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Feb 14 2012

More emerging spending issues for Saginaw Housing Commission, January audit of $1.2 million stimulus grant reveals

The Saginaw News (Michigan) - by Gus Burns

Queue Notorious B.I.G.'s 1997 chart-topping single, "Mo Money Mo Problems."

On Jan. 26, the same day the Saginaw Housing Commission finalized agreements to repay more than $3.3 million in misspent or inadequately documented federal funds, the Office of the Inspector General released another audit.

This time the federal agents analyzed a $1.2 million housing stimulus grant the Housing Commission received in 2009.

Result: The Saginaw Housing Commission improperly spent $205,815 on ineligible expenses and cannot provide adequate documentation for $530,536.

The audit recommend HUD require the Commission repay the $205,815 and the $530,536, if it cannot provide the requested support documents.

"The Commission’s executive directors, former and current, and its board of commissioners did not ensure that the Commission’s funds were used for their intended purposes," the auditor says multiple times in the 58-page report.

There are seven general "findings." The Commission:

  • 1. Improperly procured contracts
  • 2. Spent $121,200 for activities not listed in the grant spending plan
  • 3. Did not verify contracts went to Section 3 (low-income) participating companies and did not collect $79,000 in Section 3 training funds, the alternative for companies that are not Section 3-compliant
  • 4. "Drew down $67,643 in administrative fees" and "recorded the receipt of only $60,477 in its Recovery Act grant general ledger. It was unable to provide documentation to show that $7,166." The Commission also transferred $46,239 for central office costs, not allowed by the grant; and spent $14,238 on administrative salaries without time sheets
  • 5. Spent $48,000 on an improperly bid architectural contract
  • 6. Overpaid $11,000 by improperly bidding a tile project
  • 7. Spent $142,000 for 185 refrigerators and 185 ranges that it could not document the need for; could not account for a $340 range or 12 refrigerators valued at $5,388; and did not maximize the sale of the old appliances. The Commission sold 157 of the old refrigerators to the contractor for $15 each, while Consumer's Energy would have paid $30 each, with free pickup; and 157 ranges to the contractor for $5 each, about half of what the audit shows they were worth as scrap metal

Director Peter Chitekwe, who is leaving the Commission next week when his contract expires, responded to the audit findings in a letter on Jan. 12.

He agreed with the audit, except for statements that there was not adequate documentation to support the money spent on administrative costs.

The letter said that procedural changes were made to ensure the problems discovered in the audit do not reoccur.

A 2006 audit determined the Housing Commission bought the Saginaw County Fairgrounds for more than $500,000 in 2002 to develop housing after HUD had rejected the purchase request.

Another audit released in 2011 found more than $2.8 million in HUD funds were spent improperly since 2005.

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