oversight

The City of Ogden, UT, Appropriately Administered the HOME Investment Partnerships Program

Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-04-02.

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

                                                                Issue Date
                                                                     April 2, 2010
                                                                 
                                                                Audit Report Number
                                                                     2010-DE-1003




TO:        Leroy Brown, Director, Office of Community Planning and Development, 8AD

           //signed//
FROM:      Ronald J. Hosking, Regional Inspector General for Audit, 8AGA

SUBJECT: The City of Ogden, UT, Appropriately Administered the HOME Investment
           Partnerships Program


                                   HIGHLIGHTS

 What We Audited and Why

             We reviewed the City of Ogden, UT’s (City) HOME Investment Partnerships
             Program (HOME) to determine whether the City effectively established HOME
             projects, ensured that HOME funds were used for eligible HOME expenses, and
             properly monitored the HOME projects. We conducted the review as part of the
             Office of Inspector General’s (OIG) annual plan.

 What We Found
             The City appropriately established HOME projects, used HOME funds for
             eligible HOME expenses, and monitored the HOME projects during development
             and during the HOME affordability periods.

 What We Recommend
             This report contains no recommendations, and no further action is necessary.

 Auditee’s Response
             We provided the draft report to City officials on March 18, 2010. They chose not
             to have an exit conference or provide a written response.
                        TABLE OF CONTENTS

Background and Objective                    3

Results of Review                           4

Scope and Methodology                       5

Internal Controls                           6




                                2
                      BACKGROUND AND OBJECTIVE

The City of Ogden, UT (City), established the Community and Economic Development
Department, which was responsible for formulating a comprehensive community plan. The
Community Development Division was responsible for administering community development
and housing programs including the HOME Investment Partnerships Program (HOME). The
Community Development Division’s mission was “to work with our community to enhance the
quality of life in Ogden by planning for Ogden’s future, while preserving its heritage.” The City
was governed by the Ogden City Council and mayor.

The U.S. Department of Housing and Urban Development’s (HUD) Office of Community
Planning and Development approved the City to receive funding for the HOME and Community
Development Block Grant (CDBG) programs. The City and HUD entered into annual
“Funding Approval and HOME Investment Partnerships Agreements” to establish the amounts
of HOME funding the City would receive and the terms for the funding. The following table
shows the HUD Office of Community Planning and Development funding the City received
during our review period.

                    Program           2007            2008           2009
                     HOME              527,849         509,147        566,897
                     CDBG            1,130,906       1,145,377      1,103,976
                   Total             1,658,755       1,654,524      1,670,873

HUD and the City signed an “Asset Control Area Agreement” on June 8, 2005. The Asset
Control Area program was a HUD Office of Single Family Housing program for which the City
designated a specific geographical area and purchased all HUD foreclosed homes in that area at a
discounted price. The City was required to do the rehabilitation work needed to meet local and
HUD building codes. The City then sold each home to an eligible person. If the purchase and
rehabilitation costs exceeded the sales price, the City used HOME funds as a development subsidy
for the difference.

The City used HOME funds for five programs. In addition to the Asset Control Area program, the
Own in Ogden program provided downpayment assistance loans to eligible home buyers. The
Home Sweet Ogden or Homestead program provided loans to rehabilitate owner-occupied homes or
homes owned by the City, which were then sold to eligible home buyers. The Infill Housing
program replaced blighted homes or vacant lots with homes that matched the neighborhood. The
new homes were sold to eligible home buyers. The Homeowner Loan program was a joint effort
between the City and banks. The Community Reinvention Act required banks to work with local
governments to provide loans to first-time homeowners who could not afford the house without
help. The City signed agreements with some banks and used HOME funds for expenses such as
downpayment assistance and rehabilitation work.

Our review objective was to determine whether the City effectively established HOME projects,
ensured that HOME funds were used for eligible HOME expenses, and properly monitored the
HOME projects.

                                                 3
                             RESULTS OF REVIEW

The City Appropriately Administered the HOME Program
The City appropriately administered the HOME program. It established HOME projects, used
HOME funds for eligible HOME expenses, and monitored the HOME projects during
development and during the HOME affordability periods.



 The City Appropriately
 Administered the HOME
 Program

             The City appropriately administered the HOME program. It established HOME
             projects, used HOME funds for eligible HOME expenses, and monitored the
             HOME projects during development and during the HOME affordability periods.

             The City followed policies and procedures to determine the eligibility of the
             HOME projects. City staff members developed forms and checklists, for each
             type of HOME project, which they used to ensure that the project met HUD and
             City project requirements. We did not identify any reportable deficiencies in the
             HOME activity files reviewed.

             The City had procedures to ensure that HOME funds were used for eligible
             HOME expenses. We did not identify any questionable or ineligible expenses.

             The City had procedures to ensure that the HOME projects were appropriately
             monitored from development through pertinent affordability periods. City staff
             monitored the projects. In addition, the City used a loan servicer to service and
             monitor the HOME loans through maturity.

             The City had procedures to ensure that the HOME information was accurately
             entered into HUD’s Integrated Disbursements and Information System and that
             the data reconciled with the City’s accounting system.

 Recommendation

             There is no recommendation, and no further action is necessary.




                                              4
                         SCOPE AND METHODOLOGY

Our review was limited to the City’s activities with HOME funds and generally covered the
period July 2007 through December 2009. We performed on-site work from November through
December 2009 at Ogden’s office located at 2549 Washington Boulevard, Suite 120, Ogden, UT.

To achieve our review objective, we reviewed the City’s HOME and Asset Control Area
program policies and procedures, interviewed staff involved with the HOME functions, reviewed
selected HOME project files, and reviewed HOME accounting records. In addition, we reviewed
Federal regulations and HUD requirements.

We did not rely on computer-processed data to complete the review work. We used computer-
generated data to aid in the selection of project files for review but used the documents in the
files to reach our conclusions.

We selected a nonstatistical, representative sample of 20 project files, which was 11.2 percent of
the 179 projects identified as active during our review period. We selected projects from all of
the City’s HOME-funded programs except administration costs, which we included in the review
of accounting records.

                             Program                  Project count      Sample
                Downpayment Assistance                          128          10
                Asset Control Area                               34            5
                Homeowner Loan                                    8            2
                Infill Housing                                    5            2
                Homestead (rehabilitation)                        2            1
                HOME administration                               2            0
                Totals                                          179          20

We reviewed the files to assess project eligibility, eligibility of HOME expenses, and monitoring
of the HOME projects.

We conducted the review in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the review to obtain sufficient, appropriate
evidence to provide a reasonable basis for our results and conclusions based on our review
objective. We believe that the evidence obtained provides a reasonable basis for our results and
conclusions based on our review objective.




                                                5
                              INTERNAL CONTROLS

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

        Program operations,
        Relevance and reliability of information,
        Compliance with applicable laws and regulations, and
        Safeguarding of assets and resources.

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



 Relevant Internal Controls
              We determined that the following internal controls were relevant to our review
              objective:

                     Controls to ensure that the City appropriately determined project eligibility.

                     Controls to ensure that the City appropriately expended HOME funds.

                     Controls to ensure that the City appropriately monitored HOME projects.

              We assessed the relevant controls identified above.

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


 Significant Weaknesses

              We did not identify any significant weaknesses.




                                                 6