We audited the multifamily Section 8 Project-Based Rental Assistance (PBRA) program at the Northline Point Apartments. We selected Northline Point in accordance with our goal to review the U.S. Department of Housing and Urban Development’s (HUD) multifamily housing programs and because of a request from HUD to audit the property based on extensive findings from its project-based contract administrator’s management and occupancy review. This is the fifth audit in a series of Office of Inspector General, Region 6, reviews of multifamily Section 8 PBRA programs. Our objective was to determine whether the owner administered its Section 8 PBRA program in accordance with applicable requirements.
We found that the owner did not administer its Section 8 PBRA program in accordance with applicable requirements. Specifically, the owner billed HUD for at least 51 tenants whose eligibility it could not adequately support and subsidized uninspected units. These conditions occurred because the owner and its identity-of-interest management agent did not implement appropriate controls and lacked proper oversight of their staff, which allowed onsite managers to engage in questionable practices and mismanage the program. As a result, the owner received more than $1 million in housing assistance payments for tenants whose eligibility and unit physical condition standards it could not support. Further, the owner could not assure HUD that its certifications for reimbursement were based on accurate information, which could adversely affect the program.
We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to (1) support or repay HUD more than $1 million for tenants whose eligibility the owner could not support; (2) perform annual inspections as required; and (3) implement appropriate controls to ensure that tenants are eligible, housing assistance subsidies are accurate, tenants are properly moved and transferred, transactions are properly coded, units are inspected as required, and tenant files contain all required documentation.
Recommendations
Housing
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Status2019-FW-1003-001-AOpenClosed$1,054,150.00Questioned 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 December 22, 2020We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to support that the subsidies for 51 units without annual physical inspections, without required EIV reports, or missing files were eligible and accurate or repay HUD $1,054,150 for those subsidies. Repayment must be from nonproject funds.
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Status2019-FW-1003-001-BOpenClosedClosed on October 21, 2020
We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to use correct dates for tenants who move in or out of subsidized units or transfer to other units. The move-ins, move-outs, and transfers must be adequately documented and supported.
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Status2019-FW-1003-001-COpenClosedClosed on October 21, 2020
We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to ensure that form HUD-50059 transactions are properly coded and adequately document and support the transactions.
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Status2019-FW-1003-001-DOpenClosedClosed on October 21, 2020
We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to ensure that tenant income is properly verified and maintain EIV reports as required.
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Status2019-FW-1003-001-EOpenClosedClosed on October 21, 2020
We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to perform and document annual inspections as required.
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Status2019-FW-1003-001-FOpenClosedClosed on October 21, 2020
We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to implement appropriate controls to ensure that tenants are eligible, housing assistance subsidies are accurate, tenants are properly moved and transferred, transactions are properly coded, units are inspected as required, and tenant files contain all required documentation.
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Status2019-FW-1003-001-GOpenClosedClosed on August 15, 2020
We also recommend that the Southwest Region Director of Multifamily Housing verify that the owner is providing oversight to its onsite staff and its recently implemented quality control procedures are working as designed and in accordance with HUD requirements.