authority to (1) place a pro rata percentage of Section 8 families into its Terrace Gardens project within a reasonable period, (2) seek a legal opinion on the applicability of 24 CFR (Code of Federal Regulations) Part 941 to disposition proceeds used to purchase vacant land, and (3) ensure that the Authority complies with its regulatory and contractual land acquisition requirements associated with the purchase of the four vacant lots.