SNAFU - Trenton and HUD

The page on Trenton’s City Website describing its participation in the US Department of Housing and Urban Development’s (HUD) three ongoing annual funding programs for local communities such as ours is pretty straightforward. The three programs are:

• The HOME Investment Partnership (HOME), funded in the amount of $551,008 for the current fiscal year ending June 30;
• The Emergency Services Grant (ESG), funded at $213,526 this year; and by far the largest program of the three,
• The Community Development Block Grant (CDBG), in the amount of $2,260,396 this year.

The City’s CDBG (for the sake of simplicity, I will use “CDBG” as shorthand for all three of Trenton’s grants from HUD, except when it is important to distinguish them) webpage says of these grants,

The Community Development Block Grant (CDBG) Program is authorized under Title I of the Housing and Community Development Act of 1974, as amended, and was enacted in 1974 under the Housing and Community Development Act or HCDA. The primary objective of Title I of HCDA is the development of viable urban communities. These viable communities are achieved by providing the following, principally for persons of low and moderate income: decent housing; a suitable living environment, and expanded economic opportunities.

To achieve these goals, the CDBG regulations set forth eligible activities and the national objective that each activity must meet. As recipients of CDBG funds, grantees are charged with ensuring these requirments [sic] are met. [Emphasis mine – KM]

As I said, it sounds pretty straightforward. Grantees such as Trenton are supposed to supposed to know the rules and applicable law covering these programs and making sure they are well followed. Followed both for work performed directly by the City, and by other community-based organizations to whom Trenton makes direct sub-grants.

Well – and you know where I am going with this – that’s precisely where Trenton has had problems. For years.

Let’s go back to August 2014, shortly after the current Administration of Eric Jackson began its term on July 1, representatives from HUD visited the City to conduct what they call a “monitoring visit,” a review of several specific projects being undertaken by the City with federal funds, but more importantly a review of the City’s administrative practices in managing and overseeing these programs. In a report sent the next month, on September 30, HUD concluded this about the City’s CDBG program (page 7):

“Our review disclosed that the City’s program is having significant difficulties. Our review disclosed that the City’s program does not have systems and procedures in place to ensure that staff is knowledgeable of CDBG program requirements, subrecipients are meeting the program requirements, program benchmarks regarding timelines are being achieved, and documentation regarding individual activities is being maintained to track progress and compliance. Overall, the City of Trenton has not demonstrated the capacity to continues carrying out the CDBG program and strongly recommend the City seek out technical assistance to try and continue its program in a viable manner.”

Inside that report, HUD detailed a total of 26 findings for its three programs that provided the basis for that scathing conclusion. Typical of their findings was #8, which can be found on Page 16. HUD’s monitors had during their August visit randomly selected a number of activities and vouchers (payments) from the CDBG program to determine if they complied with the program. The random sample consisted of 21 vouchers totaling $1,994,154.60 in costs.

Of those vouchers, HUD determined that a number of vouchers “were not necessary, reasonable or allowable,” and struck off $1,264,508.30 in costs as disallowed. That is almost two-thirds of their random sample, a massive proportion. Some or all of that $1.264 Million was likely included in the amount of $3,322,313 that Mayor Jackson cited in his letter of December 20, 2016 requesting a Voluntary Grant Reduction (VGR) in future CDBG grants instead of paying back all those disallowed costs to the Federal Government.

That September 30, 2014 report was extremely  damning, and indicates that the new Jackson Administration was inheriting a very problematic relationship with HUD. Four years prior, in 2010, HUD had conducted a similar monitoring visit and had issued a pretty scathing report in 2011. However, during the chaotic Tony Mack years, nothing was done to improve the “significant difficulties” found between 2010 and 2014.

With the arrival of the Jackson Administration, HUD was clearly running out of patience. In its letter of 9-30-14, HUD’s regional Director of Community Planning and Development Annemarie Uebbing a deadline of thirty days to respond with a detailed plan to address their findings. That reply was sent to Uebbing on October 29 by the City’s then-Director of Housing and Economic Development, Monique King-Viehland, containing a detailed plan responding to each of HUD’s 36 findings. Here is an excerpt from that plan:

You’ll notice that the Finish dates for these tasks ranged from mid-November 2014 to the end of March 2015. That was true for all of the remaining items listed over the next three pages. That was the commitment made by the Jackson Administration to fixing the City’s broken CDBG system and repair the relationship with HUD that had been seriously strained during the Mack years. This had been one of the main planks of Eric Jackson’s campaign, you will remember. Mr. Jackson promised “to clean up the mess left to him or her, but will have to restore the faith and trust Trentonians have rightly lost in their municipal government.”

He didn’t made much progress on that score. As 2016 began, 19 months into the Jackson Administration, HUD took the City of Trenton to the woodshed. Ms. Uebbing wrote on February 2,

“…HUD has concluded that the City of Trenton has significant issues with the administration of its HOME and CDBG programs. Therefore, the City has been identified as a High Risk grantee, pursuant to 2 CFR 200.205. The ‘High Risk’ designation results from the City’s: (1) history of unsatisfactory grant expenditure performance; (2) weak management and reporting systems; and (3) inadequate staffing and program oversight – all of which undermine, successful CDBG and HOME program performance, which have contributed to the loss or risk of loss of funds.”

The City did make some attempt to improve. In 2015, it hired a consultant to help with writing and executing its annual and 5-year plans. But it couldn’t get its act together. As late as February of this year, HUD was still after the City to make good at fixing its problems, and was implicitly – but pretty obviously – tying its still-pending decision on whether or not to approve the Mayor’s VGR request to the City’s ability to fix its broken system. Here’s the key paragraph in a letter dated 2-23-2017 from Director Uebbing to Diana Rogers, the City’s current Director of Housing & Economic Development. It’s not very subtle:

“On December 20, 2016, the City submitted a request for a Voluntary Grant Reduction (VGR) in Lieu of Repayment for Ineligible Expenses. The CDBG grant reduction request was for $3,332,313 and would reduce the City’s FY 2017, 2018 and 2019 grants by equal amounts. The City’s VGR request is still under review along with HUD’s review of the City’s untimeliness [See below]. Upon completion, HUD will inform the City of its determination on both issues in a separate letter. We encourage the City to continue to take actions to clear all findings identified in our September 29, 2011, September 28, 2012, and September 30, 2014 monitoring review letters.” [Emphasis mine – KM]

Translation from Bureaucratese: “That’s a nice VGR request you have there. Sure wouldn’t want anything to happen to it!!”

A quick note on the “untimeliness” referred to above. HUD has what is called a “timeliness” standard that tries to ensure that a grantee city such as Trenton actually spends its government grants efficiently and on a timely basis. HUD wants their funds to get applied in the community as intended by the laws that created their programs.

Because there are some overlaps between grant years and delays in reporting and payments, there may be funds available from more than one grant year in a city’s account at any one time. The standard used is measured 60 days before the end of a grant year, and says that at that date, a city should have in its HUD account no more than 1.5 times the amount of its annual grant. Having balances significantly higher than that leaves a city open to various sanctions and penalties. For the program year 2013, the City was falling behind in its timeliness, with a factor of 1.9 for its account. Remember, this was during the Miserable Mack Years!

However, during the Jackson Administration, that measure has only gotten worse. As stated in the 2-23-17 letter, on June 30, 2015, the number was 2.42 the annual grant. On June 30, 2016, the number had jumped to 3.32. This means that the City had over the equivalent of over 3 years of CDBG funds unspent. This is one of the ways a City such as Trenton becomes a “High-Risk Grantee” of federal funds, which Trenton is. And that likely explains why City Council has written off $2.4 Million in unspent CDBG funds dating back to 2007, as first reported here a few days ago.

In February of this year, with the letter excerpted and linked above, HUD also sent a table, called the “CDBG Activities At-Risk Dashboard” listing no fewer than 59 outstanding items from current and prior project years that needed action by the City in order to clear old accounts and get back to anything like a current basis with HUD. Here’s a sample page:

You’ll notice the column labeled “FO Due Date.” That’s the deadline HUD set for the City to submit its plans to the local HUD Field Office (FO) for settling and closing all of the 59 items. All of the dates were May 11 or May 15 of this year.  The “Target Completion Date” in August is the deadline set by HUD for the City to follow through on its plans and fix the 59 problems.

Last week, I wrote to Director Rogers and Mayor Jackson asking, among other things, if the City had met its May deadline for submitting its plans, and if it would also meet the August deadlines for follow through. In reply, without answering my question, Director Rogers offered to meet to discuss the CDBG program. I agreed, but only if I could record the meeting. I have not heard back from her since then.

Look, this is a complicated subject. Even with all of the documents linked above, this is only a very cursory review of the relationship between the City of Trenton and an important federal agency providing a good deal of annual funding that the City can use itself and also make sub-grants to local community organizations with a great deal of flexibility. The main obligation the City has, as mentioned at the top of this piece, is to ensure  that HUD’s rules and regulations are followed, and that projects we spend their funds on serve the “national objectives” outlined in the laws establishing these programs.

But those requirements are what Trenton has consistently, for years, failed to meet. As one result, we are now on the hook to either repay over $3.3 Million Dollars in disallowed expenses, or lose that amount from future grants. As another, we failed to spend another $2.4 Million.

That’s about Five and Three-Quarter Million Dollars that we’ve fucked up. That’s not a small amount, even by Trenton’s Fuck-up Standards of the last several years!

Five Million lost in a payroll scam. Five and Three-Quarter Mill in HUD dollars pissed away. A couple of hundred grand extra for swimming pool vendors or IT contracts. That’s normal around Trenton.

You do know what SNAFU means, right? That’s what we have right here.

One final note: as I wrote in my first piece on this matter last week, all of the unspent funds and disallowed expenses at issue here are tracked back to grants in years that pre-date the Eric Jackson Administration, and track back to the in-depth monitoring visits made by HUD in 2010 and 2014. That Department has not conducted a similar monitoring visit since 2014.

We know that during the last three years, the Jackson Administration has failed to improve its administrative practices as it promised HUD it would in September 2014. In fact, measured by at least two criteria – the “timeliness” factor and the City’s 2015 designation as a “High-Risk Grantee” of federal funds – the City has arguably gotten worse under the current Administration.

Which begs the question: what fresh problems might a new monitoring visit uncover? What new grant problems might be lurking in our financial books, waiting to be uncovered?

Can this Administration assure us there aren’t any?

Could we believe such assurances?