oversight

The City of East Cleveland, OH, Had Sufficient Capacity To Effectively and Efficiently Administer Its Recovery Act Block Grant 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
                                                     Region V Office of Audit
                                                                                            th
                                                     Ralph H. Metcalfe Federal Building - 26 floor
                                                     77 W Jackson Blvd.
                                                     Chicago, Illinois 60604-3507



                                                                            MEMORANDUM NO:
                                                                                 2010-CH-1802

January 12, 2010

MEMORANDUM FOR: Jorgelle Lawson, Director of Community Planning and Development,
                  5ED

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

SUBJECT: The City of East Cleveland, OH, Had Sufficient Capacity To Effectively and
           Efficiently Administer Its Recovery Act Block Grant Program

                                       INTRODUCTION

In accordance with our goal to review funds provided under the American Recovery and
Reinvestment Act of 2009 (Recovery Act), we conducted a capacity review of the City of East
Cleveland‟s (City) operations. We also selected the City based upon the results of our audit of
the City‟s Community Development Block Grant (Block Grant) and HOME Investment
Partnerships (HOME) programs (see OIG audit report #2009-CH-1008, issued May 11, 2009).
Our objective was to determine whether there was evidence to indicate that the City lacked the
capacity to adequately administer its Recovery Act funding.

                                        BACKGROUND

Under the Recovery Act, the U.S. Department of Housing and Urban Development (HUD)
allocated nearly $300,000 in Block Grant funding to the City. The funding will be used to
address the City‟s planning for street reconstruction and resurfacing of Glenmont Avenue, as
identified by an inventory of street improvement projects based on need in the City‟s low- and
moderate-income neighborhoods.

Organized under the laws of the State of Ohio, the City is governed by a mayor and a five-
member council. The City‟s Department of Community Development (Department) administers
the City‟s Block Grant program. The Department‟s overall mission is to (1) use available
resources to build a stable and economically viable community, (2) work to eliminate blighted
conditions in areas suffering from a lack of investment, (3) direct available resources to benefit
low- and moderate-income citizens and neighborhoods serving low- and moderate-income
citizens, and (4) and work to eliminate any conditions that pose a threat to public health and
welfare, which the City does not otherwise have the available resources to address. The City‟s
former and current mayors took office on January 1, 2006, and January 1, 2010, respectively.
The former director of the City‟s Department resigned on May 16, 2008. At that time, the City‟s
former mayor assumed oversight of the Department. The City had not hired a new director or
named an acting director as of November 26, 2009. However, but not officially, the City‟s
director of water and sewer has been interacting with the day-to-day operations of the
Department since May 2009. The City‟s Block Grant program records are located at 13601 and
14340 Euclid Avenue, East Cleveland, OH.

The City was awarded more than $3.1 million from HUD‟s Office of Community Planning and
Development‟s formula programs for fiscal years 2008 and 2009. This amount included funding
under the Block Grant and HOME programs. The following chart shows the allocations by
program per fiscal year.

                    Fiscal year      Block Grant        HOME         Totals
                        2009           $1,124,081       $491,682   $1,615,763
                        2008            1,104,770        442,118    1,546,888
                       Totals          $2,228,851       $933,800   $3,162,651

Additionally, under the Housing and Economic Recovery Act, the State of Ohio„s Department of
Development‟s Office of Housing and Community Partnership approved the City‟s application
for more than $2.2 million in Neighborhood Stabilization Program funding.

                               METHODOLOGY AND SCOPE

Our review of the City was limited to gaining an understanding of internal controls over the
administration of Recovery Act funds. To meet our objective, we reviewed the City‟s Recovery
Act documentation and funding agreements with HUD, 2008 action plan and substantial
amendment to the plan, grant agreements, policies and procedures, organizational charts, and job
descriptions. We also interviewed City and HUD staff involved with the Recovery Act.
Additionally, we reviewed one drawdown from the City‟s line of credit to determine whether the
Block Grant funds were adequately supported and appropriately used. Our review of this
documentation was limited to our stated objective and should not be considered a detailed
analysis of the City‟s internal controls or operations.

                                      RESULTS OF REVIEW

We did not find evidence that the City lacked the capacity to adequately administer its one-time
Block Grant funding under the Recovery Act. Based on our review, the City had

• Written policies and procedures,
• Adequate staffing,
• Plans for the use of funds, and
• Supporting documentation.

The City had established policies and procedures through its codified ordinances and charter.
The charter provided direction and responsibilities City-wide. The City‟s Finance Department
had a manual for all City purchases, and the City‟s Department had established its own internal
departmental procedures, which included purchasing, demolition, change orders, contracting for
professional services, and contracting for street projects. These procedures were for all of its



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departmental programs‟ activities and were not specifically designed for Recovery Act program
activities.

The substantial amendment to the City‟s action plan activity data spreadsheet showed the
planning for street reconstruction and resurfacing of Glenmont Avenue, as identified by an
inventory of street improvement projects based on need in the City‟s low- and moderate-income
neighborhoods. Funding was being used for engineering and reconstruction of Glenmont
Avenue and no administrative costs. In the City‟s estimation, the activity will create an
estimated six full-time jobs and two part-time jobs for 1 month. The projected start date was
July 6, 2009, with an estimated end date of October 30, 2009. As of November 26, 2009, the
street reconstruction and resurfacing were complete with the exception of the landscaping, which
is scheduled to be completed in the spring of 2010. Additionally, the City drew down more than
$119,400 in Recovery Act funding from its line of credit for its Block Grant activity.

The activity focused on the City‟s infrastructure. To accomplish its goal, the Department
appropriately procured the professional services of an engineer to oversee the reconstruction and
resurfacing activity, as identified in its 2008 amended action plan. It also appropriately procured
the contractor performing the reconstruction and resurfacing of the Glenmont Avenue project.
The Department maintained the required documentation to support its actions and ensured that
the payment request was adequately supported and the payment was issued within a reasonable
period after the funds were drawn from its line of credit.

The Department followed its own procedures including maintaining adequate supporting
documentation and appropriately used the first drawdown from its line of credit. The finance
director approved the draw on October 29, 2009, and the check was dated November 5, 2009.
The payment was made within a reasonable/feasible period of 5 days from when the funds were
drawn.

A total of eight City employees and a contracted engineer were involved with the administration
and oversight of the activity. Three City employees were specific to the Department, and three
were from the Finance Department. The remaining employees included the director of water and
sewer and the service director. According to the service director‟s job description, “the service
director shall be the City‟s engineer.” However, the service director lacked the necessary
qualifications to be a City engineer. Also, the former mayor unofficially appointed the director
of water and sewer to interact with the Department, but she had limited knowledge of HUD
programs. Although the City‟s staffing levels were inadequate overall, the Recovery Act activity
did not create a new activity.

Based upon our review, we determined that the City had sufficient capacity to effectively and
efficiently administer its Recovery Act Block Grant program. This determination does not reflect a
finding of sufficient capacity to administer its regular Block Grant, HOME, or Neighborhood
Stabilization programs.

                                     RECOMMENDATION

Based on the results of our capacity review, this memorandum contains no recommendation.




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                    AUDITEE COMMENTS


                             The City of East Cleveland
                                MAYOR GARY NORTON JR.
January 5, 2010

Ron Farrell
Assistant Regional Inspector General for Audit
United States Department of HUD
Office of Inspector General
200 North High Street, Room 334
Columbus, Ohio 43125

Re: Draft Audit Memorandum

Dear Mr. Farrell:

I would like to acknowledge receipt of your correspondence dated December 15, 2009 and addressed to
Eric Brewer, former Mayor of the city of East Cleveland relative to the city of East Cleveland‟s draft
audit memorandum of HUD‟s Office of Inspector General for Audit.

Upon review of this correspondence, it appears the objective of the audit was to determine if the city
lacked the capacity to adequately administer its Recovery Act funding. According to the results of the
review, your office determined that the City had sufficient capacity to effectively and efficiently
administer its Recovery Act Block Grant program. Based on these results, the City has no comments at
this time.

Please be advised that I am newly elected to the office of Mayor for the City of East Cleveland. I will be
working with our HUD field office to perform an overview of the City‟s Community Development Block
Grant program and will be implementing changes to improve our program based upon this overview.
Meanwhile, if you have any questions, please do not hesitate to contact me at 216-681-2207.

Sincerely,

/signed/
Gary Norton, Jr.
Mayor
City of East Cleveland

Cc: Heath Wolfe, Regional Inspector General for Audit-HUD
    Jorgelle Lawson, Director of CPD-HUD
    Collette Clinkscale, Chief of Staff
    Karen Hood, Deputy Director


14340 Euclid Avenue East Cleveland, Ohio 44112 City Hall: Phone (216) 681-5020 Fax (216) 681-2650
                                    Website: eastcleveland.org




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