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Schroeder calls for audit at Buffalo Municipal Housing Authority

Concerned over Buffalo Municipal Housing Authority purchasing practices, Comptroller Mark J.F. Schroeder is asking city lawmakers to hire an outside firm to conduct a comprehensive annual audit of the troubled agency.

The BMHA should pay for the audit, but if it won't, the city should move forward anyway — using city funds — "in order to protect the federal housing tax dollars and rental income currently jeopardized by a lack of internal controls," Schroeder wrote in a letter the Council received at Tuesday's meeting.

The audit  is expected to cost $50,000 annually but should more than pay for itself by improving the agency's internal controls and spending practices, Schroeder wrote. The audit would be more comprehensive than any BMHA reviews now done by the city, the BMHA or the U.S. Department of Housing and Urban Development, said Patrick Curry, Schroeder's executive assistant.

Schroeder's letter was referred to the Council's Finance Committee, which will discuss the request at an upcoming committee meeting, which BMHA officials are being asked to attend.

Schroeder's letter, as well as the Council's request for BMHA officials to attend an upcoming committee meeting, comes in response to stories published by The Buffalo News about questionable housing authority purchasing.

BMHA public housing stories (updated 7/25)

The News, in an article published in July, found that a recently created firm with ties to a BMHA supervisor last year received almost twice as much work fixing up and cleaning out public housing apartments as any other outsider contractor hired to do similar work. The firm, GFY General Services & Cleaning, of Batavia, was paid almost $400,000 — most of it no-bid work permitted when individual payments do not exceed $2,000.

BMHA doled out this no-bid work in a way that, in some cases, appears to violate federal rules that prohibit government agencies from splitting work into small contracts to avoid public bidding thresholds, The News found.

In a followup article published in August, The News found that the BMHA sometimes paid more for items it purchased, such as rock salt and garbage bins, than did other local governments, or even, in the case of batteries, than a typical consumer.

At Buffalo's public housing agency, $36 worth of rock salt costs $53

The BMHA attributed some of these higher prices to its buy-as-you-need policy, which often resulted in purchasing items without seeking competitive bids.

Contacted after the Council meeting Tuesday, Gillian Brown, the BMHA's, interim executive director, said he's open to discussing the outside audit plan with city officials, but added that he's working to improve the agency's internal auditing functions. The agency hasn't had an internal auditor since its last one resigned about six years ago, Brown said.

"We don't have an internal audit function. We used to," said Brown, the interim chief since March. "I am going to be working over the next several months starting something that will probably be along the lines of a quality control team to help monitor purchasing."

The team would be one of several structural changes in BMHA staffing that Brown has outlined in response to shortcomings in the agency's purchasing.

Brown has previously said he's hiring additional supervisory staff to handle some of the purchasing duties now done at the individual housing developments. He also said he hopes to create a more centralized purchasing system.

Several Council members Tuesday said they support the comptroller's call for a comprehensive audit, but said it must be paid for by the BMHA.

"I 100 percent agree it should occur, but 2,000 percent believe it (the funding) ought to come out of the BMHA, and not the city of Buffalo," said Council President Darius G. Pridgen.  The BMHA gets funding from the federal government and through its rents, and is governed by its own Board of Commissioners, he noted.

Some Council members also suggested they might want to wait until an ongoing BMHA audit by the HUD Inspector General's office is completed before deciding on the comptroller's request.

Curry said the comptroller agrees that the BMHA should fund the audit, but doesn't want to preclude the possibility of city funding if the housing agency refuses. The comptroller's office would like to work with the BMHA, offering its expertise in helping with a request for proposals, he said.

The comptroller's office has done limited audits of the BMHA, but doesn't have the funds or expertise to do large-scale ones, Curry said.

He said other audits of the BMHA, done by the federal government, or funded by the BMHA, are also of limited scope.

The HUD Inspector General's office is conducting an audit, which began in January, that examines how the BMHA spent its federal operating funds in 2016 and 2017. That audit could be released as early a next week, a spokesman for HUD said.

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