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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Section 8 housing assistance payments program of the New Horizons project in Kansas City, MO.  Our objective was to determine whether New Horizons properly verified tenants’ eligibility, requested assistance only for tenants living in the units, retained tenant files for the required period, and properly collected and deposited tenant rents.

New Horizons’ management agent, Majestic Management, did not properly verify tenant eligibility, requested subsidies for ineligible tenants and tenants not living in units, did not retain tenant files, did not properly collect and deposit rents, and had unreported tenants living in the units.  As a result, it received $144,556 in ineligible and $726,399 in unsupported housing assistance payments and could not account for at least $16,687 in project rents owed by tenants.

We recommend that HUD require New Horizons to (1) repay $144,556 in housing assistance for tenants who were not eligible for assistance or not living in units, (2) support or repay $726,399 in housing assistance payments based on missing or incomplete tenant files, (3) support that $16,687 in tenant rents was collected and deposited or repay the project, (4) obtain independent management, and (5) conduct a review to determine who currently lives in the units and verify their eligibility.  In addition, HUD should monitor New Horizons to ensure that it properly maintains its tenant files, completes the required annual recertifications, and properly supports disability exemptions.