Affordable housing programs are blossoming around the nation with significant funding. But there’s always the risk that when a problem, like affordable housing, is deemed to be urgent, and money is thrown in that direction, oversight may be shortchanged.

According to a recent Arizona performance audit that’s been precisely the case in that state where the  Arizona Department of Housing, “inadequately oversaw affordable housing projects we reviewed”.

For example, the audit included a review of a sample of 12 projects intended to provide special needs housing, emergency shelter, and rental housing development in calendar years 2021 through 2023 and found that the Department inadequately oversaw these 12 projects, including:

• “Not conducting most required site inspections, putting participants at risk of living in unsafe or unsanitary conditions.” 

• “Approving and paying 22 grantee payment requests we reviewed that included more than $8.1 million in expenses that were not supported by adequate documentation or were unallowable.”

• “Inconsistently ensuring grantees submitted required project progress reports, limiting the state’s ability to help address progress delays and hold grantees accountable for providing agreed upon services.”

• “Not conducting risk assessments to determine if grantees needed additional monitoring”

The audit offered two key recommendations for the Department of Housing:

• “Develop and implement a written plan outlining the steps and associated timelines that it will take to implement key practices for providing program oversight consistent with federal and State requirements and recommended practices.

• Review grantee payments since 2021 to identify unallowable expenses and recover those monies.

On the positive side, this is the kind of audit report that may well have impact. The Department of Housing’s response to each of the specific recommendations: “The finding of the Auditor General is agreed to and the audit recommendation will be implemented.”

For instance, “The Department agrees that prior requests for payment received by the Special Needs Division should be reviewed to determine whether unallowable costs were approved. The Department will review one RFP, per quarter, per grantee since 2021 for payment requests submitted for State funds. If unallowable costs are identified, all the requests for payment submitted under that particular contract will be reviewed.”

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