Federal Reports

The Federal Emergency Management Agency (FEMA) continues to phase out its use of alternative contracting methods to administer the National Flood Insurance Program (NFIP).

We audited the U.S. Department of Housing and Urban Development (HUD), Office of Community Planning and Development’s (CPD) oversight and monitoring of its Community Development Block Grant Disaster Recovery (CDBG-DR) slow-spending grantees. This was a self-initiated audit consistent with our oversight activities and current top priority areas. Our objective was to assess CPD’s monitoring and oversight tools related to the progress of grant expenditures and determine the status of the grants and impacts of COVID-19 on grantee spending.CPD has tools available for the oversight and monitoring of its grantees. The tools mainly assist in evaluating or tracking the progress of the grants. While one tool identified slow spenders on a short-term basis, it did not help assess slow spending in the long term. We identified opportunities for CPD to enhance its (1) monthly CDBG-DR grant financial report, (2) use of Disaster Recovery Grant Reporting (DRGR) system flags, (3) use of grantee expenditure projections, (4) documentation for quarterly performance report reviews, and (5) documentation for monitoring reviews and updating the related exhibit (questionnaire). Enhancing these tools may allow CPD to provide more effective oversight of grant expenditures and better assist its grantees with the progress of their spending. It will also assist in preventing the recapture of funds from communities with needs that can benefit from these funds. As of July 30, 2021, more than $3.7 billion remained unspent of the $18.5 billion appropriated in CDBG-DR funds for disasters that occurred from 2011 through 2016, and the pandemic has slowed the progress of these grants.We recommend that the Deputy Assistant Secretary require CPD to (1) continue developing proper methodology to identify slow spenders and update policies, procedures, and its monitoring exhibit; (2) establish a reasonable timeframe for grantees to adequately address the system flags in DRGR, and resolve or remediate outstanding flags; (3) require updated grantee projections; (4) sufficiently document its basis for conclusions in its monitoring and quarterly performance reviews; and (5) consider grantee suggestions to assist with the progress of spending funds.

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.