U.S. flag

An official website of the United States government Here’s how you know

The .gov means it’s official.

Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.

The site is secure.

The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.


We audited the State of Texas’ Community Development Block Grant Disaster Recovery Program based on a hotline complaint, which alleged mismanagement of the Lower Rio Grande Valley Development Council’s Disaster Recovery housing program.  The complainant also made allegations concerning excessive home costs and ineligible homeowners.  Our audit objectives were to determine whether the State (1) ensured that the contractor limited the award of Disaster Recovery grant funds to eligible homeowners and homes, (2) ensured that the contractor met critical performance benchmarks in the Development Council’s housing programs, and (3) adequately monitored the Development Council’s housing programs.

Except for assisting ineligible homes, we could not substantiate the allegations.  The State, the Development Council, and its contractor generally ensured that homeowners met most eligibility requirements, and they supported the homes’ costs.  However, our testing showed the State’s contractor did not adequately document Hurricane Dolly damages for 15 assisted homes costing $1.6 million.  The contractor’s 15 inspections did not clearly show the damage or identify the repairs needed related to Hurricane Dolly as required.  This condition occurred because the State prioritized the funding to affirmatively further fair housing and did not adequately monitor the contractor.  In addition, the contractor did not perform its inspections in a timely manner, performed the inspection as the last step in the eligibility process, and did not use the Federal Emergency Management Agency or other sources to verify Hurricane Dolly damage.  Projecting the results of our statistical sample to the 700 homes that the State expects to complete by December 31, 2014, showed that the State could fund at least 84 ineligible homeowners, costing at least $8.6 million, if its contractor does not correct the inspection process.

The State also did not ensure its contractor met critical performance benchmarks.  This condition occurred because the State did not establish a policy for implementing the program in a timely manner and its contract lacked penalty provisions.  In addition, the contractor appeared to have capacity issues, and its subcontractor did not appear to adequately staff the program.  As result, the contractor had missed all of its benchmarks, and it had constructed only 137 (17 percent) of the 815 estimated homes required to be completed.

We recommend that HUD’s Acting Director of the Disaster Recovery and Special Issues Division require the State to repay $1.6 million for homes not eligible for assistance, ensure that the contractor adequately inspects for and documents Hurricane Dolly damage, monitor its contractor, and continue to withhold payments until the contractor meets benchmarks.