Property Disposition:

HUD's Illinois State Office Incurred Unnecessary Management Expenses

RCED-96-52: Published: Apr 22, 1996. Publicly Released: Apr 22, 1996.

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GAO provided information on the unnecessary management expenses being incurred by the Department of Housing and Urban Development's (HUD) Illinois State Office in its property disposition program.

GAO found that: (1) there were two practices at the Illinois State Office that unnecessarily increased HUD management costs; (2) the office incurred $22,000 in unnecessary expenses when it continued to pay for water and sewer services for 60 vacant properties that were held in inventory for months before these properties were sold; (3) because the office did not pay property taxes on time, it lost three properties and incurred $62,000 in unnecessary expenses to recover the properties and pay the penalties and interest on the delinquent taxes; (4) the office's expenses to recover these properties were substantially higher than the amount it would have paid had it timely acted; and (5) the office could avoid having future tax liens and losing properties if it better tracked its unpaid taxes.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In letters addressed to the Chairmen of the Senate Committee on Governmental Affairs and House Committee on Government Reform and Oversight (both dated July 29, 1996), the Secretary, HUD, stated that the department had advised the Illinois State Office to take appropriate action to eliminate all unnecessary water and sewer expenses. Also, in a May 1996 memorandum, the Deputy Assistant Secretary for Single-Family Housing informed all field offices of the necessity to monitor property managers to ensure that utility companies are notified to discontinue services when HUD takes ownership of a property.

    Recommendation: The Secretary of Housing and Urban Development (HUD) should direct the Assistant Secretary for Housing to require that the Illinois State Office ensure that real estate asset managers discontinue water and sewer services when HUD takes possession of properties.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Implemented

    Comments: In a May 1996 memorandum, the Deputy Assistant Secretary for Single-Family Housing informed all field offices of the necessity to monitor property managers to ensure that utility companies are notified to discontinue services when HUD takes ownership of a property. The memorandum further advised field offices to review tax statements on Secretary-held mortgages and HUD-owned properties upon receipt and to arrange prompt payment to avoid the sale of properties for unpaid taxes and to redeem any properties within the redemption period.

    Recommendation: The Secretary of Housing and Urban Development should direct the Assistant Secretary for Housing to advise other HUD field offices of this situation to reduce the likelihood that the problem can occur elsewhere.

    Agency Affected: Department of Housing and Urban Development

 

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