Pennsylvania’s affordable housing oversight has come under scrutiny following a performance audit released by Auditor General Timothy L. DeFoor. The audit highlights significant recordkeeping inconsistencies within the Pennsylvania Housing Finance Agency’s (PHFA) PennHOMES program, alongside 24 recommendations for improvement. The findings are based on a review of activities from July 1, 2022, through September 30, 2024.
While the audit found no issues with PHFA’s application review process for developers seeking funding, it revealed deficiencies in the agency’s documentation practices. Auditors noted that PHFA did not consistently retain essential decision-making documents and exhibited uneven recordkeeping when monitoring properties financed through the PennHOMES program.
Key Findings from the Audit
DeFoor emphasized the importance of efficient recordkeeping, particularly when public funds are involved. “This audit is another example of why efficient and effective recordkeeping is essential when spending public funds,” he stated. “We found that while there weren’t issues with PHFA’s application process for PennHOMES, the agency didn’t keep important decision-making documents.”
The audit aimed to evaluate whether PHFA’s processes for reviewing developers’ applications and awarding funds complied with relevant laws, regulations, and policies. Additionally, it assessed the agency’s monitoring of PennHOMES-funded housing to ensure compliance with rent restrictions and income eligibility requirements.
Auditors identified two formal findings and detailed 24 recommendations intended to strengthen internal controls, documentation practices, and monitoring procedures. PHFA officials indicated they are currently implementing a new data system, a move DeFoor expressed optimism about. “This is a system that can be improved,” he noted, adding, “We look forward to seeing these recommendations implemented and the improvements in action when we revisit this audit in the future.”
The Role of PennHOMES in Affordable Housing
The PennHOMES program provides 0% interest, deferred-payment loans to developers who construct rental housing for lower-income residents. Funding for this initiative is sourced from PHFA’s unrestricted reserves and federal HOME Investment Partnerships Program funds. The audit specifically reviewed the 2022 and 2024 application cycles, as there was no cycle in 2023.
As a key player in financing housing for low- and moderate-income families, older adults, and individuals with special housing needs, PHFA administers various homeownership and multifamily rental development programs across Pennsylvania. A comprehensive list of findings and recommendations from the audit can be accessed at https://www.paauditor.gov/audits/.
Furthermore, the Department of the Auditor General maintains a “Be Audit Smart” section at www.PaAuditor.gov, where residents can review recent audits, subscribe for notifications, and monitor how public funds are being scrutinized across the state.
