We audited of the City of Chicopee, Massachusetts (City), Office of Community Development's administration of its Community Development Block Grant (CDBG) program. The objectives of the audit were to evaluate the City's administration of its public facilities and improvement activities funded through the CDBG program and its oversight and monitoring of CDBG funds it provided to the City's Parks and Recreation Department and Department of Public Works for various public facilities and improvement activities.

The City's Office of Community Development did not properly administer more than $4.3 million in public facilities and improvement activities funded through its CDBG program. Specifically, conflict-of-interest regulations were violated, which resulted in ineligible projects being funded and the improper use of more than $1.1 million in CDBG funds. The Office of Community Development also did not properly support that more than $4.3 million in CDBG-funded public facilities and improvement activities met the low-to-moderate-income benefit requirements. Further, it did not adequately monitor or provide oversight of CDBG funds provided to the City's Parks and Recreation Department and Department of Public Works for public works and facilities activities. As a result,

Contracts funded with CDBG funds included more than $628,000 in prohibited or unsupported maintenance and repair activities,
Federal requirements for procurement and contracting were not always followed,
Federal provisions for financial management were not always followed, and
Davis-Bacon requirements for labor compliance were not always met.
We recommend that the Director of the U.S. Department of Housing and Urban Development's (HUD) Boston Office of Community Planning and Development require the City to repay the $1.1 million in ineligible costs from nonfederal sources. We recommend that the Deputy Director of the Departmental Enforcement Center pursue all applicable administrative sanctions against the City, including debarring individuals involved in the decision to expend these funds. We also recommend that the Director of HUD Boston Office of Community Planning and Development (1) ensure that the City provides supporting documentation for the unsupported costs, including adequately documenting the service area, or take administrative action requiring repayment of amounts not adequately supported or determined to be ineligible; (2) require the Office of Community Development to establish written oversight policies and procedures that meet HUD requirements for awarding, administering, and monitoring CDBG program funds; and (3) require the City to repay from nonfederal funds CDBG program funds spent on prohibited or unsupported maintenance and repair activities.