The Authority’s board of commissioners did not properly administer its management agreement with the Needham Housing Authority.

Audit found the WHA did not get DHCD approval to extend its management agreement Needham Housing Authority to oversee day-to-day operations of the authority.

Overview

The Authority’s board of commissioners did not submit its management agreement with the Needham Housing Authority to DHCD for approval. Without DHCD review and approval of the management agreement, the Authority cannot be sure that the contract terms are acceptable to DHCD and that the services purchased will allow the Authority to operate at a satisfactory level based on the staffing services in the agreement.

Before the audit period, the Authority’s board of commissioners entered into a management agreement whereby the executive director of the Needham Housing Authority would act as the executive director of the Wellesley Housing Authority, managing the latter’s day-to-day operations. Senior management officials at DHCD stated that they had not approved the agreement and did not have it on file. The management agreement was approved by the Authority’s board of commissioners at its May 23, 2013 meeting. The agreement listed its effective duration as 24 months, which it defined as January 1, 2013–December 31, 2015.³ The terms of the agreement required the Authority to pay the Needham Housing Authority $132,000 annually, payable in monthly installments, as reflected in its annual budget.

On November 28, 2016, DHCD sent a memo to the chair of the Wellesley Housing Authority board of commissioners, requesting that the Authority not commit to a formal extension of the agreement. The memo stated that DHCD had several concerns that it would like to discuss with the board. However, the Authority continues to operate under the provisions of the prior management agreement and continues to pay the Needham Housing Authority monthly fees for the operations of the Wellesley Housing Authority.

Authoritative Guidance

The Wellesley Housing Authority’s contract for financial assistance with DHCD states,

The Authority will not, without the prior approval of the Commissioner . . . award or enter into any contract for utilities or equipment, or any other contract during the management or operation of the Project by the Authority.

Reasons for Noncompliance

The management agreement was signed June 27, 2013 by a current board member who was chair when the board of commissioners approved it. She stated that she assumed it was approved when DHCD approved the annual budget.

Recommendation

Before awarding or entering into a management agreement, the Authority should submit it to DHCD for review and approval.

Auditee's Response

The Wellesley Housing Authority has been overseen by the Needham Housing Authority since 2004. There have been four (4) three year agreements that have been signed by both authorities. I cannot speak to why the last signed agreement in 2013 was not sent in to DHCD for approval; perhaps the respective boards at that time were not aware that had to be done. The agreement that was signed back in 2013 was the exact same agreement that had been signed previously. Since there were no changes to the agreement, there was nothing for DHCD to review as they had apparently approved prior agreements.

Additionally, DHCD had approved all budget submissions for both LHAs and never questioned any yearend financial data. This to me constitutes de facto acknowledgment of the existence of and approval of the management agreement.

It is accurate that DHCD requested that the WHA not commit to extending the agreement in a memo. . . . The Wellesley Housing Authority as well as the Needham Housing Authority have been operating under approved extensions of the prior agreement, which DHCD acquiesced to. It would have been very disruptive and highly irresponsible for one or both sides to simply terminate the agreement without a well thought out plan of action going forward.

Auditor's Reply

The Authority should send its management agreement to DHCD for review each time it is to be renewed to ensure that DHCD is aware of the duties and responsibilities of the parties outlined in the agreement. The annual budget, although it may state the total cost of the contract, does not provide any information about the contract.

3. The agreement states that the duration is 24 months. However, it also states that it shall be in effect from January 1, 2013 through December 31, 2015. The current executive director stated that the agreement was for 36 months and that these dates were the correct ones.

Date published:	May 30, 2018