The U.S. Department of Housing and Urban Development is contending that the City of Pine Bluff’s Community Development Department “improperly spent” nearly $200,000 in HUD funds and failed to properly document an additional $279,000 in expenditures.
HUD says the city must repay $199,907.89 or have that amount cut from its 2013 federal funding. The city also will be required to provide documentation for another $279,161.23, or that amount will have to be repaid or forfeited from 2013 funding as well. Altogether, the city could be forced to repay $479,069.12.
The mandates are contained in a June 4 HUD report on its annual monitoring review of the city’s CDBG (community development block grant) and HOME programs for the 2012 program year. The report included 14 findings and two concerns.
Primary findings state that the city:
• Did not adequately track and categorize its administrative expenditures and improperly characterized general CDGB administrative activities as technical assistance to businesses, although some of the work performed by its community development department provided aid to area businesses. The city wound up exceeding its 20-percent regulatory ceiling for CDBG administrative expenditures. HUD “corrective action” is repayment of $121,018.81 or a corresponding reduction of its 2013 grant funds.
• Acquired a building at 1101 Main Street — at a cost of $50,110 — for the purpose of using it to house CDBG, HOME and Supportive Housing programs, but never used the building for such purpose. Reimbursement or grant reduction is required.
• Did not follow applicable HUD guidelines in charging $28,779.08 in expenditures for administrative costs to support operations at its 716 Georgia Street community development office in 2009 and 2010. HUD’s rulings on these two findings was that the city repay the full, combined amount or agree to grant reduction.
• Failed to maintain a required project file on a $150,000 award to CASA (Committee Against Spouse Abuse) to assist with construction of its new shelter, paid in $50,000 increments over three years. If the city can’t substantiate “file maintenance documentation,” the $150,000 must be repaid or deleted from the current year grant.
• Did not receive bids on a work contract and then disbursed $83,423.97 to two contractors who performed the project. The city must provide a justification in such matters, and minus such must repay the amount to its HOME program account. Any unsupported costs determined to be ineligible should be reimbursed from non-federal funds.
• Several of the properties selected for rehabilitation or reconstruction were acquired outside parameters of an eligible homeowner rehabilitation program and guidelines listed in a local plan. Unless it produces evidence that involved properties were procured with proper authorization of city officials, the city must repay $45,738.26 from non-federal funds to its HOME account.
Other findings are that the city:
• Does not have adequate procedures to ensure that it complies with a minimum HOME investment requirement. The city must — “within the next 30 days” — research linked, listed activities and repay any less than $1,000 “that cannot be associated and revived to a previously completed rehabilitation project.”
• Lacks a system ensuring that “related soft costs” for project delivery representing “staff and overhead costs” are directly related to carrying out projects as required by HUD guidelines, possibly resulting in administrative staff time being “erroneously charged” as project expenses. The city was allowed 30 days to determine such errors and properly allocate the funds.
• Does not possess adequate procedures to ensure that record-keeping requirements are met in accordance with federal guidance concerning homes at 2101 Bell Street and 1505 Hickory Street. HUD is allowing the city 30 days to research its records, and “where possible,” document compliance in each cited area.
• Does not have a written policies and procedures manual for management of the Homebuyer Assistance Program, resulting in findings of non-compliance with “prevailing regulations.” Thirty days were granted for the city to provide documentation that, despite the absence of the manual, it satisfied specific requirements.
• Fails to disburse program income to pay program costs before making cash withdrawals from the U.S. Treasury. HUD is dictating that the city “modify its policy” and stated “concerns” that the city lacked “internal controls” over the design and use of documents and records to provide “reasonable assurance” to the documentation, recording and auditability of “transactions and events,” and that it is unclear that all personnel are responsible for “communicating upward” the operating problems and noncompliance with laws and regulations.
• Failed to provide supporting documentation on a $1,500 voucher, the basis for which remains in question as an eligible expenditure for federal funds. HUD is requiring the city to provide supporting documentation within 30 days.
• Did not follow federal guidelines requiring documentation of actual time worked on multiple cost objectives, when employees work on more than one grant program. The city must “immediately begin documenting time distribution records and substantiate the activity within the 30-day window.
• Approved and expended funds for a roof replacement inconsistent with city policies, regulations and procedures and federal cost standards, resulting in unlawful spending. The work was also determined to be below standard-quality. HUD is requiring the city to have the contractor redo the roof or the city to replace the $7,000 roof at its own expense, with a status update to be given within 30 days.
“I’m totally shocked,” senior Alderman Bill Brumett said late Thursday night. “I’m looking forward to finding out the details of what all has happened. I’m concerned how this might impact the community development department and the city as a whole. I’ll reserve additional comment until I get more information.”
Mayor Debe Hollingsworth, who expressed dismay with the report’s findings, said that a coming BKD accounting firm audit of the department will be similar to the HUD probe.
“I’m saddened that this has occurred,” she said. “The citizens of Pine Bluff deserve better, and HUD deserves better from the city and its community development department.”