Concerns Related to Oversight of HOME Funds

Over the past several years, several concerns have been raised about whether PJs have adequately overseen projects that use HOME funds and, ultimately, whether HUD has adequately monitored PJs’ uses of HOME funds.

Some concerns related to HUD’s oversight of PJs have been raised by HUD’s Office of the Inspector General (OIG).A 2009 OIG report questioned several aspects of HUD’s monitoring of program funds, including whether HUD’s methodology for tracking when PJs had spent their

funds was appropriate; whether the IDIS system allows HUD to adequately monitor information reported by PJs; and whether funds had been expended on projects that should have been classified as terminated. Other OIG reports have raised questions about whether HUD has ensured PJs’ compliance with program rules. For example, a 2010 OIG audit report found that, in some cases, HUD had not ensured that PJs included appropriate resale and recapture provisions in projects that used HOME funds. The OIG has also reported conducting over 60 external audits of specific PJs in recent years, some of which were undertaken at the request of HUD.

Another source of concern about HUD’s oversight of the HOME program was a series of investigative articles published in the Washington Post beginning in the spring of 2011. These articles focused on PJs’ alleged mismanagement of HOME funds used for rental housing developments and problems with HUD’s oversight of PJs. The articles suggested that nearly 15% of HOME-assisted rental projects were experiencing significant delays, and that almost 700 rental housing projects that had been awarded a total of $400 million in HOME funds over the program’s life had since stalled and were either incomplete or unoccupied. The article also claimed that HUD did not properly oversee funds that are awarded to PJs in order to identify such stalled or abandoned projects, that it had difficulty tracking program funds, and that it did not adequately demand reimbursement from PJs for misused funds.

In response to the articles, HUD maintained that the Post’s methodology for identifying troubled projects was flawed and that the amount of funds that were mismanaged or committed to stalled projects was much smaller than the Post articles suggested. It also noted that some stalled projects were the result of a weak economy rather than mismanagement or other problems. HUD argued that its oversight of the program was adequate and that it had de-obligated HOME funds from PJs that did not meet commitment and expenditure deadlines and recovered additional funds that were spent improperly by PJs.

Questions about HUD’s oversight of HOME funds led Congress to hold hearings on the topic in 2011, during which several Members of Congress expressed concern about HUD’s ability to ensure that HOME funds are used in a way that produces the program’s intended results. Congress also included a number of provisions related to the oversight or use of HOME funds in both the FY2012 and FY2013 HUD appropriations laws, the Consolidated and Further Continuing Appropriations Act, 2012 (P.L. 112-55) and the Consolidated and Continuing Appropriations Act, 2013 (P.L. 113-6). (These provisions only apply to the HOME appropriations included in those laws, not HOME funds appropriated in other fiscal years.)

The 2013 HOME program final rule, described next, included a number of provisions to better ensure that HOME funds were being spent properly, including similar provisions to those that were included in the FY2012 and FY2013 appropriations laws. The provisions in the 2013 final rule apply to all HOME funds, rather than just the funds that were appropriated within a specific appropriations law.

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