HUD OIG: Housing must strengthen its CDBG-DR capacity

On March 16, 2020, HUD’s Office of Inspector General (OIG) published audit 2020-AT-1002 on the capacity of the Puerto Rico Department of Housing (PRDOH) to administer CDBG-DR grants. The report calls for stronger financial controls, duplication-of-benefits prevention, procurement and staffing to manage more than $19 billion in CDBG-DR funds under federal requirements.

After Irma and María, HUD announced about $19.9 billion in CDBG-DR for Puerto Rico. As of August 30, 2019, the government had drawn down little more than $24 million of those disaster funds. PRDOH — designated grantee in February 2018 — had mainly handled Housing Choice Voucher ($55.4 million in 2018) and Continuum of Care ($1.4 million); it had no prior experience with disaster funds at that scale. Of the 2017 allocation, HUD had signed a $1.5 billion grant agreement and still had not assigned the rest of the congressional appropriations cited in the report.

The OIG found that PRDOH did not follow federal or its own procurement requirements when acquiring goods and services. HUD lacked assurance that $416,511 in purchases were reasonable, necessary and allowable. It recommends documenting compliance or reimbursing $55,010 with non-federal funds and canceling $361,501 in CDBG-DR obligations.

It also recommends procedures to track monthly spending, reprogram funds and program income; a financial system for the 2008 CDBG-DR; updating duplication-of-benefits and procurement policies; and continuing to fill vacancies. The 2008 portfolio was about $30 million total, with remnants still undrawn. Flagging insufficient capacity is not theft: it is a controls audit. Assigning or obligating funds is not disbursing them.

The document stands as 2020-AT-1002 on hudoig.gov. The OIG acted under a goal to review disaster funds and at congressional request for capacity reviews after Harvey, Irma and María.