“We believe the positive part of this is that our staff is working hard, and we’re trying to turn this around,” Tolliver said.
SMHA is working with a HUD recovery team to get the housing authority back on solid ground, and Tolliver is unsure how long it will take to lift the substandard designation.
“They’re helping us to get ourselves back together as far as documentation and our finances,” Tolliver said.
According to the inspector general audit, SMHA did not properly administer funds from the Reinvestment Act of 2009 Public Housing Capital Fund Stimulus Recovery Act grant.
“We’re unhappy we had to pay it back,” Tolliver said. “A lot of this happened before myself and (deputy director Anita Perrin) got this, so we’ll just have to take care of it the best way we can.”
The audit also said SMHA failed to adequately monitor its contractors for enforcement of labor standards, which could cost another $110,580 in reimbursement wages.
“We’ve had to send documentation to them, and they’re reviewing it, so we’re just waiting to hear what they have to say,” Tolliver said.
At the SMHA meeting Tuesday, SMHA board members approved updated policies and procedures for the Capital Fund Program to “ensure grants are administered according to federal regulations.” The updates, as well as evidence of staff being trained on those policies, were due to HUD by next the end of the month.
SMHA previously hired a consultant to handle its labor monitoring duties, but they’ve since been reassigned to director of modernization Cindy Hunter, construction manager Fred Fitzsimmons and a soon-to-be-named procurement officer.
“We feel that’s the best way,” Tolliver said. “Later on we might have to go back outside, but right now, we want to be able to try to handle it in-house.”
In the second audit, SMHA scored well in four of five categories but scored 15 of 30 in the financial section. The authority struggled in a measure of rent collection and scored 0 out of 9 in a measure of a public housing authority’s ability to operate using primarily its own resources without reliance on additional funding.
The audit from the regional inspector general says SMHA obligated $152,000 in grant funds for police services, computer equipment and computer and server contracts. In March of 2010, SMHA submitted its first voucher requesting grant funds to obtain computer equipment and to renew computer systems contracts, but the expenses weren’t eligible under stimulus guidelines.
Another voucher was submitted in April of 2010, this time for reimbursement for a renewal contract for police services. The voucher was flagged by HUD for review and later cancelled by SMHA. Recovery Act guidelines stated funds not obligated within one year would be recaptured, funds couldn’t be used for operational expenses and that ongoing operation expenses are ineligible.
In March of 2009, SMHA received a $1.5 million stimulus grant for its Capital Fund. As of Aug. 31 last year, the housing authority obligated 100 percent of its funds, but had used just 88 percent of the funds. According to grant requirements, housing authorities had one year to obligate 100 percent of funds, two years to use 60 percent of the funds and three years to spend all of the funds.
SMHA was also unable to provide HUD with documents showing it monitored contractors properly and that its contractors employees were paid appropriate wages.
The audit said SMHA allowed contractors to submit inaccurate and incomplete payroll reports for two of its roofing projects, meaning it wasn’t compliant with the Davis-Bacon Act, a federal law for paying prevailing wages on public works projects. The act says every contractor and subcontractor must keep a complete set of records for payrolls, time cards and tax records among others.
After SMHA interviewed 16 employees on site, the audit determined that five employees weren’t included on the payroll reports, seven of the employee interviews were conducted on a day when payroll reports didn’t show any hours worked for those employees and eight employees’ wage rates were identified as the contracted rate, but neither the contractor nor the housing authority maintained complete payroll records.
SMHA responded to these claims in the audit, saying one of its contractors, Nesser Roofing of Chillicothe, didn’t have any employees, but used subcontractors. They believe restitution shouldn’t be paid to HUD because the company is no longer in business, went into receivership and records are no longer available.
However, HUD responded in the report saying the authority is responsible for making employees whole. They’re still negotiating with HUD on whether wage restitution is needed.
“We thought the information we had was suitable,” Tolliver said. “Evidently, the auditor didn’t think it was suitable, so we’ll just have to deal with it.”
Tolliver said he’s learned a valuable lesson.
“We just have to make sure our documentation is in place,” Tolliver said. “We have to make sure the contractors we’re dealing with, that they’re most definitely giving us the most detailed information, and we have to make sure where we say we’re going to spend our money, that we spend it there.”
Contact this reporter at (937) 328-0366 or Michael.Cooper@coxinc.com.