Based on a complaint and a request from the U.S. Department of Housing and Urban Development’s Office of Public and Indian Housing (HUD PIH), we audited the Bay City Housing Authority, Bay City, TX. The complainant’s allegations included improper procurement of an attorney and board meetings held without proper notice. HUD PIH expressed concerns regarding the Authority’s financial records and policy adherence. Our audit objectives were to determine whether the Authority (1) followed Federal and its own procurement requirements for the board’s legal services, (2) paid its administrative costs in accordance with Federal requirements, and (3) conducted its board meetings in accordance with the State of Texas’ requirements.
We found that the Authority improperly procured its legal services contract, paid ineligible and unsupported administrative costs, and did not follow Texas’ Open Meetings Act or its own bylaws when conducting board meetings. These conditions occurred because the board (1) improperly believed an emergency existed, (2) lacked knowledge and training, (3) did not follow the training it received, (4) overruled the executive director, and (5) did not provide proper oversight. As a result, the Authority (1) paid $20,000 for the board’s personal legal expenses, of which $15,000 was recovered, (2) paid $39,256 in questioned administrative costs, (3) had less funds available to assist its residents, and (4) did not hold proper board meetings or maintain meeting minutes showing that it made valid and documented decisions.
We recommend that the Director of the Houston Office of Public Housing require the Authority to (1) recover the remaining $5,000 of ineligible legal service costs paid and ensure that additional invoiced legal service costs totaling $24,250 are not paid; (2) support or repay questioned costs totaling $39,256; (3) update its bylaws, policies, and procedures to reflect current Federal and State of Texas requirements; and (4) take action to address invalid or undocumented board decisions.