U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF INSPECTOR GENERAL March 20, 2014 MEMORANDUM NO: 2014-AT-1801 Memorandum TO: María Ortíz, Director, Community Planning and Development, San Juan Field Office, 4ND Paul Webster, Director, Financial Management Division, Office of Block Grant Assistance, DGBF //signed// FROM: Nikita N. Irons, Regional Inspector General for Audit, Atlanta Region, 4AGA SUBJECT: Vieques Sports City Complex, Office of the Commissioner for Municipal Affairs, San Juan, PR, Section 108 Loan Guarantee Program INTRODUCTION The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), completed a review of the Office of the Commissioner for Municipal Affairs’ (OCMA) Puerto Rico State Community Development Block Grant (CDBG) Section 108 Loan Guarantee program. We selected OCMA for review as part of our strategic plan, based on concerns regarding the slow progress of the Vieques sports complex project. The objective of this audit was to determine whether OCMA used Section 108 loan proceeds on a project that met a national objective of the CDBG program and fully provided the intended benefits. This memorandum contains five recommendations for corrective action. HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on recommended corrective actions. For each recommendation without a management decision, please respond and provide status reports in accordance with HUD Handbook. Please furnish us copies of any correspondence or directives issued because of the review. METHODOLOGY AND SCOPE To accomplish our objective, we performed the following associated with the Vieques sports complex project: Office of Audit Region 4 75 Spring Street SW., Room 330, Atlanta, GA 30303 Phone (404) 331-3369, Fax (404) 730-2382 Visit the Office of Inspector General Web site at www.hudoig.gov. • Reviewed applicable laws, regulations, and relevant HUD program requirements, including the Section 108 loan contract and CDBG grant agreements; • Reviewed HUD Section 108 loan-related files, including the application for the loan, status reports, and disbursement information reported on the loan proceeds and CDBG funds; • Reviewed OCMA project files and records, including proposals submitted by the Municipality of Vieques; • Reviewed HUD and OCMA applicable monitoring reports, including action plans submitted by OCMA for completing the project and related correspondence; • Reviewed HUD’s Integrated Disbursement and Information System reports; • Conducted site inspections of the project; and • Interviewed HUD, OCMA, and Municipality officials. We did not review the Municipality’s project files because they were not available for review. 1 The only documentation the Municipality provided for our review was a certification of project disbursements, dated August 28, 2003, and schedules listing general disbursement information for the Section 108 loan proceeds and CDBG funds. To determine the amount of CDBG funds expended for the development of the project, including repayments of the Section 108 loan and program income proceeds, we • Performed a limited review of OCMA’s financial records, including disbursed amounts recorded in budget records corresponding to program years 1993 through 2003 and 2005, and reviewed the check register for the period July 1998 through November 2013; • Compared, as applicable, information reported in HUD’s Integrated Disbursement and Information System with OCMA’s records; • Reviewed proposals 2 submitted by the Municipality to OCMA, including a balance sheet, dated December 31, 1997; and • Obtained from HUD information regarding the source of funds used for the repayment of the Section 108 loan. We reviewed, among other things, loan repayment information provided by HUD, compared OCMA’s disbursements with drawdowns in HUD’s information system, and compared 1 The project files date back to 1993. According to a Municipality official, the project files were destroyed. 2 We reviewed proposals submitted by the Municipality corresponding to program years 1995 through 2003 and 2005. 2 disbursements reported by the Municipality with HUD’s and OCMA’s records. Although we did not verify all of the data reported by HUD, OCMA, and the Municipality, we found the data adequate for our purpose of determining the amount of unsupported CDBG costs incurred for the incomplete project. We conducted the review at the HUD field office, OCMA office, and our HUD OIG office in San Juan, PR, from September through December 2013. We also conducted site inspections of the project on November 7 and 20, 2013. Our review generally covered the period July 1, 1993, through August 31, 2013. This was a limited scope review, and we did not review OCMA’s internal and information system controls and procedures. Therefore, the review was not performed in accordance with generally accepted government auditing standards. To meet our objective, it was not necessary to fully comply with the standards, nor did our approach negatively affect our review results. BACKGROUND The Section 108 Loan Guarantee program is the loan guarantee provision of the CDBG program. Section 108 loans provide grantees with a source of financing for economic development, housing rehabilitation, public facilities, and large-scale physical development projects. The principal security for the loan guarantee is a pledge by the grantee or the State of current and future CDBG funds. Section 108 obligations are financed through underwritten public offerings and may be for terms up to 20 years. A nonentitlement public entity3 (subrecipient) may apply for up to five times the latest approved CDBG amount received by its State. For purposes of determining project and activity eligibility, the CDBG rules and requirements apply. All projects and activities must meet one of the following three national objectives of the CDBG program: (1) principally benefit low- and moderate-income persons, (2) assist in eliminating or preventing slums and blight, or (3) assist with community development needs having a particular urgency. OCMA is the lead agency in Puerto Rico charged with the responsibility of overseeing the administration of the State allocation of CDBG program funds. OCMA was created August 30, 1991, through the Commonwealth of Puerto Rico Autonomous Municipalities Act of 1991. One of OCMA’s responsibilities is to regulate, advise, and give technical and professional assistance to municipalities in the areas related to their organization, administration, and operations. In fiscal year 2013, HUD awarded Puerto Rico nearly $27.8 million in State CDBG funds, distributed among 51 nonentitlement recipients, including the Municipality of Vieques. Vieques is an island located about 6 miles east of Puerto Rico with a population of 9,301. 4 In July 1993, the Municipality of Vieques, a nonentitlement recipient, submitted an application for a $5 million Section 108 loan for the planning, design, development, and construction of a 3 A nonentitlement public entity represents a unit of general local government that does not receive CDBG funds directly from HUD as part of the CDBG entitlement program. 4 According to available data from the U.S. Census Bureau, the population of the Municipality of Vieques increased from 8,602 in 1990 to 9,301 in 2010. 3 sports city complex in the Luján ward. The Municipality expected to complete the project 2 years after signing the Section 108 loan contract. In August 1993, OCMA recommended the approval of the loan and agreed to pledge future State CDBG funds in favor of the Section 108 loan. HUD approved the $5 million Section 108 loan in April 1994. More than $10.8 million in State CDBG funds were disbursed for the development of a sports complex facility targeted to serve the low- and moderate-income residents of Vieques. 5 OCMA’s books and records are maintained at 255 Ponce de León Avenue, San Juan, PR. RESULTS OF REVIEW OCMA did not ensure that the Municipality completed a Section 108 Loan Guarantee project to construct a sports complex. The project was abandoned and not completed, materials and equipment acquired for its construction were unaccounted for, and the intended benefit was not realized. These deficiencies occurred because no corrective action plan was implemented and the completion of the sports complex was not feasible. As a result, program objectives were not met, preventing low- and moderate-income persons from receiving the intended benefits. HUD also lacked assurance of the allowability of more than $10.8 million in State CDBG funds invested in the unfinished project. Incomplete Project The development of the sports complex project started in 1993. On December 24, 1997, the Vieques Conservation and Historical Trust, Inc., and a Vieques resident filed a lawsuit in Federal court, alleging environmental violations by the Municipality and two Federal agencies, HUD and the U.S. Department of the Interior. The plaintiffs alleged that the defendants, by planning, funding, and carrying out the construction of the sports complex, would violate the National Environmental Policy Act, the Endangered Species Act, and the National Historic Preservation Act. In September 2002, after various negotiation efforts, the plaintiffs entered into a settlement agreement, and the Municipality agreed to • Not complete the sports complex as designed; • Comply with the requirements for outdoor lighting in case a future facility is constructed; and • Continue to maintain the site in full compliance with all applicable Federal and State laws, including putting in place erosion control measures and protecting the archeological site. 5 The more than $10.8 million in State CDBG funds consisted of (1) more than $6.8 million used to repay the Section 108 loan, (2) more than $3.7 million expended for development costs, and (3) $320,252 in expended program income proceeds. 4 As a result of the settlement agreement, the construction of the sports complex was suspended, with about 72 percent 6 of the project completed. According to the Section 108 loan application, the sports complex was to be built on a 61-acre property conveyed to the Municipality by the U.S. Department of the Interior. 7 The project consisted of a main recreational building to house, among others facilities, a cafeteria, basketball-volleyball court with a seating area for 1,000 spectators, three handball courts, three game rooms, a child care room, an exercise room, and a swimming pool. It also included two baseball parks with seating areas for 3,000 spectators. A 1998 aerial picture shows the main recreational building and bleachers for the two baseball parks that were under construction at the project site. Source: HUD San Juan field office files 6 The construction progress is based on Municipality proposals corresponding to program years 1999 through 2002. 7 The title of the land was transferred by the U.S. Department of the Interior, National Park Service, through the Federal Lands to Parks Program, to the Municipality during 2011. The Federal Lands to Parks Program helps communities obtain surplus Federal property for public parks and recreational use. 5 We performed two site inspections of the sports complex in November 2013 and confirmed that the project was not finished. The physical condition of the site demonstrated that the project had been abandoned for a long time. Dense vegetation had grown over the years and expanded over the project site and the partially built facilities, which were not accessible by foot. On November 20, 2013, aerial pictures were taken of the project site. The sports complex was abandoned, and the main recreational building and the baseball facilities were covered with dense vegetation. In 2002, an OCMA consultant inspected the sports complex and found unused materials and equipment stored at the project site, including air conditioning, pool and plumbing, and electrical equipment. 6 The 2002 pictures show materials and equipment stored at the project site and air conditioning systems that had not been used. Municipality officials informed us that they did not know what happened to the unused materials and equipment stored at the project site. No inventory of the unused materials and equipment was maintained. In addition, the Municipality could not provide documentation evidencing the use of the State CDBG funds disbursed for the sports complex. A Municipality official explained that the records were destroyed and that they had provided to us all available documentation. This was not an acceptable explanation for not performing an integral component of the Municipality’s CDBG and Section 108 loan programs responsibilities. The Municipality failed to maintain adequate documentation on the use of HUD funds as required by 24 CFR (Code of Federal Regulations) 85.22. 8 The only documentation available was a spreadsheet listing disbursements made with general information on the payee and purpose. Among the items listed as having been paid for with HUD funds were salaries, transportation, gasoline, and ice. A 2002 HUD monitoring report concluded that the Section 108 loan proceeds, as well as additional CDBG grants used to repay the loan and for the development of the sports complex, did not accomplish program objectives. However, the deficiency remained unresolved. More than 11 years had elapsed since the construction of the sports complex was suspended, and more than $10.8 million in HUD funds had been disbursed, but the project remained incomplete and abandoned without meeting a national objective of the CDBG program. 9 As a result, funds were wasted, and HUD had no assurance that State CDBG funds were used for allowable purposes and that program objectives were met. In addition, low- and moderate-income persons did not receive the intended benefits for which more than $10.8 million in HUD funds was invested. Unfeasible Project The sports complex was not a feasible project. An OCMA consultant-engineer inspected the sports complex in 2002 and concluded that the project was not useful or cost effective to operate and maintain and was out of proportion, considering the size of the Municipality’s population and the current infrastructure of the island. In the report, the engineer also stated that the project 8 Federal regulations at 24 CFR 85.22 provide cost principles for determining allowable costs. Specifically, to be allowable under federal awards, costs must be necessary, reasonable, and adequately documented. 9 Required by 24 CFR 570.200(a)(2) and 570.703 7 was designed and constructed without consideration for the high operating and maintenance costs that this type of facility would require. 10 In addition, the consultant pointed out that the location where the project was constructed was not ideal because the site required a large amount of earth movement, resulting in a considerable increase in development costs. The Municipality’s 2005 action plan proposed the redesign of the project to reduce its scope. The Municipality also stated that the project was unrealistic for a town with fewer than 10,000 residents and it lacked the basic infrastructure to accommodate a large number of visitors for a project of such magnitude. Therefore, the sports complex was not a viable project as originally planned. OCMA informed us that it was looking for a solution to the abandoned sports complex and that it would not be feasible to continue with the original proposed project. It believed that cutting down the trees and vegetation and rehabilitating the partially built facilities would be too expensive. OCMA informed HUD that according to the most recent estimate it would costs more than $16 million to rehabilitate the site, and neither OCMA nor the Municipality had available funds to complete the project. Therefore, the completion of the sports complex was not feasible, resulting in the inefficient use of State CDBG funds. Project Future Uncertain The Municipality and OCMA submitted various proposals for completing the project. The proposals included redesigning the project, changing the original scope and use of the project, and requiring the investment of additional funds. For example, in 2005, the Municipality requested from OCMA an additional $269,675 from its State CDBG allocation to redesign the project 11 and estimated that an additional $7 million would be needed to finish the project. The last proposal submitted to HUD was on February 10, 2011. The proposal stated that the Municipality wanted to complete the sports complex, by preserving the partially built facilities and constructing new ones, and use a commercial approach to generate proceeds from recreational and commercial activities to pay for its maintenance. The estimated cost for rehabilitating and operating the project with the new facilities was $16.5 million, including a new Section 108 loan in the amount of $5.5 million and an additional $2.5 million in State CDBG funds. However, none of the proposed alternatives occurred. In September 2013, OCMA informed us that it was working on a plan to convert the sports complex to a forest preservation activity for the benefit of low- and moderate-income persons. The Municipality informed us that it was looking for alternatives to bring the sports complex into compliance with HUD requirements. Although the Municipality had conversations with OCMA, no final determination had been made on the future plan for the project. 10 The main recreational building was about 30 feet tall and was designed to have air conditioning in all of its interior facilities, which would result in excessive energy costs to operate. In addition, the Municipality would incur high maintenance costs for cleaning and painting the facilities. 11 From the $269,675 in 2005 State CDBG funds requested, only $87,681 was expended. OCMA reprogrammed the unused allocation to other subrecipients. 8 In a letter dated January 7, 2014, addressed to the San Juan Field Office Director, OCMA proposed a change in the use of the project to a wild life refuge and cultural resources conservation site. However, OCMA did not address the issues related to the abandoned and deteriorated structures, and the wasted materials and equipment for which more than $10.8 million in HUD funds was invested. In its letter OCMA stated that for years the Municipality sought a solution to the abandoned project, but the Municipality and the State did not have the funds to rehabilitate the abandoned facilities. The San Juan Office of Community Planning and Development informed us that it has not received OCMA’s letter nor approved a change to the use of the project site. The Municipality and OCMA failed to develop an acceptable solution to resolve the issues associated with the abandoned project. Therefore, the future of the sports complex remained uncertain. Other Deficiencies Our review disclosed other instances of noncompliance with HUD requirements and loan agreement provisions. Unsupported drawdown - OCMA could not support the use of $37,215, which it withdrew from HUD on August 8, 2006 (voucher number 1305973/2). OCMA identified in HUD’s information system that the funds were used for a repayment of the Section 108 loan. However, the loan was paid in full in 2003, and no evidence was found that these proceeds corresponded to a repayment. OCMA provided no other documentation that could support the use of these funds. Inaccurate reporting - HUD’s information system reflected inaccurate information. OCMA did not properly classify in HUD’s information system four withdrawals totaling $216,630 to properly reflect the use of State CDBG funds for the repayment of the Section 108 loan. These withdrawals corresponded to deductions made by HUD from OCMA’s line of credit between 2001 and 2003. One withdrawal was posted under an incorrect repayment activity, and three withdrawals were not posted in HUD’s information system to a corresponding repayment activity, resulting in the understatement of $132,985 in loan repayments made with CDBG funds. Voucher number Draw date Amount Comment 606618/2 February 27, 2001 $83,645 Posted to an incorrect activity 606618/3 February 27, 2001 21,475 Not posted to an activity 722895/1 February 6, 2002 74,295 Not posted to an activity 852308/1 February 12, 2003 37,215 Not posted to an activity Total: $216,630 Conclusion OCMA failed to properly administer its State CDBG and Section 108 Loan Guarantee programs by not ensuring compliance with program requirements and loan agreement provisions. It 9 permitted the use of more than $10.8 million in State CDBG funds for a sports complex that did not achieve program objectives and did not provide the intended benefits. More than 11 years had elapsed since the 2002 HUD monitoring review; however, the deficiencies remained unresolved. OCMA and the Municipality had not developed an acceptable solution to the issues associated with the abandoned sports complex and to bring the project into compliance with HUD requirements. These deficiencies occurred because the completion of the sports complex was not feasible. The failure to implement a corrective action plan also contributed to the abandonment and deterioration of the facilities, which were subsidized with mostly Federal funds. 12 The failure of the sports complex had a large negative impact on the State CDBG program, as more than $10.8 million in Federal funds was used to repay the Section 108 loan debt and to develop a project that was not completed. The Municipality of Vieques and other nonentitlement recipients were deprived of State CDBG funds that could have been used for other and more efficient and effective activities. Thus, not only were the objectives of the Section 108 Loan Guarantee program not met, the State CDBG program and its intended benefit to low- and moderate-income residents would be deprived of more than $10.8 million in State CDBG funds. RECOMMENDATIONS We recommend that the Director of the Financial Management Division of the Office of Block Grant Assistance instruct OCMA to 1A. Submit a plan for the sports complex project within 30 days, without proposing the use of additional HUD funds to implement it. HUD must reevaluate the feasibility of the sports complex project. If HUD determines the project has been canceled or not feasible, OCMA must reimburse total project costs in the amount of $10,838,88013 to its State CDBG program from non-Federal funds. We also recommend that the Director of the San Juan Office of Community Planning and Development instruct OCMA to 1B. Provide all supporting documentation associated with the $10,838,880 13 in State CDBG, Section 108, and program income proceeds disbursed for the development of the sports complex, if HUD determines the plan to be feasible (recommendation 1A). HUD must determine the eligibility, reasonableness, and allocability of the funds disbursed. OCMA must reimburse its State CDBG program from non-Federal funds any amount determined ineligible. 1C. Ensure that the Municipality maintains adequate documentation related to the Vieques sports complex project in accordance with HUD requirements and that these demonstrate the allowability, necessity, and reasonableness of the costs incurred. 12 The Municipality expended an additional $4.7 million from local funds for the development of the project. 13 Total disbursements of $10,876,095 were adjusted to consider $37,215 questioned in recommendation 1D. 10 1D. Submit supporting documentation showing the eligibility and propriety of $37,215 drawn from HUD or reimburse the State CDBG program from non-Federal funds. 1E. Correct any inaccurate information in HUD’s information system related to the sports complex, including but not limited to the drawdowns of $216,630 associated with the loan repayment. 11 Appendix A SCHEDULE OF QUESTIONED COSTS Recommendation number Unsupported 1/ 1B $10,838,880 1D 37,215 Total $10,876,095 1/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program or activity when we cannot determine eligibility at the time of the audit. Unsupported costs require a decision by HUD program officials. This decision, in addition to obtaining supporting documentation, might involve a legal interpretation or clarification of departmental policies and procedures. 12 Appendix B AUDITEE COMMENTS AND OIG’S EVALUATION Ref to OIG Evaluation Auditee Comments Comment 1 13 Ref to OIG Evaluation Auditee Comments Comment 1 Comment 2 Comment 3 14 Ref to OIG Evaluation Auditee Comments Comment 3 Comment 4 15 Ref to OIG Evaluation Auditee Comments Comment 5 16 Ref to OIG Evaluation Auditee Comments Comment 5 17 Ref to OIG Evaluation Auditee Comments Comment 5 Comment 6 Comment 7 Comment 5 Comment 8 18 Ref to OIG Evaluation Auditee Comments Comment 5 Comment 9 Comment 5 Comment 10 19 Ref to OIG Evaluation Auditee Comments 20 Ref to OIG Evaluation Auditee Comments Comment 7 21 Ref to OIG Evaluation Auditee Comments 22 Ref to OIG Evaluation Auditee Comments 23 Ref to OIG Evaluation Auditee Comments 24 OIG Evaluation of Auditee Comments Comment 1 OCMA requested that we identify the administrative or professional standards used for the review, including the need of the review, objective, purpose, and procedures used to prepare a response and take future administrative or legal actions. As stated in the Introduction, OCMA was selected for review as part of our strategic plan, based on concerns regarding the slow progress of the Vieques sports complex project. A survey is the first step in an audit that permits an orderly approach to planning and carrying out the audit work. The audit work done during the survey was sufficient to address our objectives and identify the reportable conditions of noncompliance. The objective of this audit was to determine whether OCMA used Section 108 loan proceeds on a project that met a national objective of the CDBG program and fully provided the intended benefits. The Inspector General Act of 1978, as amended, authorizes OIG to conduct audits, reviews, inspections, and evaluations related to HUD programs and access to any and all documents associated with any HUD program or operation held by any entity or individual. The audit was conducted in accordance with OIG policies and procedures, and consistent with our statutory mission of detecting and preventing fraud, waste, abuse, and mismanagement and promoting the effectiveness and efficiency of government operations. Comment 2 OCMA requested that we eliminate the statement because it was inaccurate and misleading and made reference that the interest paid on the Section 108 loan were questioned although these were properly recorded in the accounting records. We disagree with OCMA’s statement; its records did not reflect information on all loan repayments. In addition, OCMA did not provide additional support identifying the alleged inaccurate information. Therefore, we did not eliminate the statement from the memorandum. Comment 3 OCMA requested that we rewrite the statement because it did not recommend the approval of the sports complex and was obligated to pledge future CDBG funds. Contrary to OCMA’s statement, in a letter dated August 16, 1993, 14 the former Commissioner did recommend that HUD approve the loan and agreed to pledge future CDBG funds as follows: “Based [on] our review and taking [into] consideration that the municipality performance meets the standard required by the state we recommend the application and agree to make the pledge of future grants required under 570.705(b)(2).” We modified the statement clarifying OCMA’s recommendation of the Section 108 loan. We disagree with OCMA’s statement that it did not disburse State CDBG funds for the development of the sports complex. OCMA disbursed more than $6.8 14 Application for the Section 108 Loan Guarantee Vieques, Puerto Rico. 25 million to repay the Section 108 loan and more than $3.7 million for development costs. Comment 4 OCMA suggested we revised the statement in the memorandum. However, it did not provide additional information showing or explaining what was incorrect. Therefore, we did not modify the statement in the memorandum. Comment 5 OCMA requested the removal from the memorandum of all reference to the lack of feasibility as the cause for the abandonment and non-compliance with CDBG program requirements. It attributed the halting and abandonment of the project to the legal action against the Municipality, HUD, and the U.S. Department of the Interior. It further added that the settlement agreement made the completion of the project an unreasonable and impossible task to accomplish. Thus, OCMA claimed it could not be held liable and responsible for not completing the sports complex. We acknowledge that the construction work of the sports complex was suspended because of the legal action against the parties involved in the project. However, OCMA and the Municipality abandoned the sports complex project and allowed the existing facilities to deteriorate after an agreement was reached with the plaintiff. OCMA informed us and HUD that the completion of the sports complex was not feasible because it would cost more than $16 million to rehabilitate and that it did not have the funds to complete the work. We added this information to clarify the memorandum, but did not remove the statement as requested. We disagree with OCMA’s statement that it should not be held responsible for not completing the project. States are responsible for managing the day-to-day operations of their CDBG program and ensuring that funds are used in keeping with all program requirements. Implementation of activities by other entities (units of local government, nonprofit development organizations, etc.) does not relieve states of this responsibility. OCMA did not ensure that the Municipality completed the sports complex and failed to perform an integral component of the State’s CDBG program responsibilities. As a result, program objectives were not met, preventing low- and moderate-income persons from receiving the intended benefits. We also disagree with OCMA’s statement that the settlement created unreasonable and impossible burdens to complete the project. Contrary to OCMA’s statement, the September 2002 settlement did not prohibit or impose unreasonable burdens on the sports complex project. The Municipality agreed to • Not complete the sports complex as designed; • Comply with the requirements for outdoor lighting in case a future facility is constructed; and 26 • Continue to maintain the site in full compliance with all applicable Federal and State laws, including putting in place erosion control measures and protecting the archeological site. OCMA did not provide additional information to support that the settlement imposed unreasonable burdens that impeded the completion of the sports complex and ensure that low- and moderate-income persons received the intended benefits. Comment 6 OCMA believed that the questioned costs should not include the interest paid on the Section 108 loan and that the correct unsupported amount was more than $8.4 million. OCMA disbursed State CDBG funds to repay the Section 108 loan, including principal and interest, of a project that did not meet program objectives. Therefore, all CDBG funds disbursed for the sports complex are unsupported. OCMA did not provide additional information or explain why the interest paid with CDBG funds should be excluded from the questioned amount. Therefore, the memorandum and recommendation were not modified. Comment 7 OCMA requested that we eliminate the statement because it was inaccurate. We updated the memorandum to acknowledge that OCMA sent a letter to the San Juan, PR, HUD Field Office Director, proposing a change in the use of the project to a wild life refuge and cultural resources conservation site. We did not eliminate the statement because change in use of the site had not been evaluated or approved by HUD. In addition, the proposed change in the use of the site did not address the issues related to the abandoned and deteriorated structures, and the wasted materials and equipment for which more than $10.8 million in HUD funds was invested. Comment 8 Contrary to OCMA’s claim, HUD did monitor the Vieques sports complex and the results of the review were discussed with OCMA’s former Commissioner on August 21, 2002. However, the deficiencies remained unresolved. Comment 9 OCMA stated that it would be impossible to determine the feasibility of the sports complex after 20 years and disagreed with the recommendation to reimburse $10.8 million if HUD determines the project to have been cancelled or not feasible. In addition, it stated that Recommendation 1A must specify the type of plan to be submitted and its scope. OCMA must reimburse any ineligible amounts determined by HUD. During the audit resolution process, HUD will request all pertinent information to address the audit findings and recommendations. We disagreed with OCMA’s statement and did not modify the recommendation. 27 Comment 10 OCMA suggested the merger of Recommendations 1B and 1C because these were related. We disagree with OCMA’s statement and did not modify the recommendations. Although related, each recommendation was directed to different entities and addressing specific deficiencies found. Recommendation 1B is directed to OCMA and 1C is directed to the Municipality of Vieques. 28
Vieques Sports City Complex, Office of the Commissioner for Municipal Affairs, San Juan, PR, Section 108 Loan Guarantee Program
Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-03-20.
Below is a raw (and likely hideous) rendition of the original report. (PDF)