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Document

We audited the Stone Terrace Apartments’ Section 8 housing assistance payments program based on a citizen’s complaint alleging mismanagement of its housing assistance payments contract.  The audit was part of the activities in our fiscal year 2017 annual audit plan.  Our audit objective was to determine whether the management agent administered the project’s program in accordance with the owner’s contract with the U.S. Department of Housing and Urban Development’s (HUD) and its own requirements.

Stone Terrace Apartments’ management agent, East Lake Management Group, Inc., did not always administer the project’s program in accordance with HUD’s and its own requirements.  Specifically, it did not always correctly calculate and support housing assistance payments for the program households and properly administer the project’s waiting lists.  As a result, the project inappropriately received more than $85,000 in ineligible and more than $6,000 in unsupported housing assistance.  If the management agent does not correct its tenant certification process, HUD could overpay the project more than $76,000 in housing assistance over the next year.  In addition, housing assistance may have been unjustly denied or delayed for eligible applicants on the project’s waiting lists.

We recommend that the Director of HUD’s Chicago Office of Multifamily Housing Programs require the project owner to (1) reimburse HUD from non-project funds for the ineligible housing assistance payments, (2) reimburse the appropriate households for the underpaid housing assistance, (3) reimburse HUD for the overpayment of housing assistance due to unreported income, (4) support or reimburse HUD from non-project funds for the unsupported housing assistance payments, (5) update the waiting lists to include applicable notations, and (6) implement adequate policies, procedures, and controls to address the issues cited in this audit report.

Recommendations

Key Details
(mouse over or click items for details)
  Open
  Closed
Funds Put to Better Use
Funds Put to Better Use

Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.

Questioned Costs
Questioned Costs

Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.

Sensitive
Sensitive

Sensitive information refers to information that could have a damaging import if released to the public and, therefore, must be restricted from public disclosure.

Priority
Priority

We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.

Housing

  •   2017-CH-1005-001-A
    $52,932.00

    Closed on April 11, 2019

    Reimburse HUD $52,932 from non-project funds for the overpayment of housing assistance and utility allowances due to incorrect calculations.

  •   2017-CH-1005-001-B
    $566.00

    Closed on December 15, 2018

    Reimburse the appropriate households $566 from non-project funds for the underpayment of housing assistance due to incorrect calculations.

  •   2017-CH-1005-001-C
    $32,334.00

    Closed on April 16, 2019

    Reimburse HUD $32,334 for the overpayment of housing assistance due to unreported, and underreported income, or income reported late. This reimbursement is either from non-project funds or collections from applicable households.

  •   2017-CH-1005-001-D
    $6,444.00

    Closed on May 07, 2019

    Support or reimburse HUD $6,444 from non-project funds for the unsupported payments of housing assistance cited in the finding.

  •   2017-CH-1005-001-E
    $76,107.00

    Closed on October 12, 2018

    Implement adequate quality control procedures to ensure that housing assistance payments are appropriately calculated and supported. These procedures and controls should ensure that $76,107 in program funds are appropriately used for future payments.

  •   2017-CH-1005-001-F

    Closed on October 12, 2018

    Document the implementation of the quality control plan and the completed reviews of the tenant certification process.

  •   2017-CH-1005-001-G

    Closed on August 24, 2018

    Revise its occupancy standards to include policies and procedures to prevent underuse of the project’s units.

  •   2017-CH-1005-001-H

    Closed on August 24, 2018

    Review and update the project’s internal transfer waiting list to include the applicants’ move-in dates, and the project’s external waiting list to include notations showing the reasons why applicants were not admitted into the project’s program and why applicants were bypassed.

  •   2017-CH-1005-001-I

    Closed on October 12, 2018

    Develop and implement adequate procedures and controls to ensure that the project complies with HUD’s requirements and its own policies regarding the management of its waiting list.