We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to ensure that tenant income is properly verified and maintain EIV reports as required.

We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to perform and document annual inspections as required.

We recommend that the Southwest Region Director of Multifamily Housing require the Northline Point Apartments’ owner to implement appropriate controls to ensure that tenants are eligible, housing assistance subsidies are accurate, tenants are properly moved and transferred, transactions are properly coded, units are inspected as required, and tenant files contain all required documentation.

We also recommend that the Southwest Region Director of Multifamily Housing verify that the owner is providing oversight to its onsite staff and its recently implemented quality control procedures are working as designed and in accordance with HUD requirements.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to support the appraised fair market values of the 14 properties sampled to ensure that $5,920,097 in settlement costs was supported. This recommendation includes but is not limited to providing support to show that appraisals contained accurate and verified information for the subject and comparable properties, time adjustments were supported, and other adjustments were supported. If support cannot be provided, the State should reimburse the unsupported costs from non-Federal funds.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to support the appraised fair market values of the 942 other properties included in our sampling universe to ensure that $361,465,173 in settlement costs was supported. This recommendation includes but is not limited to providing support to show that appraisals contained accurate and verified information for the subject and comparable properties, time adjustments were supported, and other adjustments were supported. If support cannot be provided, the State should reimburse the unsupported costs from non-Federal funds.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to support the appraised fair market values of any other properties purchased under the program since January 2016 that relied upon appraisals conducted by the contractors discussed in this report to ensure that settlement costs for those properties were supported. If support cannot be provided, the State should reimburse the unsupported costs from non-Federal funds.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to strengthen controls over the property valuation process for its program to ensure that up to $93,350,616 not yet disbursed is put to better use. This recommendation includes but is not limited to implementing a process to review the appraisal and quality control work to ensure that appraised fair market values are supported and that quality control reviews are performed as required by Federal, State, and industry standards and to take appropriate action for cases in which the work does not comply with requirements.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to show that $3,119,209 paid for appraisals and poststorm addenda performed by its contractor was reasonable, supported, and for services that were performed in accordance with applicable requirements or reimburse any unsupported costs from non-Federal funds.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to show that $156,940 paid for sales brochures, economic land analysis studies, and consultant fees was reasonable, necessary, supported, and for services that were performed in accordance with applicable requirements or reimburse any unsupported costs from non-Federal funds.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to show that $75,006 used for appraisal quality control reviews was for services that complied with applicable requirements or reimburse any unsupported costs from non-Federal funds.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to show that $118,800 paid to the State’s contractor for appraisals performed by its subcontractors was reasonable, supported, and for services that were performed in accordance with applicable requirements or reimburse any unsupported costs from non-Federal funds.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to execute an agreement with the City for the use of appraisal services and obtain documentation to show that services were procured in accordance with applicable requirements and that contracts contained all required provisions. If the State cannot provide the executed agreement and documentation, HUD should use one or more of the remedies for noncompliance in 24 CFR 570.495.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to strengthen controls to ensure that future Disaster Recovery funds used for appraisal services and quality control reviews under the program are for costs that are reasonable, necessary, supported, and for services that comply with applicable requirements.

We recommend that Deputy Assistant Secretary for Grant Programs require two grantees to repay $167,254,244 for grants funds spent in excess of the amount obligated for a round.

We recommend that Deputy Assistant Secretary for Grant Programs require five grantees to repay $24,409,255 for grant funds spent before the grantee had signed a grant round agreement obligating the funds.

We recommend that Deputy Assistant Secretary for Grant Programs require four grantees to repay $334,441,871 for grant funds spent by the grantee after the grant round’s 24-month expenditure deadline had expired.

We recommend that Deputy Assistant Secretary for Grant Programs recapture $524,289 in grant funds, which the grantee had not reported spent by the grant round expenditure deadline, and return the funds to the U.S. Treasury as HUD can no longer reobligate the funds.

We recommend that Deputy Assistant Secretary for Grant Programs adopt and enforce new written policies, procedures, and internal controls for all CDBG Disaster Recovery funds that have a statutory grantee expenditure deadline, which will ensure that $413,530,414 in 2013 Act funds will be put to better use.

We recommend that Deputy Assistant Secretary for Grant Programs take action to correct and address the DRGR system material internal control weaknesses identified in this report.