Report 2014-037 Recommendation 3 Responses

Report 2014-037: California Department of Housing and Community Development: Inconsistent Oversight Has Resulted in the Questionable Use of Some Housing Bond Funds (Release Date: September 2014)

Recommendation #3 To: Housing and Community Development, Department of

To meet the intent of the law, HCD should approve and fund for the Catalyst Program only those projects that more directly create or preserve housing opportunities.

Agency Response*

HCD has revised its policy covering the Catalyst Program, via a management memo. The policy change satisfies the concerns raised in this finding. Supporting documentation has been provided.

  • Response Type†: Annual Follow Up
  • Completion Date: September 2015
  • Response Date: November 2015

California State Auditor's Assessment of Status: Fully Implemented

HCD's policy changes should help it ensure that only projects that more directly create or preserve housing opportunities receive funding.


Agency Response*

HCD maintains what was stated at the 6-month status report and emphasizes that staff will ensure all proposed scope of works for any future standard agreement are consistent with these requirements. Therefore, this finding is fully implemented.

  • Response Type†: 1-Year
  • Completion Date: February 2015
  • Response Date: September 2015

California State Auditor's Assessment of Status: No Action Taken

As we stated in our assessment of HCD's 6-month status report, the guidance HCD indicates it provided to its staff regarding the four catalyst projects yet to sign a standard agreement does not ensure HCD will comply with state law. Specifically, as we indicated in our report, we do not believe state law allows funding for projects that do not create or preserve affordable housing.


Agency Response*

Staff have reviewed the current status of all catalyst designees. Of the 10 designees, 6 have executed standard agreements with identified scopes of work. HCD is not proposing to amend existing standard agreements or disapprove fund disbursement requests on activities previously approved by HCD through an executed Standard Agreement. However, for the remaining 4 Catalyst Designees without a completed standard agreement process, staff have been notified to review proposed scopes of work to ensure all future activities funded through the Catalyst Program are in support of "creating or preserving affordable homeownership opportunities" consistent with the Statutory Authority. Staff will ensure all proposed scope of works for any future standard agreement are consistent with these requirements.

  • Response Type†: 6-Month
  • Completion Date: February 2015
  • Response Date: March 2015

California State Auditor's Assessment of Status: No Action Taken

The guidance HCD indicates it provided to its staff regarding the four catalyst projects yet to sign a standard agreement does not ensure HCD will comply with state law. Specifically, as we indicated in our report, we do not believe state law allows funding for projects that do not create or preserve affordable housing.


Agency Response*

The HCD Housing Policy Division (HPD) continues to assess projects, and will review those not currently under a standard agreement. HPD will complete the assessment by the 6-month status report.

  • Response Type†: 60-Day
  • Estimated Completion Date: 3/11/2015
  • Response Date: November 2014

California State Auditor's Assessment of Status: Pending


All Recommendations in 2014-037

†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


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