We audited the U.S. Department of Housing and Urban Development’s (HUD) San Francisco and Los Angeles Offices of Community Planning and Development’s (CPD) monitoring of CPD-funded assets transferred by former redevelopment agencies due to concerns that CPD-funded assets may be lost during the State of California’s statewide mandated closure of redevelopment agencies.  Our objective was to determine whether the San Francisco and Los Angeles CPD field offices monitored grantees’ CPD-funded assets transferred by former redevelopment agencies to minimize HUD’s risk. 

The San Francisco and Los Angeles CPD field offices did not monitor grantees’ CPD-funded assets transferred by former redevelopment agencies to minimize HUD’s risk.  Further, the CPD offices did not record and maintain accurate and complete lists of grantees’ CPD-funded assets or track CPD-funded assets managed by the grantees’ former redevelopment agencies during the State’s mandated shutdown of the agencies.  Therefore, there was no assurance that CPD had a complete and accurate account of CPD-funded assets.  As a result, more than $99 million in CPD funds used to acquire assets by the defunct redevelopment agencies is at risk of being transferred to entities that may not continue to meet HUD’s CPD program objectives.

We recommend that HUD (1) develop policies and procedures that allow for more proactive monitoring of grantees’ CPD funding and assets, (2) establish a formal listing of assets funded through CPD, and (3) require its grantees to provide adequate documentation supporting the grantees’ enforceable rights to CPD-funded assets as required in HUD regulations and requirements.