Finding 2022-001 Significant Deficiency Federal Program: HOME Investment Partnerships program Assistance Listing Number: 14.239 Federal Grantor: Department of Housing and Urban Development Federal Award Year: 2021-2022 Management?s Response and Corrective Actions: Background: Since 1985, the City...
Finding 2022-001 Significant Deficiency Federal Program: HOME Investment Partnerships program Assistance Listing Number: 14.239 Federal Grantor: Department of Housing and Urban Development Federal Award Year: 2021-2022 Management?s Response and Corrective Actions: Background: Since 1985, the City of Inglewood has approximately 90 loans issued to homeowners under the HOME Program for either homebuyer programs or for housing rehabilitation programs. Over the years, the City has contracted with the outside agency, Inglewood Neighborhood Housing Services (INHS) to administer these homeowner loan programs for Inglewood residents. Additionally, the City has directed the Community Development Block Grant (CDBG) Division and the former Inglewood Redevelopment Agency to oversee the administration of these loans. It has been demonstrated that the now defunct INHS has issued loans to homeowners and may not have recorded each transaction accurately, thus resulting in some loans being paid off without proper noticing to the City. Some homeowner loans were not adequately identified as being loans attributable to the City; and some loans issued were misidentified as being either City loans from the U.S. Department of Housing and Urban Development (HUD) or City loans from the former State of California Department of Finance Redevelopment Agency (RDA). In 2007, the City has retrieved the loan files from INHS in an attempt to reconcile the outstanding loans issued by INHS, with those loans already repaid or otherwise closed. The City?s CDBG Division along with the RDA has been tasked with reconciling the home loans for both HUD and the RDA. During this period, the City suffered a gradual reduction in HUD CDBG and HOME funds which resulted in the gradual reduction of key CDBG staff members, beginning with the separation of the Senior Grants Coordinator, the Grants Coordinator, the CDBG Division Accountant, and the CDBG Administrative Analyst. The remaining full-time staff and two new full-time CDBG Division staff saw the retirement of the Grants Manager, and a series of five subsequent managers since 2013. In a drastic turn of events and after a long litigation at the State level, effective February 1, 2012, California experienced the dissolution of over 400 of the state?s RDAs, including the City?s RDA, a once robust agency with over 15 staff members. At the local level, the City of Inglewood was named as the Successor Agency responsible to manage Inglewood redevelopment projects currently underway, make payments on enforceable obligations, and dispose of redevelopment assets and properties. With the dissolution of the Inglewood RDA, staffing was reduced to five remaining members. As of 2016, the Successor Agency had only two staff members, one full-time staff member and one part-time staff-member. Unfortunately, with the high level of turnover in the City, the City loans were not consistently updated in a timely fashion. Since 2019, the City has stabilized its staffing to include a HUD Programs Manager who is responsible for overseeing the Home Loan Programs. The HUD Programs Manager will ensure the loans are properly monitored and serviced. The City has two Senior Program Specialists who have a combined total of over 40 years of experience in HUD Programs. The City is currently recruiting for a third Senior Program Specialist. Corrective Action 1.0: The City will review each loan on the outstanding loan schedule and will update each to ensure the status is correct according to the schedule. For any outstanding loan where the terms have been satisfied, the City will ensure these are properly recorded as receivable and listed on the HOME loan receivable schedule maintained by the City. Projected Time of Completion: Each loan is scheduled to be updated by December 30, 2023. Corrective Action 2.0: The City will reconcile its records to ensure the each City loan is accounted for according to the source of funding and the terms of each loan. Staff will ensure each loan is properly recorded with the Los Angeles County Recorder?s Office, if required. Projected Time of Completion: April 30, 2024 Corrective Action 3.0: Staff will implement an intense cross-training session amongst the Finance Department Accounting Division, the Successor Agency, and the CDBG Division to ensure that all responsible staff are thoroughly trained to service and monitor the Home Program Loan files. Corrective Action 3.1: Staff will update the HOME Procedures Manual (Manual) to include the cross-training policy and any other program updates, as appropriate, to current procedures and protocol. The Manual will be maintained in a shared file for reference by all staff and willl be made available to the public upon request. Projected Time of Completion: April 30, 2024 Corrective Action 4.0 (1) Staff will monitor, annually, the outstanding loan files and will service and update the loan files as requests are made to the City. (2) Staff will notify the Accounting Division when a loan changes status and provide the appropriate supporting documentation, immediately upon receipt. (3) The HUD Programs Manager will ensure the loan files and all transactions are maintained in a shared file. (4) The HUD Programs Manager will assign staff to report quarterly on any changes to the loan files. Projected Time of Completion: Quarterly, at a minimum.