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We audited the Housing Authority of the City of Perth Amboy’s transactions with its nonprofit subsidiary, the Perth Amboy Redevelopment Team for Neighborhood Enterprise and Revitalization (PARTNER), in response to a hotline complaint. The audit objectives were to assess the merits of this complaint and determine whether Authority officials complied with provisions of the Authority’s regulatory agreement and other U.S. Department of Housing and Urban Development (HUD) financial and operational regulations when executing transactions with PARTNER. In addition, we performed a limited review of the Authority’s Family Self-Sufficiency Program because of the funding provided to it by PARTNER.

The issues raised in the complaint were factually correct, but no violation of HUD regulations occurred. Authority officials complied with HUD regulations in establishing and funding PARTNER in 2003 with Section 8 administrative fee reserve funds; however, PARTNER has realized limited accomplishments. In addition, Authority officials did not always comply with HUD regulations governing the execution and reporting of transactions with PARTNER. Specifically, the award of a social services contract to PARTNER did not comply with HUD procurement requirements, administrative expenses were not always adequately documented, and PARTNER activity was not properly reported. These deficiencies occurred because Authority officials misinterpreted HUD regulations and believed that the funds provided to PARTNER could be used at their discretion. Limited review of the Authority’s Family Self-Sufficiency Program disclosed that the program was operated in accordance with HUD regulations.

We recommend that the HUD Director, Office of Public and Indian Housing, Newark, NJ field office, instruct Authority officials to (1) submit a specific plan for HUD approval of the use of the $286,782 in unspent funds held by PARTNER, or reimburse the amount to the Authority’s Section 8 administrative fee reserve account, (2) justify the award of the social services contract to PARTNER, (3) strengthen documentation for the allocation of Authority officials’ time spent on PARTNER activity, and (4) ensure that the Authority’s component units are properly included in reports to adequately inform HUD of Authority activities.