We recommend that HUD’s Acting Director for the Office of Block Grant Assistance require the Texas General Land Office to review and update its internal controls throughout the grant cycle to ensure that the procurement and expenditure policies and procedures are implemented and working as designed, including the Federal prohibition of cost plus percentage of cost contracts.

Provide training to code enforcement staff on HUD CDBG regulations and requirements.

Develop and implement written procedures and controls to properly track and charge code enforcement officers’ costs among different CDBG activities and other funding sources.

Develop and implement written policies and procedures to define deteriorated or deteriorating areas, which would apply to its CDBG-eligible target areas, and establish a written plan for using the program, in conjunction with public or private improvements, rehabilitation, or services, that may be expected to arrest the decline in CDBG-eligible target areas.

Support the $797,222 in code enforcement costs, including meeting code enforcement and salary and benefits requirements, or repay its program from non-Federal funds.

Implement controls and procedures to ensure that all future action plans include all methods of distributing grant funds or amend the plan as required if programs are added after approval.

Amend its 2015 annual action plan to include the Main Street Revitalization program.

Develop and implement procedures and controls to ensure that graffiti abatement expenditures, including salaries and benefits, are accurately charged to CDBG grants and properly supported.

Provide documentation to support $285,496 in graffiti abatement expenditures or repay the program from non-Federal funds (appendix D).

Develop and implement policies and procedures to ensure that code enforcement salaries and benefits are charged and documented in accordance with program requirements.