|
Issue
Date: September 17, 2009
Audit
Report No.: 2009-CH-1013
File Size: 89.89KB
Title:
The Housing Authority of the City of Milwaukee, Wisconsin, Did Not
Adequately Maintain a Separate Identity for Commingled Funds
The
U.S. Department of Housing and Urban Development's (HUD) Office
of Inspector General audited the Housing Authority of the City of
Milwaukee's (Authority) nonprofit development activities. The audit
was part of the activities in our fiscal year 2009 annual audit
plan. We selected the Authority because it had high-risk indicators
of nonprofit development activity. Our objective was to determine
whether the Authority maintained complete and accurate books of
record for its funds subject to its annual contributions contract,
other agreement, or HUD regulations.
The
Authority lacked documentation to support that funds, totaling more
than $1.4 million, disbursed from its general fund were not federal
funds. The funds were used to pay nonfederal expenses incurred by
the Redevelopment Authority of the City of Milwaukee (City). Further,
the Authority could not provide documentation to support that it
did not use federal funds to pay $38,445 in City expenses.
We
recommend that the Director of HUD's Minneapolis Office of Public
Housing require the Authority to provide documentation to support
that funds, totaling more than $1.4 million, disbursed from its
general fund were not federal funds and City expenses, totaling
$38,445, were not paid with federal funds.
Issue Date: April 8, 2009
Audit
Report No.: 2009-CH-1006
File Size: 136KB
Title: The Housing Authority of the City of Milwaukee, Wisconsin,
Needs to Improve Its Procedures and Controls regarding Its Homeownership
Programs
The U.S. Department of Housing and Urban Development's (HUD) Office
of Inspector General audited the Housing Authority of the City of
Milwaukee's (Authority) 5(h) and Section 32 homeownership programs
(programs). We selected the Authority based on a risk analysis showing
that it had high-risk program indicators. Our objectives were to
determine whether the Authority properly accounted for and used
its programs' proceeds in accordance with HUD's requirements and
properly administered its programs in accordance with the Authority's
plans.
The Authority did not adequately administer its programs with
regard to whether program units were used by purchasers as their
residences, sold to eligible purchasers, sold at their appraised
value, and met HUD's recapture requirements. It also did not ensure
that outstanding mortgage notes owed to it were recaptured. The
Authority lacked adequate procedures and controls to ensure that
HUD's regulations and its plans were followed in regard to the use
of its 5(h) program units by purchasers as their residences and
the recapture of outstanding mortgage notes owed to it. It failed
to recover $68,366 for two units that it sold that were not used
by the purchasers as their residences. Further, the Authority did
not recover two outstanding mortgage amounts owed to it totaling
$23,399.
The Authority improperly sold a Section 32 program unit for $114,500
to an individual who, five months before the sale, acquired a non-Authority
property. It also sold six Section 32 program units for a total
of $150,000 below their appraised values. Further, the Authority
did not require the appropriate restrictions and/or covenants for
any of its 21 Section 32 program units sold.
We informed the Authority's executive director and the Director
of HUD's Minneapolis Office of Public Housing of minor deficiency
through a memorandum, dated March 31, 2009.
We recommend that the Director of HUD's Minneapolis Office of
Public Housing require the Authority to reimburse its applicable
homeownership program from nonfederal funds for the improper use
of more than $356,000 in program funds and implement adequate procedures
and controls to address the findings cited in this audit report
to properly secure its interest in program units.
Issue Date: February 20, 2008
Audit
Report No.: 2008-SE-1002
File Size: 522.88KB
Title: Oneida Housing Authority, Oneida, Wisconsin, Did Not Properly
Recognize and Use Program Income from Native American Housing Assistance
and Self-Determination Act-Assisted 1937 Act Housing Projects
We audited Oneida Housing Authority (Authority) to determine whether
the Authority calculated program income for NAHASDA-assisted 1937
Act properties in accordance with applicable U.S. Department of
Housing and Urban Development (HUD) guidance, regulations, and requirements
and to observe uses of revenue from NAHASDA-assisted 1937 Act properties.
The Authority failed to track Block Grant rehabilitation or capital
expenses for each property and restrict nonprogram income from its
Mutual Help program. As a result, more than $2.2 million in combined
low-rent and Mutual Help housing receipts were inappropriately classified
as nonprogram income during the period July 1, 2002, through June
30, 2007, and the proceeds from the sale of Mutual Help units were
not restricted to eligible uses. This occurred because management
in place before 2007 did not ensure that policies and procedures
for determining and administering program income were implemented.
Further, the Authority's financial auditor identified from $60,000
to $100,000 in disbursements for 2006 board expenses as abusive.
Those costs were paid from the Authority's local fund which contained
nonprogram income from 1937 Act units.
We recommend that HUD (1) require the Authority to implement policies
and procedures to determine program income in accordance with HUD
requirements, (2) evaluate the Authority's computation of low rent
program income and determine whether the estimated unit labor costs
are adequate to document the total cost of rehabilitation or capital
costs or reclassify the $990,590 in nonprogram income as Block Grant
program income, (3) evaluate the Authority's computation of Mutual
Help program income and determine whether the estimated unit labor
costs are adequate to document the total cost of rehabilitation
or capital costs or reclassify the $1,238,290 in nonprogram income
as Block Grant program income, and (4) require the Authority to
implement policies and procedures restricting the use of nonprogram
income from Mutual Help proceeds of sale to eligible activities.
Issue Date: September 30, 2007
Audit
Report No.: 2007-CH-1018
File Size: 1.94MB
Title: The City of Milwaukee, Wisconsin, Needs to Improve Existing
Controls over Its HOME Program Regarding Housing Conditions and
Contracting
The U.S. Department of Housing and Urban Development’s (HUD) Office
of Inspector General audited the City of Milwaukee’s (City) HOME
Investment Partnerships Program (Program). The audit was part of
the activities in our fiscal year 2007 annual audit plan. We selected
the City based upon our analysis of risk factors relating to Program
grantees in Region V’s jurisdiction. Our objectives were to determine
whether the City effectively administered its Program and followed
requirements.
The City needs to improve existing controls over the administration
of its Program regarding housing conditions and contracting to ensure
it follows HUD’s requirements. It did not ensure that its owner-occupied
single-family rehabilitation projects (projects) and American Dream
Downpayment Initiative (Initiative) activities (activities) met
HUD’s and/or the City’s property standards (standards) and did not
maintain an effective system of controls over its contracting processes
for projects. It used more than $300,000 in HUD funds (Program and
Initiative) for projects and activities that did not meet HUD’s
and/or the City’s standards.
We informed the director of the City’s Community Development Grants
Administration (Administration) and the Director of HUD’s Milwaukee
Office of Community Planning and Development of minor deficiencies
through a memorandum, dated September 30, 2007.
We recommend that the Director of HUD’s Milwaukee Office of Community
Planning and Development require the City to ensure that housing
rehabilitation work and required repairs are completed or reimburse
its Program and Initiative from nonfederal funds for the projects
and an activity that did not meet HUD’s and/or the City’s standards
and implement adequate procedures and controls to address the findings
cited in this audit report. These procedures and controls should
help ensure that at least $120,000 in Program funds is appropriately
used over the next year for projects that meet HUD’s and the City’s
standards.
Issue
Date: December 5, 2005
Audit
Report No.: 2006-CH-1003
File Size: 117KB
Title:
HUD ’s Interest in $47,668 in Economic Development Initiative –
Special Purpose Grant Funds Awarded to the City of Rhinelander,
Wisconsin Was Not Secured
The
U.S. Department of Housing and Urban Development’s (HUD) Office
of Inspector General audited the City of Rhinelander, Wisconsin’s
(City) Economic Development Initiative – Special Purpose Grant (Grant).
We initiated the audit in conjunction with our internal review of
HUD's oversight of Economic Development Initiative – Special Purpose
Grants. The review is part of our fiscal year 2005 annual audit
plan. We chose the City’s Grant based upon a statistical sample
of fiscal years 2002 and 2003 Economic Development Initiative –
Special Purpose Grants, in which 90 percent or more in funds were
disbursed. Our objectives were to determine whether the City used
its Grant funds in accordance with HUD’s requirements and recorded
HUD’s interest on the assisted property.
The City used the Grant funds in accordance with HUD’s requirements.
It used $120,000 in Grant funds to pay for the reconstruction of
U.S. Highway 8, which included the construction of a rail spur crossing
($72,332) and access road ($47,668). However, it did not place a
covenant on the property title for the access road assuring nondiscrimination
based on race, color, national origin, or handicap. Further, HUD
did not request the City to record HUD’s interest on the access
road’s property title.
Although
the rail spur crossing is also real property based on HUD’s requirements,
we believe it is not practical to place a covenant on the rail spur
crossing’s property title since the crossing is not a building or
land where discrimination could occur. Further, we believe that
it is highly unlikely that the land where the rail spur crossing
is located would be sold or change its purpose since the crossing
is located on U.S. Highway 8. Therefore, we did not recommend the
placing of a covenant or the securing of HUD’s interest on the rail
spur crossing’s property title.
We recommend that HUD’s director of congressional grants require
the City to record a covenant on the title assuring nondiscrimination
based on race, color, national origin, or handicap and record a
lien on the property titles for the access road showing HUD’s interest
in the assisted property. If the covenant and lien are not recorded,
the City should reimburse HUD $47,668 from nonfederal funds for
the Grant funds used to pay for the construction of the access road.
Issue Date: September 16, 2005
Audit
Report No.: 2005-CH-1016
File Size: 1.91MB
Title: The Operator Improperly Used Funds Required to Be Used
for Petersen Health Center, Rhinelander, Wisconsin
The U.S. Department of Housing and Urban Development’s Office of
Inspector General reviewed the books and records of Petersen Health
Center (project). The project consists of three skilled nursing
home facilities, Friendly Village, Horizons Unlimited, and Taylor
Park, totaling 327 beds in Rhinelander, Wisconsin. The review was
part of our efforts to combat multifamily equity skimming on HUD's
Federal Housing Administration insurance fund. We chose the project
based upon its negative surplus-cash position since 1999, its default
status, and indicators of diverted project funds/assets. Our objective
was to determine whether the owner/operator used project funds in
compliance with the regulatory agreement and HUD’s requirements.
Petersen Health Care of Wisconsin, Inc. (operator), the project’s
identity of interest operator, improperly used $728,801 in funds
required to be used for project expenses from January 2003 through
April 2005 when the project was in a non-surplus-cash position and/or
in default of its HUD-insured loan. The inappropriate disbursements
included $594,830 to P.P.F. Enterprises II, another identity of
interest company, to pay estimated taxes of the partners of P.P.F.
Enterprises (owner), the owner of the project; $80,385 in prepaid
legal services; $47,890 for legal services not related to the project’s
operations; $3,000 for scholarships; $2,096 for Christmas presents;
and $600 related to charitable activities. We provided the owner
and operator schedules of the improper disbursements.
We recommend that HUD’s director of the Minneapolis Multifamily
Housing Hub ensure that the owner and/or operator reimburse HUD’s
Federal Housing Administration insurance fund $728,801 for the inappropriate
disbursements and implement procedures and controls to ensure funds
required to be used for project expenses are used according to the
regulatory agreement.We also recommend that HUD’s director, in conjunction
with HUD’s Office of Inspector General, pursue double damages remedies
if the owner and/or operator do not reimburse the insurance fund
for the inappropriate disbursements.
We recommend that HUD’s director of the Departmental Enforcement
Center impose civil money penalties and pursue administrative sanctions
against the owner, operator, and/or their principals/owners for
the payment of inappropriate disbursements that violated the project’s
regulatory agreement.
Issue
Date: December 22, 2004
Audit
Report No.: 2005-CH-1004
File Size: 1.8MB
Title:
Lakewood Care Center; Milwaukee, WI; Multifamily Equity Skimming
of More Than $1 Million in Project Funds
HUD's
Office of Inspector General reviewed the books and records of the
Lakewood Care Center (Project), a 196-bed skilled nursing facility
in Milwaukee, WI. The review was part of our efforts to combat multifamily
equity skimming. The review was also part of our nationwide reviews
of nursing homes due to the increasingly high default rate and number
of Federal Housing Administration (FHA) insurance claims being paid
under the Section 232 program. We chose the Project due to its default
status and more than $1 million dollar write-off of bad debt reported
in its fiscal year 2002 audited financial statements.
Our
review objective was to determine whether the owner/management agent
used Project funds in compliance with the Regulatory Agreement and
the Department of Housing and Urban Development’s (HUD) requirements.
The owner of the Project, 2115 Woodstock Place, LLC (Woodstock Place),
inappropriately disposed of $1,021,056 in Project assets on December
31, 2002, without obtaining HUD approval and in violation of its
Regulatory Agreement. The Project was in a non-surplus cash position
and in default of its FHA-insured loan at the time of the disposition.
Woodstock Place also inappropriately loaned $612,500 of Project
funds to Summit Health Care, Incorporated, the identity of interest
operator of the Project. The Project was in a non-surplus cash position
and/or in default at the time Woodstock Place made the loans.
We recommend that HUD’s Director of Multifamily Housing Hub, Minneapolis
Field Office, ensure that Woodstock Place reimburse the Project’s
Reserve for Replacement and/or HUD’s FHA insurance fund $1,021,056
for the inappropriate disposition of Project assets. We also recommend
that HUD’s Director of Multifamily Housing Hub, in conjunction with
HUD’s Office of Inspector General, pursue double damages remedies
if Woodstock Place does not reimburse the Project’s Reserve for
Replacement and/or the FHA insurance fund for the inappropriate
disposition of Project assets.
We
also recommend that HUD’s Director of Departmental Enforcement Center
impose civil money penalties and pursue administrative sanctions
against Woodstock Place and its Managing Member.
Issue Date: November 26, 2003
Audit
Report No.: 2004-CH-1002
File Size: 2.32MB
Title: Waukesha County’s Community Development Block Grant and
HOME Investment Partnership Programs
HUD's Office of Inspector General completed an audit of Waukesha
County’s Community Development Block Grant and HOME Investment Partnership
Programs. The audit was conducted based on a citizen complaint to
our Office. The objectives of the audit were to determine whether
the complainant’s allegations were substantiated and whether HUD’s
rules and regulations for the Programs were followed.
The complainant’s specific allegations were: (1) abuse of HUD’s
HOME Investment Partnership Program in the State of Wisconsin; (2)
poorly kept records with the intent to cover up discrepancies in
funds given to individuals; and (3) HUD funds went to prominent
elected officials or their spouses to acquire properties.
Although we were not able to substantiate any of the complainant’s
allegations, we found that Waukesha County did not follow Federal
requirements regarding its Block Grant and HOME Programs. Specifically,
the County did not ensure that:
* Federal requirements and its Agreements with Waukesha County
Economic Development Corporation, the County’s Loan Administrator,
were followed regarding documentation maintenance for 16 economic
development loans;
* Federal requirements and its Agreements with the Corporation
were not followed for two economic development loan agreements since
the agreements either failed to meet HUD’s national objective of
creating job opportunities for low and moderate-income persons or
permitted Block Grant funds to pay for pre-award costs; and
* Federal requirements were followed to ensure assisted houses
met local building codes and/or HUD’s Housing Quality Standards.
Specifically, the County: (1) lacked adequate documentation to
support that $463,734 in Block Grant loans were used for eligible
expenses; (2) allowed two loan agreements totaling $306,000 to be
executed with provisions that violated Federal requirements and
its Agreements with the Corporation; (3) did not include $650 of
housing rehabilitation work in specifications for four houses to
ensure they met local codes and/or HUD’s Standards; and (4) failed
to assure local building permits were issued and assisted houses
passed local inspections.
We recommend that HUD’s Director of Community Planning and Development,
Milwaukee Field Office, assures that the County reimburses its appropriate
Program for the inappropriate use of HUD funds and implements controls
to correct the weaknesses cited in this report. These improvements
should help ensure that the County’s annual average of $472,800
in economic development loans meet Federal requirements.
Issue Date October 29, 2002
Audit
Memorandum No.: 2003-CH-1002
File Size: 160KB
Title: New Covenant Housing Corporation, Inc. Community Development
Block Grant And HOME Programs Milwaukee, Wisconsin
We completed an audit of New Covenant Housing Corporation's Parkwest
Townhouses Phase II project located in Milwaukee, Wisconsin. The
audit resulted from a citizen complaint to our Office. The objectives
of our audit were to determine whether the complainant's allegations
were substantiated and whether HUD's rules and regulations were
followed. The complainant's specific allegations were: the general
contractor overseeing the project's construction shifted costs from
the general operating account to the concrete and carpentry accounts;
reimbursement claims for concrete and carpentry costs were inflated;
some payroll reimbursement claims were for individuals who did not
work on the project; and excessive equipment was purchased for the
project. We found that no Federal funds were directly spent on construction
costs for Parkwest Townhouses Phase II project. However, New Covenant
Housing Corporation failed to follow Federal requirements and its
Community Development Block Grant contract with the City of Milwaukee,
Wisconsin by using $18,700 in Block Grant funds to pay ineligible
costs. The ineligible costs consisted of interest expense related
to a bank loan owed by Parkwest for construction materials and professional
service expenses that were unrelated to the project. The payment
of the ineligible costs occurred because New Covenant's Executive
Director did not exercise adequate control over cost reports submitted
to the City of Milwaukee. As a result, HUD funds were not efficiently
and effectively used, and were not available for eligible Block
Grant purposes.
Issue Date: January 31, 2002
Audit
Memorandum No: 2002-CH-1802
File Size: 639KB
Title: Partners for Community Development, Inc., Home Buyers-Lease
Purchase HOME Rehabilitation and Accessibility Programs, Sheboygan,
Wisconsin
We completed a review of Partners for Community Development, Inc.'s
Home Buyers-Lease Purchase and HOME Homeowner Rehabilitation and
Accessibility Program. The review resulted from three complaints
to our Office. The objectives of our review were to determine whether
the complainants' allegations were substantiated and whether HUD's
rules and regulations were followed.
Issue Date: November 1, 1995
Audit
Report Number 96-CH-202-1006
Title: St. Croix Chippewa HA, Comprehensive Review Hertel, Wisconsin
Findings: The Housing Authority needs to improve the administration
of its programs and ensure compliance with the Annual Contributions
Contract and other HUD requirements. This report addresses issues
related to:
(1) inadequate internal control procedures;
(2) the receipt of unauthorized loans;
(3) improperly disbursed program funds;
(4) funds not properly accounted for;
(5) excessive funds drawn down from HUD; and
(6) uncollateralized deposits exceeding Federal Deposit Insurance
Corporation limits.
|
![[Logo: Homes and Communities: U.S. Department of Housing and Urban Development]](/images/common/hgv-bnr-logo2.gif){kind=logo}
![[Vea la versión en español de esta página]](/images/common/hgv-bnr-espanol2.gif)
![[Contact Us]](/images/common/hgv-bnr-contactus.gif)
![[Display the text version of this page]](/images/common/hgv-bnr-text.gif)
![[Search/Index]](/images/common/hgv-bnr-search.gif)
![[The U.S. government's official web portal]](/images/common/hgv-tpc-usagov.gif){kind=small}
![[LOGO: Your First Click for the National Center for Missing and Exploited Children (NCMEC)]](/images/common/hgv-tpc-oig-ncmec3.gif)
![[LOGO: Your First Click for the National Law Enforcement Offices Memorial Fund]](/images/common/hgv-tpc-nleomf.gif)
![[logo: Fair Housing and Equal Opportunity]](/images/common/hgv-icn-fheo.gif){kind=small}
![[Logo: HUD seal]](/images/common/hgv-icn-seal.gif)