oversight

The City of Margate, FL, Did Not Properly Administer Its Neighborhood Stabilization Program Grants 1 and 3 in Compliance With HUD Regulations

Published by the Department of Housing and Urban Development, Office of Inspector General on 2018-05-29.

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

                            City of Margate,
                              Margate, FL
    Neighborhood Stabilization Program Grants 1 and 3




Office of Audit, Region 4            Audit Report Number: 2018-AT-1005
Atlanta, GA                                                May 29, 2018
To:            Ann D. Chavis, Director of Community Planning and Development, 4DD
               Craig T. Clemmensen, Director of Departmental Enforcement Center, CACB

                  //Signed//
From:          Nikita N. Irons, Regional Inspector General for Audit, 4AGA
Subject:       The City of Margate, FL, Did Not Properly Administer Its Neighborhood
               Stabilization Program Grants 1 and 3 in Compliance With HUD Regulations


Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
General’s (OIG) final results of our review of the City of Margate’s administration of its
Neighborhood Stabilization Program grants 1 and 3.
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 website. 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: 2018-AT-1005
                   Date: May 29, 2018

                   The City of Margate, FL, Did Not Properly Administer Its Neighborhood
                   Stabilization Program Grants 1 and 3 in Compliance With HUD Regulations



Highlights

What We Audited and Why
We audited the City of Margate’s Neighborhood Stabilization Program (NSP) grants 1 and 3 in
accordance with our audit plan to improve the U.S. Department of Housing and Urban
Development’s (HUD) execution of and accountability for grant funds. In addition, HUD
requested that we review this auditee because a forensic investigation initiated by the City found
issues with record keeping, misappropriation of funds, and overages regarding City, State, and
Federal funds. Our objective was to determine whether the City (1) administered its NSP1 and
NSP3 funds in accordance with HUD requirements and (2) followed appropriate procurement
procedures.

What We Found
The City did not administer its NSP1 and NSP3 in accordance with program regulations.
Specifically, it did not ensure that (1) services were properly procured, (2) a property acquired
met the national objective to benefit income eligible households, (3) rehabilitation costs were
allowable and supported, and (4) program income and properties were adequately reported in
HUD’s Disaster Recovery Grant Reporting (DRGR) system. These deficiencies occurred
because the City did not provide adequate oversight of the program and lacked sufficient internal
controls. In addition, the former grants manager contributed to the overall mismanagement of
program funds and allowed its contractors to violate regulations. As a result, it spent $811,571
on ineligible costs and could not support costs totaling $8,919.

What We Recommend
We recommend that the Director of HUD’s Miami, FL Office of Community Planning and
Development require the City to (1) repay $811,571 to the program from non-Federal funds, (2)
provide support for the $8,919 in NSP funds spent on rehabilitation costs, (3) report program
income and properties correctly in HUD’s DRGR system, and (4) update policies and procedures
to ensure that HUD programs are properly administered.

We also recommend that the Director of the Departmental Enforcement Center initiate
appropriate administrative actions and debarments against parties who contributed to the
mismanagement of program funds.
Table of Contents
Background and Objective......................................................................................3

Results of Audit ........................................................................................................5
         Finding 1: The City Did Not Properly Administer Its Neighborhood Stabilization
         Program Grants ................................................................................................................ 5

Scope and Methodology .........................................................................................11

Internal Controls ....................................................................................................13

Appendixes ..............................................................................................................14
         A. Schedule of Questioned Costs .................................................................................. 14

         B. Auditee Comments and OIG’s Evaluation ............................................................. 15

         C. List of NSP 1 and NSP 3 Properties ........................................................................ 21




                                                                   2
Background and Objective
On July 30, 2008, Congress authorized, under Section 2301 of Title III of the Housing and
Economic Recovery Act of 2008, $3.92 billion for the Neighborhood Stabilization Program
(NSP) to provide grants to States and certain local communities to purchase foreclosed-upon or
abandoned homes and rehabilitate, resell, or redevelop these homes to stabilize neighborhoods
and stem the decline in value of neighboring homes. Grantees are required to spend 100 percent
of their allocation within 4 years after receiving those funds. This round of funding is known as
NSP1.

On July 21, 2010, Congress provided an additional $1 billion under Section 1497 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act on a formula basis to continue assisting
State and local governments in the redevelopment of abandoned and foreclosed-upon homes.
Grantees are required to spend 100 percent of allocated funds within 3 years from the date on which
their grant agreement is signed with the U.S. Department of Housing and Urban Development
(HUD). This round of funding is known as NSP3. The City of Margate is governed by its grant
agreement with HUD.

In January 2009, HUD awarded the City more than $2.1 million in NSP1 funds, and in March
2011, HUD awarded the City more than $1.1 million in NSP3 funds. HUD’s Disaster Recovery
Grant Reporting (DRGR) system is used by grantees to access grant funds and used by HUD
staff to monitor program compliance and complete quarterly performance reporting to Congress.

In July 2009, the City Commission approved an external consultant to administer its NSP under
the oversight of the city manager. In May 2012, the City brought the administration of NSP in-
house by creating the Economic Development Department. This department was overseen by a
director responsible for the day-to-day operations, who was accountable to the city manager.
The director was also responsible for supervising the grants manager. The former grants
manager was also employed by the external consultant who administered NSP before the City
created the Economic Development Department. During our review, we determined that the
former grants manager handled a majority of the NSP1 and NSP3 funds; however, resigned in
September 2015 after the City initiated an investigation regarding the handling of grant funds
awarded to the City.

In August 2015, the City initiated an investigation of the former grants manager regarding the
mismanagement of grant funds. In August 2017, the former grants manager pled guilty to eight
counts, which included bribery, bid tampering, conspiracy, organized scheme to defraud, and
official misconduct. Also as a part of the investigation, we reviewed contractor testimonies,
which showed inflated invoices for services and collusion with the former grants manager. In
March 2018, the City hired a new grants manager under the supervision of the assistant city
manager.




                                                 3
Our objective was to determine whether the City (1) administered its NSP1 and NSP3 funds in
accordance with HUD requirements to ensure that funds were used for allowable costs and
eligible participants and (2) followed appropriate procurement procedures.




                                              4
Results of Audit

Finding 1: The City Did Not Properly Administer Its Neighborhood
Stabilization Program Grants
The City did not administer its NSP1 and NSP3 in accordance with program regulations.
Specifically, it did not ensure that (1) services were properly procured, (2) property acquired met
a national objective, (3) costs were allowable and supported, and (4) program income and
properties were adequately reported in HUD’s Disaster Recovery Grant Reporting (DRGR)
system. These deficiencies occurred because the City did not provide adequate oversight of the
program and lacked sufficient internal controls. In addition, the former grants manager
contributed to the overall mismanagement of program funds and allowed its contractors to
violate regulations. As a result, it spent $811,571 on unallowable activities and could not
support costs totaling $8,919.

Procurement Activities Were Not Adequately Performed

Construction Services
The City did not conduct procurement activities in a manner providing full and open
competition 1 as required by 24 CFR (Code of Federal Regulations) 85.36(c). In addition, the
construction contracts had change orders or increases from 11 to 116 percent over the initial
contract amount. Although the City approved these overages, it did not conduct adequate cost
analyses to justify the increase in contract price as required by 24 CFR 85.36(f). Therefore, it
used NSP funds to improperly pay a total of $380,526 for overages as shown in the table on the
following page.




1
    The City did not always inform or request proposals from its prequalified contractors as required by City
     resolutions 11-651 and 11-874.




                                                            5
                                                                                         Percentage
                                   Contract
         Property 2    Grant                        Overages         Total costs       increase from
                                   amount
                                                                                      contract amount
            5100       NSP 3        $84,845           9,600            $94,445              11%
            950         NSP1         91,405          21,004            112,409              23%
            1402        NSP3        142,552          32,736            175,288              23%
            5816        NSP3        142,552          35,936            178,488              25%
            7915        NSP3         82,524          41,250 3          123,774              50%
            6531        NSP3         70,130          37,166            107,296              53%
            6570        NSP3        139,610          78,784            218,394              56%
            935         NSP3        82,082           46,089            128,171              56%
            2585        NSP1         67,410           77,961           145,371              116%
                       Totals       903,110          380,526          1,283,636


Air Conditioning Equipment and Services
For air conditioning services, the City did not maintain records to show that it obtained a
minimum of three quotes for these services. The City’s former grants manager signed the
contracts related to the NSP3 properties without the authority to do so. 4 City ordinance, section
2-26, requires that any purchase of supplies, materials, or equipment exceeding $1,000 needs a
minimum of three quotes unless only one source is available. Therefore, $48,420 5 paid from
NSP1 and NSP3 funds for air conditioning services was unallowable.

Engineering Services
The City did not have a contract for engineering services for two NSP3 properties, although such
contracts were required. Because these services were provided without a contract or purchase
order, City staff would not be able to ensure that the contractors performed in accordance with
agreed-upon terms and conditions. Regulations at 24 CFR 85.36(b)(2) require grantees and
subgrantees to maintain a contract administration system to ensure that contractors perform in
accordance with the terms, conditions, and specifications of their contracts or purchase orders.
Therefore, all 12 payments to this contractor totaling $28,246 were unallowable.

The National Objective Was Not Met
The City did not sell NSP1 property 1012 because the property was not complete. The
contractor walked off the job, and the City’s building department failed the contractor on many
inspections. There were 126 defects with the work done, and the City’s contracted engineer
concluded that it may have been more cost and time effective to start over. In addition, the


2
  The property street number was used to identify properties.
3
  The City paid to upgrade this property, which initially had sliding doors, to french doors. According to NSP
  frequently asked question number 663, luxury items, not considered a basic amenity, are not eligible for
  reimbursement with NSP funds. This upgrade was inappropriately included as a change order.
4
  According to the City resolution 11-854, only the city manager or his designee is authorized to execute
  agreements. Based on communication with the City, the former grants manager did not receive this designation.
5
  This amount is limited to the properties reviewed in our sample.




                                                        6
procurement requirements for this project were not followed, and there were construction
payments exceeding the initial contract amount by 29 percent. Because this home was not sold
and did not benefit an income-eligible household as required by the Housing and Economic
Recovery Act of 2008, section 2301(f)(3), and there were discrepancies with the construction
and procurement of this property, all NSP funds for this property totaling $280,979 6 were
unallowable.

During our review, we also identified that property 1504 did not meet the national objective but
was excluded from the review since the City is returning funds to HUD. As of May 1, 2018,
documentation was provided to support the repayment of funds related to this property totaling
$145,125 but this transaction was not recorded in HUD’s DRGR system. Therefore, we will
recommend the City record this repayment in DRGR.

Rehabilitation Costs Were Not Allowable and Adequately Supported
The City used NSP1 and NSP3 funds for mold and asbestos remediation work; however, the
company that performed the work did not have proper licensing to do asbestos removal. In
addition, the City did not follow procurement requirements for this contractor. Further, there
were instances in which the City paid the contractor for work that was not completed or needed.
Therefore, all payments of $73,400 made to this contractor were unallowable.

For two NSP1 properties, we found unsupported rehabilitation costs of $8,919. We were unable
to obtain an explanation for differences between supporting documentation and expenditure
amounts. Regulations at 2 CFR Part 225, appendix A, paragraph (C)(1)(j), require NSP grantees
to ensure that all costs incurred are adequately documented.

Program Income and Properties Were Not Accurately Reported in HUD’s DRGR System
The City did not maintain accurate and complete records in HUD’s DRGR system. Data from
this system are used by HUD staff to review activities funded under these programs and for
required quarterly reports to Congress. The City did not report program income for all NSP
properties in DRGR. Specifically, the City’s general ledger reported $1,085,128 for program
income under NSP 1; however, DRGR reported only $1,025,067, resulting in a difference of
$60,060. For NSP3, the City’s general ledger reported $977,235 for program income; however,
DRGR reported only $622,951, resulting in a difference of $354,284. In addition, seven
properties were not reported or accurately reported in the system as shown in the table on the
following page.




6
    The City may have incurred additional maintenance costs after our scope period. We questioned only the $280,979
    for our scope period for the NSP funds spent for this property.




                                                          7
                                 HUD’s DRGR                       City’s general ledger
         Property
                             Reported?      Program               Posted?      Program
                                                                                            This property was not
    1       1012                 No                   -             Yes          NSP1       recorded in DRGR under
                                                                                            NSP1.
                                                                                            The City incorrectly
    2       1402                 Yes                NSP1            Yes          NSP3       recorded this property in
                                                                                            DRGR under NSP1.
                                                                                            This property was not
    3       1504                 No                   -             Yes          NSP1       recorded in DRGR under
                                                                                            NSP1.
                                                                                            This property was not
    4       2585                 No                   -             Yes          NSP1       recorded in DRGR under
                                                                                            NSP1.
                                                                                            This property was not
    5       5816                 No                   -             Yes          NSP3       recorded in DRGR under
                                                                                            NSP3.
                                                                                            The City incorrectly
    6       6570                 Yes                NSP1            Yes          NSP3       recorded this property in
                                                                                            DRGR under NSP1
                                                 Both NSP1                                  The City incorrectly
    7        935                 Yes                and             Yes          NSP3       classified this property in
                                                   NSP3                                     DRGR.

The City Did Not Have Adequate Oversight and Internal Controls
The issues identified occurred because the City did not have adequate oversight of its former
grants manager and appropriate internal controls, including policies and procedures, to ensure
that NSP funds were properly administered. Specifically, City staff was not adequately
supervised, adequate records were not maintained, and there was no separation of duties for
NSP-related tasks. In addition, City staff was unable to provide its written policies and
procedures in place during the administration of the NSP funds in question. 7

The City stated that upon learning of the possible mismanagement of funds, it initiated an
investigation of its former grants manger. This effort resulted in a guilty plea and incarceration
of the former grants manager for organized fraud, bid tampering, and bribery of a public servant.
In addition, the City had begun taking steps to ensure that these deficiencies did not continue.
For instance, (1) the City staff members involved in this mismanagement of funds no longer
worked with the City, (2) the City had hired a new grants manager tasked with reconciling State
and Federal funds and updating written policies and procedures, and (3) the new grants manager
was to be supervised by the assistant city manager.

Conclusion
The City did not ensure that (1) services were properly procured, (2) property acquired met the
national objective, (3) rehabilitation costs were allowable and supported, and (4) program


7
    The City was unable to confirm that the written policies and procedures provided to the audit team had been
    implemented by the prior administration. However, the City stated that policies and procedures would be reviewed
    by the new grants manager before being used by the current administration.




                                                           8
income and properties were adequately reported in HUD’s DRGR system. These deficiencies
occurred because the City did not provide adequate oversight of the program and its staff and
lacked sufficient internal controls. As a result, it spent $811,571 on unallowable activities and
could not support costs totaling $8,919.

Recommendations
We recommend that the Director of HUD’s Miami, FL, Office of Community Planning and
Development instruct the City to

1A.    Repay to the program from non-Federal funds the $457,192 ($380,526 + $48,420 +
       $28,246) in NSP funds spent for the construction, air conditioning, and engineering
       services in instances in which procurement activities were not adequately performed.

1B.    Repay to the program from non-Federal funds $280,979 in NSP funds spent for property
       1012 and identify and repay any additional costs spent on this property, including
       maintenance costs and any program income generated.

1C.    Repay to the program from non-Federal funds the $73,400 in NSP funds spent for mold
       and asbestos remediation work.

1D.    Provide documentation to support the $8,919 in NSP funds spent on rehabilitation costs
       or repay to the program from non-Federal funds.

1E.    Provide documentation to support a reconciliation between financial records and DRGR
       and report in HUD’s DRGR system the appropriate amount of program income generated
       from all NSP1 and NSP3 funds from the inception of the grants.

1F.    Provide documentation to support that all NSP properties are properly classified and
       recorded in HUD’s DRGR system.

1G.    Develop and implement policies and procedures to include but not be limited to
       oversight, effective internal controls, separation of duties, procurement, and overall
       administration of the program.

IH.    Conduct a review of the remaining 10 properties not reviewed during our audit to ensure
       compliance with HUD requirements and identify and repay costs related to ineligible or
       unsupported activities (see appendix C).

1I.    For Property 1504, provide documentation to support the recording in HUD’s DRGR
       system, the repayment of $144,004 in NSP funds and $1,120 in program income.

We recommend that the Director of the Departmental Enforcement Center, in coordination with
the Director of the Miami HUD Office of Community Planning and Development,




                                                 9
1J.   Initiate appropriate administrative actions and debarments against parties, including the
      former grants manager and contractors, who contributed to the mismanagement of
      program funds.




                                              10
Scope and Methodology
We audited the City’s Neighborhood Stabilization Program. Our review covered the period
January 2009 through July 2017. We performed fieldwork from September 2017 through March
2018 at the City’s office located at 5790 Margate Boulevard, Margate, FL, and our Miami field
office.

To accomplish our objective, we
   • reviewed applicable NSP laws and regulations;
   • reviewed applicable City ordinances, policies, and procedures;
   • reviewed monitoring, single audit, and other financial reports;
   • reviewed City financial records, property files, procurement records, and other supporting
       documentation; and
   • interviewed HUD and City staff.

In January 2009, HUD awarded the City more than $2.1 million in NSP1 funds, and in March
2011, it awarded the City more than $1.1 million in NSP3 funds. The City used NSP1 and NSP3
program and program income funds to acquire and rehabilitate 23 properties. Using a
nonstatistical sampling plan, we selected 12 properties, or 52.17 percent of the population, to
determine whether the national objective was met and expenditures were eligible and properly
supported. We selected the properties with the highest amount of expenditures. These 12
properties had more than $3 million in expenditures charged to program and program income
funds for acquisition and rehabilitation. We did not perform a 100 percent selection. The results
of this audit apply only to the items reviewed and cannot be projected to the universe of
activities. We also conducted a review of the City’s procurement process, and for the NSP
properties sold, we reviewed the participants’ eligibility.

                                           List of properties reviewed 8
                                   Property       Total                   Property    Total
                           No.                                    No.
                                       #         amount                        #     amount
                                        NSP1                                   NSP3
                             1       2585        $269,077         6         6570    $362,800
                             2       1012         280,979         7         1402      277,422
                             3        950         226,989         8         5816      266,413
                             4        610         208,064         9          935      260,257
                             5        821         198,643         10        6531      248,462
                                                                  11        7915      236,577
                                                                  12        5100      202,481
                                 Totals         1,183,752               Totals      1,854,412


8
    These amounts are based on the general ledger detail, but total expenditure amounts for each property may not be
    all inclusive. Totals do not include transactions that were not split by properties or were misclassified. In March
    2018, the City hired a new grants manager tasked with reconciling NSP data to ensure accurate reporting in the
    DRGR system.




                                                            11
Computer-processed data generated by the City were not used to materially support our audit
findings, conclusions, and recommendations. Thus, we did not assess the reliability of these
computer-processed data.

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.




                                               12
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 program operations to reasonably ensure that the program meets its
    objective(s),
•   controls over the relevance and reliability of operational and financial information, and
•   controls over compliance with laws and regulations.


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 Deficiency
Based on our review, we believe that the following item is a significant deficiency:
•   The City did not have adequate oversight of its former grants manager and appropriate
    internal controls to ensure that NSP funds were properly administered. Specifically, City
    staff was not adequately supervised, adequate records were not maintained, and there was no
    separation of duties for NSP-related tasks.




                                                  13
Appendixes

Appendix A


                           Schedule of Questioned Costs
                   Recommendation
                                    Ineligible 1/ Unsupported 2/
                       number
                          1A                $457,192
                           1B                 280,979
                           1C                  73,400
                          1D                                       $8,919

                         Totals               811,571               8,919



1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law; contract; or Federal, State, or local
     policies or regulations.
2/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
     or activity when we cannot determine eligibility at the time of the audit. Unsupported
     costs require a decision by HUD program officials. This decision, in addition to
     obtaining supporting documentation, might involve a legal interpretation or clarification
     of departmental policies and procedures.




                                             14
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG
Evaluation    Auditee Comments




Comment 1




Comment 2




                              15
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 2




Comment 3




Comment 4




                              16
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 4




Comment 5




Comment 6


Comment 7




Comment 8




                              17
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 8




Comment 9




                              18
                         OIG Evaluation of Auditee Comments


Comment 1   The City requested that OIG specify the former grant manager’s name in the
            report. However, according to our reporting guidelines, we are not allowed to
            disclose personal information, such as names and addresses in the body of the
            report. The report does distinguish that the OIG is referring to the “former”
            grants manager.
Comment 2   The City indicated that no system of internal controls is foolproof and there is no
            systematic way to ensure that all fraud instances will be detected. In addition, the
            City mentioned that once noticing irregularities, it launched a police investigation,
            hired a forensic auditor, notified affected parties, and spent numerous hours
            pulling documents and analyzing transactions. We acknowledge the City’s efforts
            to address discrepancies as discussed in the body of the report.
Comment 3   The City does not agree that services were improperly procured. However, as
            discussed in the results section of the report, the City did not adhere to
            procurement requirements including the request for proposals, obtaining quotes,
            and ensuring contracts were in place before services being rendered. In addition,
            there were instances in which the City’s former grants manager signed contracts
            related to the NSP3 properties without the authority to do so.
Comment 4   The City indicated that HUD monitoring reviews did not identify deficiencies
            disclosed in the audit report and that they relied on HUD monitoring reports and
            annual external single audit reviews as references on performance of the programs
            and the staff who were administering it. While we cannot speak on behalf of
            HUD in relation to its monitoring reviews, we maintain the position that it is the
            City’s responsibility to ensure that it has adequate internal controls to safeguard
            grant funds.
Comment 5   OIG acknowledges the City’s plan to sell property 1012 and return all NSP funds
            expended on this property. The City should work with HUD during the
            management decision process to ensure recommendation 1B is fully implemented.
Comment 6   The City indicated it did not have audit work papers related to unsupported and
            ineligible rehabilitation costs. We advise the City to refer to the draft finding
            outline provided on March 8, 2018, for details on questioned costs which included
            a listing of all properties, contractors and amounts related to all unsupported and
            ineligible costs reported.
Comment 7   OIG acknowledges that the City is working with a consultant to ensure that
            information reported in HUD’s DRGR system is complete and accurate. The City
            should work with HUD during the management decision process to ensure
            recommendations 1E and 1F are fully implemented.




                                             19
Comment 8   The City indicated that in addition to hiring a new grants manager and updating
            its written policies and procedures, it has also increased its internal controls, hired
            new management in its Finance Department, and turned over the daily
            administration of the housing grant to the Broward County Housing Finance and
            Community Redevelopment Division. We acknowledge the City’s efforts in
            addressing the mismanagement of funds and its commitment to comply with
            applicable grant guidelines and regulations.
Comment 9   The City is concerned with the amount of money recommended for repayment to
            the program. While we acknowledge the City’s concerns, ineligible costs
            identified throughout the review are recommended for repayment. The City will
            have the opportunity to work with HUD during the management decision process
            to address the funds questioned in the report.




                                              20
Appendix C


                                      List of NSP 1 and NSP 3 Properties


                    No.          Property    9
                                                          Reviewed            Not reviewed
                                                        NSP 1
                     1               610                      X
                     2               821                      X
                     3               950                      X
                     4               1012                     X
                     5               1304                                           X
                     6               1504                                           X 10
                     7               1601                                           X
                     8               2565                                           X
                     9               2585                         X
                    10               2657                                            X
                    11               5518                                            X
                    12               5712                                            X
                    13               5801                                            X
                    14               5881                                            X
                    15               6156                                            X
                                                        NSP 3
                    16               935                          X
                    17               1402                         X
                    18               4952                                            X
                    19               5100                         X
                    20               5816                         X
                    21               6531                         X
                    22               6570                         X
                    23               7915                         X
                                   Count                          12                11




9
    The property street number was used to identify properties.
10
  During our review, the City was in the process of returning funds back to HUD for property 1504. As of May 1,
2018, the City has returned the funds paid for this property to HUD but has not recorded it in DRGR.




                                                           21