We audited the city of Dallas’ management of its community housing development organizations (CHDO). We performed this audit because of our previous audit work on the City’s Home Investment Partnerships program. During that audit, we concluded that the City did not follow HOME regulations and its own policies and procedures in its reconstruction program or the administration of its match contributions, resulting in more than $4.2 million in ineligible funds. Our audit objective was to determine whether the City managed its CHDOs in accordance with U.S. Department of Housing and Urban Development (HUD) regulations and guidance, including environmental requirements.
The City did not follow environmental requirements or effectively manage its CHDOs. The City did not always (1) complete an environmental review or obtain HUD approval before committing funds, (2) maintain environmental review documentation, exercise due diligence or (3) properly administer its CHDO program in accordance with requirements. These conditions occurred because the City did not fully understand or follow HUD environmental or HOME regulations and its own policies, procedures, and contract terms. As a result, it misspent more than $6.6 million and did not account for more than $180,000 in program income.
We recommended that the Director of the Fort Worth Office of Community Planning and Development require the City to (1) repay approximately $2.4 million in funds committed before completion of an environmental review or HUD approval; (2) support or repay $424,325 in fund committed to projects without environmental reviews; (3) support or repay more than $3.8 million for unsupported files and draws; (4) support or repay $180,051 in program income; (5) repay $13,055 in ineligible costs; and (6) strengthen its underwriting procedures and implement documentation, homebuyer income verification, and CHDO recertification procedures.
Recommendations
Community Planning and Development
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Status2019-FW-1004-001-AOpenClosed$2,451,097.00Questioned 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 March 31, 2021We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to repay $2,398,872 from non-Federal funds to the City’s HOME program for funds committed to projects before the completion of an environmental review or HUD approval.
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Status2019-FW-1004-001-BOpenClosed$424,325.00Questioned 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 21, 2020We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to support or repay $424,325 from non-Federal funds to the City’s HOME program for funds committed without documentation of an environmental review.
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Status2019-FW-1004-001-COpenClosedClosed on March 02, 2020
We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to comply with HOME’s environmental requirements, including required restrictive contract language, and maintaining documentation of environmental reviews.
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Status2019-FW-1004-002-AOpenClosed$1,959,913.00Questioned 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 21, 2020We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to support or repay $1,959,913 from non-Federal funds to the City’s Community Development Block Grant program for funds expended for Serenity Place Apartments because the City cannot locate any of the project files.
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Status2019-FW-1004-002-BOpenClosed$1,676,716.00Questioned 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 March 31, 2021We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to support or repay $1,402,875 from non-Federal funds to the City’s HOME program for CHDO draws paid with no supporting documentation.
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Status2019-FW-1004-002-COpenClosed$180,051.00Questioned 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 March 31, 2021We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to support or repay $80,842 in program income from non-Federal funds to the City’s HOME program.
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Status2019-FW-1004-002-DOpenClosed$105.00Questioned 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 March 02, 2020We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to repay $105 in ineligible costs from non-Federal funds to the City’s HOME program.
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Status2019-FW-1004-002-EOpenClosedClosed on March 02, 2020
We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to strengthen and comply with its underwriting and project evaluation policies and procedures, including ensuring that when it signs and commits funds, project construction can begin within 12 months.
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Status2019-FW-1004-002-FOpenClosedClosed on March 30, 2021
We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to develop and implement policies and procedures on documentation required to support draws.
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Status2019-FW-1004-002-GOpenClosedClosed on March 02, 2020
We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to comply with requirements to obtain the required income documentation, including ensuring that employees know and apply the requirements.
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Status2019-FW-1004-002-HOpenClosedClosed on March 02, 2020
We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to develop and implement policies and procedures to review source income documentation as required by the HOME regulations.
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Status2019-FW-1004-002-IOpenClosedClosed on August 28, 2020
We recommend that the Director of the Fort Worth Office of Community Planning and Development require the City to develop and implement policies and procedures for documenting the results of its recertification procedures, including documenting the results of unpaid taxes, the resolution of CHDO audit findings, and the resolution of ineligible CHDO board members or employees because of a SAM search.