oversight

Administration of the Water and Sewer Facilities Grant Program by HUD

Published by the Government Accountability Office on 1971-10-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                   WASHINGTON.D.C.         20548

                                                                          October       13, 1971


    Bear   Mr. Hyde:
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                                                                                  LM092454


             The Department has, in recent months, directed                 its efforts      to
    help ensure that certain            community development        projects,      such as
    water and sewer projects,            which are approved and financially              assisted
    -by BUD, are constructed          by grantees withi;       a reasonable       time frame.
     To this end, we recognize           that the Department made certain             changes in
     its grant application         review and approval        procedures      which, according
     to HUD officials,       resulted     in significantly       reducing      the length of
     time that it takes to complete its review of applications.for                        Federal
     financial    assistance.        We  noted  that    in recent    hearings     before    a sub-
    committee of the House Committee on Government Operations,                        Secretary
     Romney stated that the time to process wateq and sewer facilities
    grant applications        was reduced by the Department from 32 weeks to 11
    weeks.

           In view of these efforts        to reduce the time required         to process
    grad     applications,     we made a survey, primarily         at the HUD Atlanta
    regional     office,    of HUD's practices    followed    in awarding grants under
     the Water and Sewer Facilities         Grant Program.       In addition,    we per-
    formed certain        work at the HUD central      office   and at offices    of
i   select&d grantees.

           Although our preliminary        effort      did not constitute     an in-depth
    examination     into all facets of the Department's             practices   and pro-
    cedures in reviewing        and approving      applications     for assistance     under
    this program, we did not& certain             matters    which we believe    warrant
    your attention.        In our opinion,      certain     changes in HUD's procedures
    for notifying      grantees of the disposition           of their applications      for
    assistance     could be made which would assist grantees in initiating,
    on a more timely basis, the construction                of much-needed water and
    sewer facilities.         Details  of our findings        are presented    below.


    NEED TO PROFIPTLY ADVISE
    GRANTEES 0F PRc)&CT APPROVAL

           We believe    that significant    redurntions   in the period of time
    &at it takes grantees        to begin construction       of water and sewer pro-
    jects can be accomplished         if DUD would advise grantees,      as soon as                  _
    possible,     that their proposed projects        meet HLJDcriteria.




                                50TH                               1971
            n




             OLZr review showed that grantees did not initiate              construction
    for periods        ranging from about 1 month to approximately            3 years
    ak'ter HUD advised them that their projects               were approved.       In view
    0f these apparent delays, we selected for review 30 projects                      in 7
    States-Florida,           Georgia,  Kentucky, Mississippi,        North Carolina,
    South Carolina         and Tennessee.     These projects      were approved by HUD
     in 1968 and 1969. In 21 of these projects,                construction    was not
     inrtiated      by the grantees for at least 12 months after HUD approval.
     In the remaining         nine projects,   construction     was started within       6
    months after         HUD approval,                      .
            We examined        into these projects           to identify     factors     which were
-   responsible   for,         or directly       related     to, delays in the construction
    of the projects.             Based on our review, which included discussions
    with grantee officials,              project      engineers,    and HUD regional          office
    officials,         it appears that one of the most significant                    factors       con-
    tributing        to delays in starting            construction       of water and sewer pro-
     jects     is the preparat?on          of detailed       plans and specifications             for
    construction.            We noted that generally            such plans are prepared             only
    titer      the grantees are notified              by HUD that their proposed projects
    have been-approved            and Federal funds reserved              for the projects.           HUD
    officials,         agreeing with our cuncl%s-ions that the preparation                        of such
    plans and specifications               is one of the main factors             contributing         to
    grantees?        failure     to initiate       construction     at an earlier        date, said
     that grantees          are reluctant      to take action to develop such plans
    until       they   receive     some type of assurance from HUD that they will,
     receiye       Federal financial         assistance.

           As you know, requests for Federal financial                 assistance     under the
    water and sewer program are submitted by grantees in the form of pre-
    liminary     applications.          Those States and local public bodies which
    appear to demonstrate            the greatest    potential    for achieving      the pro-
    gram objectives          are advised subsequently         by HUD to submit formal
    grant    applications.          Formal applications       are then reviewed by HUD for
    consistency       with the overall       program criteria       and to evaluate      the
    technical      feasibility       of the proposed project.         Upon the completion
    of its review of the formal application,                  HUD will either     approve or
    disapprove       the proposed project.          However, applicants       who meet pro-
    gram criteria        are not advised by HUD that their projects               are approved
    until    such time that Federal funds have been reserved for the projects.
    In this regard,          our survey showed that, because of a lack of available
    funds,    an average of 6 months elapsed between the time HUD completed
    its application           reviews and the time HUD notified         applicants      of the
    approval      of their projects,

            We noted, however,       that most applications       for assistance    which      -
    reach    the forntil   application     review stage are ultimately        funded by
    mJD,     For exanp le , of the 46~. projects        reviewed    by the Atlanta
    m.gSsnal    office   from the inception         of the program in 1965 to December
    1930 1 353 projcc ts 3 or about 90 pcrccnt,            werp funded; 35 projects      wc‘rc
    wi !&drawn    by grantees;      and 8I projects    were cancelled.


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-a             .-r-p-        .Our discussions
                                  -                 with grantee'official';+showed                  that grantees would                                                .
          _-                                                                           .e -action     to develop project
                     in certain      ins&ces,         be willing       to initiaz
                     plans and specifications,              at an earlier         ds+,           they were advised by           if


                     WI] that their grant applications                   satisfac$orilFmet             existing     HUD cri-
                     teria.      Under the present procedures,                 howeyer, as previously              mentioned,
                     DUD does not,advise           grantees of the approval                of their requests for
                     assfstance      unfil    such time that Federal funds are actually                         available
                     and are reserved         for the projects.
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                            'We recognize       that some projects           which meet program criteria                  may
                     not be financially          assisted      by HUD because of factors                outside its con-
                     trol,     such as the lack of Federal funds.                     However, we believe            HUD
                     should consider         advising     applicants,         under a preliminary            funding
                     approva 1 technique,          that their projects            meet program criteria              and that
                     when'funds      become available          the project        will be financially            assisted
                     by HUD. Notifying            grantees,     particularly          in the case of high priority
                     projects,      as soon as possible           after     the HUD formal review is completed
             _.      will provide        them with the necessary assurance they consider essential
                     to initiate       action to develop project               plans and specifications.


                                          CONCLUSIONS AND RECO?4MFNDATLONS

                                                  Grantee officials      agreed that one of the most signif icant factors
                                          affecting      their ability    to promptly initiate  construction  of water and
                                      --a sewer projects        is the need to develop project    plans and specifications
                        i
                                          for-project       construction    after HUD notifies them that their proposed
                                          projects      have been approved for Federal funding.

                                                 -In view of the large number of projects           which are funded by HUD
                                          after     the grant applications       are satisfactorily     processed through HUD's
                                          format review,        we recommend that you consider advising          grantees--at      an
                                          earlier      date -that    their applications     meet existing    HLJDprogram criteria
                                          and that Federal funds, when available,              will be provided     to financially
                                          assist      the project.


                                                                             ----


               .                                We appreciate   the cooperation  given to our representatives    during
                                           this review,   and we shall be pleased to discuss with you or members of
                                          your staff,   the matters discussed in this report.     A copy of this report
                                          is being forwarded    to the Assistant   Secretary for Administration.        _-


                                                                                                                                                                 -3-
              We wovld    appreciate       your views itnd comments        on action       taken   or
    planned      with    respect     to   the above matters.
                                                                               .
                                                                       6
                                                           Sincerely       yours,



                                                       .   B. Er Birkle
                                                                                                         i




                                                  I        Assiz tant Director         .


    The Ronarable       Floyd Hyde
_   Assistant     Secretaiy   fbr
       Comrnunf ty Deve lopmen t
    Department     of Housing     and
       Urban   Development




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