Hub City looking at potential hefty HUD payback

Issues in HOME program could cost city about a half-million dollars

Hub City looking at potential hefty HUD payback
The two initiatives are on the Hattiesburg City Council's agenda for Tuesday night's meeting. (Source: WDAM)

The City of Hattiesburg intends to sit down with the United States Department of Housing and Development to discuss repayment of half a million dollars the federal agency says was “inappropriately used … without adequate documentation” by the city.

The issue arose after HUD requested that the Office of Inspector General look into the city’s administration of certain federal dollars flowing through the HOME Investment Partnerships program over a five-year period from fiscal year 2013 through fiscal year 2017.

The HOME program consists of HUD grants allocated for expanding home ownership and affordable housing opportunities for low and very-low income families. The funds can be used to buy, build or repair housing as well as assist with rent.

Hattiesburg Mayor Toby Barker asked HUD’s Office of Community Planning and Development field office in Jackson “for a comprehensive review of the (c)ity’s HOME Program.”

The city functions as the administrator of the grants, and at least 15 percent of the funding must be allocated in partnership with a “non-profit, community-based service organization.” The audit focused only on that minimum 15 percent set-aside.

“In fiscal years 2013, through 2017, HUD allocated more than $1.1 million in HOME funds to the (c)ity,” the report said in describing a table breaking down the annual allocations. “Our audit objective was to determine whether the (c)ity administered its HOME program in accordance with HUD’s and (the city’s) own requirements.”

In the end, the OIG audit said about 45 percent of the funds, some $506,000, had been mishandled, misallocated or undistributed including:

  • · $441,000 in “unsupported costs,” such as expenses submitted without adequate documentation or disbursements without the proper or timely accompanying paperwork
  • · $33,258 in “illegal costs,” such as expenses not covered under the HOME program umbrella or not allowed by law
  • · $32,019 in “funds to be put to better use,” which are monies that arrive in Hattiesburg, but remain unallocated for various reasons

The audit found that 16 of 23 case files were not “adequately supported” by proper documentation and that the “city’s staff was not fully aware of HUD’s or its own requirements,” and that the city “lacked adequate procedures to ensure compliance.”

Andrew Ellard, director of Hattiesburg’s Urban Development Department, said the city acknowledged issues with program’s past, but also believed that other areas were “a difference in interpretation.”

Ellard submitted a letter to the OIG, arguing that documents submitted by the city on some projects should have sufficed to justify expenses.

In other cases, some monies paid out, such as housing for tenants while tests for toxic materials in a residence were being conducted, were never included on the contractor’s final bill. Change orders were another problem when not signed by the project owner.

Worse, Ellard said, some documentation in storage on Tipton Street had been destroyed in a tornado in 2017.

“Those records were lost,” Ellard said. “We were able to show what we could from other records, like city council minutes and things like that. But the OIG is going to look at it in very black-and-white terms: ‘Do you have this in hand or not?’, and certain files were in that building.”

Ellard said the city, at some point, will sit down with representatives from the Jackson field office and hash out the issues in person.

“In the end, we’re definitely going to be beefing up some of the policies and procedures for the department and make sure everybody is pleased with how they’re written and how they’re put to use going forward,” Ellard said. “In terms of the funds that they refer to that may have to be paid back to HUD, that’s also still up in the air. That kind of depends on how our conversations go with our local field office.”

When those conversations will take place, Ellard said the city will be glad to sit down whenever HUD is ready.

“We were quick to respond to HUD when we got this, because we want to stay on their timeline,” Ellard said. “But I understand they have other jurisdictions that they oversee as well, so I know they have a lot of irons in the fire at the same time. As soon as they’re ready to kind of dig in and work with us on it, we’re ready, because we want to put it behind us as soon as possible.”

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