reference to Housing Authority audit

EVANSVILLE, Ind. – A recent audit says the Evansville Housing Authority did not comply with federal guidelines during an upgrade of hundreds of units.

EHA officials predicted the matter will be settled with little or no consequence to the agency or residents, but the audit conducted by the Housing and Urban Development Office of Inspector General calls for issues to be addressed.

The audit was conducted between October 2017 and March 2018, and was released this month. It examined how the EHA handled improvements of 559 apartments under a new federal program designed to address a nationwide backlog of maintenance needs in public housing.

The federal program, known as Rental Assistance Demonstration (RAD), creates a funding mechanism for housing agencies to repair aging units. This is done with the involvement of private funding and low-income tax credits, as well as longer-term contracts for residents.

In Evansville, about $30 million was spent to convert units for use in the RAD program. RAD was created in 2012, and nearly all of EHA housing units now fall under the program’s guidelines.

According to the audit by the U.S. Department of Housing and Urban Development Office of Inspector General, the EHA’s actions came up short in these three ways:

* EHA did not ensure units complied with HUD’s housing quality standards before entering into a housing assistance payments contract.

* The EHA failed to have a HUD-approved, independent third party to inspect the units under housing quality standards.

* The EHA did not apply correct contract rents for the improved units, causing the financing to fall short by about $1 million.

The Office of Inspector General stated those situations occurred because the EHA “lacked a sufficient understanding of HUD’s requirements for housing quality standards and conflicts of interest. It also lacked an adequate quality control process.”

EHA Executive Director Rick Moore and board President David Hatfield disagreed with those conclusions.

Both said housing rehab projects across the EHA – which included kitchen and bathroom replacement, heating and cooling upgrades, roof repair, painting, carpeting and more – went through many inspections and exceed the government’s minimum standards for RAD program housing.

The units were inspected by multiple entities including the City-County Building Commission, according to the local EHA officials.

“We believe we complied with two things, one, that the units met minimum housing standards, and two, there is an inspection requirement that we met,” Hatfield said. “We’re pretty sure we didn’t violate anything, or if we did, it’s minor and will be easily remedied.”

The local housing authority is working with HUD’s field office in Indianapolis to settle issues raised by the audit.

“Our field office is basically supporting what we’re saying, that with all the rehab work, this should be no issue,” Moore said.

The Office of Inspector General’s audit, though, makes some stern comments.

As an example: “The (Evansville Housing) Authority contends that the deficiencies we ‘alleged’ were at most a technical issue of when and how to conduct housing quality standards inspections of the RAD units that did not result in any detriment to residents. Further, it contends that the units ultimately passed the housing quality standards inspection.

“The Authority was required to ensure that the units met housing quality standards before it executed the housing assistance payments contracts or no later than the date of completion of initial repairs as required by HUD. It also did not provide documentation supporting its assertion that the newly renovated units ultimately complied with the housing quality standards. The Authority should work with HUD on the resolution of the recommendation to ensure the cited issues are appropriately addressed.”

EHA officials blamed their incorrect application of rates under the new RAD program, in part, on a computer problem. They said correct rates were put in place once HUD repaired the glitch.

Moore states in his response to the audit that the temporary use of outdated contract rates “did not result in any harm to HUD or residents of the RAD units.” Moore called the audit’s finding “prejudicial” because a failure of HUD’s technology caused the problem.

But the auditors, again, stood by their conclusions.

“We acknowledged corrections the Authority made to the contract rents,” the audit states. “However, it is not accurate to state that HUD’s computer program created the issue of misapplication of the contract rents …. If the Authority had an adequate quality control process, it would have detected earlier that it was applying the incorrect contract rents for 2017.”

The EHA owns and operates 904 public housing units and 1,906 housing choice vouchers, according to the agency’s website. Moore said the agency is at capacity, and there’s a waiting list.