We completed an audit of the City of New Rochelle, located in New Rochelle, New York, in order to evaluate its administration of the HOME Investment Partnerships Program (HOME). The objectives of the audit were to determine whether the City of New Rochelle (1) committed and expended HOME funds in accordance with HUD rules and regulations, (2) disbursed funds for only eligible activities, and (3) used funds for eligible administrative and planning costs. The review generally covered the period between January 1, 2004 and December 31, 2006.

The audit disclosed that the City of New Rochelle generally committed and disbursed HOME funds in accordance with HOME regulations; however, there were weaknesses in its administrative controls. These weaknesses resulted in unsupported costs of $12,000, inadequate monitoring of the City of New Rochelle's community housing development organization, delays in closing out activities in HUD's Integrated Disbursement and Information System, and uncertainty about the number of HOME units to be included in the City of New Rochelle's senior rental housing. Consequently, the City of New Rochelle lacked assurance that all funds expended were adequately supported, its community housing development organization functioned effectively, and the senior rental housing project would comply with HOME requirements.

We recommend that the director of the New York City Office of Community Planning and Development instruct the City of New Rochelle to: (1) submit supporting documentation for the $12,000 in unsupported disbursements or repay the amount from nonfederal funds, (2) strengthen controls over its community housing development organization monitoring and procedures to close out activities in HUD's Integrated Disbursement and Information System, and (3) clarify the number of HOME units to be included in its senior rental housing development.