We completed the 16th audit report in our ongoing review of the Lower Manhattan Development Corporation’s administration of the $2.783 billion in Community Development Block Grant (CDBG) Disaster Recovery Assistance funds awarded to the State of New York in the aftermath of the September 11, 2011, terrorist attacks on the World Trade Center in New York City. During the audit period, April 1, 2010 through March 31, 2011, LMDC disbursed approximately $245 million of the $2.783 billion being administered.

The objective of this audit was to determine whether LMDC officials disbursed CDBG Disaster Recovery Assistance funds in accordance with the guidelines established under the HUD-approved partial action plans for the Chinatown Clean Streets and the New York Stock Exchange Security and Streetscape programs. LMDC officials generally disbursed the funds reviewed in accordance with the guidelines established under the HUD-approved partial action plans. However, officials approved invoices for reimbursement that were not always consistent with the terms of the subrecipient agreements and all applicable requirements.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct LMDC officials to (1) strengthen controls over the invoice approval process; (2) recoup, through offsets of future reimbursements, $107,700 in ineligible and $13,037 in unreasonable costs reimbursed under the Chinatown Clean Streets program; and (3) recover, through offsets of future reimbursements, $4,039 in ineligible costs and provide supporting documentation for $34,485 in costs reimbursed under the New York Stock Exchange Security and Streetscape program.