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The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the City of Saginaw’s (City) Community Development Block Grant (Block Grant) program-funded demolition activities. The audit was part of the activities in our fiscal year 2009 annual audit plan. We selected the City based upon a request from HUD’s Detroit Office of Community Planning and Development. Our audit objective was to determine whether the City effectively administered its Block Grant program-funded demolition activities.

The City did not effectively administer its Block Grant program-funded demolition activities. It lacked sufficient information for demolition activities to support nearly $138,000 in Block Grant funds used for demolition activity costs, did not request reimbursement from property owners and/or place liens on properties for more than $80,000 in Block Grant funds used for demolition activities, and did not provide sufficient documentation to support that it was not required to request reimbursement from property owners and/or place liens on properties for nearly $51,000 in Block Grant funds used for demolition activities.

We informed the director of the City’s Department of Development (Department) and the Director of HUD’s Detroit Office of Community Planning and Development of a minor deficiency through a memorandum, dated November 3, 2009.

We recommend that the Director of HUD’s Detroit Office of Community Planning and Development require the City to (1) provide sufficient supporting documentation or reimburse its Block Grant program from nonfederal funds for the nearly $138,000 in Block Grant funds used for unsupported expenses, (2) reimburse its Block Grant program more than $80,000 from nonfederal funds for the demolition activities for which the City did not request the property owners to reimburse the City or place liens on the properties, (3) provide sufficient supporting documentation or reimburse its Block Grant program from nonfederal funds for the nearly $51,000 in Block Grant funds used for the demolition activities for which the City did not provide sufficient documentation to support that it was not required to request reimbursement from property owners and/or place liens on properties, and (4) implement adequate procedures and controls to address the finding cited in this audit report.