We audited the City of Huntington Park's (City) HOME Investment Partnerships Program (HOME) due to an increased emphasis on HUD Office of Community Planning and Development programs and recent HUD monitoring and financial audit reports that identified problems with the City's overall management and administration of its HOME program. Our objectives were to determine whether the conditions identified in the HUD monitoring and single audit reports still existed and whether the City administered its HOME program in accordance with HOME requirements.

We found that the City did not ensure that its contracted community housing and development organization supported homebuyers' income eligibility with appropriate source documentation and that income determinations were performed in accordance with HOME requirements. The City also did not ensure that HOME affordability requirements were imposed with the sale of a property. As a result, $296,599 in HOME funds was unsupported and income eligibility determinations did not meet HOME requirements. In addition, $204,442 earned from the sale of property was retained by the community housing and development organization for four years and has not been applied to another project.

We recommend HUD require the City to provide documentation to support the eligibility of homebuyers with unsupported income or repay the $296,599 in HOME funds that were spent on the project, establish procedures with sufficient detail to ensure that income determinations are performed consistent with HOME requirements, and ensure that the future use of proceeds that are retained by a community housing and development organization are documented in a written agreement.