Explanation
BACKGROUND: The City receives annual grant allocations from the United States Department of Housing and Urban Development (HUD) Office of Community Planning and Development (CPD). These grants include the Community Development Block Grant (CDBG) program and the Housing Opportunities for Persons With AIDS (HOPWA) program. In acceptance of this funding, the City is required to comply with the provisions of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”), as well as limitations on planning and administrative costs according to 24 CFR 570.200(g)(1). Grant funds are regularly reviewed by City staff and by HUD staff to monitor compliance with applicable regulations, and address any non-compliant grant expenditures and draws.
Internal review of financial records in 2022 identified ineligible CDBG expenditures, and based on available records at the time, the City authorized a return of funds to HUD in the amount of $293,215.00 via ordinance 0526-2022. Further review of records shows that there is a balance of $600.24 that was expended on the ineligible CDBG activity which must be returned to HUD as well.
HUD’s annual review of the 2022 Program Year revealed that grant funds from 2015 had been expended in excess of the 20% origin year expenditure limit for planning and administrative expenses, in the amount of $192,559.94. In order to address the issue, the City must return this amount via wire transfer to the CDBG Line of Credit from the City's General Fund. These funds will be made available to be drawn for other eligible non-administrative expenditures. Following the return of funds, the City will draw available funds from grant year 2022 to reimburse the General Fund.
Internal review of HOPWA grant expenditures and financial records revealed a discrepancy between the grant year funding of a contract within the City’s financial system and the grant year drawn for contract expenditure...
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