Provide support for the administrative fees or repay the Continuum of Care grants $663,070 from non-Federal funds. (See appendix D.)

Submit an indirect cost rate schedule for its Continuum of Care grants to HUD for approval.

Develop and implement written policies and procedures for its administrative fee charges.

Support the $126,824 in total incentive payments. For any amount it cannot support, HUD should require the project development group, LP, to pay the equivalent, from any of its reserves other than reserve for replacement, toward the project mortgage principle.

Develop and implement controls over its incentives program, including record-keeping requirements; defined processes, such as a detailed checklist of available incentives, including monetary limits; and supervisory review requirements.

Require the Authority to support the $9,608 payment with the required 2 years of average annual net earnings. For any amount that cannot be supported, HUD should require the Oak Towers Housing Development Group, LP, to pay the equivalent, from any of its reserves other than reserve for replacement, toward the Oak Towers mortgage principle.

Take appropriate administrative actions against Authority staff for noncompliance.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to reimburse from non-Federal funds the $2,595,127 paid to purchase six properties that were not substantially damaged. Further, the State should identify and reimburse from non-Federal funds any additional Disaster Recovery funds used to acquire and dispose of the properties.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to reimburse from non-Federal funds the $783,571 paid to purchase two properties that did not comply with flood hazard requirements and for which the State did not have sufficient documentation to show that the properties were substantially damaged. Further, the State should identify and reimburse from non-Federal funds any additional Disaster Recovery funds used to acquire and dispose of the properties.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to support the hardship letter provided for a property located outside the 500-year floodplain and documentation to show that the property was substantially damaged or reimburse from non-Federal funds the $435,069 in settlement costs paid to purchase the property. Further, the State should identify and reimburse from non-Federal funds any additional Disaster Recovery funds used to acquire and dispose of the property.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to reimburse from non-Federal funds the $183,500 in incentives paid to a homeowner that failed to maintain flood insurance.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to show that the five properties for which the homeowners failed to maintain flood insurance were eligible for assistance and documentation to show that the properties were substantially damaged or reimburse from non-Federal funds the $1,336,883 paid to purchase the properties, including incentives for one property. Further, the State should identify and reimburse from non-Federal funds any additional Disaster Recovery funds used to acquire and dispose of the properties.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation to show that the remaining nine properties were substantially damaged or reimburse from non-Federal funds the $4,158,836 paid to purchase the properties. Further, the State should identify and reimburse from non-Federal funds any additional Disaster Recovery funds used to acquire and dispose of the nine properties.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to conduct a review of the universe of properties purchased through the acquisition component of its program to ensure that properties were eligible and reimburse from non-Federal funds the Disaster Recovery funds used in connection with any additional properties found to be ineligible. For example, the State’s review could include verification that (1) its files contained the required substantial damage letters, (2) the letters provided by applicants reflected the most recent substantial damage determination made by local officials, (3) substantial damage determinations were adequately supported, (4) properties met flood hazard requirements, and (5) properties were not FEMA-noncompliant.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to provide documentation showing that the acquisition component of its program has ended or improve its controls over the program to ensure that properties purchased are eligible. This recommendation includes but is not limited to updating its policies and procedures and implementing verification processes to ensure that it verifies information provided by applicants and other entities.

Reimburse its HOME program $10,389 ($8,797 $1,592) from non-Federal funds for the overpayment of housing assistance due to inappropriate recertifications and calculations of housing assistance.

Reimburse the four HOME program participants $468 from program funds for the underpayment of housing assistance due to inappropriate calculations of housing assistance.

Reimburse its CoC program $112,827 ($109,259 $3,568) from non-Federal funds for the overpayment of housing assistance due to inappropriate recertifications and calculations of housing assistance.

Reimburse the three CoC program participants $260 from program funds for the underpayment of housing assistance due to inappropriate calculations of housing assistance.

Support or reimburse its CoC program $7,309 from non-Federal funds for the unsupported housing assistance payments.