We audited the U. S. Department of Housing and Urban Development (HUD) Neighborhood Stabilization Program (NSP1) administered by the Texas Department of Housing and Community Affairs. We selected the Department based upon the large amount of NSP1 funding that it received, more than $101 million. Our objective was to determine whether the Department complied with NSP1 requirements for obligations, expenditures, program income, monitoring, and reporting.

The Department improperly obligated $42,182. In addition, it could not support more than $25 million in obligations made by the deadline and $8,767 in expenditures. Further, it did not report on its progress as required and did not appear to be on schedule to spend funds within required timeframes. As a result, the Department could not assure HUD that it properly managed its more than $101 million program.

We recommended that the Fort Worth Director of HUD’s Office of Community Planning and Development recapture $42,182 that the Department obligated improperly, and require the Department to provide support for more than $25 million in unsupported obligations and costs.