We initiated a review of the City of Hawthorne’s Community Development Block Grant (CDBG) and CDBG-Recovery Act (CDBG-R) program, based on a request by the U.S. Department of Housing and Urban Development’s (HUD) Los Angeles Office of Community Planning and Development.  Our objective was to determine whether the City adequately supported its salary and program administrative cost allocations to the CDBG and CDBG-R programs in accordance with HUD requirements. 

We found that the City did not adequately support its cost allocations to its CDBG program activities in accordance with applicable HUD rules and requirements.  It was unable to properly support more than $1.6 million in employee salaries allocated to its CDBG program activities, incurred $34,028 in ineligible CDBG program costs, and incurred $12,733 in unsupported CDBG program expenses.  We found no issues with the City’s use of its CDBG-R program funds.

We recommend that the Director of HUD’s Los Angeles Office of Community Planning and Development require the City to (1) provide adequate support for more than $1.6 million in salary costs or repay the CDBG program from non-Federal funds, (2) repay the program $34,028 in ineligible administration expenses from HOME Investment Partnerships program funds, (3) provide support for $12,733 in administration costs or repay the program from HOME funds, (4) develop written policies and procedures for its salary and administrative allocation, and (5) provide training to CDBG employees on program requirements.