We performed an audit of the City of Boston’s (City) Department of Neighborhood Development (Department). We selected the City based upon the results of our previous audit of the City’s HOME Investment Partnerships Program (HOME) and the significance of the Neighborhood Stabilization Program (NSP) funds awarded. Our objective was to determine whether the City had the capacity to effectively and efficiently administer its NSP under the provisions of the Housing and Economic Recovery Act of 2008 (HERA) and the American Recovery and Reinvestment Act of 2009 (Recovery Act).

The Department should be able to meet federal requirements for administering the NSP funds under HERA and the Recovery Act. Specifically, the Department can develop sufficient capacity to administer its NSP and ensure that NSP funds are properly administered. However, the Department must revise its cost allocation procedures for allocating costs to federal programs and ensure that it follows proper, fair, and equitable procurement practices as identified in our audit report (2009-BO-1011) on the City’s administration of its HOME program. If these discrepancies are corrected, HUD can generally be assured that the City will accurately account for its use of NSP funding under HERA and the Recovery Act and use that funding only for eligible program activities.