Affordable Housing

If the Department of Housing Stability is not adequately overseeing affordable housing contracts, development, and conditions, it cannot ensure it is meeting the needs of Denver residents who struggle to afford to live in the city and it cannot ensure it is providing more affordable housing units that are clean and safe for people to live in.

FINDING 1 — The Department of Housing Stability must improve its oversight of affordable housing

• The Department of Housing Stability is not ensuring Denver Housing Authority is complying with an agreement to build affordable housing.
• The Department of Housing Stability’s property inspections and compliance reviews may not effectively and consistently identify issues.
• The department is not ensuring contractor compliance with wage laws.
• The department does not ensure data reliability and did not follow city rules when planning a system integration.

FINDING 2 — The parts of the Department of Housing Stability’s Affordable Housing Prioritization Policy that we reviewed were well designed to minimize lawsuits and displacement

The Department of Housing Stability met with stakeholders, such as the City Attorney’s Office, to minimize the risk of discrimination lawsuits when designing its new prioritization policy. But after the department hires a program manager, it needs policies and procedures and training for property managers to help ensure program effectiveness and compliance.

1.1 Establish and document roles and responsibilities – The Department of Housing Stability should establish and document roles and responsibilities for monitoring compliance with the D3 Program agreement and performance of Denver Housing Authority to ensure the agreement terms are fulfilled.

Agency Response – Agree, Implementation Date – Sept. 18, 2023

1.2 Follow process for amendments to the agreement and scope of work – The Department of Housing Stability should follow the process outlined in the city’s Executive Order No. 8 and the D3 agreement for revising the scope of work or amending the agreement. Revisions should be made before changing any process or required deliverables. 

Agency Response – Agree, Implementation Date – June 30, 2024

1.3 Require reports from Denver Housing Authority – The Department of Housing Stability should ensure Denver Housing Authority is providing reports as required by the D3 agreement. The reports should include at least the elements outlined in the contract and scope of work.

Agency Response – Agree, Implementation Date – Dec. 31, 2023

1.4 Document meeting discussions and key decisions – The Department of Housing Stability and Denver Housing Authority should document key discussion points and decisions from monthly meetings.

Agency Response – Agree, Implementation Date – Dec. 31, 2023

1.5 Conduct and document a formal needs assessment – The Department of Housing Stability should conduct and document a formal needs assessment to determine how to ensure affordable units and buildings are maintained properly and hazards are quickly identified and corrected. The assessment should include a review of how often inspections should occur and the length of time allotted between notification and inspection.

Agency Response –Disagree

1.6 Conduct and document a staffing analysis – The Department of Housing Stability should conduct a formal staffing or workforce analysis to determine existing staffing levels and needs so it can meet department objectives and goals, particularly related to inspections and compliance.

Agency Response – Agree, Implementation Date – June 30, 2024

1.7 Revise policies and procedures for inspections – The Department of Housing Stability should revise existing policies and procedures for conducting inspections. Revisions should include the frequency for inspections and the time required to notify property managers of upcoming inspections.

Agency Response –Disagree

1.8 Establish inspection responsibilities – The Department of Housing Stability should identify a responsible party to conduct inspections of all units funded by the city, such as those funded by the D3 Program. If contractors will be responsible for conducting inspections, the department should ensure inspections are conducted consistent with city standards and that the contractor provides documentation to allow the department to monitor contractor-conducted inspections.

Agency Response – Agree, Implementation Date – June 30, 2024

1.9 Develop and document policies and procedures for income verification – The Department of Housing Stability should develop and document policies and procedures to review income verification. These policies and procedures should include responsible parties, the frequency of reviews, and how reviews will be documented.

Agency Response – Agree, Implementation Date – Jan. 31, 2024

1.10 Ensure compliance with federal and local wage laws – The Department of Housing Stability should work with Denver Labor and the City Attorney’s Office to ensure contractor compliance with federal and local wage laws.

Agency Response – Agree, Implementation Date – June 28, 2023

1.11 Revise contract policies and procedures – The Department of Housing Stability should revise all contract-related policies and procedures to include guidance for staff on when to include a prevailing wage review of contracts and how it should be documented. The revisions should include a process for reviewing contract information to ensure contracts are flagged for prevailing wage review as outlined in policies and procedures.

Agency Response – Agree, Implementation Date – Jan. 31, 2024

1.12 Follow city fiscal rules – The Department of Housing Stability must follow Fiscal Accountability Rule 1.2 before integrating any subsidiary systems — like Salesforce — with the city’s system of record, Workday.

Agency Response – Agree, Implementation Date – May 30, 2023

1.13 Revise user access permissions policies and procedures – The Department of Housing Stability should revise its policies and procedures for user access permissions to include a process and frequency for conducting regular user access reviews. These revisions should include how and where the reviews should be documented.

Agency Response – Agree, Implementation Date – Jan. 31, 2024

1.14 Develop and document policies and procedures to ensure data reliability – The Department of Housing Stability should develop policies and procedures for reviewing data held in its information systems to ensure data, particularly data used for program monitoring and data that is publicly available, is accurate and reliable.

Agency Response – Agree, Implementation Date – June 30, 2024

1.15 Clean and monitor department data – The Department of Housing Stability should develop instructions for generating accurate and reliable reports from its information systems.

Agency Response – Agree, Implementation Date – June 30, 2024

1.16 Develop and document reporting procedures – The Department of Housing Stability should develop instructions for generating accurate and reliable reports from its information systems.

Agency Response – Agree, Implementation Date – Nov. 2, 2024

2.1 Develop and document policies and procedures – The Department of Housing Stability’s asset and compliance manager should work with the prioritization program manager to develop and document policies and procedures for implementing the prioritization policy. The policies and procedures should include, at a minimum:

• Which units are included in the policy.
• The marketing period for units and the methods for marketing units’ availability.
• Eligibility requirements.
• The scoring system for prioritization.
• The types of documents that will be accepted.
• The process for selecting participants.
• The process and frequency for monitoring property managers’ and developers’ compliance with the ordinance.
• The parties responsible for implementation and monitoring.

Agency Response – Agree, Implementation Date – June 30, 2024

2.2 Develop and provide training – The Department of Housing Stability’s asset and compliance manager should work with the prioritization program manager to develop and provide training for property managers and developers related to implementing the prioritization policy and ensuring compliance

Agency Response – Agree, Implementation Date – June 30, 2024

2.3 Monitor program effectiveness and compliance – Once the prioritization policy has been finalized and implemented, the Department of Housing Stability’s asset and compliance manager should work with the prioritization program manager to use accurate and reliable data to monitor program effectiveness and compliance

Agency Response – Agree, Implementation Date – Sept. 30, 2024

Auditor’s addendum to agency response for Recommendation 1.1

The department claims to have implemented Recommendation 1.1 on Sept. 18, 2023, before publication of this report. Because this audit has ended, we cannot verify whether this claim is accurate. We will make a determination when we follow up on this report at a later date.

Auditor’s addendum to agency response for Recommendations 1.5 and 1.7

In response to Recommendation 1.5, the Department of Housing Stability said the inspection team works with property managers as needed to bring housing into compliance for the betterment of the property and the residents. Department staff also said the inspection forms they sent us showed the history of inspections, including several items needing work to be compliant and receive a passing grade. Staff also said they do not close out an inspection until all identified issues have been resolved.

But we reviewed 235 completed housing quality inspection forms, and all 235 forms said the units and properties passed the initial inspections with no identified issues or reinspections, and that some of these inspections were completed as recently as July 2023.

Further, department staff said they were not responsible for enforcing other city agencies’ rules, such as the residential housing rules.

In the audit report, we recognize the department is not responsible for enforcing housing code, but local ordinances and federal guidelines both outline standards for protecting, preserving, and promoting the health and safety of people. The department is encouraged to work with other city agencies for enforcement, and we learned the department already does so in some capacity.

However, the department’s inspection manual and form reflect many of the same housing quality standards also outlined in city ordinance. These include requirements and standards for electrical, heating and water, exterior walls and foundations, interior ceilings and floors, water supply and waste plumbing, solid waste management, and pest control.

In the response to Recommendation 1.7, department staff said inspectors ensure that city-funded properties are inspected annually, in excess of federal guidelines that require inspections to be completed at least once every three years. Therefore, the department is already conducting inspections more frequently than established by federal guidelines.

The department also said fewer days between notification and inspection would place undue stress on residents and result in noncompliance with federal guidelines and the department’s policies and procedures. But we observed public areas and did not access residential units or conduct a formal inspection requiring notice. In doing so, we identified the issues discussed in the audit report such as broken windows, exposed electrical wires, large cracks in an exterior wall, and pet or human waste in public areas. These are issues that would fail the department’s own guidelines.

In our report, we have documented issues that demonstrate a gap between what we observed and the results of the department’s own completed housing quality inspection forms — at the same properties. Therefore, we recommend the department conduct a formal assessment to determine how much notice to provide property managers and the frequency of inspections that would be required to ensure buildings are safe and clean for the people who live in them, even if that frequency is more than the minimum established by federal guidelines.

We are disappointed the department disagreed with these recommendations.

Auditor’s addendum to agency response for Recommendation 1.10

The department claims to have implemented Recommendation 1.10 on June 28, 2023, before publication of this report. Because this audit has ended, we cannot verify whether this claim is accurate. We will make a determination when we follow up on this report at a later date.

Auditor’s addendum to agency response for Recommendation 1.12

The department claims to have implemented Recommendation 1.12 on May 30, 2023, before publication of this report. Because this audit has ended, we cannot verify whether this claim is accurate. We will make a determination when we follow up on this report at a later date.

Auditor’s addendum to agency response for Recommendation 1.16

The department claims to have implemented Recommendation 1.16 on Nov. 2, 2023, before publication of this report. Because this audit has ended, we cannot verify whether this claim is accurate. We will make a determination when we follow up on this report at a later date.