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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited the Poplar Bluff Housing Authority because information obtained from HUD’s Public and Indian Housing Information Center indicated that the Authority appeared to have flat rents set at a rate below 80 percent of the fair market rent in that area.  Our objective was to determine whether the Authority complied with HUD’s flat rent requirements.

The Authority did not properly implement HUD’s flat rent requirements.  It improperly phased in flat rent increases for 30 newly admitted tenants, 6 tenants converting to flat rent from an income-based rent, and 7 additional tenants with recertifications since September 2015.  As a result, it undercharged flat rent tenants by $11,853 from October 1, 2014, to December 31, 2015, and it will undercharge these tenants by $19,679 during the next year if it does not correct this problem. It will also collect increased operating subsidies from HUD in the future.

We recommend that HUD’s St. Louis Office of Public Housing (1) monitor the Authority to ensure that it properly implements flat rent requirements, thereby putting $19,679 to better use over the next year and (2) add the $11,853 of undercharged flat tenant rent to the appropriate operating subsidy calculations to ensure that it does not overpay operating subsidies in the future.