PURPOSE:

The purpose of this report is to provide the information necessary for the Housing Authority Board to consider: 1) the Public Housing Agency Annual Plan for 2006-2007 (which includes an amendment to the Section 8 program Administrative Plan fraud recovery and income verification policies); and 2) authorizing the Chairperson of the Board and the Executive Director to execute the certifications that are required by the U. S. Department of Housing and Urban Development (HUD).

BACKGROUND:

The Section 8 Rental Assistance Program is funded by the U.S. Department of Housing and Urban Development (HUD) for the purpose of providing rent subsidies on behalf of very low income tenants throughout the City of Burbank.  The Burbank Housing Authority has been administering the Section 8 Program since 1975 and has an annual budget of $7,300,000 to assist 1,014 households. The current waiting list consists of  7,000 names, of which, 787 are Burbank residents, and the balance are non-residents.

Section 511 of the Quality Housing and Work Responsibility Act of 1998 requires that all Housing Authorities submit a Public Housing Agency Plan. Each year the Housing Authority submits an Annual Plan to the U.S. Department of Housing and Urban Development to describe how the Section 8 Program will operate in the upcoming year. This Plan covers the time period from July 1, 2006 through June 30, 2007 (Exhibit A).  The comprehensive five year Public Housing Agency Plan that covers the time period from July 1, 2005 to June 30, 2009 was approved by the Housing Authority Board on March 22, 2005. The Five-Year Plan describes the mission of the Housing Authority and the long range goals for achieving its mission over the next five years.

In an effort to implement an efficient and nationally-consistent process for the preparation, submission, and review of the document, HUD created a template to be followed.  The same template is to be used by both Housing Authorities that own public housing projects, and those that administer the Section 8 Rental Assistance Program.  Due to the fact that the Burbank Housing Authority does not own any public housing units, many of the sections of the report do not apply.  HUD has mandated that the template stay intact.

The Section 8 Program Administrative Plan is a policy and procedure manual that the Burbank Housing Authority staff uses to ensure that all applicants and participants are treated in a fair and equitable manner. Each chapter deals with different aspects of implementation. For the most part, federal regulations dictate the way the Section 8 Program will be implemented. However, there are some areas where local discretion is allowed. These local policy decisions are included in the revised Administrative Plan (also included in Exhibit A) and are highlighted below:

WAITING LIST (Chapter 3) 

It is the policy of the Burbank Housing Authority to open the Section 8 Waiting List for new applications when there are less than 100 Burbank residents on the list. The Housing Authority is allowed to open for new applications even though there are non-residents still on the list. Any Burbank resident submitting a new application is given a local preference and will be assisted before any non-resident on the existing list.

BACKGROUND INVESTIGATION (Chapter 6 & 11)

The Housing Authority requires all applicants at the time of initial eligibility determination, and Program participants at recertification time, to sign an authorization form to allow the Housing Authority to obtain a copy of their credit report. Credit reports show pertinent information concerning outstanding debts and monthly obligations. These reports give the Housing Authority information that might otherwise be concealed. The federal regulations allow flexibility in determining the level of evidence to be used in screening tenants for drug-related and violent criminal activity. The level of evidence ranges from a preponderance of evidence to a felony conviction. In Burbank, any convictions of adult family members for drug-related or violent criminal activity are grounds for denial or termination of  program participation.

In accordance with HUD guidelines, Section 24 CFR 982.516, Chapter 6 of the Housing Authority Administrative Plan states the verification methods that  Housing Authority staff will use to confirm the accuracy of information provided by the applicant or participant. Proper verification of information is essential to the integrity of the Section 8 Program. Tenants who are participating in the Section 8 Program have a right to an Informal Hearing at any time that an action adversely affects them. The Housing Authority must provide participants with the opportunity for an Informal Hearing to consider whether Housing Authority decisions are in accordance with HUD regulations and the Administrative Plan.   

To prevent fraud and abuse in HUD programs, the United States Code (USC) and Section 24, CFR 5.234 recently allowed HUD and Public Housing Agencies to obtain computer matching information about applicants and participants to determine their eligibility or level of benefits. Most importantly, the United States Code (USC) authorizes computer-matching agreements for income information. Section 42 USC 3544(c)(2)(A) provides the legal basis for preventing fraud and abuse in HUD programs. The law allows HUD to require that applicants and participants sign a consent form to request the following:

• Current or previous wages from employers;

• Wage information and unemployment compensation from State agencies charged with the administration of the State unemployment law; and

• Income information from the Commissioner of Social Security and the Secretary of the Treasury.

The new computer matching system identified several Section 8 Program participant families in Burbank, that have underreported their household income. Due to this underreporting, the Housing Authority paid more in rental assistance than the family was entitled to receive. The Housing Authority informs the family of their obligation to report all changes in income both at the time of their initially interview, and at every annual recertification.

SUBSIDY STANDARD (Chapter 7)

The current Burbank housing subsidy standard is set at 90% of the fair market rent. This policy provides the greatest benefit to Program participants while still staying within the budget. There are situations where participants do not report changes in household income and receive more rental assistance than they are entitled to under the Program regulations. Landlords and tenants who owe outstanding debts to the Housing Authority are required  to reimburse the Housing Authority in a lump sum or with monthly payments in order to continue Program participation.   

REPAYMENT AGREEMENTS (Chapter 12)

Currently, the Housing Authority offers repayment agreements to any tenant with an overpayment in the amount of $3,000 or less. Tenants who owe more than $3,000 to the Housing Authority must pay in full in order to  remain on the Section 8 Program. These methods of repayment, based on the amount owed, appear to be the best way of separating the innocent omissions from the willful fraud. These tenants are informed that a failure to report changes in income in the future will be grounds for termination of assistance.     

ANALYSIS:

The Section 8 program has faced many budget challenges within the past year. To reduce program cost and utilize all 1,014 Vouchers available to Burbank, the Housing Authority Board voted to adjust the housing subsidy payments. We are pleased to report that as a result of the Housing Authority lowering the subsidy standard to 90% of the fair market rent, along with participant turnovers, the Housing Authority contacted 283 Burbank residents on the Section 8 waiting list in order to ascertain their eligibility for program participation.

Of those 283 very low income families contacted 106 families qualified for program participation and are now being served by our program. Of the 106 households 69 Vouchers (65%)  were issued to elderly/disabled households, 13 Vouchers (13%) to households with children, and 24 Vouchers to non-elderly, very low-income Burbank households.

In 1999, the Housing Authority established the policy of offering lump sum and repayment agreements to any Section 8 tenant who owes money to the Housing Authority. Currently, there are fourteen tenants with active repayment agreements. While tenants are consistently reminded of their obligations to report additional income, we unfortunately are experiencing an increase in the number of Section 8 households who do not repay their debt obligations.

In an effort to collect the outstanding overpayment monies owed to the Housing Authority, staff is recommending a program administration amendment to include a variety of collection methods to recover debts, including, but not limited to:

• Lump sum payments;

• Repayment agreements;

• Collection agencies;

• Abatements;

• Reductions;

• Income tax off-set programs;

• Civil Suits;

• Credit bureaus;

• Prosecutions.

Before a debt is assessed, the participant or the landlord will be given ample opportunity to present documentation to dispute the Housing Authority assertion that an overpayment has been made. Federal regulations allow Housing Authorities to refer cases of willful or intentional program abuse to the HUD Office of the Inspector General for investigation and possible criminal prosecution. If the Justice Department  or appropriate local or state agency declines prosecution, the Housing Authority may pursue remedies through Civil Court.

Most cases do not require criminal prosecution, however, due to the increase in the number of households who do not pay their debt obligations, the Housing Authority  will begin referring cases to the City of Burbank Collection Specialist for collection assistance.  Federal regulations state that the Housing Authority can retain 50% of all funds collected. In addition, the Housing Authority may claim  all reasonable and necessary costs related to the collection. Reasonable and necessary costs include the cost of the investigation, legal fees, and collection agency fees.

In fiscal year 2004-05 the Housing Authority collected $63,590 in overpayment fund recoveries as a result of  repayment agreements. The Housing Authority retained $31, 795. Currently in fiscal year 2005-06 there is $74,997 in outstanding payments for potential collection. Therefore, staff is recommending the Housing Authority Board amend the debt recovery policy of the Burbank Housing Authority.  

COMMUNITY OUTREACH

In accordance with HUD guidelines, Section 24 CFR, the Resident Advisory Board (comprised of 12 Section 8 participants) reviewed the proposed Annual Plan at a Public meeting held on January 26, 2006. The Housing Authority meets annually with the Resident Advisory Board. Also, in accordance with HUD guidelines, Section 24 CFR, the required public notice was posted within the required timeframe, in the Burbank Leader, and the draft Plan has been available for public review at the Housing Authority office for nine weeks.  

SUMMARY

The U.S. Department of Housing and Urban Development (HUD) issued Public and Indian Housing Notice 2004-01 (Verification Guidance). This Notice was issued based on the results from HUD computer matching and Rental Housing Integrity Improvement Project initiatives. HUD has determined that a substantial number of participants are not accurately reporting their income. The study projected, with 95% confidence, that the amount of subsidy overpayments is attributed to tenant underreporting of income. This underreporting of income resulted in overpayment of limited government funding, thus not serving as many families in need of housing assistance, as should have been served.   

FISCAL IMPACT

The Housing Authority  currently has a Professional Service Agreement with a certified Mediator to conduct Informal Hearings. A fee of approximately $250 is charged for two hearings. Based on the information received from HUD�s new computer matching system, we estimate an additional five hearings per month resulting in a total projected cost of  approximately $2,000 for the balance of  fiscal year 2005-06. The current Section 8 budget has adequate funds available to cover all costs associated with the potential additional hearings.     

RECOMMENDATION

Staff recommends that the Housing Authority Board of Commissioners approve the proposed resolution, which: 1) approves the Burbank Public Housing Agency Annual Plan (including the amendment to the housing fraud recovery policy); and 2)  authorizes the Chairperson of the Board and the Executive Director to execute HUD required certifications.

LIST OF EXHIBITS

EXHIBIT A  - PHA Annual Plan

EXHIBIT B � HUD required Certifications

EXHIBIT C �  PHA Administrative Plan Chapter 6

EXHIBIT D � PHA Administrative Plan Chapter 12