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HUD Inspector General will launch probe of block grant funds

In response to a letter from South District Councilmember Mickey Kearns, US Department of Housing and Urban Development Inspector General Kenneth M. Donohue has pledged to audit Buffalo’s administration of federal anti-poverty funds. The probe will focus on the Buffalo Economic Renaissance Corporation.

In a July 24 letter, Donohue writes, “Based on our review of the HUD Monitoring Report and discussions with the HUD Buffalo Community Planning and Development Director, we have concluded that an audit of the corporation is warranted.”

In March, HUD released a report that recorded 19 “findings”—that is, deficiencies—in the city’s administration of community development block grant funds, based on the federal program’s statutory or regulatory requirements. (We reported about it here.) HUD also recorded two “concerns”—that is, deficiencies based not on any statute or regulation, but sufficiently worrisome to HUD’s monitors to bear mention.

The findings ranged from poor bookkeeping practices to misuse of funds, including $2.6 million used to pay down a $6 million Fannie Mae loan that bankrolled the high-end loft developments in the 800 block of Main Street (the Granite Works) and at 210 Ellicott Street (the Warehouse Lofts). Neither project, according to HUD, benefits the the CDBG program’s target clientele, which comprises low- and moderate-income residents.

The montoring report required the city to respond to its findings and concerns and take corrective ation on a schedule that ranged from 30 to 90 days. The city filed responses, but it’s not clear what, if any, corrective action has been taken.

Kearns held a press conference this morning at 11:15. Donohue anticipates that the audit will begin in early September.