We completed an audit of the City of Rome, New York's (City), administration of its economic development activity known as General Cable under its Community Development Block Grant (CDBG) program. The objectives of our audit were to determine whether the City (1) administered this economic development activity effectively, efficiently, and economically in accordance with applicable U.S. Department of Housing and Urban Development (HUD) rules and regulations and (2) expended related CDBG funds for eligible activities that met a national objective of the program.

The audit disclosed that the City did not always carry out its activities effectively, efficiently, and economically in compliance with HUD regulations. Further, it expended CDBG funds for an activity that did not meet a national objective of the program. Specifically, the City failed to (1) develop a plan to ensure that the required job creation goal would be achieved, (2) adequately address known concerns about the activity's progress, and (3) maintain adequate supporting documentation. As a result, no jobs were created, and there was no assurance that activity costs were necessary, reasonable, and in accordance with federal regulations. Consequently, the City did not use CDBG funds to address community needs.

We recommend that HUD instruct the City to (1) implement procedures and controls to ensure that funded economic development activities are feasible and can be completed in a timely manner to meet a national objective of the CDBG program, (2) establish a schedule for documenting completion of the activity and the jobs retained and/or created at the site, and (3) reimburse HUD any portion of the more than $2.95 million in CDBG funds expended on the activity for costs that do not qualify as meeting the job creation requirement.