We reviewed the developer fees the County of San Bernardino paid to its Neighborhood Stabilization Program (NSP) developers.  Our objective was to determine whether the County adequately ensured that NSP developer fees paid to its developers met HUD requirements.  We performed our review to address questionable costs identified during a prior Office of Inspector General (OIG) review (audit report 2014-LA-0002).  During that review, we found that for one of the County’s NSP-funded properties, there were instances in which project management costs were claimed and received by the developer when it appeared that the County should have paid the costs through an agreed-upon developer fee.  HUD issued policy alerts stating that HUD considers such project management fees “double-dipping” and not allowed under NSP.

The County adequately ensured that NSP developer fees paid to its developers met HUD requirements.  Documentation provided during OIG’s initial review was incomplete and made it appear as though there were indications of “double-dipping”; however, based on a more indepth review, we concluded that was not the case and the developer fees paid were eligible expenses.

This report contains no formal recommendations, and no further action is necessary.