Audit of St. Paul agency: No fraud or abuse, but issues

St. Paul's Public Housing Agency was tagged with recordkeeping errors, and allegedly owes $1.3 million to HUD, but it disputes the audit's findings.

By CHRIS HAVENS, Star Tribune

Last update: October 12, 2009 - 10:42 PM

A federal audit of a St. Paul Public Housing Agency rent-subsidy program found that the agency needs to improve its management and recommends that it pay more than $1.3 million back to the Department of Housing and Urban Development (HUD).

The St. Paul agency acknowledged some miscalculations were made but otherwise disputed the audit's claims and said it doesn't expect to owe $1.3 million.

The audit didn't find any fraud or abuse of funds.

The audit, performed by the Office of the Inspector General, looked at how the St. Paul agency administered Section 8 programs that provide vouchers and utility assistance to low-income tenants, and provides money for new and renovated affordable-housing projects. HUD funds the program.

The audit said the St. Paul agency didn't keep records of inspections for a long enough period of time and didn't perform required project reviews.

The Public Housing Agency countered that it was never told that it needed to keep records beyond a standard three-year period and that it was told by the Minneapolis HUD office that it didn't need to do the reviews.

The audit confirmed that the Minneapolis office was incorrectly advised by HUD's national headquarters on the reviews and passed that advice on to the St. Paul agency.

"We really believe we were following the regulations," said Al Hester, housing policy director for the Public Housing Agency.

While the St. Paul agency mostly followed HUD requirements in calculating housing assistance payments, the audit said some staff members made mistakes that resulted in overpayments of $7,259 and underpayments of $9,563. That's out of $1.1 million paid out.

The audit recommended the agency pay back $14,200 to HUD for the overpayments and administrative fees and reimburse tenants the $9,563.

The St. Paul agency agreed some errors were made but that it made overpayments of $5,385 and underpayments of $4,649, Jon Gutzmann, St. Paul Public Housing executive director, said in a letter responding to the audit's findings.

Hester said that the per-client underpayments were minimal -- as small as $1 per month for some -- and that the agency disagrees with some of the calculations the auditors used.

The St. Paul agency will work with HUD over the next several months to explain discrepancies and work out a resolution.

Chris Havens • 612-673-4148