oversight

HUD's Office of Community Planning and Development Did Not Always Pursue Remedial Actions but Generally Implemented Sufficient Controls for Administering Its Neighborhood Stabilization Program

Published by the Department of Housing and Urban Development, Office of Inspector General on 2015-03-31.

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

           HUD’s Office of Community
           Planning and Development –
                 Washington, DC
                Neighborhood Stabilization Program




Office of Audit, Region 4          Audit Report Number: 2015-AT-0001
Atlanta, GA                                            March 31, 2015
To:            Marion McFadden, Deputy Assistant Secretary for Grant Programs, DG


               //signed//
From:          Nikita N. Irons, Regional Inspector General for Audit, Atlanta Region, 4AGA
Subject:       HUD’s Office of Community Planning and Development Did Not Always Pursue
               Remedial Actions but Generally Implemented Sufficient Controls for
               Administering Its Neighborhood Stabilization Program


Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
General’s (OIG) final results of our review of HUD’s Office of Community Planning and
Development’s Neighborhood Stabilization Program.
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 the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.
The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.
If you have any questions or comments about this report, please do not hesitate to call me at
404-331-3369.
                    Audit Report Number: 2015-AT-0001
                    Date: March 31, 2015

                    HUD’s Office of Community Planning and Development Did Not Always
                    Pursue Remedial Actions but Generally Implemented Sufficient Controls for
                    Administering Its Neighborhood Stabilization Program



Highlights

What We Audited and Why
We reviewed the U.S. Department of Housing and Urban Development (HUD), Office of
Community Planning and Development’s (CPD) Neighborhood Stabilization Program (NSP).
We initiated the audit under the HUD Office of Inspector General’s (OIG) annual audit plan.
Our objective was to provide an overall assessment of NSP, including assessing the sufficiency of
HUD’s controls and determining whether HUD had improved its controls as a result of its own
monitoring efforts as well as audits or reviews by OIG or other entities.

What We Found
HUD failed to take appropriate action regarding more than $22 million in unexpended NSP1 and
NSP3 initial funding allocations. This condition occurred because HUD (1) did not agree that
certain grantees had missed deadlines, (2) was unable to provide documentation showing
remedial actions, and (3) relied on expenditure information reported in its Disaster Recovery
Grant Reporting system that was not always accurate. Since HUD had no assurance that these
funds were used to help reduce the effects of the foreclosure crisis in a timely manner as
Congress intended, the overall effectiveness of the program may have been lessened.

HUD had generally implemented sufficient controls and improvements, including providing
guidance and technical assistance, as a result of its own assessments. However, HUD could
improve its administration of NSP and similar programs by effectively using OIG reports on
individual grantees to identify trends programwide. HUD management did not effectively use
trends identified from OIG reports on individual grantees that highlighted common problems or
regulatory gaps on which it could base national policy guidance or other directives. As a result,
HUD may not have always recognized recurring issues or provided grantees the most effective
guidance for improving overall program performance.

What We Recommend
We recommend that CPD (1) provide support showing that it took action regarding more than
$22 million in unexpended funds or provide adequate support showing that grantees did not miss
the expenditure deadlines, (2) work with grantees to ensure that the information reported is
accurate and up to date, and (3) adopt a best practice to use OIG audit reports to help identify
potential areas for improvement programwide for NSP and similar programs.
Table of Contents
Background and Objective......................................................................................3

Results of Audit ........................................................................................................4
         Finding 1: HUD Did Not Always Pursue Remedial Actions With Grantees That
         Failed To Spend Funds by the Deadlines........................................................................ 4
         Finding 2: HUD Had Generally Implemented Sufficient Controls but Did Not
         Use OIG Reports on Individual Grantees To Identify Common Problems
         Programwide ................................................................................................................... 10

Scope and Methodology .........................................................................................16

Internal Controls ....................................................................................................18

Appendixes ..............................................................................................................19
        A. Schedule of Funds To Be Put to Better Use ............................................................. 19
        B. Auditee Comments and OIG’s Evaluation .............................................................. 20
        C. Expenditure Deadlines ............................................................................................... 41
        D. Unexpended NSP1 Funds .......................................................................................... 43
        E. Unexpended NSP3 Funds .......................................................................................... 45
        F. 2009-14 HUD OIG Reports Regarding NSP ............................................................ 49
        G. 2009-14 Most Common Deficiencies From HUD OIG Reports Regarding NSP .. 54




                                                                   2
Background and Objective
Congress created the Neighborhood Stabilization Program (NSP) to help cities, counties, and States
deal with community problems resulting from the Nation’s mortgage foreclosure crisis. One of the
key principles of NSP was to support uses and activities that would rapidly arrest the decline of
targeted neighborhoods that had been negatively affected by abandoned or foreclosed-upon
properties. The U.S. Department of Housing and Urban Development (HUD), through its Office of
Community Planning and Development (CPD), provided money to local governments, nonprofits,
and all 50 States through three rounds of NSP funding totaling approximately $6.82 billion. The
three rounds of NSP funding were for stabilizing communities through the purchase and
redevelopment of foreclosed-upon and abandoned homes and residential properties.

The first round of NSP funding (NSP1) provided $3.92 billion to 307 State and local governments
on a formula basis to stabilize communities hardest hit by foreclosures and delinquencies. Section
2301(b) of the Housing and Economic Recovery Act of 2008 established NSP1.

The second round of NSP funding (NSP2) competitively awarded $1.93 billion to 56 States, local
governments, nonprofits, and consortia of nonprofit entities. The American Recovery and
Reinvestment Act of 2009 authorized NSP2. It also authorized HUD to establish NSP-TA, a $50
million allocation made available to national and local technical assistance providers to support NSP
grantees.

The third round of NSP funding (NSP3) provided an additional $1 billion to 270 State and local
governments. Section 1497 of the Wall Street Reform and Consumer Protection Act of 2010
authorized NSP3. HUD allocated NSP3 funds by formula based on the number of foreclosures and
vacancies in the 20 percent of U.S. census tracts with the highest rates of homes that were financed
by a subprime mortgage, were delinquent, or were in foreclosure.

HUD required grantees to report NSP progress in its Disaster Recovery Grant Reporting (DRGR)
system. The information that HUD required grantees to report included but was not limited to
action plans, funding, obligations, expenditures, progress with national objectives, and project data.

Our objective was to provide an assessment of NSP, including assessing the sufficiency of HUD’s
controls and determining whether HUD had improved its controls as a result of its own monitoring
efforts as well as audits or reviews by the Office of Inspector General (OIG) or other entities.




                                                   3
Results of Audit

Finding 1: HUD Did Not Always Pursue Remedial Actions With
Grantees That Failed To Spend Funds by the Deadlines
HUD failed to take appropriate action regarding more than $22 million in unexpended NSP1 and
NSP3 initial funding allocations. This condition occurred because HUD (1) did not agree that
certain grantees had missed deadlines, (2) was unable to provide documentation showing
remedial actions, and (3) relied on expenditure information reported in DRGR that was not
always accurate. Since HUD had no assurance that these funds were used to help reduce the
effects of the foreclosure crisis in a timely manner as Congress intended, the overall
effectiveness of the program may have been lessened.

Funds Remained Unexpended
Although the spending deadlines had passed, grantees had not spent more than $72.2 million of
their initial allocations of NSP1 and NSP3 funding1 according to grantee-reported data in DRGR
as of October 2014. This amount included nearly $14 million for 29 of the 307 NSP1 grantees
and more than $58 million for 105 of the 270 NSP3 grantees. 2 Figure 1 shows the amounts that
grantees reported as unexpended as of October 22, 2014.


                                     Figure 1: Unexpended NSP funding 3


                $60,000,000
                $50,000,000
                $40,000,000
                $30,000,000
                $20,000,000
                $10,000,000
                         $0
                                  Unexpended        Unexpended         Unexpended
                                    NSP1              NSP2               NSP 3




1
  Appendixes D and E of this report show the grantees and unexpended amounts as of October 22, 2014, for NSP1
and NSP3 grantees that did not meet the expenditure deadlines according to DRGR.
2
  Unexpended amounts consist of more than $13.7 million for NSP1, $5.8 million for NSP2, and $58.6 for NSP3.
Due to availability of data, the NSP2 unexpended amount was as of July 28, 2014.
3
  The expenditure deadline for NSP2 funding is September 30, 2015.



                                                       4
HUD’s Policy Development and Research Office’s effectiveness study by Abt and Associates
(finding 2) identified the following reasons why grantees were slow to spend their funding:

•      Grantees sometimes had difficulty competing with private investors;
•      Appraisal discount requirements sometimes presented difficulties for grantees; and
•      Properties needed more rehabilitation than expected, making them cost prohibitive or driving
       up rehabilitation costs after acquisition.

Congress established expenditure deadlines for the three rounds of NSP funding within the
appropriations acts for each round. HUD also addressed the expenditure deadlines for NSP1 and
NSP3 in Federal Register issuances in which it established provisions for the recapture of any
funds not spent by the deadlines.

HUD required grantees to spend an amount equal to their initial allocation of NSP1 funding
within 4 years after receiving the funds. It executed NSP1 grant agreements on various dates
during the spring of 2009. Therefore, based on HUD’s interpretation and application of the
statute, all NSP1 grantees should have satisfied this requirement by the date of their grant in the
spring of 2013.

Congress required NSP2 and NSP3 grantees to spend 50 percent of their funds within 2 years
and 100 percent within 3 years. HUD secured a waiver from the Office of Management and
Budget to extend the deadline for 100 percent expenditure of NSP2 funds to September 30, 2015.
The 100 percent expenditure date for NSP3 grantees was March 8, 2014. Appendix C of this
report contains additional details regarding the expenditure deadlines.

HUD Did Not Always Act Regarding Unexpended Funds
HUD failed to take action regarding more than $22 million in unexpended funds. The timely
expenditure of funding was fundamental to NSP. Any delays in grantees’ expenditures reduced the
overall impact of the program since funds were not used to help reduce the effects of the foreclosure
crisis as quickly as Congress had intended. However, HUD did not always pursue remedial actions
with grantees that failed to spend NSP funds by the statutory deadlines.

Using information from DRGR, we compared grantees’ reported expenditures from April 1, 2013,
and April 1, 2014, after the expenditure deadlines for NSP1 and NSP3, respectively, to data reported
in the system on October 22, 2014. HUD required grantees to spend program income before
spending additional grant funding 4 but did not require them to spend all program income by the
statutory deadlines. However, grantees could apply program income expenditures toward the
requirement that they spend an amount equal to their initial grant allocation by the expenditure
deadlines. We included program income expenditures in our determination of unexpended
funds.




4
    Federal Register Notice 73 FR 58340, section (N), dated October 6, 2008



                                                           5
As of April 1, 2013, 69 NSP1 grantees reported spending an amount less than their initial allocation,
and by October 22, 2014, the number of NSP1 grantees that missed the expenditure deadline had
decreased to 29. This condition resulted in unexpended funds totaling more than $13.7 million.

As of April 1, 2014, 141 NSP3 grantees reported spending an amount less than their initial
allocation, and by October 22, 2014, the number of NSP3 grantees that missed the expenditure
deadline had decreased to 105. This condition resulted in unexpended funds totaling nearly $58.6
million.

HUD could take several different actions if a grantee failed to spend an amount equal to its initial
allocation of NSP1 or NSP3 funding. Regulations at 24 CFR (Code of Federal Regulations)
570.495(a) outline remedial actions, which include a letter of warning, submission of additional
information, suspension or termination of disbursements, recapture of funds, or requiring a
reimbursement basis payment method instead of an advance basis method.

We requested documentation showing CPD’s actions in response to the missed deadlines for the 29
NSP1 and 105 NSP3 grantees that did not report expenditures in DRGR at least equaling the
amount of their initial allocations. Examples of HUD’s actions included finding letters, informal
consultations, corrective action letters, corrective action deadlines, requesting periodic updates, and
in some cases, reduced grant amounts. Based on HUD’s responses, we classified the grantees into
the following five categories:

    1. HUD took no action and did not agree that the grantee missed the deadline (41 grantees);
    2. HUD took remedial actions, and DRGR showed a large reduction in the unexpended
       amounts (24 grantees);
    3. HUD took remedial actions, but DRGR showed little to no reduction in unexpended
       amounts (58 grantees);
    4. The grantee showed insufficient expenditures in October 2014 but reported meeting the
       deadline in earlier reports (6 grantees); or
    5. HUD did not provide documentation showing remedial actions (5 grantees).

Figures 2 and 3 show how the 29 NSP1 grantees and 105 NSP3 grantees reporting unexpended
funds in October 2014 fit into the assigned categories. Appendixes D and E provide additional
detail.




                                                   6
Figure 2: CPD actions for 29 NSP1 grantees




    Figure 3: CPD actions for 105 NSP3 grantees




                     7
HUD Did Not Agree That Certain Grantees Missed Deadlines
HUD did not agree that at least 41 grantees missed the expenditure deadlines, despite the fact
that the grantees’ reported expenditures in DRGR were less than their initial allocations, both
immediately after the expenditure deadlines (spring of 2013 for NSP1 and March 8, 2014, for
NSP3) and on October 22, 2014. For example, as of April 1, 2013, immediately after the NSP1
expenditure deadline, Jacksonville-Duval, FL, reported that its total NSP1 expenditures were
approximately $6.7 million short of its initial allocation. Then on October 22, 2014,
Jacksonville-Duval, FL, reported expenditures that were approximately $1.9 million short of its
initial allocation. HUD stated that it did not agree that the grantee had missed the deadline,
despite the fact that the grantee continued to report expenditures less than its initial allocation
approximately 18 months after the deadline. We asked HUD to explain why it did not agree that
the grantee missed the deadline, but HUD did not provide adequate documentation to support
these grantees’ compliance with expenditure deadlines. The only support HUD provided was a
spreadsheet with a column that indicated whether the grantee missed the expenditure deadline.
DRGR showed that these 41 grantees had unexpended funds totaling nearly $18.7 million.

HUD Did Not Provide Documentation Showing Actions Taken
HUD did not provide documentation to support remedial actions it took for five NSP3 grantees
that reported total expenditures less than their initial NSP3 grant allocations as of March and
April 2014. We asked HUD to provide the remedial actions taken and supporting documentation
for those actions, but as of February 3, 2015, HUD had provided no documentation. These five
NSP grantees reported unexpended funds totaling nearly $3.4 million as of October 22, 2014.

Expenditure Data in DRGR Were Not Always Accurate
HUD relied on DRGR to monitor grantee expenditures; however, DRGR did not necessarily show
the grantee’s actual expenditures since it contained grantee-reported information. HUD officials
explained that some grantees had not entered all expenditures into DRGR. We also found instances
in which grantees reported sufficient expenditures for meeting the deadline, but later DRGR reports
showed expenditures that were insufficient to meet the deadline. For example, as of October 22,
2014, Antioch, CA, reported that it had not spent $87,273 of its NSP1 allocation. However, on
April 1, 2013, immediately after the NSP1 expenditure deadline, the same grantee reported that it
had spent more than $4.2 million, an amount greater than its initial allocation.
In another case, Rialto, CA, reported as of October 22, 2014, that it had not spent $116,849 of its
NSP3 allocation. However, on April 1, 2014, immediately after the NSP3 expenditure deadline,
Rialto reported that it had spent more than $1.9 million, an amount equal to its initial allocation.
HUD uses DRGR reports, in part, to help track NSP expenditures. Therefore, HUD needs to work
with grantees to ensure that the information reported in DRGR is accurate and can be relied upon to
determine whether a grantee has met its expenditure deadlines.
Conclusion
HUD did not always appropriately pursue remedial actions when grantees missed expenditure
deadlines with more than $22 million in unexpended funds. This condition occurred because
HUD did not agree that certain grantees had missed deadlines, was unable to provide



                                                  8
documentation showing remedial actions, and relied on expenditure information reported in
DRGR that was not always accurate. Since HUD had no assurance that these funds were used to
help reduce the effects of the foreclosure crisis in a timely manner as Congress intended, the
overall effectiveness of the program may have been lessened. Continuing delays in the
expenditure of these funds reduce the potential for overall positive results from the program and
prevent using the funds to meet other needs.
Recommendations
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs

       1A. Provide support showing that 41 grantees (10 NSP1 grantees totaling $3,993,824 and
           31 NSP3 grantees totaling $14,681,163) did not miss the expenditure deadline or
           support that proper remedial actions were taken to put $18,674,987 to better use.
       1B. Provide support showing that it took proper remedial action regarding five NSP3
           grantees that missed the expenditure deadline, thereby putting $3,379,269 to better
           use.
       1C. Work with 134 grantees (29 NSP1 and 105 NSP3) that reported missing expenditure
           deadlines in DRGR to ensure that expenditure information submitted is accurate and
           up to date.




                                                9
Finding 2: HUD Had Generally Implemented Sufficient Controls
but Did Not Use OIG Reports on Individual Grantees To Identify
Common Problems Programwide
HUD had generally implemented sufficient controls and improvements, including providing
guidance and technical assistance, as a result of its own assessments. However, HUD could
improve its administration of NSP and similar programs by effectively using OIG reports on
individual grantees to identify trends programwide. Specifically, HUD did not fully use 66
published OIG audit reports on NSP containing recommendations for improvement and almost
$94 million in questioned costs and funds to be put to better use to help identify and address
potential problems programwide. HUD management did not effectively use trends identified
from OIG reports on individual grantees that highlighted common problems or regulatory gaps
on which it could base national policy guidance or other directives. As a result, HUD may not
have always recognized recurring issues or provided grantees the most effective guidance for
improving overall program performance.

HUD Had Generally Implemented Sufficient Controls and Improvements
HUD had generally implemented sufficient controls and improvements, including providing
guidance and technical assistance, as a result of its own assessments. CPD was responsive to the
front-end risk assessment for each NSP round and a U.S. Government Accountability Office
(GAO) report. HUD had also implemented studies to evaluate NSP.

Front-End Risk Assessments and a GAO Report
HUD conducted a front-end risk assessment for each of the three NSP rounds. It used the
assessments to evaluate its internal controls and make needed improvements. For high-risk areas
identified in the assessments, HUD identified actions that would improve controls.

GAO issued a report on NSP1 during December 2010. 5 Although GAO reported finding no
significant issues regarding HUD’s program administration, it recommended that HUD provide
additional guidance to grantees and HUD field staff to help ensure the consistent collection of
information on output measures in HUD’s data system. GAO also credited HUD with taking
actions to reduce program risks through training, technical assistance, and the establishment of
additional internal controls. It further reported that some grantees wished that they had received
more guidance on the front end of NSP.

Some of the additional actions that HUD took because of the front-end risk assessments or
GAO’s report included hiring 32 additional staff members to help administer the program,
procuring technical assistance contractors, providing grantee training through webinars, holding
round table conferences, and providing grantees NSP toolkits. To improve its data collection,
HUD made continual updates to DRGR and provided for its integration with the Line of Credit



5
 Report GAO-11-48: HUD and Grantees Are Taking Actions to Ensure Program Compliance but Data on Program
Outputs Could be Improved



                                                   10
Control System. 6 HUD acknowledged that it could have done a better job of tracking technical
assistance in the beginning of the program to better evaluate contract effectiveness.

Studies To Evaluate NSP
HUD had studies performed to evaluate NSP effectiveness and as of May 7, 2014, was
commissioning a study to evaluate lessons learned from NSP to improve potential future
programs of a similar nature.

HUD’s Office of Policy Development and Research initiated a study conducted by Abt and
Associates on the impact of NSP funding. While the study concentrated on NSP2, it included
information for NSP1 and NSP3. The assessment focused on the degree to which the program
met congressional goals and made a difference as measured by slowing the decline in home
values and reducing the number of vacant and abandoned properties in target areas. It involved
interviewing grantees and representatives of related organizations for a sample of 20 counties
and extensive analysis of administrative data, individual property data, and county and census
tract-level demographic data.

CPD obtained the final version of the study on June 2, 2014. The report stated that although
grantees in 19 study counties 7 made investments in more than 6,300 properties with NSP2
funding, there was no detectable effect on housing prices and other housing outcomes in the
surrounding neighborhoods. The report offered the following possible reasons for this result:

•   February 2013 may have been too early to detect the effects of NSP2,
•   The scale of investment was small relative to the size of the problem in targeted
    neighborhoods,
•   NSP2 investments may not have been sufficiently concentrated within census tracts,
•   NSP2 grantees had to be “opportunistic” in their selection of properties,
•   Different activities may have led to conflicting price effects in the short term, and
•   The property selection process created challenges for measuring impacts.

At the conclusion of our fieldwork, HUD was negotiating the final version of a contract with
Enterprise Community Partners to conduct a lessons-learned study of NSP. HUD was
commissioning this study because it believed that the lessons learned by grantees from
addressing various challenges and obstacles should be documented and shared as tools for
success to build the capacity of other grantees, technical assistance providers, HUD staff, and
partners.

According to the scope of work, the work plan would include five tasks: (1) coordination and
project management, (2) identification of grantees, (3) a survey of grantees, (4) enterprise




6
  The Line of Credit Control System is HUD’s primary grant disbursement system, handling disbursements for the
majority of HUD programs.
7
  Abt and Associates dropped one county late in the study due to insufficient property-level information.



                                                        11
network outreach, and (5) issuance of a technical assistance provider strategy meeting facilitation
and summary report. Enterprise would work with HUD to identify, select, and survey a variety
of NSP grantees across at least eight topic areas to collect information about the challenges or
obstacles faced and the strategies used to overcome those challenges. It would also reach out to
its network to identify stalled projects in key market areas. HUD expected the study to be
completed by December 2014.

HUD Did Not Recognize That OIG Reports Highlighted Common Problems
HUD tracked OIG NSP audits of individual grantees on a spreadsheet that it discussed at
periodic meetings; however, it did not recognize that it could effectively use trends identified
from OIG audit results for external grantees to help implement policies or other directives
programwide. HUD OIG issued 66 (61 external and 5 internal) reports pertaining to NSP. 8
These reports identified more than $47.1 million in questioned costs ($5.7 million ineligible and
$41.4 million unsupported) and more than $46.7 million in funds to be put to better use. To
identify recurring deficiencies, we reviewed the 32 reports that identified questioned costs and
funds to be put to better use. 9 The most common problem areas were a lack of documentation
for program expenses; fees to and the use of nonprofits, developers, and subrecipients;
unreasonable or excessive expenses; and supporting administrative or salary expenses. 10 Figure
4 summarizes the HUD OIG audit reports issued regarding NSP.

                              Figure 4: HUD OIG audit report summary




8
  Appendix F shows a complete listing of the OIG reports pertaining to NSP.
9
  The remaining 29 reports did not identify questioned costs or funds to be put to better use.
10
   Appendix G shows the report information and the specific deficiencies contained in the reports.



                                                          12
Lack of Documentation for Program Expenses
The most commonly recurring deficiency was a lack of documentation for program expenses.
Ten OIG audit reports contained findings related to grantees’ not maintaining sufficient
documentation to support eligible uses of program funds, resulting in $8,151 in ineligible costs,
more than $4.2 million in unsupported costs, and more than $2 million in funds to be put to
better use.

For example, Palm Beach County, FL, charged $10,000 in workers compensation and $75,000 in
indirect costs without having documentation to support the charges and could not explain why it
charged the program. 11 In another report, Reading, PA, spent NSP funds based solely on verbal
agreements with four contractors and did not execute written contracts or purchase orders with
these contractors. 12 In another example, the Alabama Department of Economic and Community
Affairs could not locate documentation, such as canceled checks, vendor invoices, home sales
contracts, and settlement statements, to support expenses. 13

Fees to and Use of Nonprofits, Developers, and Subrecipients
The second most common deficiency noted in OIG audit reports related to grantees’ improper
use of nonprofits, developers, and subrecipients. Nine reports identified instances in which
grantees did not properly use or pay such entities, resulting in $945,432 in ineligible costs, more
than $30.3 million in unsupported costs, and more than $2.3 million in funds to be put to better
use.

For example, Polk County, FL, allowed a nonprofit entity with which it had no contract to
acquire and sell abandoned and foreclosed-upon properties in its name without title restrictions. 14
In another case, the City of Santa Ana, CA, reimbursed its developer more than $669,000 for
ineligible costs incurred during the acquisition and rehabilitation of single-family properties that
should have been covered by the developer’s fee. 15

Unreasonable or Excessive Expenses
The third most commonly occurring deficiency noted in OIG audit reports was unreasonable or
excessive expenses. Eight reports showed that grantees used NSP funds for unreasonable or
excessive expenses, resulting in $599,757 in ineligible costs, $63,498 in unsupported costs, and
more than $3.8 million in funds to be put to better use.

For example, the City of Santa Ana, CA, spent at least $375,000 for unnecessary bank charges
(private bank loan fees). 16 In another example, Little Haiti in Miami, FL, collected payments




11
   2011-AT-1008, Palm Beach County, FL
12
   2011-PH-1012, Reading, PA
13
   2012-AT-1010, Alabama Department of Economic and Community Affairs
14
   2010-AT-1014, Polk County, FL
15
   2013-LA-1006, City of Santa Ana, CA
16
   2013-LA-1006, City of Santa Ana, CA



                                                   13
twice for tenant certification services. 17 In two other cases, grantees paid excessive fees because
they did not ensure that properties they purchased met the 1 percent discount from appraised
market value requirement. 18

Supporting Administrative or Salary Expenses
The fourth most common deficiency, found in seven reports, involved grantee failure to
adequately support or use administrative expenses, resulting in $47,058 in ineligible costs and
$545,049 in unsupported costs.

As examples, the State of Illinois did not document disbursements for wages for technical
assistance personnel and its program accountant, 19 and the Texas Department of Housing and
Community Affairs spent $8,767 on unsupported payroll and administrative costs for agreements
that it had canceled. 20

As a result of its front-end risk assessments and GAO’s report, HUD took actions that included
providing grantee training through webinars, holding round table conferences, and providing
grantees NSP toolkits. However, there were instances in which HUD issued a policy alert,
similar to the issues noted in HUD OIG audit reports, but after the issuance, several audit reports
were issued with the same deficiencies. For example, before HUD issued a policy alert on
procurement of developers and subrecipients in June 2012, HUD OIG issued four audit reports 21
regarding fees to and the use of nonprofits, developers, and subrecipients. After the issuance of
the policy alert, HUD OIG issued an additional five audit reports 22 with similar findings.

HUD could have analyzed the OIG findings and used the common trends from OIG reports on
individual grantees to recognize that grantees had problems with program compliance in certain
areas. It could have then implemented policies or other directives programwide to better ensure
program success.
Conclusion
HUD had generally implemented sufficient controls. It had made continual improvements and
provided guidance and technical assistance as a result of its own assessments. It had also
obtained an effectiveness study for NSP2 and was procuring a lessons-learned study because it
believed that the lessons learned by grantees from addressing various challenges and obstacles
should be documented and shared as tools for success to build the capacity of other grantees,
technical assistance providers, HUD staff, and partners. However, HUD could further improve



17
   2012-AT-1015, Little Haiti in Miami, FL
18
   2012-LA-1012, City of Long Beach, CA, and 2013-CH-1006, State of Michigan
19
   2010-CH-1011, State of Illinois
20
   2012-FW-1013, Texas Department of Housing and Community Affairs
21
   2010-AT-1014, Polk County, FL; 2011-LA-1015, Chicanos Por La Causa; 2012-AT-1010, Alabama Department
of Economic and Community Affairs; and 2012-LA-1001, Housing Our Communities, Mesa, AZ
22
   2012-AT-1015, Little Haiti in Miami, FL; 2012-FW-1013, Texas Department of Housing and Community Affairs;
2012-LA-1007, Neighborhood Housing Services of Los Angeles; 2012-NY-1009, City of Newark, NJ; and 2013-
LA-1006, City of Santa Ana, CA.



                                                     14
its program administration by effectively using OIG reports on individual grantees to identify
recurring problems to help identify and address potential problems or a need for policy guidance
or other directives programwide. This could be an effective tool for NSP as well as similar
programs.
Recommendations
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs

       2A. Adopt a best practice to use OIG audit report results to help identify and address
           potential problems programwide.




                                                15
Scope and Methodology
We performed our fieldwork between July 2013 and November 2014 at

   •   HUD headquarters at 451 7th Street SW, Washington, DC, and

   •   HUD OIG offices at 1500 Pinecroft Road, Greensboro, NC, and 710 Locust Street,
       Knoxville, TN.

To accomplish our objective, we

   •   Contacted CPD staff to obtain an understanding of the controls significant to the audit
       objective.

   •   Reviewed applicable criteria, including risk assessments and monitoring guides, Unified
       NSP1 and NSP3 Notice 10-19-2010, 73 Federal Register 58330, HUD NSP Monitoring
       Guide 6509, CPD Notice 09-04, and CPD Notice 12-02.

   •   Reviewed the following applicable acts and notices of funding availability: Division B,
       Title III, of the Housing and Economic Recovery Act of 2008; Division A, Title XII, of
       the American Recovery and Reinvestment Act of 2009; Section 1497 of the Wall Street
       Reform and Consumer Protection Act of 2010; and NSP2 notices of funding availability
       and applicable corrections.

   •   Identified and reviewed 66 HUD OIG audit reports (2009-2014) with findings and
       conclusions related to NSP. We summarized the information from these reports to
       identify common findings for inclusion in our report.

Our review generally covered the period March 2009 through July 2013 but was expanded as
determined necessary.

We relied on DRGR to determine the number of grantees reporting unexpended NSP funds and
the amount of funds that remained unexpended after the expenditure deadlines. We tested grant
numbers for missing data and duplicates and tested grant amounts, funds obligated, funds
disbursed, and program income disbursed for missing data. We found these data to be generally
reliable. We did not conduct testing to verify the amounts reported for grant funds and program
income disbursed. These amounts were grantee-reported data.

Using information from DRGR, we compared grantees’ reported expenditures from April 1, 2013,
and April 1, 2014, after the expenditure deadlines for NSP1 and NSP3, respectively, to data reported
in the system on October 22, 2014. The original allocation for NSP1 was $3.92 billion to 307
grantees, and the original allocation for NSP3 was $1 billion to 270 grantees. As of April 1, 2013,



                                                 16
NSP1 grantees reported more than $4.16 billion in total expenditures, which included program
income, and as of April 1, 2014, NSP3 grantees reported more than $905.2 million in total
expenditures. We tested the entire universe of grantees for NSP1 and NSP3 for reported
expenditures to determine whether grantees reported unexpended funds. We did not include NSP2
in this comparison because grantees received an expenditure deadline extension from the Office of
Management and Budget until September 30, 2015.

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




                                                 17
Internal Controls
Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

•   Effectiveness and efficiency of operations,
•   Reliability of financial reporting, and
•   Compliance with applicable laws and regulations.
Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls 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 audit objective:

•   Controls over compliance with laws and regulations.
•   Controls over the reliability of financial reporting.

We assessed the relevant controls identified above.

A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, the
reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or efficiency
of operations, (2) misstatements in financial or performance information, or (3) violations of laws
and regulations on a timely basis.

Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:

•   HUD did not always pursue remedial actions when grantees failed to spend their NSP funds
    by the deadlines (see finding 1).

•   HUD did not use fully use 66 published OIG audit reports on NSP containing
    recommendations for improvement and almost $94 million in questioned costs and funds to
    be put to better use to help identify and address potential problems programwide (see finding
    2).




                                                    18
Appendixes

Appendix A


                       Schedule of Funds To Be Put to Better Use
                         Recommendation Funds to be put
                             number          to better use 1/

                                  1A               $18,674,987
                                  1B                $3,379,269

                                Totals             $22,054,256



1/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an OIG recommendation is implemented. These amounts include
     reductions in outlays, deobligation of funds, withdrawal of interest, costs not incurred by
     implementing recommended improvements, avoidance of unnecessary expenditures
     noted in preaward reviews, and any other savings that are specifically identified.
     Implementation of recommendations 1A and 1B to provide support regarding
     unexpended NSP1 and NSP3 funds will ensure that funds will be used to help NSP more
     effectively reduce the effects of the foreclosure crisis as intended.




                                              19
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 1




                               20
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               21
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 2




                               22
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 3




                               23
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 4




Comment 5




                               24
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 6




Comment 7




Comment 8




Comment 9




                               25
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 10




                               26
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 11




                               27
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               28
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               29
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               30
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               31
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               32
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               33
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               34
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               35
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               36
                        OIG Evaluation of Auditee Comments


Comment 1   HUD stated that appendixes D and E of the report include only the grant funds
            drawn from the grantee’s NSP grant award plus the funds drawn from its program
            income. They do not include the additional amounts the grantee has already spent
            that have not been reimbursed.

            The OIG allowed sufficient time for DRGR to show an accurate representation of
            the missed expenditure deadlines. Appendixes D and E of the audit report reflect
            total unexpended amounts calculated using the sum of the grant funds and
            program income funds reported as disbursed in the DRGR system as of October
            22, 2014. This date was more than 6 months after the expenditure deadline of
            NSP3 and approximately 18 months after the expenditure deadline for NSP1,
            which OIG considers to be sufficient time for DRGR to show an accurate
            representation of a missed deadline.

            In addition, HUD uses the DRGR system to facilitate the distribution of NSP
            funds to the grantees. The DRGR system processes drawdown requests and
            responses as part of a nightly voucher batch process. DRGR automatically
            submits approved voucher line items with a submission date to LOCCS. This
            process is further evidence that disbursement amounts reported in DRGR should
            accurately reflect expenditures.

Comment 2   HUD does not agree that the 10 NSP1 grantees listed in appendix D missed their
            NSP 100 percent expenditure deadline. It explains that OIG used the incorrect
            total drawn amounts rather than the grantee’s actual expenditure amounts. HUD’s
            response included a chart showing the actual amounts spent by the 10 NSP1
            grantees.

            The OIG used the most current information and documentation provided by HUD
            during and after the audit to determine missed NSP1 expenditure deadlines.
            Appendix D of the report reflects total unexpended amounts, calculated using the
            sum of the grant funds and program income funds reported as disbursed as of the
            effective date of the DRGR report. In addition, the 10 NSP1 grantees OIG
            reported as missing expenditure deadlines were also reported as missing the
            expenditure deadlines in a HUD-generated report, dated April 1, 2013. This
            report also tracked grantee compliance with expenditure deadlines by total drawn
            amounts. The actual amounts spent by the NSP3 grantees were not provided
            during the audit. Any quarterly performance reports showing that these grantees
            met their expenditure deadlines that will support the data provided in HUD’s
            response can be reviewed as part of the management decision process.




                                            37
Comment 3   HUD does not agree that the 31 NSP3 grantees listed in appendix E missed their
            NSP3 100 percent expenditure deadline. It explained that OIG used the incorrect
            total drawn amounts rather than the grantee’s actual expenditure amounts.

            The OIG used the most current information and documentation provided by HUD
            during and after the audit to determine missed NSP3 expenditure deadlines.
            Appendix E of the report reflects total unexpended amounts, calculated using the
            sum of the grant funds and program income funds reported as disbursed as of the
            effective date of the DRGR report. In addition, the 31 NSP3 grantees OIG
            reported as missing expenditure deadlines were also reported as missing the
            expenditure deadlines in a HUD-generated report, dated April 1, 2014. This
            report also tracked grantee compliance with expenditure deadlines by total drawn
            amounts. The actual amounts spent by the NSP3 grantees were not provided
            during the audit. Any quarterly performance reports showing that these grantees
            met their expenditure deadlines that will support the data provided in HUD’s
            response can be reviewed as part of the management decision process.

Comment 4   HUD stated that the tables in appendxes D and E contain incorrect labeling of
            “Unexpended funds” and that the tables show the NSP total drawn amount rather
            than the “Unexpended funds” (the NSP grant award amount less the amount that
            the grantee spent.)

            Appendixes D and E of the audit report are labeled correctly and reflect total
            unexpended amounts calculated using the sum of the grant funds and program
            income funds reported as disbursed in the DRGR system as of October 22, 2014.
            This date was more than 6 months after the expenditure deadline of NSP3 and
            approximately 18 months after the expenditure deadline for NSP1, which OIG
            considers to be sufficient time for DRGR to show an accurate representation of a
            missed deadline.

Comment 5   HUD stated that the NSP3 grant B-11-UN-26-0013 was a grant that was
            redesignated to another grantee and a second separate agreement was executed.
            The expenditure deadline for the redesignated grant agreement is not until March
            16, 2016, and has not yet been reached.

            OIG has received no official documentation regarding the decision to redesignate
            the Pontiac, MI, grant to Oakland County under a separate grant agreement with
            an expenditure deadline extended to March 13, 2016. Therefore, the audit report
            does not reflect such actions. Any official documentation of these actions can be
            reviewed as part of the management decision process.

Comment 6   HUD stated that Nassau County, NY, received direct onsite NSP technical
            assistance from its providers. It believes that the grantee’s reported DRGR
            information was incorrect and may still be incorrect. The investigation for




                                             38
            potential remedial and corrective actions of the grantee’s NSP program has not
            been completed.

            OIG has received no official documentation regarding the technical assistance
            provided to the grantee or any other correspondence related to corrective actions
            taken in response to the grantee expenditure deadline. Any investigative actions
            taken by the field office in response to Nassau County’s incorrect expenditures
            reported in DRGR will help to satisfy recommendations 1B and 1C of the report.
            Any official documentation of remedial actions taken can be reviewed as part of
            the management decision process.

Comment 7   HUD stated that it took actions against the State of Texas for failure to meets its
            NSP1 and NSP3 award expenditure deadlines. It is reviewing the grantee for
            additional remedial and correction actions.

            OIG has received no official documentation regarding the informal consultation
            or the additional actions taken in response to the State of Texas’ delinquency in
            spending its NSP3 funding. Additional remedial actions taken by HUD regarding
            the State of Texas’ NSP3 program will help to satisfy recommendation 1B of the
            report. Any official documentation of remedial actions taken can be reviewed as
            part of the management decision process.

Comment 8   HUD stated that it took action against the State of Louisiana for missing its NSP3
            expenditure deadline and provided direct onsite technical assistance from its
            providers. This grant has now drawn down its entire NSP3 award.

            OIG has received no official documentation regarding the informal consultation,
            the 120-day extension of the expenditure deadline, or the finding letter issued
            from the field office to the State of Louisiana regarding unexpended NSP3 funds.
            Therefore, the audit report does not reflect these actions. Any official
            documentation can be reviewed as part of the management decision process.

Comment 9   HUD stated that Northern Mariana Islands received additional NSP3 funds and its
            expenditure deadline was moved to August 31, 2014. It added that this grantee
            met its deadline and showed the funds expended by the grantee.

            Our review of the October 22, 2014, DRGR report showed disbursements
            (including program income) of $296,855, $3,147 less than the grant amount of
            $300,002. This date was nearly 2 months after the adjusted expenditure deadline
            of August 31, 2014. OIG has received no official documentation related to this
            adjusted expenditure date or expended amounts as reported in the quarterly
            performance reports used to determine the expenditure amounts. Any official
            documentation can be reviewed as part of the management decision process.




                                              39
Comment 10 HUD stated that it will continue to work with its field offices and NSP grantees to
           ensure that NSP expenditures submitted in the DRGR quarterly reports and other
           DRGR information are accurate and up to date. Additionally, DRGR workshop
           trainings are being scheduled for later this year for NSP grantees.

              OIG acknowledges HUD’s willingness to continue its work with grantees that
              reported missing deadlines in DRGR to ensure that expenditure information
              submitted is accurate and up to date.

Comment 11 HUD stated that finding 2 is not accurate. HUD agrees that OIG audit findings
           should be considered in policy and grantee support materials. It closely tracked
           audit findings, developed policy alerts and toolkits, and provided training to NSP
           grantees related to some of the issues addressed in OIG reports.

              Finding 2 does not dispute that HUD tracked audit findings or that HUD lacked
              involvement in the resolutions of findings of individual grantees. The report
              recognized that HUD took actions that included conducting webinars and round
              table conferences, providing NSP toolkits, and issuing policy alerts. However, as
              the report states, we found instances in which HUD issued a policy alert regarding
              a recurring deficiency and the OIG reports issued after the policy alert continued
              to show the deficiency.

              In addition, when asked about specific actions taken as a result of HUD OIG
              reports, HUD stated on May 6, 2014, that “the OIG Reports issued to date did not
              highlight common themes or regulatory gaps that could be used as a basis for
              developing new NSP policy guidance. In most cases, the OIG reports addressed a
              problem or concern with a particular grantee, but at a national policy level, the
              reports were less relevant because there was no clear pattern of problems.”

              HUD could have used the common trends from OIG reports on individual
              grantees to recognize that grantees had problems with program compliance in
              certain areas. It could have then provided grantees timely guidance to better
              ensure program success.




                                               40
Appendix C
                                    Expenditure Deadlines
Congress established expenditure deadlines for the three rounds of NSP within the appropriations
acts for each round. HUD also addressed the expenditure deadlines for NSP1 and NSP3 in
Federal Register issuances in which it established provisions for the recapture of any funds not
spent by the deadlines.

NSP1
HERA* 2301(a)         “DIRECT APPROPRIATIONS. – There are appropriated out of any
                      money in the Treasury not otherwise appropriated for the fiscal year 2008,
                      $4,000,000,000, to remain available until expended, for assistance to
                      States and units of general local government (as such terms are defined in
                      section 102 of the Housing and Community Development Act of 1974 (42
                      USC [United States Code] 5302)) for the redevelopment of abandoned and
                      foreclosed upon homes and residential properties.”

HERA 2301(c)(1)       “IN GENERAL. – Any State or unit of general local government that
                      receives amounts pursuant to this section shall, not later than 18 months
                      after the receipt of such amounts, use such amounts to purchase and
                      redevelop abandoned and foreclosed homes and residential properties.”

73 FR** 58340(m)(1) “Timely use of NSP funds. At the end of the statutory 18-month use
                    period, which begins when the NSP grantee receives its funds from HUD,
                    the state or unit of general local government NSP grantee’s accounting
                    records and DRGR information must reflect outlays (expenditures) and
                    unliquidated obligations for approved activities that, in the aggregate, are
                    at least equal to the NSP allocation.”

73 FR 58340(m)(2)     “Timely expenditure of NSP funds. The timely distribution or expenditure
                      requirements of sections 24 CFR 570.494 and 570.902 are waived to the
                      extent necessary to allow the following alternative requirement: All NSP
                      grantees must expend on eligible NSP activities an amount equal to or
                      greater than the initial allocation of NSP funds within 4 years of receipt of
                      those funds or HUD will recapture and reallocate the amount of funds not
                      expended.”

NSP2
ARRA*** Title XII “For the provision of emergency assistance for the redevelopment of
                  abandoned and foreclosed homes, as authorized under division B, title III
                  of the Housing and Economic Recovery Act of 2008 (‘the Act’) (Public
                  Law 110-289)(42 USC 5301 note), $2,000,000,000, to remain available
                  until September 30, 2010: Provided, That grantees shall expend at least
                  50 percent of allocated funds within 2 years of the date funds become




                                                41
                     available to the grantee for obligation, and 100 percent of such funds
                     within 3 years of such date …”

Deadline waiver      HUD secured a waiver from the Office of Management and Budget to
                     extend the deadline for 100 percent expenditure of NSP2 funds to
                     September 30, 2015. HUD received approval for the waiver on April 29,
                     2013, citing that HUD provided compelling rationale for the need to
                     disburse funds beyond September 30, 2013.

NSP3
Dodd-Frank,
1497(a)****          “IN GENERAL. – Effective October 1, 2010, out of funds in the Treasury
                     not otherwise appropriated, there is hereby made available to the Secretary
                     of Housing and Urban Development $1,000,000,000, and the Secretary of
                     Housing and Urban Development shall use such amounts for assistance to
                     States and units of general local government for the redevelopment of
                     abandoned and foreclosed homes, in accordance with the same provisions
                     applicable under the second undesignated paragraph under the heading
                     “Community Planning and Development – Community Development
                     Fund” in title XII of division A of the American Recovery and
                     Reinvestment Act of 2009 …”

75 FR 64336 (m)(3) “Timely expenditure of NSP2 and NSP3 funds. The timely distribution or
                   expenditure requirements of sections 24 CFR 570,494 and 570.902 are
                   waived to the extent necessary to allow the following alternative
                   requirement: NSP2 and NSP3 grantees must expend on eligible NSP
                   activities an amount equal to or greater than the 50 percent of the initial
                   allocation of NSP funds within 2 years of receipt of those funds and 100
                   percent of the initial allocation of NSP funds within 3 years of receipt of
                   those funds or HUD will recapture and reallocate the amount of funds not
                   expended or provide for other corrective action(s) or sanction.”

* Housing and Economic Recovery Act of 2008
** Federal Register
*** American Recovery and Reinvestment Act of 2009
**** Wall Street Reform and Consumer Protection Act




                                               42
Appendix D
                                      Unexpended NSP1 Funds

                      HUD did not agree that the grantee missed the deadline
                                                   Unexpended       Unexpended
                       Grant         Grant          funds April        funds          Percentage of
    Grantee           number        amount             2013        October 2014         reduction
Jacksonville-
                    B-08-UN-12-0007     $26,175,317         $6,688,928   $1,886,808          71.79%
Duval, FL
Summit County,
                    B-08-UN-39-0008      $3,767,144          $881,565     $247,633           71.91%
OH
Worcester, MA       B-08-MN-25-0004      $2,390,858          $399,549     $356,165           10.86%
Orange County,
                    B-08-UN-36-0102      $2,163,744          $254,412     $250,673            1.47%
NY
Louisville
Jefferson County,   B-08-MN-21-0001      $6,973,721          $660,211     $129,831           80.33%
KY
Cuyahoga
                    B-08-UN-39-0002     $11,212,447          $377,293      $67,142           82.20%
County, OH
Palm Beach
                    B-08-UN-12-0013     $27,700,340          $927,839     $927,839            0.00%
County, FL
Dayton, OH          B-08-MN-39-0006      $5,582,902          $168,961      $71,241           57.84%
Sterling Heights,
                    B-08-MN-26-0012      $2,454,961           $44,705      $37,518           16.08%
MI
Minneapolis, MN     B-08-MN-27-0001      $5,601,967            $20,701      $18,974           8.34%
Totals                                  $94,023,401        $10,424,164   $3,993,824          61.69%

       HUD took action, and DRGR reflected a significant reduction in unexpended funds
                                                Unexpended       Unexpended
                    Grant         Grant          funds April         funds      Percentage of
    Grantee        number        amount              2013        October 2014      reduction
State of Texas      B-08-DN-48-0001     $91,323,273        $18,477,510   $5,131,723          72.23%
Detroit, MI         B-08-MN-26-0004     $47,137,690         $5,097,171     $857,286          83.18%
State of New
                    B-08-DN-36-0001     $54,556,464         $5,200,990    $789,697           84.82%
York
State of
                    B-08-DN-28-0001     $43,151,914         $3,189,499     $93,716           97.06%
Mississippi
State of Arkansas   B-08-DN-05-0001     $19,600,000         $1,074,882     $93,461           91.30%
Flint, MI           B-08-MN-26-0005      $4,224,621          $134,177        $478            99.64%
San Diego
                    B-08-UN-06-0506      $5,144,152          $115,824     $115,824            0.00%
County, CA
Bergen County,
                    B-08-UN-34-0101      $2,096,194           $44,096      $30,417           31.02%
NJ
Totals                                 $267,234,308        $33,334,149   $7,112,602          78.66%




                                                      43
        HUD took action, and DRGR showed little to no reduction in unexpended funds
                                               Unexpended       Unexpended
                   Grant         Grant          funds April         funds      Percentage of
    Grantee       number        amount              2013       October 2014      reduction
San Bernardino,   B-08-MN-06-
                                    $8,408,558        $1,421,391   $1,421,391          0.00%
CA                0520
Palm Bay, FL      B-08-MN-12-
                                    $5,208,104         $676,875     $676,875           0.00%
                  0021
Paterson, NJ      B-08-MN-34-
                                    $2,266,641         $221,869     $157,209          29.14%
                  0103
Kern County, CA   B-08-UN-06-
                                   $11,211,385         $149,341     $107,574          27.97%
                  0501
Bakersfield, CA   B-08-MN-06-
                                    $8,982,836          $99,050      $99,050           0.00%
                  0503
Compton, CA       B-08-MN-06-
                                    $3,242,817          $23,526      $21,349           9.25%
                  0505
Los Angeles       B-08-UN-06-
                                   $16,847,672          $19,768      $19,768           0.00%
County, CA        0502
Anaheim, CA       B-08-MN-06-
                                    $2,653,455           $2,042       $2,042           0.00%
                  0501
Totals                             $58,821,468        $2,613,862   $2,505,258          4.15%

            DRGR showed unexpended funds in October 2014 but not in April 2013
                                             Unexpended      Unexpended
                  Grant         Grant        funds April         funds        Percentage of
    Grantee      number        amount            2013       October 2014        reduction
Antioch, CA       B-08-MN-06-
                                    $4,049,228               $0      $87,273          -2.16%
                  0001
New Orleans, LA   B-08-MN-22-
                                    $2,302,208               $0       $1,000          -0.04%
                  0002
Jersey City, NJ   B-08-MN-34-
                                    $2,153,431               $0         $190          -0.01%
                  0101
Totals                              $8,504,867               $0      $88,463          -1.04%




                                                 44
Appendix E
                                       Unexpended NSP3 Funds

                     HUD did not agree that the grantee missed the deadline
                                                 Unexpended      Unexpended
                       Grant         Grant        funds April funds October            Percentage of
    Grantee           number        amount           2014            2014                reduction
Chicago, IL          B-11-MN-17-0002    $15,996,360         $5,816,255    $5,816,255           0.00%
Union County, NJ     B-11-UN-34-0102     $1,574,051           $758,903      $758,903           0.00%
Washington, DC       B-11-MN-11-0001     $5,000,000         $2,141,527        $1,605          99.93%
Brevard County, FL   B-11-UN-12-0001     $3,032,850         $1,139,504    $1,139,504           0.00%
Palm Beach County,
                     B-11-UN-12-0013    $11,264,172         $3,861,247    $2,066,998          46.47%
FL
Merced County, CA    B-11-UN-06-0009     $2,705,877          $925,612      $925,612            0.00%
Imperial County,
                     B-11-UN-06-0507     $1,708,780          $503,384      $503,384            0.00%
CA
Sanford, FL          B-11-MN-12-0035     $1,037,697           $256,562     $256,562            0.00%
State of Illinois    B-11-DN-17-0001     $5,000,000         $1,055,008     $107,381           89.82%
Dayton, OH           B-11-MN-39-0006     $3,115,780           $621,758     $455,896           26.68%
Lake County, IL      B-11-UN-17-0004     $1,370,421           $239,219     $239,219            0.00%
State of
                     B-11-DN-25-0001     $6,190,994          $879,918      $388,653           55.83%
Massachusetts
Birmingham, AL       B-11-MN-01-0001     $2,576,151          $345,696      $289,983           16.12%
Maricopa County,
                     B-11-UN-04-0501     $4,257,346          $400,799      $200,799           49.90%
AZ
Muskegon County,
                     B-11-UN-26-0008     $1,071,900           $89,577       $11,517           87.14%
MI
State of Iowa        B-11-DN-19-0001     $5,000,000          $372,771       $14,334           96.15%
Miramar, FL          B-11-MN-12-0018     $2,321,827          $167,305      $163,765            2.12%
Titusville, FL       B-11-MN-12-0037     $1,005,731           $71,224       $71,224            0.00%
Kansas City, KS      B-11-MN-20-0001     $1,137,796           $77,979       $77,926            0.07%
Commonwealth of
                     B-11-DN-72-0001     $5,000,000          $337,600       $59,200           82.46%
Puerto Rico
Atlanta, GA          B-11-MN-13-0001     $4,906,758           $308,957     $308,957            0.00%
Elkhart, IN          B-11-MN-18-0002     $1,022,717            $62,116      $45,509           26.74%
Clark County, NV     B-11-UN-32-0001    $20,253,261         $1,178,116     $293,900           75.05%
Denver, CO           B-11-MN-08-0003     $2,700,279           $138,162      $21,145           84.70%
Hemet, CA            B-11-MN-06-0508     $1,360,197            $62,889      $62,889            0.00%
Fresno, CA           B-11-MN-06-0003     $3,547,219           $148,712     $148,712            0.00%
Cuyahoga County,
                     B-11-UN-39-0002     $2,551,533           $96,965       $56,718           41.51%
OH
Martin County, FL    B-11-UN-12-0026     $1,563,770            $54,535       $54,535           0.00%
State of Colorado    B-11-DN-08-0001     $6,518,947           $140,273      $113,098          19.37%
Long Beach, CA       B-11-MN-06-0511     $1,567,935            $16,851       $15,364           8.83%
Manatee County, FL   B-11-UN-12-0010     $3,321,893            $11,616       $11,616           0.00%
Totals                                 $129,682,242        $22,281,040   $14,681,163          34.11%




                                                      45
        HUD took action, and DRGR showed significant reduction in unexpended funds
                                             Unexpended      Unexpended
                     Grant        Grant      funds April funds October        Percentage of
     Grantee        number       amount          2014             2014          reduction
Victorville, CA       B-11-MN-06-0523    $2,159,937        $1,290,147    $317,364      75.40%
Richmond, CA          B-11-MN-06-0006    $1,153,172          $552,382     $35,631      93.55%
Suffolk County, NY    B-11-UN-36-0103    $1,501,506          $570,054    $224,270      60.66%
Warren, MI            B-11-MN-26-0014    $1,735,633          $554,117    $239,288      56.82%
Compton, CA           B-11-MN-06-0505    $1,436,300          $454,800     $59,942      86.82%
Tampa, FL             B-11-MN-12-0029    $4,691,857        $1,071,368    $254,479      76.25%
Providence, RI        B-11-MN-44-0001    $1,309,231          $161,630      $1,222      99.24%
Apple Valley, CA      B-11-MN-06-0502    $1,463,014          $178,241     $51,687      71.00%
Sarasota, FL          B-11-MN-12-0036    $1,038,811          $103,465      $1,153      98.89%
State of Florida      B-11-DN-12-0001    $8,511,111          $668,090    $180,907      72.92%
State of Oregon       B-11-DN-41-0001    $5,000,000          $297,311    $125,941      57.64%
Lake County, FL       B-11-UN-12-0008    $3,199,585          $165,131     $26,093      84.20%
Tulare County, CA     B-11-UN-06-0007    $2,845,529          $144,914      $8,736      93.97%
State of South
                      B-11-DN-46-0001    $5,000,000         $125,039      $44,180      64.67%
Dakota
Los Angeles
                      B-11-UN-06-0502    $9,532,569         $162,859      $77,915      52.16%
County, CA
Santa Ana, CA         B-11-MN-06-0522    $1,464,113           $17,813       $1,469    91.75%
Totals                                  $52,042,368        $6,517,361   $1,650,277    74.68%


        HUD took action, and DRGR showed little to no reduction in unexpended funds
                                              Unexpended      Unexpended
                     Grant        Grant       funds April funds October        Percentage of
     Grantee        number       amount           2014             2014          reduction
Deerfield Beach, FL   B-11-MN-12-0005    $1,183,897          $691,672     $691,672      0.00%
Moreno Valley, CA     B-11-MN-06-0513    $3,687,789        $2,008,065   $2,008,065      0.00%
Miami Beach, FL       B-11-MN-12-0039    $1,475,088          $758,961     $758,961      0.00%
Richmond, VA          B-11-MN-51-0001    $1,254,970          $614,009     $614,009      0.00%
Newark, NJ            B-11-MN-34-0102    $2,018,637          $895,807     $520,006     41.95%
Pembroke Pines, FL    B-11-MN-12-0022    $2,330,542          $961,403     $876,153      8.87%
West Palm Beach,
                      B-11-MN-12-0030    $2,147,327         $821,693     $623,971      24.06%
FL
Kissimmee, FL         B-11-MN-12-0012    $1,042,299         $395,444     $279,512      29.32%
Paterson, NJ          B-11-MN-34-0103    $1,196,877         $436,339     $252,684      42.09%
Anderson, IN          B-11-MN-18-0001    $1,219,200         $368,899     $269,884      26.84%
East Cleveland, OH    B-11-MN-39-0015    $1,068,142         $303,727     $247,325      18.57%
Jacksonville-Duval,
                      B-11-UN-12-0007    $7,102,937        $1,967,946   $1,967,946      0.00%
FL
Coral Springs, FL     B-11-MN-12-0004    $1,657,845         $410,532     $406,268       1.04%
Lancaster, CA         B-11-MN-06-0510    $2,364,566         $485,098     $485,098       0.00%
Daytona Beach, FL     B-11-MN-12-0032    $1,127,616         $176,454     $176,454       0.00%
Pomona, CA            B-11-MN-06-0516    $1,235,629         $183,051     $170,689       6.75%
Lorain County, OH     B-11-UN-39-0012    $1,619,474         $209,226     $175,790      15.98%




                                                      46
                                                        Unexpended         Unexpended
                         Grant            Grant         funds April       funds October    Percentage of
     Grantee            number           amount            2014               2014           reduction
Modesto, CA           B-11-MN-06-0004     $2,951,549          $364,555          $364,555           0.00%
State of
                      B-11-DN-42-0001     $5,000,000          $577,554          $423,815          26.62%
Pennsylvania
Cleveland, OH         B-11-MN-39-0004     $6,793,290          $739,279          $590,942          20.07%
Southfield, MI        B-11-MN-26-0011     $1,084,254          $109,862          $109,862           0.00%
Kern County, CA       B-11-UN-06-0501     $5,202,037          $523,666          $522,746           0.18%
State of Utah         B-11-DN-49-0001     $5,000,000          $451,591          $451,591           0.00%
Avondale City, AZ     B-11-MN-04-0501     $1,224,903          $104,911          $104,911           0.00%
Montgomery
                      B-11-UN-39-0006     $1,145,712           $90,745           $52,767          41.85%
County, OH
Butler County, OH     B-11-UN-39-0001     $1,327,123          $102,683          $101,870           0.79%
Miami Gardens
                      B-11-MN-12-0017     $1,940,337          $142,738          $108,283          24.14%
City, FL
State of New York     B-11-DN-36-0001     $5,000,000          $296,780          $154,949          47.79%
State of North
                      B-11-DN-37-0001     $5,000,000          $280,009          $280,009           0.00%
Carolina
State of Nebraska     B-11-DN-31-0001     $5,000,000          $273,600          $269,870           1.36%
Monterey County,
                      B-11-UN-06-0010     $1,284,794           $68,383           $41,687          39.04%
CA
Rhode Island State
                      B-11-DN-44-0001     $5,000,000          $251,293          $224,111          10.82%
Program
South Bend, IN        B-11-MN-18-0011     $1,708,707           $78,552           $78,552           0.00%
State of Arkansas     B-11-DN-05-0001     $5,000,000          $207,382          $207,382           0.00%
Jackson County, MI    B-11-UN-26-0007     $1,162,482           $42,577           $42,577           0.00%
State of West
                      B-11-DN-54-0001     $5,000,000          $179,707          $115,735          35.60%
Virginia
Prince Georges
                      B-11-UN-24-0002     $1,802,242           $62,985           $62,985           0.00%
County, MD
Charlotte County,
                      B-11-UN-12-0025     $2,022,962           $65,931           $65,144           1.19%
FL
State of Kansas       B-11-DN-20-0001     $5,000,000          $157,564          $152,516           3.20%
Grand Rapids, MI      B-11-MN-26-0006     $1,378,788           $35,199           $35,199           0.00%
Indianapolis, IN      B-11-MN-18-0007     $8,017,557          $195,496          $154,743          20.85%
St. Petersburg, FL    B-11-MN-12-0026     $3,709,133           $84,500           $84,500           0.00%
Wayne County, MI      B-11-UN-26-0006     $7,839,293          $156,436          $136,401          12.81%
Flint, MI             B-11-MN-26-0005     $3,076,522           $11,465            $6,442          43.81%
Trumbull County,
                      B-11-UN-39-0011     $1,143,889            $3,740            $3,740           0.00%
OH
Richland County,
                      B-11-UN-39-0010     $1,022,278            $2,715            $2,715           0.00%
OH
Detroit, MI           B-11-MN-26-0004    $21,922,710        $16,607,278      $13,351,809          19.60%
San Bernardino, CA    B-11-MN-06-0520     $3,277,401         $2,137,751       $2,137,751           0.00%
Pasco County, FL      B-11-UN-12-0014     $5,185,778         $3,163,903       $3,163,903           0.00%
State of California   B-11-DN-06-0001    $11,872,089         $4,869,386       $4,541,456           6.73%
Totals                                  $176,828,665        $44,128,542      $38,670,005          12.37%




                                                       47
            DRGR showed unexpended funds in October 2014 but not in April 2014
                                            Unexpended     Unexpended
                    Grant        Grant       funds April funds October       Percentage of
     Grantee       number       amount          2014           2014            reduction
Rialto, CA           B-11-MN-06-0518    $1,936,370               $0     $116,849            -6.03%
Indian River
                     B-11-UN-12-0022    $1,500,428               $0      $95,889            -6.39%
County, FL
Essex County, NJ     B-11-UN-34-0103    $1,851,984               $0        $416              -0.02%
Totals                                  $5,288,782               $0     $213,154            -4.03%


                     HUD did not provide support regarding remedial actions
                                                 Unexpended    Unexpended
                       Grant         Grant       funds April funds October          Percentage of
     Grantee          number        amount          2014            2014              reduction
Oakland County, MI   B-11-UN-26-0010    $1,410,621        $1,357,691   $1,181,975          12.94%
Nassau County, NY    B-11-UN-36-0101    $2,116,070          $882,834     $882,834           0.00%
State of Texas       B-11-DN-48-0001    $7,284,978        $1,730,347   $1,281,158          25.96%
State of Louisiana   B-11-DN-22-0001    $5,000,000          $319,056      $30,155          90.55%
Northern Mariana
                     B-11-SN-69-0001     $300,002            $8,596       $3,147           63.39%
Islands
Totals                                 $16,111,671        $4,298,524   $3,379,269          21.39%




                                                     48
Appendix F


                      2009-14 HUD OIG Reports Regarding NSP

    Item    Audit report    Report                     Report title                   Round of NSP
              number          date
     1     2009-AT-0801    9/24/2009   Evaluation of the Front-End Risk Assessment       NSP2
                                       for the Neighborhood Stabilization Program 2
     2     2009-BO-1802    9/23/2009   The City of Boston’s Department of               NSP1&2
                                       Neighborhood Development, Boston,
                                       Massachusetts, Can Develop the Capacity to
                                       Administer Its Housing and Economic
                                       Recovery Act and American Recovery and
                                       Reinvestment Act Programs
     3     2009-BO-1803    9/28/2009   The City of Brockton, Massachusetts,              NSP1
                                       Recipient, Building a Better Brockton, Inc.,
                                       Lacked Sufficient Capacity to Effectively
                                       Administer Its Neighborhood Stabilization
                                       Program
     4     2009-CH-1801    7/29/2009   The City of Cincinnati, Ohio, Lacked              NSP1
                                       Sufficient Capacity to Effectively and
                                       Efficiency Administer Its Neighborhood
                                       Stabilization Program
     5     2009-CH-1802    9/17/2009   Cook County, Illinois, Needs to Improve Its       NSP1
                                       Capacity to Effectively and Efficiently
                                       Administer Its Neighborhood Stabilization
                                       Program
     6     2009-FW-0001    6/25/2009   HUD’s Disaster Recovery Grant Reporting          NSP1&2
                                       System Can Collect the Basic Information
                                       Needed to Monitor the Neighborhood
                                       Stabilization Program (Amended Report)
     7     2009-LA-1016    8/21/2009   State of California’s Department of Housing       NSP1
                                       and Community Development, Sacramento,
                                       California, Review of the Allocation Formula
                                       for the Neighborhood Stabilization Program
     8     2009-LA-1017    9/2/2009    The Los Angeles County Community                  NSP1
                                       Development Commission Had Sufficient
                                       Capacity and the Necessary Controls to
                                       Administer its Neighborhood Stabilization
                                       Program
     9     2009-SE-1802    9/15/2009   The State of Washington Did Not Always            NSP1
                                       Allocate Its Neighborhood Stabilization
                                       Program Funds Based on Greatest Need
     10    2010-AT-0001    6/25/2010   HUD Evaluated and Selected Applications for       NSP2
                                       the Recovery Act’s Neighborhood
                                       Stabilization Program 2 in Accordance With
                                       Applicable Requirements
     11    2010-AT-1002    3/31/2010   Broward County, FL, Needs To Strengthen           NSP1
                                       Controls Over Its Neighborhood Stabilization
                                       Program



                                              49
Item    Audit report     Report                     Report title                    Round of NSP
          number          date
 12    2010-AT-1012     9/3/2010    The City of Chattanooga, TN, Needs To              NSP1
                                    Strengthen Controls for Tracking Obligations
                                    and Reporting for Its Neighborhood
                                    Stabilization Program
 13    2010-AT-1013    9/17/2010    The Louisville/Jefferson County Metropolitan       NSP1
                                    Government Needs To Strengthen Controls
                                    Over Reporting for Its Neighborhood
                                    Stabilization Program
 14    2010-AT-1014    9/28/2010    Polk County, FL, Did Not Comply With               NSP1
                                    Procurements and Contract Requirements in
                                    Its NSP and HOME Program
 15    2010-AT-1801    11/20/2009   Miami-Dade County, Florida, Needs to               NSP1
                                    Strengthen Controls over Its Neighborhood
                                    Stabilization Program
 16    2010-AT-1802    12/14/2009   The City of Atlanta, GA, Needs To Improve          NSP1
                                    Certain Aspects of Its NSP To Meet the
                                    Program’s 18-Month Obligation Deadline
 17    2010-AT-1803    12/18/2009   Hillsborough County, FL, Has the Capacity          NSP1
                                    To Administer Its Neighborhood Stabilization
                                    Program and To Accurately Enter
                                    Commitments for Its HOME Investment
                                    Partnerships Program
 18    2010-AT-1806    9/24/2010    The City of Augusta, GA, Demonstrated the          NSP1
                                    Capacity To Obligate Its NSP1
 19    2010-BO-1004    1/20/2010    The City of Waterbury, Connecticut’s               NSP1
                                    Subrecipient, Waterbury Development
                                    Corporation, Needs to Improve Its Capacity to
                                    Effectively Administer Its Neighborhood
                                    Stabilization Program
 20    2010-BO-1801    12/7/2009    The State of Vermont’s Agency of Commerce          NSP1
                                    and Community Development Had Sufficient
                                    Capacity To Effectively Administer Its
                                    Neighborhood Stabilization Program
 21    2010-BO-1802    12/16/2009   The State of Maine’s Department of                 NSP1
                                    Economic and Community Development,
                                    Office of Community Development, Has
                                    Sufficient Capacity To Effectively Administer
                                    Its Neighborhood Stabilization Program
 22    2010-BO-1804    1/20/2010    The City of Meriden, CT, Had Sufficient            NSP1
                                    Capacity To Effectively Administer Its
                                    Neighborhood Stabilization Program
 23    2010-CH-0001    3/29/2010    The Office of Block Grant Assistance Lacked        NSP1
                                    Adequate Controls Over the Inclusion of
                                    Special Conditions in Neighborhood
                                    Stabilization Program Grant Agreements
 24    2010-CH-1011     8/5/2010    The State of Illinois Needs To Improve Its         NSP1
                                    Capacity To Effectively and Efficiently
                                    Administer Its Neighborhood Stabilization
                                    Program




                                           50
Item    Audit report    Report                      Report title                   Round of NSP
          number          date
 25    2010-CH-1801    1/12/2010    Wayne County, MI, Needs To Improve Its            NSP2
                                    Capacity to Effectively and Efficiently
                                    Administer Its Neighborhood Stabilization
                                    Program
 26    2010-CH-1803    2/25/2010    The State of Indiana’s Administrator Awarded      NSP1
                                    Neighborhood Stabilization Program Funds
                                    for an Inappropriate Project
 27    2010-DE-1006    9/17/2010    City and County of Denver, CO, Did Not            NSP1
                                    Properly Obligate and Report NSP1 Funding
 28    2010-KC-1006    8/20/2010    The State of Kansas Did Not Properly              NSP1
                                    Obligate Its Neighborhood Stabilization
                                    Program Funds
 29    2010-LA-1004    12/29/2009   Although the County of Riverside Had              NSP1
                                    Sufficient Overall Capacity, It Lacked
                                    Necessary Controls To Administer Its
                                    Neighborhood Stabilization Program
 30    2010-LA-1006     2/3/2010    City of Fresno Generally Had Sufficient           NSP1
                                    Capacity and the Necessary Controls To
                                    Manage and Administer Its Neighborhood
                                    Stabilization Program
 31    2010-LA-1007    2/11/2010    The County of San Bernardino, CA, Had             NSP1
                                    Questionable Capacity To Administer
                                    Neighborhood Stabilization Program Funds
 32    2010-LA-1008    3/17/2010    The City of Los Angeles Housing Department       NSP1&2
                                    Generally Had Sufficient Capacity and
                                    Adequate Internal Controls To Administer Its
                                    Neighborhood Stabilization Program Funds
 33    2010-LA-1011     6/2/2010    Sacramento Housing and Redevelopment              NSP1
                                    Agency Did Not Always Administer the
                                    Neighborhood Stabilization Program in
                                    Accordance With HUD Rules and Regulations
 34    2010-LA-1012     6/9/2010    Clark County, NV, Needs To Revise Its             NSP1
                                    Written Procedures and Developer
                                    Agreements To Ensure Compliance With
                                    Neighborhood Stabilization Program
                                    Requirements
 35    2011-AO-1004     4/8/2011    The New Orleans Redevelopment Authority,          NSP2
                                    LA, Had Not Administered Its Recovery Act
                                    Neighborhood Stabilization Program 2 in
                                    Accordance With Federal Regulations
 36    2011-AT-1005     4/6/2011    The Nashville, TN, Metropolitan                   NSP2
                                    Development and Housing Agency Generally
                                    Complied With Neighborhood Stabilization
                                    Program 2 Requirements
 37    2011-AT-1007    4/12/2011    The City of Miami Gardens, FL, Did Not            NSP1
                                    Adequately Support Salary Costs Charged to
                                    the Neighborhood Stabilization Program




                                          51
Item    Audit report    Report                      Report title                   Round of NSP
          number          date
 38    2011-AT-1008    4/22/2011    Palm Beach County, FL, Did Not Fully             NSP1&2
                                    Comply With Federal Requirements When
                                    Administering Its Neighborhood Stabilization
                                    Programs
 39    2011-AT-1801    11/24/2010   The City of Columbus, GA, Demonstrated the        NSP1
                                    Capacity To Obligate Its NSP-1 Funds
 40    2011-BO-1007    3/21/2011    The Community Builders Expected To                NSP2
                                    Expend Funding Within the Deadline and
                                    Meet Its Goals for the Neighborhood
                                    Stabilization Program 2
 41    2011-CH-1008     6/3/2011    The State of Michigan Lacked Adequate            NSP1&2
                                    Controls Over Its Neighborhood Stabilization
                                    Program Regarding Awards, Obligations,
                                    Subgrantees’ Administrative Expenses and
                                    Procurements, and Reporting
                                    Accomplishments
 42    2011-LA-1004    12/21/2010   The Community Development Programs                NSP1
                                    Center of Nevada Did Not Fully Comply With
                                    Neighborhood Stabilization Program
                                    Requirements
 43    2011-LA-1006     2/8/2011    The City of Mesa, AZ, Needs To Improve Its        NSP1
                                    Procedures for Administering Its
                                    Neighborhood Stabilization Program Grant
 44    2011-LA-1015    7/22/2011    Chicanos Por La Causa, Inc., Did Not Always       NSP2
                                    Administer Its Neighborhood Stabilization
                                    Program 2 Grant as Required
 45    2011-PH-1012    6/30/2011    The City of Reading, PA, Generally Complied       NSP2
                                    With Neighborhood Stabilization Program 2
                                    Requirements
 46    2011-SE-1003     3/1/2011    Oregon Housing and Community Services             NSP1
                                    Allowed a Developer To Use Neighborhood
                                    Stabilization Program Funds for Ineligible
                                    Purposes
 47    2011-SE-1004    3/28/2011    Oregon Housing and Community Services             NSP2
                                    Generally Complied With Neighborhood
                                    Stabilization Program 2 Requirements
 48    2012-AT-1010    5/24/2012    The Alabama Department of Economic and            NSP1
                                    Community Affairs, Montgomery, AL, Did
                                    Not Follow Its Neighborhood Stabilization
                                    Program Requirements
 49    2012-AT-1015     9/6/2012    Little Haiti in Miami, FL, Did Not Fully          NSP2
                                    Comply With Federal Rules When
                                    Administering NSP2
 50    2012-CH-1007    3/30/2012    The State of Michigan Lacked Adequate             NSP1
                                    Controls Over Its Use of Neighborhood
                                    Stabilization Program Funds Under the
                                    Housing and Economic Recovery Act of 2008
                                    for a Project
 51    2012-FW-1013    8/22/2012    The Texas Department of Housing and               NSP1
                                    Community Affairs, Austin, TX, Did Not
                                    Always Comply with Neighborhood
                                    Stabilization Program Requirements



                                           52
Item    Audit report     Report                     Report title                   Round of NSP
          number          date
 52    2012-FW-1804     8/6/2012    The City of San Antonio, TX, Did Not              NSP1
                                    Administer Its Neighborhood Stabilization
                                    Program Grant in Accordance With
                                    Requirements
 53    2012-LA-1001    12/8/2011    Housing Our Communities, Mesa, AZ, Did            NSP1
                                    Not Administer Its Neighborhood
                                    Stabilization Program in Accordance With
                                    HUD Requirements
 54    2012-LA-1003    12/22/2011   The City of Modesto, CA Did Not Always            NSP2
                                    Comply With Neighborhood Stabilization
                                    Program 2 Requirements
 55    2012-LA-1007     6/5/2012    Los Angeles Neighborhood Housing Services,        NSP2
                                    Los Angeles, CA, Did Not Always Properly
                                    Administer Its NSP2 Grant
 56    2012-LA-1008    6/15/2012    The City of Phoenix, AZ, Did Not Always          NSP1&2
                                    Comply With Program Requirements When
                                    Administering Its NSP1 and NSP2 Grants
 57    2012-LA-1012    9/21/2012    The City of Long Beach, CA, Did Not Fully         NSP2
                                    Comply With Federal Regulations When
                                    Administering Its NSP2 Grant
 58    2012-NY-1009    7/20/2012    The City of Newark, NJ, Generally Obligated       NSP1
                                    and Expended NSP1 Funds in Accordance
                                    With Regulations but Had Weaknesses in
                                    Administrative Controls
 59    2012-PH-1001    10/24/2011   Healthy Neighborhoods, Inc., Baltimore, MD,       NSP2
                                    Generally Ensured That Its Consortium
                                    Members Met Recovery Act Requirements
 60    2012-PH-1009    6/21/2012    The City of Philadelphia, PA, Generally           NSP2
                                    Administered its Neighborhood Stabilization
                                    Program 2 Grant in Accordance With
                                    Applicable Requirements
 61    2013-AT-1004    4/25/2013    The City of Sarasota, FL, Did Not Always          NSP2
                                    Properly Administer Its NSP2
 62    2013-LA-1006    6/17/2013    The City of Santa Ana, CA, Did Not                NSP2
                                    Administer Neighborhood Stabilization
                                    Program 2 Funds in Accordance With HUD
                                    Rules and Requirements
 63    2013-CH-1006    9/15/2013    The State of Michigan Lacked Adequate             NSP2
                                    Controls Over Its Neighborhood Stabilization
                                    Program Under the American Recovery and
                                    Reinvestment Act of 2009
 64    2014-CH-1002     1/6/2014    The City of Detroit, MI, Lacked Adequate          NSP1
                                    Controls Over Its Neighborhood Stabilization
                                    Program Funded Demolition Activities Under
                                    the Housing and Economic Recovery Act of
                                    2008
 65    2014-KC-1003     2/5/2014    The City of Kansas City, MO, Did Not              NSP1
                                    Properly Obligate Its NSP1 Grant Funds and
                                    Allowed Its Subrecipient To Enter Into
                                    Contracts Without the Required Provisions
 66    2014-LA-0002    3/10/2014    CPD Did Not Monitor NSP Grantees’              NSP1, 2, & 3
                                    Payments of Developer Fees to Developers



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Appendix G
       2009-14 Most Common Deficiencies From HUD OIG Reports Regarding NSP


Lack of Documentation for Program Expenses (10):

•   2011-AO-1004, New Orleans Redevelopment Authority – The Authority did not adequately
    document how it ensured that its consortium members were on target to meet performance
    deadlines. It did not have documentation showing the current program progress for each of
    the consortium members and, therefore, could not demonstrate that all consortium members
    were on target with performance deadlines.
•   2011-AT-1008, Palm Beach County, FL – The County charged $10,000 in workers
    compensation and $75,000 in indirect costs without having documentation to support the
    charges or knowing why they were charged to the program.
•   2011-LA-1004, Community Development Programs Center of Nevada – The Center did not
    have policies or procedures in place to ensure that it maintained proper documentation to
    support rehabilitation costs. It did not include all invoices and time sheets to support
    expenditures.
•   2011-PH-1012, Reading, PA – The grantee spent program funds based solely on verbal
    agreements with four contractors and did not execute written contracts or purchase orders
    with these contractors.
•   2012-AT-1010, Alabama Department of Economic and Community Affairs – The
    Department could not locate documentation, such as canceled checks, vendor invoices, home
    sales contracts, and settlement statements, to support expenses.
•   2012-CH-1007, State of Michigan – The State did not maintain documentation to support its
    determination of the estimated fair market value of a $3.3 million property acquisition.
•   2012-FW-1013, Texas Department of Housing and Community Affairs – The Department
    was not able to support the obligations it reported to HUD in DRGR. For example, it
    reported obligations without executed agreements.
•   2012-LA-1007, Neighborhood Housing Services of Los Angeles – The grantee did not
    maintain sufficient documentation to support its draw requests, and it could not properly
    trace each of its drawdowns to the activities it funded. It was not able to match rehabilitation
    expenses to DRGR.
•   2013-CH-1006, State of Michigan – The State paid for increases in anticipated program
    costs without providing adequate support for the increased expenditures.
•   2014-CH-1002, Detroit, MI – The City did not maintain records that adequately identified
    the source and application of funds provided for its activities.

Fees to and Use of Nonprofits, Developers, and Subrecipients (9):

•   2010-AT-1014, Polk County, FL – The County allowed a nonprofit entity with whom it had
    no contract to acquire abandoned and foreclosed-upon properties in its name without title
    restrictions and sell the properties.
•   2011-LA-1015, Chicanos Por La Causa – The grantee paid developer fees to subrecipients.


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•   2012-AT-1010, Alabama Department of Economic and Community Affairs – A subgrantee
    did not identify or report its program income earned. The grantee did not require its
    subgrantees to provide supporting documentation when submitting draw requests.
•   2012-AT-1015, Little Haiti in Miami, FL – The grantee reimbursed itself for tenant
    certification services already paid for in the codeveloper fee it received for this service.
•   2012-FW-1013, Texas Department of Housing and Community Affairs – Of 44
    subrecipients, 15 did not complete the planned activities for 24 of the 58 grant agreements
    because the Department lacked systems and controls for selecting and helping subrecipients
    complete grant activities within guidelines.
•   2012-LA-1001, Housing Our Communities, Mesa, AZ – A subrecipient did not conduct
    procurements with open and free competition, did not conduct a cost and price analysis, and
    violated conflict-of-interest requirements.
•   2012-LA-1007, Neighborhood Housing Services of Los Angeles – The grantee made
    payments to a consortium member that did not comply with the consortium agreement.
•   2012-NY-1009, City of Newark, NJ – The City approved ineligible and unsupported
    consultant fees.
•   2013-LA-1006, City of Santa Ana, CA – The City reimbursed its developer more than
    $669,000 for ineligible costs incurred during the acquisition and rehabilitation of single-
    family properties that should have been covered by the developer’s fee.

Unreasonable or Excessive Expenses (8):

•   2011-AT-1008, Palm Beach County, FL – Program funds disbursed for four home buyers
    exceeded amounts authorized by mortgage agreements. The County approved and disbursed
    funds for additional repair costs without also increasing the home buyer’s mortgage amount.
•   2010-LA-1011, Sacramento Housing and Redevelopment Agency – The Agency approved
    unnecessary upgrades for units that did not require upgrades based on market value.
•   2011-LA-1015, Chicanos Por La Causa – The grantee approved acquisition expenditures,
    which included uncustomary real estate agency commissions totaling $63,498 for eight
    properties.
•   2012-AT-1015, Little Haiti in Miami, FL – The grantee collected payment twice for tenant
    certification services.
•   2012-LA-1001, Housing Our Communities, Mesa, AZ – A subrecipient billed inflated
    construction costs and arranged to convert a portion of NSP funds for discretionary use.
•   2012-LA-1012, City of Long Beach, CA – The City did not always ensure that property
    purchases met the 1 percent discount requirements.
•   2013-LA-1006, City of Santa Ana, CA – The City reimbursed its developer at least $375,000
    for unnecessary bank charges (private bank loan fees).
•   2013-CH-1006, State of Michigan – The State did not ensure that residential properties were
    acquired at a discount of at least 1 percent from current market value.




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Supporting Administrative or Salary Expenses (7):

•   2010-CH-1011, State of Illinois – The State did not document disbursements for wages for
    technical assistance personnel and the program accountant.
•   2011-AT-1007, City of Miami Gardens, FL – The City did not support its salary allocation
    to the program.
•   2011-CH-1008, State of Michigan – Accounting information for administrative expenses
    charged to the program were not adequately supported by payroll, time, and attendance
    records.
•   2011-LA-1006, City of Meza, AZ – The City did not ensure that labor costs claimed by its
    subgrantee were determined in accordance with applicable cost principles because it agreed
    to hourly labor rates but did not ensure that these rates were consistent with the subgrantee’s
    actual costs.
•   2010-LA-1011 Sacramento Housing and Redevelopment Agency – The Agency allowed the
    developer to earn $1,000 per week in administrative costs for the projects when the
    developer’s fee had been budgeted for $425,000. Administrative invoices submitted did not
    detail accomplishments. The payment was automatic.
•   2012-FW-1013, Texas Department of Housing and Community Affairs – The Department
    spent $8,767 on unsupported payroll and administrative costs for agreements that it had
    canceled.
•   2012-LA-1008, City of Phoenix, AZ – Wage and salary costs were not adequately supported.
    Employees worked on multiple activities, but their payroll records did not adequately
    account for the distribution of time.




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