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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the State of Iowa’s (State) Community Development Block Grant Disaster Assistance Funds. Our audit objective was to determine whether the State ensured that the City of Cedar Rapids provided disaster assistance funds to only eligible businesses and that these businesses did not receive duplicate Federal benefits.

The State misspent more than $10.5 million of its CDBG disaster funding and failed to check for duplicate benefits before awarding the funds. It provided jumpstart disaster assistance funds to 305 of 406 businesses without supporting their eligibility for funding. It also failed to verify that the 406 Jumpstart recipients did not receive duplicate benefits through any other program, insurance, or source before awarding the disaster assistance funds.

We recommend that HUD require the State to (1) provide documentation to support that $10.5 million in disaster assistance funds was paid to businesses in accordance with Iowa State law or reimburse the CDBG program from non-Federal sources for amounts that it cannot support and (2) perform oversight and monitoring of the disaster recovery activities in a timely manner. We also recommend that HUD require the State to perform a duplication of benefits check on all 406 businesses to ensure compliance with the Robert T. Stafford Disaster Relief and Emergency Assistance Act and repay any amounts that are found to have been duplicated.