Develop and implement controls to ensure that indemnification agreements that result from U.S. Department of Justice settlements have been properly recorded in FHA Connection.

Take appropriate administrative action against FTB for violations of the settlement agreement.

Support the reasonableness of or reimburse the project $2,232,004 ($1,719,736 $484,615 $27,653) from nonproject funds for the project funds disbursed without sufficient procurement or contract documentation.

Support or reimburse the project from nonproject funds $7,091, as appropriate, for the project funds disbursed without sufficient supporting documentation.

Reimburse the project from nonproject funds $46,024 for the project funds that were not used for reasonable operating expenses or necessary repairs of the project.

Support or reimburse the project from nonproject funds $39,690, as appropriate, for the project funds disbursed without sufficient documentation supporting that the invoices were not for duplicate work.

Implement adequate procedures and controls to ensure that project funds are used for only reasonable operating expenses or necessary repairs when the project is in a non-surplus-cash position.

Reimburse the project $95,174 from nonproject funds for management fees in excess of the maximum yield.

Support or reimburse the project $70,632 from nonproject funds, as appropriate, for the project funds disbursed to Vesta Corporation for bookkeeping fees without documentation showing that the bookkeeping fees charged were reasonable.

Implement adequate procedures and controls, including but not limited to ensuring that the project receives HUD’s communications to ensure that its management and bookkeeping fees comply with HUD’s requirements.

Implement adequate procedures and controls to ensure that its bookkeeping fees are based on actual costs.

Use the project’s security deposits bank account to deposit and disburse security deposits.

Ensure that $1,385,791 ($1,229,684 in housing assistance payments and $156,107 in associated administrative fees) used by the Lexington-Fayette Urban County Housing Authority is supported through a valid and retroactive exemption from HUD’s third-party requirements. If a retroactive exemption cannot be issued, HUD should follow recovery procedures prescribed in HUD Handbook 2000.06, REV-4.

Revise the standard MTW agreement for all existing 39 MTW housing agencies to clearly and specifically support which provision(s) waive the third-party inspection requirements.

Issue clarifying guidance to all existing 39 MTW housing agencies advising that HUD intended to waive the third-party inspection requirements via attachment C to the standard agreement.

Ensure that reviews of MTW annual plans are thorough by verifying that the MTW plan accurately identifies the appropriate exemptions as authorized in the MTW agreements.

Verify that the Office of Public Housing Investments’ approvals of all MTW public housing agencies’ MTW plans’ exemptions from HUD’s third-party requirements were valid and appropriate.

Require the Authority to reimburse its Public Housing Capital Fund program $38,411 from nonproject funds for the inappropriate use of funds for the Section 8 Project-Based Voucher Program units.

Ensure that the Louisville, KY, PIH field office sends to the Office of Recapitalization any requests it receives for approving capital funds expenditures after the RAD conversion is complete.

Require the Authority to ensure that capital funds are used in accordance with the program requirements for any future RAD conversions.