Department of Housing and Urban Development, Office of Inspector General | Housing and Urban Development | City of Dallas Housing Department, Dallas, TX

City of Dallas Housing Department, Dallas, TX

Published by the Department of Housing and Urban Development, Office of Inspector General on 1998-04-24.

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

U.S. Department of Housing and Urban Development
Southwest District Office of Inspector
General
1600 Throckmorton, Room 404
Post Office Box 2905
Fort Worth, Texas 76113-2905
(817)978-9309 FAX (817)978-9316
http://www.hud.gov/oig/oigindex.html

April 24, 1998 98-FW-241-1810

MEMORANDUM FOR: Katie S. Worsham
Director, Office of Community Planning and Development, 6AD

FROM: D. Michael Beard
District Inspector General for Audit, 6AGA

SUBJECT: Congressional Inquiry and Citizen’s Complaint
City of Dallas Housing Department
Dallas, Texas
and
Community Planning and Development
HUD Texas State Office
Fort Worth, Texas

In response to a citizen’s complaint and the resulting Congressional Inquiry, we reviewed
allegations against officials of the City of Dallas, Texas, and the HUD Office of Community
Planning and Development (HUD) in Fort Worth, Texas. Our objective was to determine
whether the citizen had valid complaints and decide whether they warrant an in-depth audit of the
Dallas Community Development Block Grant (CDBG) and HOME Programs. The citizen
alleged:

1. The City of Dallas contracted with the Enterprise Foundation to administer its CDBG
Housing and HOME funds in violation of procurement requirements.

2. HUD is not providing oversight to the Enterprise Foundation because the Enterprise
Foundation is staffed with former HUD employees.

3. The Enterprise Foundation violated HUD requirements and used HUD money to
participate in legal action between the NAACP and the City of Irving.

4. The Enterprise Foundation or one of the Community Housing Development
Organizations (CHDOs) violated HUD requirements and spent $50,000 to qualify a
family for a house.

5. One of the CHDOs received HUD funds from the City of Dallas and misused or
improperly used the funds in connection with three unsold homes involved in foreclosure.
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6. HUD is selling properties for prices above market value.

7. Organizations have attempted to extort lenders by offering not to investigate
discrimination in exchange for technical assistance contracts.

To achieve our objective, we interviewed the complainant and employees of the Dallas Housing
Department and HUD in Fort Worth. We reviewed monitoring procedures in both offices. Also,
we reviewed material provided by the complainant and the files on the Enterprise Foundation at
the City and HUD, including the procurement documents relating to contract awards. In addition,
we reviewed all files of reimbursable expenditures and supporting documentation for Enterprise
Foundation contracts with both the City of Dallas and the HUD Fort Worth Office.

If you have any questions, please contact Jerry R. Thompson, Assistant District Inspector
General.

SUMMARY

Of the seven allegations, our review disclosed the first five of them are not valid and the remaining
two are unsupported. The complainant could provide no information to support the allegations
that HUD sold properties above their market value or that organizations have attempted to extort
lenders for technical assistance contracts. If we receive valid information supporting these
allegations in the future, we will consider a review of the matters then. We decided the matters
do not warrant an in-depth audit of the Dallas CDBG and HOME Programs at this time.

BACKGROUND

The City of Dallas contracts with the Enterprise Foundation (Enterprise) to administer its CDBG
Housing and HOME programs. Enterprise is a large national foundation headquartered in
Columbia, Maryland. It provides technical assistance to HUD, cities, and nonprofit owners and
developers using CDBG and HOME funding and other resources. From October 1996 to
September 1997, the Enterprise Foundation administered the Dallas Affordable Housing
Partnership (DAHP) program on behalf of the City of Dallas. It also processed applications for
the Infill Housing Program and the CHDO program. From October 1997 to September 1998, the
Enterprise Foundation will administer the City’s CDBG and HOME funds and the Upfront Cost
Assistance Program (UCAP) and DAHP programs under the City’s Mortgage Assistance
Program.

The programs under the Mortgage Assistance Program provide assistance to lower income first-
time homebuyers. Specifically, the DAHP program leverages private funds with public assistance
for up to 20 percent of the purchase price of the home to provide acquisition loans to
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lower income first-time homebuyers. The Infill Housing program provides homeownership
opportunities to lower income first-time homebuyers through the construction of new, single
family homes. Under the CHDO program, the City is required to fund 15 percent of its HOME
allocation to assist in the development of community organizations to enhance their capacity to
develop affordable houses, either single family units or single and multifamily rental projects. The
UCAP program provides downpayment and related closing cost assistance up to $2,000 to lower
income first-time homebuyers when acquiring homes through participating lenders.

RESULTS OF REVIEW

Allegation 1: The City of Dallas contracted with the Enterprise Foundation to administer
its CDBG Housing and HOME funds in violation of procurement requirements.