Finding 389683 (2023-001)

Reference Number: 2023-001 Category of Finding: Special Tests and Provisions – HQS Enforcement Type of Finding: Significant Deficiency and Instance of Noncompliance Federal Agency: U.S. Department of Housing and Urban Development City Administering Department: Housing and Community Services Federal Program Title: Section 8 Housing Choice Vouchers Assistance Listing Number: 14.871 Federal Award Number and Year: CA088; 2022 Criteria: Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 - Internal controls. (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 24 - Housing and Urban Development. Subtitle B - Regulations Relating to Housing and Urban Development. Chapter IX - Office of Assistant Secretary for Public and Indian Housing, Department of Housing and Urban Development. Part 982 - Section 8 Tenant-Based Assistance: Housing Choice Voucher Program. Subpart I - Dwelling Unit: Housing Quality Standards, Subsidy Standards, Inspection and Maintenance. §982.404 - Maintenance: Owner and family responsibility; PHA remedies. (24 CFR 982.404): (a) Owner obligation. (1) The owner must maintain the unit in accordance with HQS. (2) If the owner fails to maintain the dwelling unit in accordance with HQS, the PHA must take prompt and vigorous action to enforce the owner obligations. PHA remedies for such breach of the HQS include termination, suspension or reduction of housing assistance payments and termination of the HAP contract. (3) The PHA must not make any housing assistance payments for a dwelling unit that fails to meet the HQS, unless the owner corrects the defect within the period specified by the PHA and the PHA verifies the correction. If a defect is life threatening, the owner must correct the defect within no more than 24 hours. For other defects, the owner must correct the defect within no more than 30 calendar days (or any PHA-approved extension). (4) The owner is not responsible for a breach of the HQS that is not caused by the owner, and for which the family is responsible (as provided in § 982.404(b) and § 982.551(c)). (However, the PHA may terminate assistance to a family because of HQS breach caused by the family.) Title 24 - Housing and Urban Development. Subtitle B - Regulations Relating to Housing and Urban Development. Chapter IX - Office of Assistant Secretary for Public and Indian Housing, Department of Housing and Urban Development. Part 985 - Section 8 Management Assessment Program (SEMAP) and Small Rural PHA Assessments. Subpart A - General. §985.3 - Indicators, HUD Verification Methods and Ratings. (24 CFR 985.3): (f) HQS Enforcement (1) This indicator shows whether, following each HQS inspection of a unit under contract where the unit fails to meet HQS, any cited life-threatening HQS deficiencies are corrected within 24 hours from the inspection and all other cited HQS deficiencies are corrected within no more than 30 calendar days from the inspection or any PHA-approved extension. In addition, if HQS deficiencies are not corrected timely, the indicator shows whether the PHA stops (abates) housing assistance payments beginning no later than the first of the month following the specified correction period or terminates the HAP contract or, for family-caused defects, takes prompt and vigorous action to enforce the family obligations. (24 CFR 982.404) Condition: We noted the following 3 exceptions during our testing of 40 HQS inspection reports: • One HQS inspection report indicated a life-threatening (emergency) repair which was required to be repaired within 24 hours by the owner (landlord). The City did not have documentation that the emergency repair work was completed within the required 24-hour period. The City’s only documentation of communications with the landlord regarding the required repairs from the failed inspection indicated that all repairs, both the emergency and non-emergency, were completed within the required 30-day non-emergency repair timeframe. • One of the City’s failed inspection memo noted all repairs were made, however, the City did not have documentation supporting the repair for one of the failed items included in the HQS inspection report. • For one inspection report, there was no evidence of review by the City’s housing program inspector on the failed inspection memo. The failed inspection memo documents the City’s review of all corrective action documentation for the failed inspection. Cause: The City’s established process for documenting correction of emergency repairs is reliant on the housing program personnel to document verbal and/or video meeting calls where landlords will provide visual confirmation of the corrective action. In addition, due to the temporary suspension of all HQS inspections by HUD during the COVID-19 pandemic, there was a significant increase in the number of inspections during FY2023, as HUD issued guidance that all units must have catch-up inspections that were missed during the temporary suspension. Effect: Housing Assistance Payments (HAP) may not be properly abated to owners that fail to make required repairs within the specified timeframe. Questioned Costs: There was a HAP payment of $1,102 made to the owner on the first of the month following the 24-hour repair for which there was no documentation of corrective action within the required 24-hour timeframe. Context: HAP for the Section 8 Housing Choice Vouchers program (excluding Emergency Choice Vouchers and Portability Vouchers) totaled $23,638,920 for the fiscal year ended June 30, 2023. The sample was not a statistically valid sample. Identification as a Repeat Finding: This was not a repeat finding from the immediate prior year. Recommendation: The City should evaluate its current tracking method of 24-hour repairs and consider including written confirmation via email with the landlords or tenants of verbal communications. In addition, the City should ensure to appropriately abate the owner’s monthly HAP payment beginning the first month following the date by which corrective action was required for any failed inspections where corrective action is not confirmed within the required timeframe. Views of Responsible Officials and Corrective Action Plan: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.