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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited the City and County of Denver’s (City) Neighborhood Stabilization Program I (NSP I). We selected the City for review based on our risk assessment considering the amount of Housing and Economic Recovery Act of 2008 (HERA) and American Recovery and Reinvestment Act of 2009 NSP funds it received and expended along with other evaluative factors. The objectives of the review were to determine whether the City obligated NSP I funding in accordance with HERA rules and regulations and whether the City followed HUD’s NSP reporting regulations and posted quarterly NSP I performance reports on its official Web site. We concluded that the City improperly obligated more than $1.5 million of its NSP I funds by recording its funds as obligated in HUD’s Disaster Recovery Grant Reporting System (DRGR) without the funds being linked to a specific address and/or household. Additionally, the City did not follow HUD’s NSP I reporting regulations. It did not post two quarterly NSP I performance reports on its official Web site within the 30-day requirement.

We recommend that the Director of the Denver, CO, Office of Community Planning and Development require the City to develop and implement policies and procedures to ensure proper obligation of NSP I funding and deobligate any portion of the more than $1.5 million in NSP I funds that was not properly obligated. We also recommend that HUD provide technical assistance to the City regarding HUD’s reporting requirements to ensure that it posts quarterly NSP I performance reports on its official Web site within the 30-day requirement.