almost entirely from federal monies, the housing authority is technically separate from the city of san francisco, although the mayor does appoint seven member board of commissioners. for fiscal year ending september 30, 2013, the housing authority has a budget of 210.6 million -- sorry, can you hold on a minute. folks that are sitting on the side, i have to ask you to sit in the chamber. there's some overflow seats in the chamber, we don't have room in the committee room right now. thank you. give me a second.

there's seats in the overflow room in the chamber. maybe you don't hear me. sir, in the back standing up. i need you to either take a seat -- take a seat in the chamber. thank you, continue. >> so as i was saying, the budget for this fiscal year which ends september 30, 2013, the housing authority has a budget of 210.6 million dollars with nine departments and 289 full-time positions. we should note that those staffing numbers were as of may 10, 2013. it's our understanding that the housing authority has

made some staffing rejections and we'll let them speak to those changes during their report. because the housing authority is largely department on hud resources -- >> supervisor breed has a question for you. >> these numbers are really small and i was wondering if you had something larger 'cause i couldn't see them on the large screen either. >> i can try to pull that up for you. not sure if that's going to work. it's in our report if -- >> can you tell me which page? >> the housing authority has faced significant financial challenges due to reduction of federal funding for public

housing across the country. while that reduction has had a major impact on the agency the agency's poor internal financial management practices have worsened the situation. since 2009 the housing authority has not hired a chief financial officer and there's no long term financial plan. as you can see from this slide in 2011 and 2012 the housing authority faced budget shortfalls of 4 million and 2.6 million respectively. as of the first five months of this fiscal year 2013, the housing authority is already facing -- exceeded 1.7 million dollars. according to hud's latest report in march, the housing author ity is expected to run

out of cash sometime between may or july of this year. responsibility for fiscal oversight lies primarily with its commission. at least the past two years, commission has provided inadd kate oversight and insufficiently addressed the [inaudible] committees such as the finance subcommittee were allowed to lapse while at the /saoeupl time the authority of the executive director was expanded. as we look at government and compare san francisco's performance with other housing authorities we found it was unusual for the executive body to have sole authority for commission appointments. typically this is shared between the executive and legislative bodies, but san francisco's legislative body is currently prohibitive from such participation by state law. we

believe sheer participation will improve accountability and we believe relocating commission meetings to city hall will improve transparency. one concern is with procurement. as i noted the previous commission expanded the awe /thorbty of the director but didn't enforce proper procedures. the housing authority has not had a consistent home within the agency for years shifting five times in the -- we saw no evidence of contract monitoring. beyond these more obvious deficiencies in financial management and procurement we saw weaknesses in management overall throughout the agency. they have not performed a staffing analysis in years and the organizational needs and

staffing levels across departments are currently unknown. this has led to insufficient management across the department. in addition, several senior staff members have been in acting positions for several years and they're on going key vacancies in senior roles at the agency. one major department that has been managed by an acting director for several years is the section eight department. we focused on two areas of section eight, that being staff productivity performance and waiting list management. over the past ten years, hud assessments have -- everyone as the housing authority was

inactive, correction action processes it really failed to demonstrate significant improvements across those deficiencies. one measure of performance for section at is which [inaudible] of their department's performance in 2011 and found that on average staff were completing one re-certify per day. the section eight /tkp-pt actually manages both the public housing and section eight waiting list, which we have found to be unusual. despite hud guidelines to update the waiting list annual, they have not been updated in years. the section eight waiting list which currently has 8900 families on it, has not been updated since 2001 and the

public housing hasn't been updated since 2008. this places a burden on the eligibility process. the section eight director notices that it typically takes completing an intake process for 80 applicants in order to find one viable candidate for a vacant housing unit. this wastes staff time and income as these housing units remain vacant longer than necessary. occupancy is the key indicator used by hud to -- the hud standard for occupancy has been 98 percent. at the time of hud's last assessment of the san francisco housing authority it's act pansy rate was 93 percent. not only does the housing authority have a high number of /sra cant units, but they have remained vacant for extended periods of. you can

see on this graph, hopefully, that the units -- and there are currently 276 vacant units in san francisco, have been vacant for an average of 195.5 days, or six-and-a-half months and this is despite hud standards that these units be turned over within 30 days. 276 current vacant units. that number may have changed since our audit. >> and what's the size of the wait list for these units? >> 26 thousand families on the waiting list. >> thank you. >> a major factor relating to the high vacancy is the high cost of preparing units for occupancy. the cost varies significantly between the senior units and family units

are respective average costs of 7306 dollars and 14,779 dollars. there are also costs to not preparing units for occupancy. they lose hud subsidies and also tenant rent as long as these units remain vacant. rent represents 33 percent of the authority's public housing program budget. failure to collect rent means that other important agency functions cannot take place and those functions include things like ongoing maintenance and repairs. since 2010 the average number of delinquent --

2572 delinquent tenants at the housing authority, only 19 percent were on payment plans. in accordance with hud guidelines, the housing authority is allowed to write off the uncollectible rent each year. the average amount of rent that the housing authority fails to collect is over 1.5 million dollars annually. in addition to rent the other opportunity that the housing authority has to generate revenue is to charge tenants for damage caused by them to units. this is standard, but san francisco stopped enforcing this policy in 2009 and as a result the department has fewer resources to meet the growing maintenance need at their properties. as you can see from this slide, maintenance

expenditures have far exceeded the budget in recent years and there are 3000 outstanding requests at properties across the city. one reason for this is that there's been a significant reduction in skilled craft workers and the other is that the housing authority has failed to [inaudible] by 40 percent in 2010 from 68 positions to 41 positions and we believe it's our understanding that there was another reduction in may of 2013, i believe of 11 position, which the housing authority can speak to in their report. at the same time the housing authority has been unable to transition to hud's new model of property management or asset

management. a /kaoer barrier to the housing authority for this transition is creating a new class of maintenance workers, referred to as a maintenance mechanic, otherwise a typically handy man. the san francisco housing authority is trying to negotiate with the union for in classification, but in the meantime it has lost 1.5 million dollars annually for a total of 7.5 million dollars over over the past several years. the final area we looked at was public safety. to address security concerns at its property, they have engaged in three primary efforts -- enhanced police services, private security guards and in-house security guards, however, to date the housing authority has not monitored the performance of these contracts, nor has it

performed a needs assessment to determine the appropriate level of service at each property. as you can see from this slide in 2012 the housing authority paid 490.10 for security per housing unit, as compared to an average cost of $210 per unit for other comparable housing authority. with regard to the housing authority's memorandum of understanding with the san francisco police department we found that despite its having been if place for ten years, performance has never been measured or effectiveness been determined. we believe the police department could continue to provide sufficient and effective policing at these properties using regular work shifts. we also recommend that the housing authority get a

staff person toover see public safety and conduct a needs assessment of those needs. those are the key highlights from our report. we would like to thank the staff and management of the housing authority for all of their assistance, including the new housing commission. we'd also like to thank the housing authority clients who participated in our survey and we're happy to answer any questions. >> thank you very much. holly, any questions on the findings? none? okay. let's open up for public comment. wait. oh, okay. housing authority. sorry barbara. >> it's okay. well, i do wish to thank all of you on behalf of the housing authority and express our appreciation to the board of supervisors and the

budget audit. it begins with the hud assessment last year and designating the housing authority as troubled for failing the financial and management indicator scores. ? january hud sent a public housing recovery sustainability team to the housing authority for public assessment and identified many of the problems that the analyst has confirmed. if july of this year hud will begin to provide several months of staffing [inaudible] address these problems and assist the housing authority in preparation of a comprehensive recovery agreement and action plan that will be executed between the housing authority and hud. the establishment of complete new leadership in february with the appointment of a highly qualified new commissioners by the mayor, the

you shall gent need for making critical fundmental changes to achieve better delivery of its affordable housing services was confirmed by the new leadership immediately. the commissioners amended the housing authority's bylaws in february to that meet monthly to increase oversight of operations and improve program delivery and begin to address the housing authority's financial and operational problems. housing authority in february faced an unprecedented 6.9 million dollar operating deficit and 11 million dollars of immediate urgent capital needs for its properties. that's within the 270 million dollars of the overall needs, but these 11 million dollars are the most urgent needs. the

housing authority's severe financial difficulties have been improves. as a result of these efforts, the housing authority's deficit has de/skraoesed to a little less than one million dollars at this time, which means the housing authority can operate into the beginning of august of this year. we've accomplished this through elimination of some positions, mostly management. reduction of overtime for non emergency work, increased recycling composting and modification of trash collection moat odds, realignment of service hours, labor concessions and relief payments for the police department, dpw and puc. a critical remaining come /poe innocent of these labor

negotiations that were part of the reduction in cost are the requirement for over a million dollars that hud is holding back from the housing authority is the maintenance mechanic position that the budget analyst mentioned. this will enable the housing authority to provide much better services to its residents by having individuals at the properties that can provide repairs for routine plumbing, electrical, carpentry, painting, flooring and other repairs, improvements that are really important to the residents. we're aware there is an enormous amount of work to be done to right this ship. and as we work toward better serving our residents and the city, we welcome continued collaboration and

assistance we've been receiving from the mayor, the board of supervisors, community organizations and the residents. the commission and i are committed to reforming the housing authority for the city. it is a strong operationally sound agency that improves the quality of life and safety for our residents. i'd like to briefly summarize where we are with the recommendations. i'll try to be brief because i want to let the residents have an opportunity to talk also. of the 43 recommendations, we' actually either completed or have underway 23 of those actions. for oversight, we created the personnel and finance committees and diversity committees and has

been holding monthly meetings, improve program delivery by requiring presentation of detailed reports by sfha's staff on the /tpoeu than /-rbl condition, operations and compliance with hud performance measures. we are preparing to relocate meetings to city hall for public participation as soon as sfgovtv videotaping is available at hours that are con convenient to our residents. the times available now are 8:00 am and 6:00 pm which are not the most convenient times for our residentses. and also some funds, this will be additional cost to the housing authority but it's very important for us to provide that to everyone to view our

meetings. in may, our finance committee instructed the director to arrange for staff training and employee appraisal process that will be monitored monthly. this training will begin /torpbl. it's much needed so all of our staff become high performers. on the public houseing financial commission we are preparing a disposition application to sell the 44 turk commercial property. we're looking to market this. the commission intends to use these funds for primarily one time uses and to address our capital needs. asset management -- the commission and personnel and finance committee receive

monthly budget variance reports that include material negative variances and corrective actions to correct those. asset management fees are no longer charged to properties. tenant rent collection has increased and this has been confirmed by hud. the remaining item for asset management compliance is establishment of a maintenance mechanic position. the housing authority has contracts for preventive maintenance for alarm system equipment. we're also developing a preventive maintenance plan for pest control and mold and mildew abatement. we're developing a

comprehensive maintenance plan that will include main /tphapbs that maintenance that the the staff at the housing authority can perform. that should reduce maintenance costs. a description has been drafted, training for existing staff has been developed and implementation will begin as soon as we have reached agreement with the unions. under the direction of the commission, the executive director is developing a preliminary training plan that identifies the appropriate number and type of these maintenance positions at each property, again, to provide quick response to residents for repairs. this will incorporate the costs into the budget. in

april if commission lowered the threshold from 100 thousand dollars to 30 thousand dollars. the approval threshold is already part of the procurement policy that may only be amended by commission resolutions. it was amended immediately after the commission action. the commission has directed the director to report on the amoresco contract, which was completed in february of this year. the first reports will be available on a quarterly basis, following this february completion of implementation. at that time, if any adjustments need to be made to that contract through baseline because we do have increased

occupancy at the housing authority that affect that contract -- of more favable and city and or lifeline rates in /aeu addition to [inaudible] by 30 percent from 233 thousand dollars a month down to 165 thousand dollars a month. the housing authority has reinstated centralized procurement and annual planning and documentation of contract administration is underway. guidelines for their use and training for procurement use and training is also underway. we engaged the housing authority's former director of procurement who retired five

years ago to assist with this transition while we're waiting for hud assistance. this began in may with an updated policy and procedures manual, accountable and responsibility to staff administering contracts. of in consultation with hud [inaudible] requirements all procurement monitoring of contract administration is being recentralized. property management and maintenance -- in this area the acting director is ensuring that the director of may not takes immediate steps to improve maintenance operations to address the work order backlog and meet maintenance timeliness. hoe's working with the it department for implementation of a new work order system. work is dispatched through i pads to foremen throughout the day.

the foreman knows where the craft workers are and is able to most efficiently dispatch them. the workers are also able to close out work on their i pads and trigger and automatic email to the property manager so they're aware of the status of work orders at their sites. work order come /phroegs times are being accelerated, but there's a ways to go. we still have a lot of outstanding work orders. since january we've completed about 15 thousand work orders, but almost 3000 work orders are still outstanding. maintenance mechanic work /-rs will greatly improve or ability to address work orders since they'll be able to perform a broad range of repairs right at the properties. there is a resolution pending before the

commission today to reinstate maintenance chargers. we expect that will be approved today. rent payments are due on the 1st of the month and are late after the 5th. the housing authority has not been diligent in communicating with residents about their late rent payments and also providing them with information on resources that are available to them that might help with financial management and any particular problems they're having in getting their rent obligations. a 14 day notice are being now automatically generated from the housing authority's computer system on the sixth of the month. we're working out some bugs with that, but generally that's true. and the property managers distribute those

notices directly to the tenants. the housing authority is reinstituting a late fee if rent payments are not paid by the 15th of the month. this action is also pending before the commission today. since april the acting ed have been meeting monthly with the property managers to discuss property management responsibilities, including challenges and practices for lease enforcement and rent collection. in addition, in february, all property managers were required to attend three day property management certification training that was hosted at the housing authority. and it was a certification training and included all aspects of