Finding 5627 (2023-002)

Program name: Moving to Work Demonstration Program Assistance Listing Number: 14.881 Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Department: Fairfax County Department of Housing and Community Development (DHCD) Compliance Requirement: Special Test-Housing Quality Standards (HQS) Enforcement Prior Year Finding Number: Not applicable Type of finding: Significant Deficiency, Non Material Non-Compliance Criteria: Per 24 CFR 982.404 “The public housing authority (PHA) must not make any housing assistance payments (HAP) 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).” Per 2 CFR section 200.303, non-Federal entities receiving Federal awards must establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Per 24 CFR 982.405, “The PHA must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets the Housing Quality Standards (HQS).” However, Fairfax County DHCD participates in the Moving to Work Demonstration Program (MTW) that provides them the opportunity to design and test innovative strategies that use federal dollars more efficiently. MTW allows PHAs exemptions from many existing public housing and voucher rules. Per Fairfax County Redevelopment and Housing Authority’s FY 2023 Moving to Work Plan, the County implemented Activity 2014-3, Streamlined Inspections for Housing Choice Voucher and Rental Assistance Demonstration Project-Based Voucher Units, in 2014 and later amended in 2020 and 2021. This activity reduces costs associated with conducting inspections, encourages owners to maintain their units, and incentivizes families to employ good housekeeping practices. The activity allows HCV units to be inspected on a triennial basis. Condition: During our testing of 60 inspections, we noted four instances where a unit failed its inspection and the defect was not corrected within the allowable timeframe and HAP payments were not abated:  In one instance, a unit failed inspection and the required re-inspection was never performed prior to the tenant moving out, 4 months after the failed inspection.  In the second instance, a unit failed inspection. The first re-inspection was performed within 30 days, however the unit failed re-inspection. Another re-inspection was never performed prior to the tenant moving out, 5 months after the second failed inspection.  In the third instance, a unit failed inspection and was not re-inspected for 7 months. The re-inspection also failed. DHCD withheld HAP payments beginning after the second failed inspection, however, this was not completed timely.  In the fourth instance, a unit failed inspection and the required re-inspection was not performed prior to the fiscal year end. During our testing of 60 inspection, we noted four instances where a unit was not inspected on the required triennial basis. Cause: The Authority relies on a heavily manual process and does not have a comprehensive inspection report for ensuring that units are timely re-inspected, self-certifications get documented within the system, the status of the failed unit is changed in the system, and that rent is abated when a unit with a failed inspection is not corrected within the required timeframe. The nature of the current process is complex and allows for human error. The current process consists of a daily, multi-step process by the inspection supervisor, who runs several reports to monitor inspections, as follows:  Inspectors must enter in the results of the inspections they perform within 24 hours. The Inspection Supervisor runs the inspector activity report to ensure that the inspectors have entered in their results timely. Inspectors are responsible for entering in a failed inspection and entering the date of the next inspection.  The Inspection Supervisor also runs a “failed and follow up report” that tracks failed inspections that do not have a re-inspection scheduled. The Inspection Supervisor goes into each account on this report and investigates why an inspection was not rescheduled.  The HAP hold report is run weekly to show units that have failed inspections twice and thus should have a hold placed on their account.  The inspection assignment report is run almost daily; it tells the inspection supervisor what’s scheduled and unscheduled for both annual inspections and re-inspections due to failures. The inspection supervisor then schedules any units that are due for re-inspection. Due to the above limitations and complexities, there are oversights that occur in the review and documentation process. Effect: The Authority’s control environment over HQS enforcements did not ensure that re-inspections were timely performed or documented within the system or that HAP abatements occurred in a timely manner. As a result, the Authority was not in compliance with the HQS enforcement requirements as of June 30, 2023. Non-compliance with these requirements creates a risk that the Authority may provide federal funds to tenants of ineligible units. Recommendation: We recommend the Authority review their system functionality to determine whether an electronic process for scheduling and follow-up or comprehensive reporting can be identified to improve efficiency and eliminate the potential for human error. If an electronic process or comprehensive reporting isn’t available, or cannot fully cover the deficiency, we recommend the Authority look into measures to streamline their current process and to eliminate non-compliance. Potential examples include adding an inspection checklist, having the inspection supervisor review and schedule upcoming inspections in advance, building room into the schedule for life-threatening re-inspections, having the inspection supervisor ensure that each scheduled inspection is timely documented in the system, etc. Questioned costs: None. Repeat Finding: No.