We audited the District of Columbia’s (grantee) administration of its HOME Investment Partnerships program (HOME) at the request of the U.S. Department of Housing and Urban Development’s (HUD) Office of Affordable Housing. This is our second and final of two reports issued in relation to the grantee’s administration of its HOME program. The objective addressed in this report was to determine whether the grantee properly administered its HOME program by providing home ownership and rehabilitation assistance in accordance with Federal requirements, ensuring that its Community Housing Development Organizations (CHDO) were eligible and complied with HOME program requirements, and implementing sufficient controls over the receipt and expenditure of HOME funds.

The grantee did not administer its HOME program in accordance with Federal requirements. It (1) obligated more than $2.5 million in HOME funds for an activity/project that was significantly delayed and not completed, (2) did not properly manage funds that it drew for downpayment assistance and financing of home repairs, (3) committed and disbursed CHDO operating funds for an ineligible CHDO, and (4) did not properly account for program administrative funds. These deficiencies occurred because the grantee did not have and/or implement sufficient procedures to ensure that it complied with program requirements. As a result, it charged more than $1.6 million in ineligible costs to its HOME program and could not support approximately $6.5 million in costs charged to the program. The grantee also accumulated more than $1.5 million in funds that it could have used to improve its administration of its HOME program and/or fund additional eligible HOME projects.

We recommend that the Director of HUD’s Washington, DC, Office of Community Planning and Development require the grantee to recover more than $1.6 million that it spent on ineligible expenses and provide support for approximately $6.5 million in expenses or repay that amount to the HOME program. In addition, the grantee should use approximately $1.6 million in accumulated funds to improve its administration of the program and/or fund additional eligible HOME projects. Lastly, we recommend that the grantee create and implement procedures to ensure that HOME funds are disbursed and used in compliance with applicable requirements.