oversight

The City of Tulsa, Oklahoma Allowed Its Largest Subrecipient to Expend $1.5 Million in Unsupported CDBG Funding

Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-08-04.

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

                                                                 Issue Date
                                                                              August 4, 2008
                                                                 Audit Report Number
                                                                              2008-FW-1012




TO:         David H. Long
            Director, Community Planning and Development Division, 6ID


FROM:       Gerald R. Kirkland
            Regional Inspector General for Audit, Fort Worth Region, 6AGA

SUBJECT: The City of Tulsa, Oklahoma Allowed Its Largest Subrecipient to Expend $1.5
         Million in Unsupported CDBG Funding


                                   HIGHLIGHTS

 What We Audited and Why

             We audited the City of Tulsa’s (City) Community Development Block Grant
             (CDBG) program due to a departmental request. Our initial objective was to
             determine whether the City expended CDBG funds in accordance with U. S.
             Department of Housing and Urban Development (HUD) rules and regulations.
             Based upon the initial results, we modified the objective to determine whether the
             City ensured that its largest subrecipient, the Tulsa Development Authority
             (Authority), expended CDBG funds within HUD rules and regulations for its
             acquisition, clearance, relocation, and disposition activities.

 What We Found


             While the City generally monitored other subrecipients, it did not monitor or
             supervise its largest subrecipient, the Authority. From October 1, 2005, through
             September 30, 2007, the Authority inappropriately expended $1.5 million for its
             CDBG acquisition, clearance, and relocation activities. However, it did not have
             specific disposition plans for its CDBG-acquired properties and only benefited the
             low- to moderate-income community “whenever possible.” In addition, the
           Authority’s acquisition and clearance projects did not have the HUD-required
           environmental reviews.

What We Recommend


           We recommend that the Director, Oklahoma City Office of Community Planning
           and Development require the City to

              •      Adopt written policies and procedures for its CDBG program for
                     day-to-day operations that include procedures to ensure that it monitors all
                     of its subrecipients in accordance with HUD and local requirements;
              •      Require the Authority to develop and implement specific plans for its future
                     CDBG acquisitions and currently owned CDBG properties that will benefit
                     the low- to moderate-income community as a whole and individually, which
                     would put more than $8.9 million to better use;
              •      Support or repay more than $1.5 million for funds that the Authority could
                     not support in performing its acquisition, clearance, relocation, and
                     disposition activities; and
              •      Perform the necessary environmental reviews when acquiring or clearing
                     land.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3.
           Please furnish us copies of any correspondence or directives issued because of the
           audit.

Auditee’s Response


           We provided the City and HUD with our draft report on June 16, 2008. We held
           an exit conference with the City and HUD on July 1, 2008. The City provided its
           written response on July 17, 2008. The City agreed with the majority of the
           recommendations; however, it did not agree with our monetary recommendations.

           The City’s response and our evaluation of the response are located in Appendix B
           of this report. The City’s response included schedules that are available upon
           request.




                                               2
                            TABLE OF CONTENTS


Background and Objectives                                                   4

Results of Audit
      Finding: The Authority Did Not Support $1.5 Million in CDBG Funding   5

Scope and Methodology                                                       11

Internal Controls                                                           12

Appendixes
   A. Schedule of Questioned Costs and Funds to Be Put to Better Use        14
   B. Auditee Comments and OIG’s Evaluation                                 15




                                            3
                        BACKGROUND AND OBJECTIVES

The City of Tulsa, Oklahoma (City), was the third largest Community Development Block Grant
(CDBG) recipient in the State of Oklahoma. Between October 2005 and September 2007, the City
received more than $8 million in CDBG funds from the U. S. Department of Housing and Urban
Development (HUD). During the audit period, various City divisions had responsibility for
administering its CDBG program as follows:

    •   Until October 2006, the Urban Development Division;
    •   October 2006 to March 2008, the Working in Neighborhoods Division; and
    •   April 2008 to present, the Department of Grants Administration.

The primary objective of the CDBG program is to develop viable urban communities by providing
decent housing and a suitable living environment and by expanding economic opportunities,
principally for low- and moderate-income persons.

To carry out the program, the City granted CDBG funding to various subrecipients, including the
Tulsa Development Authority (Authority), its largest subrecipient. The City accounted for the
Authority on its comprehensive annual financial report as a discretely presented component unit.
While the Authority was legally separate from the City, the City was financially accountable for and
supplied staffing to the Authority. The Authority's primary source of funding was from the City’s
CDBG program. As a CDBG recipient, the City was responsible for the actions of its subrecipients.

Under the grant agreements, the Authority received CDBG funds for community improvement
activities including land acquisition, clearance, and relocation. The Authority’s purpose for these
activities was to eliminate slum and blight and to provide low- and moderate-income households or
areas with economic opportunities. As of September 30, 2007, the Authority owned approximately
160 properties throughout Tulsa that it acquired with CDBG funding. 1 It had owned some of the
properties since 1966. However, its property list may not be accurate due to its conflicting
information.

Our audit objective was to determine whether the City ensured that its largest subrecipient, the
Authority, expended CDBG funds within HUD rules and regulations for its acquisition,
clearance, relocation, and disposition activities.




1
    While the CDBG program did not exist until 1974, we included properties purchased under its predecessor,
    Model Cities program. Congress enacted the Model Cities program in 1966 with similar objectives to the
    CDBG program, which was to benefit the low- to moderate-income community.


                                                       4
                                       RESULTS OF AUDIT

Finding: The Authority Did Not Support $1.5 million in CDBG
Funding
The Authority failed to support $1.5 million in CDBG funding for acquisition, clearance,
relocation, and disposition activities. For instance, its salaries and expenses that it charged to the
City’s CDBG program were disproportionate when compared to the planned activities in its
consolidated annual plans. Further, while it had sector redevelopment/urban renewal plans, it did
not have specific disposition plans for the properties it acquired. According to the Authority, it
would benefit the low- to moderate-income community “whenever possible” when it sold or
leased a property. Thus, its acquisition, clearance, relocation, and disposition activities did not
comply with HUD requirements or benefit the low- to moderate-income community as required.
This condition occurred because the City failed to monitor and supervise the Authority partly due
to a lack of written policies and procedures and partly due to its relationship with the Authority.
As a result, $1.5 million was not available to provide services to low- and moderate-income
persons.


    The Authority Could Not
    Support More Than $1.39
    Million

                  The Authority could not support more than $1.39 million in salary expenditures,
                  supplies, and other expenses. From October 2005 through September 2007, it spent
                  approximately $1 million in salaries for its acquisition, clearance, relocation,
                  disposition, and CDBG property management activities.2

                  A review of seven City/Authority employees’ timesheets showed that while the
                  employees worked on both CDBG and non-CDBG activities, they did not charge
                  time in accordance with federal regulations.3 Federal regulations required the
                  employees working on both CDBG and non-CDBG grants to allocate time
                  resembling actual results. One employee charged time in accordance with the
                  budget. Other employees charged time to the relocation project in the same manner
                  as they did the acquisition project. 4 The Authority needs to support that employees
                  charged time resembling their actual work.




2
     The City’s consolidated annual plans and the contract between the City and the Authority were silent on the
     disposition and CDBG property management activities.
3
     Office of Management and Budget Circular A-87, attachment B(8).
4
     The Authority’s acquisition project also included CDBG property management and disposition activities. In
     addition, the Authority did not perform relocation activities.


                                                         5
                 Further, the following chart shows a comparison of accomplishments and cost of the
                 Authority’s CDBG programs to similar activities by non-CDBG programs and
                 reported goals for its CDBG programs.

                                                                                                           Salaries
                                                                                                             and
                         Fund           Acquisitions     Dispositions     Clearances      Relocations      benefits
                   CDBG                     5                14 5             5                0          $1,006,939
                   CDBG goals per                                                                          Budget
                   consolidated               50              Did not          36              28         $1,929,327
                   annual plans                               report
                   1996 sales tax              5                 6             10          unknown            34,060
                   Kendall/Whittier           12                 6              9          unknown            21,587

                 While the Authority expended more than 50 percent of its acquisition, clearance, and
                 relocation budget on salaries, the Authority completed only 10 percent of the
                 planned acquisitions and less than 14 percent of the planned clearances. In addition,
                 a comparison of accomplishments to the salaries showed an abnormal disparity
                 between CDBG and non-CDBG land activities. Without proper allocation of
                 employees’ time and the disparity in cost charged to CDBG, the Authority failed to
                 support more than $1 million in salary cost it charged to the City’s CDBG program.

                 The remaining $384,428 in expenditures was unsupported due to the Authority’s
                 lack of specific disposition plans and not benefiting the low- to moderate-income
                 community. Review of a sample of expenditures including office and property
                 maintenance supplies, employee training, and temporary staffing concluded that
                 the Authority could not support that the expenditures benefited its CDBG
                 program. Additionally, it misclassified two expenditures: property clearance and
                 water bills. Both expenditures were for non-CDBG properties. The Authority
                 took action to correct the $6,725 in misclassifications.

                 The Authority did not have specific disposition plans for its land acquisitions. 6 Its
                 executive director stated that it disposed of property in accordance with the urban
                 renewal/sector redevelopment plans. However, these plans were general in nature
                 and did not have a completion date with exception to redeveloping the entire sector.
                 Despite the Authority’s purpose of providing low- and moderate-income households
                 or areas with economic opportunities, the Authority’s executive director stated that it
                 would benefit the low- to moderate-income community “whenever possible” when it
                 disposed of CDBG-acquired lands.




5
    The Authority sold all 14 properties at fair market value and did not retain documentation to support that the
    property benefited the low- to moderate-income community.
6
    Title 24, Code of Federal Regulations (24 CFR) 570.208 (d)(1) states that a preliminary determination of the
    acquisition of real property activity addresses may be based on the planned use of the property after acquisition.


                                                          6
     The Authority Accumulated
     Property


                  The Authority accumulated approximately 160 properties with CDBG funds,
                  including some that it acquired in the 1960s. On June 30, 2007, the City valued the
                  Authority’s CDBG properties at almost $9 million. The Authority did not have
                  specific plans for the end use of the individual properties. Further, because it did not
                  sell or otherwise dispose of the properties, it continued to incur property
                  maintenance costs, which it paid with CDBG funds. HUD regulations 7 state that
                  when recipients or subrecipients acquire land with CDBG funds, they may
                  temporarily maintain the land with CDBG funds. The Authority acquired 134 of its
                  approximately 160 properties before 2000. It must develop end use plans for the
                  disposition of each property consistent with CDBG national objectives and expend
                  the resulting program income in accordance with HUD requirements. By complying
                  with HUD requirements, the Authority could put approximately $9 million 8 to the
                  intended use of benefiting the low- to moderate-income community.

                  The Authority accounted for its CDBG property management expenses under the
                  CDBG acquisition fund. The City did not include the Authority’s CDBG property
                  management within its consolidated annual plans or the contract between the City
                  and the Authority. It also did not report the accomplishments to HUD within its
                  consolidated annual performance and evaluation report (CAPER). 9

                  Further, the Authority sold or leased its CDBG property at fair market value without
                  maintaining documentation to demonstrate how the property benefited the low- to
                  moderate-income community. When it leased property, it did not maintain job
                  creation or retention documentation for low- to moderate-income individuals.10
                  Contrary to the Authority’s actions, the City’s CAPER stated that the City used 100
                  percent of its CDBG funds, which included funds provided to the Authority, to
                  benefit low- to moderate-income persons.11 The Authority’s lack of specific
                  disposition plans and benefit to low- to moderate-income persons did not meet the
                  CDBG primary objective. As a result, the City provided HUD incorrect
                  information, and HUD had no assurance that the City complied with meeting HUD’s
                  goals. The City needs to ensure that it provides HUD with accurate information and
                  that its subrecipients use CDBG funds in compliance with HUD requirements.




7
     24 CFR 570.201(b).
8
     This represents a one time savings.
9
     The City prepares the CAPER to show HUD its accomplishments with the provided funds.
10
     24 CFR 570.208(a)(4).
11
     24 CFR 570.200 (a)(2) states that recipients must maintain evidence that each of its activities assisted with
     CDBG funds meets one of the three national objectives. The Authority did not have documentation to support
     its use of funds for the low to moderate income national objective.


                                                         7
     The City Underreported
     Program Income

                   The City underreported to HUD its program income for at least the 2007 fiscal
                   year.12 The City’s CAPER for the 2007 fiscal year reported $9,133 in property
                   rental income for the Authority. Authority officials denied that the Authority had
                   used CDBG funds to purchase the properties that earned the rental income reported.
                   However, its property inventory classified one of the properties as a
                   CDBG-purchased property. During the same period, the Authority earned at least
                   $106,415 in rental income from its CDBG properties and expended $47,228 in
                   operation costs for the properties.13 Therefore, it should have remitted a minimum
                   of $59,187 in rental income to the City, which it should have reported to HUD.

                   While the Authority transferred $100,000 from one of its CDBG property
                   management accounts to the City on March 31, 2008, to report earned program
                   income, it did not reconcile the $100,000. HUD required the City, and by extension
                   the Authority, to report accurate information on its CDBG activities. The City needs
                   to ensure that the Authority properly accounts for and remits program income in
                   accordance with its contract. 14

     City Did Not Perform
     Environmental Reviews


                   The City 15 did not perform the required environmental reviews for five properties
                   that the Authority acquired and cleared from March 2006 through October 2007 at
                   a cost of $108,490. According to its executive director, the Authority acquired all
                   properties under the slum and blight national objective.

                   HUD’s Office of Community Planning and Development staff performed two
                   environmental monitoring reviews: one in February 2006 and the other in
                   February 2008. The City did not respond to the February 2006 review and
                   allowed the Authority to continue acquiring and clearing property without
                   performing the necessary environmental reviews. HUD performed a followup
                   review, which resulted in repeat findings from the February 2006 review. The
                   City communicated with HUD concerning the 2008 environmental monitoring
                   review.



12
      October 2006 through September 2007.
13
      The Authority and the City need to ensure that the operation costs were eligible and in accordance with the
      lease agreements.
14
      The contract between the City and the Authority required the Authority to remit program income to the City on
      a monthly basis.
15
      The grant agreement between the City and HUD required that the recipient perform the necessary
      environmental reviews.


                                                          8
                   Without the necessary environmental reviews, the City failed to comply with
                   HUD regulations. Therefore, the $108,490 spent on acquiring and clearing
                   property was ineligible.

     The City Did Not Monitor the
     Authority

                   The City did not monitor the Authority. It granted the Authority $3.28 million 16 of
                   its $8 million in CDBG funding, which made the Authority its largest subrecipient.
                   The City did not have local written policies and procedures for its day-to-day CDBG
                   program operations and had an organizational identity of interest with the Authority.

                   The City’s unwritten policy was for its Urban Development Division/Working in
                   Neighborhoods Division to monitor subrecipients quarterly and to review and
                   approve subrecipient requests for reimbursements. However, the City did not
                   monitor the Authority quarterly, nor did it review and approve the Authority’s
                   payment requests. The City monitored the Authority for the first time in September
                   2007 and allowed it to submit payment requests directly to the City’s grants
                   accounting department, bypassing the review and approval process.

                   The City may not have monitored or supervised the Authority because it had an
                   identity of interest with the Authority within its organizational structure. A City
                   employee served in the dual capacity of Urban Development Division deputy
                   director, responsible for monitoring, and the Authority’s executive director. This
                   employee supervised the employee who supervised the staff responsible for
                   monitoring the City’s CDBG subrecipients. Effectively, the Authority’s executive
                   director supervised the City employees responsible for monitoring the Authority.

                   The lack of monitoring and independent review of expenditures allowed the
                   Authority to operate in a manner that did not primarily benefit the City’s low- to
                   moderate-income community. The City needs to monitor all of its subrecipients
                   and ensure that an organizational identity of interest does not exist between it and
                   its subrecipients.

      Conclusion


                   The Authority failed to support $1.5 million of its CDBG funds for acquisition,
                   clearance, relocation, and disposition activities. Without proper allocation of
                   employees’ time, which resulted in a disparity in cost charged to its CDBG grant,
                   the Authority could not support more than $1 million in salary cost it charged to
                   the City’s CDBG program. Also, the Authority accumulated almost $9 million in
                   property for which it did not have a specific end use that would benefit the City’s
16
      Includes all of the Authority’s CDBG activities.


                                                         9
       low- to moderate-income community. In addition, the City did not report all of the
       Authority’s rental program income and did not perform the necessary environmental
       reviews for property acquisition and clearance. As a result, the Authority’s land
       activities did not comply with HUD regulations and may not have benefited the low-
       to moderate-income community.

       The City aided the Authority in its noncompliance because it did not have local
       written policies and procedures and it had an organizational identity of interest
       that favored the Authority.

Recommendations


       We recommend that the Oklahoma City Community Planning and Development
       Director require the City to

       1A. Support or repay $1,391,367 in salary expenditures, supplies, and other
           expenses.

       1B. Require the Authority to develop and implement specific plans for its future
           CDBG acquisitions and currently owned CDBG properties that will benefit the
           low- to moderate-income community as a whole and individually, which
           would put $8,982,150 to better use.

       1C. Determine what properties the Authority purchased with CDBG funds and
           report program income earned from these properties as HUD requires and in
           accordance with the contract between the City and the Authority and ensure
           that the City expends the program income for eligible expenses.

       1D. Repay the ineligible acquisitions and clearances totaling $108,490.

       1E. Repay the misclassified activities, which resulted in misspending $6,725.
           This recommendation will be closed as the Authority has taken corrective
           action.

       1F. Develop written policies and procedures for its CDBG program.

       1G. Ensure that an organizational identity of interest does not exist between the
           City and any of its current or future subrecipients.

       1H. Monitor all subrecipients, including the Authority, in accordance with HUD
           and local rules and regulations.




                                        10
                         SCOPE AND METHODOLOGY

Our audit period covered October 2005 through October 2007. We expanded the audit period as
appropriate. To accomplish the audit objective, we

    •   Reviewed City and Authority financial records and policies and procedures;
    •   Reviewed the City’s audited financial statements, fiscal year 2007 comprehensive annual
        financial report, internal audit report concerning federal grant programs, consolidated
        annual plans, and consolidated annual performance and evaluation reports;
    •   Reviewed relevant federal regulations;
    •   Interviewed HUD and City staff; and
    •   Viewed eight CDBG-acquired properties that the Authority owned or had previously
        owned.

We initially selected six of 73 subrecipients to review. In addition to the six subrecipients, we
included the Authority based on a July 2007 HUD monitoring review and an interview with City
staff. We selected the Authority for further review due to the amount of salaries charged to CDBG
acquisition, clearance, and relocation activities.

We reviewed a sample of the Authority’s acquisition, clearance, relocation invoices and credit card
purchases. The Authority had a total of 344 invoices and 432 credit card purchases for the
acquisition, clearance, and relocation activities from October 2005 through September 2007. For
the October 2005 through September 2006 invoices, we selected the known acquisitions, the two
largest clearance expenditures, and all of the relocation expenditures. We selected ten items using
EZ Quant to review the credit card purchases for the same time period. For the October 2006
through September 2007 invoices, we selected the three largest acquisition, two largest clearance,
and all of the relocation expenditures. Finally, for the credit card purchases during the same time
period, we selected the largest payment to each vendor if was equal to or more than $300 for the
acquisitions, and the two largest clearance expenditures.

We performed fieldwork at the City’s offices in Tulsa, Oklahoma, from November 2007 through
May 2008. We performed our review in accordance with generally accepted government
auditing standards.




                                                11
                              INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.



 Relevant Internal Controls
              We determined the following internal controls were relevant to our audit objectives:

              •       Program operations – Local CDBG policies and procedures that
                      management has implemented to reasonably ensure that a program meets its
                      objectives,
              •       Compliance with laws and regulations – Policies and procedures that
                      management has implemented to reasonably ensure that resource use is
                      consistent with laws and regulations, and
              •       Validity and reliability of data – Policies and procedures that management
                      has implemented to reasonably ensure that it obtains, maintains, and fairly
                      discloses valid and reliable data in reports.

              We assessed the relevant controls identified above.

              A significant weakness exists if management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.


 Significant Weaknesses


              Based on our review, we believe the following items are significant weaknesses:

              •       The City did not have written CDBG policies and procedures, had an
                      organizational identity of interest with the Authority, and failed to monitor
                      the Authority;


                                                12
•   The City did not perform the necessary environmental reviews for CDBG
    acquisitions and clearances after HUD performed an environmental
    monitoring review and informed the City of the necessary steps; and

•   The City did not accurately report the Authority’s program income or
    accomplishments.




                             13
                                         APPENDIXES

Appendix A

                SCHEDULE OF QUESTIONED COSTS
               AND FUNDS TO BE PUT TO BETTER USE



          Recommendation                                                      Funds to be put
              number                Ineligible 1/        Unsupported 2/       to better use 3/
                   1A                                        $1,391,367
                   1B                                                              $8,982,150
                   1D                    $108,490
                   1E                       6,725

                        Totals           $115,215            $1,391,367            $8,982,150




1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity that the auditor
     believes are not allowable by law; contract; or federal, state, or local policies or regulations.

2/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured program or activity when
     we cannot determine eligibility at the time of audit. Unsupported costs require a decision by HUD program
     officials. This decision, in addition to obtaining supporting documentation, might involve a legal
     interpretation or clarification of departmental policies and procedures.

3/   Recommendations that funds be put to better use are estimates of amounts that could be used more
     efficiently if an Office of Inspector General (OIG) recommendation is implemented. This includes
     reductions in outlays, deobligation of funds, withdrawal of interest subsidy costs not incurred by
     implementing recommended improvements, avoidance of unnecessary expenditures noted in preaward
     reviews, and any other savings which are specifically identified. In this instance, the amount represents
     funds that the City could use for the benefit of the low- to moderate-income community by having specific
     end uses for the Authority’s 160 properties. This represents a one time savings.




                                                    14
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                         15
Comment 2




Comment 3




            16
Comment 4




Comment 5




Comment 6




Comment 7




            17
Comment 8




Comment 9




            18
                                  OIG Evaluation of Auditee Comments

Comment 1         We modified our report to provide clarification concerning the accomplishments
                  and costs associated with the Authority’s acquisition, clearance, and relocation
                  projects. The City provided additional information concerning the Authority’s
                  costs. However, it did not provide sufficient evidence to support that employees
                  charged their time reflecting “an after-the-fact distribution of the actual activity”
                  as required. 17 In further support that it did not comply with requirements, the
                  City’s response stated it expended $77,302 for relocation salaries to its CDBG
                  grant, but it did not perform any CDBG relocations during the period.

                  The City provided a schedule that showed it was able to split the acquisition,
                  property management, and disposition costs. However, if the Authority had
                  adequate disposition plans, it would not have had to manage the number of
                  properties it did and could have avoided the cost of maintaining these properties.

Comment 2 The Authority did not always have adequate documentation to support that it met
          the slum and blight national objective, even after a July 2007 HUD monitoring
          review finding. In addition, the Authority must provide supporting
          documentation that the activities also support a low to moderate income national
          objective.

Comment 3 We disagree with the City’s assertion that the Authority collected and remitted
          fair market value for its sales and leases. Review of 14 dispositions concluded
          that the Authority used outdated 18 appraisals to support the fair market value of
          the property.

Comment 4 We commend the City for taking corrective actions in developing a plan for
          disposition of CDBG acquired properties.

Comment 5 The City believes it had an accurate listing of Authority properties purchased with
          CDBG funds. However, in at least one instance, the Authority refuted that a
          property on this list was purchased with CDBG funds. We maintain that the City
          needs to determine the properties the Authority purchased with CDBG funds.

Comment 6 We commend the City for developing a plan to ensure that the Authority remits
          program income and the City properly reports the program income into IDIS.

Comment 7 The City did not provide us with the environmental clearances that it referenced in
          its response. As stated in the report, HUD performed two environmental
          monitoring reviews and determined that the City did not comply with the required
          environmental regulations for fiscal years 2004 through 2007.


17
     Office of Management and Budget Circular A-87, attachment B(8).
18
     The Authority used appraisals that were one and a half years to almost eight years old.


                                                         19
Comment 8 We commend the City developing written policies and procedures for its CDBG
          program.

Comment 9 We commend the City for eliminating the organizational identity of interest and
          separating the monitoring and operating functions.




                                            20