A Colorado rental assistance program that paid money directly to landlords for tenants who needed help with rent during the pandemic paid an estimated $2.39 million in error between July 2020 and March of this year, according to a state audit report.
The report about the Property Owner Preservation Program, presented Monday to the state’s Legislative Audit Committee, found that about 5% of the $47.13 million in housing assistance likely had problems. The program, which received state and federal funding, ultimately distributed more than $50 million to about 1,600 property owners before it ended after June of this year, the report stated.
The audit team estimates that the housing division most likely made $2.39 million in payments erroneously, but acknowledged that the amount could range between $625,000 and $4.4 million. Had those incorrect payments had not been made, the Office of the State Auditor said the program could have made an additional 1,200 payments.
Of 60 payments reviewed, auditors found duplicate payments, payments covering fees for returned checks or late fees (which were not allowed), and one instance where the wrong payment amount was approved, audit supervisor Heidi Wagner said at the meeting. One landlord received payment for rent that was due before the pandemic started. In two payments to local government to help renters, auditors found one payment with a calculation error and one that covered rent for a unit that was vacant.
The report showed that for 10 of the payments the team reviewed, it found $15,960 was paid above what was allowed.
“According to the division, these overpayments happened because they were reviewing applications very quickly, and trying to get the money out the door to those in need,” Wagner said. The program was started less than a month after the bill authorizing it was signed into law.
“…Of course we would have loved to have had this report say we made no errors,” said Division of Housing Deputy Director Wendy Hawthorne. “But despite that, we are very proud of the program.”
The samples also indicated that the housing division didn’t always get copies of signed rental agreements or send timely tenant notification letters about the payments.
Auditors estimate that about 6.67% of 23,179 cases received payment before the housing division had copies of signed rental agreements during the period reviewed, and 47% of renters (11,000) didn’t receive notification letters until the audit found the problem.
Landlords were not allowed to start the eviction process if they had received money from the program.
“From August 2020 through July 2021, the division received about 80 allegations that property owners were not complying with program provisions,” the report stated. “If the tenant notification letters were provided for the months between January and May 2021, the division may have received more allegations.”
Hawthorne said part of the problem was some of those applying for rental assistance didn’t have lease agreements with their landlords and the division was trying to provide alternatives for those agreements so it wasn’t a barrier for those who needed help most. The division corrected the issue of notifications when they found out about it, she said.
The auditors recommended the following changes to the division:
- Implementing detailed payment procedures
- Following up on overpayments identified in the audit and asking for the money back
- Periodically monitoring payments to make sure staff had all required documentation such as rental agreements
- Implementing written procedures for tenant notification letters
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