The City of Joplin, MO, Did Not Always Comply With the Requirements of Section 3 of the Housing and Urban Development Act of 1968 for Its Disaster Recovery Program

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited the City of Joplin, MO’s Community Development Block Grant Disaster Recovery (CDBG-DR) program because the City was awarded more than $45 million in CDBG-DR funds in April 2012 and received an additional $113 million in May 2013. We previously audited the City’s CDBG-DR program in 2013 and issued audit report 2014-KC- 1002. At that time, the City had obligated only $50,000 and had spent only $20,280. Our audit objective for this report was to determine whether the City complied with the requirements of Section 3 of the Housing and Urban Development Act of 1968 in its CDBG-DR program. The City did not always comply with the requirements of Section 3 of the Housing and Urban Development Act of 1968 for its CDBG-DR program. It did not always direct employment and other economic opportunities generated from CDBG-DR funding to low- and very low-income persons and the businesses that employed them. In addition, it did not always incorporate the Section 3 clause into its contracts. As a result, the City may have denied low- and very low-income residents and the businesses that employed them more than $2.2 million in economic benefits. We recommend that the Director of HUD’s Kansas City, KS, Office of Community Planning and Development require the City to develop a checklist or other processes to verify that all contractors implement their Section 3 plans to ensure that the City spends disaster funds in compliance with the requirements to ensure that $2.2 million in CDBG-DR funds are put to better use in the future. We also recommend that the Director of HUD’s Kansas City, KS, Office of Fair Housing and Equal Opportunity provide Section 3 technical assistance to the City and monitor the City’s compliance with Section 3 requirements.