The City of Chicago Office of Inspector General (OIG) has completed a follow-up to its December 2019 audit of the Chicago Low-Income Housing Trust Fund’s management of housing quality inspections for units participating in the Rental Subsidy Program (RSP). Based on the Trust Fund’s responses, OIG concludes that the Trust Fund has fully implemented 3 of 14 corrective actions related to the audit findings, substantially implemented 2, partially implemented 7, and not implemented 2.
The purpose of the 2019 audit was to determine if the Trust Fund met its mission of providing “secure, safe, and sound” housing by ensuring that RSP properties,
- received their required annual Housing Quality Standards (HQS) inspections;
- had evidence of a lead safe housing certificate in their contracts;
- came into compliance after the discovery of housing deficiencies, including serious health and safety risks; and
- addressed unresolved Chicago Building Code violations.
Our audit found that in 2017, the Trust Fund did not ensure that all properties participating in the RSP met its standards for safe, sound, and secure housing. The Trust Fund subsidized properties with Chicago Building Code violations and other serious housing quality deficiencies, had a payment system that inadequately protected against potential fraud and errors, and paid properties with incomplete contract documentation. In addition, errors in the Trust Fund’s internal management tool caused it to publish inaccurate and incomplete quarterly reports from 2014 through 2018, and prevented accurate accountings of the amount of funding it had allotted to RSP properties in those years.
Based on the results of the audit, OIG recommended that the Trust Fund,
- develop a contracting, inspection, and payment process sufficient to ensure that it only subsidizes well-maintained housing for low-income Chicagoans;
- continue developing a software system that monitors properties’ inspection compliance status, ensures that noncompliant properties do not receive payment, tracks contract documents in a reliable manner, and allows the Trust Fund to independently monitor the compliance of its HQS inspection vendor;
- assess properties’ compliance with the Chicago Building Code every quarter before it pays property owners;
- incorporate controls for quarterly payments to reduce or remove the opportunity for fraud and errors;
- immediately resolve errors in its property tracking spreadsheet; and
- take additional measures to ensure that its reports accurately reflect both the full distribution of active subsidies across the city and the amount of available funding for the RSP.
In its response to the audit, the Trust Fund described corrective actions it would take.
In March 2021, OIG inquired about the status of the Trust Fund’s corrective actions. Based on its follow-up response, OIG concludes that the Trust Fund has partially implemented corrective actions related to inspection compliance tracking, payments, and record-keeping. Specifically, the Trust Fund is currently implementing an electronic portal integrating its contract management and subsidy request systems. The new system will also allow the Trust Fund to automatically generate and upload a payment file. The software development was delayed by a year after the Trust Fund released its previous vendor, Globetrotters LLC, from its contract. The Trust Fund cancelled 2020 HQS inspections due to the COVID-19 pandemic; it resumed in-person inspections in April 2021. The Trust Fund has fully implemented OIG’s recommendations to use the Chicago Data Portal to verify Chicago Building Code compliance. It has not completed the transition away from a manually updated spreadsheet, but expects to after it has fully implemented new software in the third quarter of 2021.
Once fully implemented, OIG believes the corrective actions reported by the Trust Fund may reasonably be expected to resolve the core findings noted in the audit. We urge the Trust Fund to fully implement an electronic system that allows it to actively monitor inspection and contract compliance, write instructions for how to identify building code violations, transition away from its manually updated spreadsheet, and implement controls to ensure accurate payments.