HUD’s oversight of housing-construction program lagging, audit finds

February 13, 2013

The U.S. Department of Housing and Urban Development is still struggling to adequately monitor its construction program for the poor more than a year after Congress demanded widespread improvements in oversight and accountability, the agency’s Office of Inspector General said in an audit this week.

Auditors pointed out that HUD has strengthened controls over its HOME Investment Partnerships Program, which was established in 1992 and delivers between $1 billion and $2 billion in annual grants to states and local jurisdictions to build, buy or renovate affordable housing.

But the audit found that the agency could not demonstrate the effectiveness of field office monitoring efforts and “may have lost opportunities to obtain early warnings of potentially serious problems.”

HUD declined to comment on Wednesday, instead referring to its written response to the audit. HUD said its monitoring is effective and the agency “continually strives to manage its programs as effectively and efficiently as possible.”

A Washington Post investigation in 2011 found that HUD had routinely failed to track the progress of projects and that hundreds nationwide showed signs of delay. The Post subsequently confirmed an additional 75 construction projects that drew and spent $40 million in HOME funds with little or nothing built.

Congress took up the issue, ultimately cutting the program’s budget by 38 percent and passing a law that requires local housing agencies to certify that developers have financial means and building experience. The law also requires HUD to improve its tracking of projects and provide regular reports to Congress.

HUD officials at the time submitted to Congress an overhaul of HOME regulations — the first major rule change to the program since 1996.

The audit questioned HUD’s efforts to step up its oversight of projects.

The report said that HUD still needed to ensure that its 42 field offices were effectively tracking local projects. The agency, for example, reported that 238 HOME reviews during 2009 and 2010 turned up 591 examples of compliance problems. The agency, however, could not say how many of the deficiencies had been resolved.

The audit also cited ongoing problems with the agency’s record-keeping, saying that HUD did not assess whether field offices validated key information from local jurisdictions about the status of projects to make sure it was “accurate, complete and consistent.”

Reliable data, the audit said, “are critical to HUD’s oversight” of the HOME program because the agency doesn’t have the resources to visit the hundreds of jurisdictions that receive funding and observe up to 20,000 open projects.

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