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.
Recommendations
Public and Indian Housing
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Status2022-NY-1002-001-AOpenClosed
Terminate the current lease and pay for any fees needed to terminate the lease from non-Federal funds.
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Status2022-NY-1002-001-BOpenClosed
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.
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Status2022-NY-1002-001-COpenClosed$1,278,260.00Funds 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.
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.
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Status2022-NY-1002-001-DOpenClosed
Repay from non-Federal funds any proceeds used for unallowable expenses identified in recommendation 1C.
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Status2022-NY-1002-001-EOpenClosed
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.
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Status2022-NY-1002-001-FOpenClosedClosed on July 19, 2023
Improve controls over the proper execution and recording of all declaration of trust documents.
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Status2022-NY-1002-001-GOpenClosedClosed on July 20, 2023
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.
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Status2022-NY-1002-001-HOpenClosedClosed on July 21, 2023
Implement controls to ensure that future disposition proceeds are properly accounted for and used only for planned, approved purposes.
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Status2022-NY-1002-001-IOpenClosedClosed on April 19, 2024
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.
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Status2022-NY-1002-001-JOpenClosed
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.
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Status2022-NY-1002-001-KOpenClosedClosed on September 20, 2023
Provide technical assistance to the Authority regarding the deficiencies identified with the rooftop lease and related proceeds, and Federal requirements for property disposition.
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Status2022-NY-1002-002-AOpenClosed$2,870,374.00Questioned 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.
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.
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Status2022-NY-1002-002-BOpenClosed$1,236,210.00Funds 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.
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
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Status2022-NY-1002-002-COpenClosedClosed on December 13, 2023
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.
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Status2022-NY-1002-002-DOpenClosedClosed on July 19, 2023
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.
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Status2022-NY-1002-002-EOpenClosedClosed on July 19, 2023
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.