oversight

Propriety of Expenditures and Benefits Derived From Planning the Model Cities Program in Cleveland, Ohio

Published by the Government Accountability Office on 1971-06-18.

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

                                           i



Department   of Housing    and
     Urban   Development




BY THE COMPTROLLER GENERAL
OF THE UNITED STATES



                                 JUWE 18, I97   1
                        COMPTROLLER     GENERAL     OF      THE   UNITED   STATES
                                      WASHINGTON.    D.C.     20548




B-171500

Dear Mr.     Vanik:

      At your request       we examined into the propriety           of expendi-
tures made from Federal          and city    funds in Cleveland,      Ohio, in
connection     with the planning      of a Model Cities        Program in that
city.     In addition,     we discussed      with certain    local   officials,
who were associated        with the planning       for the Model Cities
Program,    the benefits      that the city      and its residents       might
have realized       or would realize      through    such planning     efforts.

       The City Demonstration         Agency (CDA)--a         local   public   agency
responsible       for planning    and coordinating         the Model Cities
Program --administered         the $266,000    grant awarded by the De-
partment     of Housing and Urban Development               (HUD) to the city
of Cleveland        to plan its Model Cities         Program.       We found that
payments made by the CDA in planning               the, program were supported
adequately,       were well documented,       and generally         were made in
accordance       with the prescribed      accounting      procedures       and con-
trols    established      by the city   of Cleveland.

        With respect          to benefits      that the city       and its residents
might have realized               or would realize      through     the Model Cities
Program planning            efforts,      we noted that the CDA had prepared
a comprehensive          demonstration        plan which,       according     to CDA and
city    officials,       was designed        to cope with the social,            economic,
and physical         problems        of the model neighborhood           and its resi-
dents.        Because this         plan has not yet been implemented,              however,
it is too early           to assess the effectiveness              or benefits     of the
plan.       We did find         that the model neighborhood            residents     were
interested         in the program and that many of them were hopeful
that this        program would breathe            new life    into their       community.

       A brief    description        of the Model Cities     Program,   certain
background     information       which describes     the program in Cleve-
land,   and additional        details     of our examination     are presented
in the following        sections.

MODEL CITIES          PROGRAM

         The Model Cities   Program--established                              in 1966--was   de-
signed     to enable cities    to demonstrate                          that     the living


                               50TH ANNIVERSARY                   1921- 1971         --
B-171500



environment     and general       welfare   of people      living   in slum and
blighted    neighborhoods       can be improved       through     an effective
and coordinated       concentration       of Federal,      State,   and local  ef-
forts.

        A local      Model Cities     Program generally         consists      of (1) a
5-year plan which describes              the needs of the city           in terms of
the projects         required    to make a substantial          impact on the so-
cial,      economic,     and physical      problems    of the city       and (2) a
first-year       s'action"    program which outlines         certain       projects
which are to be initiated             during     the first   year of the program.
At the local         level,   the development,       execution,       and adminis-
tration      of the Model Cities         Program are the responsibilities
of the CDA.

         HUD selected    150 cities   to participate      in the program.
As of March 31, 1971, HUD awarded grants              of about $22 million
to these cities       for planning    their   Model Cities     Programs and
about $700 million        to 139 of these cities        to assist   them in
initiating      their  Model Cities     Programs.     A major goal of the
program is to involve        the residents      in planning    and carrying
out the program.

        In June 1969 HUD awarded a Federal         grant of $266,000      to
the city    of Cleveland     to plan its Model Cities      Program.      Under
conditions     of the grant,    the city   was required    to contribute
$67,000 for such planning,         which increased     its planning    budget
to $333,000.

        The CDA, as an administrative              unit    of the city,         was re-
quired    to follow      the accounting       procedures         and controls        a -
plicable      to individual      organizational         units      of the tit -/y&z
ernment.        Under this    arrangement,       the Finance         Department        of
the city maintained         the books of account             for the local         Model
Cities    Program and all vouchers            and claims         for the disburse-
ment of the planning          funds were required            to be approved          first
by the CDA director         and then by specific             city    officials,         in-
cluding     the commissioner        of accounts       and the city          treasurer.

      In Cleveland   the model neighborhood    residents   elected                            a
29-member board--generally     referred   to as the Residents'

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Board    of Trustees--      to participate           in the model      neighborhood
policy     and program      planning       process       and program      operations.
The board,       the mayor,      area city        councilmen,       and public        offi-
cials    form    the Model     Cities      Executive        Committee     which     passes
on final      program  proposals         developed        by the CDA prior          to their
submission       to the city       council      for    formal   approval.

        In November         1970,     after        the Model         Cities       Executive          Com-
mittee     approved       Cleveland’s           first-year           action       plan       developed
by the CDA and after              the planning             funds      were exhausted,                the
CDA disbanded.            In February           1971 the Cleveland                  city      council
authorized         the plan     to be submitted                for    review        to HUD and to
the other        Federal     agencies         involved         in the Model              Cities      Pro-
gram.      In   April     1971    HUD     returned         the     plan      to   the     city     for
certain      revisions.         As of May 1971 the city                        was in the process
of revising          the plan     on the basis             of the Federal                agencies’        re-
view    comments.         Representatives               of the city            advised         us that
they    expected        to submit       the revised            plan      for    review         by the
Federal      agencies       by June 15, 1971.

          Under     the Cleveland          model      cities        plan,      as submitted,
$9.1 million           was requested          from      HUD and $2.2 million                 from    the
other       Federal     agencies       involved         in the program.                As you know,
however,         HUD stated       in a letter,            dated       January       22, 1971,      to
Mayor       Carl    B. Stokes,       that,      until       the city         took    steps      to de-
velop       a continuing        program       for     expanding           the supply       of housing
for     its    low-    and moderate-income                families,          HUD was suspending
further        Federal     funding       of the Model            Cities        Program     and all
other       HUD-assisted        community         development             programs       in Cleveland.

         In this       regard,    on May 10, 1971,           the Cleveland          ity    coun-
cil    approved        an agreement       with   the Cuyahoga       Metropo     i itan     Hous-
ing Authority,             which  authorized       construction       of 2,500        public
housing       units      in Cleveland.         As of May 26, 1971,           HUD regional
office      representatives          were in the process          of providing           tech-
nical      assistance         to, and negotiating          with,  representatives              of
the city         in the development           of a substantial,         continuing         hous-
ing program          in Cleveland        so that    the city     could     proceed       with
its    federally         assisted    community      development       programs.


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.   B-171500



    PROPRIETY OF FEDERAL AND CITY EXPENDITURES
    FOR PLANNING CLEVELAND'S MODEL CITIES PROGRAM

            As of November 30, 1970, about              $332,000    of   the planning
    funds    of $333,000 had been expended.

            A listing      of the funds expended during            the period     June 30,
    1969, through        November 30, 1970, is shown in schedule                1.    As
    shown in that schedule,             the major expenditures         were for (1)
    salaries--$219,350,            (2) consultant     services--$40,293,        and (3)
    resident       board expenses--$22,158.           We examined these expen-
    ditures      in detail      and the remaining      expenditures      on a selec-
    tive basis.         Our examination        showed that the expenditures           were
    supported       adequately,       were well documented,        and generally      were
    made in accordance           with the prescribed        accounting     procedures
    and controls        established       by the city    of Cleveland.

             As provided      for in the grant,         HUD withheld      $26,600   (10
    percent       of the total     grant    funds)     pending    its approval    of a
    certificate        of completion       which was required         to be submitted
    by the city        to indicate      that the conditions          of the grant    con-
    tract     had been met.        HUD officials        told us that the city        sub-
    mitted      the certificate       of completion         on May 9, 1971, and that
    an audit       of the planning        expenditures       might be conducted      by
    the HUD Office          of Audit before       this    final   payment would be
    made.

            In September    1969 HUD made an accounting             inspection         of
    Cleveland's     Model Cities      Program and found that the internal
    controls    of the CDA generally          were adequate.       HUD did find,
    however,    that the city      had not (1) executed         written      contracts
    with two program consultants,              (2) documented    its files         for
    salary    comparability    between CDA employees           and other       city     em-
    ployees,    and (3) adopted       an official      policy   covering       cash pay-
    ments to neighborhood        residents        for expenses    they incurred           in
    connection     with their    participation        at Model Cities        Program
    meetings.

          The city  took corrective      action   on the HUD findings      with
    the exception   of entering     into a written     contract   for the ser-
    vices  of one of the consultants.          HUD advised    us, however,    that

                                               4
    -   B-171500



        it had examined             into     the propriety        of the costs      incurred       by
        this  consultant            and    had concluded        that   the services        provided
        were consistent             with     the basic     objectives      of the program.

                During         January        and February          1971,    the Cleveland      city
        council      had       its   budget       analyst       make a review        of the planning
        grant    activities.               The budget          analyst     did not prepare        a re-
        port    on his         review;        however,      he informed         us that    the CDA could
        have maintained               certain       additional         documentation       to further
_       support      some        of its      planning       grant      expenditures.
                                                                                           /
                In addition        to HUD awarding           a grant,       the Council’     for    Eco-
        nomic     Opportunities         in Greater        Cleveland--the         local   antipov-
        erty    agency--awarded           a grant      of $53,000,        to train     model     neigh-
        borhood     residents         to participate         and assist        in the planning
        of the Cleveland           Model     Cities      Program.        As of May 1970,         $50,680
        of the $53,000          grant     from     the council       had been expended.

                A listing        of the funds       expended          during       the period          Febru-
        ary 1969 through              May 1970 is shown in schedule                      2.     Of the
        expenditures,          $35,332      was paid     to a consulting                 firm     to pro-
        vide    management          and communicative           skill      training          to the board
        and its       staff    members.        We examined          into     the contract            between
        the consulting           firm    and the board,          discussed           with      board    mem-
        bers    the nature          of the training        activities            provided,          and re-
        viewed     a copy of the consulting                firm’s        report        on the training
        provided.           We are satisfied        that      the payments            made under          this
        grant     were proper.

        BENEFITS   DERIVED FROM CLEVELAND’S
        MODEL CITIES    PLANNING EFFORTS

                The comprehensive           demonstration         plan          developed        by the
        city    emphasized        (1) increasing          the control            that      residents         have
        in their       neighborhoods        over     decisions      and         changes       which      affect
        their    lives,       (2) increasing         the opportunities                 of model        neigh-
        borhood      residents       to become more productive                     members        of society,
        and (3) developing             a physical       environment             appropriate          to,     and
        compatible        with,    decent,     safe,      and sanitary             living.


                                                           5
B--171500



     We noted that,     in the development    of the comprehensive
demonstration    plan,  city  officials  had reported   that they were
able to identify     many of the social    and economic problems   con-
fronting     the   model     neighborhood,         as well     as   the   underlying
causes of such problems.     In addition,     they stated  that,   in
planning  for the Model Cities      Program,  they were able to de-
fine and suggest   certain  solutions     to help reduce or elimi-
nate these problems.

        Although    it is difficult         to effectively       evaluate     or rea-
sonably      assess the benefits        of the model cities          planning    ef-
fort     in Cleveland,    primarily      because the comprehensive             demon-
stration       plan has not been implemented,              we noted that the plan
did not, in all cases,          specifically        identify     and adequately
discuss      the approaches     to be adopted by the city              to accomplish
many of the stated        program objectives.

          We discussed     the first-year         action   plan for the Cleveland
Model Cities         Program with HUD regional            officials         in Chicago,
Illinois.          These officials,        who had reviewed          the plan,       advised
us that,       although    HUD and the other Federal                agencies      involved
in the program had accepted                 the city's    overall       strategy       for
attacking        the problems       confronting       the model neighborhood               and
had not requested          the city       to add or delete          specific      projects,
they returned          the plan to the city           for certain       revisions        in
April      1971.                                                                              d

        These officials         also said that the plan had been returned
because (1) there were a number of technical                      defects     in the
plan,    such     as the  failure       to show   Federal     categorical       sources
of funds for certain            projects,     (2) the Cleveland         city    council
had rewritten        major segments of the plan without                 first    discuss-
ing such revisions          with elected       representatives         of the model
neighborhood,        and (3) descriptions           of certain     projects      did not
fully    identify      the scope of services          to be performed         or how the
projects     would solve the problems             which were identified.

       Because the         CDA staff    was disbanded    in November 1970, the
city   established         several   special   task forces--consisting          of
public    officials,        city   employees,    and community      residents--

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B’171500



to make certain           changes    in the comprehensive         plan    pursuant       to
the points         raised    by HUD and the other         Federal     agencies       in-
volved        in the review       of the plan.       As indicated      above,      city
officials        advised     us that    they   expected     to submit     the revised
plan      for   Federal    review    by June 15, 1971.

         In attempting        to determine        the type         of benefits       that   might
have resulted         from    the model    cities         planning       efforts,      we dis-
cussed     the program        with   the city       officials         and certain       members
of the board,         including      the chairman,            the treasurer,         and the
individual       chairmen       of the Employment,              Housing,       and Finance
Committees.

       Only the treasurer               expressed      certain       doubts       relative         to
the overall         objectives        of the Cleveland            program.          Although         he
was unable        to provide        us with      any specific          information,             he
stated    that      he did not believe            that     the model        cities        planning
funds    were properly           used.       The other       board     members        stated,
however,      that     they were satisfied             with     the planning            efforts
and were optimistic              that    the model      neighborhood            residents
would    benefit       from    the program.

        We also        discussed        the program        with    the former        chairman
of the city          council’s        Community       Development         Committee.          Al-
though     not specifically               commenting       on the benefits           of the
planning       efforts,        he stated         that   the city      council      should       mon-
itor    closely        model     city     projects      to ensure       that   the program
would     benefit        the majority          of the model neighborhood                resi-
dents     and would         not be directed           to serve       certain     small,       but
highly     influential,            groups      of model      neighborhood        residents.



        As agreed   with   you,    we did not obtain          written        comments
from any of the parties          involved  in this        review;         however,      this
report    was based     on information    available         in their         files    or
furnished     by them and was discussed          informally           with      them.

        We trust        that   the     above   information             will      serve     the pur-
pose    of your       request.         We plan     to make        no     further       distribution

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B-171500



of this report    unless   copies    are specifically     requested, and
then copies will     be distributed     only after    your approval  has
been obtained   or public      announcement    has been made by you con-
cerning   the contents    of the report.

                                      Sincerely   yours,




                                      Comptroller   General
                                      of the United   States

The Honorable  Charles     A. Vanik
House of Representatives




                                      8
                                                              SCHEDULE1


                           CITY OF CLEVELAND


                     MODELCITIES PLANNING GRANT

       FEDERALAND CITY FUNDSEXPENDEDDURING THE PERIOD

             JUNE 30, 1969, THROUGHNOVEMBER30, 1970


Salaries                                                      $219,350
Consultant     services                                         40,293
Resident board expenses                                         22,158
Office rental                                                    10,119
Resident planning                                               ~ 9,227
Office supplies                                                   6,161
Equipment purchases                                               5,789
Communications                                                    4,283
Travel                                                            3,518
Equipment rental                                                  2,374
Administrative      expenses                                      2,357
Utilities                                                         1,885
Motor vehicle hire                                                1,576
Advertising                                                       1,482
Other contractual       expenses                                     393
Printing                                                             336
General hardware                                                     265
Maintenance of equipment                                              83
Hygiene and sanitation                                                21

     Total

aAs of May 26, 1971, additional        expenses of $12,744 had not
 been paid.

SOURCE: Data supplied        by the Division   of Accounts,    city   of
        Cleveland.
                                                            .    L.




,I’
:i:   SCHEDULE2
:/I

                      COUNCIL FOR ECONQMICOPPORTUNITIES

                            IN GREATERCLEVELAND



                      MQDELCITIES PROGRAM
                                        PLANNING GRANT

                      FUNDSEXPENDEDDURING THE PERIOD

                       FEBRUARY1949 THROUGHMAY 1970



      PERSONNEL, COSTS:
         Consultants                           $35,332
         Salaries    and wages                   8,819
         Fringe benefits                          . 521                 $44,672

      NONPERSONNEL  COSTS:
         Travel                                   4,727
         Rental, lease, and purchase   of
            equipment                             1,017
         Other costs                                 264                    6,008

              Total                                                     $50,680

      SOURCE: Data supplied by the Council   for Economic Opportuni-
              ties, Cleveland, Ohio.




                                                           US.        GAO, Wash.. D.C.