Modesto, which faced repaying HUD $1.94M, will only have to repay $154K
Modesto is repaying the U.S. Department of Housing and Urban Development $154,160 after an audit had faulted the city for how it had spent its HUD funding.
City Council members voted 7-0 at their Wednesday meeting to approve the repayment as well as reallocating $38,156 among city HUD accounts to reflect how the city actually spent that money.
But this was a good outcome for the city, a point made by several council members and City Manager Joe Lopez, who also praised city staff for their work in resolving the audit findings with HUD.
Modesto had faced having to repay as much as $1.94 million after HUD’s Office of Inspector General issued an audit in July 2018 of Modesto’s community development block grant program.
HUD provides the city with about $1.8 million annually in CDBG money, which the city spends to help low- and moderate-income residents and neighborhoods. The audit focused on the city’s housing rehabilitation program.
The audit was for the 2015-16 and 2016-17 budget years and found, among other things, that the city “did not follow HUD’s and its own requirements for its rental and homeowner rehabilitation projects, ... provided false information to HUD, (and) spent HUD funds inefficiently.”
City officials have attributed the audit’s findings to, among other issues, the city restructuring its HUD program, high turnover and vacancies among program staff, and problems with the city’s purchasing administration.
Modesto Community Development Manager Jessica Narayan, who was not overseeing the city’s HUD program during the time period covered by the audit, said in an interview that the main reason Modesto needs to repay the $154,160 is for city staff charging their time to the wrong funding source.
City officials have said Modesto has updated its policies and procedures to adhere to HUD guidelines and taken other steps to improve its HUD program. “I think we are in a constant improvement process in our division,” Narayan said.
Modesto will use general fund dollars — which mainly are spent on police and fire — to repay HUD. But Narayan said HUD will add the $154,160 payment to the city’s CDBG program, giving Modesto roughly $1.95 million to spend this year.
This story was originally published August 9, 2019 at 5:00 AM with the headline "Modesto, which faced repaying HUD $1.94M, will only have to repay $154K."
