The U.S. Department of Housing and Urban Development's Office of Inspector General reviewed the City of Saginaw’s (City) Community Development Block Grant (Block Grant) program under the American Recovery and Reinvestment Act of 2009 (Act). The review was part of the activities in our fiscal year 2010 annual audit plan. We selected the City based upon the results of our prior audit of the City’s Block Grant-funded demolition activities. Our objective was to determine whether the City had the capacity to effectively and efficiently administer its Block Grant program under the Act. We found that the City’s capacity to effectively and efficiently administer its Block Grant program under the Act had weaknesses. Specifically, the City: (1) did not have documentation, such as a use survey, to support that work associated its program principally benefited Saginaw’s low- to moderate- income residents; (2) lacked a work completion schedule in its program contract; (3) did not follow HUD’s regulations and its own requirements for monitoring the program project; (4) had not established sufficient policies and procedures for its Block Grant program under the Act.
We recommend that the Director of HUD’s Detroit Office of Community Planning and Development require the City to provide documentation, such as a use survey, to support that the $335,750 in Block Grant funds under the Act principally benefitted the City’s low- to moderate-income residents. If the City cannot provide supporting documentation, it should amend its substantial amendment to remove the program project and include for the $335,750 in Block Grant funds an eligible activity or activities that meet one of HUD’s three national objectives. We also recommend that HUD's Director require the City to implement adequate policies, procedures, and controls to ensure that Block Grant funds under the Act are used effectively and efficiently and in accordance with applicable requirements.