After auditing the city of Richmond, California’s Neighborhood Stabilization Program, the U.S. Department of Housing and Urban Development Office of the Inspector General determined that the city was not following the requirements related to procurement and cost eligibility of NSP1.
The problem revolves around the city awarding contracts to developers that lacked the capacity and financial resources to administer the program.
Then, it failed to monitor the rehabilitation progress or the quality of work performed by three developers.
As a direct result, HUD said, “The rehabilitation of some properties suffered significant delays, while the rehabilitation of other properties had not been completed after more than 3 years.”
Along with that, the city paid $691,005 for rehabilitation work that was not performed and other ineligible and unreasonable costs, and it did not ensure that NSP1 properties were sold to eligible homebuyers.
The HUD-OIG recommends these three actions:
- Richmond should repay the actual administrative costs charged or $223,085 for mismanaging three developers
- Richmond should repay $691,005 for ineligible or unreasonable costs and for work not performed.
- HUD should review the remaining NSP1 activities and the $1.1 million NSP3 grant, along with requiring the city to reimburse the programs for any ineligible or unreasonable costs.