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The City of Colorado Springs Did Not Always Administer Its CDBG Program in Accordance With Applicable Requirements

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the City of Colorado Springs’ Community Initiatives and Economic Vitality Division based upon findings identified in U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, memorandum number 2014-DE-1802.  Our audit objective was to determine whether the City used its grant funds for eligible project costs and performed environmental reviews of its projects.

The City used grant funds for unsupported salary and project costs.  It could not support its Community Development Block Grant (CDBG) salaries from 2009 to 2013 totaling more than $3.8 million and could not support any expenditures for a 2011 capital improvement project totaling more than $67,000.    Additionally, the City did not properly complete environmental reviews of its projects.  It did not document the exempt status for its human service projects and did not complete a full environmental review of 22 of its non-human service projects totaling more than $3.1 million.

We recommend that the Director of the Denver Office of Community Planning and Development require the City to (1) provide support for more than $3.8 million in unsupported salary costs or reimburse HUD from non-Federal funds any portion of that amount that it cannot support; (2) provide support for more than $67,000 in unsupported project costs or reimburse HUD from non-Federal funds any portion of that amount that it cannot support; (3) develop and implement a detailed payroll tracking system to ensure that only costs incurred in administering the CDBG program are charged to the CDBG grants; (4) develop and implement a system to track its project files; (5) develop and implement detailed policies and procedures to ensure that the City complies with HUD environmental review requirements; and (6) provide support for the 22 non-human service CDBG projects, showing that each project was either exempt or complied with environmental requirements and for any portion of the more than $3.1 million not supported, the City should reimburse HUD from non-Federal funds.