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September 17, 2015
  • Community Planning and Development
2015-NY-1011

We audited the New York State Community Development Block Grant Disaster Recovery Assistance (CDBG-DR) funded New York Rising Housing Recovery Program to address the Disaster Relief Appropriations Act requirement that the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, monitor the expenditure of CDBG-DR funds.  State officials allocated more than $1 billion in CDBG-DR funds to the Housing Recovery Program, of which $621 million had been obligated and more than $600 million had been disbursed as of March 31, 2015.  The objective of the audit was to determine whether State officials established and maintained adequate controls to ensure that CDBG-DR funds were disbursed for eligible activities and allowable costs and properly reported in compliance with regulations.

Weaknesses in program controls did not always ensure that CDBG-DR funds were disbursed for eligible costs, ineligible awards could be recovered, procurement activity was executed or reported as required, and disbursements were properly reported.  Specifically, (1) funds were disbursed for ineligible and unsupported costs, (2) disbursements were made before recipients executed grant agreements, (3) procedures were not implemented to recapture funds disbursed for ineligible costs, (4) procurement of construction management and environmental review services did not comply with Federal and State requirements, (5) national objectives were inadequately classified and reported, and (6) assistance payments were made without receipts.

We recommend that HUD direct State officials to (1) repay the program more than $2.2 million in CDBG-DR funds disbursed for ineligible costs, (2) provide documentation for $119,124 in unsupported disbursements and the reasonableness of the cost figure used to disburse more than $55.6 million for reconstruction costs,  (3) strengthen controls to ensure that grant agreements are signed before checks are disbursed to recipients, (4) implement procedures to recapture ineligible CDBG-DR funds disbursed, (5) provide documentation showing that the $127.2 million contract for construction management and environmental review services was fair and reasonable, (6) strengthen controls to ensure that national objectives are adequately classified and reported and (7) require receipts for completed work to ensure that more than $241.2 million will be put to its intended use.

Recommendations
Recommendation Status Date Issued Summary
2015-NY-1011-001-A Open September 17, 2015 We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct State officials to reimburse the line of credit for $2,229,234, which was disbursed to program recipients for ineligible costs.
2015-NY-1011-001-B Open September 17, 2015 We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct State officials to de-obligate the undisbursed amount of $911,662 to ensure that the funds will be put to their intended use.
2015-NY-1011-001-D Open September 17, 2015 We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct State officials to provide adequate documentation to support $119,124 in CDBG-DR funds that was disbursed to three recipients. If any amount cannot be adequately supported, it should be repaid to the State’s line of credit.
2015-NY-1011-001-F Open September 17, 2015 We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct State officials to provide adequate documentation for the reasonableness of the cost figure used to disburse $55,672,982 for reconstruction costs. Any amount not adequately supported should be repaid to the State’s line of credit.
2015-NY-1011-001-G Open September 17, 2015 We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct State officials to provide adequate documentation for the reasonableness of the cost figure used for reconstruction costs, thus ensuring that the undisbursed award balance of $31,831,316 is put to its intended use.
2015-NY-1011-001-H Open September 17, 2015 We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct State officials to document the amount paid for the flawed studies used to support the $160-per-square-foot cost figure and take action to recoup the amount paid, thus ensuring that this amount will be available for other eligible costs.
2015-NY-1011-003-A Open September 17, 2015 We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct State officials to provide documentation showing that the $127.2 million budgeted for inspection-related construction management and environmental review services is fair and reasonable in accordance with a cost or price analysis as required by regulations at 24 CFR 85.36.