Finding Text
Finding Reference Number: SA2022-003 - Monitoring CDBG and HOME Program Activities for
Compliance with Program Rules and Regulations
Assistance Listing Numbers: 14.228, 14.239
Assistance Listing Title: Community Development Block Grants/State's Program
HOME Investment Partnerships Program
Name of Federal Agency: Department of Housing and Urban Development
Federal Award Identification Number: B-19-MC-06-0039, B-20-MC-06-0039
M-18-DC-06-0240. M-20-DC-06-0240
Criteria: The State CDBG program is subject to Title I of the HCDA (42 USC 5301 et seq.) and implementing regulations at 24 CFR Part 570, Subpart I24, while CFR Part 92 details the various rules and regulations of the HOME Investment Partnerships (HOME) Program. These regulations include specific program requirements for timing of activities, eligible and prohibited activities, project and subrecipient monitoring requirements, as well as other provisions. If the City does not adhere to the requirements of the implementing regulations both before disbursement for eligible activities and on an ongoing basis to ensure continued compliance with the requirements of each program, costs incurred may be deemed ineligible and need to be returned to the grantor.
Condition: The City underwent a monitoring review by the grantor during fiscal year 2022 related to the fiscal year 2022 CDBG and HOME Programs, the results of which were issued in August 2022. The monitoring review results included two CDBG findings, four HOME findings and one HOME concern as follows:
• CDBG Findings:
o Incorrect identification of activity in the Integrated Disbursement & Information System (IDIS), which deemed the activity ineligible unless the City provided justification as necessary costs.
o Lack of a current Residential Anti-Displacement and Relocation Assistance Plan
• HOME
o Findings:
Absence of dated signatures of all parties on the beneficiary written agreement for the two IDIS projects and a lack of HOME program policies and procedures to ensure written agreements include dated signatures of all parties.
The absence of many federally required provisions in the City’s loan agreement with a property owner, including five components detailed in the monitoring letter that were missing from the agreement.
The amount of HOME funds invested in one IDIS project was not at or below the applicable maximum per-unit HOME subsidy limit as required under 24 CFR Section 92.250(a). The limit was exceeded by $133,625.
The City does not have comprehensive written policies and procedures as required under HOME regulation 24 CFR Section 92.504(a), including Tenant Selection, Income Determination and Lease Compliance.
o Concern
Section 3 Compliance - the City has selected “no” for the question, “Is this Activity Subject to Section 3?” in the IDIS system, although the budgets for many construction and rehabilitation projects exceed the compliance threshold of $200,000.
In addition, the monitoring review included follow up on prior outstanding findings (two CDBG findings and five HOME findings) that had not yet been implemented and remain outstanding.
Cause: The City lacks or has not updated its CDBG and HOME policies and procedures or did not follow those that do meet the requirements.
Effect: The City is not in compliance with the policies and procedures documentation and reporting requirements of the CDBG and HOME programs. As a result, the City is required to return $133,615 to the grant program.
Questioned Costs: We question costs in the amount of $133,615, but those costs were incurred prior to fiscal year 2022.
Recommendation: The City must develop the required policies and procedures to ensure that all grant program activities are in compliance with the provisions of 24 CFR Part 570 and 24 CFR Part 92. And, the City should ensure that all outstanding findings and concerns are resolved with the grantor.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.