We audited the U.S. Department of Housing and Urban Development’s (HUD) required conversion program activities to determine whether HUD ensured that public housing agencies (PHA) properly evaluated their distressed units and converted them to tenant-based rental assistance programs. We selected this program for review based on an approved internal audit suggestion in our annual audit plan. Our audit objective was to determine whether HUD adequately implemented its required conversion program to ensure that its PHAs complied with the procedures for the required conversion of distressed public housing developments to tenant-based rental assistance programs.
HUD did not adequately implement its required conversion program. Specifically, HUD did not properly identify potential projects requiring conversion and did not follow up to ensure that PHAs took action by conducting proper analyses to determine if listed projects should be converted to tenant-based rental assistance. HUD also did not apply available remedies when PHAs did not properly identify projects or implement required conversions. We attributed this deficiency to lack of oversight and miscommunication among the Office of Public and Indian Housing (PIH), Office of Field Operations; the Special Application Center; regional PIH field offices; and the PHAs. As a result, HUD did not require PHAs to identify and convert distressed projects, and up to $75 million in operating subsidies and capital funds could continue to be spent on projects that have not been determined to be physically viable or less expensive than tenant-based rental assistance.
We recommend that HUD develop and implement policies and procedures to identify potentially distressed projects and monitor and enforce the required conversion program. Additionally, we recommend that HUD determine whether nine PHAs provided appropriate documentation to support whether potentially distressed projects should be converted to tenant-based rental assistance and if conversion is required that it is accomplished timely, thereby ensuring that up to $75 million is used effectively for projects that are cost effective and have long term viability and ensuring that tenants receive other rental assistance.
Recommendations
Public and Indian Housing
-
Status2017-NY-0001-001-AOpenClosed$75,540,916.00Funds 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 April 24, 2024We recommend that HUD’s Deputy Assistant Secretary for Public Housing Investments direct staff to determine whether the nine PHAs that were classified as troubled or physically substandard have public housing developments that are subject to the required conversion requirements to support whether potentially distressed projects should be converted to tenant-based rental assistance. If conversion is required, ensure that it is accomplished timely, thereby ensuring that up to $75,540,916 is used effectively for other projects that are cost effective and have long term viability and ensuring that residents receive other rental assistance. Footnote: The $75 million cited as funds to be put to better use is based on an analysis of available data. We recognize that the 131 PHAs cited in this report, including the 9 PHAs that comprise the $75 million figure, may not have projects with at least 250 units on one or more contiguous sites that have vacancy rates of 12 percent or more. However, the data did not allow us to calculate vacancy rates for each group of contiguous units, and HUD could not provide a reasonable, supported method to identify projects subject to required conversion. To address this recommendation, HUD will need to determine whether these PHAs have projects that are subject to required conversion.
-
Status2017-NY-0001-001-BOpenClosedClosed on February 21, 2020
We recommend that HUD’s Deputy Assistant Secretary for Public Housing Investments direct staff to develop and implement policies and procedures with the Office of Field Operations regarding identification of potentially distressed projects and monitoring and enforcement of the required conversion program.