Jessica McBride/Media Coordinator
Floyd, Tiger discuss findings
OKMULGEE, Okla. — The U.S. Office of the Inspector General for the Department of Housing and Urban Development released their findings July 8 from an audit of the Muscogee (Creek) Nation Housing Program.
The report, which reviews years 2013-2015, is available online at: www.hudoig.gov/sites/default/files/documents/2016-FW-1003.pdf.
The report identifies nine deficiencies resulting in $219,839 in questionable expenditures.
‘These conditions occurred because the Nation’s staff did not follow its or HUD’s requirements. In addition, the Nation’s payments and rents policy did not comply with Federal regulations,’ the report states.
The audit recommends that MCN repay $219,839 to HUD from its non-federal funds, as well as update policies and procedures, and train staff to prevent the deficiencies from re-occurring.
What did the auditors look at?
The reviewed files included nine of 385 identity of interest participants, which would include individuals related to MCN officials or employees, 34 of 70 contracts and seven of 68 lease files.
The auditors compared the files to HUD regulations and MCN policies.
Findings: Lease to non-low-income family
The audit found that the Nation approved a lease to a non-low-income participant without HUD approval.
The scenario described states that the home was purchased for $150,835 for a low-income participant in 2010. In 2014, MCN allowed the participant to transfer the home to his nephew in 2014, whose income exceeded the median income.
The report states that this action occurred because the Nation waived its requirements.
‘Since it did not obtain HUD’s approval for this transfer, the $120,581 Indian Housing Block Grant funds spent on the property were ineligible,’ the report states.
Mvskoke Media reached out to former Principal Chief George Tiger regarding the use of waivers since the years reviewed were during his administration.
View Tiger’s full interview here:
Tiger said that MCN is a self-governance tribe that takes care of its own people and makes decisions accordingly.
“On the waivers, I know that even the Council at one time questioned whether or not it didn’t come through them. That’s an executive process itself and our deal was to provide housing to people that needed it.
“And it was on a case-by-case situation and so yes, waivers were signed off on. But from my understanding, even with this new administration there’s been some waivers signed off on as well,” Tiger said.
The version of MCN Code Annotated Title 24, Section 2-102 (C) available on the MCN Supreme Court website discusses the Housing operating policy and procedures.
‘The Housing Division shall adopt housing program operating policies and housing program admissions policies, which shall not be effective until approved by the Principal Chief and the National Council,’ the Code states.
MCN’s response to the finding included in the report states that the policy will be updated.
The Nation disagrees that $120,581 needs to be repaid for this specific finding.
‘All federal guidelines were followed when the home was acquired and it remained low income for the period 6/1/2010 to 03/31/2014. Because the home remained low income for a period of almost four years we believe a prorated amount is repaid,’ the Nation’s statement reads.
OIG documents responses back to MCN and HUD regarding the Nation’s statements.
In the audit, OIG’s response requests documentation that policies and procedures have been updated.
The response also states that HUD will need to make a decision on the repayment of funds.
‘While the Nation’s position may be reasonable, HUD will need to decide whether proration of the $120,581 that the Nation spent on the home is acceptable to address the deficiency,’ the response states.
Findings: Improper rent charged to non-low-income family
The audit found that the Nation did not require a non-low-income family to pay the correct amount of rent as calculated using HUD regulations and instead, charged the participant $350 per month.
‘This occurred because the Nation’s payments and rents policy did not comply with Federal requirements, which resulted in collecting $13,878 less in rent than was due from the family,’ the report states.
MCN’s response to the finding included in the report states that non-low income participants are being notified that rent will be calculated according to HUD regulations. The response also states MCN is updating their policy regarding this finding.
The Nation states it disagrees that $13,878 needs to be repaid for the specific finding.
‘The home will be repaid out of non-federal funds. Therefore the home is not subject to any Federal requirements so uncollected rents do not apply,’ the statement reads.
OIG’s response requests documentation that policies and procedures have been updated.
OIG maintains that the $13,878 will need to be repaid.
‘The Nation used program funds to purchase and repair the home, which was subject to 24 CFR 1000.110, and should have collected the rents in accordance with the requirements,’ the response reads.
Findings: No action regarding a participant who did not recertify
The audit found that the Nation did not take action when a participant did not recertify, verifying their current employment and family composition, and the Nation also could not verify if the participant was in fact living in the home.
‘This condition occurred because the Nation’s housing management department did not have procedures for following up on participants that did not recertify,’ the report states.
The lease agreement reviewed did not require the participant to use the home as a primary residence. The report states that recertification is required in order to charge the proper amount of rent.
MCN’s response to the finding included in the report states the participant has recertified and that staff will receive training on the recertification process.
The Nation states the lease agreement has been updated to include that the home must be used as a primary residence.
OIG’s response requests documentation that polices and procedures have been updated, as well as a copy of the updated lease agreement.
OIG states that the recertification documentation provided for the file is insufficient.
‘…it did not provide the necessary documents to address whether the participant entered into a corrective action plan to provide income and occupancy information for 2014 and 2015.
‘In addition, it did not provide information on whether the participant owed the Nation for unreported income or reduced family composition. The Nation will need to provide supporting documentation to HUD to close the recommendation.’
MCN Principal Chief James Floyd said in an interview with Mvskoke Media that programs which require recertification affect approximately 60 participants. He said a letter has been sent to these participants explaining the process.
View Floyd’s full interview here:
Tiger said that a $350 maximum in rent payments has been in existence for a number of years.
“I do know that I received a lot of calls when there was a letter that was sent out increasing everyone’s or the possibility of everyone’s payments,” he said. “Well, I also know that that would probably in essence would affect about a little over 100 people that could probably afford the increase and probably need to have an increase in their payments, but not every participant should’ve received that letter.”
Floyd explained that the first participant who came in for their recertification received a decrease in their rent payment.
“So it doesn’t mean that when you come in to Housing and show us your financial situation, that you’re automatically going to get an increase,” he said.
Floyd said Housing is working with HUD to see if they can phase in changes over time.
“But our Housing Department has told me this affects approximately 60 people, not hundreds. So I think the illusion is these are hundreds, that everybody’s rents going to get increased when actuality, it’s about 60 people… The outcome is, we will be compliant.
“The objective is that we’ll be 100 percent compliant, but on the ground with the families, we know that it’s going to be a financial impact and we want to ease that burden as much as possible. And hopefully HUD understands that and can be sensitive to that,” Floyd said.
Findings: Manager allowed to continue in conflict of interest situation
The report found that a former manager was allowed to manage her brother’s file, and did not disclose or recuse herself from the situation.
The manager allowed violations to the agreement, including the number of people occupying the home and not including an occupants’ income.
The report states that MCN did not notify HUD of the situation.
‘Because the former manager managed her brother’s agreement with the Nation, she retained benefits for her family, including herself,’ the report states.
MCN’s response to the finding included in the report states the procedures have been updated to require personnel to recuse themselves from managing a family member’s file.
‘All counselors have read and signed the conflict of interest statement,’ the statement reads.
OIG’s response requests documentation that it has relinquished the participant’s rights as a potential homebuyer, or added the participant’s income and recalculate the rent payment and the amount owed by the participant.
Findings: Documentation not provided that contracts were reasonable
The audit found that documentation was not provided to support that four of its contracts were fair and reasonable, ranging from 33-79 percent greater than the Nation’s independent cost estimates.
‘Therefore, the Nation spent $47,225 for unsupported construction costs,’ the report states.
The report states MCN should have performed additional price analysis and included supporting documentation to explain the contract prices versus the estimated costs.
MCN’s response to the finding included in the report states that the Nation disagrees with this finding, and that each file includes supporting documentation for contract approval.
‘We believe we have complied with all the requirements of 85.369(f)(1) because an independent cost estimate was performed, an adequate number of comparable bids were received, which we believe to be fair and reasonable, and it compares with previous bids received for the same service, therefore repayment of costs exceeding the independent cost estimate should not be repaid,’ the statement reads.
OIG’s response states that it disagrees with the Nation’s statement.
‘When bids are significantly greater (30 percent or more in this instance) than the independent cost estimates, the bids do not appear reasonable or assumptions used for the independent cost estimates seem incorrect,’ the response reads.
OIG requests documentation supporting the contract amounts.
Findings: Procurement files were incomplete
Files reviewed by the auditors did not include information regarding the bidding process, procurement methods and cost estimates.
Documents were found by MCN staff outside of the files, but the Nation could not located price quotations for a $38,155 contract.
HUD requires documents be kept for at least three years, and requires records to support appropriate expenditures of federal funds.
‘However, the Nation did not maintain the integrity of its contract files because it lacked a comprehensive system to ensure contract file completeness and proper ordering of file contents,’ the report states.
MCN’s response to the finding included in the report states the Nation disagrees with this finding.
The Nation states that the missing documents were in the file auditors reviewed in 2015 and audit findings did not document them as missing.
‘We are unsure how a complete section became missing from the contract file, but we believe when the files were taken apart to be scanned by the HUD OIG auditor the complete procurement section was misfiled. We are still in the process of going through all of the tenant and contract files that were selected for review to see if we can locate the missing section,’ the statement reads.
The Nation also states it should not be required to repay $38,155 due to this, ‘single incident of human error.’
OIG’s response requests supporting documentation for the contract.
Findings: Contracts omitted mandatory clauses
Contracts approved by MCN omitted clauses required by federal regulations.
‘This condition occurred because the Nation’s contract management procedures did not include steps to ensure that its contracts included required clauses that would protect the rights of the Nation and ensure compliance with Federal laws,’ the report states.
MCN’s response to the finding included in the report states the clause has now been added to the contracts.
OIG’s response states that a retention clause was left out of the submitted documentation and must be added.
Findings: Insufficient income information for participant
The audit found that the Nation approved a participant that had not completed an unemployment statement before the lease was granted.
The checklist in the file stated that the statement was requested by MCN, but did not receive it.
‘This condition occurred because the Nation did not have procedures in place to conduct and document income verifications,’ the report states.
MCN’s response to the finding included in the report states an audit checklist has been implemented and the participant has provided a signed unemployment statement.
OIG’s response requests supporting documentation of the correction.
Findings: No documentation regarding required inspections
For two of the seven leases reviewed, the auditors found that the Nation did not provide signed documentation on required move-in inspections.
‘Because of these errors, the Nation could not support that it used Indian Housing Block Grant funds to provide two homes that were decent, safe, and sanitary,’ the report states.
MCN’s response to the finding included in the report states the Nation has implemented procedures to correct this issue.
OIG’s response requests documentation of updated policies and procedures.
Tiger said he had vaguely read through the report, and found it ironic that some of the findings called into question policies that had been in place for 20 years and were never questioned before.
He also said that the findings are a negotiating tool.
“If it’s a finding that there’s some recommendations that can be negotiated out and how it can be addressed and how it can be taken care of. As far as I saw, there was really no major, major issues,” Tiger said. “The $200,000 the tribe has to pay back, in essence eventually the participant in question is going to be paying that back at some point in time. So that money will be recouped.”
He said he believes the findings are being politicized.
“It’s unfortunate that to some degree that a lot of things that are being questioned and these things again can be worked out are being politicized to a large degree,” Tiger said. “And I don’t think that’s who we are as Muscogee (Creek) people.”
Floyd said that during the process of the audit, they were working on updating processes and procedures. He believes Housing has addressed all but one of those items.
“We do have to respond. We do have to comply and so we made sure we started that early,” he said. “So as of even last month, there’s some things that we’re putting in place. So I think that if they were to come back today, they would be pleased with what they saw.”
Floyd said he feels positive about the direction Housing is heading.
“There’s still a lot of work to do in Housing because Housing as a program is a very wide program,” he said. “They have a lot of offerings and it isn’t just a singular program of either rent or build for our citizens.”
Floyd said his goal is to help citizens understand the Housing programs and process as well.
“So if we can do that, I think we begin to clear a lot of the complexities or the vagueness that many feel they get from Housing because then they will know where they stand, what type of program and what the expectation is of when they can be served,” he said.
Mvskoke Media contacted HUD to verify the process now that the audit is complete.
‘Once the OIG issues the audit report to the HUD program area, the program issues a Management Decision within 120 days of the date of the audit. This Management Decision, which is established in collaboration with the grantee, details all actions that will be taken to correct the deficiencies outlined in the OIG report.
‘All actions must be completed within one year of the management decision; and three years for repayment of all disallowed costs. There are instances when, due to particular circumstances, these timelines may be different,’ HUD Region VI Public Affairs Officer Patricia Campbell said in a written response.
The statement said that HUD works with audited parties to gather documentation and review the report, and that HUD can make its own recommendations.
HUD’s preference is for the funds to be repaid as soon as possible or within one year, but sometimes repayment can take up to three years.
HUD declined to make any comment regarding MCN’s specific audit.