Develop and implement policies to safeguard HUD funds by ensuring that its projects meet national objectives, have a completed environmental review, and have executed agreements for all projects and verify that work is complete before approving payment, including its rental rehabilitation projects.

Update policies and procedures to ensure that costs are reasonable, including preparing an independent cost estimate and a detailed scope of work for each project.

Support that $173,508 spent on homeowner rehabilitation project expenses was reasonable or repay the program from non-Federal funds.

Update and implement policies and procedures to ensure that all procurements are conducted in a manner that promotes full and open competition and avoids any arbitrary action in the procurement process, including ensuring that contractors are given sufficient time to respond to solicitations.

Repay from non-Federal funds $257,737 from voucher 6035061 for the duplicate draw.

Support that $45,304 drawn in advance met eligibility and procurement requirements and costs were reasonable or repay the unsupported amount from non-Federal funds.

Update its policies and procedures to ensure that the City issues payments to vendors and obtains reimbursement from HUD only after the City’s Community and Economic Development Department has verified that work is complete.

Support that $323,563 spent on rehabilitation administration charged in program year 2015 costs was reasonable and benefited the City’s rehabilitation program or repay the program from non-Federal funds any amount determined to be unreasonable or ineligible.

Reclassify $69,794 in employee payroll and benefits for City employees that did not work on rehabilitation-related activities or repay the program from non-Federal funds.

Support that expenses were related to rehabilitation activities for $66,910 in payroll expenses charged to the rehabilitation delivery expenses activity for its former environmental review specialist or repay the program from non-Federal funds.

Support that expenses were related to rehabilitation activities for $13,263 in unsupported payroll or repay the program from non-Federal funds.

Reclassify $517 in miscellaneous expenses that was incorrectly prorated or repay the program from non-Federal funds.

Provide training for its staff to ensure sufficient knowledge of CDBG requirements regarding when to charge delivery costs, including when to charge payroll to rehabilitation administration, versus general administrative costs.

Implement policies and procedures to ensure that the City includes all recipients of CDBG funds in its monitoring plan and that it selects objective sample items for monitoring.

Repay the project the $1,168,000 in ineligible distributions made to affiliated healthcare facilities during fiscal years 2015 and 2016.

Implement controls to ensure that project distributions are made from surplus cash and comply with the regulatory agreement and HUD requirements.

We recommend that the Deputy Assistant Secretary for Operations develop and implement policies to require CPD headquarters’ substantive involvement and responsibility in the risk assessment and monitoring function, including (1) oversight of risk assessment, including ensuring that all required grantees have a risk assessment performed; (2) review of annual work plans; (3) evaluation of monitoring performance and findings; (4) institution of functional supervisory controls; and (5) enforcement of field office compliance with risk analysis and monitoring requirements. If OFM does this, a minimum of $907 million in Federal funds could be put to better use by more consistently and accurately assessing risk and monitoring grantees.

We recommend that the Deputy Assistant Secretary for Operations establish a monitoring tracking system, organized on a CPD field office basis, to incorporate and track internal and external data and provide an immediate, multiyear quantification of grantees, grants, and dollar value for both monitored and not monitored grantees, allowing immediate assessment of monitoring findings, resolutions, and coverage individually and in total.

Repay from non-Federal sources the $1,451,559 in ineligible funds when the HOME program commitment requirements were not completed as required, the environmental reviews were not properly completed, and funds were not disbursed in accordance with written agreements.

Support that $1,559,908 in HOME funds disbursed was reasonable, supported, and allowable in accordance with Federal requirements or repay from non-Federal funds any amount that cannot be supported.