oversight

HUD's Guidance on Posting Signs for American Recovery and Reinvestment Act Projects

Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-08-06.

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
                                             451 7th St., S.W.
                                          Washington, D.C. 20410


                                                                        MEMORANDUM NO.:
                                                                             2010-HA-0801


August 6, 2010

MEMORANDUM FOR: Elizabeth Willmott, Senior Program Manager for Economic
                         Recovery, Office of Strategic Planning and Management, X
             //s//
FROM: Saundra G. Elion, Director, Headquarters Audit Division, GAH

SUBJECT: HUD’s Guidance on Posting Signs for American Recovery and Reinvestment Act
           Projects


                                  INTRODUCTION
In response to a request from the Recovery Accountability and Transparency Board (Board),
we performed a review of the U. S. Department of Housing and Urban Development’s (HUD)
guidance to the American Recovery and Reinvestment Act (Recovery Act) recipients to post
signs, logos, and emblems intended to publicly identify the expenditure of Recovery Act or
“stimulus” funds. The Board was asked by Congressman Darrell Issa, ranking member of the
Committee on Oversight and Government Reform, to determine the scope and impact of the
Obama Administration’s guidance to recipients on what he stated was politicized stimulus
advertising. The Board in turn asked us to respond to a series of inquiries regarding such
advertising as it pertained to HUD’s Recovery Act programs. Congressman Issa characterized
HUD’s stimulus advertising as the most overtly political guidance that “provided recipients a
suggested sign template informing the public that projects have been funded by American
Recovery and Reinvestment Act, Barack Obama, President.”

Our objective was to determine whether HUD required or encouraged its Recovery Act
recipients to post signs to publicly identify projects that were funded with stimulus funds. We
concluded that for two programs, HUD initially included provisions in the grant agreements
requiring posting of signs. HUD subsequently issued agency-wide guidance that “encouraged”
Recovery Act recipients to post signs. We have addressed the congressman’s specific inquiries
in the Results of Review section of this memorandum.

We provided a copy of the draft audit memorandum to the Office of Strategic Planning and
Management on August 4, 2010 and received comments on August 5, 2009. We made changes
to the audit memorandum as deemed appropriate.
                             SCOPE AND METHODOLOGY
The Board requested that we respond to Congressman Issa’s concerns regarding the scope and
impact of the Obama Administration’s guidance to recipients on politicized stimulus
advertising. The congressman specifically asked us to include the following in our review 1:

    1. A complete accounting of all guidance issued by HUD to recipients of stimulus funds,
       including federal, state and local agencies on the posting of signs, logos, or emblems
       intended to publicly identify the source or expenditure of stimulus funds;

    2. Determine whether HUD requires or has required recipients of stimulus funds to post
       signs, logos, or emblems identifying the source or expenditure of stimulus funds and
       whether HUD had the statutory authority to do so; and

    3. Determine whether HUD has relaxed its requirement that recipients post signs, logos or
       emblems identifying the source or expenditure of stimulus funds, and an explanation of
       the decision to do so.

To accomplish our objective, we

    •    Reviewed the guidance, policies, regulations and correspondence for posting signs,
         logos, and emblems that HUD issued to the recipients of Recovery Act funds.

    •    Conducted interviews with HUD’s Recovery Act team to identify the specific guidance
         HUD issued to its recipients of Recovery Act funds.

    •    Conducted interviews with representatives of the Office of Community Planning and
         Development (Office of Affordable Housing and Office of Block Grant Assistance),
         Office of Healthy Homes and Lead Hazard Control, and Office of Public and Indian
         Housing (Housing Capital Fund program office and Office of Native American
         Programs) to determine what guidance they received from HUD’s Office of the
         Secretary on the posting of signs.

    •    Contacted 10 Recovery Act recipients (three Native American Housing Block Grant
         (NAHBG-R) grantees, two Indian Community Development Block Grant (ICDBG)
         grantees and five public housing authorities) to determine whether they were required
         or encouraged to post signs publicly identifying projects.



1
 Initially, the request included a fourth item, that being an assessment of the total cost to the taxpayers from the
posting of signs, logos or emblems identifying the source or expenditure of stimulus funds. The Board
subsequently reassigned this part of the request to HUD.


                                                          2
We performed our review from July 1 through 26, 2010, at HUD headquarters in Washington,
DC. Our review generally covered the period February through August 2009. For this
memorandum, our work was not conducted in accordance with generally accepted government
auditing standards. Our scope was limited to responding to the congressman’s inquiries.

                                      BACKGROUND
The Recovery Act was signed into law by President Obama on February 17, 2009 and included
appropriations totaling $13.6 billion for the following HUD programs.

                                                                                  Funding
              Program                                   Area
                                                                                  Amount
Office of Public and Indian Housing       Public Housing Capital Fund           $4,000,000,000
                                          Native American Housing Block
Office of Public and Indian Housing                                               $510,000,000
                                          Grant
Office of Community Planning and          Community Development Block
                                                                                $1,000,000,000
Development                               Grant
Office of Community Planning and          Neighborhood Stabilization
                                                                                $2,000,000,000
Development                               Program
Office of Community Planning and
                                          Homelessness Prevention Fund          $1,500,000,000
Development
Office of Community Planning and          HOME Investment Partnerships
                                                                                $2,250,000,000
Development                               (Tax Credits)
Office of Multifamily Housing             Assisted Housing Stability            $2,000,000,000
Office of Multifamily Housing             Assisted Housing Energy Retrofit        $250,000,000
Office of Healthy Homes and Lead Hazard
                                                                                  $100,000,000
Control
Total                                                                          $13,610,000,000

On August 26, 2009, HUD issued guidance regarding the posting of signs. Program officials
used various methods to notify their Recovery Act recipients of HUD’s policy, some officials
included language in grant agreement documents, while others amended their program guides
or simply sent e-mails to their recipients.

                             RESULTS OF REVIEW
Our review disclosed that HUD issued guidance encouraging Recovery Act recipients to post
signs publicly identifying projects that were funded with Recovery Act funds. Of the nine
programs that received Recovery Act funds, HUD officials did not issue any guidance for four
of the programs. The nature of two programs (Homelessness Prevention and Assisted Housing
Stability) did not lend themselves to posting signs; and two other programs (Neighborhood
Stabilization Program and Assisted Housing Energy Retrofit did not distribute funds until
months after the posting guidance was issued. Officials administering the remaining five
programs used different ways to notify their Recovery Act recipients of HUD’s guidance. Our



                                              3
results are based on information obtained from the five program areas that distributed guidance
on the posting of signs.

Congressional Request
Inquiry 1: A complete accounting of all guidance issued by HUD to recipients of stimulus
funds, including federal, state and local agencies, on the posting of signs, logos, or
emblems intended to publicly identify the source or expenditure of stimulus funds.

HUD’s Recovery Act team issued guidance on August 26, 2009, establishing HUD-wide
policy on posting signs. That guidance states:

       One of the most important goals in implementing Recovery Act-funded programs is
       transparency. In support of that goal, we encourage recipients to identify HUD
       Recovery-funded projects, to the extent possible and reasonable, with clear signage.
       Please understand that this is not a HUD requirement, however it is suggested.

The guidance also contained two templates for sample graphics that the recipients could use for
printing signs (see appendix).

Officials from five program areas that did distribute guidance on signs are discussed below.

    1. HUD officials administering both the Native American Housing Block Grant and the
        Community Development Block Grant Recovery (CDBG-R) programs added special
        conditions to their grant agreements before HUD issued its agency-wide guidance.
        The special condition to the grant agreement states, “In any contract involving the use
        of [CDBG-R, NAHBG, ICDBG] funds, the Grantee shall include, and require its sub-
        recipients and contractors to include, a project sign provision consistent with criteria
        established by the Secretary.”

       In September 2009, shortly after HUD issued its agency-wide guidance, both program
       officials notified their recipients that posting of signs was no longer mandatory.
       Instead, they encouraged the recipients to “identify HUD Recovery Act funded
       projects, to the extent possible and reasonable, with clear signage.”

    2. The Office of Healthy Homes and Lead Hazard Control (OHHLHC) issued OHHLHC
        [Recovery Act] Grantee Program Guidance - 2009-01(dated September 17, 2009) to
        notify its Recovery Act grantees of signage for their projects. OHHLHC guidance
        states, “In support of that goal, we encourage [Recovery Act] grant recipients to
        identify and [sic] HUD Recovery-funded projects or materials, to the extent possible
        and reasonable, with clear signage. Although this is not a requirement, we are
        recommending that you consider placing signage on [the Recovery Act]. This is not a
        HUD requirement, however it is suggested.”

                                               4
    3. Although the Tax Credit Assistance Program (TCAP) funds cannot be used for
        administrative costs such as program operations, monitoring compliance and posting
        signs, its grant agreement states, “The Grantee shall include in its written agreement
        with each project owner, a project signage provision consistent with criteria
        established by HUD.”

       HUD officials also sent the following e-mail to its TCAP Recovery Act recipients
       regarding signs:

           HUD’s policy is to encourage recipients of Recovery Act funds to identify
           Recovery-funded projects, to the extent possible and reasonable, with clear
           signage. Project signage is not a requirement, however. TCAP grantees should
           follow their existing practice in setting signage requirements for projects assisted
           with TCAP funds, and include these requirements in the written agreement with the
           project owner. If a TCAP grantee has no established signage requirement, it may
           still choose to develop one for use on TCAP-assisted projects. Should you have an
           existing signage requirement or choose to use one, please find 2 PDFs attached to
           be used as resources for TCAP signage:

               •   a sample signage graphic into which you can add partner and project info
                   and print to desired size using desired materials; and
               •   a sample decal graphic which can be printed and added to existing project
                   signage.

           If you choose not to impose a signage requirement, please indicate as much in the
           written agreement with the project owner.

    4. Public Housing Capital Fund program officials simply forwarded HUD’s guidance
        (without any changes) to its Recovery Act recipients.

Inquiry 2: Did HUD require stimulus recipients to post signs, logos or emblems
identifying the source or expenditure of stimulus funds and did HUD have statutory
authority to do so?

While the language used in the published guidance states that it is not a HUD requirement to
post signs, the tone and other information (such as examples of sign templates) were clear
indicators that posting signs was preferred. Further, an earlier e-mail from the Deputy Press
Secretary stated that the posting of signs was highly recommended. That August 4, 2009, e-
mail to HUD’s Recovery Act team also provided examples of graphics, cost estimates for
various banner sizes and the Secretary’s preference to “highly recommend (not require)”
grantees to post signs.



                                               5
Neither the Recovery Act nor other regulations governing HUD require or prohibit the
purchase and/or use of signs at Recovery Act projects or HUD-funded projects. However,
HUD considers the cost of printing these signs as an eligible administrative expense.

Inquiry 3: Has HUD relaxed its requirement that recipients post signs, logos, or emblems
identifying the source or expenditure of stimulus funds, and if so, why?

The guidance issued on August 26, 2009, appears to have relaxed the requirement that
recipients post signs, logos, or emblems identifying the source or expenditure of Recovery Act
funds in that the program officials for the Native American Housing Block Grant and the
Community Development Block Grant Recovery Programs rescinded the special condition
clause in their grant agreements. However, HUD’s Recovery Act recipients continue to be
encouraged to post signs at projects funded with Recovery Act funds.

HUD provided the following reasons for not requiring the posting of signs:

   •   The administrative follow-up “would be immense;”
   •   The estimated production costs could be too high for recipients without an
       administrative set-aside (HUD had already decided it would not pay for any signs);
   •   The posting of signs is a normal act of transparency; therefore, it would be allowable
       “for public housing authorities, tribes, cities, counties, states and non-profit recipients
       to post signs if they so chose”; and
   •   While posting signs is normal, it should not be imposed on Recovery Act recipients.

Conclusion: While HUD’s published guidance did not require its recipients of Recovery Act
funds to post signs identifying projects provided by stimulus funds, it encouraged its Recovery
Act recipients do so.


                                    RECOMMENDATION

Based on the result of our review, this report contains no recommendations.




                                                 6
                                       APPENDIX

     HUD encouraged Recovery Act recipients to identify HUD Recovery Act-funded
     projects with clear signage. Below are two templates that were sent to Recovery Act
     recipients to be used as resources to help facilitate HUD’s request.




This figure represents a signage sample that could include a partner and project information.




  This figure represents a decal sample that can be printed and added to existing signage.




                                             7