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Home My WebLink AboutMINUTES - 08142007 - D.2 (2) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: BOARD OF COMMISSIONERS �• FROM: Joseph Villarreal, Executive Director Z DATE: August 14, 2007 SUBJECT: REPORT ON THE STATUS OF HUD OIG'S AUDIT REPORT 2007-LA-1004 RENT REASONABLENESS SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION I. RECOMMENDED ACTION: ACCEPT report providing information on the status of HUD OIG's audit report 2007-LA-1004 Rent Reasonableness issued on December 15, 2006. II. FINANCIAL IMPACT: The U. S. Department of Housing and Urban Development (HUD), Office of the Inspector General (OIG) assessed the Housing Authority with $186,286.74 in penalties as a result of this audit. The Authority repaid HUD $108,286.74 on August 2, 2007. Of this amount, $82,659 was required to be paid from unrestricted (nonfederal) reserves (currently, these are primarily from developer fees for projects such as De Anza Gardens or fee-for-services programs), while the remainder was paid from the Authority's administrative fee reserves (which are restricted for use within the Section 8 program). The Authority is still negotiating with HUD on the final $77,997 which the report said should be repaid. On July 16, 2007 the Authority proposed that it repay HUD only $46,153.27 of this amount (see item IV-C below). HUD is currently considering the Authority's proposal. III. BACKGROUND HUD's OIG conducted an audit of the Housing Authority's system for determining rent reasonableness in the Section 8 Housing Choice Voucher program. The audit report was issued on December 15, 2006. The IG recommended that HUD's San Francisco Office of Public Housing should require the Housing Authority to: A) Either provide support for, or reimburse HUD, $82,659 in housing assistance payments (HAP) where rent reasonableness was not determined properly; CONTINUED ON ATTACHMENT:I': X YES SIGNATURE oseph Villarreal,Executive Director RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON0/)4 f APPROVED AS RECOMMENDED OTHER VOTE OF COMMISSIONERS C 6A)ICE I HEREBY CERTIFY THAT THIS IS A�UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF COMMISSIONERS ON THE DATE SHOWN. ATTESTED 0 go/'41 0 JOHN CULLEN,CLERK OF THE BOARD OF COMMISSIONERS AND COUNTY ADMINISTRATOR BY , DEPUTY H:\JudyHayes\MSOFFICE\WINWORD\BOARD\BO HUD OIG Audit 2007-LA-1004 Rent Comps.doc `1 OIG Status Report— Rent Comps August 14, 2007 Page 2 B) Develop and implement adequate, HUD-approved policies and procedures for performing and documenting rent reasonableness determinations, including adequate quality control procedures; C) Reimburse HUD $77,997 in administrative fees as a penalty for improperly administering the rent reasonableness function; D) Repay HUD $5,236 for subsidy overpayments resulting from processing delays; E) Repay HUD $20,394.74 that was used to absorb Section 8 clients' portions of rent increases due to late processing of rent change requests; and F) Develop and implement written procedures that ensure the timely processing of rent increase requests and address the reimbursement to HUD for payments using housing assistance payment grant funds resulting from any of the Authority's errors or omissions discovered after the fact. Additionally, the Authority must establish procedures to use nonfederal funds to pay for its errors and omissions when the Authority is aware of the reason for such payments. The Authority appealed findings A and C and submitted proposed policies and procedures for findings B and F to HUD on April 11, 2007. On July 18, 2007 HUD replied to the Authority's appeal. IV. STATUS A) HUD denied the Authority's appeal. The Authority repaid $82,659 to HUD on August 2, 2007. B) HUD felt that the Authority's submitted policies met requirements concerning the performance and documentation of rent reasonableness determinations, including the provision of adequate quality control procedures met requirement. The Authority must now include these policies and procedures in its Administrative Plan. A revised Administrative plan will be brought to the Board for comment in either September or October and for approval the following month. C) HUD denied the Authority's appeal on the validity of the finding. However, the Authority has appealed the amount owed. The Authority has proposed a repayment of$46,153.27 as opposed to $77,997. This amount was derived by applying HUD's 2.7% penalty solely to labor costs for the period audited and not to the Authority's entire Administrative fee which covers non-labor costs as well. The Authority put forth this argument because HUD's penalty was based on the actions and inactions of staff. HUD is considering this appeal. We do not currently have a timeline for HUD's final decision. D) The Authority did not appeal this amount and repaid HUD $5,236 on August 2, 2007. E) The Authority did not appeal this amount and repaid HUD $20,394.74 on August 2, 2007. F) HUD felt that the Authority's submitted policies and procedures concerning the processing of rent adjustments met requirements. The Authority still must establish procedures to use nonfederal funds to pay for its errors and omissions when the Authority is aware of the reason for such payments. The Authority must provide HUD copies of such procedures by August 17, 2007. The Authority will repay the amount due for item C after HUD provides its decision on the appeal of the amount owed. HUD will receive copies of the Authority's procedures to use nonfederal funds to pay for its errors and omissions when the Authority is aware of the reason for such payments. An updated Section Administrative Plan will be provided to the Board for review and approval after HUD has approved the Authority's procedures on repayment and after all other changes have been prepared.