We audited the City of Compton’s (City) HOME Investment Partnerships Program (HOME) in response to a citizen complaint generally alleging misuse of HOME funds by the Community Redevelopment Agency (subrecipient) administering the program, including allegations stating that more than $4 million in HOME funds was missing and that program objectives were not met. Our audit objective was to determine the validity of the complaint allegations, whether program objectives were met, and if program activities complied with HOME requirements. Although we found nothing to support allegations that HOME funds were missing, we determined that the City and its subrecipient did not properly administer the program in accordance with HUD requirements. Required completion data were not always entered to close out funded activities, and appropriate source documentation had not been maintained to support activity costs or salary and wages charges. In addition, home-buyer eligibility was not correctly determined, and HOME affordability requirements were not always maintained. Finally, HOME funds were not always used within the required timeframe, and program income was not always processed in such a way to ensure compliance with HOME requirements.

We recommend that the Director of HUD’s Los Angeles Office of Community Planning and Development require the City to support or repay more than $2.2 million in HOME withdrawals for unsupported activity expenditures and unsupported salaries and wages. The City should also repay $193,420 for two home buyers who were ineligible to receive assistance, $100,000 in HOME funds used for a property that did not maintain affordability standards, and $72,397 that was drawn for a cancelled activity. Policies and procedures should be established or revised as necessary for the administration of the program, and the City should implement regular monitoring of its subrecipient.