After critical audit, feds eying Fresno’s use of money marked for low-income areas

The original version of this story incorrectly quoted HUD spokesman Eduardo Cabrera saying HUD will monitor Fresno to “ensure compliance.”

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The federal government is watching how the city of Fresno handles federal dollars earmarked for cleaning up low-income neighborhoods, after an independent audit found inconsistencies with more than $8 million of the city’s spending on code enforcement, after-school programs and graffiti cleanup.

The U.S. Department of Housing and Urban Development will give the city “an opportunity to demonstrate compliance” with federal rules, said Eduardo Cabrera, spokesman for the department’s regional office in San Francisco. The city maintained that no money was used inappropriately, and many of the findings of the audit – which looked back as far as 2012 – have already been corrected. The city has suspended its use of Community Development Block Grant (CDBG) funds on code enforcement, for example.

The audit, released Aug. 9 by the HUD inspector general’s office, recommends the regional office require the city to repay $163,555 in CDBG funds the auditors found were used outside of their allowed scope. In general, this money must be used in areas of concentrated poverty, and the audit finds that thousands of dollars were spent on code enforcement outside of those areas.

The auditors also recommended that HUD look into more than $7.9 million worth of CDBG money that may have been used outside of low-income areas. This money was not necessarily used improperly, the audit notes, but the record-keeping required by the federal government was not followed completely. Auditors also recommended more training in handling CDBG funds for Fresno staff.

Specifically, the audit calls about $6.5 million in code enforcement costs into question. It says that city staff members were not properly differentiating when they were inspecting low-income areas using the federal funding and when they were checking other areas of Fresno using other funds.

Also, just over $1.1 million in spending on after-school programs is called into question due to incomplete surveys, which the children are asked to take home, fill out and return for record-keeping. The government requires that at least 51 percent of students participating in these programs be from low- to-moderate-income families. The city maintained that more than 90 percent of the participants fit into this category, but the audit says Fresno’s data was skewed by the lack of completed surveys.

There was also about $200,000 in unclear graffiti cleaning costs, the audit says.

City spokesman Mark Standriff said city staff members worked with the auditors for about six months and take their findings seriously. However, he maintained the city had not misused any CDBG money – rather, the city had simply not kept up with the rigorous documentation requirements required by the federal government.

“We’re confident the CDBG funding was used for meaningful activities – to improve the quality of life for our low-income neighborhoods,” Standriff said.

In the event the city does have to repay any federal funding, Standriff said that money would go back into the city’s treasury for future reuse in low-income areas. He said he does not believe this kind of maneuvering would affect any other city departments or programs.

This story was originally published August 15, 2017 at 8:00 AM with the headline "After critical audit, feds eying Fresno’s use of money marked for low-income areas."