We audited the Saginaw Housing Commission’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus formula grant. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Commission based upon our previous audits of the Commission’s use of Federal funds and a request to perform a comprehensive review of its programs from the U.S. Department of Housing and Urban Development’s (HUD) management. Our objective was to determine whether the Commission followed Recovery Act and HUD requirements regarding the administration of its Recovery Act grant.

The Commission did not administer its grant in accordance with Recovery Act, HUD’s, and its requirements. Specifically, it (1) inappropriately procured contracts, did not maintain documentation to show that contracts were correctly procured and that Davis-Bacon Act wages were correctly paid, and did not accurately report the number of rehabilitated units in HUD’s Recovery Act Management and Performance System (RAMPS); (2) spent more than $112,000 and obligated nearly $9,200 in Recovery Act funds for activities that were not included in its 5-year action plans or annual statements of performance and evaluation for the years 2009, 2010, and 2011; (3) did not ensure that opportunities to become employed or to receive employment training were provided to eligible Section 3 participants, failed to accurately report the number of its Section 3 new hires in FederalReporting.gov and did not ensure that more than $79,000 from its Recovery Act contracts was collected and remitted to its Section 3 training fund; (4) did not maintain adequate accounting records to support its administrative draws and expenditures; (5) incorrectly spent nearly $48,000 when it did not have a valid contract for architectural services because it amended an expired contract with its architect without competition; (6) overpaid more than $11,000 when it awarded a contract for floor tile replacement without full and open competition; and (7) used nearly $142,000 for the replacement of appliances without documenting the need for new appliances and incorrectly disposed of the appliances that were replaced.

We recommend that the Director of HUD’s Detroit Office of Public Housing require the Commission to (1) provide documentation or reimburse $530,536 from non-Federal funds to HUD for transmission to the U.S. Treasury, (2) reimburse $205,815 from non-Federal funds to HUD for transmission to the U.S. Treasury, (3) correct its Recovery Act overreporting of jobs in RAMPS and FederalReporting.gov, and (4) implement adequate procedures and controls to address the findings cited in this audit report.