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The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General reviewed Wayne County’s (County) Neighborhood Stabilization Program (Program). The review was part of the activities in our fiscal year 2009 annual audit plan. We selected the County based upon a request from HUD’s Detroit Office of Community Planning and Development. Our objective was to determine whether the County had the capacity to effectively and efficiently administer its Neighborhood Stabilization Program. Congress amended the Neighborhood Stabilization Program and increased its funding as part of the American Recovery and Reinvestment Act of 2009 (Recovery Act). As part of a consortium, the Wayne County Land Bank Corporation (Corporation), which is controlled by the County, submitted an application to HUD, dated July 13, 2009, that totaled $290 million in additional Neighborhood Stabilization Program funds under the Recovery Act. The application is under review by HUD.

We found that the County needs to improve its capacity to effectively and efficiently administer its Neighborhood Stabilization Program. Specifically, the County: (1) did not ensure that the Corporation fully complied with HUD’s regulations for full and open competition regarding the procurement of project management services for the County’s Neighborhood Stabilization Program; (2) had not established sufficient policies, procedures, and controls for its Program as of December 16, 2009; and (3) provided a detailed fiscal year 2010 through 2013 budget for planning and administrative costs ($2,609,096) that exceeded 10 percent of the County’s total Program grant and its revised Program budget for planning and administrative costs ($2,590,915) by more than $18,000. Lastly, HUD’s Detroit Office of Community Planning and Development did not include sufficient special conditions in its Neighborhood Stabilization Program grant agreement with the County.