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Report Fraud, Waste and Abuse
March 30, 2022
  • Public and Indian Housing
2022-NY-1002
2022-NY-1002.pdf

We audited the Housing Authority of Plainfield, NJ’s administration of its public housing programs.  We selected the Authority based on a risk analysis of public housing agencies in New Jersey that considered the size of the agency, the amount of operating and capital funds received, and previous work conducted by the Office of Inspector General.  The objective of the audit was to determine whether the Authority administered its Public Housing Operating Fund and Capital Fund programs in accordance with U.S. Department of Housing and Urban Development (HUD), Federal, and Authority requirements.

The Authority did not always comply with Federal, HUD, State, and Authority requirements when administering its public housing programs.  Specifically, the Authority (1) made an unauthorized disposition of property by entering into a long-term rooftop lease and did not properly handle nearly $1.3 million in related proceeds and (2) did not comply with procurement requirements when purchasing $4.1 million in goods and services.  These conditions occurred because the Authority did not fully understand its relationship with HUD and requirements for property disposition, related proceeds, and procurement and because it did not have adequate controls in place.  As a result, (1) HUD did not have assurance that its interest and investment were adequately protected and that $1.3 million in rooftop lease proceeds was properly accounted for and used for planned, approved purposes, and (2) the Authority paid nearly $2.9 million in unsupported costs and may pay an additional $1.2 million for procurements not adequately performed and documented.

We recommend that HUD require the Authority to (1) terminate the current rooftop lease; (2) remedy the reporting and use of proceeds issues related to the nearly $1.3 million in proceeds received under the lease; (3) repay from non-Federal funds any proceeds used for unallowable expenses; (4) obtain HUD approval of any new lease agreement; and (5) implement controls to ensure compliance with requirements for third-party agreements and that disposition proceeds are properly accounted for and used.  Further, we recommend that HUD require the Authority to (1) support that nearly $2.9 million paid for goods and services was reasonable in accordance with applicable requirements or repay from non-Federal funds any amount that it cannot support; (2) support that $1.2 million in funds not yet spent on the contracts reviewed, along with any new procurements, would be reasonable or reallocate the funds; (3) ensure that its staff receives training on applicable requirements; and (4) improve its controls to ensure that future procurement actions comply with requirements and that prices paid for goods and services are reasonable. 

Recommendation Status Date Issued Summary
2022-NY-1002-001-A Open March 30, 2022 Terminate the current lease and pay for any fees needed to terminate the lease from non-Federal funds.
2022-NY-1002-001-B Open March 30, 2022 Execute and record the release of the current lease with the third party and ensure that the declaration of trust is returned to the first priority position.
2022-NY-1002-001-C Open March 30, 2022 Correct the reporting and use of proceeds received from the current lease, thereby putting $1,278,260 to better use. This requirement includes properly recording the proceeds as restricted nonrental program income on its financial data schedule, placing any unspent funds into an account subject to a general depository agreement until spent, providing a detailed accounting of the use of the proceeds, reporting the use of any proceeds used for demolition or other expenses in a revised 5-year annual plan, and making any other updates needed to ensure that funds are properly recorded and used.
2022-NY-1002-001-D Open March 30, 2022 Repay from non-Federal funds any proceeds used for unallowable expenses identified in recommendation 1C.
2022-NY-1002-001-E Open March 30, 2022 Submit a Section 18 application to obtain HUD approval of any proposed new lease agreement prior to its execution, in compliance with the United States Housing Act of 1937 and 24 CFR Part 970.
2022-NY-1002-001-F Closed March 30, 2022 Improve controls over the proper execution and recording of all declaration of trust documents.
2022-NY-1002-001-G Closed March 30, 2022 Implement controls to ensure that it does not enter into future third-party agreements unless the Authority follows applicable requirements in Notice PIH 2017-24 (HA), the annual contributions contract, 24 CFR Part 970, and the United States Housing Act of 1937.
2022-NY-1002-001-H Closed March 30, 2022 Implement controls to ensure that future disposition proceeds are properly accounted for and used only for planned, approved purposes.
2022-NY-1002-001-I Open March 30, 2022 Place the Authority onto a zero threshold review process, requiring that all draws for funds go through field office review until the Authority completes all actions needed to close recommendations 1A through 1H.
2022-NY-1002-001-J Open March 30, 2022 Consider and take additional action if the Authority does not complete recommendations 1A and 1B before submitting its next annual plan, including withholding further awards for its program, conditioning future grant funds, and other remedies that may be legally available until the Authority completes recommendations 1A and 1B.
2022-NY-1002-001-K Closed March 30, 2022 Provide technical assistance to the Authority regarding the deficiencies identified with the rooftop lease and related proceeds, and Federal requirements for property disposition.
2022-NY-1002-002-A Open March 30, 2022 Support that $2,870,374 paid for goods and services was reasonable in accordance with applicable requirements or repay its Public Housing Operating Fund or Capital Fund programs from non-Federal funds for any amount that it cannot support or that is not considered reasonable.
2022-NY-1002-002-B Open March 30, 2022 Support that $1,236,210 in funds not yet spent on the contracts reviewed, along with any new procurements, would be reasonable or reallocate the funds to ensure that they will be put to their intended use
2022-NY-1002-002-C Open March 30, 2022 Review any ongoing time-and-materials contracts and if requirements were not followed, remedy the noncompliance or reprocure the contracts to ensure compliance with HUD requirements.
2022-NY-1002-002-D Closed March 30, 2022 Ensure that all Authority staff members working with procurements and contract administration receive procurement training on applicable requirements, including the requirements related to cost reasonableness, contract types, the number of bids or quotations, contract provisions, and maintaining documentation to show the history of procurements.
2022-NY-1002-002-E Closed March 30, 2022 Establish and implement adequate record-keeping procedures to comply with applicable procurement requirements, including a register of all contracts with key information and a checklist for each procurement action, to ensure that it completes required steps and receives all required documentation.