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DiNapoli: State is Slow in Disbursing Some Federal Relief Funds for Housing

Audit Finds State Agency Needs to Speed Up Allocation of Federal COVID-19 Grants for Affordable Housing or Risk Losing Some Funds

September 16, 2022

New York has been slow when it comes to using some federal relief funds earmarked to alleviate the state’s affordable housing crisis, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. The audit found that, under the management of Homes and Community Renewal (HCR) and its local program administrators, the distribution of funds has been delayed, putting some of the funding at risk. Because there is a deadline on using federal COVID-19 funds, delays in allocating it to specific housing projects or housing relief programs could result in funds being lost.

“The state continues to navigate the difficult waters of the post-pandemic housing crisis,” DiNapoli said. “We need every dollar available for housing needs in our state, particularly those that can help bolster affordable housing. HCR must work more efficiently to ensure the unprecedented federal relief funds help New Yorkers in need and are not lost because of unnecessary delays and miscommunications.”

HCR received hundreds of millions of dollars from the federal government over the past several years, including:

  • $244 million from Housing and Urban Development (HUD) through the Community Development Block Grant (CBDG) program.
  • $127 million in additional CBDG funds through the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act) with a HUD-HCR funding agreement through 2026.
  • $120 million in HOME Investment Partnership Program funds from HUD.
  • $93 million in additional HOME COVID-19 relief aid through the HOME American Rescue Plan Program (HOME-ARP) with a HUD-HCR funding agreement through 2030.

HCR acts as the pass through for the money by awarding it, in the form of grants, to local program administrators, which HCR oversees to make sure they use the money in ways that meet federal requirements. Federally funded programs often set time frames for spending funds awarded, especially in temporary streams like the CARES Act and American Rescue Act of 2021. For example, HUD’s and HCR’s funding agreement for CDBG CARES Act funding runs through September 23, 2026, and HCR must expend at least 80% of the funds by September 23, 2023.

DiNapoli’s audit found HCR needs to improve its timeliness in obligating and disbursing the federal funds, particularly with those specific to COVID-19 relief. For example, the audit found HCR had only committed about $98 million of the $127 million in CBDG funds it received through the CARES Act and has reimbursed less than $5 million. To meet HUD’s deadline, HCR, working with local program administrators, has to spend $96 million by Sept. 2023 — 19 times the amount HCR has spent since it received the funding in September 2020, or it risks losing the money. The remaining $122 million must be spent by September 2026 to prevent further potential loss of funding.

In addition, the audit determined that some local administrators did not apply to HCR for COVID-19 relief funds because of the agency’s restrictions. Two of the five local administrators that auditors spoke with said they could not meet HCR’s 12-month timeframe for completing projects because of supply chain and contractor availability issues. HCR does offer extensions but the audit found not all local administrators were aware of that option.

The audit also concluded that HCR needed to increase oversight on some of the local administrators that did get funding to ensure they were monitoring contractors and subrecipients for compliance with federal requirements that govern the use of the funds.

Recommendations

Among its recommendations, DiNapoli’s audit called on HCR to:

  • Work with local program administrators to make sure funds on a deadline tied to COVID relief are obligated and spent in a timely manner, by improving communication regarding performance completion requirements and by identifying and reducing delays in releasing funds for completed work.
  • Improve internal controls over the administration of the CDBG, including better monitoring of subrecipients and contractors used by local program administrators and strengthening controls over confidential information.

Response

HCR generally agreed with the audit findings and officials stated that they had taken steps to improve allocation and distribution of funds and increase communication with local administrators about rules governing the completion of projects. The agency’s response is available in the audit.

Audit
Homes and Community Renewal: Housing Trust Fund Corporation: Internal Controls Over and Maximization of Federal Funding for Community Development Block Grant & HOME Investment Partnership Programs


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