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The U.S. Department of Housing and Urban Development, Office of Inspector General audited Pioneer Civic Services, Inc’s Supportive Housing Program and Housing Opportunities for Persons with AIDS (HOPWA) competitive grants. We selected Pioneer based on a request by the U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development. Our audit objective was to determine whether Pioneer effectively administered its Program and HOPWA grants in accordance with HUD’s and other Federal requirements.

Pioneer did not effectively administer its Program and HOPWA grants in accordance with HUD’s and other Federal requirements. Specifically, Pioneer did not ensure that (1) its housing units met HUD’s habitability standards and local code, and (2) Riverside Apartments, a single-room occupancy rooming house for chronically homeless persons with HIV-AIDS, and its four-unit apartment building (Perry Street) met Federal and State accessibility requirements.

Pioneer inappropriately used funds from its Program and HOPWA grants to pay ineligible and unsupported expenses. However, it generally provided services to program participants who were homeless with two exceptions. As a result, HUD lacked assurance that more than $483,000 in funds from its Program and HOPWA grants was used for eligible activities and to maintain its housing units in decent, safe, and sanitary condition.

We recommend that the Director of HUD’s Chicago Office of Community Planning and Development require Pioneer to (1) certify that the applicable violations have been corrected for the 30 housing units cited, (2) reimburse HUD $187,000 from non-Federal funds for the housing units that failed to meet HUD’s habitability standards and local code, (3) implement adequate procedures and controls to ensure that all of its units meet local and HUD habitability standards to prevent funds from its Program and HOPWA grants from being spent over the next year on units that do not comply with applicable requirements, (4) ensure that its inspector is properly trained on HUD’s habitability standards and local code, (5) discontinue funding for the operation of Riverside Apartments until Pioneer submits written confirmation that the applicable accessibility code violations cited have been corrected, and (6) implement adequate procedures and controls to ensure that the Perry Street building, including the one accessible housing unit, complies with applicable accessibility requirements.

We also recommend that the Director of HUD’s Chicago Office of Community Planning and Development require Pioneer to (1) provide documentation to support the eligibility of $93,972 in Program and HOPWA grant expenditures and reimburse HUD $202,604 from non-Federal funds for ineligible expenses, (2) develop and implement adequate procedures and controls to ensure that funds from its Program and HOPWA grants are only used for eligible activities, and (3) implement adequate procedures and controls to ensure that it serves participants who are eligible to receive benefits from the Program.