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Línea Directa

REPORTAR FRAUDE, DESPERDICIO O ABUSO
Mayo 14, 2009
2009-BO-1008
ig0911008.pdf

We initiated an audit of the City of Holyoke, Massachusetts, Office of Community Development's (City) award and use of HOME Investment Partnerships (HOME) program set-aside funds as part of our annual audit plan. Our objective was to determine whether the City ensured that Contemporary Apartments, Inc. (Contemporary Apartments), met community development housing organization (CHDO) qualification requirements and whether the related CHDO project activities carried out by Contemporary Apartments and Olde Holyoke Development Corporation met the HUD eligibility requirements for CHDOs.

This is the first of two planned audit reports on the City's HOME program and other housing-related activities.

The City awarded more than $1.7 million in HOME program CHDO set-aside funds to Contemporary Apartments, which was not eligible to receive set-aside funds. This occurred because the City did not ensure that Contemporary Apartments was qualified to be designated as a CHDO or that the related CHDO projects met key requirements for this designation and project eligibility. Despite these deficiencies, the City certified Contemporary Apartments as a CHDO, and provided set-aside funds for three homeownership projects.

As a result, the City significantly overstated the HOME set-aside funds recorded in HUD's financial reporting systems for fiscal years 2006, 2007, and 2008. Also, due to the overstatement of reserved and expended set-aside funds, the City (through its partnership in a Regional Consortium) will not meet the statutory 15 percent spending requirement, totaling $501,000, for set-aside funds unless other qualifying projects can be identified and funded.

We recommend that the Director of the Office of Community Planning and Development in Boston require the City to (1) deobligate the $1,768,071 in HOME set-aside funds awarded to Contemporary Apartments for the three ineligible projects, and reduce the amount of set-aside funds reported in HUD financial systems accordingly, (2) ensure that the Consortium, of which the City of Holyoke is a member, has designated development projects for fiscal years 2006 through 2008 sufficient to meet the statutory requirement of $500,754 in HOME set-aside funds for CHDOs, and (3) develop and implement controls to ensure that only eligible entities as certified as CHDOs and related HOME set-aside spending amounts are appropriately awarded and reported in the future.