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We audited the State of Mississippi’s Community Development Block Grant Hurricane Disaster Recovery Program.  The Gulf Coast Regional Infrastructure Program was selected for audit based upon a congressional request, and it was also included in the U.S. Department of Housing and Urban Development, Office of Inspector General’s (HUD OIG) annual audit plan.  Our main objectives were to determine whether the State ensured that (1) appraisers complied with the terms of appraisal agreements and Federal requirements and (2) projects and growth projections were reasonable and adequately supported.

The State did not ensure that its subrecipient, Harrison County Utility Authority, and its appraisers complied with the terms of appraisal agreements for the appraisal of property acquired under the State’s Gulf Coast Regional Infrastructure Program.  The State could not support $7,200 paid for appraisals that did not meet standards.  In addition, it lacked assurance that land purchased for more than $2.1 million was appraised at a reasonable price.  Furthermore, the State did not fully implement adequate controls and procedures to ensure (1) that the need for and capacity of water and wastewater treatment facilities constructed addressed needs created by Hurricane Katrina or supported economic development and (2) the proper designation and completion of emergency activities.  As a result, disaster funding of more than $653 million was approved to construct 67 facilities that may include some plants, the capacity of which was either too small or excessive, and others plants that may not have been needed.  More than $9.6 million of disaster funds were approved for a facility based on an emergency requirement when the facility did not meet the definition of an emergency requirement.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to support $7,200 in appraisal fees; more than $2.1 million for property acquisition of three projects; and fully implement procedures and controls to address the findings cited in this audit report.