Ohio Housing Finance Agency

HOME INVESTMENT PARTNERSHIPS PROGRAM ? WAGE RATE REQUIREMENTS Finding Number: 2020-002 CFDA Number and Title: 14.239 ? Home Investment Partnerships Program Federal Award Identification Number / Year: N-B-18-9AA-1 / 2018 Federal Agency: Department of Housing and Urban Development Compliance Requirement: Special Tests and Provisions ? Wage Rate Requirements Pass-Through Entity: Ohio Development Services Agency Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS As required by 40 U.S.C. ?? 3141-3144, 3146, and 3147, Wage Rate Requirements, formerly known as the Davis-Bacon Act, requires all laborers or mechanics employed by contractors or subcontractors that work on construction contracts in excess of $2,000 and are financed by federal assistance funds to be paid wages not less than those established by the U.S. Department of Labor for the locality of the project. For the Home Investment Partnerships Program (HOME), as required by 42 U.S.C. ? 12836 and 24 C.F.R Part 92.354 (a)(1), contracts for the construction of affordable housing with 12 or more HOME-assisted units are required to comply with the Wage Rate Requirements. In addition, 24 C.F.R. Part 92.354 (a)(3) states: Participating jurisdictions, contractors, subcontractors, and other participants must comply with regulations issued under these acts and with other Federal laws and regulations pertaining to labor standards, as applicable. Participating jurisdictions shall be responsible for ensuring compliance by contractors and subcontractors with labor standards described in this section. In accordance with procedures specified by HUD, participating jurisdictions shall: (i) Ensure that bid and contract documents contain required labor standards provisions and the appropriate Department of Labor wage determinations; (ii) Conduct on-site inspections and employee interviews; (iii) Collect and review certified weekly payroll reports; (iv) Correct all labor standards violations promptly; (v) Maintain documentation of administrative and enforcement activities; and (vi) Require certification as to compliance with the provisions of this section before making any payment under such contracts. It is management?s responsibility to implement policies and procedures to ensure compliance with the rules and regulations related to the Wage Rate Requirements. During state fiscal year (SFY) 2020, there was one active construction project for the HOME program that had 12 or more HOME-assisted units, and therefore subject to Wage Rate Requirements. Multiple entities provided funding for this project: two of the entities, including the Agency, provided HOME funding. The Agency made three monthly payments, totaling $675,000, to the project during SFY 2020. The Agency included the required labor standards provisions and wage determinations in the contract and received certification as to compliance with the provisions before making the payments However, the Agency did not conduct on-site inspections or collect and review the required certified weekly payroll reports for this project. Without proper controls over Wage Rate Requirements, there is increased risk the Agency and its contractors and subcontractors are not in compliance with applicable federal regulations. Noncompliance could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. Based on discussions with management and review of various documents, the Agency discussed the need for wage rate monitoring but did not pursue it due to uncertainty regarding which of the grantors for the project would monitor the Wage Rate Requirements. We recommend the Agency establish (or perform existing) controls and take steps to ensure contractors and subcontractors are in compliance with all labor standards by conducting on-site inspections and collecting the required certified payroll documentation in a timely manner. The Agency should also obtain the certifications for the payments already disbursed for the project. Additionally, when uncertainties about monitoring responsibilities arise because other grantors of HOME funds are involved in a project, the Agency should reach out to those grantors to determine if the responsibilities for ensuring compliance with program requirements can be shared and coordinated to eliminate duplication of effort. This communication and determination should be documented in some manner. We also recommend the Agency evaluate and reinforce its policies and procedures regarding Wage Rate Requirements on-site inspections and certified payroll reviews. Management should develop a consistent method to document on-site inspections and the review of certified payroll records and ensure management has access to all required documentation to perform monitoring duties timely and effectively. Furthermore, management should periodically monitor the procedures in place for Wage Rate Requirements to ensure they are operating effectively and as intended.

Finding Number: 2020-002: HOME ? Wage Rate Requirements Planned Corrective Action: Summary of corrective action to be taken Anticipated Completion Date: 10/31/2020 Responsible Contact Person: Kevin Clark, Portfolio Manager Upon determination that the other grantors were not monitoring for the Wage Rate Requirements for Parsons Place, OHFA reached out to the developer, Community Housing Network (CHN) and its contractor, Rockford Homes to request certified payroll reports. The Community Housing Network is an experienced, nonprofit developer with a track record of effectively managing their utilization of HOME funds and adhering to the Davis-Bacon prevailing wage requirements. As noted in the finding, OHFA did include the required labor standards provisions and wage determinations in the HOME funding agreement that was executed by the recipient and received certification as to compliance with the provisions before making the payments. The Agency has since obtained the certifications for the payments already disbursed for the project. As recommended, OHFA will perform existing controls and establish new controls to ensure that contractors and subcontractors are in compliance with all labor standards by conducting on-site inspections and collecting the required certified payroll documentation in a timely manner. Specifically, the Agency will add a Davis-Bacon Prevailing Wage Acknowledgement Form to the HDAP Closing Checklist that will be required to be submitted by the grantee before closing. A project will not be considered closed until the Legal Office has received an executed copy of the acknowledgement form. Upon notification of construction commencement, OHFA will immediately begin monitoring for Wage Rate Requirements in the form of both on-site inspections and review and approval of certified payroll reports. In the event that a project has multiple grantors of HOME funds or other federal funds, e.g., a Project-Based Section 8 Housing Assistance Payment Contract, the Agency will reach out to the other grantors immediately upon award commitment (OHFA Board approval) to determine if the responsibilities for ensuring compliance with program requirements can be shared and coordinated to eliminate duplication of effort. This sharing and coordination will be documented with a Memorandum of Understanding (MOU) executed by all parties, including the project developer, which will be maintained in the project file. These additional controls will be incorporated into the Office of Multifamily Housing Handbook which includes the Davis-Bacon Review Procedures.