City of Dallas Rushed Projects, Could Owe Feds Millions: Report

The City of Dallas could owe more than a million dollars to the U.S. Department of Housing and Urban Development, according to a report issued by the federal agency's inspector general.

HUD's Office of Inspector General had been investigating the city's HOME Investment Partnerships, specifically the city's reconstruction program. The program provides forgivable loans up to $103,000 for demolition costs and reconstruction for eligible homes.

The Inspector General's report found the city did not follow HOME regulations and its own policies and procedures in the reconstruction program. The report found the city did not follow environmental regulations, properly assess contractors, check eligibility of subcontractors, sign loan agreements or support and calculate participant income correctly.

The report said the errors listed occurred because city staff were not properly trained.

"As a result, the City rushed projects without ensuring that it followed HOME regulations or its own policies. Therefore, it misspent more than $1.3 million to reconstruct 13 single-family homes," the report said.

The report also found the city claimed more than $2.9 million in ineligible match contributions with projects that did not meet HOME requirements.

The Inspector General recommended the HUD regional office require the City of Dallas to repay the agency more than $1.3 million used to reconstruct homes and more than $2.9 million in match contributions. The report also asks HUD to require the city to perform environmental reviews, hire qualified entity to determine structural integrity of reconstructed homes, provide plan for potential warranty work, develop procedures for review of subcontractors and ensure employees understand HOME requirements.

The City of Dallas released a statement on Thursday afternoon regarding the report:

The City of Dallas acknowledges the findings from the Office of Inspector General and we are currently in conversations with HUD to resolve the findings from the audit of the HOME Program. We recognize the issues with our prior administration of the Program and have already begun to address many of these findings and have developed more rigorous internal controls to ensure a higher level of accountability and administration of these types of government funded programs.

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