. The federal government has instructed the authority to repay $36,000 it overpaid in rent to landlords and to review how it has spent nearly $10 million in federal aid.
The audit report included three findings:
- The authority approved rents without performing adequate rent reasonableness determinations.
- The authority failed to follow proper procurement procedures
- Housing Choice Voucher Program units were not always reinspected ina timely manner or abated properly.
What do these findings mean?
A rent reasonableness determination is made to make sure the rental rate of anyone receiving housing assistance is competitive with similar units in the area that don't receive assistance.
The Department of Housing and Urban Development requires housing authorities to consider nine factors: location, quality, size, unit type, age of unit, amenities, housing services, maintenance and utilities. But the housing authority used a website to determine whether rent was reasonable that only took into account two of these nine factors, according to the audit report.
What will be done?
The Department of Housing and Urban Development in a letter March 30 called on the housing authority to reexamine units that had rent reasonableness determined between July 2010 and September 2011 and recoup an funds overpaid to landlords, or else pay back $7,876,534 the housing authority has received from the housing assistance payment reserve during that time. The federal agency also told the authority to implement written policy on rent reasonableness, and determine whether they need to hire a new staff member.
A total of 21 of 26 housing authority construction-related contracts or procurements reviewed in the audit violated federal housing regulations, according to the report. The regulations aim to provide a transparent, competitive process in awarding construction projects.
Among the alleged issues raised in the audit:
- Contractors were selected without competition. For ten projects, the housing authority did not have paperwork showing price or rate quotes.
- Authority did not perform an independent cost estimate before receiving bids on six projects. Independent estimates are used to ensure costs are reasonable. They are a federal housing requirement.
- Authority failed to readvertise Tempone Manor project when the price changed. The authority's first advertisement for bid on this project said it sought replacement of windows and doors for $95,000. But after receiving two bids and selecting the lowest bid, the project was changed to only replace the windows for about $63,000.
- Competitive process was not followed in procurements. The authority did not prepare proper requests for proposals, and was "unfamiliar with HUD regulations regarding competitive procurements," according to the audit report.
- Work was done without contracts. Auditors found 10 occasions in 2009 and 2010 when the authority paid for work without a contract. "Not having a contract in place put the Authority at risk for overbilling and inadequate service," the audit report said.
What will be done?
According to the letter from housing and urban development, the housing authority is expected to go back through projects and complete independent cost analysis. The Medford Housing Authority used a total of $1.4 million in federal funds in 2009 and 2010. Any money used unreasonably is expected to be paid back. The authority is also expected to implement better controls over the procurement process.
Housing Choice Voucher Program Issues
This voucher program is funded by the Department of Housing and Urban Development and aims to help low-income families, the elderly, and the disabled afford housing in the private market. The Medford Housing Authority receives funds from the program and is expected to administer and manage the funds locally.
The audit raised the following issues related to the voucher program:
- Units with problems were not re-inspected in a timely manner. The audit reviewed 62 re-inspections of units that received housing choice vouchers and found 32 of them were not conducted in a timely manner. Problems identified in the initial inspections included: mouse activity, rats, an inoperable carbon monoxide detector, and a blocked exit. On average, the re-inspections were done 48 days late, according to the audit report.
- The housing authority failed to abate rent for uncorrected violations. The authority overpaid a total of $36,744 in rent to landlords because it failed to reduce rent in 31 units that had violations that went unfixed.
- The housing authority gave itself a perfect score in a management assessment. As part of a management assessment form, the housing authority gave itself a perfect rating of 6 for housing quality standards enforcement, even though it does not have policy to reduce rent on units that don't meet federal standards, the audit report said.
What will be done?
The authority must pay back $36,744 to the voucher program that should have been abated from rent due to violations, according to the federal housing department. It is also expected to implement policy to prevent such failures in the future.
Medford Housing Authority's Response
A call to housing authority executive director Robert Covelle has not been returned, but the audit report includes a letter from Covelle dated March 9, written in response to a draft of the report.
Covelle admits the housing authority failed to re-inspect voucher programs in a timely manner and did not abate rent to landlords with units that had violations. But he only partly admits to the other issues raised.
The housing authority typically uses a form that includes all nine factors in establishing rent reasonableness, Covelle wrote. The audit only reviewed about 20 reports of over 1000, he wrote.
"The files we pulled in-house had the proper back-up," the letter reads.
The website the authority uses as source because it is "very efficient and non-time consuming," Covelle wrote.
In regard to procurement procedure, the housing authority failed to analyze the cost of projects independently on smaller jobs, but has done so on larger ones, Covelle wrote.
Many of the vendors that have done work without contracts were long-time vendors that pre-existed Covelle's tenure as executive director, which began in 2009, according to the letter. Many of those vendors no longer do work with the authority, Covelle wrote.
At the time he sent the letter, Covelle felt the issues raised in the audit has been addressed.
"The MHA found the review to be helpful and the Inspector General's auditors to be professional and forthright," Covelle wrote. "We believe all concerns have been addressed and corrected."