Housing Authority of the County of MercedLocal Government

The PHA must inspect the unit leased to a family at least bi-annually to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re‐inspections. The PHA must prepare a unit inspection report (24 CFR §§982.405, 983.103)). Additionally, for units under HAP contract that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA‐approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family‐caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). During our audit, we identified two (2) individuals who did not have support for a the bi-annual inspection. Additionally, we identified Seventeen (17) failed HQS that did not receive a passing inspection within the alloted time frame and no rent abatement process was started or enforced during that time period. During the audit, a sample of 40 tenant files were reviewed for the Housing Choice Voucher/Mainstream program. Of these reviewed inspections, 2 of the HCV/Mainstream tenants did not have documentation for a bi-annual inspection. During the audit, a sample of 40 HQS failed inspections were reviewed for the Housing Choice Voucher/Mainstream program. Of these reviewed inspections, 17 of the HCV/Mainstream were not properly re-inspected, and no voucher abatement steps were taken to enforce compliance. Controls over compliance associated with HQS inspections are inadequate. The absence of voucher abatement steps and the failure to enforce compliance through potential voucher loss may result in noncompliance with federal program requirements and potential financial implications. We suggest the Authority properly oversee compliance with regulations and enforce rent abatements if necessary to adherence to federal compliance requirements. Management agrees, see Corrective Action Plan.

INFORMATION ON THE FEDERAL PROGRAM: ALN 14.871 – Section 8 Housing Choice Voucher Program, US Department of Housing and Urban Development. COMPLIANCE REQUIREMENTS: Special Tests & Provisions – Housing Quality Standards (HQS) Re-inspections TYPE OF FINDING: Non-compliance and significant deficiency in internal controls over compliance. CRITERIA: Pursuant to 24 CFR Part 982 set forth basic housing quality standards (HQS) which all units must meet before assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. HQS defines "standard housing" and establish the minimum criteria for the health and safety of program participants. CONDITION: The auditor noted that the Authority was not conducting reinspection’s of tenant units that failed initial inspections under HAP contract. CAUSE: Turnover in management at the Authority within the HCV program department caused delays in rescheduling units for reinspection. EFFECT: Potential effects of the Authority not conducting HQS inspections in a timely manner include: (1) Delays in inspections can expose tenants to substandard conditions and health hazards; (2) Housing Authorities must conduct regular HQS inspections by law, and delays can result in legal liabilities; (3) HUD may reduce or withhold funding if inspections are not timely; (4) HUD may impose sanctions, additional oversight, or appoint an administrator, impacting the Authority’s funding, and operations. QUESTIONED COSTS: None. CONTEXT: The auditor selected a sample of 40 out of an amount greater than 250 failed HQS inspections for all units under HCV contracts during the fiscal year under examination, of which, 6 instances of non-compliance we’re discovered. For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. RECOMMENDATION: To address this issue, the auditor recommends: (1) Review the inspection process for inefficiencies and consider implementing technology solutions for scheduling, tracking, and reporting; (2) Ensure sufficient staffing, training, and resources for prompt inspections; (3) Develop a system to prioritize inspections based on repair urgency, property condition, and the needs of vulnerable populations; (4) Establish metrics to measure average inspection turnaround time and compliance rates; (5) Regularly monitor compliance and enforce consequences, such as fines or termination of assistance, for property owners who fail to meet housing standards. VIEWS OF RESPONSIBLE OFFICIAL(S): Management agrees with the finding and have outlined a plan of action in the Corrective Action Plan section of this report.

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