MEMORANDUM
July 24, 2018

To:

Dominique Blom
General Deputy Assistant Secretary, Office of Public and Indian Housing, P

From:

Brian T. Pattison
Assistant Inspector General for Evaluation, G

Subject: Final Evaluation Report – HUD’s Oversight of the Alexander County Housing
Authority, 2017-OE-0014
Please see the attached final report on our evaluation of the U.S. Department of Housing and
Urban Development’s (HUD) oversight of the Alexander County Housing Authority in Cairo,
IL. It contains three findings and four recommendations. The report will be posted to our
website within 3 days.
In your response to our draft report, you agreed with our findings and recommendations. Your
response, along with our comments to it, are included in our report. Based on your response, we
consider recommendations 1, 2, 3, and 4 “unresolved-open.” We will contact your office within
90 days to begin discussing your proposed management decisions.
I appreciate the assistance you, your staff, and staff throughout HUD provided throughout the
evaluation. If you have any questions, please contact Director Paul Bergstrand at (202) 4022728.
Attachment
cc
Unabyrd Wadhams, Former Deputy Assistant Secretary for Field Operations, PQ
Donald Lavoy, Deputy Assistant Secretary for the Real Estate Assessment Center, PX
Kelley Lyons, Regional Public Housing Director for Chicago Hub, Office of Public and Indian
Housing, 5FPH
Daniel Sherrod, Director, Chicago Hub, Office of Public and Indian Housing, 5APH
Peter Schmiedel, Financial Management Specialist, Office of Public and Indian Housing, PCE
Rochelle Katz, Assessment Manager, Office of Public and Indian Housing, PG
James Cunningham, Deputy Regional Administrator, Office of Field Policy and Management,
5AMA
Bryan Greene, General Deputy Assistant Secretary, Office of Fair Housing and Equal
Opportunity, E1
Terri L. Wanzer, Management Analyst, Office of Fair Housing and Equal Opportunity, EGP
Charles M. Montgomery III, Director, Office of Fair Housing and Equal Opportunity, EGP
Craig T. Clemmensen, Director, Departmental Enforcement Center, CACB
Office of Inspector General
Office of Evaluation
451 7 Street SW, Washington, DC 20410
Phone (202) 708-0430, Fax (202) 401-2505
www.hudoig.gov
th

 HUD’s Oversight of the Alexander County Housing Authority
July 24, 2018

Frieda Edwards, Director, Office of General Counsel, CAGB
Patrice Mitchell, Management Analyst, Office of General Counsel, CAGB

 U.S. Department of Housing and Urban Development

Office of Inspector General
Office of Evaluation

HUD’s Oversight of the Alexander
County Housing Authority

Program Evaluations Division
Washington, DC

Report Number: 2017-OE-0014

July 24, 2018

 Executive Summary
HUD’s Oversight of the Alexander County Housing Authority
Report Number: 2017-OE-0014
Why We Did This
Evaluation
The Office of Public and
Indian Housing (PIH) is
responsible for (1)
monitoring public housing
agencies’ (PHA)
compliance with program
requirements and (2)
ensuring that effective
controls are in place to
prevent potential problems.
PHAs are responsible for
providing safe, decent, and
affordable rental housing
for eligible low-income
families, the elderly, and
persons with disabilities.
We initiated this review in
response to a request for an
evaluation from Senators
Richard (Dick) Durbin and
Tammy Duckworth of
Illinois and interest from
other members of
Congress. In the formal
request, the Senators noted
the deteriorating housing
conditions and overall
mismanagement at the
Alexander County Housing
Authority (ACHA). In
response to this request, we
assessed the U.S.
Department of Housing and
Urban Development’s
(HUD) oversight of ACHA
to determine whether HUD
met program requirements.

July 24, 2018

Results of Evaluation
HUD had been aware of negative conditions at ACHA since at least 2010. HUD
identified issues with ACHA’s governance, including the misuse of funds,
conflicts of interest, and a failure to comply with HUD policies and Federal civil
rights laws. Further, about 200 children and their families lived in units with
peeling paint; graffiti; pest infestations; and other health and safety hazards, such
as inoperable appliances and obstructed accessibility routes.
Despite HUD’s attempts to bring ACHA into compliance, its efforts did not
resolve the negative conditions at ACHA. Residents continued to live in
deplorable conditions as ACHA languished, and ACHA officials were generally
uncooperative in addressing the negative conditions HUD identified. Since
2010, PIH had used several oversight tools to identify issues at the ACHA, but
major enforcement action against ACHA occurred only after HUD assembled a
cross-programmatic team. HUD hesitated to take ACHA into possession in part
because PIH officials believed that they had to allow ACHA an opportunity to
improve instead of declaring it in substantial default. Additionally, HUD
guidance and expertise on receiverships were limited.
On February 19, 2016, HUD declared ACHA in substantial default of its
contract with HUD, removed its board, and took possession of it. At that time,
HUD assumed the role of administrative receiver of ACHA.
Recommendations
Conditions at ACHA had deteriorated over a decade or more, and two housing
developments there, Elmwood and McBride, are scheduled for demolition.
Since we concluded our fieldwork, HUD decided that two additional ACHA
housing developments (Sunset Terrace and Mary Alice Meadows in Thebes, IL)
will also be closed as necessary repairs there are too expensive, further reducing
available affordable housing stock for low-income residents. While local
officials are responsible for the daily administration of ACHA, HUD could and
should have done more to oversee it. Although it may to be too late to save
ACHA, as of June 2018, 50 other PHAs were designated as troubled. Therefore,
we offer four recommendations to improve PIH’s administration and oversight of
troubled PHAs. PIH agreed with each of our recommendations. The status of
each recommendation will remain “unresolved-open” until we receive further
documentation outlining PIH’s proposed management decision to address each
recommendation.

 Table of Contents
Introduction ........................................................................................................................... 2
Objective ............................................................................................................................ 2
Background........................................................................................................................ 2
Scope and Methodology .................................................................................................... 4
A Primer: HUD’s Oversight of ACHA ................................................................................... 5
Findings ................................................................................................................................ 6
PIH Used Several Oversight Tools To Identify Issues at ACHA, but Negative Conditions
Persisted ............................................................................................................................ 6
Only After HUD Assembled a Cross-Programmatic Team Did It Take Major Enforcement
Action Against ACHA ......................................................................................................... 9
HUD Hesitated To Exercise Its Authority To Take ACHA Into Receivership .................... 12
Recommendations .............................................................................................................. 17
1. Create Agreements and Strategies With Other Program Offices That Describe When
Cross-Programmatic Reviews and Enforcement Actions Against PHAs Are Required .... 17
2. Train PIH Officials on the Authority and Processes for Declaring PHAs in Substantial
Default and for Taking PHAs Into HUD Possession ......................................................... 17
3.

Update and Strengthen the Training Program for HUD Receivers of PHAs ............. 18

4. Update Procedures for Receiverships To Include Specific Guidance on When
Initiating a Receivership May Be Appropriate .................................................................. 18
Agency Comments and OIG Response .............................................................................. 19
Summary of PIH’s Comments .......................................................................................... 19
OIG Response to PIH’s Comments ................................................................................. 19
PIH Comments to the Draft Report .................................................................................. 20
Appendixes ......................................................................................................................... 22
Appendix A – Acknowledgements.................................................................................... 22
Appendix B – Acronyms................................................................................................... 23

List of Figures
Figure 1 – Timeline of HUD’s oversight of ACHA.................................................................. 5
Figure 2 – ACHA housing developments’ physical conditions scores from FY 2012 to 2013 9
Figure 3 – FHEO findings of racially segregated housing developments at ACHA ............. 10
Figure 4 – ACHA’s overall PHAS scores from FY 2010 to 2016 ......................................... 14

 Introduction
Objective
To assess the U.S. Department of Housing and Urban Development’s (HUD) oversight of the
Alexander County Housing Authority (ACHA).

Background
Overview of the Public Housing Program and Public Housing Agencies
The Office of Public and Indian Housing (PIH) operates HUD’s public housing programs.
Public housing’s mission is to provide safe, decent, and affordable rental housing for eligible
low-income families, the elderly, and persons with disabilities. Nationwide, approximately 1.2
million families reside in public housing developments that are owned and operated by about
3,300 local public housing agencies (PHA). HUD provides Federal aid to PHAs, which in turn
manage public housing for eligible residents at rents they can afford. Additionally, HUD
furnishes technical and professional assistance to PHAs for planning, development, and
management. Each year, HUD provides approximately $4 billion in operating subsidies to assist
PHAs in running their public housing programs. HUD also awards approximately $2 billion to
PHAs annually to develop, modernize, and maintain public housing properties.
A PHA is a legal entity authorized by a State to develop or administer low-rent public housing.
PHAs are the “caretakers” of public housing funds and must ensure that the funds are properly
managed. The PHA’s executive director, board, or commission operates and manages the PHA.
PHAs are responsible for operating their housing developments to ensure that the PHA complies
with its annual contributions contract. This contract is an agreement between the PHA and
HUD, which outlines the applicable regulations and procedural requirements that PHAs must
abide by to receive Federal funding. The contract also outlines HUD funds available for a
PHA’s use for that year. ACHA is a moderate-size PHA in Cairo, IL, with nearly 500 units in its
inventory.
HUD’s Oversight of PHAs
The Housing Act of 1937 requires that HUD establish rules and provide funding for PHAs to
manage their own housing programs. The intent of the Act is to give as much flexibility and
responsibility to the State and its units of local government as possible. In turn, HUD is to
ensure that PHAs meet performance requirements and provide technical assistance, with the goal
of safeguarding both public investment and resident quality of life.
HUD’s objective is to identify endangered funds and assist PHAs in correcting deficiencies it
identifies while monitoring PHAs. Field offices monitor PHAs remotely from the field office or
onsite at the PHA. A field office generally does not perform onsite monitoring of a PHA unless
it knows of performance or compliance problems. Field offices may focus efforts on PHAs that
are determined to be in the greatest need of attention. To identify those in greatest need of
attention, PIH uses a risk-based monitoring approach that accounts for a PHA’s risk in five areas.
These five areas are (1) organization, management, and personnel; (2) facilities management; (3)
2

 finance and budget; (4) marketing, leasing, and management; and (5) community relations and
involvement.
In addition to the field offices’ monitoring activities, PIH’s Real Estate Assessment Center
(REAC) inspects HUD properties to ensure that units are decent, safe, sanitary, and in good
repair. REAC uses a uniform physical inspection protocol with an intent to ensure that the
inspections of HUD properties are as uniform and objective as possible. REAC examines four
indicators about the PHA: its physical condition, financial condition, management operations,
and Public Housing Capital Fund program. Inspectors submit inspection data to REAC, which
REAC checks and analyzes. A PHA’s physical conditions indicator score affects the frequency
of its inspection cycle, with poorly performing PHAs requiring inspection more frequently.
REAC compiles each of the four indicators into an overall score using a scale of 0 to 100. This
score helps HUD identify PHAs with performance issues using its Public Housing Assessment
System (PHAS). Using this PHAS score, PIH designates the PHA as a high, standard,
substandard, or troubled performer. A PHA that achieves an overall PHAS score of less than 60
percent would be designated as a troubled performer.
PIH policy requires that the field office initiate the PHA Recovery and Sustainability (PHARS)
protocol for PHAs designated as troubled. 1 In 2011, PIH launched the PHARS protocol as a
four-phased approach to recover PHAs. HUD created this protocol as a holistic approach to
solving and remediating systemic issues at PHAs. When a PHA is found to be troubled, the
regional director usually assigns a PHARS team to lead in the recovery effort of that PHA. This
team is composed of staff from the Office of Field Policy and Management (FPM), PIH, and the
Departmental Enforcement Center (DEC). The PHARS team performs a preliminary financial
management and governance assessment of the PHA. The PHARS team (1) works with troubled
PHAs to assess the underlying systemic issues causing the PHA’s troubled status, (2) creates
recovery agreements, and (3) implements action plans that will ensure the sustainability of
successful PHA performance. It also continues to monitor the PHA and provide support during
the implementation and cure period.
Although HUD generally follows the PHARS protocol to remedy negative conditions at PHAs,
HUD also has the authority to declare a PHA in substantial default in emergency situations. In
these cases, the PHA is not provided an opportunity to respond or cure negative conditions when
HUD determines that conditions exist that pose an imminent threat to the life, health, or safety of
public housing residents or residents of the surrounding neighborhood or (2) the events or
conditions precipitating the default are determined to be the result of criminal or fraudulent
activity. 2 HUD may also determine that PHAs with serious financial, physical, management, or
ethical problems that cannot be remedied through the PHARS protocol are in substantial default
of their contract with HUD. When a PHA is found in substantial default, HUD temporarily takes
possession of the PHA to correct identified problems through a process known as administrative
receivership. 3 HUD views administrative receivership as a last resort for assisting PHAs with the
most severe problems. In extreme cases, HUD may also suspend or debar PHA officials as an
administrative remedy to address longstanding performance issues at the PHA. PIH’s Office of
1
During fieldwork, a HUD official told us that the procedures had changed and HUD may now initiate this process
for substandard performer PHAs as well.
2
24 CFR (Code of Federal Regulations) 907.5(d)
3
Administrative receiverships may include PHAs under settlement agreements, PHAs under cooperative endeavor
agreements, possession and control of PHA projects, and HUD “Secretary in possession” of PHAs.

3

 Receivership Oversight is responsible for providing day-to-day oversight and direction for
receiverships. If the PHA’s improvement is sustained, the PHA may be returned to local control,
and PIH’s local field office resumes oversight and monitoring of the PHA. Otherwise, HUD
maintains control of the PHA through the receivership process.

Scope and Methodology
We completed this evaluation under the authority of the Inspector General Act of 1978 as
amended and in accordance with the Quality Standards for Inspection and Evaluation, issued by
the Council of the Inspectors General on Integrity and Efficiency (January 2012).
Scope
We performed fieldwork for this evaluation between August and December 2017. This
evaluation covered operations within six HUD programs offices – PIH, DEC, the Office of Fair
Housing and Equal Opportunity (FHEO), FPM, the Office of General Counsel (OGC), and the
Office of Davis-Bacon and Labor Standards (Labor Standards). We assessed HUD’s oversight
of ACHA since 2010 to determine what HUD knew about ACHA, when it knew those facts, and
what steps it took to correct identified deficiencies. We did not assess ACHA, except as it
related to interactions with the above-named HUD program offices. We did not include in our
scope a comparison of ACHA to other PHAs and their receiverships.
Methodology
To address our objective, we conducted 24 interviews with current and former HUD officials
identified in our scope. Through these interviews and other documentation collected during our
evaluation, we learned what actions HUD took in an attempt to identify and address deficiencies
at ACHA. We also identified the roles and responsibilities of personnel involved in the
monitoring and oversight of ACHA. We reviewed relevant statutes, regulations, and other
documentation to determine criteria for the monitoring and oversight of PHAs.
Limitations
On November 22, 2017, we sent HUD a request for several HUD officials’ emails to determine
what they knew and communicated about ACHA at the time the issues occurred. HUD produced
the requested emails and provided them to us in June 2018. 4 We received nearly 50 gigabytes of
email data, which we will review following the release of this report. If our findings or
recommendations are substantially affected by new information, we will communicate that
information in an appropriate format.

4

In December 2017, we issued a report finding that OGC’s collection of electronically stored information, including
emails, does not meet customer demand because processing these requests takes too long to meet each program
office’s needs.

4

 A Primer: HUD’s Oversight of ACHA
On February 19, 2016, HUD declared ACHA in substantial default of its contract with HUD,
removed its board, and took possession of it. In April 2017, HUD announced its plan to relocate
about 400 residents, including 200 children, from two ACHA housing developments, Elmwood
and McBride. 5 Those developments will be demolished. According to news reports, residents
remain angry and frustrated with HUD’s decision. The city of Cairo has insufficient housing
stock for these displaced families, so almost 200 families will have to move out of the city. A
HUD spokesperson said that HUD was “stunned … at what we saw, not just in terms of the
deplorable living conditions that we encountered but at the poor, even absent record keeping, the
staggering backlog of critical repairs, all of this going to the very health and safety of the
residents living there.” However, the deplorable conditions at ACHA did not occur overnight.
HUD had been aware of negative conditions at ACHA since at least 2010. Over the span of 6
years, HUD performed multiple assessments and reviews of ACHA. Figure 1 below outlines the
steps HUD had taken since 2010 in an attempt to address the negative conditions.
Figure 1 – Timeline of HUD’s oversight of ACHA
2010
• PIH conducted
an onsite review
of the Authority,
which produced
negative
findings.

2013

2014

• Due to the
• HUD conducted
Authority's FY* a cross2012
programmatic
substandard
review, which
physical
produced
conditions score, negative
PIH conducted
findings.
an onsite review
of the Authority,
which produced
negative
findings.

2015

2016

• FHEO issued a • HUD took the
voluntary
Authority into
compliance
receivership.
agreement to the
Authority to
address its civil
rights violations.

2017
• HUD began the
process of
relocating
residents from
two Authority
housing
developments
scheduled for
demolition.
• HUD debarred
some Authority
executives.

* FY = fiscal year

HUD had failed ACHA in every physical condition indicator since fiscal year (FY) 2012 and
identified weaknesses with its financial condition as early as FY 2013. ACHA was generally
uncooperative in addressing the negative conditions identified by HUD’s assessments and
reviews. Despite HUD’s attempts to bring ACHA into compliance, the negative conditions
remained. In June 2017, DEC and OGC issued an indefinite debarment from participating in
government programs for two former ACHA executives and a 3-year debarment for a board
member. This action resulted from many violations of HUD regulations and the contract, such
as deplorable physical conditions, severe misuse of Federal funds, civil rights violations, leadbased paint violations, and other issues.

5

Since we concluded our fieldwork, HUD decided that two additional ACHA housing developments (Sunset
Terrace and Mary Alice Meadows in Thebes, IL) will also be closed as necessary repairs there are too expensive for
ACHA to cover. Some of the residents relocated from the Elmwood and McBride developments ended up at the
Thebes developments, so they will have to relocate again.

5

 Findings
PIH Used Several Oversight Tools To Identify Issues at ACHA, but
Negative Conditions Persisted
Since 2010, HUD 6 had performed multiple assessments and reviews of ACHA, which
highlighted issues with its governance, including the misuse of funds, conflicts of interest, and a
failure to comply with HUD policies and Federal civil rights laws. Despite HUD’s attempts to
bring ACHA into compliance, the negative conditions remained. ACHA was generally
uncooperative in addressing the negative conditions HUD identified during its assessments and
reviews. On February 19, 2016, HUD removed ACHA’s board and took possession of ACHA,
declaring it in substantial default of its contract with HUD.
PIH Identified Issues at ACHA During a Review in 2010, but Closed the Findings
In keeping with routine oversight practices, the Chicago field office assigned a team to monitor
and oversee ACHA. This team was assigned to ensure that ACHA complied with HUD rules
and regulations and to provide technical assistance to ACHA as needed. The team was
composed of an engineer, a financial analyst, and a public housing revitalization specialist. In
March 2010, this team completed a review of ACHA, which identified improper payments and
other high-risk elements. 7 During this review, the team conducted tenant file reviews to
determine whether ACHA calculated rents accurately and reviewed its compliance with HUD
policies.
The team made nine findings and four observations, one of which indicated that there was a
conflict of interest among the board of commissioners, the president of the resident council, and
ACHA. PIH records and the team leader of the review confirmed that the field office closed the
findings.
The Field Office Conducted Onsite and Remote Assessments of ACHA in 2012 and 2013,
but ACHA Did Not Correct Identified Negative Conditions
For FY 2012, REAC scored ACHA as a substandard physical performer due to the poor physical
conditions of its buildings. A team member assigned to ACHA told us that the substandard score
required the field office to conduct an onsite review. Before the onsite review, this team member
performed a remote assessment of ACHA. He said that during the remote assessment, he
identified several issues unrelated to ACHA’s physical conditions score, such as inappropriate
procurement practices and nepotism, stating that ACHA’s organization chart looked like a
“family tree.” After completing the remote assessment, he issued a letter to ACHA, stating his
findings, and asked for a response and for ACHA’s plans to address the findings before the
upcoming onsite review. In response, ACHA provided an action plan, which the team member
believed did not sufficiently address the concerns in the findings letter. Accordingly, this
6

When “HUD” is used, officials or actions from more than one program office are being cited. When PIH is used,
we are referring only to PIH officials or actions.
7
HUD completed a Consolidated Tier II review. Consolidated Tier I or Tier II reviews were a type of onsite review
of PHAs, which PIH no longer performs.

6

 response required the field office to continue its onsite review of ACHA. In May 2013, the
National Association for the Advancement of Colored People also sent HUD a letter alleging
discriminatory conditions at ACHA, which reinforced the need for the onsite review.
The field office conducted the onsite review of ACHA from September 4 through 13, 2013. A
team member who participated in the review told us that ACHA personnel were very
uncooperative during the visit. For example, one team member told us that several members of
the ACHA staff attempted a “sick-out” to avoid being interviewed. Team members also
observed serious civil rights violations during the review, such as segregated housing and
segregated staffing. One team member said the team conducted physical inspections of all of the
ACHA housing developments, during which it reviewed the building interiors and exteriors and
inspected a sample of units. He said, in total, these physical inspections took about a half day.
This team member also said that the poor physical condition of the properties was obvious, even
from the outside. However, when the team members went inside the properties, one team
member said that he observed broken and outdated appliances and pest infestations in housing
developments occupied by African-Americans.
On November 1, 2013, following the onsite review, the field office issued a letter to ACHA,
which detailed concerns related to its finances, operations, and procurement practices. In total,
the field office made 9 findings related to the physical condition of ACHA’s properties and 20
findings related to its overall management. Major findings included that
•
•
•
•
•
•
•

The McBride and Elmwood housing developments had ongoing security issues.
The plumbing at the McBride housing development was deteriorated and in need of
rehabilitation.
The former executive director improperly procured a consultant services contract for
himself.
ACHA awarded retirement packages and offered part-time employment to specific
employees with no documented or defined formula or eligibility requirements.
ACHA’s nepotism policy was inadequate.
An ACHA board member had a nephew and grandson employed by the PHA.
The executive director’s son-in-law and the assistant executive director’s husband were
maintenance workers at ACHA.

In December 2013, ACHA provided an action plan to address the issues identified during the
onsite review, in which it generally disagreed with the field office’s findings and observations.
Field office staff members told us and documentation confirms that they found ACHA’s
response insufficient. Field office staff members also told us that they informed regional PIH
leadership about issues pertaining to ACHA. Around this time, the field office staff also
approached HUD’s Region V Administrator. The Administrator is responsible for engaging with
local officials and acting as a liaison for HUD field offices and programs. As such, he was
positioned to engage with ACHA and Cairo, IL, officials.

7

 REAC Routinely Inspected ACHA, but Physical Inspection Scores Did Not Always
Accurately Reflect ACHA’s Conditions
As discussed earlier, REAC scored ACHA as a substandard physical performer for FY 2012 due
to the physical conditions of the Elmwood and McBride housing developments. 8 The FY 2012
inspection report continuously indicated the presence of peeling paint; graffiti; deteriorated caulk
and sealants; and the presence of insects, such as bed bug and live roach infestations, among
other issues. It also noted health and safety hazards, such as inoperable electrical breakers and
appliances and obstructed accessibility routes.
Despite these findings, in FY 2013, ACHA’s REAC scores indicated that the physical conditions
had improved dramatically. Field office staff members were concerned that the FY 2013
physical condition scores did not reflect the actual conditions at ACHA. One remarked that he
was shocked by the inflated score. At this time, ACHA’s budget showed that only two major
capital improvements had been undertaken. PIH’s practice was to wait to initiate the PHARS
protocol until it had designated a PHA as troubled. Without a score low enough to consider
ACHA troubled, PIH was unable to initiate the PHARS protocol, which aims to recover PHAs
by solving and remediating systemic issues. 9 As a result, in April 2014, field office staff
requested that REAC rescore the housing developments off cycle and immediately release the
scores. The field office staff continued to request updates on the status of the rescore request,
and in August 2014, REAC confirmed that ACHA would be reinspected.
REAC began the FY 2013 rescore for the housing developments in November 2014 and
completed it by February 2015. According to a REAC official, a number of factors can delay
REAC inspections of PHAs and 95 to 99 percent of the time those delays are related to procuring
contract inspectors to perform the inspections. Further, documents showed that holidays and
HUD staffs’ use of “use or lose leave” contributed to delays as well.
REAC’s revised scores showed that conditions had deteriorated since FY 2012 and not improved
as the original FY 2013 score indicated. For two housing developments, the score was lowered
by more than 50 points. The score for the Elmwood and McBride housing developments, which
are now scheduled for demolition, were lowered by 54 points. Figure 2 below provides the
physical conditions scores in FYs 2012 and 2013 and the rescores for FY 2013.

8
ACHA has several housing developments that receive individual physical conditions scores during the inspection
process.
9
During the interim period, PIH field offices also have the ability to implement a zero threshold review of capital
fund grants. However, this is not a sanction. This action requires PIH field office staff to review and approve all
draws a PHA wants to make from its Capital Fund.

8

 Figure 2 – ACHA housing developments’ physical conditions scores from FY
2012 to 2013
Development
name
Elmwood and
McBride

FY 2012 physical
conditions score

FY 2013 original physical
conditions score

FY 2013 physical
conditions rescore

42

82

28

Scattered sites

76

73

71

Connell F. Smith
Building

74

92

34

The revised FY 2013 inspection report for the Elmwood and McBride housing developments
showed that there were 112 health and safety deficiencies and concluded that if all buildings and
units were inspected, 1,134 health and safety deficiencies would be found. 10 REAC decertified
and dismissed the contract inspectors who performed the initial FY 2013 inspections for not
following REAC’s inspection protocol. 11,12

Only After HUD Assembled a Cross-Programmatic Team Did It Take
Major Enforcement Action Against ACHA
After PIH field office staff approached him with concerns about ACHA, the Region V
Administrator assembled a cross-programmatic review team in early 2014 to review ACHA.
The Administrator, who is part of FPM, served as the lead on this team. The team consisted of
Region V staff from the following HUD program offices: PIH, FHEO, DEC, and Labor
Standards. Each participating program office focused on its respective programmatic
jurisdiction.
HUD Conducted a Cross-Programmatic Review of ACHA in 2014, Which Resulted in
Negative Findings Against ACHA
Several cross-programmatic review team members stated that this type of review was uncommon
and that they had not seen so many program offices work collectively to review a single PHA.
The onsite portion of the cross-programmatic review occurred from June 24 through 26, 2014.
Participating team members reviewed ACHA documents, conducted interviews, and inspected
low-rent housing properties. Unlike its response to PIH’s 2013 reviews, HUD staff told us that
ACHA was relatively cooperative as the team carried out its cross-programmatic review.

10

The inspections examine a sample of units at a given PHA and not every unit.
This protocol refers to the standard set of rules and procedures for inspectors to follow on all inspections. The
purpose of the physical inspection process is to provide HUD with the ability to assess whether its properties are in a
safe, decent, and sanitary condition and in good repair.
12
In response to a congressional mandate, REAC released a report, entitled “Efforts and Progress Made to Improve
Inspection Processes and Protocols,” on February 23, 2018. Within the report, REAC stated that its physical
inspection process has declined over time due to a number of reasons, including competing demands of Federal
inspection staff, a shifting quality environment, and external pressures. However, most notably, REAC stated that it
also faced challenges in acquiring contract inspectors that met HUD’s quality inspection standards in the
performance of duties. To address issues highlighted in the report, REAC stated that, as of June 2017, it had
identified and implemented 86 process improvements in an effort to enhance its inspection process.
11

9

 PIH, DEC, and Labor Standards made several significant findings on ACHA’s noncompliance
with several HUD rules and regulations, which included mismanagement of ACHA, misuse of
Federal funds, misadministration of contracts subject to Davis-Bacon and related acts, and
governance issues. In July 2014, ahead of releasing its official findings, PIH field office staff
issued a memorandum to ACHA which placed its Capital Fund under zero threshold review,
which required PIH field office staff to review and approve all draws ACHA wanted to make
from its Capital Fund. In November 2014, PIH issued a memorandum to ACHA, which
documented its official cross-programmatic review findings of ACHA noncompliance with
several Federal, State housing, and labor laws.
During this review, DEC also identified an issue that inappropriately benefited ACHA’s
financial condition score used for PHAS. DEC found a significant deficiency in ACHA’s
internal control over financial reporting and compliance when it borrowed funds in a manner not
permissible under the HUD Financial Management Handbook or Office of Management and
Budget Circular A-133. ACHA borrowed more than $400,000 from the Elmwood and McBride
operating fund to cover the central office cost center’s deficit, which resulted from the cost
center’s failure to charge fees to any of ACHA’s three housing developments. ACHA’s method
for recording the transaction made the financial condition appear better than it was and, hence,
inappropriately benefited its financial condition score. A DEC official stated that had ACHA
recorded the transaction properly, the PHAS financial condition score would have declined from
“satisfactory” to “unsatisfactory.” As a result of this issue, the original financial condition score
was reduced from 18 to 10. This score revision and the revised physical conditions scores
(released in 2015) resulted in HUD’s changing ACHA’s overall performance designation for FY
2013 to troubled.
However, FHEO made the most significant findings of the cross-programmatic review. FHEO
issued its findings to ACHA in a separate memorandum, dated September 30, 2014. FHEO
found that ACHA violated rules under Title VI of the Civil Rights Act 13 for its racial segregation
of public housing and employment discrimination on the basis of race. Additionally, FHEO
found that the Elmwood and McBride housing developments, where heads of household were
96.8 percent African-American, were older and more poorly maintained than other ACHA
housing developments. Figure 3 below provides a summary of FHEO findings of racially
segregated housing in the housing developments at ACHA.
Figure 3 – FHEO findings of racially segregated housing developments at ACHA
Number of units

Percentage of units occupied by
African-American heads of household

Elmwood and McBride

247

96.8%

Connell F. Smith
Building and scattered
sites

188

57.4%

Development name(s)

In its findings, FHEO also noted that ACHA had a documented history of discriminating against
African-American employees. FHEO found that the highest paid ACHA maintenance
13

Title VI of the Civil Rights Act states, “No person in the United States shall, on the ground of race, color or
national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under
any program or activity receiving Federal financial assistance” (42 U.S.C. (United States Code) 2000d).

10

 technicians were what FHEO referred to as white employees and that those employees’ seniority
had no direct correlation to their pay rates compared to their African-American peers. For
example, ACHA contracted two white retirees for part-time work at a pay rate of more than $20
per hour, whereas a part-time African-American retiree, not under contract, received a pay rate
of just under $16 per hour for the same position. In another example, ACHA employed four fulltime maintenance employees in September 2013. Two were white and two were AfricanAmerican. The white employees had 8 and 4 years of job experience, respectively, and earned
an equal or higher rate of pay compared to the two African-American employees who had 28 and
4 years of job experience, respectively. FHEO also found that African-Americans typically
serviced the Elmwood and McBride housing developments (identified as racially segregated)
instead of other ACHA housing developments.
FHEO and other HUD officials said that PIH senior officials were reluctant to move quickly
against ACHA on the cross-programmatic findings. 14 Some officials attributed this delay to
different causes, such as the disagreement over programmatic jurisdiction (FHEO’s versus
PIH’s). When asked about their reaction to the cross-programmatic review, some PIH senior
officials, including the PIH Region V Director at the time, said that they were unaware of it or its
findings. However, field office staff and the Region V Administrator claimed that they met with
the PIH Region V Director and discussed this topic in August 2014.
Following the Cross-Programmatic Review Findings, FHEO Entered Into an Agreement
With ACHA, Which ACHA Violated
FHEO officials said that FHEO’s authorities enable it to act more quickly than other HUD
program offices. Therefore, FHEO could act as the “tip of the spear” to get ACHA to comply
with public housing rules and regulations. Once FHEO makes a finding of noncompliance at a
PHA, the PHA is required to review the finding within a 30-day window and enter into a
voluntary compliance agreement to remedy the identified negative conditions. Additionally,
FHEO officials said that PIH generally requires a much more lengthy remedial process for PHAs
and that PIH’s remedial process, the PHARS protocol, could take up to 1 year or more.
ACHA entered into the agreement with HUD in August 2015. It required ACHA to comply with
provisions related fair housing, security of housing, and equal employment opportunity. For
example, to ensure fair hiring practices, the agreement required ACHA to obtain prior HUD
review and approval before hiring a new executive director. Among other things, it also required
that ACHA develop a public housing waiting list to provide residents in the Elmwood and
McBride housing developments the opportunity to relocate to a more racially integrated housing
development.
FHEO officials said that ACHA officials violated the agreement and the violations were
deliberate and serious. For example, ACHA unilaterally hired a new executive director, and
FHEO officials considered this violation to also be a breach of its contract with HUD. FHEO
and PIH officials disagreed about the extent to which this provision of the agreement was
permissible and enforceable. In January 2016, the Region V Director of FHEO issued a
memorandum to the PIH field office director formally challenging ACHA’s compliance with the
14

The term PIH “senior officials” refers to PIH staff at the regional public housing director level and above. We
choose to refer to this group as “PIH senior officials” because of the many staffing changes that occurred within PIH
from 2010 to the present, with some individuals occupying more than one senior position at different times.

11

 contract. FHEO officials said that this memorandum forced PIH to take action on ACHA. The
violation of the agreement became the basis for finding ACHA in substantial default of its
contract with HUD. On February 19, 2016, HUD removed ACHA’s board and took possession
of ACHA, declaring it in substantial default of the contract.
Despite ACHA’s limited cooperation in addressing PIH-identified deficiencies over time, PIH
did not feel that it could take more aggressive action against ACHA. Without a score low
enough to consider ACHA troubled, PIH was unable to initiate the PHARS protocol, which aims
to recover PHAs by solving and remediating systemic issues. However, the cross-programmatic
approach, led by FPM, empowered HUD to use alternative means of enforcement against
ACHA. Specifically, FHEO’s involvement enabled HUD to leverage different authorities that
would have required ACHA to remedy issues more quickly. When ACHA did not remedy the
deficiencies within this period, HUD was empowered to take swifter action against it. Without
FHEO’s involvement, negative conditions at ACHA may have persisted longer before HUD took
it into receivership. Involving several parts of HUD, such as FHEO or DEC, may improve PIH’s
oversight of uncooperative PHAs like ACHA.

HUD Hesitated To Exercise Its Authority To Take ACHA Into
Receivership
HUD temporarily takes possession of a PHA to correct identified problems through a process
known as administrative receivership. HUD views administrative receivership as a last resort for
assisting PHAs with the most severe problems. Residents at ACHA continued living in
deplorable conditions as ACHA languished, and HUD hesitated to take ACHA into receivership.
Despite negative conditions at ACHA, HUD did not take it into receivership earlier for several
reasons; namely,
•

•
•
•
•

PIH officials initially allowed ACHA several opportunities to improve instead of using
HUD’s authority to declare it in substantial default and take possession of it. In our
discussions with PIH officials, they did not seem to be aware of HUD’s authority to take
possession of ACHA without first offering it an opportunity to cure deficiencies.
ACHA’s official performance scores were not initially low enough to initiate the PHARS
protocol.
PIH officials disagreed about the extent to which ACHA’s actions and existing
documentation were sufficient to place it into receivership.
HUD officials claimed that receiverships were costly to administer and could attract
negative attention to the agency.
HUD guidance and expertise on receiverships were limited at the time.

PIH Officials May Not Have Been Aware of HUD’s Authority To Declare PHAs in
Substantial Default
HUD has the authority to declare a PHA in substantial default of its contract with HUD in
emergency situations. In these cases, HUD is not required to provide the PHA with an
opportunity to respond to or cure negative conditions when (1) HUD determines that conditions
exist that pose an imminent threat to the life, health, or safety of public housing residents or
residents of the surrounding neighborhood or (2) the events or conditions precipitating the
12

 default are determined to be the result of criminal or fraudulent activity. 15 Although this
authority allows PIH to declare a PHA in default of its contract before the maximum 2-year cure
period ends, PIH headquarters and field officials emphasized during interviews the necessity to
use the PHARS protocol and allow PHAs the full 2 years to cure negative conditions. The living
conditions at ACHA posed an immediate threat to its residents and we believe PIH should have
exercised this authority sooner. We are concerned that the PIH officials we spoke with may not
have been aware of HUD’s authority to declare substantial default and take PHAs into
possession in emergency situations. If PIH officials are not aware of this authority or prepared to
use it, uncooperative PHAs with similar issues may languish without adequate corrective action
at the expense of housing development residents, as ACHA did.
ACHA’s Official Performance Scores Were Not Initially Low Enough To Trigger the
PHARS Protocol
As discussed earlier, HUD designates PHAs as high, standard, substandard, or troubled
performers based on their performance. Once a PHA is designated as troubled, HUD initiates
the PHARS protocol. A troubled PHA is given a maximum of 2 years to cure negative
conditions. 16 If the PHA cannot cure its issues within 2 years, this condition should trigger a
referral for administrative receivership. 17 However, PIH has not enforced this referral procedure
uniformly. Given this lack of uniformity, the Office of Receivership Oversight has begun
developing protocols and a standardized process for assessing PHAs that have not met their 1- or
2-year recovery goals and for making referrals. At the conclusion of our fieldwork, this process
had not been completed or implemented.
ACHA’s performance scores were not initially low enough to trigger the PHARS protocol,
which is a process of enhanced oversight meant to help a PHA solve and remediate systemic
issues or later receivership action. Until FY 2013, ACHA scored substandard or better on all of
its PHAS assessments. As discussed earlier, REAC did not revise ACHA’s FY 2013 physical
conditions score or its financial conditions score until much later, which resulted in HUD’s
changing ACHA’s overall performance designation to troubled for FY 2013. PIH’s practice was
to wait to initiate the PHARS protocol until it designated a PHA as troubled. One HUD official
told us that at the time, there was no formal remedial process for substandard PHAs (such as
ACHA) as there was for troubled ones. A PIH employee told us that he suggested placing
ACHA into the PHARS protocol in 2013, although it was not yet officially designated troubled,
but that management opposed this approach. A PIH senior official said that if a substandard
PHA remained uncooperative about addressing identified issues, it would continue to decline
until it reached troubled status. Conditions at ACHA continued to decline this way over time.
Figure 4 below lists ACHA’s performance scores from FY 2010 to 2016.

15

24 CFR 907.5(d)
During this period, the PHA has 1 year to raise its PHAS score to at least 50 percent of the difference between its
poor PHAS score and the current score and a maximum of 2 years to raise it to at least 60 percent overall. HUD
takes incremental steps to work with the PHA to cure the conditions during that 2-year period.
17
However, the recovery process is not limited to administrative receivership. There are two basic types of
receiverships: administrative and judicial. Judicial receiverships are established, monitored, and supervised by
Federal courts.
16

13

 Figure 4 – ACHA’s overall PHAS scores from FY 2010 to 2016
FY

Total score

Designation status

2010

No score

No score released

2011

78

Standard

2012

67

Substandard physical

2013*

52

Troubled

2014

52

Troubled

2015

29

Troubled

2016

27

Troubled

*Indicates the revised FY 2013 scores that REAC released in February 2015

PIH Officials Disagreed About the Extent to Which ACHA’s Actions and Existing
Documentation Were Sufficient To Place It Into Receivership
HUD officials told us that there was a major emphasis on developing an action plan and
continuing to work with ACHA officials to remedy the negative conditions there. Records
showed that field office staff began working to develop an action plan as early as October 2013.
ACHA submitted its action plan to PIH in December 2013. The action plan refuted PIH’s results
and determinations and stated that ACHA personnel were not willing to cooperate to remedy the
negative conditions PIH had identified. Several field office staff members also told us that
ACHA personnel were uncooperative. However, we were told that PIH senior officials
encouraged the field office to continue to work with ACHA officials to remedy the conditions at
the local level despite their lack of cooperation.
Once HUD has decided to take a PHA into receivership, HUD gathers substantial documentation
to show the necessity for the receivership. PIH senior officials were generally unsatisfied with
the existing administrative record and encouraged field office staff to document the negative
conditions at ACHA. PIH senior officials also told us that there was a major emphasis on
gathering documentation to substantiate the need for taking the PHA into receivership, which
resulted in delays. We heard that this documentation was critical for establishing a clear
administrative record of the negative conditions. This record could be necessary if ACHA
attempted to challenge a receivership decision in court.
Personnel disagreed about the extent to which the existing action plan and corresponding
documentation were sufficient to warrant receivership. Field office staff members told us that
they requested that PIH senior officials take action against ACHA and they were frustrated with
senior leadership’s inaction. They argued that such action would help ensure that the decision to
take ACHA into receivership was sound and defensible if ACHA appealed. PIH senior officials
consulted OGC staff about the sufficiency of the administrative record. According to OGC staff,
consultations began on February 4, 2016, approximately 2 weeks before HUD issued the
substantial default letter to take ACHA into receivership.

14

 HUD Officials Claimed That Receiverships Were Costly To Administer and Could Attract
Negative Attention
During interviews, HUD officials told us that taking a PHA into receivership was very costly, so
HUD was not inclined to initiate receiverships. PIH’s Deputy to the Deputy Assistant Secretary
for the Office of Field Operations stated that a receivership can take many years to execute,
require the labor of four to five full-time employees, and cost more than $5 million. Other HUD
officials said that there were concerns about not having the necessary funding for executing a
receivership of ACHA. Field office staff told us that the Region V Director commented in 2014
that there were no funds available to take ACHA into possession.
HUD officials added that the agency must consider the political repercussions from taking a
PHA into receivership. These concerns contributed to HUD’s hesitation to take ACHA into
receivership.
HUD Guidance and Expertise on Receivership, Due in Part to a Lack of Training, Were
Initially Limited and Could Still Be Improved
HUD officials told us that an administrative record to justify receivership must include an onsite
review of a PHA, its results, and follow-up activity with the PHA. One of the officials told us
that it takes years to build such a record. However, that official also said that the receivership
process “isn’t too mapped out,” and another told us that he was unsure of what precisely triggers
a receivership.
From 1985 to 2015, HUD initiated administrative receiverships of 20 PHAs without a
receivership manual. 18 At the time HUD took ACHA into receivership in 2016, HUD was in the
process of creating such a manual. As a result, there was no systematic process for executing
receiverships when HUD initiated the receivership of ACHA or the 20 other PHAs taken into
administrative receivership before that.
HUD developed a PowerPoint training presentation for receivers in March 2013. However, two
PIH staff members who served as receivers, including the one assigned to ACHA, told us that
they did not attend formal training on receivership. One of the receivers told us that he relied on
his institutional knowledge from previously working at PHAs. Multiple officials told us that a
limited number of HUD staff members had the expertise to fulfill this role.
HUD did not publish its Internal Procedures Manual for HUD Receiverships until April 2017,
approximately 14 months after HUD took ACHA into receivership. HUD has also not updated
its PowerPoint training for receivers to align with the Internal Procedures Manual released in
2017. Although the Internal Procedures Manual for HUD Receiverships outlines post
receivership actions HUD officials should take when executing an administrative receivership, it
does not provide guidance to HUD officials or circumstances in which initiating a receivership
may be appropriate.
The small pool of experienced receivers, inadequate guidance, and outdated training pose
18

HUD has taken the Lafayette Housing Authority in Layfette, LA, into administrative receivership twice since
1995.

15

 organizational risks that could negatively affect HUD’s oversight of PHAs over time. Without
these elements, HUD may avoid taking PHAs into receivership when it is necessary and may
oversee PHAs in receivership improperly or inadequately.

16

 Recommendations
Conditions at ACHA had deteriorated over a decade or more, and two housing developments
there, Elmwood and McBride, are scheduled for demolition. Since we concluded our fieldwork,
HUD decided that two additional ACHA housing developments (Sunset Terrace and Mary Alice
Meadows in Thebes, IL) will also be closed as necessary repairs there are too expensive, 19 further
reducing available, affordable housing stock for low-income residents. While local officials are
responsible for the daily administration of ACHA, HUD could and should have done more to
oversee it. Although it may be too late to save ACHA, as of June 2018, 50 other PHAs were
designated as troubled. Therefore, we recommend that the General Deputy Assistant Secretary
of Public and Indian Housing:

1. Create Agreements and Strategies With Other Program Offices
That Describe When Cross-Programmatic Reviews and
Enforcement Actions Against PHAs Are Required
Considering ACHA’s limited cooperation in addressing PIH-identified deficiencies over time,
we are concerned that the PHARS protocol does not enable PIH to address issues at
uncooperative PHAs in a timely manner. Although PIH has strategies to engage some HUD
offices, such as DEC, when it encounters serious performance issues at PHAs, the crossprogrammatic approach led by FPM empowered HUD to use alternative means of enforcement
against ACHA. Specifically, FHEO’s involvement enabled HUD to leverage different
authorities that required ACHA to remedy issues more quickly. Involving several parts of HUD,
such as FHEO or Labor Standards, may improve PIH’s oversight of uncooperative PHAs like
ACHA so that conditions can be improved more quickly.

2. Train PIH Officials on the Authority and Processes for Declaring
PHAs in Substantial Default and for Taking PHAs Into HUD
Possession
The living conditions at ACHA posed an immediate threat to its residents, and we believe PIH
should have exercised its authority to declare it in substantial default sooner. PIH headquarters
and field officials emphasized during interviews the necessity to use the PHARS protocol and
allow troubled PHAs the full 2 years to cure negative conditions. This interpretation of HUD’s
authority and process may enable uncooperative PHAs like ACHA to languish at the expense of
housing development residents. PIH should train its officials at all levels to identify when a cure
period is not appropriate. This includes emergency situations in which conditions exist that pose
an imminent threat to the life, health, or safety of public housing residents or residents of the
surrounding neighborhood. PIH should also train PIH officials at all levels about the process for
expediently exercising the authority to declare a substantial default without a cure period.

19

The housing developments will be removed from public housing inventory. However, HUD has not decided how
the housing developments will be removed. They will be either demolished or sold.

17

 3. Update and Strengthen the Training Program for HUD Receivers of
PHAs
PIH’s expertise on receiverships was limited at the time of ACHA’s receivership and could still
be improved. PIH should update its training for receivers to align with the Internal Procedures
Manual released in 2017.

4. Update Procedures for Receiverships To Include Specific Guidance
on When Initiating a Receivership May Be Appropriate
While PIH has released its Internal Procedures Manual for HUD Receiverships, guidance and
policy on when initiating receivership may be appropriate are not included. The limited HUD
guidance and expertise on receiverships present organizational risks that could negatively affect
HUD’s oversight of PHAs over time.

18

 Agency Comments and OIG Response
Summary of PIH’s Comments
PIH agreed with each of our four recommendations. However, PIH stated that although it agreed
in concept with recommendation 1 and that requiring cross-programmatic reviews was
inappropriate, it requested that the recommendation be reworded. In its comments, PIH stated
that PHAs face “varying circumstances and challenges,” which requires PIH to have flexibility in
addressing issues at PHAs. PIH further stated that agreements and strategies should outline
when cross-programmatic reviews are appropriate. For recommendations 2, 3, and 4, PIH stated
that it would address the recommendations when it submitted its proposed management decision
for each recommendation within 120 days of final report issuance.

OIG Response to PIH’s Comments
Based on PIH’s response, we consider recommendations 1, 2, 3, and 4 “unresolved-open.” With
regard to recommendation 1 and PIH’s request to reword the recommendation, we agree that
cross-programmatic reviews and enforcement actions may not be required in every instance.
Therefore, we changed the language to make it clear that the agreements and strategies with
other program offices should describe when cross-programmatic reviews and enforcement
actions are required. We will reevaluate the status of recommendations 2, 3, and 4 upon receipt
of documentation detailing PIH’s proposed management decision, along with target dates for
completing corrective actions to address our recommendations.

19

 PIH Comments to the Draft Report

 


., . 
5: ll' 1 :3 US. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
7s I DC 
?use"
DFFECE OF PUBLIC AND HOUSING JUL 0 5 2018

MEMORANDUM FOR: Brian T. Pattison, Assistant Inspector General for Evaluation. 

FROM:

 

SUBJECT: Response to Discussion Draft Audit Report Oversight of
the Alexander County Housing Authority (ACHA) in Cairo,
Illinois: DIG Audit Report 2017?030014-

Thank you for conducting a thorough review and making recommendations that can help
the Of?ce of Public and Indian Housing (PIH) improve its oversight of troubled agencies. 
appreciates the collaborative discussions held during this audit and during the Exit Conference
held on May 3, 2018. Man):I of the comments and feedback provided on the working draft report
were considered and incorporated into the draft report. We have reviewed the draft report and
our suggestions for the ?ndings and reconunendations are outlined below.

Recommendation: Create Agreements and Strategies with other Program Of?ces
and require Cmss-Progranunatic Reviews and Enforcement Actions against PHAs.

PIH Recommendation: We request that this recommendation be reworded as Create
Agreements and Strategies with other Program O?ices that Include Cross-Programmatic
Reviews and Enforcemnt Actions Against PHAs.

Justification: PIH agrees with this recommendation in concept but believes ?requiring"
reviews is inappropriate. As discussed during the Exit Conference. each PHA has varying
circumstances and challenges which require ?exibility in addressing. The agreements and
strategies should outline when cross-programmatic reviews are appropriate.

Recommendation: Train PIH Of?cials on the Authority and Processes for Declaring
PHAs in Substantial Default and for Taking PHAs into HUD's Possession.

PIH Recommendation: PIH agrees with this recommendation and will address the
recommendation when submitting the Proposed Management Decision within 120 days of
issuance of the final report.

Recommendation: Update and Strengthen the Training Program for HUD Receivers
of PHAs.

PIH Recommendation: PIH agrees with this recommendation and will address the

wwaIud .gnv espannulud .gmr

 

 

 

20

 

 

recommendation when submitting the Proposed Management Decision within 120 days of
issuance of the ?nal report.

1G Recommendation: Update Procedures for Receiverships to Include Speci?c
Guidance on when Initiating a Receivership may be Appropriate.

PIH Recommendation: PIH agrees with this recommendation and will address the
recommendation when submitting the Proposed Management Decision within [20 days of
issuance of the ?nal report.

PIH also wishes to note the accomplishments made at the Alexander County Housing
Authority since possession on February 22, 2016, to correct de?ciencies, substantially reduce the
administration costs that threatened to bankrupt the agency and reposition the assets.
Speci?cally:

I Physical assessments of four properties [containing 324 units) contributed to the
determination that demolition was the best course of action due to rehabilitation costs in
excess of and necessary for the correction of health and safety de?ciencies.
PIH has approved the demolition for the Elmwood and McBride properties, and the
applications for Mary Alice Meadows and Sunset Terrace are in process.

a As of June 29, 2013, 165 of the [35 families at Elmwood and McBride have moved to
decent and safe housing. Five of the 3! families at Mary Alice Meadows and Sunset
Terrace have relocated. Relocation and mobility services pre- and post?move continue
for all families.

I ACHA has developed a plan for addressing the capital needs of the remaining 155 units
in the inventory and developed and implemented standard operating practices, including
ones to stabilize the maintenance and management operations. It has made investments in
reducing the rodent and insect infestations.

A Voluntary Compliance Agreement required ACHA to address numerous civil rights
violations. Staff have worked with the Of?ce of Fair Housing and Equal Opportunity to
make substantial progress towards resolving these violations.

- ACHA has taken steps to reduce its operating expenses by abrogating the in?ated
Collective Bargaining Agreement. negotiating a ?at rate to reduce utility and trash
payments, and signi?cantly reduced maintenance costs, insurance premiums, and other
operating costs.

Thank you for your continued partnership. We look forward to working with you to
implement the reconunendations.

If you have any questions, please do not hesitate to contact my of?ce at 202?402-4100.

 

21

 

Appendixes
Appendix A – Acknowledgements
This report was prepared under the direction of Brian T. Pattison, Assistant Inspector General for
Evaluation, Paul H. Bergstrand, Director of the Program Evaluations Division, and Lindsay K.
Clarke Brubaker, Supervisory Evaluator. The Office of Evaluation staff members who
contributed are recognized below.
Major Contributors
Josh Rowell, Senior Evaluator (team lead)
Christa Kidd, Senior Evaluator
Sonia Pena, Senior Forensic Auditor
Other Contributors
Angelina Johnston, Senior Evaluator

22

 Appendix B – Acronyms
ACRONYM
ACHA
DEC
FHEO
FPM
FY

DEFINITION
Alexander County Housing Authority
Departmental Enforcement Center
Office of Fair Housing and Equal Opportunity
Office of Field Policy and Management
fiscal year

HUD

U.S. Department of Housing and Urban Development

OGC

Office of General Counsel

PHA

public housing agency

PHARS

PHA Recovery and Sustainability

PHAS

Public Housing Assessment System

PIH

Office of Public and Indian Housing

REAC

Real Estate Assessment Center

23

 The Office of Inspector General is an independent and objective oversight
agency within the U.S. Department of Housing and Urban Development.
We conduct and supervise audits, evaluations, and investigations relating
to the Department’s programs and operations. Our mission is to promote
economy, efficiency, and effectiveness in these programs, while preventing
and detecting fraud, abuse, and mismanagement.
Report fraud, waste, and mismanagement in HUD programs and operations by
Completing this online form: https://www.hudoig.gov/report-fraud
Emailing the OIG hotline: hotline@hudoig.gov
Faxing the OIG hotline:
(202) 708-4829

Sending written information to
U.S. Department of Housing and Urban Development
Office of Inspector General Hotline (GFI)
451 7th Street SW, Room 8254
Washington, DC 20410

Whistleblowers are protected by law.
https://www.hudoig.gov/fraud-prevention/whistleblower-protection

Website
https://www.hudoig.gov/

Program Evaluations Division