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HUD Evaluation of CDBGP~MENT~F Q* ~0~~~~~ * N~ y~~ II~II~II ~~2 9egN DEJ ~\~Q Honorable Roy D. Buol Mayor of Dubuque City Hall 50 West 13`" Street Dubuque, IA 52001-4864 RE: 2007 Monitoring Results Dear Mayor Buol: U.S. Department of Housing and Urban Development Omaha Field Office Executive Tower Centre 10909 Mill Valley Road Omaha, Nebraska 68154-3955 June 5, 2007 An evaluation of the City of Dubuque Community Development Block Grant (CDBG) program was conducted on May 1, 2007, by Ms. Kim Radice and Ms. Terry Inserra. The purpose of this review was to examine the city's activities for compliance with program and project requirements. As a result of the review, there were (2) findings. They are identified with appropriate corrective actions in the enclosure. HUD staff would like to thank the City of Dubuque staff for their cooperation and assistance during the review. The courtesies extended by David Harris, Jolene Patterson, and Aggie Tauke were appreciated. As part of the monitoring review we started to review the Multicultural Family Center project, in the time that we had, we could not determine the boundaries of the service area, please provide us a copy of your service area and description as in accordance with 24 CFR 506(b)(2)(i & ii). In addition, how was it determined that the center is used predominately by individuals and families from these service areas. Please respond within 30 days of the date of this letter. Your response should be sent to me at the Omaha Field Office. If further information is necessary regarding this letter, please contact Ms. Kim Radice at (402) 492-3190. Sincerely, ~. /~ Patricia M. McCauley Director, Community Planning & Development Division cc: David Harris MONITORING REPORT COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM The review focused on The Neighborhood Tool Library. This program lends, without charge, a variety of tools for the purpose of improvement or rehabilitation of residential property for low and moderate income households. HUD staff reviewed client files for income determinations and reviewed program policies. FINDING #1: The City is currently not maintaining adequate documentation to support the services to eligible residents. DISCUSSION: The Neighborhood Tool Library allows for income self certification for tool borrowers. Some of the application and eligibility forms were incomplete or contained inconsistencies. Frequently, the first question, which asked how many related people were living in the household, was not completed. On the majority of forms, this question was left blank. However, the chart for family size that required the borrower to circle family size and income was filled out. Some forms showed the first question answered as to the number of related persons in the household but the borrower circled a family size and income in the chart that was inconsistent with the answer above. There is no system in place to periodically verify income information from participates. STANDARD: The regulations at 24 CFR 570.506(b), states that the recipient may substitute a copy of a verifiable certification from the assisted person that his or her family income does not exceed the applicable income limit established in accordance with 570.3. The regulations at 24 CFR 91.5 states that certification means a written assertion, based on supporting evidence, that must be kept available for inspection by HUD, by the Inspector General of HUD, and by the public. Monitoring and reporting regulations 24 CFR 85.40 (a) states Grantees are responsible for managing the day-to-day operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Grantee monitoring must cover each program, function or activity. 24 CFR 570.501 (b) states "The recipient is responsible for ensuring that CDBG funds are used in accordance with all program requirements. The use of designated public agencies, subrecipients, or contractors does not relieve the recipient of this responsibility. The recipient is also responsible for determining the adequacy of performance under subrecipient agreements and procurement contracts, and for taking appropriate action when performance problems arise, such as the actions described in 570.910." Corrective Action: Please provide written assure that all applications will be completed in full and the answers will be consistent. In addition, the City must develop and adopt a monitoring process which requires periodic review of income and supporting documentation. Please provide written assurance that a monitoring process has been implemented. We recommend that the City perform income verification reviews on a spot check basis by requiring income verification of every 20"' participant, or the city may provide us with an alternative process. FINANCIAL MANAGEMENT Ms. Radice reviewed all source documentation for the December 2006 draw down, General ledger, expense and revenue reports, balance sheet, chart of accounts, organizational chart, and expenditure transaction analysis report. FINDING #2: In reviewing source documentation for the December 2006 draw down, there were several cases where the CDBG program was over charged. DISCUSSION: In reviewing the request for reimbursement for the Multicultural Family Center, the Center had billed the CDBG program ($21.99) for an item not included in it's application. The total for reimbursement cost for supplies/printing ($227.60) did not agree with the total of support documentation ($227.26). When a person splits their time between departments/grants, their expenses are also split by the percentage specified in the City's cost allocation plan for the specific grant. There were charges to the CDBG program for the City's Planning employees who split time between City and CDBG activities, but the costs were not split. Examples; Planner's estimating guide $75.95 (HUD share 13% _ $9.87), travel $319.00 (HUD share 13% _ $41.47), guest speaker $1,699.19 (HUD share 13% _ $216.99), and remodel/reconfiguration of one cubicle $1,438.80 (HUD share 70% _ $1,007.16). STANDARD: 24 CFR 570.501 (b) states the recipient is responsible for ensuring that CDBG funds are used in accordance with all program requirements. The use of designated public agencies, subrecipients, or contractors does not relieve the recipient of this responsibility. The recipient is also responsible for determining the adequacy of performance under subrecipient agreements and procurement contracts, and for taking appropriate action when performance problems arise, such as the actions described in 570.910. 24 CFR 85.22 (2)(b) Applicable cost principles. For each kind of organization, there is a set of Federal principles for determining allowable costs. Allowable costs will be determined in accordance with the cost principles applicable to the organization incurring the costs. Office of Management and Budget Circular A-87 Attachment A -Allocable Costs -Federal awards bear their fair share, must be reasonable and allocability. Corrective Action: Provide written assurance that in your next draw down that these over charges will be returned to the CDBG program fund. Verify that costs charged to the CDBG program are approved line cost items in the subrecipents' application and when costs benefit multiple activities the cost will be born by all funding programs on a reasonable and consistent basis. Request for reimbursements and support documentations are to be checked for accuracy prior to payment.