We audited the Shelby County Housing Authority in Memphis, TN, based upon an audit request from the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General for Investigation. The request included many areas of concern for both public housing operations and Section 8 Housing Choice Voucher program administration. Our objective was to determine whether the Authority complied with HUD requirements for administering its public housing program, including funds received under the American Recovery and Reinvestment Act of 2009, and its Section 8 Housing Choice Voucher program.
The Authority failed to administer its HUD-funded programs in accordance with requirements. We found indicators of noncompliance in every program area reviewed. The Authority did not comply with all requirements of its public housing consolidated annual contributions contract. Specifically, it willfully abandoned its Horton Gardens Apartments site, failed to protect tenants’ sensitive personally identifiable information, and failed to maintain complete and accurate records. As a result, the Horton Gardens appeared to be devalued, and tenants’ personal information was unnecessarily placed at risk.
The Authority did not comply with the “buy American” requirement, did not publicly advertise, and did not conduct an independent cost estimate for its only Recovery Act contract. In addition, it did not maintain records supporting fair and open competition for two other procurements. As a result, it expended its entire $315,372 Recovery Act grant for an ineligible procurement and could not support the eligibility of other expenditures totaling $13,692.
The Authority could not support that it met its 24-month obligation deadline requirement for $200,000 in unspent funds for its 2008 annual capital fund grant. As a result, $450,955 in fiscal years 2010 and 2011 capital funds risk being recaptured by HUD and redistributed to other public housing authorities.
The Authority mismanaged its Section 8 Housing Choice Voucher program. Management failed to ensure that existing internal controls were understood by staff and followed. This failure created an environment resulting in or contributing to significant areas of noncompliance, including (1) failure to support a determination of owner eligibility, (2) miscalculation of tenant income and utility allowances, (3) failure to determine rent reasonableness, (4) incomplete housing quality inspection forms, (5) failure to document head of household’s citizenship, and (6) failure to retain a copy of a lease agreement resulting in $12,679 in unsupported housing assistance payments.
These deficiencies occurred because management was either unaware of HUD regulations and its own procedures or chose to ignore them.
We recommend that the Director of the Memphis Office of Public Housing (1) determine whether the Authority should be declared in substantial default with its public housing consolidated annual contributions contract, 2) explore the feasibility of possible dissolution of the Authority or absorption of Authority activities by another public housing authority, (3) require the Authority to repay the U.S. Treasury $315,372 from non-Federal funds due to noncompliance with the “buy American” provision of the Recovery Act, (4) require the Authority to provide documentation to support that $200,000 in 2008 capital funds was properly obligated, and (5) require the Authority to properly train its staff on HUD Section 8 requirements as well as its own Section 8 policies and procedures.
We recommend that the Director of the Departmental Enforcement Center, in coordination with the Director of HUD’s Memphis Office of Public Housing, take appropriate administrative action against the Authority’s former executive director for badly mismanaging its operation.