We audited the Glen Cove Housing Authority’s administration of the disposition proceeds it received from selling properties. We selected the Authority for review because the U.S. Department of Housing and Urban Development’s (HUD) New York Office of Public and Indian Housing ranked it as the third highest risk performer among 67 public housing providers in New York and because the audited financial statements and property disposition records showed that the Authority may have loaned a portion of its property disposition proceeds to its nonprofit entity. The objective of the audit was to determine whether the Authority used property disposition proceeds in accordance with applicable requirements, including its HUD-approved disposition application.
The Authority did not always use proceeds generated from the sale of 19 properties in accordance with requirements. Specifically, it loaned more than $900,000 to its nonprofit entity for activities that did not benefit its residents and disbursed $169,975 in proceeds and $10,804 in other Federal funds for costs that were not eligible or supported, such as Rental Assistance Demonstration conversion costs that require prior HUD approval. Further, it did not ensure that the disposition application and related documentation were maintained, and that it submitted required reports to HUD. We attributed these deficiencies to the Authority’s desire to increase revenue and weaknesses in its controls. As a result, HUD and the Authority did not have assurance that proceeds were used and available for use as intended to benefit the Authority’s residents, and HUD could not fully monitor the Authority’s use of the proceeds.
We recommend that HUD require the Authority to (1) obtain retroactive approval from HUD for the outstanding unauthorized loans and proceeds used for Rental Assistance Demonstration conversion costs or repay any amount for which it does not obtain approval, (2) provide documentation to show that proceeds were used for approved activities or repay any amount not supported, (3) repay proceeds and other Federal funds spent on ineligible activities, and (4) strengthen its controls to ensure that $1 million in remaining proceeds and any funds to be repaid are put to better use to benefit the Authority’s residents.
Recommendations
Public and Indian Housing
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Status2018-NY-1002-001-AOpenClosed$815,398.00Questioned 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.
We recommend that the Director of HUD’s New York Office of Public and Indian Housing require the Authority to obtain retroactive approval from HUD for the $815,398 in outstanding unauthorized loans made to its nonprofit entity or reimburse its Public Housing Operating Fund from non-Federal funds for any amount for which it does not obtain approval. If approval is obtained, HUD should also require the Authority to execute a loan agreement with the nonprofit entity and properly record the loans in its books and records.
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Status2018-NY-1002-001-BOpenClosed$108,061.00Questioned 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 September 07, 2023We recommend that the Director of HUD’s New York Office of Public and Indian Housing require the Authority to provide documentation to show that $108,061 in property disposition proceeds was used for the activities outlined in its HUD-approved disposition application and modifications or reimburse its Operating Fund from non-Federal funds for any amount not supported.
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Status2018-NY-1002-001-COpenClosed$61,545.00Questioned 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 September 26, 2019We recommend that the Director of HUD’s New York Office of Public and Indian Housing require the Authority to obtain retroactive approval from HUD for the $61,545 in property disposition proceeds used for Rental Assistance Demonstration conversion costs or reimburse its Operating Fund from non-Federal funds for any amount for which it does not obtain approval.
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Status2018-NY-1002-001-DOpenClosed$11,173.00Questioned 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 June 21, 2019We recommend that the Director of HUD’s New York Office of Public and Indian Housing require the Authority to reimburse its Operating Fund from non-Federal funds for $11,173 spent on ineligible activities funded by $369 in property disposition proceeds and $10,804 in tenant participation funds.
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Status2018-NY-1002-001-EOpenClosed$1,074,979.00Funds 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 September 13, 2019We recommend that the Director of HUD’s New York Office of Public and Indian Housing require the Authority to strengthen its controls to ensure that $1,074,979 in remaining property disposition proceeds and any outstanding loans and other funds to be repaid will be put to better use as intended to benefit the Authority’s residents. These controls include controls to ensure that proceeds are used in accordance with the HUD-approved disposition application, adequate supporting documentation is maintained, and the source and use of funds is properly recorded in the Authority’s books and records and reported to HUD.