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We reviewed the City of Apalachicola’s Small Cities Community Development Block Grant (CDBG) funded by the State of Florida for a marina improvements project in response to a hotline complaint.  The complaint was submitted to the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General in a letter, dated June 29, 2012.  The objectives of the review were to determine whether the City’s CDBG grant application contained a false statement, as alleged by the complainant, that impacted the project’s eligibility for funding and whether the marina improvement project met a national CDBG program objective.

The complainant’s allegation that the City made a false statement in its grant application was true, but the false statement had no impact on the State’s decision to award the grant or on the project’s eligibility for CDBG funding.  This condition occurred because City officials included information in the application relative to the complaint issues, knowing that the information had not been validated.  As a result, the complainant was correct in stating that the City’s application contained a false statement, but the complainant was not correct in stating that taxpayer funds were expended under false pretenses.  The false statement was not related to a material fact, did not affect the State’s decision to fund the project, and did not affect the project’s eligibility for funding.