We audited the City of Pasadena’s Community Development Block Grant program due to performance issues identified 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 administered its program in accordance with applicable HUD rules and requirements. Specifically, we wanted to determine whether its projects complied with program requirements.
The City did not always administer its program in accordance with HUD rules and requirements. Specifically, it did not always follow documentation requirements and did not ensure that its subrecipient followed conflict-of-interest requirements. This condition occurred because the City did not always obtain supporting documentation for program expenses. Also, City staff did not have sufficient knowledge of HUD contract requirements, nor did it have adequate policies and procedures to ensure that program-funded projects and expenses complied with HUD rules and requirements. In addition, the City did not have sufficient controls to ensure that it met conflict-of-interest requirements. As a result, it spent $334,774 in program funds without supporting that these expenses and projects met program requirements and $48,611 in ineligible program funds, which resulted in a potential unfair competitive advantage for a vendor.
We recommend that the Director of HUD’s Los Angeles Office of Community Planning and Development require the City to (1) obtain written agreements and support the eligibility of $284,649; (2) revise or reclassify the national objective for $38,165; (3) support the eligibility of $11,960; (4) establish and implement written policies and procedures to ensure that all program expenses and projects comply with program rules and requirements; (5) provide training to program staff on program rules and requirements; (6) repay the program for $48,611 in ineligible costs; (7) monitor its subrecipients and ensure that they meet program procurement requirements; and (8) establish and implement written policies and procedures to minimize instances of potential conflicts of interest that violate program rules and requirements, agreements, and the City’s own procurement policies and procedures.