The city continues to be under the microscope of the U.S. Department of Housing and Urban Development after it received three letters this week pertaining to its subsidized housing program, commonly known as Section 8.

The city underwent a three-day Civil Rights Compliance review of its Section 8 Housing Choice Voucher program last month and HUD officials aren’t done, according to a letter dated July 31. The federal housing agency will continue that investigation with a second on-site inspection later this month, including a series of interviews scheduled for next week.

The city also received two letters on Tuesday concerning how the Middletown Public Housing Authority is in violation of the Uniform Financial Reporting Standards requiring housing authorities to submit financial information to HUD.

On Aug. 13-15, HUD will continue its compliance review, according to a letter from the HUD obtained by The Middletown Journal.

During this month’s visit, investigators “will continue to conduct interviews, and review files related to the Section 8 program,” according to the letter from Carolyn Murphy, the director of HUD’s Columbus Fair Housing Center.

The city had prepared 1,000 pages worth of documents when the HUD officials came to review the program from July 16-18. City officials were informed of the July on-site review of the program and an in-house review of data pertaining to the program in a May 31-dated letter from Murphy’s office.

City and HUD officials are not commenting on the ensuing interviews, the upcoming visit or the visit that had already happened.

According to the July 31-date letter, officials from HUD’s Cincinnati field office will conduct interviews by phone and at the MPHA office on Elliott Drive in Middletown. On Wednesday and Thursday, all council members except for Mayor Larry Mulligan will be interviewed by telephone. On Friday at the MPHA office, City Manager Judy Gilleland and Community Revitalization Director Doug Adkins will be interviewed in person.

It is uncertain why the mayor was not included to be interviewed.

Before the city was informed about the continuation of the Civil Rights Compliance review, it was addressing two letters pertaining to the 2011 Section 8 program financial audit.

The two letters — one outlined the financial reporting requirements and the other highlighted two “findings” from an independent audit — give the city two months to submit documents that outline corrective actions to violating HUD’s reporting standards and not accounting for more than $8,000.

MPHA apparently did not submit financial data schedules for 2006 to 2011, which “prevents the department from conducting proper assessments of the financial health of the financial authority,” according to Sweet.

The city must submit FDS information for 2009 to 2012 within 60 days, as well as a corrective action plan.

MPHA also apparently paid $736 in February 2001 for a person that left the Section 8 program in 2010. MPHA also did not pay HUD $7,571 in interest earned on federal funds.

HUD concluded that in both cases, there was “a lack of internal controls,” and the nonpayment of the interest funds “resulted in noncompliance with the grant agreement.”

The letter indicates the city had responded to both issues and “concurs” with both findings.

Pertaining to the payment for a former Section 8 participant, the city has recovered that money. The city had indicated internal changes happened in early 2011 when it changed program administrators from Consoc Housing Consultants to Nelson & Associates.

Regarding the nonpayment, the city “intends to make modifications to the internal controls covering these programs to ensure compliance … .”

HUD is also asking for documentation to correct an apparent accounting error regarding a transfer of $50,000 from the Home program to the Housing Assistance Fund. An audited financial data schedule was not submitted to HUD to determine when the issue occurred. Documentation is also being requested.