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We reviewed the City of Richmond’s Filbert Phase 1 and Filbert Phase 2 activities in response to the U.S. Department of Housing and Urban Development’s (HUD) San Francisco Office of  Community Planning and Development’s and HUD’s Office of Program Enforcement’s concerns over the City’s administration of its HOME Investment Partnerships Program, Community Development Block Grant (CDBG), and CDBG Recovery (CDBG-R) funding of Filbert Phase 1 and Filbert Phase 2 activities.

The City did not use its HUD funds for Filbert Phase 1 and Filbert Phase 2 activities in accordance with HUD requirements.  The City constructed three HOME-funded townhomes and disbursed more than $2 million in HOME, CDBG, and CDBG-R funding for both projects.  In addition, the City (1) removed restrictions requiring a low income family to occupy HOME funded units for a minimum of 15 years (Filbert Phase 1); (2) entered inaccurate information that misrepresented the status of its project in IDIS; and (3) withdrew funds without an agreement in place (Filbert Phase 2).  As a result of the City’s actions, long-term affordability of HOME assisted units was not maintained, and HUD lacked assurance on how funding was used for the projects.

We recommend that the Director of the HUD San Francisco Office of Community Planning and Development require the City to (1) repay from non Federal funds $1,290,264 for funds spent on Filbert Phase 1 for units that did not meet affordability requirements (2) repay $1,089,613 in ineligible costs for Filbert Phase 2 that were misrepresented in IDIS, drawn before a legally binding agreement was in place and did not produce a project. We also recommend that HUD require the City to implement policies and procedures that require HOME, CDBG, and CDBG-R program expenditures to be adequately supported, ensure proper oversight of IDIS administration and maintenance of support for grant expenditures, and ensure long-term affordability of HOME projects and activities.