The City of Houston, Houston, TX, Faced Challenges in Administering Its Hurricane Harvey Program and Risked Losing Its Funding

We audited the City of Houston’s Hurricane Harvey Community Development Block Grant Disaster Recovery (CDBG-DR) program. We initiated this audit as part of our commitment to helping the U.S. Department of Housing and Urban Development (HUD) address its top management challenges and to support HUD’s strategic objective to support effectiveness and accountability in long-term disaster recovery. Further, Congress has expressed strong interest in HUD’s disaster programs. Our objective was to assess the efficiency and effectiveness of the City of Houston’s Hurricane Harvey CDBG-DR program. We found that the City of Houston faced challenges in administering its Hurricane Harvey CDBG-DR program efficiently and effectively. Specifically, 3 years after Hurricane Harvey, the City had spent only 1.8 percent of its suballocated grant funds, which substantially delayed assistance to participants. Further, it had assisted only 297 of 8,784 housing program participants, leaving affected Houstonians without the help they needed. This weak performance contributed to HUD’s designating the Texas General Land Office (Texas GLO) as a slow spender. These conditions occurred due to significant disagreements between the City and the Texas GLO over how to implement the City’s programs. Also, the Texas GLO did not provide programmatic benchmarks in its contract to hold the City accountable. As a result, the City’s slow performance risked its missing HUD’s spending deadlines, recapture of the Texas GLO’s grant funds, and potential loss of the City’s $1.275 billion in suballocated Hurricane Harvey grant funds. We recommend that the Director of the Office of Block Grant Assistance require the Texas GLO to ensure that (1) it includes milestones and appropriate consequences for not meeting them in future subrecipient agreements and (2) processes are in place to assist participants transitioning from the City’s programs to the Texas GLO’s programs. With HUD’s approval of action plan amendment 8, we recommend that the Director require the Texas GLO to also (1) provide its plan to continuously monitor the City’s pace and performance in its remaining program and take appropriate action to ensure that program goals are met, (2) set performance and financial milestones for all programs and activities funded under the City’s subrecipient agreement, and (3) provide its plan to ensure that the City complies with the Texas GLO’s guidelines and requirements. Implementation of these recommendations would include a process for repurposing additional grant funds if necessary.