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.
Recommendations
Public and Indian Housing
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Status2021-FW-1003-001-AOpenClosed$5,000.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on March 23, 2023We recommend that the Director of HUD’s Houston Office of Public Housing require the Authority to reimburse its Public Housing Operating Fund $5,000 from non-Federal funds for the unrecovered remaining balance of the $20,000 that was paid to the attorney.
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Status2021-FW-1003-001-BOpenClosed$24,250.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on January 26, 2022We recommend that the Director of HUD’s Houston Office of Public Housing require the Authority to ensure that no Federal funds are used to pay the remaining legal services invoices totaling $24,250, which will result in these funds being put to better use.
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Status2021-FW-1003-001-COpenClosedClosed on January 26, 2022
We recommend that the Director of HUD’s Houston Office of Public Housing require the Authority to update its policies to ensure the future commissioners obtain training on Texas’ Open Meetings Act requirements and HUD’s training for commissioners within 90 days after appointment, which will ensure that future commissioners understand the requirements for board meetings and procurement actions.
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Status2021-FW-1003-001-DOpenClosedClosed on February 08, 2023
We also recommend that the Director of HUD’s Houston Office of Public Housing evaluate the reported actions the three commissioners took when procuring the legal services contract and, if warranted, pursue administrative sanctions or other corrective actions.
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Status2021-FW-1003-002-AOpenClosed$2,172.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on March 23, 2023We recommend that Director of the Houston Office of Public Housing require the Authority to Reimburse its low-rent operating fund $2,172 from non-Federal funds for the ineligible travel, training, and credit card expenditures.
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Status2021-FW-1003-002-BOpenClosed$4,469.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on January 18, 2022We recommend that Director of the Houston Office of Public Housing require the Authority to reimburse its low-rent operating fund $4,469 from its Housing Choice Voucher Program fund for the expenses that should have been paid from its Housing Choice Voucher Program fund.
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Status2021-FW-1003-002-COpenClosed$704.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on March 23, 2023We recommend that Director of the Houston Office of Public Housing require the Authority to reimburse its Housing Choice Voucher Program fund $704 from non-Federal funds for the ineligible travel and training expenditures.
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Status2021-FW-1003-002-DOpenClosed$31,327.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on March 23, 2023We recommend that Director of the Houston Office of Public Housing require the Authority to support or repay $31,327 to its low-rent operating fund from non-Federal funds for the various unsupported expenditures.
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Status2021-FW-1003-002-EOpenClosed$584.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on March 23, 2023We recommend that Director of the Houston Office of Public Housing require the Authority to support or repay $584 to its Housing Choice Voucher Program fund from non-Federal funds for the unsupported travel, training, and phone expenses paid with Housing Choice Voucher Program funds.
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Status2021-FW-1003-002-FOpenClosedClosed on October 24, 2022
We recommend that Director of the Houston Office of Public Housing require the Authority to update and implement its policies and procedures, including creating a policy for recording expenses, a cost allocation plan, and a travel policy, to ensure that the Authority appropriately pays and accurately reports its costs.
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Status2021-FW-1003-003-AOpenClosedClosed on January 26, 2022
We recommend that the Director of the Houston Office of Public Housing require the Authority’s new board to complete HUD’s “Lead the Way” online training and Texas’ Open Meetings Act training.
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Status2021-FW-1003-003-BOpenClosedClosed on December 23, 2022
We recommend that the Director of the Houston Office of Public Housing require the Authority’s new board to review the board minutes during our audit period, determine which board decisions were invalid, and take action to address the invalid decisions.
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Status2021-FW-1003-003-COpenClosedClosed on September 23, 2022
We recommend that the Director of the Houston Office of Public Housing require the Authority’s new board to revise its bylaws to agree with the Texas Open Meetings Act.