SPRINGFIELD – Although the Department of Housing and Urban Development (HUD) found issues in its audit of how the city spent disaster relief funds, Springfield will not have to return any funds.

Gerry McCafferty, head of the city’s Department of Housing, responded to Reminder Publications’ request for clarification with a written statement and noted, “There is every indication that the issues cited in the audit were due to staff oversight, and not due to intentional wrong-doing or negligence.”

Mayor Domenic Sarno’s office released the results of the audit on Oct. 20 from the HUD office of Inspector General (OIG). The city had received $21.9 million in Community Development Block Grant Disaster Recovery (CDBG-DR) funds in 2013. The city used the funds in areas affected by the June 1, 2011 tornado to improve infrastructure, rebuild housing and job training.  

ccording to information supplied by the city, “The HUD OIG made a single finding: that the city’s CDBG-DR activities were not always properly procured and adequately supported. The city takes this finding seriously, as it always strives to be a good steward of public funds. The city notes, however, that the finding addresses technical issues. There are no findings of serious problems with the city’s spending of HUD funds.”

In question was lack of documentation about demolition costs and price quotes for appraisal firms. There were also HUD concerns the city had overpaid for construction of single family homes on Central Street – rather than to construct multi-family units. According to the city’s response, “However, the city’s goal (allowable under the CDBG-DR program) was to stabilize the neighborhood, and the city made a deliberate choice to construct high-quality housing as a means of reaching that goal.”

McCafferty wrote in her statement, “This audit was conducted regarding the city CDBG-DR program. HUD’s Office of Inspector General (OIG) audits all DR programs because the very design of the program makes it susceptible to errors. Communities are given very large grants (multiple times the amount of annual CDBG allocations) and are pressured to spend the funds quickly. At the same time, HUD guidance regarding the program is both very technical and is subject to regular updates and changes in interpretation. The backwards-look of audits of these programs results in many communities needing to pay back some amount of these funds. Springfield is pleased that there were no findings of ineligible expenses, which would have triggered repayment to HUD with non-federal funds.

“After Springfield was awarded CDBG-DR funds, in order to provide strong oversight of the program, Springfield increased staff, created an Administrative Manual, and created written policies and procedures for each activity to be funded by the CDBG-DR program. The Administrative Manual and all policies and procedures were reviewed and approved by HUD regional staff.  City staff attended HUD-sponsored training conferences regarding the CDBG-DR program and made additional revisions to the policies and procedures following training. There is every indication that the issues cited in the audit were due to staff oversight, and not due to intentional wrong-doing or negligence.”

She concluded, “City staff have worked closely and cooperatively with both OIG staff and HUD regional staff to provide documentation requested and improve policies and procedures where warranted.”

The full report can be read at www.hudoig.gov/sites/default/files/documents/2017-BO-1002.pdf.