U.S. Department of Housing and Urban Development
Office of Inspector General for Audit, Region V
Ralph H. Metcalfe Federal Building
77 West Jackson Boulevard, Suite 2646
Chicago, Illinois 60604-3507
Phone (312) 353-7832 Fax (312) 353-8866
Internet http://www.hud.gov/offices/oig/
MEMORANDUM NO.
2009-CH-1801
(Reissued)1
July 29, 2009
MEMORANDUM FOR: Jorgelle Lawson, Director of Community Planning and Development,
5ED
FROM: Heath Wolfe, Regional Inspector General for Audit, 5AGA
SUBJECT: The City of Cincinnati, Ohio, Lacked Sufficient Capacity to Effectively and
Efficiently Administer Its Neighborhood Stabilization Program
INTRODUCTION
We audited the City of Cincinnati’s (City) Neighborhood Stabilization Program. The audit was
part of the activities in our fiscal year 2009 annual audit plan. We selected the City based upon
the results of our three previous audits of the City’s HOME Investment Partnership Program
(HOME). Our objective was to determine whether the City had the capacity to effectively and
efficiently administer its Neighborhood Stabilization Program.
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.
BACKGROUND
The Program. Authorized under Title III of the Housing and Economic Recovery Act (Act), as
amended, the Neighborhood Stabilization Program provides grants to every state and certain
local communities to purchase foreclosed or abandoned homes and to rehabilitate, resell, or
redevelop these homes to stabilize neighborhoods and stem the decline in value of neighboring
homes. HUD allocated more than $3.9 billion in Neighborhood Stabilization Program funds to
grantees.
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This report was amended and reissued to clarify that the City applied as part of a consortium for additional
funding under the Neighborhood Reinvestment Program amendments enacted as part of the American Recovery and
Reinvestment Act of 2009.
The City. Organized under the laws of the State of Ohio, the City is governed by a mayor and a
nine-member council, elected to two-year terms. The City’s Department of Community
Development and Planning’s (Department) Housing Division (Division) administers the City’s
Neighborhood Stabilization Program. The Department’s overall mission is to work with diverse
neighborhood partners to leverage financing and other funding for quality housing, distinct
commercial properties, small business development opportunities, and community based
programs. The City’s records are located at 805 Central Avenue, Cincinnati, Ohio.
HUD allocated nearly $8.4 million in Neighborhood Stabilization Program funds to the City
based upon the funding formula developed by HUD pursuant to the Act. On March 19, 2009,
HUD entered into a grant agreement with the City for the full amount allocated. The City’s
revised Neighborhood Stabilization Program budget included the following: more than $810,000
to establish financing mechanisms for purchase and redevelopment; nearly $2.2 million for the
purchase and rehabilitation of abandoned or foreclosed homes or residential properties in order
to sell, rent, or redevelop the homes or properties; nearly $2.5 million to demolish blighted
structures; $2.1 million for the redevelopment of demolished or vacant properties; and more than
$830,000 for planning and administration costs.
Congress amended the Neighborhood Stabilization Program and increased its funding as part of
the American Recovery and Reinvestment Act of 2009. The City submitted an application as
part of a consortium to HUD, dated July 15, 2009, which totaled nearly $60 million in additional
Neighborhood Stabilization Program funds under the American Recovery and Reinvestment Act
of 2009. The application is currently under review by HUD.
Effective June 2007, the City executed an agreement with HUD and the U.S. Department of
Justice to settle all outstanding issues regarding the City’s improper use of HOME funds for the
Huntington Meadows apartment project. The settlement agreement required the City to
reimburse its HOME program $3.95 million.
We issued three audit reports [Office of Inspector General (OIG) Audit Report numbers 2007-CH
1017, 2008-CH-1010, and 2008-CH-1014] on the City’s HOME program from September 30, 2007,
through September 26, 2008. We found that the City did not adequately manage its HOME
program. It incorrectly reported HOME program match contributions in its consolidated annual
performance and evaluation reports (consolidated reports) to HUD, lacked sufficient documentation
to support HOME program match contributions it reported in its consolidated reports to HUD,
inappropriately used HOME and American Dream Downpayment Initiative (Initiative) funds, failed
to ensure that it sufficiently protected HOME funds, lacked documentation to support its use of
HOME and Initiative funds, and did not accurately report HOME program activity data in HUD’s
Integrated Disbursement and Information System because the City’s management did not
implement adequate procedures and controls to ensure that its HOME program was operated
according to HUD’s and its own requirements. These deficiencies had existed with the City’s
HOME program for at least three years.
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METHODOLOGY AND SCOPE
To accomplish our objective, we reviewed
• Applicable laws; the Federal Register, dated October 6, 2008; HUD’s regulations
at 24 CFR [Code of Federal Regulations] Parts 85, 91, and 570; OIG Audit
Report numbers 2007-CH-1017, 2008-CH-1010, and 2008-CH-1014; HUD’s
Program grant agreement with the City; and HUD’s Columbus Office of
Community Planning and Development’s monitoring reports for the City’s
HOME and Community Development Block Grant (Block Grant) programs from
2005 through 2008.
• The City’s 2008 action plan substantial amendment for the Program, policies and
procedures, 2005 through 2007comprehensive annual financial reports,
consolidated reports, staffing assignments, job descriptions, and organization
charts.
We also interviewed the City’s employees and HUD’s staff.
We performed our on-site audit work from April through May 2009 at the City’s office located at
805 Central Avenue, Cincinnati, Ohio. The audit covered the period January 2007 through
March 2009 and was expanded as determined necessary.
RESULTS OF REVIEW
1. The City did not have sufficient capacity to effectively and efficiently administer its
Neighborhood Stabilization Program.
The Federal Register, dated October 6, 2008, stated that HUD encouraged each local jurisdiction
receiving an allocation of Neighborhood Stabilization Program funds to carefully consider its
administrative capacity to use those funds within the statutory deadline versus the capacity of a state
administrator. Further, HUD expected that after such consideration, some local jurisdictions would
choose to apply for less than the full amount of the funds allocated to them.
Policies, Procedures, and Controls
As of June 30, 2009, the City had not established adequate policies and procedures. On May 1,
2009, it provided its draft policies and procedures manual (draft manual) dated May 2009.
However, the draft manual was incomplete. It lacked sections covering policies and procedures
for the rental program, the redevelopment of demolished or vacant properties for public facilities,
financial management, acquisition and relocation, labor standards, construction management,
initial occupancy and leasing of rental projects, ongoing occupancy and long-term compliance,
project monitoring, project closeout, and other federal requirements. Further, the draft manual
did not contain management’s monitoring procedures to ensure that funds were used
appropriately. On June 30, 2009, the City provided a revised draft policies and procedures
manual (revised draft manual). The revised draft manual included the sections mentioned above
that were missing in the draft manual. However, the revised draft manual did not contain
management’s monitoring procedures to ensure that funds were used appropriately.
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As previously stated, we found that the City did not adequately manage its HOME program. The
following issue we identified in OIG Audit Report number 2008-CH-1010, if left uncorrected,
could also impact the Neighborhood Stabilization Program.
The City provided HOME-funded assistance for rental rehabilitation projects with improper
units, lacked documentation to support that units were eligible, and failed to ensure that it
sufficiently protected HOME funds. The City’s revised HOME program rental rehabilitation
manual addressed the issues identified for rental rehabilitation activities. The City also used
the HOME program rental rehabilitation manual in the revised draft manual for the policies
and procedures for the City’s rental program. Therefore, the revised draft manual includes
policies and procedures for the City’s rental program that were not applicable to the
Neighborhood Stabilization Program. For example, the revised draft manual contains
references to HUD’s Integrated Disbursement and Information System even though HUD’s
Disaster Recovery and Grants Reporting system was utilized for the reporting on
Neighborhood Stabilization Program activities.
The Department’s housing division manager said that the City had not been able to complete the
revised draft manual due to the limited amount of time it was given to implement the
Neighborhood Stabilization Program, HUD not providing adequate training or sufficient
guidance regarding policies and procedures, and changes to the program’s requirements. The
City could have completed the revised draft manual if it had an additional staff person dedicated
only to developing the revised draft manual or contracted with another organization to develop
the revised draft manual.
The City expressed a need and requested that HUD consider it a high priority for technical
assistance in further developing its policies, procedures, and controls to ensure that funds are
used effectively and efficiently.
Staffing
HUD awarded the City an average of about $4.2 million in HOME funds and about $4 million in
Block Grant funds for fiscal years 2007 through 2009 to be administered by the Department’s
Division. Under the Neighborhood Stabilization Program, HUD awarded an additional $8.4
million to be administered by the Department’s Division. As of May 13, 2009, the Division had
a total of 10 employees that devoted the equivalent of about 6.7 staff years annually to
administer the day-to-day operations of the HOME and Block Grant programs. One additional
staff position was assigned to administer the day-to-day operations of the Neighborhood
Stabilization Program. The following table shows the average annual amount of HOME and
Block Grant funds along with the projected annualized Neighborhood Stabilization Program
funds to be administered by the Division; the staff resources to administer each program; and the
average annual amount of funds to be administered per employee.
4
HOME Block Grant Neighborhood
Stabilization
Average amount of funds awarded per $4, 195,290 $4,026,710 $2,090,398
year*
Number of employees to administer the 4.8 1.9 1
programs **
Average amount of funds administered per $874,019 $2,119,321 $2,090,398
employee
* - The Neighborhood Stabilization Program funds were divided by four to conservatively spread these funds over
the four years during which the City must disburse the funds.
** - These numbers do not include management or administrative support staff for the programs.
The Division’s community development analyst, who was recently hired to administer the day-
to-day operation of the Neighborhood Stabilization Program, had minimal experience with the
planned activities. The Department’s housing division manager said that there were three senior
community development analysts and one community development analyst, with more than five
years of experience with community planning and development programs, who could provide
assistance in the administration of the Program. However, the City had not budgeted the four
employees’ time for the Neighborhood Stabilization Program. Further, each of the four
employees spent from 75 to 100 percent of their time on the City’s HOME and/or Block Grant
programs. Therefore, if the City used the four employees to assist with the Neighborhood
Stabilization Program, it would need to reduce staff time in administering its HOME and/or
Block Grant programs.
Initially, the City’s Neighborhood Stabilization Program budget included less than $512,000 for
planning and administration costs although the City was allowed to use more than $836,000. On
May 21, 2009, the City’s council passed a revised budget that allocated more than $836,000 for
planning and administration costs. The revised budget included nearly $210,000 in salary over
four years for an administrative specialist to handle administrative support duties. However, the
hiring of the additional employee would not be sufficient to ensure that the City had adequate
staff to effectively and efficiently administer the Program. In addition, the revised budget
included planning and administration costs that could be directly charged to the activities as
delivery costs.
The City based its Neighborhood Stabilization Program staffing needs on discussions among the
Department’s director, deputy director, and housing division manager and the City’s Office of
Budget and Evaluation’s community development administrator regarding the demands of the
program and what the City’s council would approve for planning and administration costs. The
City did not conduct a formal analysis to determine the staffing needs for the City’s
Neighborhood Stabilization Program.
5
2. HUD’s Columbus Office of Community Planning and Development did not include special
conditions in its Neighborhood Stabilization Program grant agreement with the City.
HUD’s regulations at 24 CFR 85.12 state that a grantee may be considered high risk if it has a
history of unsatisfactory performance or has not conformed to the terms and conditions of previous
awards. Special conditions and/or restrictions shall correspond to the high-risk condition and shall
be included in the award.
On February 24, 2009, HUD’s Director of Field Management provided guidance on Neighborhood
Stabilization Program grant agreements to all of the directors of the Office of Community Planning
and Development. The guidance addressed when a special condition must be included in the
Neighborhood Stabilization Program grant agreement with the grantee. The guidance stated that if
a grantee’s Neighborhood Stabilization Program funds totaled at least three times its fiscal year
2008 Block Grant fund allocation or had unresolved monitoring findings or other serious actions, a
special condition must be included in the Program grant agreement with the grantee. The guidance
also included the following standard language to be included in grant agreements:
Pursuant to 24 CFR 85.12(a)(1), (2), (4), or (5), a special condition applies to the
Neighborhood Stabilization Program grant agreement due to past performance in the Block
Grant program. The Program grantee shall submit documentation describing how past
Block Grant program performance issues have been resolved or are now being resolved and
explain how they will not impact the administration of the Program. If the Program grantee
fails to submit such documentation within 60 days from the date HUD signed the Program
grant agreement, HUD may withhold the Program grantees authority to incur additional
obligations of Program funds or take other actions authorized under 24 CFR 85.12(b).
The Assistant Director of Financial Management in HUD’s Office of Block Grant Assistance
stated that the special conditions referred to the Block Grant program since Neighborhood
Stabilization Program funds were considered a special allocation of Block Grant funds. However, if
a grantee had a history of unsatisfactory performance in another community planning and
development program, such as the HOME program, and that unsatisfactory performance was
applicable to the grantee’s Neighborhood Stabilization Program, it would be appropriate to include
special conditions in the grant agreement.
As previously stated, the City executed an agreement with HUD and the U.S. Department of Justice
to reimburse its HOME program $3.95 million to settle all outstanding issues regarding the City’s
improper use of HOME funds for the Huntington Meadows apartment project. In addition, we
identified significant deficiencies in the City’s administration of its HOME program, which
included issues applicable to the City’s Neighborhood Stabilization Program. Further, the
Division administers both the Neighborhood Stabilization Program and the HOME program.
However, HUD’s Columbus Office of Community Planning and Development did not place special
conditions in its Neighborhood Stabilization Program grant agreement with the City since the Act
stated that the Program funds should generally be treated as though the funds were Block Grant
funds and HUD’s Columbus Office of Community Planning and Development had not previously
identified significant issues with the City’s Block Grant program. After we brought it to the
Columbus Office of Community Planning and Development’s attention and after additional
6
consideration, the Office recognized that the previous issues identified with the City’s HOME
program may have warranted the inclusion of special conditions in the grant agreement.
RECOMMENDATIONS
We recommend that the Director of HUD’s Columbus Office of Community Planning and
Development require the City to
1A. Implement adequate policies, procedures, and controls to ensure that Neighborhood
Stabilization Program funds are used effectively and efficiently and in accordance with
applicable requirements.
1B. Hire additional staff and/or contract with another organization to assist in administering the
Neighborhood Stabilization Program to ensure that the City has sufficient capacity to
effectively and efficiently administer program funds. This may require the City to revise
its budget by reallocating planning and administrative costs that could be directly charged
to Neighborhood Stabilization Program activities as delivery costs to the specific activity
costs within the budget and/or reorganize staff within the Division.
We recommend that the Director of HUD’s Columbus Office of Community Planning and
Development
2A. Include special conditions in its Neighborhood Stabilization Program grant agreement with
the City. The special conditions should include but not be limited to (1) requiring the City
to submit documentation describing how past HOME program performance issues were
resolved or are now being resolved and explain whether they will impact the administration
of the Neighborhood Stabilization Program, (2) performing additional monitoring, and (3)
providing technical assistance to the City.
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AUDITEE COMMENTS AND OIG’s EVALUATION
Ref to OIG Evaluation Auditee Comments
June 30, 2009
Mr. Brent Bowen, Assistant Regional Inspector General for Audit
U.S. Department of Housing and Urban Development
Office of Inspector General
77 West Jackson Boulevard, Suite 2646
Chicago, Illinois 60604-3507
SUBJECT: City of Cincinnati Neighborhood Stabilization Program Capacity
HUD Office of Inspector General Memorandum #2009-CH-180X
Issue Date: July XX, 2009
Dear Mr. Bowen:
This letter serves as the City of Cincinnati’s response to HUD Columbus Audit
Memorandum #2009-CH-180X dated June 17, 2009. The Audit Memorandum is dated
July XX, 2009. The cover letter is dated June 17, 2009. The City of Cincinnati has been
working diligently to correct the issues raised by the federal Housing and Urban
Development (HUD) Office of Inspector General (OIG) during their review of the City of
Cincinnati’s Neighborhood Stabilization Program (NSP1). We will continue to review our
programs and processes, seek training and technical assistance and make all necessary
changes to improve our service delivery to the citizens of the City of Cincinnati while also
complying with HUD regulations and guidance.
Office of Inspector General Results of Review
1. The City did not have sufficient capacity to effectively and efficiently administer its
Neighborhood Stabilization Program.
POLICIES, PROCEDURES, AND CONTROLS
March 18, 2009 is the effective date of the formula grant agreement between the City of
Cincinnati and HUD related to a Neighborhood Stabilization Program (NSP1) award in the
Comment 1 amount of $8.3 million. Prior to this award, a number of City staff attended a minimum of
three training sessions held by the Ohio Conference for Community Development
(OCCD), HUD, and/or the State of Ohio on at least three occasions in an effort to seek the
most updated information related to regulations and expectations of the program. One
training session included the Office of the Inspector General. Additionally, the City worked
with its federal lobbyist (The Ferguson Group) in search of more information about NSP1
requirements. The City’s NSP1 program model was
8
Ref to OIG Evaluation Auditee Comments
based entirely on the initial and subsequent publications of HUD’s regulations and
information provided at training sessions.
Prior to HUD’s notification of the grant award in March, there had been no communication
related to a review of the City’s proposal and recommendations nor were there reporting
requirements evident beyond those stated in the grant application presented in the form of
program regulations.
The City of Cincinnati’s director of the Department of Community Development (DCD) was
notified by the OIG around April 7, 2009 of the OIG’s intent to conduct a survey related to
the City’s capacity to manage NSP1 funding. The entrance conference between the City
and the OIG was held April 15, 2009. It is important to note that this required the City to
juggle the timing of this OIG review process with the most critical start-up work needed in
the field by DCD housing staff assigned to get NSP1 up and running. It is also important
to note that this OIG audit was conducted when no NSP1 funds had been expended.
While the City anticipated a survey based on initial discussion with the OIG, the process
was conducted in the same manner as an audit. This OIG visit, which started on the same
day as the Entrance Conference ran concurrently with the timing City staff needed to
Comment 2 formalize its execution of processes, pre-planned for NSP1. While preliminary legwork
had been done with respect to community planning and partnership building, processes,
procedures and controls were not finalized due to the City’s need to assess and solidify
the planning and partnerships by moving them to contract execution through a Scope of
Work and Budget.
The NSP1 documents provided to the OIG represented the best information available to
the City from a variety of sources. These sources included a comprehensive HUD
program procedures manual that the City has been compiling that represents information
from the HUD national website, HUD-Columbus, the Ohio Conference for Community
Comment 3 Development (OCCD), and/or the State of Ohio’s meeting/training sessions. One item
requested by the OIG was a procedures manual for NSP1. In conducting our research
and working with Columbus – HUD staff, the City was unable to find a complete NSP1
manual available at any other Ohio Participating Jurisdiction (PJ) or within regions we
contacted. Additionally, there was no specific reference to an NSP1 manual on the
Comment 2 hud.gov website that the City could use as a point of reference. Furthermore, none of the
training sessions attended or regulations researched by the City suggested a policies and
Comment 4 procedures manual must be in place prior to the start of the program. Our plan was to use
working documents until HUD finalized all NSP1 regulations and then add pertinent NSP1
Comment 5 sections to the department’s comprehensive manual already being developed. The current
draft of the NSP manual is represented in Attachment I.
The City also sought information from colleagues at the Hamilton County (OH) Office of
Community Development and from other communities applying for NSP1 funds.
9
Ref to OIG Evaluation Auditee Comments
Further, the City initiated communication between the City and Columbus HUD as staff
Comments 4 questions arose. Therefore, the City feels the OIG expectation of having a written manual
that represented the full scope of NSP1 within one month of being funded may have been
and 6
an inequitable expectation. This is especially true given that some regulations were still in
Comment 7 transition and/or inaccessible from the HUD Office. Also, some regulations changed. An
example would be the inability of the City’s Office of Budget and Evaluation to access the
DRGR system although passwords had been requested in the fall of 2008, and by May
2009, there was still no access. Information was provided to the OIG that demonstrated
the City’s willingness to access DRGR but HUD’s inability to provide necessary assistance
hindered the process. Without access, the City was unable to write this portion of a
procedures manual, as it was still theory and not hands-on application.
Following an on-site OIG review that began on April 15, 2009 and lasted until
approximately May 8, 2009, more requests were made by the OIG as the review continued
from Chicago via email requests and phone calls that lasted through the end of May 2009.
Comment 8 The content in the Audit for NSP1 found in the Exit Conference held with the OIG, included
language from previous HUD OIG audits. This blurred the City’s understanding of what
was needed in the response to the NSP1 Audit.
Comment 8 Given the most recent conversation within the OIG and Columbus HUD at the 2nd Exit
Conference on June 26, 2009 and a subsequent conference call with Columbus HUD on
Monday, June 29th, there is still some lack of clarity in terms of how HUD’s OIG wants the
City to respond in terms of documentation needed. The confusion is related to the many
references of past audit findings instead of NSP1-specific recommendations. The City will
provide the OIG with the most thorough information available given the short response
time available from June 26th until the due date of July 1, 2009.
Comment 8 While there are areas that were unclear, the City of Cincinnati appreciates the analysis
conducted by the Office of the Inspector General associated with the assessment of the
NSP1 capacity. The City is always interested in best practices from the OIG, HUD
leadership and other communities that can be used to foster an environment that utilizes
the most effective and efficient strategies in a holistic approach toward reaping
programmatic results. The City of Cincinnati also understands the gravity associated with
federal funding and knows it is imperative that our community benefits from the Formula
and Stimulus allocations which we have been fortunate to receive.
CAPACITY AND EXPERIENCE
The following information provides background on the environment City Administration
was working within when developing the original staffing plan submitted with the NSP1
application. The City of Cincinnati has a centralized Human Resources function, which,
when asked, does not have a formal staffing analysis process. Given the limited
resources and the short time frame for the development of the grant application, senior
staff in the Community Development Department and Office of Budget and Evaluation
10
Ref to OIG Evaluation Auditee Comments
worked to put together a staffing plan based on their experience with staffing needs on
other projects recognizing the City’s dwindling General Fund and CDBG dollars which
would typically be used to leverage HUD funding. The NSP1 plan included the hiring of
two individuals. The plan also contained approximately $95,000 in flexible funding that
would allow the department to adapt once the City had a better understanding of the NSP1
requirements. This flexible funding was placed under the category of pre-program costs,
but was available to be moved to other line items because the City was able to use current
CDBG administrative resources to fund most pre-program costs. The Administration’s
initial staffing plan was amended by City Council to include funding for only one staff
person and eliminated other flexible resources within the Administration’s plan. Since that
Comment 1 time, the Administration has and will continue to work with City Council to amend the
planned use of administrative dollars to best meet the needs of the program. Details
related to these efforts are outlined below.
The following data is not being provided to negate the OIG’s recommendation to build
capacity within the City of Cincinnati to handle HUD funds. However, this information
provides a more in-depth outline of the City’s programmatic landscape for managing HUD
dollars and specifically addresses NSP1 staffing and experience concerns presented by
Comment 9 the OIG. Collectively, the number of experienced staff is beyond what was originally
outlined by the OIG.
For the purposes of this document, we will highlight specific staff that impact NSP1
outcomes as our part of the DCD “team.” An important facet of NSP1 that is not evident in
the Housing staffing calculation provided by the OIG was the work of DCD’s
Operations/Fiscal division and DCD’s Property Maintenance Code Enforcement (PMCE)
division who are an integral part of NSP1 program implementation. DCD’s fiscal staff will
Comments 9 be responsible for the important and timely financial processing aspects of NSP1. It is
and 10 anticipated that these staff members will contribute the following to NSP1: Supervising
Accountant @ 3%, Senior Accountant @ 1%, Administrative Specialist @ 3%, and
Accounting Technician II @ 3%. DCD’s fiscal staff will also process vouchers, interface
with the City’s financial system and the DRGR system, and provide fiscal oversight of
contracts.
Comments 9 Additionally, leadership and staff in DCD’s PMCE division as well as the Vacated Building
and 11 Task Force will be responsible for a major component of NSP1. The Vacated Building
Task Force consists of five Inspectors and a supervisor who identifies blighted buildings,
enforces the Vacated Building Maintenance Licensing Ordinance, and refers non-
compliant condemned and blighted buildings to the Hazard Abatement Program
(demolition and barricade programs). Of the $8.3 million in NSP1 funding, these
individuals will be responsible for the implementation of $2.4 million earmarked for Hazard
Abatement and Demolition. Specific activities include supervision of the overall program
operations. The breakdown is as follows: Division Manager @ 20%, blighted building
Inspections supervision and Demolition Program Management Supervisor @ 70%,
Demolition Inspections and Demolition Contract Compliance Inspector II @ 70%,
11
Ref to OIG Evaluation Auditee Comments
Comments 9 additional and back-up Demolition Inspections and Demolition Contract Compliance
and 11 Inspector II @ 52%, Blighted Building identification, inspection and enforcement includes
the following inspectors: Inspector II @ 70%, Inspector II @ 70%, Inspector II @ 70%, and
an Accounting/Administrative Technician @ 30%.
Comments 9 The PMCE team has been researching and formalizing a plan of action toward the NSP1
and 11 objectives since the Grant was first confirmed as a formula allocation the City would
Comment 12 receive. This division has already proven experience and capacity to meet the demolition
of blighted buildings objective of NSP1 and is currently well over a 40% completion rate.
The following has already been handled by PMCE related to NSP1: 128 blighted buildings
have already been processed in the high needs neighborhoods; each of these buildings
has been condemned, had a title search completed by a Real Estate Attorney (under City
contract), had a report prepared by a Certified Property Manager (under City contract), as
to whether the buildings are depreciating property values, has been evaluated by Police as
to degree of moral hazard and crime nuisance, and has been evaluated by the Fire
Department as to the degree of fire hazard. These structures have also been through a
Public Nuisance Hearing where the owner and any interested parties, neighbors and
public are invited to testify to the degree of blight, hazard presented and provided
testimony as to whether the building should be demolished.
Comment 12 Seventy-five of the 128 confirmed blighted buildings have completed Environmental
Reviews (by City Planning Staff) and were put out for competitive bid. These bids were
received and are either under contract or awaiting contract award in the total amount of
$767,559.20 (Attachment II). Contracts are awarded to 8 to 10 local private demolition
contracting companies. In addition to these 128 blighted buildings, another 30 buildings in
the high needs neighborhoods are condemned, in the Demolition Program, and awaiting a
Public Nuisance Hearing. Overall, a total of 158 blighted buildings are in process
(Attachment III).
There are an additional 307 condemned buildings in the 10 high needs neighborhoods for
a total of 465 buildings. It is estimated that it would cost $6.5 million dollars to rid these
areas of blighted buildings (Attachment IV).
DCD STAFFING ANALYSIS
The following changes relate to staffing concerns as recommended by HUD through a
revised Administrative Plan for NSP1 funds. Attachment V represents DCD’s
Organizational Structure.
Comments 1, Attachment VI represents the PMCE Division staff bios. Five new inspectors were hired in
9, and 11 DCD’s PMCE Division. This allowed PMCE to reassign more experienced staff to NSP1
thus addressing the OIG’s experience and capacity. The salaries for these inspectors were
Comments 1 moved to project delivery costs. This leveraging of resources is a direct result of the OIG’s
and 13 recommendation that the City Administration work with City Council
12
Ref to OIG Evaluation Auditee Comments
Comments 1 to appropriate the full 10% of Administration funding allowable under NSP1. A further
and 13 example of leveraging funds is PMCE’s ability to receive reports for blighted structures
from City Police and Fire with no cost to staff time allocated for NSP1.
Attachment VII represents the current Housing Division staff bios. Specifically, within the
Housing Division, as a result of this Audit, the following changes have occurred or will
Comments 1 occur by year-end. The division manager has been approved through Human Resources
to hire an Administrative Specialist who will be assigned specifically to assist with NSP1
and 14 activities. This position will be responsible for preparing the NSP1 environmental review
requests and relocation evaluation requests for other City agencies that perform these
reviews. This position will also track project progress, maintain project records and
documentation and assist in the preparation of quarterly reports for NSP1. He or she will
also be a conduit between NSP1 Housing and Property Maintenance NSP1 activities. The
City will seek individuals familiar with HUD programs as one of the requirements.
Additionally, the individuals who will be strongly considered must be well versed in various
software programs, knowledgeable in data collection for federal reporting, and have
effective communication skills. He or she will also be trained in DRGR immediately
following an orientation into DCD operations.
Comment 1 The Administrative Specialist’s position is a direct follow-through on the OIG’s
recommendation that the City move the work of NSP1 inspectors’ into the project delivery
costs. This move freed up funds to hire with an anticipated date of the posting to be no
later than July 13, 2009.
Comments 1 The Housing Division also plans to move forward with a request to promote an already-
and 15 identified Senior Community Development Analyst into a supervisor’s role. This individual
will serve as a back up to the division manager on all housing projects. He will specifically
oversee CDBG and HOME projects while the division manager ensures the infrastructure
and partnerships related to NSP1 (and hopefully NSP2) activities are in place and
producing results to meet the expressed timelines. This is another benefit of the OIG’s
recommendation to increase administrative funds.
Comments 1 Attachment VIII represents the Fiscal Division’s staff bios. DCD will move two staff from
Operations/Human Services to a new Monitoring function as soon as mid-July. We are
and 15 currently revisiting the activities in the Business Development Division to determine
whether a third staff person who is already on staff can be reassigned to assume
monitoring responsibilities for CDBG funded projects.
The timing of this official move toward a Monitoring section was due to several factors that
have come together around the same time: 1) one staff, formerly of the City’s Contract
Compliance office, recently joined the department and is completing orientation; 2) DCD
needed to assess which staff currently handling the City’s Human Services program that
was recently revamped by City Council would be available to train on the monitoring
functions for HUD programs while also facilitating the transition
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of Human Services responsibilities; 3) HUD will offer basic HOME training (August 5-6,
2009) that will allow these individuals to receive the most up-to-date information on
regulations; and, 4) these staff will participate in a CDBG IDIS training specific to our
Business Development Division on July 20, 2009. The City’s Office of Budget and
Evaluation is hosting this training in an effort to reduce the number of outstanding IDIS
project activities.
Comments 1 In addition to the staffing changes above, DCD’s deputy director will assume even more
and 16 responsibility related to the overall implementation, compliance and outcomes of federal
HUD programs. She currently drives the scheduling and performance of the monthly intra-
City projects meetings, the quarterly IDIS problem-solving meetings, and communications
with HUD-Columbus (along with the Housing division manager) to resolve outstanding
issues and locate best practices.
The deputy director has been with DCD for over 2 years serving as the Administrative
Officer under the director’s leadership. She brings over 25 years of community services
programming and community building experience including managing more than $25
million in program initiatives funded by HUD, the Corporation for National Service, the
Department of Justice, and Health and Human Services. Her background also includes the
start up of nonprofit and government community based agencies. She has been a federal
grantor, federal grantee, pass through entity for federal sub-granting, as well as a
monitor/evaluator of programming strategies that follow federal regulations. She will
specifically work with the Operations Manager to spearhead the development of the newly
formed Monitoring Section and set monitoring targets for outcomes that ensure HUD
compliance issues are addressed in a more timely way citywide. The tentative focus for
the monitors is the targeting and closeout of projects in the IDIS system. The City hopes
these initial changes will build confidence in the OIG that the amount of experienced staff
working comprehensively on NSP1 activities is increasing.
Comment 1 The next phase of the internal DCD restructuring is a determination of exact percentages
of time that will be assessed through time sheets required by City government. From that
assessment, duties that are not covered sufficiently or that will improve performance of the
department will be developed into role descriptions and move forward as requests to fill.
However, to further address HUD staffing concerns, it is important to note that DCD must
get approval through the City Human Resource, Budgeting and Council structures to
change staffing patterns. In previous years, DCD communicated its need for increased
staffing annually through the formal City budget processes and/or through human
resources upon the retirement or departure of staff. These requests resulted in the
department’s ability to retain staffing although the rest of the City had a hiring freeze. As
Comment 1 needed, DCD redesigned staff job descriptions to tailor them to the needs of the
department’s programs and to address any deficiencies found in HUD audits, thus
continuing to build infrastructure.
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CITY DEPARTMENTAL STAFFING ANALYSIS
The OIG report highlights major areas where the City has been focused on resolving
concerns as quickly as possible. In order to do so sufficiently and to HUD’s satisfaction, it
is important to also note that HUD funding within the City of Cincinnati also requires
additional analysis associated with processes, timelines and outcomes not controlled by
DCD. While DCD receives the majority of HUD funds to implement programs, it works
Comment 1 with a number of City departments to actually execute administrative processes. To gain a
clear understanding of the HUD-funded landscape, DCD conducted an assessment of the
number of individuals who work with federal dollars citywide in an effort to gauge actual
administrative capacity. Communications have increased substantially over the last two
years, as have collective results across City government.
Comment 1 A preliminary needs assessment for additional DCD staff is completed and was
communicated to appropriate departments. Since some functions related to federal funds
are not managed by DCD, the department also contacted the following offices to assess
their staffing capacity related to the amount of their staff’s HUD activity by percentage:
Office of Budget and Evaluation, Finance Department, City Solicitor’s Office (Law), City
Planning, the Health Department, and the Office of the City Manager (for Contract
Compliance). Each department was asked to identify staff that process any activities
related to federal NSP1, HOME, CDBG, CDBG-R, LEAD, and HPRP programs. As it
relates to LEAD activities, the City has received two LEAD grants – one implemented
through DCD Lead Hazard Reduction Demonstration Grant and the other through the
Health Department Lead Hazard Control Grant.
Attachments IX, X, XI, XII and XIII represent flowcharts of the City’s internal processes.
From the data gathered the City has determined that, at a minimum, 100 positions within
the City system contribute to the administration and implementation of programs funded by
Comment 9 HUD. Of those positions, a total of 26 positions have time specifically dedicated to the
NSP1 program. Seventeen of the NSP1 positions are senior level positions or require
multiple years of City experience to qualify. The time dedicated to NSP1 by these positions
is estimated to be the equivalent to 8.0 FTE. Other personnel throughout City
departments will likely contribute to implementation of NSP1 although staff time may not
be charged for these contributions to the NSP1 grant specifically. In addition, current
funding either from CDBG administration or City General Fund resources will likely be
needed to support the staff time dedicated to the NSP project. In this sense the budget of
NSP1 administration funds is not necessarily comprehensive because it does not include
project delivery expenses or other City resources that may be utilized.
The City has attached a table that lists all positions with time specifically dedicated to the
NSP project (Attachment XIX). This table also lists all staff in DCD’s Housing Division. As
Comment 1 is evidenced by this table, a total of 6 analysts, 5 of whom are senior analysts, within the
Housing Division of the Department of Community Development
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Comment 1
spend the equivalent of 1.5 FTE on City General Fund Capital projects. The City’s
General Fund Capital resources depend in part on City income tax. These resources are
declining due to the economic circumstances in 2010. Community Development’s share
of these resources is projected to decline by 7% in 2010 compared to the original 2010
Comment 1
budget. In 2010, due to the housing climate, the diversification of resources will likely
increase focus on business development programs over housing programs in an effort to
make the most community impact that could lead to increased tax revenue and more
funds for the City to use as leverage. This will free up staff hours within the Housing
Division that are currently dedicated to City projects. These staff hours can then be
dedicated to HUD programs, such as NSP1.
Comment 1
While we have collected preliminary staffing results for HUD activity, a more thorough
assessment must be conducted over the next few months to reduce the incidences of
duplication of effort across City government, ensure all needs are covered related to HUD
expectations, and verify that any recommendations for new positions have justification and
funding to accomplish the goal. As needed, role descriptions will be revamped and/or
created among the identified City departments. Following that process, the impacted
department(s) will have to work through human resource processes as well as City
Council processes since the City has a hiring freeze and an anticipated budget deficit.
Therefore, with the exception of some NSP1 and HOME related changes within DCD, the
City does not anticipate making any major staffing changes until the City’s budget
processes for the Consolidated Plan, Capital Budget, and General Operating Fund are
completed later this year. However, the potential of additional federal funding, the clear
expectations of HUD’s OIG, and a projected City General Fund budget shortfall, forces the
City to revisit HUD staffing. Changes will be made as required as quickly as possible.
PARTNERSHIPS/CONSULTANTS
DCD understands its role as the oversight entity that will ultimately be held accountable for
NSP1 activities and outcomes. DCD prides itself on the ability to build partnerships and
convene stakeholders relatively quickly and effectively.
Interdepartmental Collaborations
Comment 1
DCD has met with various departments on a regular basis to resolve all HUD-related
items. In addition to monthly Projects Meeting and quarterly IDIS meetings, DCD staff has
met with the Law Department, Budget Office, and the City Manager’s Office to update the
Manager and other senior staff on recommendations, suggestions and intent of the OIG.
DCD reviewed staff time sheets to provide specific percentages of time spent on all DCD-
related activities including federal funds and the City’s General Fund. DCD met with
specific departments requesting the same analysis of staff time. The result of the meeting
is a strategy for short and long-term planning that re-evaluates the budget structure related
to federal funding among all city departments to ensure staff focus and tracking of time
associated administration of federal dollars is accurate and documented.
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Comment 5
DCD and the Office of Budget and Evaluation have already drafted sections for a
procedures manual reflective of HUD NSP and other federally funded HUD programs. As
Comment 1
mirrored by the need to evaluate all of the City’s staffing processes thoroughly in order to
create a comprehensive procedures manual reflective of all HUD NSP1 systems, DCD will
work closely with other departments that impact this new program to assess their systems
and ability to get things done in a timely way.
Comment 1
Over the last 2-3 years, DCD has been proactive in inviting departments to various training
opportunities led by HUD and other entities related to HUD programs to ensure that all
staff, regardless of department, work effectively together to meet outcomes. This is
evidenced in the City’s request to bring in ICF International, HUD’s technical assistance
provider, to assist the City in developing systems to reduce the number of open activities
in the IDIS system. Once the City receives this report, we will immediately begin reviewing
systems Citywide to meet the recommendations made by ICF. ICF International was also
able to review and make recommendations for updating our procedures manual for our
Rental Rehabilitation Program and our Section 3 process.
Community
Our community partners are a significant component of the delivery of services related to
NSP1. The level of detail in the Scope of Work and Budget in current and future contracts
with the various Community Development Corporations (CDCs) and other partners who
actually complete the work is comprehensive, specific and time-driven.
There are 7 of the 10 priority NSP1 neighborhoods that have active Community
Development Corporations (CDCs), experienced in acquisition/rehabilitation/resale
activities. Of the three neighborhoods without a CDC, one is receiving only demolition of
blighted buildings, which will be administered directly by DCD staff using contractors. The
two remaining neighborhoods will collaborate with experienced developers to accomplish
neighborhood projects.
National Development Council (NDC)
Another of the City’s partners is the National Development Council (NDC), the oldest
national non-profit community development organization in the U.S. The organization was
founded in 1969. Its mission is to increase the flow of capital to underserved urban and
rural areas for community development, job creation, economic opportunity, and small
business development. NDC’s relationship with the City of Cincinnati is tailored to the
varied needs of DCD. NDC offers development assistance and professional training as
well as small business financing and debt and equity for residential, commercial, public
and non-profit facilities projects.
NDC regularly works with the City to review development project deals and assess the
developer’s capacity. NDC also works with the City to increase the flow of capital for
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affordable housing and neighborhood revitalization through development assistance by
working with community partners to plan and execute their development strategies, with
emphasis on getting the job done, whether it’s an economic development program, a
development project or multiple projects. Additionally, NDC finances through the NDC
Corporate Equity Fund and can act as developer for affordable housing projects in our
client communities. NDC’s Housing and Economic Development Corporation offers clients
the opportunity to address the challenges of building public facilities using a unique model.
DCD’s Business Development Division accesses NDC’s small business lending arm, the
Grow America Fund. This fund is the nation’s only SBA-licensed Small Business Lending
Company that is owned and operated by a non-profit organization. The Grow America
Fund offers participating Community Partners a loan program that helps leverage their
capital by four to one, and lend to eligible businesses at the lowest possible interest rates
and for the longest possible terms. NDC is a leading participant in the Federal New
Markets Tax Credit program, with $376,000,000 in tax credit allocations through 2009.
Our 38 projects in 18 states include neighborhood and downtown revitalization, new and
expanded industrial enterprises, and cultural, recreation, social service and health care
facilities.
Comment 1 NDC training and certification is an integral part of the City of Cincinnati’s DCD staff
professional development structure and is generally a requirement factored into staff
promotions. As funds allow, staff attends training that is specially geared toward
developing knowledge and skills essential to making deals happen through either the
Housing Development Finance Professional (HDFP) Certification Program which explores
the development process, financial analysis techniques and structuring and negotiating
skills needed to successfully develop and finance affordable home ownership and rental
housing development. Another option for staff is NDC’s Economic Development Finance
Professional (EDFP) Certification Program, a rigorous training series that explores the
skills essential for the successful practice of economic development - business credit and
real estate finance analysis techniques, loan packaging procedures, negotiating and
problem solving skills and deal structuring techniques.
Community Development Corporation of Cincinnati (CDCA) including (CDCs) and
Community Urban Redevelopment Corporations (CURCs)
The Cincinnati DCA is the trade association in the Greater Cincinnati and Northern
Kentucky area for Community Development Corporations (CDCs), housing service
providers, financial institutions, community resources, and committed individuals. CDCA’s
vision is of a Greater Cincinnati and Northern Kentucky with exciting communities that
revitalize themselves through dedication and hard work in their Community Development
Corporations and Community Urban Redevelopment Corporations. With resources from
around the area they will provide a variety of housing, strong commercial districts, arts and
open spaces for all their residents and work with DCD to help build capacity for the CDCs
and CURCs.
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Local Initiatives Support Corporation (LISC)
Local Initiatives Support Corporation (LISC) is the nation’s leading community
development support organization. LISC helps resident-led, community-based
development organizations transform distressed communities and neighborhoods into
healthy places to live, do business, work, and raise families.
By providing capital, project training, and consultation, LISC supports the development of
local leadership and the creation of affordable housing, commercial and community
facilities, businesses and jobs. The Local Initiatives Support Corporation of Greater
Cincinnati & Northern Kentucky works to bring new, significant, project-related financial
and technical assistance to Community Development Corporations (CDCs) operating in
Clermont and Hamilton Counties in Ohio and Boone, Campbell, and Kenton Counties in
Kentucky.
LISC’s work begins and ends with the premise that local residents can best identify
community needs and develop solutions that solve neighborhood issues. Through its
nuanced and tailored lending, granting, and technical assistance support, LISC provides
individuals and communities with the capital and technical expertise they need to revitalize
and rebuild neighborhoods. LISC empowers whole communities and gives residents a
voice in shaping their local market, civic environment, and physical neighborhoods. The
City will continue to work with LISC to engage neighborhood residents in physical
development and strengthening capacity of local CDCs to plan and execute real estate
projects.
Cincinnati Development Fund (CDF)
The Cincinnati Development Fund (CDF) is a non-profit lending institution established in
1988 to finance affordable housing development and community revitalization in the
Greater Cincinnati Area. CDF fills a critical niche that is not sought after by traditional
lenders, such as small projects, new developers, and complex financing structures. The
primary business of the organization is to underwrite and service community development
real estate loans that result in the creation or preservation of affordable housing, or
revitalization of urban communities. CDF’s Mission is to drive community revitalization by
providing capital access and technical assistance. CDF’s Vision is to be a national leader
in community development where we bring financial institutions, nonprofit and commercial
developers, and local governments together to create vibrant, diverse neighborhoods and
strong central cities. The City and CDF regularly work together to analyze and leverage
capital for development deals.
As NSP1 implementation continues, the City Administration will continue exploring the
feasibility of external contracting for those services that are either cost-prohibitive or have
timeliness issues if handled within current City structures. Unfortunately, that
determination cannot be made by the required response date of the OIG. However, it is
still on the table for review and decision. The funding made available by charging
inspection costs to project delivery instead of administration would pay for these services.
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Other Resources in the State of Ohio
HUD Columbus and the City have maintained an ongoing resolution process for previous
OIG audits and reporting. As part of the process HUD Columbus contracted with ICF
International to provide DCD with onsite training and technical assistance for IDIS
processing and Section 3 monitoring. ICF also assisted DCD with a Rental Rehabilitation
Program manual re-write.
Comment 1 DCD staff is working with HUD - Columbus on draft reporting documents, reporting
procedures as well as to resolve all OIG issues. We will continue to tap into HUD’s staff
knowledge about technical assistance providers who can help the City accomplish projects
in a more quality-driven and quantitative manner. And, as always, we will consult our
colleagues in Ohio and other communities to get information about their approaches
related to NSP1 and other HUD programs.
Other partnerships will be developed throughout NSP1 implementation. As NSP1
progresses, other likely relationships will be with various lenders, national partners
acquired by HUD, state and local organizations focused on NSP1 and other stimulus
programs as well as nonprofit organizations.
SUMMARY
Comment 1 In closing, the City of Cincinnati reiterates that it is employing as many of the strategies
recommended by the Office of the Inspector General as expeditiously as possible. The
City further hopes that the information communicated in this document and all attachments
demonstrates our commitment to continuous improvement, effectiveness and efficiency.
We hope this will restore the Office of Inspector General’s confidence that the Cincinnati is
willing and focused on making our City the best operations possible.
Should you require additional information or wish to discuss this current or previous Audits
further, please don’t hesitate to contact Michael Cervay, Director, Department of
Community Development at Michael.Cervay@cincinnati-oh.gov or by phone at (513) 352-
1947; or you may contact Dwendolyn Chester, Deputy Director, Department of Community
Development at Dwendolyn.chester@cincinnati-oh.gov or via phone at (513) 352-4881.
Sincerely,
/signed/
Milton Dohoney, Jr.
City Manager
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Attachments: I. Neighborhood Stabilization Program Draft Manual
II. HAP – NSP1 Demolition – Under Contract or Out to Bid
III. HAP – NSP1 Demolition – In Demolition and Program
Nuisance
IV. Condemned Buildings – NSP High Need
V. DCD Organizational Structure
VI. PMCE Division Staff Bios
VII. Housing Division Staff Bios
VIII. Fiscal Division Staff Bios
IX. NSP Departmental Workflow Chart
X. NSP Community Development Internal Workflow Chart
XI. Expenses/Vouchers Departmental Workflow Chart
XII. Commitment Form Departmental Workflow Chart
XIII. Contracts Departmental Workflow Chart
XIX. NSP Staffing Table
Cc: Mark Mallory, Mayor, City of Cincinnati
Milton Dohoney, Jr., City Manager, City of Cincinnati
John Curp, Solicitor, City of Cincinnati
Lea Eriksen, Director, Office of Budget and Evaluation, City of Cincinnati
Joe Gray, Director, Finance, City of Cincinnati
Michael Cervay, Director, Department of Community Development, City of Cincinnati
Dwendolyn Chester, Deputy Director, Community Development, City of Cincinnati
Herman Bowling, Housing Manager, Community Development, City of Cincinnati
Oren Henry, Community Development Administrator, City of Cincinnati
Jorgelle Lawson, Director, Office of Community Development and Planning, HUD
Columbus
Richard Hendershot, Program Manager, Office of Community Development and
Planning, HUD Columbus
Robert Milburn, Program Officer, Office of Community Development and Planning,
HUD Columbus
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OIG’s Evaluation of Auditee Comments
Comment 1 The City’s commitment to provide Neighborhood Stabilization Program training
to staff working on, reallocate and hire additional staff for, and directly charge
salaries as delivery costs for the Neighborhood Stabilization Program, if fully
implemented, should improve its capacity to effectively and efficiently administer
its Neighborhood Stabilization Program.
Comment 2 The City should finalize its policies, procedures, and controls applicable to
activities before executing contracts with partners for the activities under the
Neighborhood Stabilization Program.
Comment 3 We did not request the City’s procedures manual for its Neighborhood
Stabilization Program. We requested the City’s policies and procedures for its
Neighborhood Stabilization Program.
Comment 4 The City should finalize its policies, procedures, and controls for its activities
under the Neighborhood Stabilization Program, as appropriate, and make any
revisions to its policies, procedures, and controls if and when HUD revises the
requirements for the Neighborhood Stabilization Program.
Comment 5 We revised this memorandum to state the following:
• As of June 30, 2009, the City had not established adequate policies and
procedures. On May 1, 2009, it provided its draft manual, dated May 2009.
• On June 30, 2009, the City provided a revised draft manual. The revised draft
manual included the sections mentioned above that were missing in the draft
manual. However, the revised draft manual did not contain management’s
monitoring procedures to ensure that funds were used appropriately.
• As previously stated, we found that the City did not adequately manage its
HOME program. The following issue we identified in OIG Audit Report
number 2008-CH-1010, if left uncorrected, could also impact the
Neighborhood Stabilization Program.
• The City’s revised HOME program rental rehabilitation manual addressed the
issues identified for rental rehabilitation activities. The City also used the
HOME program rental rehabilitation manual in the revised draft manual for
the policies and procedures for the City’s rental program. Therefore, the
revised draft manual includes policies and procedures for the City’s rental
program that were not applicable to the Neighborhood Stabilization Program.
For example, the revised draft manual contains references to HUD’s
Integrated Disbursement and Information System even though HUD’s
Disaster Recovery and Grants Reporting system was utilized for the reporting
on Neighborhood Stabilization Program activities.
22
We removed the following from this memorandum:
• The City did not comply with HUD’s regulations in providing downpayments,
closing costs, homebuyer counseling, and home inspections. It
inappropriately provided funds to households that were not income eligible
and did not have documentation to support that activities were eligible.
Although the policies and procedures for the City’s downpayment program in
the draft manual addressed the issues identified in our prior audit, the draft
manual did not specify the hours of homebuyer counseling the potential home
buyer would need to receive before obtaining a loan. According to the
Federal Register, dated October 6, 2008, the grantee must require each
Neighborhood Stabilization Program-assisted homebuyer to receive and
complete at least eight hours of homebuyer counseling before obtaining a
loan.
Comment 6 Through the Federal Register, dated October 6, 2008, HUD notified the City that
it allocated nearly $8.4 million in Neighborhood Stabilization Program funds to
the City. Further, the City submitted its 2008 action plan substantial amendment
for the Neighborhood Stabilization Program on December 1, 2008. On April 17,
2009, we requested the City’s policies and procedures for its Neighborhood
Stabilization Program. The City provided its draft manual on May 1, 2009. As of
May 1, 2009, the City had nearly seven months since it was notified that it was
allocated Neighborhood Stabilization Program funds to finalize its policies,
procedures, and controls for its activities under the Neighborhood Stabilization
Program, as appropriate.
Comment 7 Due to the limited amount of guidance HUD had provided grantees regarding and
the City’s inability to obtain access to HUD’s Disaster Recovery and Grants
Reporting system, we did not include in the audit memorandum that the City’s
draft policies lacked a section covering policies and procedures for reporting in
HUD’s Disaster Recovery and Grants Reporting system.
Comment 8 We audited the City’s capacity to administer its Neighborhood Stabilization
Program and referred to significant issues from our prior audit reports on the
City’s HOME program because the issues were applicable to the City’s
Neighborhood Stabilization Program, and if left uncorrected, could also impact
the City’s capacity to effectively and efficiently administer its Neighborhood
Stabilization Program.
Comment 9 We recognize that the City has experienced staff that will provide support services
for the Neighborhood Stabilization Program. However, our audit focused on the
City’s staff assigned to administer the day-to-day operations of the Neighborhood
Stabilization Program.
During the audit, the City provided a listing of the Department’s staff, including
their duties, regarding the Neighborhood Stabilization Program. The listing only
23
included the Department’s director, deputy director, housing division manager,
recently hired community development analyst in the Division, and property
maintenance code enforcement division manager. The listing stated that the
property maintenance code enforcement division manager was responsible for the
operation of the Property Maintenance Code Enforcement Division and
supervised building inspectors that were responsible for identifying and enforcing
property code violations, including the demolition of blighted buildings. The
listing also stated that the Department requested an additional position to provide
administrative support for the Neighborhood Stabilization Program and that there
was other staff in the Department that will process payments and provide support
services for the Neighborhood Stabilization Program. Further, the City only
provided job descriptions for the Department’s director, housing division
manager, and senior community development analysts.
Comment 10 The staff in the Department’s fiscal division provided support services for the
Neighborhood Stabilization Program.
Comment 11 The City did not provide documentation to support that the staff in the
Department’s Property Maintenance Code Enforcement Division were
administering the day-to-day operations of the Neighborhood Stabilization
Program.
Comment 12 The City should finalize its policies, procedures, and controls applicable to
demolition activities under the Neighborhood Stabilization Program before
conducting any additional work related to the demolition activities under the
Neighborhood Stabilization Program.
Comment 13 The City did not provide a revised budget to support that salaries for inspectors in
the Department’s Property Maintenance Code Enforcement Division were
reallocated from administrative costs.
Comment 14 The City did not provide documentation to support that the administrative
specialist in the Department’s Division would be administering the day-to-day
operations of the Neighborhood Stabilization Program.
Comment 15 The City did not provide documentation to support its plans to promote a senior
community development analyst to a supervisory role and reallocate two staff
from the Department’s Operations Division or how the promotion of the senior
community development analyst and reallocation of the two staff from the
Department’s Operations Division would benefit the Neighborhood Stabilization
Program.
Comment 16 The City did not provide documentation to support that the Department’s deputy
director would assume more responsibility over the City’s HUD programs.
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The City of Cincinnati, Ohio, Lacked Sufficient Capacity to Effectively and Efficiently Administer Its Neighborhood Stabilization Program
Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-07-29.
Below is a raw (and likely hideous) rendition of the original report. (PDF)