We audited the City of Chicago’s Department of Public Health’s (Department) Lead Hazard Reduction Demonstration Grant Program based on our analysis of the U.S. Department of Housing and Urban Development’s (HUD) Office of Lead Hazard Control and Healthy Homes grantees in Region 5’s jurisdiction. Our audit objective was to determine whether the Department administered the Program in accordance with HUD’s and its own requirements.
The Department did not administer the Program in accordance with HUD’s and its own requirements. Specifically, it did not (1) properly procure its subcontractor, (2) make appropriate reimbursements to the subcontractor for Program activities, (3) ensure that income was properly calculated for households residing in assisted units, (4) ensure that landlords gave preference in renting assisted units to targeted families, (5) properly document its lead inspection results to support that Program activities were necessary, (6) ensure that Program funds were adequately protected, and (7) ensure that it accurately report the number of assisted units to HUD. As a result, the Department lacked support that more than $512,000 in Program funds was used in accordance with HUD’s requirements and did not have more than $122,000 in Program funds available for eligible activities. In addition, HUD and the Department lacked assurance that more than $386,000 in Program funds was protected and available for program use.
We recommend that the Director of HUD’s Office of Lead Hazard Control and Healthy Homes require the Department to support that the contract for grant administration services was cost reasonable or reimburse the program, reimburse its programs for duplicate reimbursements and for four units that had been sold within 3 years, support the eligibility of households residing in assisted units and that landlords gave preference in renting units or reimburse the program, and implement adequate procedures and controls to address the findings cited in this audit report.
Recommendations
Lead Hazard Control
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Status2018-CH-1010-001-AOpenClosed$387,443.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on February 11, 2022Support that grant administration services paid were cost reasonable or reimburse its Program $387,443 from non-Federal funds.
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Status2018-CH-1010-001-BOpenClosed$204,138.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on February 03, 2022Reimburse its Program $102,069 from non-Federal funds for the duplicate payments made to its subcontractor for lead-based paint and other health hazard control activities.
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Status2018-CH-1010-001-COpenClosed$88,258.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on November 04, 2021Coordinate with HUD’s Office of Lead Hazard Control and Healthy Homes to determine whether $88,258 in Program funds ($77,597 $10,661) may be drawn down and used to reimburse its subcontractor if the lead-based paint and other health hazard control activities are determined to be eligible.
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Status2018-CH-1010-001-DOpenClosedClosed on September 30, 2020
Determine whether the subcontractor is owed payment for 21 units, which the Department’s records showed were assisted under the Program but were not identified as assisted units according to documentation maintained by the Department to support its drawdowns from HUD’s LOCCS. If the Department determines that the subcontractor is owed payment for the lead-based paint and other health hazard control activities, it should provide support that the lead-based paint and other health hazard control activities were eligible and that the subcontractor was not reimbursed for these activities from non-Program funds. If these conditions have been met, the Department should reimburse the subcontractor from Program funds.
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Status2018-CH-1010-001-EOpenClosedClosed on November 04, 2021
Determine whether appropriate reimbursements were made to the subcontractor for the remaining 166 assisted units that were not a part of our review. If the Department determines that appropriate reimbursements were not made, it should provide support that the lead-based paint and other health hazard control activities are Program eligible and the subcontractor was not reimbursed for these activities from non-Program funds. If these conditions have been met, the Department should reimburse the subcontractor from Program funds.
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Status2018-CH-1010-001-FOpenClosed$119,766.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on February 03, 2022Support that the four households residing in assisted units were income eligible or reimburse its Program $59,883 from non-Federal funds for the lead-based paint and other health hazard control activities completed in the assisted units.
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Status2018-CH-1010-001-GOpenClosed$41,240.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on April 27, 2021Support that landlords gave preference in renting six vacant units to families with children under 6 years of age or reimburse its Program $41,240 from non-Federal funds for the lead-based paint and other health hazard control activities completed at these assisted units.
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Status2018-CH-1010-001-HOpenClosed$23,857.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on May 19, 2022Support that lead-based paint hazard control activities were necessary at 13 assisted units or reimburse its Program $23,857 from non-Federal funds for the unsupported lead-based paint hazard control activities completed at these assisted units.
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Status2018-CH-1010-001-IOpenClosed$2,900.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on November 04, 2021Reimburse its Program $2,900 from non-Federal funds for the two units in which the seven windows were not installed.
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Status2018-CH-1010-001-JOpenClosed$17,507.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on November 04, 2021Transfer $17,507 in non-Federal funds to its Childhood Lead Poisoning Prevention Program and use the funds in accordance with the program grant requirements since these funds were not recaptured after the four assisted units were sold within 3 years.
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Status2018-CH-1010-001-KOpenClosed$297,924.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on November 16, 2021Execute agreements with owners of the assisted units detailing the Department’s recapture policy and determine whether liens should be filed with the appropriate government office to ensure that Program funds used to assist the units are properly protected and able to be recaptured if assisted units are resold within 3 years. These protections should ensure that $297,924 in Program funds is adequately protected.
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Status2018-CH-1010-001-LOpenClosedClosed on November 04, 2021
Implement adequate procedures and controls to ensure that (1) contracts are properly procured in accordance with HUD’s requirements, (2) annual income is properly calculated for households residing in assisted units, (3) the appropriate reimbursement payments are made to the subcontractor for lead-based paint and other health hazard control activities, (4) lead inspection results properly support lead-based paint hazard control activities, (5) it complies with its work plan regarding executing agreements with property owners and determining whether other mechanisms are needed to enforce the agreements. This measure would ensure that future Program funds are protected, and (6) accurate and complete information regarding assisted units is reported to HUD.
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Status2018-CH-1010-001-MOpenClosedClosed on April 27, 2021
Develop and implement adequate procedures and controls to ensure that assisted rental units are prioritized for families with children under 6 years of age.