Reclassify $69,794 in employee payroll and benefits for City employees that did not work on rehabilitation-related activities or repay the program from non-Federal funds.

Support that expenses were related to rehabilitation activities for $66,910 in payroll expenses charged to the rehabilitation delivery expenses activity for its former environmental review specialist or repay the program from non-Federal funds.

Support that expenses were related to rehabilitation activities for $13,263 in unsupported payroll or repay the program from non-Federal funds.

Reclassify $517 in miscellaneous expenses that was incorrectly prorated or repay the program from non-Federal funds.

Provide training for its staff to ensure sufficient knowledge of CDBG requirements regarding when to charge delivery costs, including when to charge payroll to rehabilitation administration, versus general administrative costs.

Implement policies and procedures to ensure that the City includes all recipients of CDBG funds in its monitoring plan and that it selects objective sample items for monitoring.

Repay the project the $1,168,000 in ineligible distributions made to affiliated healthcare facilities during fiscal years 2015 and 2016.

Implement controls to ensure that project distributions are made from surplus cash and comply with the regulatory agreement and HUD requirements.

We recommend that the Deputy Assistant Secretary for Operations develop and implement policies to require CPD headquarters’ substantive involvement and responsibility in the risk assessment and monitoring function, including (1) oversight of risk assessment, including ensuring that all required grantees have a risk assessment performed; (2) review of annual work plans; (3) evaluation of monitoring performance and findings; (4) institution of functional supervisory controls; and (5) enforcement of field office compliance with risk analysis and monitoring requirements. If OFM does this, a minimum of $907 million in Federal funds could be put to better use by more consistently and accurately assessing risk and monitoring grantees.

We recommend that the Deputy Assistant Secretary for Operations establish a monitoring tracking system, organized on a CPD field office basis, to incorporate and track internal and external data and provide an immediate, multiyear quantification of grantees, grants, and dollar value for both monitored and not monitored grantees, allowing immediate assessment of monitoring findings, resolutions, and coverage individually and in total.

Repay from non-Federal sources the $1,451,559 in ineligible funds when the HOME program commitment requirements were not completed as required, the environmental reviews were not properly completed, and funds were not disbursed in accordance with written agreements.

Support that $1,559,908 in HOME funds disbursed was reasonable, supported, and allowable in accordance with Federal requirements or repay from non-Federal funds any amount that cannot be supported.

Support that $1,253,596 in funds not yet expended was reasonable, supported, and allowable or reallocate the funds, thus ensuring that they will be put to their intended use.

Develop and implement adequate underwriting policies and procedures for their affordable housing activities and for the downpayment assistance program to ensure that HOME activities are consistent and meet Federal requirements. Further, they should include the downpayment underwriting policies and procedures in the written agreement with the City’s subrecipient.

Cancel activities in IDIS that have had no construction in more than 12 months.

Develop and implement adequate environmental policies and procedures to ensure that HOME activities are properly classified, the environmental review is documented and supported, and that HUD and Federal environmental requirements have been followed before committing HOME funds to an activity

Determine the total supported development costs for the completed HOME activities and calculate and obtain any program income due to the HOME program.

Support that City officials properly administered the HOME program and earned $338,665 in HOME administrative fees or repay from non-Federal funds any amount that cannot be supported.

Develop and implement tools to improve record-keeping practices to support the eligibility, necessity, and reasonableness of the HOME activities.

Request that HUD headquarters recalculate the City’s commitment shortfall for program year 2013 based on the lack of the amendment with the City’s subrecipient and for the projects that were not properly committed.