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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.