oversight

Wayne County, MI, Needs To Improve Its Capacity to Effectively and Efficiently Administer Its Neighborhood Stabilization Program

Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-01-12.

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

                                            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.
                                                                                    2010-CH-1801

January 12, 2010

MEMORANDUM FOR: Jeanette Harris, Director of Community Planning and Development,
                  5FD


FROM: Heath Wolfe, Regional Inspector General for Audit, 5AGA

SUBJECT: Wayne County, MI, Needs To Improve Its Capacity to Effectively and Efficiently
         Administer Its Neighborhood Stabilization Program

                                     INTRODUCTION

We reviewed Wayne County’s (County) Neighborhood Stabilization Program (Program). The
review was part of the activities in our fiscal year 2009 annual audit plan. We selected the
County based upon a request from the U.S. Department of Housing and Urban Development’s
(HUD) Detroit Office of Community Planning and Development. Our objective was to
determine whether the County 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 review.

                                      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.

The County. Organized under the laws of the State of Michigan, the County is governed by the
county executive, elected to a 4-year term, and a 15-member board of commissioners (board),
including a board chair, elected to 2-year terms. The County’s Economic Development Growth
Engine administers the County’s Neighborhood Stabilization Program. The Economic
Development Growth Engine’s overall mission is to provide financial, technical, and consultant
services to the County’s residents, businesses, and neighborhoods so they can thrive in a globally
competitive economy and live comfortably in their communities. The County’s records are
located at 600 Randolph, Detroit, MI.

HUD allocated more than $25.9 million in Neighborhood Stabilization Program funds to the
County based upon the funding formula developed by HUD pursuant to the Act. On March 19,
2009, HUD entered into a grant agreement with the County for the full amount allocated. The
County’s revised Neighborhood Stabilization Program budget included the following:

   •   Nearly $2.6 million to establish financing mechanisms for the purchase and
       redevelopment of foreclosed-upon homes and residential properties;

   •   Nearly $10.4 million for the purchase and rehabilitation of abandoned or foreclosed-upon
       homes or residential properties to sell, rent, or redevelop the homes or properties;

   •   Nearly $5.2 million for establishing land banks for foreclosed-upon homes or residential
       properties;

   •   Nearly $5.2 million for the demolition of blighted structures; and

   •   Nearly $2.6 million for planning and administration costs.

The County entered into a subrecipient agreement with the Wayne County Land Bank
Corporation (Corporation) on October 1, 2009, for nearly $6.4 million in Neighborhood
Stabilization Program funds to assist the County in administering funds for establishing land
banks for foreclosed homes or residential properties and procuring project management services
for the County’s Neighborhood Stabilization Program. The nearly $6.4 million included $1.2
million in planning and administration costs for the project management services.

Congress amended the Neighborhood Stabilization Program and increased its funding as part of
the American Recovery and Reinvestment Act of 2009 (Recovery Act). As part of a consortium,
the Corporation which is controlled by the County, submitted an application to HUD, dated July
13, 2009, that totaled $290 million in additional Neighborhood Stabilization Program funds
under the Recovery Act. The application is under review by HUD.

HUD’s Detroit Office of Community Planning and Development conducted three monitoring
reviews of the County’s Community Development Block Grant (Block Grant), HOME
Investment Partnerships (HOME), and/or Emergency Shelter Grant programs from June 2007
through August 2009. HUD did not identify any findings or concerns during its June 2007
monitoring review. However, it identified the following finding during its May 2008 monitoring
review that was still open as of October 26, 2009: the County failed to ensure that the City of
Highland Park, a subunit of the County, complied with HUD’s regulations for full and open
competition regarding the procurement of Block Grant-funded library rehabilitation services.



                                                2
HUD identified the following findings and concerns during its August 2009 monitoring review
and analysis through October 26, 2009:

   •   The County failed to disburse more than $43,000 of more than $243,000 in Emergency
       Shelter Grant funds before HUD’s disbursement deadline as of September 13, 2009;

   •   HUD’s records indicated that the County failed to commit more than $2.1 million in
       HOME program funds by HUD’s 24-month commitment deadline and disburse more
       than $1.3 million in HOME program funds by HUD’s 5-year disbursement deadline as of
       September 30, 2009;

   •   The County was in jeopardy of having more than $10.3 million in HOME program funds
       recaptured;

   •   The County did not enter completion information into HUD’s Integrated Disbursement
       and Information System within 120 days of the final drawdown for HOME-funded
       projects; and

   •   The County had not made draws of HOME program funds for 365 or more days for nine
       activities.

HUD’s October 26, 2009, monitoring review letter also stated that if HUD must recapture any of
the HOME program funds, it would reflect that the County lacked capacity to administer its
HOME program in a timely manner. Further, the County’s lack of capacity to administer its
HOME and Emergency Shelter Grant programs would raise concerns regarding the County’s
capacity to administer its Neighborhood Stabilization Program funds and Neighborhood
Stabilization Program, Block Grant, and Homelessness Prevention and Rapid Re-Housing
Program funds under the Recovery Act.

On December 9, 2009, HUD's Detroit Office of Community Planning and Development
provided a supplemental monitoring review letter, dated November 9, 2009, that revised its
October 26, 2009, monitoring review letter regarding the County’s commitment and
disbursement of HOME program funds. The supplemental monitoring review letter stated that
the County met HUD’s 24-month commitment deadline and 5-year disbursement deadline as of
September 30, 2009. Therefore, the County did not fail to commit more than $2.1 million in
HOME program funds by HUD’s 24-month commitment deadline and disburse more than $1.3
million HOME program funds by HUD’s 5-year disbursement deadline as of September 30,
2009. Further, only HOME program funding authorized in the County’s program year 2003 was
in jeopardy of being recaptured and the County met HUD’s commitment and obligation
requirements for program year 2003 as of September 30, 2009. Therefore, the County was not in
jeopardy of having more than $10.3 million in HOME program funds recaptured as of September
30, 2009.

                             METHODOLOGY AND SCOPE

To accomplish our objective, we reviewed

                                              3
   •   Applicable laws; the Federal Register, dated October 6, 2008, May 4, 2009, and June 19,
       2009; HUD’s regulations at 24 CFR (Code of Federal Regulations) Parts 85 and 570;
       HUD’s Neighborhood Stabilization Program grant agreement with the County; and
       HUD’s Detroit Office of Community Planning and Development’s monitoring reports for
       the County’s HOME and Block Grant programs from 2007 through 2009.

   •   The County’s 2008 action plan substantial amendment for the Neighborhood
       Stabilization Program, policies and procedures, staffing plans and allocations, budgets,
       job descriptions, organizational charts, subrecipient and developer applications, and
       procurement files.

We also interviewed the County’s employees and HUD’s staff.

We performed our on-site review work from September through October 2009 at the County’s
office located at 600 Randolph, Detroit, MI. The review covered the period October 2007
through August 2009 and was expanded as determined necessary.

                                    RESULTS OF REVIEW

1. The County Needs to Improve Its 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.

Procurement
The County did not ensure that the Corporation fully complied with HUD’s regulations for full
and open competition regarding the procurement of project management services for the
County’s Neighborhood Stabilization Program. The Federal Register, dated October 6, 2008,
stated that HUD’s regulations at 24 CFR Part 570 were applicable to the Neighborhood
Stabilization Program. HUD’s regulations at 24 CFR 570.502(a) state that recipients and
subrecipients that are governmental entities shall comply with 24 CFR 85.36. HUD’s
regulations at 24 CFR 85.36(c)(1) state that all procurement transactions will be conducted in a
manner providing full and open competition consistent with HUD’s regulations at 24 CFR 85.36.
Any arbitrary action in the procurement process is considered to be restrictive of competition.
Section 85.36(d)(3)(iv) states that awards through competitive proposals will be made to the
responsible firm with the proposal that is most advantageous to the program, with price and other
factors considered. Section 85.36(f)(1) states that grantees and subgrantees must perform a cost
or price analysis in connection with every procurement action. The method and degree of
analysis are dependent on the facts surrounding the particular procurement situation. However,
as a starting point, grantees must make independent estimates before receiving bids or proposals.




                                                 4
On February 2, 2009, the Corporation published a request for qualifications to obtain a list of
qualified vendors from which to issue requests for proposals to obtain management services for
the County’s Neighborhood Stabilization Program. The Corporation received responses to the
request for qualifications from 24 organizations. On August 3, 2009, the Corporation issued a
request for proposals to the 24 organizations to select a qualified respondent to provide
management services for the County’s Neighborhood Stabilization Program. The request stated
that the contract for the services would be for 3 years and would not exceed $1.2 million. It did
not require the organizations to include in their proposals a price for providing the services. The
Corporation received proposals from 10 organizations. It reviewed the proposals to determine
whether they complied with the instructions and met the minimum qualifications of the request.
It determined that only 3 of the 10 proposals were responsive to the request. It provided the
three proposals to a committee selected by its executive director to evaluate and score the
proposals based upon the criteria contained in the request. The committee rated Community
Improvement Group as the most responsible organization with a proposal that was most
advantageous to the County’s Neighborhood Stabilization Program. On October 16, 2009, the
Corporation entered into a written agreement with Community Improvement Group to provide
management services for the County’s Neighborhood Stabilization Program for $1.2 million over
3 years.

Contrary to HUD’s requirements, the Corporation did not sufficiently consider price when
selecting an organization to provide management services for the County’s Neighborhood
Stabilization Program. The Corporation’s senior executive project manager said that the County
wanted to focus on procuring the most qualified organization that could provide the best project
management services for its Neighborhood Stabilization Program. After estimating the
administrative costs necessary to administer its Neighborhood Stabilization Program for 4 years,
the County identified $1.2 million in Neighborhood Stabilization Program funds available to
obtain management services for its Neighborhood Stabilization Program. The County’s assistant
corporation counsel stated that the County also considered the number of developers,
subrecipients, and projects the organization would have to manage in addition to the scope of
services it would be responsible for in providing management services for the County’s
Neighborhood Stabilization Program. However, the County could not provide a formal analysis
to support that the $1.2 million was reasonable for the management services to be provided.

Policies, Procedures, and Controls
As of December 16, 2009, the County had not established sufficient policies and procedures for
its Neighborhood Stabilization Program. On October 13, 2009, it provided its draft
Neighborhood Stabilization Program policies and procedures manual (draft manual). However,
the draft manual was incomplete. It lacked a section covering policies and procedures for
monitoring, including management’s monitoring, to ensure that funds were used appropriately.

In addition, the County did not amend the draft manual to address revisions regarding land banks
and appraisals contained in the Federal Register dated June 19, 2009. Section 1 of the draft
manual stated that land banks would purchase properties that have been abandoned or foreclosed
upon. However, the Federal Register, dated June 19, 2009, stated that land banks can only
purchase homes and residential properties that have been foreclosed upon. Section 1 of the draft
manual also stated that if the anticipated value of the acquisition of property was less than

                                                5
$25,000, the value of the property could be established based on a review of available data by a
person the grantee determined was qualified to make the valuation. However, the Federal
Register, dated June 19, 2009, stated that if a grantee determines that the anticipated value of the
proposed acquisition of property is estimated at $25,000 or less and the acquisition is voluntary,
the current market appraised value of the property may be established by a valuation of the
property based on a review of available data by a person qualified to make the valuation. Section
1 of the draft manual did not include that the acquisition must be voluntary.

On September 23, 2009, the Corporation’s senior executive project manager said that the
County’s draft manual had not been completed since the County’s first priority was the
commitment of Neighborhood Stabilization Program funds for eligible projects due to the
reduced amount of time that grantees have to commit the funds. Further, the County initially
planned for the management services provider to develop its policies and procedures for the
Neighborhood Stabilization Program. However, due to the delay in contracting with the
management services provider, the County started developing the draft manual on September 22,
2009. On October 13, 2009, the senior executive project manager stated that the County’s draft
manual would not be finalized until Community Improvement Group reviewed the draft manual.
She expected the draft manual to be finalized by November 1, 2009. However, the County had
not provided its final Neighborhood Stabilization Program policies and procedures manual
(manual) as of November 9, 2009. Further, on November 13, 2009, the senior executive project
manager said that the County’s draft manual was not clear regarding whether appraisals for
property valued under $25,000 were for the voluntary acquisition of property and that the County
would revise the final Neighborhood Stabilization Program policies and procedures manual to
comply with HUD’s requirements.

On December 16, 2009, the County provided its manual. The manual included a section
covering policies and procedures for monitoring. However, the manual did not contain
management’s monitoring procedures to ensure that funds were used appropriately. Further, it
was not amended to address the revisions regarding land banks and appraisals.

Staffing
Through the Federal Register, dated October 6, 2008, HUD notified the County that it had been
allocated more than $25.9 million in Neighborhood Stabilization Program funds. The County
submitted its 2008 action plan substantial amendment to HUD for the Neighborhood
Stabilization Program on November 24, 2008. The County’s revised Neighborhood Stabilization
Program budget included nearly $2.6 million for planning and administrative costs.

The County’s board-approved detailed fiscal year 2010 budget for planning and administrative
costs totaled $1 million in Neighborhood Stabilization Program funds and more than $9,000 in
general funds. The board-approved detailed fiscal year 2010 budget included

   •   More than $474,000 in salaries and benefits,
   •   Nearly $203,000 for professional services,
   •   Nearly $194,000 in miscellaneous operating expenses,
   •   More than $103,000 for support services,
   •   $13,000 for furniture and equipment,

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   •   $8,000 for travel,
   •   $5,000 for advertising,
   •   $3,000 for equipment repair and maintenance,
   •   $2,000 for supplies,
   •   $2,000 for memberships and subscriptions,
   •   $1,300 for postage, and
   •   $200 for communication services.

On September 22, 2009, the County provided a revised detailed fiscal year 2010 budget for
planning and administrative costs that totaled more than $905,000. The revised detailed fiscal
year 2010 budget included more than $462,000 in salaries and benefits for nine staff members to
administer the operations of the Neighborhood Stabilization Program, $400,000 for management
services, and more than $43,000 in surplus costs.

On October 9, 2009, the senior executive project manager stated that the County’s management
and budget staff had not prepared detailed budgets for the fiscal years after fiscal year 2010. The
County’s Economic Development Growth Engine’s staff was developing estimated planning and
administrative costs for future fiscal years. The County would not be able to prepare a detailed
budget covering the next three fiscal years before the completion of our review.

However, on December 16, 2009, the County provided a detailed fiscal year 2010 through 2013
budget for planning and administrative costs that totaled more than $2.6 million. The detailed
fiscal year 2010 through 2013 budget included more than $939,000 in salaries and benefits for
eight staff members to administer the operations of the Neighborhood Stabilization Program,
$1.2 million for management services, more than $414,000 for central services, and nearly
$56,000 for travel, supplies, and equipment. Although the board-approved detailed fiscal year
2010 budget included more than $9,000 in general funds, the detailed fiscal year 2010 through
2013 budget did not contain whether general funds would be used for any of the planning and
administrative costs. Further, the detailed fiscal year 2010 through 2013 budget did not contain
whether Neighborhood Stabilization Program income would be used for any of the planning and
administrative costs. The Federal Register, dated October 6, 2008, stated that up to 10 percent of
a Neighborhood Stabilization Program grant may be used for general planning and
administration activities. The County’s revised Neighborhood Stabilization Program budget for
planning and administrative costs was 10 percent of the County’s total Neighborhood
Stabilization Program grant. Therefore, the detailed fiscal year 2010 through 2013 budget for
planning and administrative costs ($2,609,096) exceeded 10 percent of the County’s total
Neighborhood Stabilization Program grant and the County’s revised Neighborhood Stabilization
Program budget for planning and administrative costs ($2,590,915) by more than $18,000.

2. HUD’s Detroit Office of Community Planning and Development Did Not Include Sufficient
   Special Conditions in Its Neighborhood Stabilization Program Grant Agreement With the
   County

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


                                                 7
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 Neighborhood Stabilization 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)(3), a special condition applies to the Neighborhood Stabilization
   Program grant agreement due to the size of the Neighborhood Stabilization Program grant
   amount relative to the grantee’s fiscal year 2008 Block Grant fund allocation. Within 60 days of
   the date HUD signed the grant agreement, the grantee must submit a management plan that
   describes how it has determined that it possesses adequate staff and other resources necessary to
   administer its Neighborhood Stabilization Program. If the grantee fails to submit the
   management plan within 60 days, HUD may thereafter withhold authority to incur additional
   obligations of Neighborhood Stabilization Program funds.

   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 Neighborhood Stabilization 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 Neighborhood Stabilization Program. If the grantee fails to submit such
   documentation within 60 days from the date HUD signed the grant agreement, HUD may
   withhold the grantee’s authority to incur additional obligations of Neighborhood
   Stabilization 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.

The County received more than three times in Neighborhood Stabilization Program funds than its
2008 Block Grant fund allocation. Therefore, HUD’s Detroit Office of Community Planning and
Development placed a special condition on the County’s grant agreement requiring the County to
submit a proposed management plan to HUD within 60 days of March 19, 2009, that described how
it determined that it possessed adequate staff and other resources necessary to administer its
Neighborhood Stabilization Program. The County submitted its management plan to HUD on July

                                                  8
24, 2009, more than 120 days after March 19, 2009. In addition, as of December 9, 2009, HUD was
waiting on additional information from the County before it approved the management plan.

As previously stated, HUD identified the following finding during its May 2008 monitoring review
that was still open as of October 26, 2009: the County failed to ensure that the City of Highland
Park complied with HUD’s regulations for full and open competition regarding the procurement of
Block Grant-funded library rehabilitation services. The County’s Economic Development Growth
Engine also administers the Neighborhood Stabilization Program and Block Grant program.
However, HUD’s Detroit Office of Community Planning and Development did not include
special conditions in its Neighborhood Stabilization Program grant agreement with the County
regarding procurement. The Director of HUD’s Detroit Office of Community Planning and
Development said that she had been in contact with staff in HUD’s Office of Block Grant
Assistance and it was not the intention of HUD’s Director of Field Management that multiple
special conditions be placed on program grant agreements. Further, as previously stated, the County
did not ensure that the Corporation fully complied with HUD’s regulations for full and open
competition regarding the procurement of project management services for the County’s
Neighborhood Stabilization Program. HUD’s Director said that the County should redo the
procurement of or use non-Federal funds to pay for the project management services and should
submit its future procurements for services to her office for review and approval.

In addition, HUD identified the following findings and concerns during its August 2009 monitoring
review and analysis:

   •   The County had failed to disburse more than $43,000 of more than $243,000 in Emergency
       Shelter Grant funds before HUD’s disbursement deadline as of September 13, 2009;

   •   HUD’s records indicated that the County had failed to commit more than $2.1 million in
       HOME program funds by HUD’s 24-month commitment deadline and disburse more than
       $1.3 million in HOME program funds by HUD’s 5-year disbursement deadline as of
       September 30, 2009;

   •   The County was in jeopardy of having more than $10.3 million in HOME program funds
       recaptured;

   •   The County did not enter completion information into HUD’s Integrated Disbursement and
       Information System within 120 days of the final drawdown for HOME-funded projects; and

   •   The County had not made draws of HOME program funds for 365 or more days for nine
       activities.

HUD’s October 26, 2009, monitoring review letter also stated that if HUD must recapture any of the
HOME program funds, it would reflect that the County lacked capacity to administer its HOME
program in a timely manner. Further, the County’s lack of capacity to administer its HOME and
Emergency Shelter Grant programs would raise concerns regarding its capacity to administer its
Neighborhood Stabilization Program funds and Neighborhood Stabilization Program, Block Grant,
and Homelessness Prevention and Rapid Re-Housing Program funds under the Recovery Act.

                                                9
Further, the County’s Economic Development Growth Engine administers the Neighborhood
Stabilization Program, Block Grant, and HOME program.

On December 9, 2009, HUD’s Detroit Office of Community Planning and Development
provided a supplemental monitoring review letter, dated November 9, 2009, that revised its
October 26, 2009, monitoring review letter regarding the County’s commitment and
disbursement of HOME program funds. The supplemental monitoring review letter stated that
the County met HUD’s 24-month commitment deadline and 5-year disbursement deadline as of
September 30, 2009. Therefore, the County did not fail to commit more than $2.1 million in
HOME program funds by HUD’s 24-month commitment deadline and disburse more than $1.3
million HOME program funds by HUD’s 5-year disbursement deadline as of September 30,
2009. Further, only HOME program funding authorized in the County’s program year 2003 was
in jeopardy of being recaptured and the County met HUD’s commitment and obligation
requirements for program year 2003 as of September 30, 2009. Therefore, the County was not in
jeopardy of having more than $10.3 million in HOME program funds recaptured as of September
30, 2009.

On December 29, 2009, HUD’s Director said that although the County met HUD’s 24-month
commitment deadline and 5-year disbursement deadline as of September 30, 2009, for the
HOME program, she was still concerned that the County did not have the capacity to meet its
commitment and disbursement requirements for its Neighborhood Stabilization Program. At a
minimum, the County’s management services provider should assist the County in its
commitment and disbursement of Neighborhood Stabilization Program funds. Further, on
January 11, 2009, her office will provide technical assistance to aid the County in obligating and
disbursing HUD funds timely. Once her office has provided the technical assistance and has a
better understanding of where the County is at in improving its procedures and controls over its
obligation and disbursement of HUD funds, her office may recommend that the County contract
with an outside organization to assist it in increasing its capacity and ensuring that it obligates
and disburses HUD funds in a timely manner.

                                    RECOMMENDATIONS

We recommend that the Director of HUD’s Detroit Office of Community Planning and
Development require the County to

1A. Perform a formal cost or price analysis to determine whether the $1.2 million was
    reasonable for the project management services to be provided. The County should also
    submit the analysis to HUD’s Detroit Office of Community Planning and Development for
    review and approval. If the County does not perform a formal cost or price analysis, it
    should not use HUD funds to pay for the management services. If the County performs a
    formal analysis and determines that a reasonable cost for the management services was less
    than $1.2 million, it should amend its written agreement with Community Improvement
    Group for the amount determined to be reasonable. If Community Improvement Group
    will not agree to amend the agreement, the County should void the agreement and
    reprocure the management services in accordance with HUD’s regulations.



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1B. Implement adequate policies, procedures, and controls to ensure that Neighborhood
    Stabilization Program funds are used effectively and efficiently and in accordance with
    applicable requirements.

1C. Revise its detailed budget for each year of its Neighborhood Stabilization Program so that
    it does not exceed 10 percent of the County’s total Neighborhood Stabilization Program
    grant and to ensure that it has sufficient capacity to effectively and efficiently administer its
    Neighborhood Stabilization Program.

1D. Revise its proposed management plan for its Neighborhood Stabilization Program to
    include that it will submit its future procurements for services to HUD’s Detroit Office of
    Community Planning and Development for review and approval before entering into
    written agreements. The management plan should also include those actions that HUD
    plans to require the County to take to assist it in ensuring that it obligates and disburses
    Neighborhood Stabilization Program funds in a timely manner.




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        AUDITEE COMMENTS AND OIG’s EVALUATION

Ref to OIG Evaluation                               Auditee Comments



                                                  Robert A. Ficano                                   Turkia Awada Mullin
                                                                                                     Chief Development Officer
                                                     County Executive




               December 16, 2009

               Brent Bowen
               Asst. Regional Inspector General for Audit
               U.S. Department of Housing and Urban Development
               Office of Inspector General
               77 W. Jackson Blvd., Ste. 2646
               Chicago, IL 60604-3507


               RE:    Wayne County’s Response to HUD’s Office of Inspector General’s Audit
                      Memorandum

               Dear Mr. Bowen:

               We are in receipt of the Office of Inspector General’s (OIG) “Discussion Draft Audit
               Memorandum on OIG’s Review of Wayne County, MI’s Neighborhood Stabilization Program-
               Capacity Review” (“Review”) dated December 3, 2009.

               Before I respond to your review and findings, I would like to thank you for assisting Wayne
               County (County) to improve its HUD funded community development programs, in particular
               Neighborhood Stabilization Program (NSP). Your review and recommendations will allow the
               County to improve its current operations and continue to provide valuable services to its
               deserving residents. Even though the County does not entirely agree with your review, some of
               your recommendations are helpful.

               Nevertheless, Wayne County does have some “serious” concerns pertaining to various
               statements and/or issues raised in your Review. For purposes of simplicity, I will discuss each of
               the County’s concerns under the respective headings which correspond to your Review.

                                                      BACKGROUND

               A. October 29, 2009 Monitoring Review Letter:

               The OIG states in its Review that HUD’s Detroit Office of Community Planning and
               Development (CPD) issued a monitoring review letter to the County on October 26, 2009
               identifying problems related to the County’s administration of the HOME and Emergency
               Shelter Grant Program (ESG). Wayne County did not receive the October 26th monitoring
               review letter. Wayne County was provided a copy of the monitoring review letter for the first
               time via email from HUD-OIG Auditor, Tom McManigal, on November 30, 2009.




                                                       12
Ref to OIG Evaluation                            Auditee Comments




              Once the County’s staff became aware of the letter, they contacted the Detroit CPD office to
              inquire about it. The staff was advised by the Director, Jeanette Harris, that a letter was sent, but
              CPD will contact OIG since the letter was being updated. See Attachment A. Furthermore, during
Comment 1     a telephone conversation with Mr. McManigal on December 3, 2009, Wayne County Assistant
              Corporation Counsel, Muddasar Tawakkul, was informed that the “letter may have been lost in
              the federal internal postal process” and that there is was no guarantee that the letter was sent out
              to the County.

Comment 2     Based on the email from HUD and conversations with Mr. McManigal, it’s safe to assume that
              Wayne County was never “officially” issued a monitoring review letter. Therefore, Wayne
              County should not be responsible for the October 29 2009 findings since HUD regulations,
              specifically 24 CFR 570.913 and 92.551, require written notification of corrective actions, which
              was never provided.

Comments 2    Nevertheless, CPD did send a letter to the County on November 9, 2009, and an updated
 and 3        “unofficial” letter via email on December 7, 2009. See Attachment B. Both documents removed
              and clarified many of the findings in the “October 29th” letter:

Comment 3              1. The updated letters authored by local CPD office made clear that Wayne County
              successfully obligated $2.1 million dollars of HOME funds and disbursed more than $1.3 million
              dollars of HOME funds by the September 30, 2009 deadline. On October 9, 2009, Detroit CPD
              staff (i.e. Steve Spencer. Portia McGoy, and Gerald Henry) visited Wayne County offices to
              review the HOME obligations and disbursements and determine whether the documentation was
              in order. After the review, Detroit CPD staff informed the County that the HOME commitments
              were met and in order.

Comment 3            2. The updated letters also eliminated the finding that $10.3 million dollars of HOME
              funds would be recaptured by HUD. In addition, the OIG’s Review found that on November 13,
              2009, HUD’s Director, Jeanette Harris, advised OIG that “ it was unlikely that the County would
              lose Emergency Shelter Grant or HOME program funds.”

Comment 2     The County has taken corrective measures to rectify many of the findings related to ESG,
              entering of information into IDIS and drawdowns referenced in the “October 29th” letter. See
              Attachment B. Therefore, the updated CPD letters corrected all of the findings contained in the
              “October 29th” letter.

              B. Prior Monitoring Reviews:

              Prior to HUD conducting its monitoring review of the County’s Community Development Block
              Grant (CDBG) in May 2008, Wayne County had proactively conducted a review of Highland
              Park’s administration of the CDBG program and issued its findings on February 11, 2008, three
Comment 4     months before HUD’s review. See Attachment C. Similar to HUD’s findings, Wayne County also




                                                    13
Ref to OIG Evaluation                           Auditee Comments


Comment 4     determined that Highland Park failed to comply with HUD’s regulations for full and open
              competition regarding the procurement of CDBG library rehabilitation services.

              After receiving Wayne County’s findings, Highland Park addressed those findings and took
              corrective action in letter dated March 21, 2008. See Attachment C. Wayne County responded to
              the March 21st letter with a correspondence on June 23, 2008 clearing some of the initial findings
              and reiterating concerns initially raised. In response to the County’s findings, Highland Park
              hired a third-party manager to assist it with administering the CDBG program and implementing
Comment 4     the County’s recommendations. See Attachment C. Therefore, Wayne County’s proactive review
              demonstrates the County’s commitment to ensuring that HUD funded program are administered
              properly and in accordance with regulations.

Comment 2     In addition, the finding contained in the updated December 7, 2009 letter demonstrate that all
              except one of the findings (i.e. “Finding 1”) have been resolved. See Attachment B. However, on
              August 25, 2009, Highland Park’s third-party manager, Wade Trim, provided a document to a
              member of CPD staff, Gerald Henry, during his subsequent site visit. The document addressed
              and resolved “Finding 1.” See Attachment D. Thus, all of the findings contained in the “October
              26th” and the December 7th letters were resolved prior to October 26, 2009.

                                                 RESULTS OF REVIEW

              A. Procurement:

              The OIG states in its Review:

                     The County did not ensure that the Corporation fully complied with HUD’s
                     regulations for full and open competition regarding project management services for the
                     County’s Neighborhood Stabilization Program… Contrary to HUD’s Regulations,
                     the Corporation did not sufficiently consider price when selecting an organization to
                     provide management services….”

              Wayne County disputes this assertion since the County through the Wayne County Land Bank
              Corporation (WCLB) substantially complied with the requirements of 24 CFR 85.36 by properly
              publishing notice of the request for qualification and proposal and competitively selecting the
              program manager. The only issue is the difference of interpretation regarding 24 CFR 85.36(f)(1)
              and the use of price as an evaluation criterion.

Comment 5     It is the County’s position that subsection (f)(1) does not require price to be considered in
              evaluating every proposal. Instead, price can be chosen (but does not have to be chosen) as one
              of many factors in evaluating proposals. The County’s argument is based on the plain reading of
              the regulation and the use of the phrase “with price and other factors considered” in the
              subsection, which implies that price is not a necessary evaluation criterion. The intent of




                                                   14
Ref to OIG Evaluation                            Auditee Comments


Comment 5     subsection (f)(1) is to require subgrantees to evaluate and award contracts based on objective
              criteria.

Comment 5     The Land Bank did not evaluate price since it was interested in the firm’s qualification and the
              implementation strategy of managing NSP. Furthermore, WCLB wanted to prevent firms from
              underbidding and then requesting contract modifications to increase the contract amount to
              properly provide the scope of services. The underbidding would have resulted in unnecessary
              delays. Thus, the request for proposal had a set-contract amount to put firms on notice that the
              contract amount would not increase and that they were expected to provide all the services at the
              set contract amount.

Comment 5     In the alternative, it is a fair reading of the regulations to conclude that price was in fact
              considered as an evaluation factor. The procurement in this matter did set a price of $1.2 million.
              The County’s goal was to acquire the greatest quantity of services possible for the grant funds
              being provided since the amount of those funds was $1.2 million, which is the amount included
              is the request. Thus, the County did not fail to consider cost in reviewing the proposals.

Comment 6     Prior to issuance of the request for proposal, the County conducted an informal cost/price
              analysis pursuant to subsection 85.36(f)(1) and had established that $1.2 million dollars was
              adequate for managing NSP for 3 years. The cost/price analysis took into account the following
              factors:

                     a. The County’s budget for the past two years in administering the CDBG and  HOME
              programs and the number of staff for each program and their salaries and benefits.
                     b. The current budget to administer CDBG, HOME, and NSP, which included
                     additional funds from previous years due voluntary resignation of numerous
                     Division of Community Development staff. The current budget was used to take into
              account staff salaries, benefits and other administrative costs for 3 years.
                     c. The extent of the scope of services required to effectively manage NSP and the
                     number of subrecipients and projects that would be managed.

Comment 6     Based upon the aforementioned factors it was determined that $400,000 was available each year
              for the program manager to manage NSP on behalf of Wayne County.

Comment 6     It is important to note that the level of services that the program manager is expected to provide
              is very extensive and that the costs associated to the County to hire additional staff and/or replace
              staff to provide similar services would be high. See Attachment E. The County would have to
              take into account salaries and fringe benefits in replacing or hiring staff which would exceed the
              amount budgeted for NSP administrative costs. The sole purpose of the program manager is to
              enhance service delivery to subrecipients and developers and simultaneously curtail costs and
              meet the NSP timelines.




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Ref to OIG Evaluation                            Auditee Comments



Comment 6     The County also takes exception to the OIG’s determination that a “formal” price/cost analysis
              had to be conducted. Subsection 85.36(f)(1) does not require a formal price analysis:

                     “Grantees and subgrantees must perform a cost or price analysis in connection with every
                     procurement action including contract modifications. The method and degree of analysis
                     is dependent on the facts surrounding the particular procurement situation, but as a
                     starting point, grantees must make independent estimates before receiving bids or
                     proposals….”(Emphasis added).

Comment 6     The plain language of subsection (f)(1) only requires that a cost/price analysis should be
              conducted prior to procurement. The subsection does not specify whether the analysis should be
              formal or informal or establish the required information to be included in the analysis. Therefore,
              based on the information presented in this Response and previously provided to OIG, Wayne
              County has met the requirements of subsection (f)(1) and adequately performed a price/cost
              analysis prior to procuring a program manager for NSP.

Comment 5     In conclusion, the OIG states “ any arbitrary action in the procurement process is considered to
              be restrictive of competition.” Even though the OIG is citing subsection 85.36(c)(1) as a basis for
              its conclusion, the County’s actions are not “arbitrary” since they are based on an examination of
              relevant data and on a rational basis. See: FCC v Fox Television Network, 129 S.Ct. 1800 (2009).
              As previously discussed, the County had a rational basis and reason to not utilize “price” as an
              evaluation criterion. Furthermore, contract amount has been justified. Thus, the County’s actions
              are not “arbitrary.”

              B. Policies, Procedures and Controls:

              The County concurs that as of October 14, 2009, there were not sufficient policies and
              procedures in place for NSP. The County’s first priority was to reorganize the department due to
              staff losses primarily attributed to attrition, layoffs and voluntary resignations. The second main
              concern was the commitment of NSP funds to meet the 18-month NSP deadline and the selection
              of a program manager.

              The OIG’s evaluation expedited the drafting of policies and procedures, which were proposed
              and submitted to review to the OIG as stated in the Review. The OIG was satisfied with majority
              of the policies and procedures proposed except for the issues raised in the Review. Nevertheless,
Comment 7     as of the date of this Response, the County has adopted policies and procedures which
              incorporated OIG’s recommendations. See Attachment F.


              C. Staffing:

Comment 8     Wayne County has adopted the OIG’s recommendations and amended its NSP Management Plan
              and Community Development Task Outline. See Attachment G. Both documents demonstrate




                                                    16
Ref to OIG Evaluation                           Auditee Comments

Comment 8     that there is sufficient staff to perform each administrative duty as required by NSP.
              Furthermore, The OIG’s Review does not demonstrate that NSP is being administered
              incorrectly or that a deficiency warrants the hiring of additional staff for NSP. Therefore, the
              current staff is sufficient to administer NSP.

Comment 9     Wayne County has issues with the OIG’s assertion that it was required to prepare a detailed
              budget beyond fiscal year 2010. Current NSP guidelines do not require a detailed budget to be
              prepared for the life of the NSP program. The guidelines only require that a budget should
              include the “amount of funds budgeted for the activity” and incorporated within the County’s
              Substantial Amendment. The County adhered to NSP guidelines by incorporating the budget
              information into its Substantial Amendment.

               In addition, the County adopts yearly fiscal budgets beginning on October 1 and extending
              through September 30. Pursuant to the Wayne County Charter, a budget is not adopted until it is
              approved by the legislative body (i.e. Wayne County Commission). A budget beyond fiscal year
              2010 would have to take into account various economic factors and administrative costs that may
              change for year to year. Therefore, it would be very difficult for the County to prepare and
Comment 10    propose a detailed budget beyond fiscal year 2010. Moreover, the County is mandated by law to
              have a balance budget and can ensure that NSP will be properly budgeted beyond 2010.

Comment 11    Nevertheless, the County has submitted a “line-item” budget to OIG that demonstrates the cost
              associated with administering NSP during the life of NSP and the budget is within the allowable
              administrative costs under NSP. See Attachment H. Therefore, satisfying NSP regulations and
              Charter requirements.

              D. HUD’s Detroit’s Office of Community Planning and Development (CPD) and Special
              Conditions:

              Wayne County challenges OIG’s Review findings that CPD should place special restrictions on
              it for a “history of unsatisfactory performance or has not conformed to the terms and conditions
Comment 2     of previous awards.” As previously discussed, the past findings by CPD in regards to CDBG,
              HOME or ESG have been timely resolved to HUD’s satisfaction. Moreover, based upon the
              foregoing analysis and as detailed by the attachments to this Response, Wayne County has
              demonstrated its commitment to effectively administer HUD funded community development
              programs. Therefore, the CPD was correct in not placing special conditions in the NSP grant
              agreement with the County.

              In regards to the late submittal of the Management Plan, as previously stated, Wayne County was
              going through an extensive reorganization of staff for the administration of its various HUD-

              funded programs. In the first six months of 2009, Wayne County lost 70% of its Division of
              Community Development staff due to retirements or voluntary resignations, and as a result, it
              was difficult to submit an accurate Management Plan. Once the Division was organized, the
              County submitted its Management Plan.




                                                   17
Ref to OIG Evaluation                          Auditee Comments


              It is important to note that during the reorganization, the County was in constant contact with
              CPD providing updates regarding the reorganization and the Management Plan. Furthermore,
              during the reorganization and prior to the submittal of the Management Plan, the County DID
              NOT obligate any NSP funds. Funds were not obligated until after the reorganization and
              submittal of the Plan.

                                                RECOMMENDATIONS

Comment 6     1A. Formal Cost/Price Analysis- 24 CFR 85.36(f)(1) does not require a “formal” price/cost
              analysis prior to the procurement of HUD funded goods and services. Subsection only requires
              that an analysis be done prior to procurement. Therefore, Wayne County has satisfied the
              requirements of subsection (f)(1) as set forth in this Response. Furthermore, the cost/price
              analysis previously provided justifies the $1.2 million dollar contract with the NSP program
              manager.

Comment 7     1B. Policies, Procedures and Controls- Wayne County concurs with this recommendation and
              has adopted adequate policies, procedures, and controls. See Attachment F.

Comments 9    1C. Develop and Implement a Detailed Budget- The current NSP guidelines do not require a
 and 11       detailed budget beyond fiscal year 2010. However, the County has submitted a line-item budget
              to OIG that demonstrates the costs associated with administering NSP during the life of NSP
              program and that those costs are within the allowable administrative costs under NSP. See
              Attachment H.

Comment 12    1D. Revised Proposed Management Plan- Wayne County has amended its Management Plan as
              recommended by the OIG. See Attachment G. In addition, the County will submit all future
              procurements for NSP services of $100,000 or more to CPD for review prior to solicitation.


              Thank you again for allowing Wayne County the time and opportunity to respond to the OIG’s
              Review and assisting the County to improve its HUD funded programs.


              Sincerely,



              Turkia Awada Mullin
              Chief Development Officer



              Enclosures




                                                  18
                           OIG’s Evaluation of Auditee Comments

Comment 1   During the December 3, 2009, telephone conversation, we did not inform the
            County’s assistant corporation counsel that HUD’s October 26, 2009, monitoring
            review letter may have been lost in the Federal internal postal process and that
            there was no guarantee that HUD’s Detroit Office of Community Planning and
            Development sent the monitoring review letter. We informed the assistant
            corporation counsel that on November 30, 2009, a community planning and
            development representative in HUD’s Detroit Office of Community Planning and
            Development said that the letter was sent to the County on October 26, 2009.

Comment 2   On December 7, 2009, the Director of HUD’s Detroit Office of Community
            Planning and Development resent its October 26, 2009, monitoring review letter
            to the County. On December 9, 2009, HUD’s Detroit Office of Community
            Planning and Development provided the supplemental monitoring review letter,
            dated November 9, 2009. The supplemental monitoring review letter revised the
            issues in the monitoring review letter regarding the County’s commitment and
            disbursement of HOME program funds and stated that the remaining issues in the
            monitoring review letter were unchanged and should be addressed through the
            prescribed monitoring response protocols. Therefore, HUD officially issued the
            monitoring review letter to the County, and it is responsible for the remaining
            findings and concerns contained in the monitoring review letter.

Comment 3   We revised this memorandum to state the following:

            •   On December 9, 2009, HUD’s Detroit Office of Community Planning and
                Development provided a supplemental monitoring review letter, dated
                November 9, 2009, that revised its October 26, 2009, monitoring review letter
                regarding the County’s commitment and disbursement of HOME program
                funds. The supplemental monitoring review letter stated that the County met
                HUD’s 24-month commitment deadline and 5-year disbursement deadline as
                of September 30, 2009. Therefore, the County did not fail to commit more
                than $2.1 million in HOME program funds by HUD’s 24-month commitment
                deadline and disburse more than $1.3 million in HOME program funds by
                HUD’s 5-year disbursement deadline as of September 30, 2009. Further, only
                HOME program funding authorized in the County’s program year 2003 was
                in jeopardy of being recaptured, and the County met HUD’s commitment and
                obligation requirements for program year 2003 as of September 30, 2009.
                Therefore, the County was not in jeopardy of having more than $10.3 million
                in HOME program funds recaptured as of September 30, 2009.

Comment 4   The County’s February 11, 2008, monitoring review letter stated that the City of
            Highland Park lacked sufficient documentation to support the procurement of its
            contract with ADR Consultants. However, the monitoring review letter did not
            support that the concern involved the procurement of Block Grant-funded library
            rehabilitation services. Further, the County’s corrective action was that the City

                                            19
            of Highland Park must procure and rebid future Block Grant-funded consulting
            and professional services contracts every 2 to 3 years according to 24 CFR 85.36.

Comment 5   HUD’s regulations at 24 CFR 85.36(c)(1) state that all procurement transactions
            will be conducted in a manner providing full and open competition consistent
            with the standards of 24 CFR 85.36. Any arbitrary action in the procurement
            process is considered to be restrictive of competition. HUD’s regulations at 24
            CFR 85.36(d)(3)(iv) state that awards by competitive proposals will be made to
            the responsible firm with the proposal that is most advantageous to the program,
            with price and other factors considered. Section 85.36(d)(3)(v) states that the
            method in which price is not used as a selection factor can only be used in the
            procurement of architectural/engineering professional services. The Corporation
            procured the project management services for the County’s Neighborhood
            Stabilization Program using competitive proposals. On August 3, 2009, the
            Corporation issued a request for proposals to 24 organizations to select a qualified
            respondent to provide management services for the County’s Neighborhood
            Stabilization Program. The request stated that the contract for the services would
            be for 3 years and would not exceed $1.2 million. It did not require the
            organizations to include in their proposals a price for providing the services.
            Further, the request did not state that the Corporation was trying to obtain the
            greatest quantity of management services for the $1.2 million. The County did
            not ensure that the Corporation fully complied with HUD’s regulations for full
            and open competition regarding the procurement of management services for the
            County’s Neighborhood Stabilization Program.

Comment 6   The County could not provide documentation to support that the $1.2 million was
            reasonable for the management services to be provided. Therefore, the County
            could not provide a formal analysis.

Comment 7   We revised this memorandum to state the following:

            •   As of December 16, 2009, the County had not established sufficient policies
                and procedures for its Neighborhood Stabilization Program.

            •   On December 16, 2009, the County provided its manual. The manual
                included a section covering policies and procedures for monitoring. However,
                the manual did not contain management’s monitoring procedures to ensure
                that funds were used appropriately. Further, it was not amended to address
                the revisions regarding land banks and appraisals.

Comment 8   We removed the following from this memorandum:

            •   On October 8 and October 19, 2009, the County provided job descriptions for
                nine staff members and duty descriptions for eight staff members,
                respectively, that would administer its Neighborhood Stabilization Program.
                However, it did not provide job descriptions or duty descriptions for two staff

                                             20
                 members that were included in the revised budget. On October, 23, 2009, the
                 Corporation’s senior executive program manager said that the job descriptions
                 accurately reflected the staff members that would be involved in administering
                 the County’s Neighborhood Stabilization Program. Therefore, the revised
                 budget and the duty descriptions did not accurately reflect the staff members
                 that would administer the Neighborhood Stabilization Program.

Comment 9    We did not state that the County was required to prepare a detailed budget for its
             Neighborhood Stabilization Program beyond fiscal year 2010. The County
             budgeted at least 34.9 percent of its total budget for planning and administrative
             costs in fiscal year 2010. The County has 4 years in which to disburse its
             Neighborhood Stabilization Program funds. Since the County could not provide a
             detailed budget for the nearly $2.6 million for planning and administrative costs,
             we had concerns as to whether it would have sufficient Neighborhood
             Stabilization Program funds for planning and administrative costs. Therefore, we
             recommended that the Director of HUD’s Detroit Office of Community Planning
             and Development require the County to develop and implement a detailed budget
             for the each year of its Neighborhood Stabilization Program to ensure that it has
             sufficient capacity to effectively and efficiently administer its Neighborhood
             Stabilization Program.

Comment 10 Although the County is mandated by law to have a balanced budget, a balanced
           budget does not ensure that the County will have sufficient Neighborhood
           Stabilization Program funds for planning and administrative costs.

Comment 11 We removed the following from this memorandum:

             •   However, the County could not provide a detailed budget for the nearly $2.6
                 million for planning and administrative costs.

             We revised this memorandum to state the following:

             •   However, on December 16, 2009, the County provided a detailed fiscal year
                 2010 through 2013 budget for planning and administrative costs that totaled
                 more than $2.6 million. The detailed fiscal year 2010 through 2013 budget
                 included more than $939,000 in salaries and benefits for eight staff members
                 to administer the operations of the Neighborhood Stabilization Program; $1.2
                 million for management services; more than $414,000 for central services;
                 and nearly $56,000 for travel, supplies, and equipment. Although the board-
                 approved detailed fiscal year 2010 budget included more than $9,000 in
                 general funds, the detailed fiscal year 2010 through 2013 budget did not state
                 whether general funds would be used for any of the planning and
                 administrative costs. Further, the detailed fiscal year 2010 through 2013
                 budget did not state whether Neighborhood Stabilization Program income
                 would be used for any of the planning and administrative costs. The Federal
                 Register, dated October 6, 2008, stated that up to 10 percent of a

                                             21
                 Neighborhood Stabilization Program grant may be used for general planning
                 and administration activities. The County’s revised Neighborhood
                 Stabilization Program budget for planning and administrative costs was 10
                 percent of the County’s total Neighborhood Stabilization Program grant.
                 Therefore, the detailed fiscal year 2010 through 2013 budget for planning and
                 administrative costs ($2,609,096) exceeded 10 percent of the County’s total
                 Neighborhood Stabilization Program grant and the County’s revised
                 Neighborhood Stabilization Program budget for planning and administrative
                 costs ($2,590,915) by more than $18,000.

             We revised recommendation 1C of this memorandum to state that the Director of
             HUD’s Detroit Office of Community Planning and Development should require
             the County to revise its detailed budget for each year of its Neighborhood
             Stabilization Program so that it does not exceed 10 percent of the County’s total
             Neighborhood Stabilization Program grant and to ensure that it has sufficient
             capacity to effectively and efficiently administer its Neighborhood Stabilization
             Program.

Comment 12 The revised management plan did not include that the County would submit its
           future procurements for services to HUD’s Detroit Office of Community Planning
           and Development for review and approval before entering into written agreements
           or those actions that HUD plans to require the County to take to assist it in
           ensuring that it obligates and disburses Neighborhood Stabilization Program
           funds in a timely manner.




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