BHA attempts to block residents from buying their long-time public housing units

Berkeley Housing Authority

LIPH and RHCP Rental Housing Disposition Process

http://tinyurl.com/ycw8ms4


Timeline


April 2009 Completed Capital Needs Assessment of BHA Portfolio (Basis
Architects). Documented need for approximately $4.5 million in
hard cost to repair and modernize 75 LIPH and RHCP units.

April 2009 3x3 Committee Meeting

June 2009 City of Berkeley set aside $700,000 in Housing Trust Funds in
order to support the redevelopment of the LIPH/RHCP portfolio
under a new ownership structure.

July 2009 Completed LIPH/RHCP Strategic Plan (EJP Consulting)
recommending disposition of LIPH/RHCP portfolio to an
affordable housing developer and project-basing of the units.

July 2009 BHA Board adopts recommendations of LIPH/RHCP Strategic
Plan. Votes to proceed with Disposition application to HUD.

October 2009 BHA procures Overland, Pacific & Cutler (OPC) to provide part-
time project management and relocation consulting services
throughout the Disposition process.

November 2009 BHA and OPC provide General Information Notice (GIN) to
residents in LIPH and RHCP housing notifying them of their
rights under the Federal and state relocation regulations. BHA
and OPC also carry out informational meetings with residents
and with the legal aid community.

November 2009 3x3 Committee Meeting

November 2009 Meet with BUSD to discuss potential transfer or reissue of long-
term leases for Ward St. and Francisco St. properties under
disposition plan.

November 2009 Draft Inventory Removal Application available for public review.

December 2009 Additional consultation with residents, local government and
legal aid community regarding draft Inventory Removal
Application.

December 17, 2009 BHA Board votes on approval to submit Inventory Removal
Application to HUD Special Applications Center (SAC). Submit
application.

December 31, 2009 HUD deadline per Memorandum of Agreement with BHA to
submit Inventory Removal Application to HUD.
Berkeley Housing Authority page 2 of 2
LIPH and RHCP Rental Housing Disposition Process

January 2010 BHA Board revisits goals for disposition, relocation, and resident
and community involvement. Develops “charge” to Planning
Committee.

February 2010 First Planning Committee meeting.

February 2010 (approx) BHA releases Developer Request for Qualifications (RFQ) to
purchase, renovate and operate LIPH/RHCP portfolio as
affordable rental housing.

February 2010 (approx) Begin negotiations with California Departments of Housing and
Community Development (HCD) to refinance RCHP debt and
transfer ownership to selected developer.

April 2010 (approx) HUD approval of Inventory Removal Application.

April 2010 (approx) Complete Resident Relocation Plan. Issue 90-Day Notice to
Vacate to households who do not want to return, post-
rehabilitation, or who, because of income or family size, will not
be able to return.

April 2010 (approx) Submit application to HUD for Replacement Housing Choice
Vouchers.

July 2010 (approx) Execute Disposition and Development Agreement (DDA)
between BHA and selected affordable housing developer or
developers.

July 2010 – March 2011 Carry out relocation of residents who do not want to return,
(approx) or who, because of income or family size, will not be able to
return to rehabilitated housing.

March 2011 (approx.) Developer(s) closes on the construction financing. LIPH/RHCP
properties transfer from BHA to selected developer. BHA enters
into HCV Agreement to Enter into Housing Assistance Payment
(AHAP) contract with developer.

March – December 2011 Developer(s) carries out rehabilitation of 75 units.
(approx) Existing residents who choose to stay receive temporary
relocation assistance during the renovation or move directly to
newly renovated units.

December 2011 Renovation complete. Execute Project-Based Housing Choice
Voucher HAP contract.

December 2011 (approx) Project complete.

(Berkeley's Housing Section / HUD Funded Programs)


Audit of Berkeley / Berkeley Housing Authority

See partial text of audit below, including pages 11 through 38...


For more...

Click below for full Berkeley / BHA audit report...

http://tinyurl.com/yf7raye


CITY OF BERKELEY, CALIFORNIA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Direct Programs:
Community Development Block Grant/Entitlement Grants(1) -- $3,160,335
Emergency Shelter Grants Program -- $134,892
Shelter Plus Care Program{1) -- $2,251,911
Home Investment in Affordable Housing(1> -- $2,210,909
Section 8 - Moderate Rehabilitation Program -- $504,318 (to administer program?)
Low-Income Public Housing - Operating Subsidy -- $125,090
Section 8 - Rental Voucher Program(l) -- $22,650,275
Public Housing Capital Fund -- $33,392 (repairs & maintenance)
TOTAL U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT -- 31,071,122

^^^^^^^^^^^^^^^
Page 11
CITY OF BERKELEY, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30,2007

Section II - Financial Statement Findings
During our audit of the City's Housing Authority ("Berkeley Housing Authority") for the fiscal
year ended June 30, 2007, we noted significant deficiencies in internal control design and
operation as described in section III of this schedule as Deficiency 07-01 and 07-02

Section III - Federal Award Findings and Questioned Costs

Deficiency 07-01 - During our testing of the Security Deposit Loan Program we noted eleven
samples with incomplete information, such as missing copies of applications, contracts, loan
checks, and evidence of payment. The Berkeley Housing Authority ("BHA") staff explained that
copies of payment checks are organized by student volunteers because of short staffing and since
there are multiple files for different programs for these applicants, workers sometimes misplace
items from one folder into another folder.

We also noted multiple missing entries on the Security Deposit Loan Program payment ledger
itself, such as check date, loan term, and agreed monthly payment amount. BHA staff
commented that they are using an updated version of accounting software called Emphasys to
document and print loan checks. However, the new version of the program is used to print Wells
Fargo checks (section 8), but does not print Union bank checks, therefore BHA relies on the old
version of the software to print the security deposit checks (Union Bank). Also, there are
software problems with the old version that only allows the program to function periodically.
Since the older version of Emphasys is the only tool BHA staff uses to print security deposit
checks, they sometimes could not print these checks because of software malfunctions. In
addition, BHA staff was unable to print a listing of checks from the older version of Emphasys
because of the software problems. In conclusion, the data in the payment ledger is incomplete
and unreliable because BHA staff must manually update information on the payment ledger from
Emphasys, and because of the missing loan agreements from applicants.

Recommendation - We have noted similar deficiencies related to BHA's financial software
in prior management letters dating back to June 30, 2003. With regards to the collection of
loan repayments, BHA sent confirmation letters to loan recipients expecting response by
January of 2007. However, that effort did not increase the accuracy of the ledger used to
track the loan balances and payments applied. Nor did it improve the record keeping in
relation to payments made by loan recipients. We recommend that management perform a
reconciliation of the ledger using bank statements to verify the loans and payments. This
reconciliation should stretch back as far as deemed necessary by management using a cost
benefit analysis of the resources available versus quality of the information both to the
financial statements and to the recipients.

Status - This is a repeat recommendation from the June 30,2006 audit.

Page 12
CITY OF BERKELEY, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Deficiency 07-02 - During our audit of BHA for the fiscal year ended June 30, 2007 we noted
significant deficiencies in internal control design and operation for the Section 8 Voucher
program.

The following summarizes the results of internal control and compliance tests we performed for
thirty tenant files sampled from the Section 8 program.

1. Four samples were missing the Housing Assistant Payment (the "HAP") contract.
2. In one sample a copy of the birth certificate was not on file which was required to verify
citizenship.
3. One sample was missing the family report.
4. Two samples had family reports that were completed more than 90 days after the
anniversary date.
5. Ten samples were missing waiting list information.
6. In one sample, the utility calculation was not done correctly.
7. One sample was missing the housing quality standard (the "HQS") inspection report.
8. In one sample, the income re-examination information was the same as last year.

The following summarizes similar findings we had in the 2006 audit and is presented here for
comparison purposes.

1. Five samples were missing the Housing Assistant Payment (the "HAP") contract.
2. In one sample the actual HAP amount did not match with the amount on the HAP
contract.
3. Four samples were missing the family report.
4. Two samples were missing supporting documentation verifying bedroom size.
5. One sample was missing supporting documentation verifying the social security number.
6. Thirteen samples were missing waiting list information.
7. In three samples, the income calculations were done incorrectly.
8. Eleven samples were missing the housing quality standard inspection report.
9. The annual re-certification process was not done in eight samples.
10. One tenant file could not be located by BHA.

The primary cause of the conditions noted is a lack of monitoring over programs at the Berkeley
Housing Authority (the "Authority"). The monitoring is insufficient mostly because the City's
housing authority does not have adequate resources and personnel to manage the Authority's
caseload.

Recommendation - Based on our procedures performed during the audit of the BHA, we
recommend that the BHA create and implement procedures that will achieve the following:
1. Eligibility Process - BHA should collect application data, verify income eligibility
(including third party verifications), calculate rent, and perform annual re-
certifications and inspections.
10

Page 13
CITY OF BERKELEY, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

2. Reasonable Rent Determination - BHA should have written procedures as to how they
determine rent reasonableness, and should conduct tests on properties to be assisted,
including checking for comparability as required by the Department of Housing and
Urban Development.
3. Utility Allowance Schedule - BHA should conduct utility allowance surveys on an
annual basis and the surveys should be used in the determination of total tenant
payments, which in part determines the Housing Assistance Payment.
4. HQS Inspections and Enforcement - Under the Section 8 Programs administered by
BHA, they should inspect each and every unit prior to initial occupancy and annually,
thereafter; and enforce decent, safe, and sanitary standards as a condition of providing
federal rent assistance payments.
All aspects of the housing assistance process should revolve around the findings of the
Housing Inspectors. No recertification or initial move-in should be approved until inspections
are conducted. A utility allowance survey should be conducted immediately and rent
adjustments made accordingly.
Status - Repeat recommendation. While the findings did decrease from prior year, a
documentation issue still exists as evidenced by the amount of missing items noted during the
current audit. Although BHA has taken steps to improve their filing systems and
maintenance, they still have a high rate of missing documentation as noted above.
11

Page 14
CITY OF BERKELEY, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
FOR THE FISCAL YEAR ENDED JUNE 30,2007

Finding 06-01 - During our audit of the Berkeley Housing Authority (the "Authority") for the
fiscal year ended June 30, 2006, we noted significant deficiencies in internal control design and
operation for the Section 8 Voucher program.

The following summarizes the results of internal control and compliance tests we performed for
30 tenant files sampled from the Section 8 program.

1. 5 sampled tenant files were missing the Housing Assistant Payment ("HAP") contract.
2. The actual HAP amount did not match with the amount on the HAP contract in 1 sampled
file.
3. 4 sampled tenant files were missing the family report.
4. Missing supporting documentations to verify bedroom size in 2 sampled tenant files.
5. Missing supporting documentations to verify the social security number in 1 sampled
tenant file.
6. 13 sampled tenant files were missing waiting list information.
7. The income calculations were done incorrectly in 3 sampled tenant files.
8. The housing quality standard inspection report was missing in 11 sampled tenant files.
9. The annual re-certification process was not done in 8 sampled tenant files.
10. The Authority cannot locate 1 sampled tenant file.

Questioned Costs - None noted.

Cause - The primary cause of the conditions noted is a lack of monitoring over programs at
the Authority. The monitoring is insufficient mostly because the Authority does not have
adequate resources and personnel to manage the Authority's caseload.

Recommendation - Since the findings noted are similar to prior year, we repeat our
recommendations as follows:

1. Eligibility and Re-certification Process - The Authority should collect application
data, verify income eligibility (including third party verifications), calculate rent, and
perform annual re-certifications and inspections in a timely manner.

2. HQS Inspections and Enforcement - Under the Section 8 voucher program
administered by the Authority, they should inspect each and every unit prior to initial
occupancy and annually, thereafter, and enforce decent, safe and sanitary standards as
a condition of providing federal rent assistance payments.

Progress and Status - Management concurs with the recommendations and has implemented
a corrective plan to eliminate the findings identified in this audit.

The management issues identified in this audit report are consistent from year to year. With
constant changes in management (almost annually the past 5 years), it has been difficult to
12

Page 15
CITY OF BERKELEY, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

fully implement any corrective action plan and see the benefits carry from one year to the
next. We have again embarked upon a period of improvement including:

1. A comprehensive revision of the Administrative Plan building upon policies and
practices adopted by the Alameda County Housing Authority, and the Oakland
Housing (two high performing agencies).
2. We have identified major discrepancies with data in the (Elite) computer system.
Efforts are underway to clean up the data; grant staff appropriate access to perform
required functions. We are gleaning best practices information from other agencies
utilizing the Elite system, and increasing our active participation in the Elite users
group.
3. Currently the annual two-phase recertification process (inspection and income
eligibility) are decoupled, making tracking difficult. The BHA Manager is working
with Information Technology to compare the "inspection" and "income
recertification" databases so the two functions can be synced, with a single
caseworker held accountable.
4. A system for performing periodic SEMAP reviews in an effort to anticipate the year-
end certification. A form has been developed (SEMAP Indicator 1) to access the
components; line staff was instructed (via a hands on exercise) on the impact of each
error has on the SEMAP certification.
5. Purchasing "GoS8", an interactive Rent Reasonableness database service offered by
NanMcKay and Associates, a recognized leader in the assisted housing industry.

Finding 05-01 - During our audit of the Authority for the fiscal year ended June 30, 2005, we
noted significant deficiencies in internal control design and operation with respect to inspections,
re-certifications, eligibility, waiting lists, record retention, records maintenance, and access to
records for the Low-Income Public Housing ("LIPH") and Section 8 Voucher programs.
The following summarizes the results of internal control and compliance tests we performed for
tenant files sampled, by program.

1. LIPH Program - From 57 tenant files, we selected 10 files for testing and noted the
following:
• 8 files were missing the annual inspection report.
• 3 tenants were living in units with the wrong bedroom sizes.
• 1 tenant did not have their inspection completed before moving in.
13

Page 16
CITY OF BERKELEY, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

• 2 tenants did not have their recertification completed, which could lead to
incorrect rent payments since there was no information certifying the current
income of the tenants.

2. Section 8 Voucher Program - From 1800 tenant files, we selected 30 files for testing and
noted the following:

• 8 tenant files did not have current annual Housing Quality Standard (HQS)
inspections.
• 1 tenant file indicated that the rent was over the current fair market rent.
• 2 tenant files did not have the Family Report; therefore, the number of family
members could not be verified.
• 2 tenant files did not have the current annual income re-examination worksheet;
therefore, rent calculations could not be verified.
• 7 tenant files did not have the original application or any other form of
documentation that could be used to verify the tenant was next in line on the
waiting list. In many cases, based on Authority employee interviews, the original
applications had been purged from the files at the discretion of Authority staff.
This creates an opportunity for preferential treatment and violates fair housing
practices since not all applicants on the waiting list have the same opportunity to
be selected for assistance. See finding 05-03 for additional findings and
recommendations related to the waiting lists.

In general, these deficiencies are notable throughout the overall administration of the Authority
and are reportable conditions that require immediate correction. In addition to the above detailed
findings, through interviews of management and non-management staff, and further review of
tenant files, we concluded that: inspections are approximately one month behind schedule and
are not completed on many units; tenant data worksheets and re-certifications are not prepared in
conjunction with tenant processing; tenant fiscal data sheets are authorized without support and
without documentation of approved inspections which are required to ensure compliance with
federal guidelines; the Authority allows the issuance of payments for tenants that do not have
documentation of re-certifications or inspections in tenant files; fiscal data sheets are filed for
failed inspections and holds are subsequently placed on tenant checks after tenants have already
moved in which is a timing issue since the results of the inspections should be filed before
checks are authorized for payment; rent reasonableness tests are performed at the time of
inspections and since the inspections are behind schedule, rent payments are made before
reasonableness tests have been performed; and rent payments have been made without current
utility allowance information. We also noted that the Authority has not completed a Utility
Allowance survey since 2003. The Authority continues to calculate rents and utilities using
outdated information.

Questioned Costs - None noted.
14

Page 17
CITY OF BERKELEY, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Cause - The primary cause of the conditions noted is a lack of monitoring over programs at
the Authority. The monitoring is insufficient mostly because the Authority and the City do
not have adequate resources and personnel to manage the Authority's caseload.

Recommendation - Based on our procedures performed during the audit of the Authority, we
recommend that the Authority create and implement procedures that will achieve the
following:

1. Eligibility Process - The Authority should collect application data, verify income
eligibility (including third party verifications), calculate rent, and perform annual re-
certifications and inspections.
2. Reasonable Rent Determination - The Authority should have written procedures as to
how they determine rent reasonableness and have tests conducted on every property to
be assisted, including inspecting for condition and comparability.
3. Utility Allowance Schedule - The Authority should conduct utility allowance surveys
on an annual basis and the surveys should be used in the determination of total tenant
payments, which in part determines the Housing Assistance Payment.
4. HQS Inspections and Enforcement - Under the Section 8 Programs administered by
the Authority, they should inspect each and every unit prior to initial occupancy and
annually, thereafter, and enforce decent, safe and sanitary standards as a condition of
providing federal rent assistance payments.

In conclusion, the Authority should review staffing patterns and redistribute the workload to
efficiently comply with all aspects of the recertification and eligibility process. All aspects of
the process should revolve around the findings of the housing Inspectors. No Recertification
or initial move-in should be approved until inspections are conducted. A Utility Allowance
Survey should be conducted immediately and rent adjustments made accordingly. All staff
should be retrained and, as a condition of employment, be required to implement program
requirements consistently. All corrective actions should be coordinated with the City, as
needed, and subsequently reviewed by the City for adequacy. Future follow-up and City
assistance will be required to ensure that control designs are sufficient and in operation.

Progress and Status
1. Eligibility Process - This recommendation was not implemented as of June 30, 2006
and there were recurring findings for the year ended June 30, 2006. As of January 31,
2007, a checklist has been established for all annual and interim re-certifications. The
checklist requires staff to verify the presence of documents for the file as well as
verification that computer entries have been confirmed. In addition, the
administrative plan has been revised to clarify when a 3rd party is required and when
exceptions can be made.
15

Page 18
CITY OF BERKELEY, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

2. Reasonable Rent Determination - This recommendation was partially implemented
and there were recurring findings for the year ended June 30, 2006. As of January 31,
2007, staff has utilized three resources to document rent reasonableness: (1) The
Agency has purchased and now relies on "Go Section 8" software developed and
managed by Nan McKay and Associates as the primary source for rent reasonableness
analysis; (2) as necessary, staff obtains rent comparability data from Craig's List; (3)
staff requires the owner to provide rent comparability data for a minimum of 2-3 units
for all new contracts.

3. Utility Allowance Schedule - Our recommendation has been implemented as of June
30, 2006. The newly adopted utility allowances have been applied to all new contracts
and to existing contracts at the time of annual re-certification.

4. HQS Inspections and Enforcement - This recommendation was not implemented and
there were recurring findings for the year ended June 30, 2006. As of January 31,
2007, the following steps had been taken to implement our recommendation.

A. New Contracts: Staff has always required a "passed" inspection as a
prerequisite to all new contracts; because of the way the work was divided
internally, the inspection report was not always placed in the tenant file in a
timely manner.

B. Annual Recertification: "Sterling Inc", a consultant in the area, was hired to
perform the annual unit inspection. The past due inspections have been
performed, and are currently being performed 30-60 days prior to the contract
anniversary.

Finding 05-02: Recertification Processing - During our testing, we noted that there was a lack
of consistency in the methods used by the Authority staff to process re-certifications, and it is not
clear if staff know the sequential process over the administration of the Authority programs. For
example, inspectors send out their own letters of re-certification, one staff member generates
inspection letters for their case load while another does not, housing inspectors schedule their
own inspections and re-certifications, one staff requires re-certification one on one while another
sends letters to schedule an appointment. Basically, there is a conflict between administrative
and operational duties.

Questioned Costs - None noted.

Cause - The primary cause of the condition(s) noted is the Authority and the City do not have
adequate resources and personnel to manage the Authority's caseload.
Recommendation - The optimal situation would be that inspectors have as limited
administrative responsibility as possible, and that a clerical person be assigned to assist and
16

Page 19
CITY OF BERKELEY, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

organize those duties. At a minimum, the job responsibilities of the inspectors should be
redefined and standardized procedures should be implemented. The City should oversee the
Authority's plans to restructure these job duties and review the procedures and changes
implemented to ensure they adequately address the findings noted.

Progress and Status - Our recommendation for this finding was not implemented as of June
30, 2006. As of January 31, 2007, significant progress had been made to complete past due
re-certifications and ensure that every family is recertified every 12 months. A procedure has
been implemented requiring regular review of "error reports" from the HUD system and
requisite corrections to ensure that all completed work is properly credited.

Finding 05-03: Waiting Lists - During our testing, we noted that the Authority maintains
multiple waiting lists to identify and control tenants applying for housing subsidies. There are
three major problems with the waiting lists: (1) the sequence dates on the lists are different than
the application dates, (2) many of the applicants do not have original documentation supporting
the sequence date in the waiting lists since that information was incorrectly filed, purged from the
file, or otherwise not available, and (3) multiple staff have access to the waiting lists and can
manipulate the lists at their discretion.

Questioned Costs - None noted.

Cause - The primary cause of the condition(s) noted is the Authority and the City do not have
adequate resources and personnel to manage the Authority's caseload.

Recommendation - The Authority should establish written policies as to how it administers
its waiting list and a person independent of that function should review the process to ensure
those procedures have been followed. In order to minimize manipulation, the waiting list
should be restructured to provide minimum access for changing tenant data, complete with an
accountability system so that staff with access are aware of the changes. The City should
review the procedures developed by the Authority for adequacy in relation to the findings
noted.

Progress and Status - The implementation of our recommendation for this finding was in
progress as of June 30, 2006. As of January 31, 2007, BHA had completed a purge of the
Section 8 Housing Choice Voucher program wait list. A new list has been developed and
reconfirmed applicants have been advised of their placement on the wait list. The only new
assistance granted families had been for project based assistance. Evidence of their position
on the wait list is a part of each participant file.

Finding 05-04: Records Accountability and Access - During our testing, we noted the
following administrative weaknesses related to records accountability and access:
• There is no centralized filing system maintained by the Authority.
17

Page 20
CITY OF BERKELEY, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

• While there are checklists of the documentation contained in most files, there are no
checklists of what documentation "should" be kept in files; i.e. a required documentation
checklist.
• There is no system in place to ensure that each file contains a record of eligibility and
fund disbursement authorization.
• There is no assignment of responsibility over file maintenance. Three staff may have
access to a file at various stages, but not any one staff has overall responsibility to ensure
that file documentation is complete.
• Too many staff have access to client information in the Authority's computerized
database. This access should be limited to specific caseload assignments.
• Access to physical files is not sufficiently limited since staff take files home in an effort
to catch-up with the file review. This practice should be completely eliminated. Tenant
files contain personal information and should never leave the Authority.
• Records are shredded after three years, even if the case is active, using volunteers.

Questioned Costs - None noted.

Cause - The primary cause of the condition(s) noted is the Authority and the City do not have
adequate resources and personnel to manage the Authority's caseload.

Recommendation - The Authority's overall file maintenance should be re-organized and the
re-organization should begin with the development and implementation of procedures that
will address the deficiencies noted above. We recommend that the City review the
implementation of administrative procedures needed to correct the internal control
weaknesses noted above and assist the Authority as needed in the development of those
procedures. Legal counsel may be needed to determine the legal ramifications surrounding
access to tenant information contained in the Authority's files and if the use of volunteers to
shred tenant information is legally acceptable.

Progress and Status - BHA is currently looking into a new file management system.
However, many of the same findings noted in the fiscal year 2005 still remain. Subsequent to
the audit for June 30, 2006, quotes have been obtained and a vendor identified for the
purchase of a new filing system, including 5-part case files. In response to errant filing, staff
reviewed each file drawer and correctly filed all participant files. The checklist developed for
annual and interim re-certifications provides staff guidance in determining the required file
components. Management continues a practice of periodic 100% or random selection for case
file audits.

Finding 05-05: Staffing - During our audit we noted that the Authority is understaffed and does
not sufficiently coordinate existing staff responsibilities to achieve maximum efficiency. In
addition, staff assignments are constantly changing because the workload makes it difficult to
learn and follow procedures. We also noted that 56% of a Management Analysts position at the
City is paid from the Authority administrative budget, but the functions performed by this
18

Page 21
CITY OF BERKELEY, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
FOR THE FISCAL YEAR ENDED JUNE 30,2007

position on behalf of the Authority are unclear. Finally, the Authority spends $35,000 annually
for a temp agency that does not support the Authority staff needs.
Questioned Costs - None noted.

Cause - The primary cause of the condition(s) noted is the Authority and the City do not have
adequate resources and personnel to manage the Authority's caseload.

Recommendation - The Authority should review its staffing patterns and redistribute
workloads. The review and reorganization of the Authority staffing should prioritize the
inspector positions and should involve human resources to consult with applicable bargaining
units to ensure that staff are not performing duties outside of their job class. The function of
the Management Analysts position as it relates to the Authority should be reviewed and
clearly identified by the City. The third party consultant providing support services to the
Authority should be replaced by additional City support or additional staffing at the
Authority, concurrently or soon after internal control weaknesses identified in this letter have
been corrected.

Progress and Status - BHA has worked closely with the Finance department to create a
corrective action plan that will be effective in resolving the issues surrounding the day to day
operations at the Authority. However, BHA has not had the resources to implement the
recommendation as noted above. A "corrective action plan" was submitted to HUD as part
of the FY05-06 SEMP Certification. Staff continues to make progress on each of the
indicators.
19

Page 22
CITY OF BERKELEY, CALIFORNIA
CORRECTIVE ACTION PLAN
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Corrective Action Plan to Deficiency 07-01
Management concurs with the recommendations and has implemented a corrective plan to
eliminate the findings identified in this audit.

Several process improvements have been implemented since the on-site visit from the auditor.

1) Copies are made of all deposit receipts and back-up documentation. These are kept in a
designated binder for SDLF.
2) All accounts have been reconciled and posted for current year 07/08.
3) Reconciliation of prior fiscal years will be attempted with most recent current years first,
using bank deposit data (if available).
4) Any outstanding balances dating back two fiscal years will be written off since it is be
more cost-prohibitive due to limited BHA accounting resources.

Corrective Action Plan to Deficiency 07-02

1) The staff previously responsible for performing eligibility functions have been terminated and
new staff are in place.
There are formal procedures governing the initial and re-examination of family eligibility.
New and/or revised forms were developed to ensure more complete reporting from families.
A check-list has been developed and is included in each participant file.
RHCP and LIPH were previously privately managed. The contract was not renewed after
June 30, 2007 when it expired, in large part due to failure to perform. A combination of in-
house and contracted services are currently performing the required program functions of
these programs.
2) BHA contracted with NanMcKay and now uses "GoS8" software for rent comparables
(comps). A minimum of 2 comps are obtained for each new contract. In addition a "rent
reasonableness" worksheet has been developed for owners to complete. This new form
provides detailed information about the amenities in the unit; this form is required for all new
contracts and contract rent increases.
3) The utility allowance was revised effective March 2007, approved by the Board of
Commissioners in December 2007. The Management Analyst position once filled will be
responsible for recalculating the utility allowance schedule on an annual basis.
4) Inspection services for the S8 program have been contracted out for the past two years.
Inspections are scheduled in accordance with established HUD guidelines, and with minimal
exceptions (i.e. family no-show), over 90% of the units were inspected as required during the
year.
20

Page 23
CITY OF BERKELEY, CALIFORNIA
CORRECTIVE ACTION PLAN
FOR THE FISCAL YEAR ENDED JUNE 30,2007

HUD SEMAP indicator #11 tracks pre-contract inspections, and the PHA fails the indicator if
more than 2% of the new contracts lack an inspection. The BHA passed this indicator with
only 1 unit not having a passed inspection prior to the effective date of the contract.
Note: Due to staffing shortages the inspection reports were not filed in a timely manner. Current
procedure is to file all inspection reports within one week of completion.
Inspection services for the LIPH and RHCP program were contracted out. The contractor
performed 100% of the required inspections during June 2007, although the contract
terminated before appropriate follow up was performed. The contract was not renewed when
it expired on June 30, 2007.

Contact Person Responsible for All Corrective Actions Above
Tia Ingram, Executive Director of the Berkeley Housing Authority, (510) 981-5471

>>>>>>>>
>>>>>>>>
>>>>>>>>
Page 36
REVISED
CITY OF BERKELEY, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Section II - Financial Statement Findings
During our audit of the City's Housing Authority ("Berkeley Housing Authority") for the fiscal
year ended June 30, 2007, we noted significant deficiencies in internal control design and
operation as described in section III of this schedule as Deficiency 07-02.

Section III - Federal Award Findings and Questioned Costs
Deficiency 07-02: Section 8 Vouchers - CFDA #14.871. U.S. Dent, of HUD
Criteria - Federal guidelines require local governments to sufficiently maintain files so that
supporting documentation can be provided evidencing each entity's compliance with federal
procedures.

Condition - During our audit of BHA for the fiscal year ended June 30, 2007 we noted
significant deficiencies in internal control design and operation for the Section 8 Voucher
program.

The following summarizes the results of internal control and compliance tests we performed for
thirty tenant files sampled from the Section 8 program.

1. Four samples were missing the Housing Assistant Payment (the "HAP") contract.
2. In one sample a copy of the birth certificate was not on file which was required to verify
citizenship.
3. One sample was missing the family report.
4. Two samples had family reports that were completed more than 90 days after the
anniversary date.
5. Ten samples were missing waiting list information.
6. In one sample, the utility calculation was not done correctly.
7. One sample was missing the housing quality standard (the "HQS") inspection report.
8. In one sample, the income re-examination information was the same as last year.

The following summarizes similar findings we had in the 2006 audit and is presented here for
comparison purposes.

1. Five samples were missing the Housing Assistant Payment (the "HAP") contract.
2. In one sample the actual HAP amount did not match with the amount on the HAP
contract.
3. Four samples were missing the family report.
4. Two samples were missing supporting documentation verifying bedroom size.
5. One sample was missing supporting documentation verifying the social security number.
6. Thirteen samples were missing waiting list information.
7. In three samples, the income calculations were done incorrectly.

Page 37
REVISED
CITY OF BERKELEY, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

8. Eleven samples were missing the housing quality standard inspection report.
9. The annual re-certification process was not done in eight samples.
10. One tenant file could not be located by BHA.

Questioned Costs - We were unable to identify any known or likely questioned costs.
Context - This is a repeat recommendation. While the findings did decrease from prior year, a
documentation issue still exists as evidenced by the amount of missing items noted during the
current audit. Although BHA has taken steps to improve their filing systems and maintenance,
they still have a high rate of missing documentation as noted above.
Effect - BHA, as a component unit of the City, was not in compliance with the documentation
requirements of the Section 8 Vouchers program. The missing documentation made it difficult
to verify BHA's compliance with other sections of the program. This deficiency could lead to
penalties from HUD and other federal agencies.

Cause - The primary cause of the conditions noted is a lack of monitoring over programs at the
Berkeley Housing Authority (the "Authority"). The monitoring is insufficient mostly because the
City's housing authority does not have adequate resources and personnel to manage the
Authority's caseload.

Recommendation - Based on our procedures performed during the audit of the BHA, we
recommend that the BHA create and implement procedures that will achieve the following:

1. Eligibility Process - BHA should collect application data, verify income eligibility
(including third party verifications), calculate rent, and perform annual re-certifications
and inspections.
2. Reasonable Rent Determination - BHA should have written procedures as to how they
determine rent reasonableness, and should conduct tests on properties to be assisted,
including checking for comparability as required by the Department of Housing and
Urban Development.
3. Utility Allowance Schedule - BHA should conduct utility allowance surveys on an
annual basis and the surveys should be used in the determination of total tenant
payments, which in part determines the Housing Assistance Payment.
4. HQS Inspections and Enforcement - Under the Section 8 Programs administered by
BHA, they should inspect each and every unit prior to initial occupancy and annually,
thereafter; and enforce decent, safe, and sanitary standards as a condition of providing
federal rent assistance payments.
10

Page 38
REVISED
CITY OF BERKELEY, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007

All aspects of the housing assistance process should revolve around the findings of the Housing
Inspectors. No recertification or initial move-in should be approved until inspections are
conducted. A utility allowance survey should be conducted immediately and rent adjustments
made accordingly.

Views of Responsible Officials and Planned Corrective Actions - The staff previously
responsible for performing eligibility functions have been terminated and new staff are in place.
There are formal procedures governing the initial and reexamination of family eligibility. New
and/or revised forms were developed to ensure more complete reporting from families. A check-
list has been developed and is included in each participant file.

RHCP and LIPH were previously privately managed. The contract was not renewed after June
30, 2007 when it expired, in large part due to failure to perform. A combination of in-house and
contracted services are currently performing the required program functions of these programs.
1. BHA contracted with NanMcKay and now uses "GoS8" software for rent comparables
(comps). A minimum of 2 comps are obtained for each new contract. In addition a "rent
reasonableness" worksheet has been developed for owners to complete. This new form
provides detailed information about the amenities in the unit; this form is required for all
new contracts and contract rent increases.

2. The utility allowance was revised effective March 2007, approved by the Board of
Commissioners on December 07. The Management Analyst position once filled will be
responsible for recalculating the utility allowance schedule on an annual basis.

3. Inspection services for the S8 program have been contracted out for the past two years.
Inspections are scheduled in accordance with established HUD guidelines, and with
minimal exceptions (i.e. family no-show), over 90% of the units were inspected as
required during the year.

4. HUD SEMAP indicator #11 tracks pre-contract inspections, and the PHA fails the
indicator if more than 2% of the new contracts lack an inspection. The BHA passed this
indicator with only 1 unit not having a passed inspection prior to the effective date of the
contract.

Note: Due to staffing shortages the inspection reports were not filed in a timely manner.
Current procedure is to file all inspection reports within one week of completion.

5. Inspection services for the LIPH and RHCP program were contracted out. The contractor
performed 100% of the required inspections during June 2007, although the contract
terminated before appropriate follow up was performed. The contract was not renewed
when it expired on June 30, 2007.
11

(Audit of the City of Berkeley for FY 2007, including the Berkeley Housing Authority Audit -- Report was dated and issued on March 10, 2008 )

Just in case the other link to the full audit of Berkeley / Berkeley Housing Authority is in error, the following Quickview link below should work...


CITY OF BERKELEY, CALIFORNIA
SINGLE AUDIT ACT
JUNE 30, 2007


Click below for complete audit report dated March 10, 2008...

Quickview -- http://tinyurl.com/yaocphz

Berkeley Housing Authority
(Archived links through Google)

http://tinyurl.com/ye5z6he


^^^^^^^^^^^^^^^^^^^^^
The following are more recent articles;


Title: The struggle over Berkeley's public housing program...


BHA attempts to block residents from buying their long-time public housing units

By Lynda Carson -- March 19, 2010

http://www.indybay.org/newsitems/2010/03/19/18641981.php

>>>>>>>>>
Berkeley's scheme to privatize public housing, double-crosses the poor

By Lynda Carson -- March 16, 2010

Click below....

http://www.indybay.org/newsitems/2010/03/16/18641467.php

>>>>>>>>
(SF Bay View)
Berkeley Housing Authority's shady operations -- San Francisco Bay View

March 6, 2010 -- According to documents recently released online by the Office of the City Manager in Berkeley, the Berkeley Housing Authority (BHA) may ...

Click below for full story...

http://www.sfbayview.com/2010/berkeley-housing-authority’s-shady-operations/

>>>>>>>>>>>
(Urban Habitat)

Berkeley Housing Authority's shady operations
Dateline: 03/06/2010

By Lynda Carson
Berkeley – According to documents recently released online by the Office of the City Manager in Berkeley, the Berkeley Housing Authority (BHA) may receive kickbacks from a local non-profit housing developer in a scheme to privatize, revitalize and sell off its public housing. The scheme involves a vice president of consultant ICF International.

Click below...
http://urbanhabitat.org/node/5270
>>>>>>>>>>>
(Available on Media Freedom Foundation on PNN)
Berkeley Housing Authority's shady operations · Frank Greene, Silicon Valley technology pioneer, dies at 71 · Oscar nomination for Music by Prudence about ...

Click below for media news links...

http://mediafreedom.pnn.com/5174-independent-news-sources

>>>>>>>>>>>
(Oakland Post)
BHA May Get Benefits From Privatizing It's Public Housing Sites

by Lynda Carson -- March 5th, 2010

Click below...

http://www.postnewsgroup.net/postnewsgroupcom/?p=5249

>>>>>>>>>>>
Shady operations in the Berkeley Housing Authority, may involve ICF International

by Lynda Carson -- March 3, 2010

Click below...

http://www.indybay.org/newsitems/2010/03/03/18639429.php

>>>>>>>>>>>
BHA may get kickbacks for privatizing it's public housing sites

by Lynda Carson -- February 28, 2010

Click below...

http://www.indybay.org/newsitems/2010/02/28/18639061.php

>>>>>>>>>>>>>
(Post Group Newspapers)
Berkeley Public Housing Tenants Demand Resignations

by Lynda Carson -- February 1, 2010

Click below...

http://www.postnewsgroup.net/postnewsgroupcom/?p=4853

>>>>>>>>>>>>>
(Berkeley Daily Planet Newspaper)

Berkeley to Sell Off Public Housing Stock
By Riya Bhattacharjee

Berkeley Daily Planet -- Thursday January 07, 2010

Click below...

http://tinyurl.com/yb6hupx

>>>>>>>>>>>>>
Local Housing Authority Plans To Privatize Units

Stephanie Baer, The Daily Californian, 1/21/2010

Click below...

http://tinyurl.com/yhngdxo

http://www.dailycal.org/issue.php?id=2391

>>>>>>>>>>>>>
Tenants Rally Against Sale Of Public Housing

Riya Bhattacharjee, Berkeley Daily Planet, 1/21/2010

Click below...

http://tinyurl.com/ybvsjdn

>>>>>>>>>>>>>
City's Plan To Sell Public Housing Raises Tenants' Concern
Stephanie Baer, The Daily Californian, 1/20/2010

Click below...

http://tinyurl.com/yhyzsk9

>>>>>>>>>>>>>
(Indy Bay News Wire)

Berkeley's public housing residents oppose privatization of their housing

by Lynda Carson ( tenantsrule [at] yahoo.com )
Saturday Jan 2nd, 2010 4:50 AM

Click below...

http://www.indybay.org/newsitems/2010/01/02/18634048.php

>>>>>>>>>>>
(California Black Media)

Berkeley Public Housing Residents Oppose Privatization
Friday, 08 January 2010 09:32

By Lynda Carson ... Click below...

http://tinyurl.com/yzp9sa3

>>>>>>>>>>>
(January Issue of Street Spirit Newspaper)

Berkeley's public housing residents oppose privatization

by Lynda Carson

Copy not available on-line...

>>>>>>>>>>>
(February Issue of Street Spirit)

Berkeley Public Housing Tenants Demand Resignations

by Lynda Carson

Copy not available on-line...

>>>>>>>>>>>
(Berkeley Daily Planet Newspaper)

Partisan Position: Residents Oppose Privatization of Berkeley Public Housing

By Lynda Carson

Berkeley Daily Planet -- Thursday January 07, 2010

Click below...

http://tinyurl.com/yajn84p

>>>>>>>>>
(Berkeley Post Newspaper)
Berkeley’s public housing residents oppose privatization

By Lynda Carson -- January 6 - 12

Click below...

http://tinyurl.com/ybhkhgk

>>>>>>>>>
(SF Bay View Newspaper)

January 4, 2010
Berkeley’s public housing residents oppose privatization

By Lynda Carson

Click below...

http://tinyurl.com/y874tvm

>>>>>>>>>>>>>
(January 23, 2010 -- San Francisco Bay View Newspaper)
Berkeley public housing tenants demand resignations

by Lynda Carson

Click below...

http://tinyurl.com/yfrtwvq

http://www.sfbayview.com/2010/berkeley-public-housing-tenants-demand-resignations/

>>>>>>>>>>>>>>
(Most Popular Websites)
Berkeley public housing tenants demand resignations

Click below...

http://tinyurl.com/ybrnoml

>>>>>>>>>>>>>>
Berkeley Public Housing Tenants Demand Resignations
Lynda Carson, Bay Area Indymedia, 1/20/2010

Click below...

http://www.indybay.org/newsitems/2010/01/20/18635737.php

>>>>>>>>>>>>>
(Los Angeles Indy Media)
Berkeley public housing residents demand resignations


by Lynda Carson Friday, Jan. 22, 2010 at 9:50 PM

Click below...
http://la.indymedia.org/news/2010/01/234245.php

>>>>>>>>>>>>>
News > Housing - The Daily Californian
A plan to sell Berkeley's 75 public housing units to private developers was approved by the Berkeley Housing Authority in December...Read More" ...

Click below...

http://www.dailycal.org/category.php?id=21

>>>>>>>>>>>>>
(Urban Habitat)
Berkeley's public housing residents oppose privatization of their housing
Dateline: 01/01/2010
Source: Indy Bay

By Lynda Carson

Click below...

http://www.urbanhabitat.org/node/5073

Berkeley Housing Authority (BHA) Strategic Plan To Kill Berkeley's Public Housing Program

See Berkeley / BHA report...


Berkeley Housing Authority
LIPH/RHCP Strategic Plan
Prepared by EJP Consulting Group LLC
Final Report (7/3/09

Click below...

PDF file -- http://tinyurl.com/yexa26a

Or click on the Quickview Link to EJP's report to the BHA -- http://tinyurl.com/yg2p95h

Published on the Los Angeles Indy Media News Wire...

Click below...

http://la.indymedia.org/news/2010/03/236247.php


[[[Berkeley's mostly African-American public housing residents are not wanted by local nonprofit housing developers that are interested in the proposal to sell Berkeley's 75 public housing units!]]]


Local nonprofit developers are interested in Berkeley's
public housing properties, minus the poor residents

By Lynda Carson -- March 21, 2010

Berkeley -- During April 2009, the Berkeley Housing Authority (BHA) hired EJP/Praxis consultants to develop a strategic plan to assess options for what to do with it's public housing units, including the option to continue with it's public housing program, or the option to dispose of it's 75 public housing units through the Housing and Urban Development (HUD) disposition process, or to seek other options to meet the goals of the BHA, according to a July 3, 2009 report titled "Berkeley Housing Authority LIPH/RHCP Strategic Plan," prepared by EJP Consulting Group LLC, for the BHA.

Based upon information provided by the BHA to the consultants, nearly 72.9% of it's public housing tenants earn less than $30,000 annually. Additionally, 86.5% of the residents in the BHA's public housing program identify themselves as Black / African-American, 11.2 % as white, and 2.2% as Asian, and that the BHA only makes around $607 per month from federal subsidies, including rent collected from the tenants for a three to four bedroom public housing unit.

Out of the options being offered by the consultants as to what to do with the public housing units, the BHA chose to dispose of it's occupied public housing units and filed a Disposition Plan (inventory removal plan) with HUD on or around Dec. 31, 2009, in an effort to kill it's public housing program, and sell the properties to one or more local nonprofit developers. HUD is expected to approve the disposition plan by early April.

Additionally, the BHA's consultants have been in discussions and interviews with local nonprofit developers, property managers and funders to test the feasibility of the BHA's plans, in an effort to see who would be interested in buying and managing Berkeley's public housing units. The discussions included, Ryan Chao, director of Satellite Housing, Dan Sawislak, director of Resources for Community Development, Susan Friedland and Angela Cavanaugh of Affordable Housing Associates, Jack Gardner, President and CEO of the John Stewart Company, Margaret Schrand, VP and Manager of Wells Fargo Bank, Community Lending Division, and Christine Daniel, Deputy City Manager, City of Berkeley.

According to the consultant's report, during the discussions taking place, specific concerns were expressed by those being interviewed who believed that Berkeley's public housing residents are highly politicized and organized, and are worried about the ability for a new owner or property manager to successfully carry out lease enforcement, in the Berkeley setting.

Those responding to the consultants also mentioned the potential political and financial risks to their organizations if they were to take on such a high profile and challenging redevelopment scheme.

Berkeley's public housing tenants are now facing displacement and eviction as a direct result of the consultants findings, for the BHA. There is very little turnover of the housing units, and the families have been there for a very long time according to BHA staff who noted that no one has moved in recent memory, except for three families who moved due to evictions. In addition, except for three rental units needing renovation, Berkeley's 75 public housing units are fully occupied, according to the report.

In response to the plight of Berkeley's public housing tenants, "It's reprehensible that Berkeley, a city in the forefront of social justice movements, that the citizens would not rise up against the dishonesty of the greed of the developers and their influence on the BHA. I for one, would encourage more organization among Berkeley's tenant population to strongly oppose these draconian measures," said former Commissioner of Berkeley's Rent Stabilization Board, Eleanor Walden.

Public housing tenant Keith Carlisle said, "Among the dead and the living, Ray Charles, Stevie Wonder, Helen Keller and other blind and sighted people, clearly can see the objectives of the BHA, which are to run poor black people out of Berkeley under the thinly veiled guise of urban renewal. This is nothing short of ethnic and economic cleansing."

Lynda Carson may be reached at tenantsrule [at] yahoo.com

Clarification: ---Disposition Process Timeline ---

I am the one who posted the dates and timetable for the Timeline disposition process on the Indy Bay website, but it was someone with the Berkeley Housing Authority that put that time table together. There was no name or date on the on-line document.

Regarding the Timeline information, it should be noted that nonprofit housing developer partnerships with Public Housing Authority's all across the nation, are notorious.

They work together to develop projects that end up displacing tens of thousands of poor people who never manage to move back into their former public housing locations, because the new rules being imposed on them by the new owners often make it impossible for the poor to jump the hurdles to relocate back into the finished housing projects.

For instance, the federal Hope VI program involving partnerships with nonprofit housing developers and Public Housing Authority's to renovate public housing buildings all across the nation have displaced tens of thousands of poor people from their public housing. The public housing residents were all promised that the rehabilitation project would benefit their families and the community.

As it turned out, in the last ten years and more over 120,000 units of public housing were rehabilitated (demolished / disposed of), only to be replaced by around 40,000 units of gentrified / privatized so-called mixed income developments.

Out of the 40,000 public housing projects that were rebuilt in partnerships with nonprofit developers, on average some statistics reveal that only around 12% of the original public housing tenants ever managed to move back to the gentrified properties after renovations / revitalization occurred.

As a huge consulting firm traded on Wall Street, ICF International is a big player in the displacement schemes involving the so-called revitalization of low-income communities and public housing sites, displacing thousands of the poor from their homes and communities in the process.

ICF International is also heavily dependent on government contracts involving HUD's housing assistance programs and other social welfare agencies.

In this case in Berkeley, ICF International vice president, Carole Norris, is also the Berkeley Housing Authority (BHA) Chair Commissioner and is directly involved in the scheme to kill Berkeley's public housing program, which will displace the poor from their housing in the near future.

The is a clear conflict of interest, and an investigation into the affairs of ICF International and the activities of their employee Carole Norris, who is also the chair commissioner of the BHA, is warranted.

Lynda Carson
510/763-1085
tenantsrule [at] yahoo.com