The City of Providence, RI Did Not Properly Administer Its HOME Program | Office of Inspector General, Department of Housing and Urban Development

June 20, 2018

Community Planning and Development

2018-BO-1003

2018-BO-1003.pdf

We audited the City of Providence RI’s HOME Investment Partnerships program based on an OIG risk assessment, which ranked the City as the highest risk HOME grantee in New England. The objective of the audit was to determine whether the City properly committed and disbursed HOME funds in accordance with Federal and U.S. Department of Housing and Urban Development (HUD) rules and regulations.

City officials did not properly administer their HOME program. Specifically, they did not properly commit and disburse HOME funds in accordance with Federal and HUD rules and regulations. They did not ensure that they (1) met the commitment deadline for their HOME funds for program year 2013, (2) properly documented and supported their underwriting of activities, (3) complied with environmental review requirements, (4) disbursed funds in accordance with requirements, (5) properly tracked and obtained program income, and (6) supported their administrative fees. These deficiencies occurred because City officials and the previous directors of community development lacked adequate program knowledge and disregarded HUD and Federal requirements. Further, City officials did not have adequate underwriting and environmental policies and procedures and had poor record-keeping practices. As a result, they incurred more than $1.4 million in ineligible costs, more than $1.8 million in unsupported costs, and more than $1.2 million in unexpended HOME funds that may need to be reallocated to eligible activities.

We recommend that the Director of HUD’s Boston Office of Community Planning and Development require City officials to (1) repay more than $1.4 million in ineligible costs when commitment and environmental requirements were not properly completed and funds were not properly disbursed, (2) support more than $1.8 million was reasonable, supported, and allowable or repay the funds, (3) support more than $1.2 million in unexpended funds was reasonable and allowable or reallocate the funds, (4) cancel stalled activities in HUD’s Integrated Disbursement and Information System, and (5) develop and implement adequate underwriting and environmental policies and procedures and tools to improve record-keeping practices.

Recommendations

Recommendation	Status	Date Issued	Summary
2018-BO-1003-001-A	Closed	June 20, 2018	Repay from non-Federal sources the $1,451,559 in ineligible funds when the HOME program commitment requirements were not completed as required, the environmental reviews were not properly completed, and funds were not disbursed in accordance with written agreements.
2018-BO-1003-001-B	Closed	June 20, 2018	Support that $1,559,908 in HOME funds disbursed was reasonable, supported, and allowable in accordance with Federal requirements or repay from non-Federal funds any amount that cannot be supported.
2018-BO-1003-001-C	Closed	June 20, 2018	Support that $1,253,596 in funds not yet expended was reasonable, supported, and allowable or reallocate the funds, thus ensuring that they will be put to their intended use.
2018-BO-1003-001-D	Closed	June 20, 2018	Develop and implement adequate underwriting policies and procedures for their affordable housing activities and for the downpayment assistance program to ensure that HOME activities are consistent and meet Federal requirements. Further, they should include the downpayment underwriting policies and procedures in the written agreement with the City's subrecipient.
2018-BO-1003-001-E	Closed	June 20, 2018	Cancel activities in IDIS that have had no construction in more than 12 months.
2018-BO-1003-001-F	Closed	June 20, 2018	Develop and implement adequate environmental policies and procedures to ensure that HOME activities are properly classified, the environmental review is documented and supported, and that HUD and Federal environmental requirements have been followed before committing HOME funds to an activity
2018-BO-1003-001-G	Closed	June 20, 2018	Determine the total supported development costs for the completed HOME activities and calculate and obtain any program income due to the HOME program.
2018-BO-1003-001-H	Closed	June 20, 2018	Support that City officials properly administered the HOME program and earned $338,665 in HOME administrative fees or repay from non-Federal funds any amount that cannot be supported.
2018-BO-1003-001-I	Closed	June 20, 2018	Develop and implement tools to improve record-keeping practices to support the eligibility, necessity, and reasonableness of the HOME activities.
2018-BO-1003-001-J	Closed	June 20, 2018	Request that HUD headquarters recalculate the City's commitment shortfall for program year 2013 based on the lack of the amendment with the City's subrecipient and for the projects that were not properly committed.
2018-BO-1003-001-K	Closed	June 20, 2018	Provide technical assistance to the City to ensure that City officials responsible for administering the HOME program receive necessary HOME program training.