[Survey Report on Employee Housing Rental Income, National Park Service (99-I-919)]
[From the U.S. Government Printing Office, www.gpo.gov]

Title: Survey Report on Employee Housing Rental Income, National
       Park Service (99-I-919)  

               Report No:   99-I-919

               Title:            Survey Report on Employee Housing Rental Income, National Park
                                    Service

               Date:            September 1999


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 C-IN-NPS-001-99
  
  
                     
  
  
 SURVEY REPORT 
  
  Memorandum
  
  To:                Assistant Secretary for Fish and Wildlife and Parks
  
            From:   Robert J. Williams
                                        Assistant Inspector General for Audits
  
                 Subject:     Survey Report on Employee Housing Rental Income, National Park Service
                                                  (99-I-919) 
  
                         INTRODUCTION
     
  This  report presents the results of our survey of rental income for housing provided to 
  National Park Service employees.  The objective of the survey was to determine whether (1)
  the Park Service complied with the criteria contained in Office of Management and Budget
  Circular No. A-45, "Rental and Construction of Government Quarters," concerning rental
  rates charged for Government quarters;  (2) housing was  provided only to properly
  authorized and eligible individuals; and (3) the Park Service established adequate controls
  over the use of rental income. 
  
  BACKGROUND
  
  According to the Acting Director of the Park Service, the Park Service provides housing for
  "those persons who are essential to the management and operation of the park," including
  Park Service employees, concessioners' employees, park volunteers, "essential cooperators,"
  and employees of other Federal agencies.  In fiscal year 1999, the Park Service managed
  4,516 single-family and multiple-unit housing quarters (excluding trailers, trailer pads, and
  tents).  In its fiscal year 2000 budget justification, the Park Service reported that it expected
  to receive rental income of about $15 million in fiscal year 1999 and $15.3 million in fiscal
  year 2000.  The Park Service collected rental income of about $14.8 million and spent
  housing account funds of about $14.2 million in fiscal year 1998.  The Park Service does not
  maintain information on the amount of rental income paid by concessioner employees who
  occupy park housing because this income is collected and retained by the concessioners. 
  Park Service compensation for concessioner employees' use of park housing was discussed
  in our audit report "Concession Contracting Procedures, National Park Service" (No. 99-I-
  626), dated June 1999.  In this report, we stated that neither the Park Service's concession
  management nor its housing program provided for concessioners or their employees to make
  rental payments to the Government for concessioner use of park housing.
  
  Federal law (5 U.S.C. 5911) requires agencies to establish rental rates or charges for
  Government quarters that are based on their "reasonable value . . . to the employee . . . in the
  circumstances under which the quarters and facilities are provided, occupied or made
  available."  Office of Management and Budget Circular No. A-45, "Rental and Construction
  of Government Quarters," states that rental rates should be based on "the rule of equivalence;
  namely, that charges for rental and related facilities should be set at levels equal to those
  prevailing for comparable private housing located in the same area, when practicable." 
  Circular A-45 also states that the rates should not reflect subsidies to the employees or serve
  as an inducement in the recruitment or retention of employees and that the rates should be
  fair and consistent.  The Interior Appropriations Acts for fiscal year 1985 (Public Law 98-
  473) and fiscal year 1989 (Public Law 100-446) provide for rents and charges for housing
  to be collected by payroll deductions and for rental fees to be deposited into a special fund
  in each agency and for the monies "to remain available, until expended, for the maintenance
  and operation of the quarters of that agency." 
  
  The Park Service uses the Department of the Interior's computerized Quarters Management
  Information System to calculate rental rates.  The System, which is operated by the
  Department's National Business Center, has a rental rate calculation program and a
  computerized housing inventory.  The Park Service is responsible for providing accurate 
  housing inventory data to the Center on the location, type, age, size, and condition of each
  housing unit.  The Center uses this information to update its housing data and rental rate
  calculations.
  
  In November 1997, the Park Service revised its housing policy and criteria to comply with
  the Omnibus Parks and Public Lands Management Act of 1996 (Public Law 104-333), which
  required the Park Service to eliminate unnecessary housing, to assess the physical condition
  of its housing, to determine whether existing housing was needed and justified, and to assess
  its housing criteria.  The revised policy created two categories of housing: Category I
  (required housing), which covers "employees in positions whose physical presence is
  required within a specific geographic area to provide timely response to emergencies outside
  normal working hours," and Category II, which covers housing provided for employees at
  remote locations, for the parks' temporary work force, and for the use of historic structures. 
  All housing that is neither Category I nor Category II is considered to be excess to the
  housing program.  According to the Park Service's Acting Director, in addition to revising
  housing policy, "parks were directed to prepare an excess housing plan that could indicate
  continued use, or other uses such as leasing, stabilization, removal, etc."
  
  In addition, during our review, the Park Service was reviewing or planned to review housing
  in three phases: conducting an overall needs assessment, conducting condition assessments,
  and developing a business plan/feasibility analysis for housing use.  The needs assessment
  was completed by contractors in December 1998; however, the contractors and the individual
  parks did not always agree on the parks' housing needs.  Consequently, as of June 1999, the
  Park Service had not finalized the needs assessment.  According to a Park Service official,
  the second phase of the review will be initiated after the issues relating to the first phase are
  resolved.
  
  SCOPE OF SURVEY
  
  Our survey work was performed from March through May 1999 at the Intermountain
  Regional Office in Lakewood, Colorado; Rocky Mountain National Park; and Sequoia and
  Kings Canyon National Parks (two distinct parks that are administratively managed as one
  park).  We also contacted the Pacific West Regional Office, in San Francisco, California, and
  the Bureau of Reclamation's Quarters Management Information System Office, in Denver,
  Colorado.  We selected the Intermountain and Pacific West Regions because they contain
  3,042, or 67 percent, of the 4,516 units in the Park Service's housing inventory.  In addition, 
  total employee housing revenues and expenditures for these two regions were $10.2 million
  and $9.8 million, respectively, or 69 percent of the total Park Service revenues and
  expenditures for housing in fiscal year 1998.  For our survey, we selected Rocky Mountain
  National Park (141 housing units) in the Intermountain Region and Sequoia and Kings
  Canyon National Parks (172 housing units) in the Pacific West Region.  These two parks
  were selected for review because they have a large number of housing units (only
  Yellowstone, Yosemite, and Grand Canyon National Parks have a significantly greater
  number of housing units) and a variety of housing types. 
  
  We conducted the survey in accordance with the "Government Auditing Standards," issued
  by the Comptroller General of the United States.  Accordingly, we included such tests of
  records and other auditing procedures that were considered necessary under the
  circumstances.  As part of our review, we evaluated the system of internal controls related
  to the Park Service's compliance with housing eligibility requirements and the collection and
  use of housing rental fees.  We found internal control weaknesses in these areas, which Park
  Service officials agreed to correct.  Based on the relatively minor deficiencies found during
  our review and the Park Service's plans to review its policy regarding housing eligibility, we
  limited our audit to the survey sites selected. 
  
  In addition, we reviewed the Departmental Report on Accountability for fiscal year 1998,
  which includes information required by the Federal Managers' Financial Integrity Act, and
  the Assistant Secretary for Fish and Wildlife and Parks annual assurance statement on
  management controls for fiscal year 1998 and determined that a material weakness was
  reported in the annual assurance statement regarding housing needs assessments and the cost
  of constructing new housing in the National Park Service.  The annual assurance statement
  stated that Park managers, as part of the corrective action plan, will be responsible for
  determining the minimum number of mission-critical housing units at their park units. 
  
  PRIOR AUDIT COVERAGE
  
  During the past 5 years, the Office of Inspector General has not issued any audit reports on
  Park Service housing rentals.  However, the General Accounting Office has issued three
  reports on the subject as follows:
  
     - "National Park Service Concerns About the Implementation of Its Employee
  Housing Policy" (No. GAO/T-RCED-99-119), issued in March 1999, presented General
  Accounting Office testimony before the Subcommittee on Interior and Related Agencies,
  Committee on Appropriations, House of Representatives.  The report discussed  the Park
  Service's progress in implementing its October 1997 commitments to issue a revised housing
  policy and hire contractors to conduct a park-by-park needs assessment based on the revised
  policy.  The report stated that the contractors determined that there was a surplus of 522
  housing units Servicewide (which included an overall surplus of 1,072 units and an overall
  shortage of 550 units) but that Park managers who reviewed the contractors' work
  determined that there was a shortage of 760 housing units Servicewide (which included an
  overall surplus of 165 units and an overall shortage of 925 units).  The report attributed the
  differences to "many park managers' fundamental disagreement with the revised housing
  policy" and stated that this disagreement "raises serious concerns about the credibility of
  future Park Service housing initiatives and any funding requests that the agency might have
  for providing employee housing."
  
     - "National Park Service Employee Housing Issues" (No. GAO/T-RCED-98-35),
  issued in October 1997, presented General Accounting Office testimony before the
  Subcommittee on Interior and Related Agencies, Committee on Appropriations, House of
  Representatives.  The report stated that the Park Service was slow in responding to
  previously identified housing issues; "had not clearly justified the need for all" employee
  housing; had prepared no detailed support for the estimated repair backlog; and had given
  park managers' broad discretion in implementing housing policy, which resulted in
  "inconsistencies in how the program was managed across the agency and raises questions
  about whether housing decisions are being made in the best interest of the agency."  The
  report also stated that as a result of the Omnibus Parks and Public Lands Management Act
  of 1996, the Park Service "is beginning the process to assess the need for its housing units"
  but that "continued Congressional attention is needed to ensure that the Park Service is held
  accountable" for its housing policies and decisions.
  
     - "National Park Service: Reexamination of Employee Housing Program Is Needed"
  (No. GAO/RCED-94-284), issued in August 1994, stated that a major issue facing the Park
  Service's housing program was insufficient rental and appropriated funds to finance the
  backlog of housing repair, rehabilitation, and replacement needs.  The report recommended
  that the Park Service (1) conduct a park-by-park review of housing needs to determine
  whether the current housing inventory at each location is necessary and justified and (2)
  develop a strategy for obtaining non-Federal funds by reviewing identified housing
  alternatives and formulating a plan for implementing the most effective alternatives.
  
   RESULTS OF SURVEY
  
  The National Park Service generally charged and collected the proper rents for Government-
  furnished quarters and used the rental income properly with the exceptions that are discussed
  in the Other Matters section of this report.  However, we found that the Park Service
  provided Category II housing to permanent employees who were not eligible for such
  housing under Park Service policy, which was under reconsideration as of August 1999. 
  Specifically, we identified 52 housing units that were assigned to permanent employees who
  were not eligible under existing policy to occupy the housing.  Chapter 3, Sections 3.4 and
  3.5, of the Employee Housing Management Handbook, issued by the Park Service in
  December 1997, permits permanent employees to occupy housing (other than historic
  structures) under Category II criteria only when their duty station is "remote" and adequate
  private housing is not available within a 60-minute one-way commute.  The Park Service
  provided housing to permanent employees who did not qualify for housing because two parks
  (Rocky Mountain and Kings Canyon National Parks) relied on contractor needs assessment
  studies that qualified employees for housing based on determinations of remoteness, which,
  in our opinion, were incorrect.  At another park (Sequoia National Park), ineligible
  employees were provided housing, which was contrary to the Park Service's policy.  As a
  result, the Park Service may not have accurate information for the employee housing needs
  assessment, which is required under provisions of Public Law 104-333. 
  
  At the three parks visited, there were 313 housing units available for occupancy.  Of these
  housing units, 49 were occupied by employees who qualified for housing under Category I
  criteria, 260 were occupied by Park Service or concessioner employees under Category II
  criteria, and 4 were considered excess based on the Park Service's needs assessment (see
  Appendix 2).   
  
  Remoteness Determinations
  
  One criterion for assigning Category II housing to employees is "remoteness," which is
  defined by the Park Service as an adequate supply of private housing not being available
  within a commuting "distance requiring travel time of not more than 60 minutes (one way)
  from the employee's duty station by conventional private/public transportation."  The Park
  Service further required that the remoteness determination should be based on the
  commuting time from the park to the available housing in "good weather at non-peak times."
  
  In March and November 1997, the Park Service contracted for two housing needs
  assessments, which were being finalized at the time of our survey.  Based on the contractors'
  determinations, Rocky Mountain and Kings Canyon National Parks assigned Category II
  housing to permanent employees on the basis of remoteness because, according to the
  contractors, local communities with adequate housing within a 60-minute drive did not exist. 
  Specifically, at Rocky Mountain National Park, the contractor's report stated that adequate
  private housing did not exist within a 60-minute drive from the headquarters area of the park.
  However, the contractor told us that its evaluations were made during a light snowfall and
  that the driver encountered two separate rock slides en route--conditions that would decrease
  the number of communities within a 60-minute commute.  Consequently, in making its
  determination, the contractor did not include housing in the communities of Loveland
  (population 45,728), Longmont (population 60,226), and Boulder (population 92,446), all
  of which were within a 50- to 51-minute commute to the Park (based on our commute to the
  Park from these areas in good weather at non-peak times).  A similar condition existed for
  the Grant Grove housing area at Kings Canyon National Park, where the communities of
  Reedley (population 20,050) and Sanger (population 18,650), California, were not included
  in the contractor's determination of remoteness, even though we determined that the areas
  were less than a 60-minute commute to the Park.  As such, we identified 30 housing units
  (20 at Rocky Mountain and 10 at Kings Canyon) that were occupied by permanent
  employees who were not eligible for housing based on the remoteness consideration under
  the Park Service's Category II requirements.
  
  Policy Implementation
  
  Regarding  Sequoia  National  Park's  Ash Mountain housing area, the contractor
  determined, and Park officials agreed, that private housing was available within a 60-minute
  drive.  As such,  Ash Mountain  housing  could  be occupied only by employees eligible
  under Category I criteria and seasonal employees or employees who occupied historic
  structures under Category II criteria.  The housing could not be used for permanent
  employees under Category II criteria.  However, Park officials allowed ineligible permanent
  employees to reside in the housing and continued to assign ineligible permanent employees
  to the housing when it became available because the officials were awaiting the completion
  of all three phases of the Park Service's housing review.  We determined that 22 housing
  units at Ash Mountain were occupied by permanent employees who did not qualify for
  housing under either the Category II historic structure or the remoteness criterion.  
  
  We concluded that housing was occupied by employees who were ineligible for the housing
  under current Park Service policy because the contractors did not determine remoteness in
  accordance with Park Service criteria.  Specifically, the contractors did not include
  communities that were within a 60-minute commute to Rocky Mountain and Kings Canyon
  National Parks in their determination of the proximity of available housing.  Also, Sequoia
  National Park did not comply with Park Service policy on employee eligibility for park
  housing.  As a result, the needs assessment for the three parks appeared to be misstated by
  52 units, or 16.8 percent (52 divided by 309).
  
  During our review, the Park Service's Associate Director for Park Operations and Education
  said that the Park Service intends to reconsider and possibly revise its November 1997
  housing policy. 
  
   Recommendation
  
  We recommend that the Director, National Park Service, review the Park Service's policy
  regarding eligibility for employee housing under the Category II remoteness criterion.  Upon
  completion of the review, actions should be taken to ensure that all regions and parks comply
  with the Park Service's housing policy (current or revised), and the needs assessments for
  Rocky Mountain and Kings Canyon National Parks should be reviewed to determine
  employee eligibility for housing based on the remoteness criterion.
  
  National Park Service Response and Office of Inspector General Reply
  
  In the September 15, 1999, response (Appendix 3) to the draft report from the Acting
  Director, National Park Service, the Park Service did not respond to the report's
  recommendation and said that it did not agree with our survey results.  Based on the
  response, we consider the recommendation unresolved (see Appendix 4).  
  
  Additional Comments on Report
  
  In its response, the Park Service made general and specific comments on the report.  The
  general comments and the Office of Inspector General's responses to the comments are as
  follows:
                                                               
  National Park Service Comment.    The Park Service said that it was  "concerned
  . . . that the focus of the report [had] shifted from its stated objective to another objective: 
  the recent Housing Needs Assessment" and that the Inspector General should have met with
  Park Service officials and "clearly" stated that it was expanding the audit objective to include
  the housing study.  The Park Service also said that the report contained "many allegations
  which are not substantiated" regarding the Park Service's housing study and that we had not
  requested information on the study "such as the scope of work and the specific criteria to be
  used."  The Park Service also stated that it disagreed with our conclusion that it provided
  housing to ineligible employees.  The Park Service, however, agreed with our finding on
  housing rental income and stated that "any deficiencies noted were corrected or are to be
  corrected effective October 1, 1999."
  
  Office of Inspector General Reply.  We did not conduct a comprehensive review
  of the Park Service's contracted housing needs assessments/market analyses, and we did not
  comment on the contractors' approach (scope or criteria) used to conduct the reviews. 
  Rather, we used the contractors' application of the Park Service's "remoteness" criterion in
  determining whether housing was available outside the parks.  We believe that using this
  aspect of the housing needs assessment study was appropriate and relevant to  the objective
  of our audit, which included a determination as to whether "housing was provided only to
  properly authorized and eligible individuals."  Also, from personnel at the three parks visited,
  we obtained copies of the contractors' housing studies for their parks, which we reviewed
  and discussed with park and regional Park Service officials. 
  
  Also, we strongly disagree with the Park Service's statement that housing was not provided
  to ineligible employees.  At Sequoia National Park, Park officials said that housing was
  provided to ineligible employees pending completion of the Park Service's needs assessment
  studies and its development of related housing policy.  Moreover, the General Accounting
  Office in its March 1999 testimony (see "Prior Audit Coverage") said that "Park managers
  did not assess their housing needs consistent with the Park Service's housing policy" and
  later added that "there is some evidence to suggest that park managers have not accepted the
  new housing policy or the need to minimize the agency's housing inventory."
  
  In addition to its general comments, the Park Service made specific comments on the report,
  and we revised the report to reflect the comments as appropriate.  However, we did not revise
  the report relating to the following comments:
  
     -   Referring to our discussion in Prior Audit Coverage of the General Accounting
  Office's March 1999 testimony ("National Park Service Concerns About the Implementation
  of Its Employee Housing Policy"), the Park Service said that it "did not change any contractor
  numbers" when the Park Service and the contractors differed in their  assessments of park
  housing needs.
                                                               
  In the report, we did not state or imply that the Park Service made revisions to the
  contractors' determinations of the parks' surplus or shortage of housing.
  
     -   The Park Service said that our statements "regarding contractor-determined
  availability are not substantiated and leave the reader with the impression that the NPS
  [National Park Service] market analysis was flawed.  These statements need to be
  substantiated and based on the very same criteria the [Park Service] contractor used, or they
  should be deleted from the report."
  
  We did not review or comment on the accuracy or propriety of the contractors' market
  analysis.  However, we discussed the contractors' assessments of remoteness with park and
  regional officials and interviewed contractor employees who performed the assessments.  For
  one assessment, we found that  a contract employee had not applied the Park Service's
  remoteness criterion properly in determining whether housing was available within a 60-
  minute, one-way commute to the park.
  
     - Regarding the remoteness factor, the Park Service said that the contractor was
  "directed to use a 60-minute commute shed from the employees' duty station, not the park,
  under normal driving conditions" and that adverse weather conditions and heavy visitor
  traffic were "considered normal" at both parks.
  
   We do not consider adverse weather to be the normal condition at Rocky Mountain or Kings
  Canyon National Park.  Moreover, the contractor based his assessment of the commute to
  one park on a trip in which he encountered light snowfall and two rock slides--conditions
  that are not typical of a normal commute.  Also, we based our commuting time on the
  distance between Park headquarters and available housing outside the parks.  We made the
  commute under normal driving conditions and during a high-visitation period.
  
     - The Park Service said that the criterion for remoteness was based on Office of
  Management and Budget Circular A-11, which defines a reasonable commute as not more
  than a 2-hour round-trip.
  
  We revised the report to state that the remoteness criterion was based on a 60-minute, one-
  way commute, which is the equivalent of a 2-hour round-trip commute.
  
  Other Matters
  
  During our review, we identified minor deficiencies in the areas of rental rates charged to
  employees and the controls over collections and expenditures of rental income.  Park
  officials informed us that appropriate actions would be taken to correct these minor
  deficiencies.
  
  Rental Rates.  The rental rates charged by the Park Service for Government housing
  generally were established in accordance with Office of Management and Budget Circular
  No. A-45, "Rental and Construction of Government Quarters."  We tested the rental rate
  calculations from the Quarters Management Information System (the Department of the
  Interior's automated system used to record employee housing data) and found that the
  calculations were accurate based on the inventory data in the System.  However, when we
  compared the data on housing conditions in the System (excellent, good, fair, or poor) with
  the  condition of housing units at Sequoia and Kings Canyon National Parks, we found minor
  inconsistencies and inaccuracies in the data.  For example, we found housing that needed
  considerable maintenance recorded in "good" condition in the System.  Conversely, we found
  housing that was in very good condition with new paint and carpet and no identified
  maintenance needs that was listed in "poor" condition in the System.  These inconsistencies
  occurred because the determinations of housing conditions were performed by different
  employees who had different interpretations of what constituted excellent, good, fair, or poor
  condition.  In addition, the housing inventory was not always updated by Park officials to
  recognize changes in the condition status resulting from renovations or repairs.  We
  identified two instances in which housing had been repaired/renovated but which were
  recorded in the System as in "poor" condition.  When rental rates are based on inaccurate
  housing conditions, the monthly rent is higher or lower than necessary.  The Park
  Superintendent stated that a part-time housing assistant was being recruited and that the
  inconsistency in housing condition determinations would be corrected.
  
     Rental Income and Controls. We found that controls over the collection and
  expenditure of rental income were generally adequate at the three parks visited.  However,
  at Rocky Mountain National Park, appropriate amounts of rent were not collected for housing
  units occupied by volunteers.  At Sequoia and Kings Canyon National Parks, the Park
  Service did not implement adequate controls over the expenditure of rental income.
  
  Chapter 8, Section 8.3.1, of the Park Service Employee Housing Management Handbook 
  requires benefiting activities to pay rent for quarters occupied by volunteers.  However, at
  Rocky Mountain, the Park did not charge the benefiting programs the full rental rate for
  housing occupied by volunteers.  As a result, for fiscal year 1998, the quarters account at
  Rocky Mountain was not reimbursed  $9,250.  After we brought this matter to the attention
  of Park management, the Park Superintendent issued a directive requiring benefiting
  programs to pay, effective October 1, 1999, the full rental rate for housing used by
  volunteers.
  
  Also, at Sequoia and Kings Canyon National Parks, the Park Service did not implement
  adequate controls over the expenditure of rental income.  We found that maintenance salaries
  of $248,154 charged to the housing accounts were not supported by adequate documentation. 
  In addition, of 21 transactions reviewed, totaling $15,858, we found only 5 transactions,
  totaling $10,529, that were specifically identified as housing related.  We also identified
  seven transactions, totaling $3,201, that involved charges to the housing account for central
  supply warehouse items.  These expenses were charged to the housing account without
  documentation to show that the expenses were justified or approved by a supervisor.  Park
  management said that the Park's controls "could be improved" and that corrective action
  would be taken. (The monetary impact of the amounts cited is in Appendix 1.)
  
  In accordance with the Departmental Manual (360 DM 5.3), we are requesting a written
  response to this report by November 30, 1999.  The response should provide the information
  requested in Appendix 4.
  
  Section 5(a) of the Inspector General Act (Public Law 95-452, as amended) requires the
  Office of Inspector General to list this report in its semiannual report to the Congress.
  
  We appreciate the assistance of Park Service personnel in the conduct of our survey.
  
  
   APPENDIX 1
                                                           
CLASSIFICATION OF MONETARY AMOUNTS
     
 APPENDIX 2

SCHEDULE OF HOUSING UNITS BY TYPE AND PARK APPENDIX 3

 APPENDIX 4

STATUS OF SURVEY REPORT RECOMMENDATION