We audited the operations of the City of Syracuse, NY, pertaining to its Community Development Block Grant (CDBG) program. The objectives of the audit were to determine whether the City administered its CDBG program effectively, efficiently, and economically in accordance with applicable rules and regulations. Specifically, we wanted to determine whether City officials had (1) established and implemented the necessary controls to ensure that program activities were adequately documented and administered in accordance with HUD regulations, and (2) expended CDBG funds for eligible activities.

The City did not always administer its CDBG program in accordance with HUD regulations. Specifically, it had administrative weaknesses in its float loan program. City officials could not demonstrate that $907,195 in float loan funds used to finance 11 new housing construction activities (1) were provided to qualified nonprofits; (2) were necessary, reasonable, and adequately supported; and (3) met a national objective. Review of four CDBG Special Housing Program activities revealed that City officials did not ensure that national objectives were obtained; costs charged were necessary, reasonable, and adequately supported; and performance goals were achieved. In addition, 38 CDBG activities administered by both the City and various subrecipients, budgeted for funding during program years 2004-2007, had been either not completed or not started due to a lack of controls.

We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct City officials to (1) repay from non-Federal funds the $162,200 in ineligible float loan activity costs; (2) submit documentation to justify the unsupported float loan costs of $744,995 and unsupported Special Housing Program costs of $415,927, so that HUD can make an eligibility determination, and repay any amounts determined to be ineligible; (3) reallocate for other viable activities the $408,282 in unused CDBG funding authority related to the 38 activities from program years 2004-2007 that had been either not completed or not started or return the unused funds to the U.S. Treasury; and (4) establish controls to ensure that costs are eligible and necessary before being charged to the program, program activities meet a national objective, and performance goals are accomplished.