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The U.S. Department of Housing and Urban Development, Office of Inspector General audited the State of Wisconsin’s Department of Commerce’s Lead-Based Paint Hazard Control program under the American Recovery and Reinvestment Act of 2009. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the State for review based on a citizen’s complaint forwarded to our office from the U.S. Department of Commerce’s Office of Inspector General (OIG). Our objective was to determine whether the State ensured that its subrecipients (1) awarded Recovery Act grant funds to eligible property owners and (2) complied with the U.S. Department of Housing and Urban Development’s (HUD) and its own requirements.

The State did not always ensure that its subrecipients awarded Recovery Act grant funds to eligible property owners and complied with HUD’s and its own requirements. Specifically, it did not ensure that its subrecipients (1) awarded grant funds to property owners that were current with their property taxes, (2) ensured that property owners gave priority to families with a child under 6 years of age in the rental of housing units, (3) maintained sufficient or complete documentation to support that they performed independent price estimates before receiving bids for construction services, or (4) maintained sufficient documentation to support that six households were income eligible to receive grant funds. As a result, a State subrecipient inappropriately awarded $53,919 in grant funds to property owners that were not eligible to receive grant funds, and HUD and the State lacked assurance that families with a child under 6 years of age had priority in the rental of housing units that received Federal assistance.

The complainant’s allegations regarding the State’s Lead-Based Paint Hazard Control program, in particular the procurement of contracts for risk assessment services, were not substantiated by the results of this audit.

We recommend that the Director of HUD’s Office of Healthy Homes and Lead Hazard Control require the State to (1) reimburse its program $53,919 from non-Federal funds for the grant funds awarded and expended to assist the two ineligible property owners, (2) amend its implementation manual in accordance with its work plan to include the requirement that property owners’ property taxes be current, and (3) establish procedures and controls to ensure that property owners give priority in renting housing units for not less than 3 years following the completion of lead abatement activities to families with a child under 6 years of age.