PHA Didn't Adhere to Unit Inspection Requirements

HUD’s Office of Inspector General (OIG) audited the Lexington-Fayette Urban County Housing Authority’s Section 8 Housing Choice Voucher program. The audit objective was to determine whether the PHA administered its program units in accordance with HUD’s and its own requirements.

Auditors found that the PHA didn’t always administer its program units in accordance with HUD’s and its own requirements. Specifically, it didn’t always comply with: (1) HUD’s third-party requirements for conducting inspections and rent reasonableness determinations for PHA-owned units; (2) its requirements for conducting unit inspections in a timely manner; and (3) HUD’s housing quality standards for the program units.

HUD requires that PHA-owned units be inspected by an independent agency [24 CFR 982.352(b)(1)(iv)(A)(3)]. However, the PHA failed to comply with the requirement when it inappropriately conducted unit inspections on some PHA-owned units, instead of having an independent entity do them. Although it obtained the services of an independent entity to perform unit inspections, the PHA conducted additional inspections without seeking further services of the independent entity.

Auditors also found that: (1) the PHA didn’t follow HUD’s requirements for performing unit inspections and wasn’t familiar with the requirements for rent reasonableness determinations; (2) its inspection software was inadequate for scheduling inspections; and (3) it didn’t perform the required quality control inspections. As a result, HUD and the PHA lacked assurance that the unit inspections and rent reasonableness determinations were properly conducted and units were eligible to be on the program, and some residents lived in inadequately maintained units. In addition, auditors found that the PHA inappropriately paid nearly $147,000 in housing assistance payments and received more than $20,000 in administrative fees for the units cited in the audit report.

OIG recommended that the Director of HUD’s Louisville, Ky., Office of Public and Indian Housing require: (1) the PHA to reimburse its program more than $167,000 from nonfederal funds; (2) coordinate with HUD and provide adequate training to its staff to ensure compliance with HUD’s requirements; (3) upgrade its inspection software system or develop and implement an alternative method for timeliness of unit inspections; (4) perform all housing quality standards quality control inspections as required; and (5) ensure that all violations cited for units failing to meet housing quality requirements have been corrected and certify that the units meet program requirements.

• HUD Audit 2018-AT-1006