Performance audit, Arizona Department of Building and Fire Safety

              State of Arizona
Office
of the
Auditor General
PERFORMANCE AUDIT
Report to the Arizona Legislature
By Debra K. Davenport
Auditor General
ARIZONA
DEPARTMENT
OF
BUILDING
AND
FIRE SAFETY
September 2001
Report No. 01-23
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee
composed of five senators and five representatives. Her mission is to provide independent and impar-tial
information and specific recommendations to improve the operations of state and local government
entities. To this end, she provides financial audits and accounting services to the state and political
subdivisions and performance audits of state agencies and the programs they administer.
The Joint Legislative Audit Committee
Senator Ken Bennett, Chairman
Representative Roberta L. Voss, Vice-Chairman
Senator Herb Guenther Representative Robert Blendu
Senator Dean Martin Representative Gabrielle Giffords
Senator Peter Rios Representative Barbara Leff
Senator Tom Smith Representative James Sedillo
Senator Randall Gnant (ex-officio) Representative James Weiers (ex-officio)
Audit Staff
Dale Chapman—Manager
and Contact Person (602) 553-0333
Jay Dunkleberger—Team Leader
Andrea Leder—Team Member
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410
Phoenix, AZ 85018
(602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
September 20, 2001
Members of the Arizona Legislature
The Honorable Jane Dee Hull, Governor
Mr. N. Eric Borg, Director
Department of Building and Fire Safety
Transmitted herewith is a report of the Auditor General, A Performance Audit of the
Arizona Department of Building and Fire Safety. This report is in response to a
September 18, 2000, resolution of the Joint Legislative Audit Committee. The
performance audit was conducted as part of the Sunset review set forth in A.R.S. §41-
2951 et seq. I am also transmitting with this report a copy of the Report Highlights for
this audit to provide a quick summary for your convenience.
As outlined in its response, Department of Building and Fire Safety plans to implement
5 of 7 recommendations directed at it and does not plan to implement 2
recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on September 21, 2001.
Sincerely,
Debra K. Davenport
Auditor General
Enclosure
OFFICE OF THE AUDITOR GENERAL
Program Fact Sheet
Department of Building and Fire Safety
Services: The Department of Building and Fire Safety operates with three programs: the State Fire
Marshal, Manufactured Housing, and Administration. 1) State Fire Marshal—Enforces the State Fire
Code by conducting fire safety inspections of state, county, and university buildings and public, char-ter,
and private school buildings; and provides training and education for fire personnel. 2) Manufac-tured
Housing—Inspects manufactured homes, factory-built buildings, and recreational vehicles as
they are constructed to ensure they adhere to federal- or state-approved design plans; inspects mobile
homes installed in the State to ensure they are properly installed. 3) Administration—Provides admin-istrative
services to all programs, licenses manufactured housing manufacturers, dealers, brokers,
salespersons, and installers; issues manufactured housing installation permits; assists the Office of
Manufactured Housing in investigating consumer complaints.
Revenue: $ 6.95 million (fiscal year 2001)
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
1999 2000 2001
Other (1)
Homeowner tax assessments(2)
Sales and charges for goods and services
Licenses and fees
General Fund appropriations
(1) Includes intergovernmental and interest revenues.
(2) Assessed on mobile homeowners who rent the land their
mobile homes are located on. These taxes are deposited
in the Mobile Home Relocation Fund.
Equipment: While the Department mainly
uses general office equipment, it also leases 53
state vehicles, consisting of sedans, pickups,
half-ton trucks, SUVs, and minivans. These ve-hicles
were leased from the Department of Ad-ministration
at a cost of more than $300,000 dur-ing
fiscal year 2001.
Personnel: 76.5 full-time staff
The Department also consists of the nine-member
Board of Manufactured Housing, and
the seven-member State Fire Safety Commit-tee.
Office of
Administration (25.5)
Office of Manufactured
Housing (28)
Office of the
State Fire Marshal (23)
Department Office Locationsa:
1 State owned; 2 Leased
a Additional inspection staff for the Manufactured Housing
and the State Fire Marshal programs work from their homes
in Prescott Valley, Williams, the Village of Oak Creek, and
St. Johns.
Bullhead
City
Phoenix
Tucson
u
u
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OFFICE OF THE AUDITOR GENERAL
¾ Only one goal covers the State Fire Mar-shal’s
responsibilities for providing train-ing
to Arizona firefighters and conduct-ing
fire safety inspections of public build-ings.
Developing separate goals for these various
functions might create more useful informa-tion
for oversight bodies and the public.
Further, the Manufactured Housing and
State Fire Marshal programs should estab-lish
additional outcome, efficiency, and
quality performance measures for many of
their program functions. For example:
¾ The Manufactured Housing program
should adopt outcome measures that re-port
the results of its housing plan re-view
and plant inspection efforts, effi-ciency
measures that report on the time-liness
of these reviews, and quality
measures that reflect customer satisfac-tion
with the Department's services.
¾ The State Fire Marshal program should
establish output, outcome, and efficiency
measures covering its critical follow-up
inspection activities, which ensure that
violations of the State Fire Code have
been corrected. Additionally, it should es-tablish
outcome measures reporting on
the results of its fire safety inspections, ef-ficiency
measures reporting how effi-ciently
fire safety inspections are con-ducted,
and quality measures for both the
firefighter training and fire safety inspec-tion
functions.
Program Goals (Fiscal Years 2001-2003):
Fire Marshal :
n To increase life safety and property
conservation through fire code en-forcement
and firefighting training.
n To ensure public safety in the removal
of petroleum tanks under DEQ re-quirements.
Manufactured Housing:
n To ensure safe products for consumers
of manufactured/mobile homes, rec-reational
vehicles, and factory-built
buildings.
Administration:
n To be responsive and accurate in re-sponse
to internal and external requests
for administrative services.
n To expedite licensing of qualified ap-plicants.
n To rapidly and accurately investigate
alleged illegal conduct within the
manufactured housing industry.
Adequacy of Goals and Performance
Measures:
The Department should consider revising
some of its goals and adding some per-formance
measures.
Currently, the Department has established
goals that are overly broad and combine
separate program activities. For example:
¾ Only one goal covers all Manufactured
Housing program functions, including
reviewing and approving manufac-tured
housing plans and inspecting
manufactured housing plants and in-stallations.
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OFFICE OF THE AUDITOR GENERAL
SUMMARY
The Office of the Auditor General has conducted a follow-up
performance audit and Sunset review of the Arizona Depart-ment
of Building and Fire Safety (Department) pursuant to a
September 18, 2000, resolution of the Joint Legislative Audit
Committee. This audit was conducted as part of the Sunset re-view
set forth in A.R.S. §41-2951 et seq. The Auditor General last
reviewed the Department’s performance in 1999 (Auditor Gen-eral
Report No. 99-16).
The Department has the following responsibilities:
n Conducting fire safety inspections for state- and county-owned
public buildings and public, charter, and private
school buildings.
n Inspecting locations where manufactured housing, factory-built
buildings, and recreational vehicles are manufactured,
sold, or installed; and establishing licensing and regulation
procedures for manufacturers, dealers, brokers, and in-stallers.
n Administering the Mobile Home Relocation Fund, which as-sists
owners of mobile homes when they must relocate under
certain circumstances.
Fire Safety Inspection
Process Improved
(See pages 9 through 14)
Since the 1999 Auditor General report, the State Fire Marshal has
made many improvements to its policies and procedures for
providing fire safety inspections of Arizona public buildings.
While fire safety inspections are important to minimize the fre-quency
of fires, the 1999 report found that almost half of all char-ter
school campuses and a majority of buildings owned by the
Summary
ii
OFFICE OF THE AUDITOR GENERAL
State, Maricopa County, Pinal County, and the University of Ari-zona
had no recorded fire safety inspections. Additionally, audi-tors
found evidence of follow-up inspections or documentation
that violations were corrected for only 20 percent (55 of 272) of
inspections in which at least one fire code violation was found.
The Fire Marshal has since increased its inspection coverage, but
these efforts have been limited by the time and resources it has
dedicated to improve its inspection program. For example, a re-view
of 30 of the 444 building files originally reviewed in the
1999 audit found that the Fire Marshal inspected 19 of these
buildings since that time, as compared to 17 at the time of the
1999 audit.
Although the Fire Marshal has not yet reached 100 percent cov-erage,
the Fire Marshal has taken several steps that should im-prove
its ability to conduct regular fire safety inspections. First,
the Fire Marshal implemented policies and procedures for main-taining
an accurate and complete inventory of buildings requir-ing
inspection. Second, the Fire Marshal assessed the fire safety
risk of buildings on this list, assigning each a fire safety inspec-tion
priority based on life and property loss potentials. Third, the
Fire Marshal developed a system to manage the inspection and
re-inspection process, using each building’s inspection priority,
along with its inspection history, to produce schedules identify-ing
when inspections and re-inspections are due. The Fire Mar-shal
has also developed policies specifying when violations re-quire
follow up and has improved its recordkeeping system.
Some Steps Taken To Improve
Installation Inspection Program
(See pages 15 through 22)
While the Department has addressed some of the recommenda-tions
made in the 1999 report, it should still reduce the number
of inspections it provides for manufactured housing installations.
Since the 1999 report, the Department strengthened licensure re-quirements
for manufactured housing installers by adopting
minimum education and experience requirements, and added a
continuing education program. Further, the Department has
Summary
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OFFICE OF THE AUDITOR GENERAL
taken steps to simplify the installation process by drafting new
rules that more clearly specify installation standards. However,
after initially agreeing with the recommendations to reduce the
number of inspections associated with an installation permit
from three to one and to revise the permit fee accordingly, the
Department changed its position. Citing analysis showing that
the Department provides an average of two inspections per in-stallation
permit, the Department and the Board of Manufac-tured
Housing, which is part of the Department and responsible
for overseeing the regulation of manufactured housing, con-cluded
that a change in the number of inspections per permit is
unnecessary.
Despite this position, further research shows the Department
could take steps to reduce the number of inspections it must
provide. Specifically, auditors’ analysis suggests that installers
should generally be able to complete their work in a manner that
requires only one inspection. Auditors reviewed 27 permits is-sued
by the Department in 2000 and found that 8 required only 1
inspection, and 16 of these permits required 2 or more inspec-tions
because of installer errors. As a result, it appears that
homeowners and the better-performing installers are subsidizing
the costs of additional inspections for some installers who are not
performing as well.
To reduce the number of inspections it carries out, the Depart-ment
should continue with its efforts to track and identify in-stallers
who repeat violations. It should take appropriate action
against those licensees, and incorporate information on fre-quently
occurring violations in its installer training program.
Further, to encourage installers to install homes correctly the first
time, the Department should reduce the number of inspections it
provides for each permit from three to one.
Department Has Acted to
Improve Access to and
Awareness of Relocation Fund
(See pages 23 through 31)
The Department has acted upon recommendations made in the
1999 Auditor General report to improve access to and increase
Summary
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OFFICE OF THE AUDITOR GENERAL
awareness of the Mobile Home Relocation Fund. The Fund helps
homeowners relocate when they must move due to certain con-ditions
and is funded through assessments on these homeown-ers
and park owner fees. In response to the 1999 report, the De-partment
now allows eligible homeowners to request assistance
from the Fund even if their park owners fail to notify the De-partment
of a change in use for a park. The Department also
works with industry and homeowner organizations to increase
Fund awareness. Finally, the Department revised its procedures
to ensure park owners give adequate notice of an intended
change of use, and added information about the Fund to park
manager training.
Despite increased use of the Fund, Fund revenues continue to
exceed expenditures, resulting in an excessive Fund balance. The
1999 report found that few homeowners used the Fund, and as a
result, from fiscal years 1995 to 1999, the Fund’s revenues were
ten times its expenditures. While the Fund paid out record
amounts in fiscal years 2000 and 2001, revenues continue to out-pace
expenditures, resulting in a fund balance that exceeds $5.8
million as of June 30, 2001. Because it is difficult to project the fu-ture
use of the Fund, the Department should study the Fund’s
use over the next three years and, if necessary, meet with the
homeowner and park owner associations to determine if
changes to the homeowner tax assessment are warranted. A
lower tax assessment would ease the tax burden on these home-owners
but allow the Fund to continue receiving assessment
revenues at a reduced rate.
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OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS
Page
Introduction and Background............................. 1
Finding I: Fire Safety Inspection
Process Improved........................................... 9
Fire Safety Inspections
Reduce Fire Risk................................................................. 9
Fire Marshal Has Realized
Some Improvement to
Inspection Coverage.......................................................... 10
Program Improvements Should
Enhance Fire Safety Coverage........................................... 11
Recommendations ............................................................. 14
Finding II: Some Steps Taken
to Improve Installation
Inspection Program......................................... 15
Department Ensures Homes
Installed Properly............................................................... 15
Some Improvements
Made to Improve Installer
Performance ....................................................................... 16
Further Actions Needed
to Reduce Inspections ........................................................ 19
Recommendations ............................................................. 22
Table of Contents
vi
OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (Cont’d)
Page
Finding III: Department Has Acted
to Improve Access to And
Awareness of Relocation Fund...................... 23
Mobile Home
Relocation Fund ................................................................. 23
Efforts Made to Improve
Access to and Awareness of
the Fund and its Requirements ......................................... 25
Fund Revenues Continue
to Exceed Expenditures..................................................... 28
Recommendations ............................................................. 31
Sunset Factors..................................................... 33
Agency Response
Tables
Table 1 Arizona Department of
Building and Fire Safety
Statement of Revenues, Expenditures,
and Changes in Fund Balance
Years Ended June 30, 1999, 2000, and 2001
(Unaudited)...................................................... 4
Table 2 Arizona Department of
Building and Fire Safety
Mobile Home Relocation Fund
Statement of Revenues, Expenditures,
and Changes in Fund Balance
Years Ended June 30, 1995 through 2001
(Unaudited)...................................................... 30
Table of Contents
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OFFICE OF THE AUDITOR GENERAL
TABLE OF CONTENTS (Concl’d)
Page
Item
Item 1 The Manufactured Home
Installation Process........................................... 16
viii
OFFICE OF THE AUDITOR GENERAL
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1
OFFICE OF THE AUDITOR GENERAL
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a follow-up
performance audit and Sunset review of the Arizona Depart-ment
of Building and Fire Safety pursuant to a September 18,
2000, resolution of the Joint Legislative Audit Committee. This
audit was conducted as part of the Sunset review set forth in
A.R.S. §41-2951 et seq. The Auditor General last reviewed the
Department’s performance in 1999 (Auditor General Report No.
99-16).
Department Responsibilities,
Organization, and Staffing
The Department of Building and Fire Safety (Department) was
established in 1986 through a merger of the Office of the Fire
Marshal and the Office of Manufactured Housing. Statute re-quires
the Department to further the public safety and welfare by
maintaining relevant standards and codes for manufactured
housing and fire safety. The Department is headed by a Gover-nor-
appointed director and employs 76.5 full-time equivalent
(FTE) employees. To fulfill its statutory obligations, the Depart-ment
is organized into three offices:
n The Office of the State Fire Marshal (23 FTEs)—The Fire
Marshal is charged with conducting a regularly scheduled
fire safety inspection program for all state- and county-owned
public buildings and all school district, charter, and
private school buildings throughout the State, except for pri-vate
schools in cities with a population of 100,000 or more.1
Additionally, the Fire Marshal can enter into agreements
with local fire departments to conduct these fire safety in-spections
for the State. Thirty cities or fire districts statewide
have elected to enter into these agreements and inspect pub-lic
buildings within their jurisdictions. In addition to fire
1 Cities with a population of 100,000 or more can adopt and enforce their
own fire codes and conduct fire safety inspections for private schools.
Introduction and Background
2
OFFICE OF THE AUDITOR GENERAL
safety inspections, the Fire Marshal also approves plans for
building construction, remodeling, alterations, and additions
for state, county, and public school buildings; provides train-ing
for firefighters; assists local fire departments with arson
investigations; and enforces compliance with the state fire
code, except in nine cities with populations of 100,000 or
more that have adopted their own fire codes.1
n The Office of Manufactured Housing (28 FTEs)—The Of-fice
of Manufactured Housing regulates the manufactured
housing industry in the State. It inspects each manufactured
home, and randomly inspects factory-built buildings and rec-reational
vehicles constructed in manufacturing plants in
Arizona to ensure their construction adheres to federal- or
state-approved design plans. The Office also requires that
every manufactured or mobile home installed in the State be
inspected to ensure utilities are properly connected and the
home is securely set on its lot. These installation inspections
are conducted by either the Office or one of 68 cities and
counties that have agreements to conduct inspections within
their jurisdictions. Additionally, the Department carries out
an agreement with the federal government to enforce the
Federal Manufactured Home Construction and Safety Stan-dards
for the construction of new manufactured homes and
to investigate and resolve consumer complaints concerning
these homes.
n The Office of Administration (25.5 FTEs)—The Office of
Administration provides the administrative services neces-sary
to operate the Office of Manufactured Housing and the
Office of the State Fire Marshal. In addition, the Office
administers the Mobile Home Relocation Fund. This fund as-sists
homeowners when they must relocate from their mobile
home park under certain circumstances, or helps low-income
homeowners bring older homes into compliance with the
current manufactured housing codes.
1 The nine cities are Chandler, Gilbert, Glendale, Mesa, Peoria, Phoenix,
Scottsdale, Tempe, and Tucson.
Introduction and Background
3
OFFICE OF THE AUDITOR GENERAL
Board of Manufactured
Housing and State Fire
Safety Committee
The Board of Manufactured Housing and the State Fire Safety
Committee, which are established within the Department, also
have a number of duties concerning building and fire safety
codes. Specifically,
n The Board of Manufactured Housing—This Board consists
of nine members representing the industry and the public,
who are appointed by the Governor for three-year terms. The
Board adopts rules for the construction and installation of
manufactured housing and factory-built buildings, and es-tablishes
licensing requirements for manufacturers, dealers,
brokers, and installers of these buildings.
n The State Fire Safety Committee—This Committee is com-posed
of seven members representing municipal fire chiefs,
architects, and chief building officials from cities, towns and
counties, and the general public. Reactivated in March 2001,
the Committee adopts rules governing the state fire code and
administration of the Arson Detection Reward Fund estab-lished
under A.R.S. §41-2167. The Fund is funded by legisla-tive
appropriations, donations, and monies from fines and
bail forfeiture collected from arson-related offenses. People
providing information about acts of arson may receive a re-ward
of up to $10,000 from this Fund. As of May 31, 2001, the
Fund’s balance was $19,749.
Department Budget
As illustrated in Table 1 (see page 4), the Department generated
over $2.4 million in revenues for fiscal year 2001 from manufac-tured
housing industry licensing fees, and charges for services,
fines, and intergovernmental agreements.
Introduction and Background
4
OFFICE OF THE AUDITOR GENERAL
Table 1
Arizona Department of Building and Fire Safety
Statement of Revenues, Expenditures, and Changes in Fund Balance
Years Ended June 30, 1999, 2000, and 2001
(Unaudited)
1999 2000 2001
Revenues:
State General Fund appropriations $3,115,200 $3,337,400 $3,633,500
Licenses and fees 1,228,960 1,088,490 1,232,293
Sales and charges for goods and services 742,838 1,082,571 949,277
Homeowner tax assessments 1 527,274 568,937 550,267
Intergovernmental 320,138 256,443 225,089
Interest on investments 240,663 259,654 337,915
Fines and forfeits 22,741 20,992 18,203
Other2 6,901 20,308 4,179
Total revenues 6,204,715 6,634,795 6,950,723
Expenditures:
Personal services 1,880,517 1,994,055 2,100,148
Employee-related 488,213 485,691 524,279
Professional and outside services 237,225 233,813 227,963
Travel, in-state 208,574 222,843 407,596
Travel, out-of-state 3,121 3,780
Aid to individuals and organizations 3 43,234 549,392 422,819
Other operating 642,627 546,867 744,516
Capital outlay 28,304 136,110 27,150
Total expenditures 3,531,815 4,172,551 4,454,471
Excess of revenues over expenditures 2,672,900 2,462,244 2,496,252
Other financing uses:
Reversions to the State General Fund 94,788 63,694 200,315
Remittances to the State General Fund 2,011,850 2,150,322 1,794,682
Total other financing uses 2,106,638 2,214,016 1,994,997
Excess of revenues under expenditures and other
financing uses 566,262 248,228 501,255
Fund balance, beginning of year 5,081,532 5,647,794 5,896,022
Fund balance, end of year 4 $5,647,794 $5,896,022 $6,397,277
1 Assessed on mobile homeowners who rent the land their mobile homes are located on. These taxes are
deposited in the Mobile Home Relocation Fund.
2 Consists primarily of collections from park owners for statutory assessments on each relocation.
3 Consists of relocation payments to mobile home owners.
4 Includes $5,171,944, $5,418,492, and $5,807,584 in the Mobile Home Relocation Fund for 1999, 2000, and 2001,
respectively.
Source: Auditor General staff analysis of the Arizona Financial information System Accounting Event Extract
File; and the Revenues and Expenditures by Fund, Program, Organization, and Object, Trial Balance by Fund,
and Status of Expenditures and Appropriations reports for the years ended June 30, 1999, 2000, and 2001.
Introduction and Background
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OFFICE OF THE AUDITOR GENERAL
The Department is required to remit revenues equal to 95 to 105
percent of the manufactured housing program’s operating costs
and remitted approximately $1.8 million of these revenues to the
State General Fund in fiscal year 2001. The Department also re-ceived
over $3.6 million in General Fund appropriations to fi-nance
its operations in fiscal year 2001.
Additionally, the Department manages the Mobile Home Relo-cation
Fund. Revenues to the Fund accrue from a tax on owners
of mobile homes who rent or lease land for their homes, and fees
levied upon owners of mobile home parks. When the Fund
reaches an $8 million “cap,” the homeowner tax assessment is
waived until the Fund’s balance drops below $6 million. In fiscal
year 2001, the homeowner tax generated approximately $550,000
in revenues, while interest on the Fund’s balance amounted to
approximately $300,000. Fund expenditures, including adminis-trative
costs, amounted to approximately $459,000. As of June 30,
2001, the Fund’s balance exceeds $5.8 million. (For more on the
Fund, see Finding III on pages 23 through 31.)
Audit Scope
and Methodology
This audit focused on the Department’s progress in addressing
concerns identified in the Auditor General’s 1999 performance
audit (Report No. 99-16). This performance audit and Sunset re-view
includes findings and recommendations in three areas:
n The Department has significantly improved its ability to con-duct
fire safety inspections by identifying and prioritizing all
buildings within its jurisdiction requiring fire safety inspec-tions,
developing formal inspection policies, and improving
its oversight of the inspection process.
n The Department has made some improvements to strengthen
licensing requirements and reduce the number of inspections
required to approve manufactured home installations. How-ever,
the Department still needs to take action to address fre-quently
occurring violations and reduce the number of in-spections
associated with each permit.
Introduction and Background
6
OFFICE OF THE AUDITOR GENERAL
n The Department has taken several steps to improve aware-ness
of and access to the Mobile Home Relocation Fund and
park owners’ compliance with requirements. However, be-cause
the Fund continues to grow and its future use is diffi-cult
to project, the Department should study the Fund’s use
over the next three years and, if necessary, meet with the
homeowner and park owner associations to determine if
changes to the homeowner tax assessment are warranted.
Auditors used a variety of methods to assess Department efforts
to implement the 1999 report’s recommendations, including in-terviewing
Department management and staff and reviewing
Department policies and procedures. The following methods
were also used:
n To assess improvements in the Fire Marshal’s fire safety
inspection processes, auditors reviewed inspection files for a
random sample of 24 high-priority buildings (i.e., school dis-trict
and charter school buildings) and a random sample of 30
buildings from the Auditor General’s previous audit sample
of 444 buildings; compiled an inventory of charter schools
from the Arizona Department of Education’s June 2001 list-ing
and compared 50 of these schools to the Department’s
building inventory database; and reviewed the completed
fire risk assessments for a separate random sample of 29
buildings.
n To assess manufactured housing installation inspection effi-ciency
and effectiveness, auditors analyzed a random sample
of 51 manufactured housing installation permits issued in
2000; met with the Board of Manufactured Housing and in-terviewed
the Board chairman to determine their perspec-tives
on the Department’s manufactured housing installation
inspection processes; interviewed officials with the Arizona
Registrar of Contractors, three Arizona cities, and five states;
and reviewed the minutes for 15 Board meetings held be-tween
July 1999 and January 2001.1
n To assess Department efforts related to the Mobile Home Re-location
Fund, auditors reviewed Department logs of the
1 California, Colorado, Nevada, New Mexico, and Utah were contacted be-cause
of their geographic proximity to Arizona.
Introduction and Background
7
OFFICE OF THE AUDITOR GENERAL
Fund’s use since July 1999 for change in park use, rent in-crease,
mobile home rehabilitation, and abandonment assis-tance;
reviewed Fund financial records for fiscal years 1995
through 2001; interviewed officials with the Arizona Associa-tion
of Manufactured Home Owners and the Manufactured
Housing Communities of Arizona; and reviewed the files for
ten homeowners who applied for change-in-park-use assis-tance
during fiscal years 2000 and 2001.
This audit was conducted in accordance with government audit-ing
standards.
The Auditor General and staff express appreciation to the direc-tor
and staff of the Department of Building and Fire Safety and
the chairman and members of the Board of Manufactured Hous-ing
for their cooperation and assistance throughout this audit.
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OFFICE OF THE AUDITOR GENERAL
FINDING I FIRE SAFETY INSPECTION
PROCESS IMPROVED
The Office of the State Fire Marshal (Fire Marshal) has made
many improvements to its policies and procedures for providing
fire safety inspections of Arizona’s public buildings. The Auditor
General’s 1999 report identified serious deficiencies with the Fire
Marshal’s process for inspecting buildings. Although the Fire
Marshal has inspected some additional buildings, its biggest im-provements
to date have been in its fire safety policies and prac-tices,
which should improve the regularity of future fire safety
inspections.
Fire Safety Inspections
Reduce Fire Risk
Regular fire safety inspections are important to minimize the fre-quency
of fires. Consistently scheduled fire safety inspections
help identify and correct fire hazards, and educate building
management about fire safety and prevention. According to the
National Fire Protection Association, cities that do not annually
inspect public buildings have fire rates as much as 50 percent
higher than cities that inspect public buildings annually.
Despite the importance of these inspections, a 1999 Auditor Gen-eral
report (see Report No. 99-16) noted that the Fire Marshal
provided inadequate fire inspection coverage to many Arizona
public buildings. Statute requires the Fire Marshal to establish a
regularly scheduled fire safety inspection program for all state-and
county-owned buildings, and all public and private school
buildings, except for private school buildings in cities with a
population of 100,000 or more. However, based on a stratified
random sample of 444 public buildings reviewed during the
1999 audit, almost half of all charter school campuses, and a ma-jority
of buildings owned by the State, Maricopa and Pinal Coun-ties,
and the University of Arizona, had no recorded fire safety
A 1999 Auditor General
report noted inadequate
fire safety inspection cov-erage.
Finding I
10
OFFICE OF THE AUDITOR GENERAL
inspection. Additionally, auditors found evidence of follow-up
inspections or documentation that the violations were corrected
for only 20 percent (55 of 272) of inspections that had at least one
fire code violation. The 1999 audit noted three main problems
that affected the Fire Marshal’s ability to conduct regular inspec-tions:
an incomplete inventory of buildings, ill-defined inspec-tion
policies, and incomplete inspection records.
Fire Marshal Has Realized
Some Improvement to
Inspection Coverage
The Fire Marshal has made some improvements to its inspection
coverage. To review the Fire Marshal’s inspection activity since
1999, auditors examined 54 Fire Marshal inspection files. First,
auditors reviewed a random sample of 30 of the 444 files origi-nally
sampled in the 1999 report. At that time, 17 of the 30 build-ings
had a recorded fire safety inspection. Since then, the Fire
Marshal has inspected or re-inspected 19 of these buildings, in-cluding
6 buildings that did not have a recorded fire safety in-spection
on file in 1999. One of the buildings with no fire safety
inspection on file is no longer under the Department’s jurisdic-tion.
The other buildings with no record of having received a fire
safety inspection are mostly buildings with low inspection priori-ties,
such as a mobile classroom and a garage owned by the De-partment
of Administration.
Additionally, auditors reviewed the Fire Marshal’s inspection
activity for buildings it has designated as high priority. Buildings
designated as high priority include public school district and
charter school campuses. Based on a review of a random sample
of 24 public school district and charter school campuses within
the Fire Marshal’s jurisdiction, nearly all of these schools have a
fire safety inspection on record. Specifically, 96 percent, or 23, of
these school campuses have received a fire safety inspection.
Auditors also reviewed the Fire Marshal’s efforts to follow up on
violations identified during fire safety inspections, but found
only a slight increase in the number of buildings for which the
Fire Marshal conducted re-inspections or obtained documenta-tion
that the violations were corrected. Follow up on identified
Finding I
11
OFFICE OF THE AUDITOR GENERAL
violations is an important step in ensuring that fire safety prob-lems
are corrected and buildings are kept free from fire code
violations. However, while 40 of the 54 files reviewed by
auditors had one or more violations that required inspector
follow up, only 48 percent (19 of 40 instances) contained
evidence that the violations were corrected, or that inspectors
followed up on the deficiencies. Comparatively, in 1999, only 20
percent (55 of 272 instances) that required follow up showed
evidence that violations had been corrected.
The Fire Marshal has not realized more significant improve-ments
to its inspection coverage, in part because of the time and
resources it has devoted to implementing needed changes to its
fire safety inspection policies and procedures. According to a
Department official, the Fire Marshal’s ability to conduct regular
inspections was reduced because an estimated 50 percent of in-spectors’
time was temporarily dedicated to making needed
changes to its inspection processes, rather than conducting build-ing
fire safety inspections.
Program Improvements
Should Enhance Fire
Safety Coverage
Significant changes to the Fire Marshal’s inspection policies and
practices should improve its ability to conduct regular fire safety
inspections. However, the Fire Marshal should take some further
actions to improve its fire safety inspection program. Specifically:
n Developed an accurate building inventory—Since the 1999
report, the Fire Marshal has developed an inventory of build-ings
from lists provided by counties and state agencies, such
as the Department of Administration, the Department of
Transportation, and the Department of Education. Currently,
the Fire Marshal’s complete inventory consists of over 19,000
buildings. To ensure that it maintains a complete and accu-rate
building inventory, the Fire Marshal has implemented
written procedures to annually update the inventory. Fur-ther,
because charter schools open and close more frequently
than other buildings, the Fire Marshal indicates that it has an
The current Fire Marshal
inventory contains over
19,000 buildings.
Finding I
12
OFFICE OF THE AUDITOR GENERAL
informal policy to update its list of charter schools each quar-ter.
To assess the completeness and accuracy of the Fire Mar-shal’s
inventory, auditors compared 50 charter schools from
the Department of Education (DOE) June 2001 listing to the
Fire Marshal’s inventory. This review revealed that all 50
charter school campuses were listed in the Fire Marshal’s in-ventory.
However, given the frequency of changes to the
charter school population in the State, including schools that
open or close, change names, or relocate, and the need for the
Fire Marshal to constantly update its inventory to reflect
these changes, the Fire Marshal should formally adopt poli-cies
for updating its charter school inventory on a quarterly
basis.
n Assessed each building’s fire risk—The Fire Marshal as-sessed
each building’s fire risk and assigned a priority, but
should develop policies and procedures governing how fre-quently
buildings should be inspected and how the priority
is documented. Specifically, the Fire Marshal implemented a
process that prioritizes buildings using a “Fire Risk Assess-ment”
model that combines life loss and property loss poten-tials
and targets inspections to those buildings that pose the
highest safety threat. Factors weighed in these assessments
include building occupancy, number of stories, and potential
for property loss. Fire Marshal inspectors assess each build-ing
according to these factors, and the Fire Marshal assigns a
final inspection priority score for each facility based on this
assessment. Auditor review of a random sample of 29 build-ing
files found a completed risk assessment for each building.
To further enhance these efforts, the Fire Marshal needs to
develop inspection time frames for its inspection priority
scores. Specifically, while the Department has assigned a pri-ority
score of 1-5 for each building, with a “1” representing
the highest priority, the Department has not developed poli-cies
specifying how frequently these buildings should be in-spected.
For example, the Fire Marshal has not determined
whether priority 1 buildings should be inspected annually or
semi-annually, or how often lower-priority buildings should
be reviewed. Department officials indicate that they wish to
The Fire Marshal has
completed building fire
risk assessments and as-signed
inspection priori-ties.
Finding I
13
OFFICE OF THE AUDITOR GENERAL
assess the impact of the inspection process on its workload
before assigning time frames to inspection priorities.
Finally, supervisors, inspectors, and data entry staff some-times
change a building’s inspection priority without docu-menting
the factors influencing their decisions. Specifically, a
review of 29 building assessment forms revealed 15 instances
when a supervisor, inspector, or data entry staff changed the
final inspection score, usually by assigning the building a
higher inspection priority. While upgrading inspection pri-orities
is not necessarily a problem, and policy allows super-visors
and inspectors to change scores, the Fire Marshal
should modify its policies to require them to document their
reasons for changing an inspection priority score to ensure
consistency in future assessments. Further, the Fire Marshal
should ensure that data entry staff do not change inspection
priority scores.
n Developed system to manage inspection and re-inspection
process—The Fire Marshal completed devel-opment
of a database containing inspection priority informa-tion
and began implementing an automated inspection and
re-inspection system. Since the 1999 audit, the Fire Marshal
has entered each building’s inspection priority and last in-spection
date into a database that it developed to schedule
inspections and re-inspections. The Fire Marshal plans to
continually update this database with current information. In
May 2001, the Fire Marshal began using this system to pro-duce
reports identifying when inspections and re-inspections
are due. Each month, the database generates a list of 20 high-priority
buildings that require fire safety inspections and
buildings requiring follow-up inspections for each Fire Mar-shal
inspector.
n Developed follow-up inspection policies—The Fire Mar-shal
has developed policies and procedures for follow-up in-spections.
The new policies allow Fire Marshal inspectors to
determine when violations are severe enough to require a re-inspection,
or when other follow-up efforts, such as docu-mentary
or verbal confirmation, are sufficient. The policy also
specifies how long the inspector should wait to confirm that
the violations were corrected. For example, fire protection
The Fire Marshal now
uses an automated system
to identify buildings due
for inspection.
Finding I
14
OFFICE OF THE AUDITOR GENERAL
equipment repairs should be corrected within ten days and
imminent dangers, such as inoperable exit doors and flam-mable
leaks, should be corrected immediately.
n Maintained Fire Marshal inspection files—The Fire Mar-shal
has improved its recordkeeping system. First, it has as-signed
a full-time position to perform data entry and limits
access to its inspection files. Additionally, the Fire Marshal
plans to adopt policies and procedures that require all inspec-tors
to forward fire-safety inspections, re-inspections, correc-tion
documentation, and any verbal confirmation to the cen-tral
office located in Phoenix, which maintains the inspection
files. A review of 90 randomly selected state, county, univer-sity,
and public and charter schools found that records on
each facility were maintained in separate files, and that the
files were maintained and organized efficiently.
Recommendations
1. The Department should formalize its procedures for updat-ing
its charter school inventory on a quarterly basis.
2. The Department should:
a. Develop policies that specify inspection time frames for
its inspection priorities once it has assessed the impact of
its inspection process on its workload;
b. Require documentation when supervisors and inspectors
change inspection priority scores; and
c. Ensure that data entry staff do not change inspection pri-ority
scores.
Building inspection files
are now better maintained
and organized.
15
OFFICE OF THE AUDITOR GENERAL
FINDING II SOME STEPS TAKEN
TO IMPROVE INSTALLATION
INSPECTION PROGRAM
While the Department has addressed some of the recommenda-tions
made in the Auditor General’s 1999 report, it should take
steps to reduce the number of manufactured housing installation
inspections it provides. The Auditor General’s 1999 report made
several recommendations to address inadequate home installa-tions
and reduce the number of inspections the Department con-ducted
to approve installations. In response, the Department im-plemented
some of the recommendations to improve installer
experience and qualifications. The Department also initially
agreed to implement recommendations to reduce the number of
inspections it provides, but later disagreed with and did not
implement these recommendations.
Department Ensures
Homes Installed
Properly
Both the Department and its Board of Manufactured Housing
have the responsibility to ensure that manufactured homes are
appropriately installed. According to statute, the Board is re-sponsible
for adopting rules specifying licensure requirements
for installers and installation requirements for manufactured
homes. The Department is responsible for licensing installers
based on the requirements established by the Board and con-ducting
inspections of home installations. As explained in Item 1
(see page 16), before a homeowner can occupy his or her home,
Department inspectors must verify the home is properly set and
that electric, gas, water, and sewer systems have been properly
connected.
Finding II
16
OFFICE OF THE AUDITOR GENERAL
Some Improvements
Made To Improve Installer
Performance
The Auditor General’s 1999 report (No. 99-16) found that licen-sees
failed to consistently follow installation codes and suggested
a number of improvements to strengthen licensing requirements
and reduce the number of inspections required to approve
manufactured home installations. In response, the Department
took steps to address some of these concerns, while others were
not addressed. Specifically, the Department:
n Strengthened licensure requirements—The Department
addressed the performance of licensed installers by adopting
minimum education and experience requirements and
adopting voluntary continuing education requirements. The
previous audit determined that the Department did not re-quire
any combination of experience or training for someone
to become a licensed installer. Rather, the prospective licen-see
paid a fee, posted a bond, submitted an application, and
Item 1 The Manufactured Home
Installation Process
A homeowner wishing to install a manufactured home:
n Obtains a $90 installation permit from the Department, which author-izes
the installation and entitles the home to up to three installation in-spections
over a period of six months. If additional inspections are re-quired,
an additional $30 inspection fee is typically charged.
n After the home has been installed, the homeowner or the installer con-tacts
the Department, which sends an inspector to ensure that the in-stallation
conforms with state standards and the manufacturer’s in-structions.
n If the inspector finds a violation, he or she will note the deficiency and
conduct re-inspections until the home meets all installation standards.
The homeowner cannot occupy the home until the home is properly
set on the ground and the inspector has approved the electric, gas, wa-ter,
and sewer system connections.
The Department adopted
recommendations to im-prove
licensing require-ments.
Finding II
17
OFFICE OF THE AUDITOR GENERAL
passed a licensing test. Further, the Department did not re-quire
licensees to have any continuing education to remain
licensed.
In response to the report, the Department agreed to adopt
minimum licensing standards, including minimum educa-tion
and experience requirements, and implement manda-tory
continuing education for licensees. In February 2000, the
Department’s Board of Manufactured Housing approved a
three-year experience requirement for installers, allowing
technical training or classes to replace up to one of the three
years. The Department indicates that an administrative rule
adding these licensure requirements will be included in its
next set of proposed rules, although the Department has not
determined when it will begin the rule-making process. Fur-ther,
rather than requiring mandatory continuing education,
the Department implemented a voluntary four- to eight-hour
continuing education program, starting in June 2000. While
there are approximately 200 licensed installers, as of Novem-ber
2000, 235 individuals, consisting of licensees and their
employees, had attended.
n Simplified the installation process—The Department has
taken steps to simplify the installation process. The Auditor
General noted that minimal licensing requirements were
compounded by the existence of multiple installation stan-dards.
As a result, installations had become more complex,
making it more difficult to correctly connect utilities and set
the home.
Shortly after the 1999 audit, the Department adopted new
rules simplifying installation requirements. These rules now
present the installation requirements in clearer language,
provide more detail to installers, and are organized more ef-fectively.
Further, the Department developed a guidebook
that provides homeowners who install their own homes in-structions
on how to safely set their homes. Finally, the fed-eral
government passed the American Homeownership and
Economic Opportunity Act of 2000. The Act requires a com-mittee
to develop model manufactured home installation
standards that take into account current manufactured home
designs and installation instructions. The model standards
The Department has sim-plified
installation re-quirements
and developed
an installation guidebook
for homeowners.
Finding II
18
OFFICE OF THE AUDITOR GENERAL
are required to be in place in 2005, but until that time, no state
or manufacturer may adopt standards deemed less restrictive
than those currently in place. The Department reports that its
current requirements in rule are likely to exceed any stan-dard
adopted by the federal government.
In contrast, the Department did not implement other Auditor
General recommendations to reduce the number of inspections
required to approve a home installation. Specifically, the De-partment
and the Board:
n Decided not to require supervisory review—The Depart-ment
did not take action to ensure that licensed installers su-pervise
each home installation. Specifically, A.R.S. §41-2194
requires that anyone engaged in the business of installing
manufactured or mobile homes be licensed as an installer by
the Department. However, licensed installers hire unlicensed
employees to install homes, and homes can be installed by
these workers without the licensee ever visiting or supervis-ing
the installation.
While the Department initially agreed to take steps ensuring
that licensed installers supervise each home installation, it
did not implement this recommendation. The Board of
Manufactured Housing’s chairman noted that requiring an
installer to visit every installation would force installers to
operate in a limited area, unfairly restricting their trade. Fur-ther,
licensees are responsible for the actions of their employ-ees,
regardless of whether a licensee supervises an installa-tion
or not. As a result, the Department indicated that it had
found this recommendation was unfeasible. Additionally, the
Registrar of Contractors, which regulates licensees who con-struct
other types of homes, does not require the license
holder to be present at the site. A Registrar of Contractors of-ficial
noted that some licensees could be responsible for a
large number of locations, and it would be impossible for a
licensee to be present at all of them.
n Failed to revise permit fees and inspection process—The
Department did not reduce the number of inspections associ-ated
with each permit. The Auditor General proposed that
once the Department introduced improvements to the licens-
Finding II
19
OFFICE OF THE AUDITOR GENERAL
ing and inspection standards, it should reduce the number of
inspections associated with the $90 inspection permit from
three to one, and the cost of the permit fees accordingly. This
step would not only create an incentive for installers to cor-rectly
complete a job by the first inspection, but also increase
the Department’s efficiency by reducing nonproductive
travel time and allow homeowners to occupy their homes
earlier. While the Department initially agreed to implement
this recommendation, the Board of Manufactured Housing
elected to continue providing up to three inspections per $90
permit, citing analysis that the Department conducts an aver-age
of two inspections to approve installations. The Board’s
chairman indicated that the Board determined this inspection
rate to be acceptable and maintained the current policy of
providing up to three inspections per permit.
Further Actions
Needed To Reduce
Inspections
While the Department has made some improvements, it should
still take additional steps to reduce the number of inspections
conducted to approve an installation. Specifically, many homes
require more than one inspection because installers fail to follow
installation standards. To reduce these additional inspections,
the Department should continue its efforts to identify installers
or violations that consistently require additional inspections to
approve an installation. Finally, to encourage installers to cor-rectly
install a home the first time, the Department should reduce
the number of inspections associated with each permit.
Installer violations result in multiple inspections—While manu-factured
homes can be properly installed and approved with the
initial inspection, many homes require multiple inspections be-cause
licensed installers fail to properly install the home. Specifi-cally,
a review of 27 inspection permits issued during 2000 found
that 8 required only one inspection to approve an installation,
although the current permit allows for up to 3 inspections. How-ever,
homeowners and the installers who complete installations
with just one inspection are paying the same permit fee and sub-sidizing
the costs of installers who require more inspections. The
The Department did not
adopt recommendations to
reduce the number of in-spections
per permit and
revise its permit fees.
Installations can be com-pleted
and approved with
only one inspection.
Finding II
20
OFFICE OF THE AUDITOR GENERAL
same review of 27 inspections found 13 installations that re-quired
2 inspections to approve the installation and 3 installa-tions
that required 3 or more inspections due to violations of in-stallation
standards. The following examples illustrate added in-spections
that result from installer errors:
n In March 2000, the Department cleared the water, sewer, gas,
and electrical connections, and the home’s installation on a
property, but could not approve the inspection because the
installer failed to affix an insignia indicating that the building
complied with construction and installation requirements, as
required by law. Four months later, the inspector returned to
inspect additions to the home, but found the insignia still
missing. In September 2000, the inspector returned for a third
time and found the installer’s insignia was still not in place,
and recommended that the Department take administrative
action against the installer.
n In a separate installation, after a foundation for a retaining
wall was laid, a home failed inspection because backfill pre-vented
the inspector from examining the water, sewer, and
electrical connections, and because footings were too far from
the home’s supports. The inspector returned the next day,
and while he approved the sewer and electrical connections
and footings, he found the installer had not completed the
water connections and there were no approved plans for a re-taining
wall on site. Because these issues were not resolved,
the inspector was forced to return three days later for a third
inspection.
Identify problem licensees and repeat violations—To reduce the
number of inspections it provides, the Department should de-velop
a regular process to identify licensees or types of violations
more likely to require multiple inspections. The Department re-cently
completed a study to identify patterns in installation viola-tions.
Specifically, in July 2001, the Department analyzed 100 in-stallation
permits and the associated inspection records to de-termine
if some installers repeat the same violations or consis-tently
require multiple inspections, or identify if some violations
appear more frequently. The Department’s report identified in-stances
where licensees repeat the same violations or where
some violations appear more frequently. For example, the De-
Finding II
21
OFFICE OF THE AUDITOR GENERAL
partment identified one licensee who installed 11 homes and re-quired
a total of 24 inspections to clear the homes. However, in
seven of these installations, inspectors had to return because of
violations involving the gas connections. The review also found
the most common violations involved necessary installation
processes, including gas or electrical connections, and setting the
home properly on its lot. Therefore, to consistently identify pat-terns
in installation violations, the Department should develop a
process that identifies licensees who repeat violations and viola-tions
that occur more frequently.
In addition to these efforts, the Department should develop steps
to address any installer or violation patterns that its efforts iden-tify.
Currently, the Department has the authority to take admin-istrative
action against licensees, such as issuing letters of con-cern,
administrative fines, and suspending or revoking a license.
If the Department finds that certain licensees continually require
multiple inspections because they violate installation standards
and codes, the Department should take appropriate action
against these licensees. Further, if the Department finds that
some violations appear frequently across many licenses, it
should incorporate these findings into its training program. In
fact, at the July 2001 Board of Manufactured Housing meeting,
the Department reported it would incorporate its study findings
into the training it offers licensees.
The Department should reduce the number of inspections inher-ent
in each permit—To give installers an incentive to do the job
correctly with a minimal number of inspections, the Department
should reconsider its stance and reduce the number of inspec-tions
inherent with each permit from three to one. Reducing the
inspections currently associated with each permit from three to
one will allow homeowners to purchase one inspection when
only one is needed, and provide incentive to installers to cor-rectly
install homes the first time. Homeowners or installers who
would need additional inspections, either due to the type of
home installed or the need for re-inspections, would not be pre-cluded
from purchasing additional permits.
Including one inspection per permit is a system used by some of
Arizona’s neighboring states. Colorado’s Division of Housing is
in the process of implementing an inspection program for install-
The Department should
reduce the number of in-spections
associated with
each permit and revise its
permit fees.
The Department should
address installation prob-lems
that it identifies.
Finding II
22
OFFICE OF THE AUDITOR GENERAL
ing manufactured housing in September 2001 and plans to offer
a similar one-inspection-per-permit system. California and Ne-vada’s
state installation inspection programs also charge for an
initial installation inspection, adding a separate fee for each re-inspection
required to approve a home.
In addition to reducing the number of inspections provided by
each permit, the Department should also calculate an appropri-ate
permit fee that reflects the costs of conducting an inspection.
The current $90 fee was selected arbitrarily and was not based on
an analysis of the Department’s actual inspection costs. How-ever,
the Department recently began recording the amount of
time it takes to travel to and conduct an inspection, giving the
Department the basic information needed to calculate inspec-tions
costs. The Department should review this information and
calculate an appropriate inspection fee that reflects inspection
costs, as well as any associated administrative costs.
Recommendations
1. The Department should develop a process to track and iden-tify
installers who repeat violations and take appropriate ac-tion
against these licensees.
2. The Department should incorporate information on fre-quently
occurring violations and how to prevent these viola-tions
in its voluntary training program.
3. The Department should reduce the number of inspections it
provides for each permit from three to one.
4. The Department should determine the costs of providing an
inspection and revise its current fee, if necessary.
23
OFFICE OF THE AUDITOR GENERAL
FINDING III DEPARTMENT HAS ACTED
TO IMPROVE ACCESS
TO AND AWARENESS OF
RELOCATION FUND
The Department has acted upon recommendations made in the
1999 Auditor General Report to facilitate access to and increase
awareness of the Mobile Home Relocation Fund. The Fund,
which consists of homeowner tax assessments and park owner
fees, assists homeowners when they must relocate from their
mobile home park under certain circumstances. In response to
the report, the Department has taken several steps to improve
access to and awareness of the Fund. However, despite record
use of the Fund, its balance continues to grow. Therefore, the
Department should study the Fund’s use over the next three
years and, if necessary, meet with the homeowner and park
owner associations to discuss any needed changes to the home-owner
tax assessment.
Mobile Home
Relocation Fund
The Mobile Home Relocation Fund comprises tax assessments
and park owner fees and is used to assist owners of mobile
homes who must relocate their homes under certain circum-stances.
Currently, homeowners may access the Fund for any of
four reasons:
n Change of Land Use Relocation—The Fund offers any
homeowner who lives in a mobile home park up to $5,000 for
relocating a single-wide mobile home or $10,000 for relocat-ing
a multi-wide mobile home to another location if the park
owner changes the use of the land where the homeowner re-sides.
Mobile Home Relocation
Fund assists mobile home
owners who must relocate
their homes for certain
reasons.
Finding III
24
OFFICE OF THE AUDITOR GENERAL
n Refurbishment—The Fund provides up to $1,000 to owners
of mobile homes who live at or below the poverty line to
bring their homes into compliance with the current manufac-tured
housing code when the home is moved.
n Rent Relocation—The Fund provides $5,000 for single-wide
and $10,000 for larger mobile homes to support the relocation
costs of homeowners forced to move because their park
owner raised their rent by more than 10 percent plus the in-crease
in the Consumer Price Index for certain cities in the
western United States.
n Park Redevelopment/Home Abandonment—Starting in
2000, homeowners can collect up to $5,000 to relocate a sin-gle-
wide or $10,000 to relocate a multi-wide mobile home if
they have to move while their park space is redeveloped or
upgraded. Homeowners have the option of abandoning their
homes and receiving $1,250 for a single-wide or $2,500 for a
multi-wide mobile home.
Owners of mobile homes who rent land for their homes pay $.50
for every $100 taxable assessed value of their mobile home into
the Fund annually. This would equate to $9.75 annually for a
1990 mobile home worth $25,000.1 Further, park owners who
change the use of their land or redevelop their park and force
homeowners to relocate, pay into the Fund $500 for each single-wide
and $800 for each larger mobile home relocated using the
Fund. Additionally, when the Fund reaches an $8 million “cap,”
the homeowner tax assessment is waived until the Fund’s bal-ance
drops below $6 million.
1 A mobile home’s full cash value is based on its age and calculated using
depreciation schedules. The full cash value for a 1990 mobile home with a
list price of $25,000 is $19,500, as determined by Arizona Department of
Revenue Valuation Tables. To determine the assessed value, the home’s
full cash value is multiplied by 10 percent ($19,500 x 0.1=$1,950). The
Fund’s assessment is $.50 for every $100 of the assessed value, or
$1,950/100 x 0.5 = $9.75.
Finding III
25
OFFICE OF THE AUDITOR GENERAL
Efforts Made to Improve
Access to and Awareness of
the Fund and its Requirements
In response to the 1999 Auditor General’s report, the Department
has taken several steps to improve access to and awareness of the
Fund. While the Legislature has not amended statute to facilitate
access, the Department has revised its procedure to improve
homeowner access to the Fund. Additionally, the Department
has taken steps to increase homeowner awareness of the Fund.
Finally, the Department has also revised its procedure concern-ing
landlords who fail to provide adequate notification and has
sought to educate park managers concerning their responsibili-ties
under the Fund.
Improved access to Fund—While the Legislature has not
amended statute to facilitate access to the Fund, the Department
has revised its procedures to improve this access. The 1999 report
found that homeowners were restricted by statutes that required
them to submit an application 15 days before they moved, and
Department practices that denied access to the Fund if the park
owner failed to notify the Department of the land’s change in
use. As a result, the report recommended that the Legislature
consider amending statute to allow tenants to apply for Fund
assistance up to 60 days after relocating, and the Department to
allow homeowners to receive assistance even if the park owner
did not notify the Department. Since that time:
n No Legislation Proposed—Legislation has not been pro-posed
to allow tenants access to the Fund up to 60 days after
relocation and the Department reports that it has not received
requests for Fund assistance after the 15-day deadline. Even
though the Department has not received any requests after
the 15-day deadline, the possibility still exists that all eligible
homeowners may not have reasonable access to the Fund if
they are not aware it is available before relocating. Therefore,
the Legislature should still consider modifying A.R.S. §33-
1476.01(H) to allow tenants to apply for the Fund up to 60
days after they have relocated.
Finding III
26
OFFICE OF THE AUDITOR GENERAL
Allowed homeowner access without park notification—The
Department now allows eligible homeowners to request assis-tance
from the Fund even if their park owners fail to notify the
Department. In response to the report, the Department revised
its procedures and now allows tenants access to the Fund with-out
park owner notification. Currently, the Department reports
that there have not been any instances where park owners failed
to notify the Department of the change in use as required by
statute. In addition, Auditor General staff reviewed the files for
ten homeowners who applied for change-in-use assistance and
found that in each case the landlord notified the Department.
Increased homeowner awareness of Fund—The Department has
taken steps to increase homeowner awareness of the Fund. Spe-cifically,
the Department has:
n Continued to educate homeowners—The Department has
continued its efforts to educate homeowners about the Fund as
recommended in the 1999 report. The Department presented in-formation
on the Fund at the Arizona Association of Manufac-tured
Home Owners’ 2000 and 2001 conferences and met with
tenants about the Fund after two neighboring mobile home
parks announced their pending closures. Additionally, the De-partment
provided a grant to the association to support confer-ences
and workshops that include information on the Fund.
n Pursued agreements with county assessors—In Decem-ber
1999, the Department sent letters to the State’s 15 county
assessors proposing the inclusion of Fund information, as
well as the Department’s role and contact information, on tax
bills, as recommended in the 1999 report. However, auditor
interviews with officials from three county assessor’s offices
indicated that including this information in tax bills may not
be useful because this information may not reach all eligible
homeowners, while the cost and logistics of this recommen-dation
would make implementation difficult.
Revised notification procedure and educated park management
about Fund—The Department has also revised its procedure
concerning landlords who fail to provide adequate notification,
and sought to educate park managers concerning their responsi-bilities
under the Fund. Specifically, the Department has:
The Department helped
educate homeowners
about the Fund.
Department has improved
homeowner access to the
Fund.
Finding III
27
OFFICE OF THE AUDITOR GENERAL
n Revised procedures to enforce park owner notification—
The Department revised its procedures to enforce statutory
provisions concerning park owner notification of an intended
change in park use as recommended in the 1999 report. Spe-cifically,
statute requires landlords to notify tenants of the
planned change in park use at least 180 days before the ten-ants
must move, and to pay additional money into the Fund
if they fail to provide at least 180 days’ notice. However, as
reported in the 1999 audit, out of a sample of 14 homeowners
who used the Fund between 1996 and 1999, 4 reported that
they received less than the statutorily mandated 180-day
change-in-use notice. The Department took no action against
these park owners. While the Department now has a proce-dure
in place to track compliance with the 180-day notice re-quirement
and notifies tenants of their rights pertaining to
the Fund, the Department reports that it has not received any
complaints from owners that they were not given their 180-
day notice. An auditor review of the files for ten homeowners
who applied for assistance found no evidence of insufficient
notification.
n Incorporated Fund information into statutorily required
training—The Department has incorporated information
about the Fund into the training required for mobile home
park managers. In 1999, the Legislature established education
requirements for park managers addressing issues concern-ing
the operation of a mobile home park. These requirements
went into effect on January 1, 2000. Since the training is pro-vided
by the Manufactured Housing Communities of Ari-zona
(MHCA), the Department contacted the organization to
offer its assistance in implementing the education require-ments
and to convey its desire to ensure that the training in-clude
information about the Fund.1 The MHCA currently
covers the Fund in this training.
n Worked with the industry to educate park owners—The
Department has also worked with the MHCA to provide its
members with information about the Fund and park owner
responsibilities. The Department participated in the MHCA’s
annual three-day conference in 2000 and 2001 and in Manu-
1 The MHCA was previously known as the Arizona Mobile Home Associa-tion,
which is how the association was referenced in the 1999 report.
The Department took
steps to help park owners
and managers fulfill their
Fund requirements.
Finding III
28
OFFICE OF THE AUDITOR GENERAL
factured Housing Week at the Capitol. Additionally, the De-partment
provides materials related to the Fund that the as-sociation
uses and distributes as part of its training and
outreach activities.
Fund Revenues Continue
to Exceed Expenditures
Despite a large increase in the use of the Fund, Fund revenues
continue to exceed expenditures, resulting in an excessive fund
balance. In 1999, the Auditor General found that the Fund had
been used on a limited basis and had an excessive balance. Two
years later, despite the highest fund expenditures in seven years,
the Fund’s balance continues to grow. As such, the Department
should study the Fund’s use over the next three years and, if nec-essary,
meet with homeowner and park owner associations to
determine if changes are needed for the homeowner tax as-sessment.
Previous report found Fund’s use limited—In the 1999 report, the
Auditor General found few homeowners used the Fund and, as
a result, it had a substantial balance. The 1999 report noted that
few members of Arizona’s significant population living in mo-bile
homes had used the Fund to help defray relocation expenses
in recent years. For example, while there were approximately
43,000 mobile homes on rental properties in Maricopa County
alone, Fund monies helped to relocate a total of only 53 mobile
homes in fiscal years 1997 and 1998. Further, according to the
Department, the Fund had never been used to defray the cost of
bringing pre-1976 mobile homes into compliance with current
standards. As a result, between 1995 and 1999, the Fund ex-pended
only $239,402, while gaining over $3 million in assess-ments
and interest, ending fiscal year 1999 with a balance of over
$5.1 million.
Use has increased but Fund balance continues to grow—Despite
additional uses, the Fund balance has continued to grow during
the past two years. Specifically, Laws 1999, Chapter 227 allowed
homeowners to access the Fund if forced to move due to large
rent increases, and increased the Fund cap from $5 million to $8
million in anticipation of increased use. Because experts dis-
Despite new uses, the
Fund’s balance continues
to grow.
Finding III
29
OFFICE OF THE AUDITOR GENERAL
agreed about whether this new use for the Fund would result in
increased demand, in 1999, the Auditor General recommended
studying the Fund’s use for two years before recommending any
further changes to the cap. After the report, in 2000, the Fund’s
use was further expanded to include relocations resulting from
the redevelopment of a mobile home park.
Despite a large increase in expenditures, the Fund’s balance con-tinues
to grow. In fiscal years 2000 and 2001, as illustrated in Ta-ble
2 (see page 30), $584,234 and $458,719, respectively, was paid
out in total assistance and administrative costs from the Fund,
representing the largest expenditures recorded across a seven-year
period. Approximately $400,000 of these expenditures relate
to a single event, the closure of two neighboring Phoenix mobile
home parks owned by the same individual, and the relocation of
108 tenants and their homes. However, even during this period
of record Fund expenditures, the Fund balance grew by over half
a million dollars, exceeding $5.8 million as of June 30, 2001. As a
result, even if this level of Fund use continues, it would take ap-proximately
ten years to exhaust the Fund’s balance, not includ-ing
any revenues to the Fund.
Department should monitor Fund use—Since it is difficult to pro-ject
the Fund’s use and the amount of funding that will be
needed to satisfy future claims, the Department should study the
Fund’s use over the next three years. Then, if necessary, it should
work with the homeowner and park owner associations to de-termine
if changes to the homeowner tax assessment are war-ranted.
Although homeowners continued to be taxed, the Fund’s
interest alone was enough to cover over 50 percent of the reloca-tion
assistance and administrative expenses paid out between
July 1999 and June 2001, and the Fund balance exceeds $5.8 mil-lion.
However, while it is difficult to project the future use of the
Fund, industry experts indicate that rising land values may en-courage
more park owners to change the use of their land, while
other owners may redevelop their current parks to accommodate
newer mobile homes and retain their customers. These factors
suggest that Fund use could remain high.
Department should study
the Fund’s use over the
next three years.
Table 2
Arizona Department of Building and Fire Safety
Mobile Home Relocation Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance
Years Ended June 30, 1995 through 2001
(Unaudited)
1995 1996 1997 1998 1999 2000 2001
Revenues:
Homeowner tax assessments $ 379,138 $ 377,040 $ 452,573 $ 445,912 $ 527,274 $ 568,937 $ 550,267
Interest on investments 105,526 129,666 162,951 203,460 221,959 244,445 293,644
Collections from park owners 1          12,500 12,600 5,000 17,400 3,900
Total revenue 484,664 506,706 628,024 661,972 754,233 830,782 847,811
Expenditures 2 7,768 50,108 77,171 53,858 80,597 584,234 458,719
Excess of revenues over expenditures 476,896 456,598 550,853 608,114 673,636 246,548 389,092
Fund balance, beginning of year 2,405,847 2,882,743 3,339,341 3,890,194 4,498,308 5,171,944 5,418,492
Fund balance, end of year $2,882,743 $3,339,341 $3,890,194 $4,498,308 $5,171,944 $5,418,492 $5,807,584
1 Collection revenues for 1995 and 1996 are not readily available and expenditures for the same period are net of collections. The
Department records collections as an individual reduction of expenditures.
2 Includes payments made to mobile home owners and administrative costs.
Source: The Arizona Financial Information System Revenues and Expenditures by Fund, Program, Organization, and Object and Trial
Balance by Fund reports for the years ended June 30, 1995 through 2001; and Accounting Event Extract File for the year
ended June 30, 2001.
Finding III
OFFICE OF THE AUDITOR GENERAL
30
Finding III
31
OFFICE OF THE AUDITOR GENERAL
Recommendations
1. The Legislature should consider modifying A.R.S. §33-
1476.01(H) to allow tenants to apply for and receive mone-tary
assistance from the Fund up to 60 days after they have
relocated.
2. The Department should study the Fund’s use over the next
three years and, if necessary, work with homeowner and
park owner associations to determine if charges to the home-owner
tax assessment are warranted.
32
OFFICE OF THE AUDITOR GENERAL
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33
OFFICE OF THE AUDITOR GENERAL
SUNSET FACTORS
In accordance with A.R.S. §41-2954, the Legislature should con-sider
the following 12 factors in determining whether the De-partment
of Building and Fire Safety should continue or be ter-minated.
1. The objective and purpose in establishing the
agency.
The Department of Building and Fire Safety was estab-lished
in 1986 through a merger of the Office of the Fire
Marshal and the Office of Manufactured Housing. A.R.S.
§41-2141 establishes the Department to further the public
safety and welfare by reducing hazards to life and prop-erty
through the maintenance and enforcement of the
state fire code, and by maintaining and enforcing stan-dards
of quality and safety for manufactured homes, mo-bile
homes, factory-built buildings, and recreational vehi-cles.
To meet this purpose, statutes charge the Department
with a variety of responsibilities, including:
n Establishing a regularly scheduled fire safety inspec-tion
program for all state- and county-owned public
buildings and all public and private school buildings
throughout the State, except for private school build-ings
in cities with a population of 100,000 or more.
n Maintaining relevant standards and codes for
manufactured housing safety by inspecting locations
where manufactured homes, factory-built buildings,
and recreational vehicles are manufactured, sold, or
installed to ensure that the structures adhere to
federal or state guidelines. The Department also
establishes and maintains licensing standards and
Sunset Factors
34
OFFICE OF THE AUDITOR GENERAL
bonding requirements for all installers of manufac-tured
homes, mobile homes, and accessory structures.
n Administering the Mobile Home Relocation Fund,
which assists owners of mobile homes who must re-locate
their homes when the park owner changes the
use of the land their home rests on, renovates the
park, or raises their rent by greater than a specific
amount. Further, the Fund helps owners who live at
or below the poverty line to bring their home into
compliance with state codes prior to the home being
moved.
2. The effectiveness with which the agency has met its
objective and purpose and the efficiency with which
it has operated.
Since the 1999 report, the Department has demonstrated
significant operational improvements, but should make
additional changes to improve its efficiency and effec-tiveness.
Specifically, the Department:
n Improved Fire Safety Inspections—The Fire Mar-shal
increased the efficiency of its building inspection
program by developing a master inventory of build-ings
requiring inspections; reviewing each building in
its inventory to assess the fire risk and using this as-sessment
to assign an inspection priority; incorporat-ing
the complete building inventory and inspection
priority into a computer database of buildings; devel-oping
appropriate re-inspection policies; and improv-ing
its recordkeeping system (see Finding I, pages 9
through 14).
n Revised Installer Requirements and Training—The
Department has attempted to increase the expertise of
licensed installers by approving a three-year experi-ence
requirement for installers and implementing a
voluntary continuing education program. Addition-ally,
the Department took steps to simplify the home
Sunset Factors
35
OFFICE OF THE AUDITOR GENERAL
installation process by adopting new rules that pre-sented
installation requirements in clearer language
and greater detail to licensees (see Finding II, pages 15
through 22).
Despite these improvements, the Department should take
a number of steps to further enhance its effectiveness.
Specifically, the Fire Marshal should determine how often
a building should be inspected based on its inspection
priority (see Finding I, pages 9 through 14). Additionally,
the Department can improve the effectiveness of its home
installation inspection function by identifying repeat vio-lations
of installation standards, and frequently occurring
violations; taking appropriate action against licensees
who repeat violations; and reducing the number of in-spections
associated with inspection permits from three
to one (see Finding II, pages 15 through 22).
3. The extent to which the agency has operated within
the public interest.
The Department has taken several steps to better serve
the public interest. While the Auditor General’s 1999 re-port
found that the Fire Marshal failed to regularly in-spect
public buildings, the Fire Marshal has undertaken
several improvements to the fire safety inspection process
that should improve its ability to adequately identify and
regularly inspect public buildings.
Additionally, the Department has taken a number of
steps to facilitate public access and increase awareness of
the Mobile Home Relocation Fund. The Department re-vised
its policies and procedures to allow homeowners to
access the Fund if park owners fail to notify the Depart-ment
of a proposed change in use, and to pursue land-lords
who do not provide at least 180 days’ notice of
change of use. Additionally, the Department took steps to
publicize the Fund with homeowners and educate park
owners about their responsibilities regarding the Fund
(see Finding III, pages 23 through 31).
Sunset Factors
36
OFFICE OF THE AUDITOR GENERAL
4. The extent to which rules and regulations promul-gated
by the agency are consistent with the legisla-tive
mandate.
While the Department has promulgated many of the re-quired
rules, the Department’s Fire Safety Committee
should adopt rules relating to the Arson Detection Fund.
The Committee, which has a number of responsibilities
concerning the state fire code and other aspects of fire
safety, was inactive for ten years until the Governor re-activated
it in March 2001. As reported in a review by the
Governor’s Regulatory Review Counsel (GRRC), the
Committee should adopt rules addressing how monies
are allocated under the Arson Detection Award Fund as
required by A.R.S. §41-2146(E).
5. The extent to which the agency has encouraged in-put
from the public before adopting its rules, and the
extent to which it has informed the p ublic as to its ac-tions
and their expected impact on the public.
The Department’s rules are developed and adopted
through the Board of Manufactured Housing and the
State Fire Safety Committee. According to the Depart-ment,
the public is notified of proposed rules through the
Arizona Administrative Register as well as through vari-ous
industry and consumer-related newsletters, speaking
appearances, brochures, and agency mailings.
The Board of Manufactured Housing and the State Fire
Safety Committee also generally comply with the State’s
open meeting laws. The Board has posted public meeting
notices at least 24 hours in advance at required locations
while the Department reports that the Commission has
done so as well. Also, both the Board and Commission
make agendas available to the public. However, neither
the Board nor the Committee have current statements of
where meeting notices will be posted on file with the Sec-retary
of State, as required by law. Specifically, the state-ment
for the Board of Manufactured Housing specifies
the notice will be posted at the Department’s previous of-fice
location, while there is no statement on file for the
Sunset Factors
37
OFFICE OF THE AUDITOR GENERAL
State Fire Safety Committee. The 1999 Auditor General’s
report also noted that the Board of Manufactured Hous-ing
did not have a statement on file with the Secretary of
State.
6. The extent to which the agency has been able to in-vestigate
and resolve complaints that are within its
jurisdiction.
The Fire Marshal has the authority to investigate com-plaints
regarding fire safety at buildings within its juris-diction.
The Fire Marshal is in the process of implement-ing
a system by which each complaint concerning a
building is recorded in a log. When it receives complaints,
the Fire Marshal investigates the complaint and, if neces-sary,
orders any action necessary to bring the building
into compliance with the state fire code.
Further, as part of its role in maintaining standards of
quality and safety for manufactured homes, factory-built
buildings, mobile homes, recreational vehicles, and acces-sory
structures, the Department is charged with investi-gating
complaints filed by purchasers within one year
from the date of purchase or installation of units. The De-partment
reports that it investigates all consumer com-plaints,
and has statutory authority to issue penalties to li-censees,
including administrative penalties, probation, or
license suspension or revocation.
7. The extent to which the attorney general or any other
applicable agency of state government has the au-thority
to prosecute actions under the enabling legis-lation.
The attorney general is authorized to act for the Depart-ment
in all legal actions or proceedings and advise the
Department on all questions of law. These proceedings
include administrative hearings regarding manufactured
housing industry licensee penalties, as well as actions be-fore
Superior Court to cease and desist operations that
constitute a fire safety hazard to life or property.
Sunset Factors
38
OFFICE OF THE AUDITOR GENERAL
8. The extent to which the agency has addressed
deficiencies in its enabling statutes, which prevent it
from fulfilling its statutory mandate.
While legislation concerning the Department was not
passed during the 2001 legislative session, in 2000, several
bills were enacted that affect Department operations. Spe-cifically:
n Laws 2000, Chapter 400 expanded the use of the Mo-bile
Home Relocation Fund by allowing tenants
forced to move due to the redevelopment of a mobile
home park to collect money from the Fund to assist
with moving expenses.
n Laws 2000, Chapter 118 revised the licensing re-quirements
for mobile home dealers. The changes
added bonding requirements for mobile home dealers
and expanded the Board of Manufactured Housing’s
ability to adopt rules for establishing dealer trust and
escrow accounts.
¾ Laws 2000, Chapter 232 allows local fire districts to
assist the Fire Marshal in the enforcement of fire pro-tection
standards within their fire district, including
the enforcement of the uniform fire code when au-thorized
by the State Fire Marshal.
9. The extent to which changes are necessary in the
laws of the agency to adequately comply with the fac-tors
listed in this section.
Based on audit work, the Legislature should consider
modifying A.R.S. §33-1476.01(H) to allow tenants to ap-ply
for and receive monetary assistance from the Fund up
to 60 days after they have relocated.
Sunset Factors
39
OFFICE OF THE AUDITOR GENERAL
10. The extent to which termination of the agency would
significantly harm the public health, safety, or wel-fare.
Terminating the Department would potentially harm the
public’s health, safety, and welfare because the Depart-ment
is responsible for ensuring thousands of public
buildings across the State are free from fire hazards and
maintaining and enforcing standards of safety in the mo-bile
home industry. Additionally, the Department pro-motes
public health and safety and reduces hazards to
life, limb, and property by providing and coordinating
training in firefighting and prevention with local fire de-partments.
The Department also helps local jurisdictions
by aiding in arson investigations and prescribing a uni-form
system for reporting fires.
11. The extent to which the level of regulation exercised
by the agency is appropriate and whether less or
more stringent levels of regulation would be appro-priate.
The level of regulation exercised by the Department is
appropriate.
12. The extent to which the agency has used private con-tractors
in the performance of its duties and how e f-fective
use of private contractors could be accom-plished.
Because many of the Department’s duties are regulatory,
these functions cannot be transferred to the private sector.
However, the Department has entered into intergovern-mental
agreements with local jurisdictions to conduct fire
safety and mobile home inspections. The Department has
agreements with 30 city or rural fire departments to con-duct
fire safety inspections for state-, county-, and univer-sity-
owned buildings, school district, and charter schools
within their jurisdictions. According to the Department,
these agreements have reduced the inspection workload
for the State Fire Marshal. Also, the Department has con-
Sunset Factors
40
OFFICE OF THE AUDITOR GENERAL
tracts that allow 68 cities and counties to inspect manufac-tured
housing installations within their jurisdictions. The
Department audits these jurisdictions to ensure they
comply with manufactured housing installation codes.
OFFICE OF THE AUDITOR GENERAL
AGENCY RESPONSE
OFFICE OF THE AUDITOR GENERAL
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1
Finding I: Fire Inspection Process Improved
The Department concurs with the overall finding that the fire inspection process
is improved. In fact, the Auditor General correctly points out that 96% of the high
priority inspections were completed.
The dedicated, hard working staff are to be congratulated for accurately
inventorying over 19,000 buildings statewide in an 18 month period with no
additional resources in order to assign the priority of inspections based upon the
fire inspection priority policy. The sunset audit was conducted in the middle of a
24 month corrective action plan. The action plan called for a statewide inventory
to be conducted, then an automated inspection program to be implemented
including an automated system of follow-ups and management reporting to
insure that as inspections with violations require follow-ups, staff and
management are alerted so that appropriate action can be taken. Any
inspections which require follow-up will be automatically assigned and if
corrective action is not taken, management will be automatically alerted. The
automated system is in place. The audit sample clearly shows that even though
as much as 50% of the resources were dedicated to the inventory process, the
high priority inspections were incredibly approaching 100%. Even when low
priority inspections are considered (lower priority inspections may include such
properties as an open field which may never require an inspection), the number
is 85%. This proves the newly automated system is working.
Audit Recommendation 1
The Department should formalize its procedures for updating its charter school
inventory on a quarterly basis.
Department Response
The Finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
Audit Recommendation 2
The Department should:
a. Develop policies that specify inspection time frames for its inspection priorities
once it has assessed the impact of its inspection process on its workload; and
b. Require documentation when inspection priority scores are changed.
c. Ensure that data entry staff do not change inspection priority scores.
2
Department Response
a. The Finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
The automated system, which is currently in place, assigns monthly workload
based upon priority. The Department will automatically monitor the inspection
and follow-up progress through its automated system, and determine whether or
not additional resources are required to ensure that regular inspections are
conducted with resources available. The Department needs to complete a full
cycle of the priority assignments generated through the database before it can
assess whether there is a need to assign specific timeframes to the priority
assignments.
b. The Finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
c. The Finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
3
Finding II: Some Steps Taken To Improve Installation Inspection Program
Audit Recommendation 1
The Department should develop a process to track and identify installers who
repeat violations and take appropriate action against these licensees.
Department Response
The Finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
Audit Recommendation 2
The Department should incorporate information on frequently occurring violations
and how to prevent these violations in its voluntary training program.
Department Response
The Finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
Audit Recommendation 3
The Department should reduce the number of inspections it provides for each
permit from three to one.
Department Response
The Finding of the Auditor General is not agreed to and the recommendation will
not be implemented.
The Department would like to thank the auditors for acknowledging the
improvements made by the Department and the Board regarding the installations
of manufactured homes in Arizona. Although the Board of Manufactured Housing
and the Department disagree with the audit recommendation, we do agree with
the underlying concept of creating greater efficiencies and reducing fees. After
numerous meetings between the audit team and the Board and Department
representatives, it became apparent that both sides were advocating a reduction
in the number of reinspections for manufactured home installations. The Board
and Department, however, do not agree that it is necessary to reduce the
number of inspections issued per permit to achieve this. By implementing
recommendations one and two above along with the already implemented
increases in training, more rigid licensure requirements and the adoption of
simpler installation rules, we feel that there will be a corresponding reduction in
the number of reinspections required and thus the intent of the audit
recommendation will be achieved.
4
The basis for the Board and the Department’s position lies in the research and
review of a random sample of 100 installation permits the Department conducted
to attempt to validate or refute the auditor’s 26 installations sample results. The
data shows that 72% of the permits required at least two inspections to clear the
basic life-safety functions such as the connecting of the sections, foundation
systems and utility connections. Many reasons may account for this including the
complex nature of the foundation system, site preparation and the fact that this
work may be performed by different licensees under the same permit. These two
inspections don’t account for the addition of accessory structures (awnings,
skirting, carports, garages, decks, etc.) which may be installed anytime within
180 days after the permit was issued.
Although the data shows that on average two inspections were required in over
72% of the installations, only five out of 100 installations required more than
three inspections. Licensees are required to pay for the additional inspections at
a rate of $30 plus mileage. The Department feels that this data refutes the audit’s
assumption that installers requiring more inspections are being subsidized by
installers requiring fewer inspections.
The data supports the auditor’s contention that the inspections can be cleared
with only one inspection (not accounting for accessory structures), but mostly in
the case of single section units. Violations for multi-section homes were almost
four times as prevalent as in single-section homes. Multi-section units have an
inherent complexity due to their size and weight, the addition of the connecting of
the sections, the crossover connections for the utilities and more complex
foundation systems. The Department will look at this issue further to see what
may be done.
When comparing Arizona’s permit structure to its neighboring states, one sees
this is not an “apples-to-apples” comparison. None of the neighboring states
includes accessory structures on their initial permits. New Mexico doesn’t provide
safety inspections prior to occupancy of the units. Instead, New Mexico conducts
an “audit” inspection approximately 90 days after the homeowner has moved into
the home. There is no inspection to ascertain whether the gas, electric and
foundations are safe before the homeowner moves in. Colorado’s new program
will start this September and allows installation inspections to be conducted
primarily by third-party inspection companies and local jurisdictions with the state
conducting the inspections as a last resort. California and Nevada charge $120
and $100 for initial inspections and $66 and $75 for re-inspections respectively –
far more than the inspection cost in Arizona. While none of these states breaks
down their data by single-section versus multi-section units, each of the states
manufactured housing heads states that the one inspection per permit works with
single-sections, but that multi-sections require more than one permit on average.
Further, it should be noted that the Office of Manufactured Housing is a 95%-
105% funded program, and the Board of Manufactured Housing sets and adjusts
5
fees in order to remain within that percentage. The Department has collected in
excess of the 105% for the past five years. The Board of Manufactured Housing
decided to keep the permit fees at current levels and reduce other fees in order
to stay within the 95-105% range.
Additionally, the Board looked at comparisons to the site-built industry. Local
jurisdictions require more than one inspection for site-built homes due to the
nature of their complexity and the usage of different sub-contractors. Today’s
manufactured homes are just as complex and also may use multiple sub-contractors
per job site. Foundation systems, on-site drywall interiors, and utility
work are just a few components that should be treated similarly to the site-built
industry. With an average of two inspections per manufactured home, our
industry requires far fewer inspections per home than the residential site-built
industry.
Since the majority of manufactured homes sold in the western states are multi-section
homes, it doesn’t seem appropriate to reduce Arizona’s current permitting
system. The Arizona Board of Manufactured Housing, comprised of both industry
and consumer representatives, studied this issue over the past eighteen months.
They appointed a subcommittee to study this issue, requested the 100 permits
sample from the Department, analyzed our neighboring states’ permit systems
and looked at permit systems for the site-built industry. The Board concluded that
the current system of permits is appropriate for the usage in Arizona.
Again, the Board and the Department agree with the underlying intent of the audit
recommendation, but not with the actual recommendation. The Board of
Manufactured Housing will continue to monitor the number of inspections per fee,
and should the Board of Manufactured Housing reverse it’s position in the future,
the Department will implement the fees passed by the Board.
Audit Recommendation 4
The Department should determine the costs of providing an inspection and revise
its current fee, if necessary.
Department Response
The Finding of the Auditor General is not agreed to and will not be implemented.
See response to recommendation 3.
6
Finding III: Department Has Acted To Improve Access To And Awareness
of Relocation Fund.
Recommendation 1
The Legislature should consider modifying A.R.S. 33-1476.01(H) to allow tenants
to apply for and receive monetary assistance from the Fund up to 60 days after
they have relocated.
Department Response
The Finding of the Auditor General is not directed to the Department. The
Department will implement whatever modifications the Legislature and the
Governor’s Office makes.
Recommendation 2
The Department should study the Fund’s use over the next three years and, if
necessary, work with homeowner and park owner associations to determine if
changes to the homeowner tax assessment are warranted.
Department Response
The Finding of the Auditor General is agreed to and the audit recommendation
will be implemented.
Other Performance Audit Reports Issued Within
the Last 12 Months
01-10
Future Performance Audit Reports
Arizona Department of Corrections—Arizona Correctional Industries
Department of Public Safety—
Criminal Information Services Bureau
Access Integrity Unit, and
Fingerprint Identification Bureau
01-1 Department of Economic Security—
Child Support Enforcement
01-2 Department of Economic Security—
Healthy Families Program
01-3 Arizona Department of Public
Safety—Drug Abuse Resistance
Education (D.A.R.E.) Program
01-4 Arizona Department of
Corrections—Human Resources
Management
01-5 Arizona Department of Public
Safety—Telecommunications
Bureau
01-6 Board of Osteopathic Examiners in
Medicine and Surgery
01-7 Arizona Department
of Corrections—Support Services
01-8 Arizona Game and Fish Commission
and Department—Wildlife
Management Program
01-9 Arizona Game and Fish
Commission—Heritage Fund
01-10 Department of Public Safety—
Licensing Bureau
01-11 Arizona Commission on the Arts
01-12 Board of Chiropractic Examiners
01-13 Arizona Department of
Corrections—Private Prisons
01-14 Arizona Automobile Theft
Authority
01-15 Department of Real Estate
01-16 Department of Veterans’ Services
Arizona State Veteran Home,
Veterans’ Conservatorship/
Guardianship Program, and
Veterans’ Services Program
01-17 Arizona Board of Dispensing
Opticians
01-18 Arizona Department of Correct-ions—
Administrative Services
and Information Technology
01-19 Arizona Department of Education—
Early Childhood Block Grant
01-20 Department of Public Safety—
Highway Patrol
01-21 Board of Nursing
01-22 Department of Public Safety—
Criminal Investigations Division