Audit shows issues at Springs’ Housing Development Division

An audit report released Tuesday sheds light on issues at Colorado Springs’ Housing Development Division.

The audit was done by the U.S. Department of Housing and Urban Development Office of Inspector General, to verify a citizen’s complaints.

According to the audit, the division’s former executive director fabricated a contract to avoid losing more than $68,000 in funding from HUD’s HOME Investment Partnership Program. And that the division committed four projects totaling $1,625 million in HOME funds without written agreements.

It also said the city delayed depositing grant money for more than a month to avoid missing a spending deadline, that it used money meant for programs to pay at least half the salaries of two administrative employees and that it used more than $20,000 in HOME and Community Development Block Grants money to maintain and clean a vacant building.

The city said its staff was already aware of the issues.

“We were familiar with all of the findings that were substantiated in this report from the OIG,” Community Initiatives Manager Aimee Cox said. “We had previously identified these issues through an audit with a city auditor.”

The city’s audit results were finalized last April, and Cox said the city has been making changes to resolve the issues.

“We’ve worked on internal controls, policies and procedures, we’ve hired key staff positions, so we’ve made key personnel changes in the division,” she said.

Cox said they have been making changes as they see issues, and they will continue to make more as they see more problems. But she wants to make one thing clear.

“No money is missing. We’ve accounted for all dollars,” she said. “What’s at question is the timeliness of the expenditures, and the eligibility in terms of the category in which they were spent.”

The report lists some recommendations as a result of the audit. One is for the more than $68,000 the city received to be recaptured.

“If they’re recaptured from the line of credit, they were not spent. So there’s no direct impact, except $68,000 fewer dollars are available for the city to spend,” Cox said. “The other possibility is that the funds would be drawn from the general fund, and that of course has some implications to other departments.”

She said the reason for why the money could be taken from the general fund is, the recommendation is that the money be recaptured from the city’s non-federal funds.

Another recommendation is for the city to provide support showing that the more than $20,000 it used for the office vacant building was for supported eligible activities, and if the city has no support, for that money to be recaptured too. Cox said she is confident they can provide the needed support.

The OIG plans two more audits and Cox said the city will continue to cooperate.