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We audited the U.S. Department of Housing and Urban Development’s (HUD) Kansas City, KS, Office of Public Housing as part of a nationwide audit of HUD’s oversight of environmental reviews. We selected the Kansas City Office based on our risk assessment. Our audit objectives were to determine whether the Kansas City Office ensured that (1) the responsible entities or the Kansas City Office performed the required reviews and (2) HUD did not release funds until all requirements were met and required documents were submitted. The Kansas City Office did not provide adequate oversight of two public housing agencies to ensure that the responsible entities properly completed and documented environmental reviews as required by 24 CFR (Code of Federal Regulations) Part 58. Further, it did not maintain sufficient internal control records. These conditions occurred because the Kansas City Office thought that the Office of Community Planning and Development (CPD) was responsible for monitoring responsible entities; thus, it did not monitor them or the housing agencies, and it did not properly implement the environmental requirements. The Kansas City Office also did not follow environmental requirements of 24 CFR Part 50 for the nine public housing agencies that we reviewed. This occurred because the Kansas City Office did not have adequate standard operating procedures and its culture concerning environmental reviews was inattentive. As a result, the Kansas City Office may have increased the risk to the health and safety of public housing agency residents and the general public, and may have failed to prevent or eliminate damage to the environment. Further, the 11 housing agencies spent more than $27 million, including more than $12 million in Recovery Act grant funds, for projects that either did not have environmental reviews, or that did not have adequately supported environmental reviews. We recommended that two housing agencies repay HUD, for transmission to the U.S. Treasury, more than $1 million and support or repay almost $19 million. We also recommended that the Director of the Kansas City Office of Public Housing take available actions against two housing agencies and their responsible entities. To correct systemic weaknesses identified in this report, we will make recommendations to HUD headquarters in an upcoming nationwide audit report.

ARRA