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We audited the Sacramento Housing and Redevelopment Agency’s Community Development Block Grant (CDBG) program, based on an Office of Inspector General risk assessment and U.S. Department of Housing and Urban Development (HUD) concerns.  The objective of our audit was to determine whether the Agency used the City of Sacramento’s CDBG funds in accordance with HUD requirements and adequately monitored its subrecipients. 

The Agency adequately monitored its subrecipients.  However, it did not always use CDBG funds in accordance with HUD requirements or its own policies.  Specifically, it did not (1) seek competition or maintain adequate documentation for four of its activities, (2) properly classify three capital improvement projects, or (3) ensure that one activity continued to meet national objective requirements.  Additionally, the Agency paid for $283 in unallowable costs.  This condition occurred because the Agency disregarded HUD regulations and its own procurement policy.  As a result, HUD had no assurance that $385,414, which the Agency spent on four activities, was a fair and reasonable cost.  Also, the Agency did not properly classify three activities totaling $119,150.

We recommend that the Director of HUD’s San Francisco Office of Community Planning and Development require the Agency to (1) provide supporting documentation for four procurements made without adequate competition totaling $385,414; (2) support that three feasibility studies met a final cost objective, reclassify the activities as administration and planning, or repay the program $55,200 from non-Federal funds; (3) reimburse its program $283 from non-Federal funds for unallowable costs; (4) provide training to its employees regarding allowable costs;; and (5) provide training on CDBG and  procurement regulations to staff involved in CDBG activities.