10/17/13 – New HUD Audit Confirms City’s Earlier Findings

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October 17, 2013

(West Palm Beach, FL)  – A just-released audit by the U.S. Department of Housing and Urban Development (HUD) which looked at the recordkeeping surrounding the use of federal housing dollars in the City of West Palm Beach confirms the findings of a city investigation two years ago.

The audit looked at over a decade’s worth of activity, stretching back to 2002.

The HUD Inspector General’s report sent to the HUD Miami field office cited missed administrative deadlines, poor recordkeeping, and a lack of “effective procedures” to ensure information reported to the Federal Government was “current and accurate.”

The report was sent to the HUD field office in Miami for review. Officials in Miami are expected to review the report and issue their own recommendations directly to the City.

The findings support the city’s own conclusions, and are similar to the results of the city’s own investigation two years ago when the city looked at the spending practices of Redemptive Life Fellowship, the local organization that contracted with the city to use those federal funds to build low-income homes in the city.

The HUD report issued two findings. The first was that the city “did not properly commit and accurately report HOME funds.”  The second was that the city “did not ensure that it charged supported and eligible expenditures to the HOME program.”

In August, 2011 following a city audit of Redemptive Life, the city notified Redemptive Life it had found 21 examples of the organization not complying with Federal or State rules, and four additional examples of areas of concern that the city felt needed “improvement to avoid future problems.”

“We have been working closely with HUD on their inquiry, have been anticipating the report, and actually met with HUD to go over it several weeks ago. The fact is that while there were issues with Redemptive Life, there were also issues with our own internal procedures,” said city spokesman Elliot Cohen. “Since then, we’ve made major changes to the way we track federal housing dollars to ensure we have the needed checks and balances.”

Under Mayor Jeri Muoio the city has changed the process involving the tracking of federal housing dollars. Specifically, the city has created an additional layer of checks and balances, through the Finance Department, to ensure the accuracy and completeness of the reporting to the Federal government.

Federal housing funds are given directly to cities. Those cities then essentially “subcontract” the work to outside organizations such as Redemptive Life.  Therefore, the HUD report only examined the city’s procedures since it was the city to whom HUD gave the money.  It is the responsibility of cities to monitor the actual spending of the money by their “subcontractors.”

The report recommends that the City “(1) recapture $559,289 in HOME funds that it did not commit by the 24-month statutory deadline, (2) reprogram $988,272 in canceled activity funds and determine whether $11,728 drawn down was for eligible expenditures, (3) provide support or reimburse its program more than $1.2 million for unsupported expenditures from non-Federal funds, and (4) reimburse $229,777 in ineligible costs from non-Federal funds.”

Those recommendations will be evaluated by HUD officials in Miami.  City officials will be working with the Miami field office in that process.

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