Overview
The Authority did not properly conduct rent redeterminations for some of its tenants during fiscal year 2016. By not performing the required rent redeterminations or obtaining required information from its tenants, the Authority creates a higher-than-acceptable risk of overcharging or undercharging tenants for their housing or of providing housing to individuals or families whose incomes may make them ineligible.
Specifically, we judgmentally selected a sample of 25 tenants and found that rent redeterminations had not been performed for 5 of them. In addition, several other tenants in our sample did not have lease addendums, supporting documentation of deductions, or supporting documentation of income in their files. Specifically, we noted the following deficiencies:
- Six rent redeterminations were missing supporting documentation for both income and deductions.
- Five tenant files did not have documentation to support income.
- One tenant’s file did not have documentation to verify the tenant’s eligibility for medical deductions taken.
- Two tenants’ files did not have documentation to verify their eligibility for multiple deductions taken, including deductions for family housing, medical expenses, and a dependent child.
- Three tenants had not signed lease addendums extending the rental periods for a year.
In addition, six tenants living in housing for elderly tenants were allowed a $400 deduction from their income that is only supposed to be provided to tenants of family housing.
Authoritative Guidance
DHCD regulations state, in Section 6.04 of Title 760 of the Code of Massachusetts Regulations (CMR),
(4) Annual Re-determination
(a) The Re-determination Date. The LHA shall re-determine each tenant’s monthly rent once annually to be effective on a specific re-determination date which shall be the first day of a month. . . .
(6) Verification. The tenant shall provide and authorize reasonable verification of information regarding income, exclusions from income and deductions (whether at initial determination or at any re-determination) in order to insure reliability of the information.
In addition, 760 CMR 6.06(5)(q) requires the tenant “to sign a new lease or lease addendum whenever necessary to reflect a re-determined rent, a change in household size, or change(s) in terms and conditions of tenancy.”
Finally, 760 CMR 6.05(4) lists the following deductions:
a. $400 for a household living in family housing in which the tenant is an elderly person of low income or a handicapped person of low income provided that the household is not overhoused.
b. $300 for each unemancipated minor household member (younger than 18 years old). . . .
c. Payments for necessary medical expenses (including co-payment amounts) which are not covered by insurance or otherwise reimbursed, provided that such expenses are in excess of 3% of annual gross household income and are paid by household members. Payments for medical health insurance are considered medical expenses.
Reasons for Noncompliance
The Authority has not established policies and procedures for its rent redetermination process to ensure that it complies with DHCD requirements.
Recommendation
The Authority should develop and implement policies and procedures for its rent redetermination process that are consistent with DHCD regulations and should implement monitoring controls to ensure that its staff consistently adheres to these requirements.
Auditee’s Response
The WHA performs redetermination processes each year per DHCD regulations and guidance. Our property manager is very diligent about making certain that all recertifications are completed and that adequate backup exists to justify the rent redetermination. As the auditors are aware, we underwent a purge of files during the latter part of 2016 that was done by a now former employee in which a number of pieces of income and expense verifications were removed. Our staff has stabilized at this point and we look to the future with optimism that all documentation will always be in the files.
The WHA has retained the services of Execu-Tech Consultants to undertake a comprehensive file review to identify any remaining issues in order to position us for 2018 and beyond. The $400 family credit to the elderly residents was given out in error and those adjustments have been made.
Auditor's Reply
Based on its comments, the Authority has taken some measures to address our concerns in this area. However, we again recommend that the Authority establish a policy to ensure that all rent redeterminations are completed annually. The Authority should also monitor these redeterminations by selecting a sample annually to review to verify that all documentation is present and all adjustments are made correctly.
| Date published: | May 30, 2018 |
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