Two Reports from the HUD OIG on Texas Entities

HUD’s Office of Inspector General (OIG) released two audit reports on Texas entities last week.  One report covered $503 million of the Katrina, Rita, and Wilma disaster recovery funds that flowed through TDHCA’s CDBG program, while the other report covered $725,546 in funds from the American Recovery and Reinvestment Act of 2009 (the Recovery Act) at the Housing Authority of Port Arthur.

TDHCA’s report was fairly uneventful. Titled “The Texas Department of Housing and Community Affairs Generally Ensured That Its Program Management Firm Complied With Requirements,” the report dinged TDHCA for allowing a subcontractor (Reznick, Mississippi, L.L.C.) to calculate $71,691 of its administrative feeds using an ineligible “cost plus a percentage of cost method.”

Nevertheless, the report stresses the finding was minor, pointing out “This amount represents less than .01% of the total draws reviewed,” and concluding “TDHCA reviews and monitoring activities generally ensured that the [contracted program management] Firm generally complied with Federal and State regulations and that program costs submitted for reimbursement were adequately supported.”

The report on TDHCA also notes that the recommendations of a July 2010 OIG report (“The Texas Department of Housing and Community Affairs Did Not Fully Follow Requirements or Best Practices in the Acquisition of Its Disaster Recovery-Funded Program Management Firm”) are still in “open status.”  Among other findings, that report had recommended that TDHCA “adopt sound agency business procedures for Disaster Recovery-funded procurements in accordance with State policy.”

Port Arthur’s report was less upbeat.  Titled “The Housing Authority of the City of Port Arthur, TX, Mismanaged Its Recovery Act Funding,” the report called for Port Arthur to return $725,546 in Recovery Act funds to HUD.  The Port Arthur Housing Authority is using these funds to build a learning center adjacent to its “Gulfbreeze Place” development, but the report found that the Housing Authority failed to properly put the project out for competitive bid and has also failed to perform an environmental review for the construction.

Seledonio Quesada, the Executive Director of the Housing Authority of the City of Port Arthur, responded with a written letter disagreeing with the OIG’s findings.  The letter includes the (IMHO somewhat snarky) comment “It is not for the OIG to substitute its judgment as to what is needed in Port Arthur for that of the Board residing in Port Arthur.”