Report 2014-037 Recommendation 4 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 #4 To: Housing and Community Development, Department of

To ensure that recipients submit required status reports, HCD should develop and implement strategies to better monitor these reports. For example, program management could review a central tracking spreadsheet of status reports and require staff to contact recipients that are not complying with requirements. After six months of noncompliance by recipients, HCD should send warning letters to recipients that it will cancel their awards or seek remedies and require them to return the funds unless they provide the reports within a specified time.

1-Year Agency Response

The Local Housing Trust Fund Program standard agreement includes a change that once the Contractor is awarded, they must submit annual status reports to HCD, even prior to the disbursement of funds. This satisfies the CSA request to require "some reporting before the initial disbursement request." For the SERNA program, a policy document is provided to show what is required for past due monitoring reports. Both issues are resolved and implemented.

  • Completion Date: September 2015
  • Response Date: September 2015

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

The DFA BEGIN program developed a formal reporting process, which is documented in the Desk Manual (Attachment AF4a-1, AF4a-2), and includes processes for collection, tracking, and follow up of reports.

CalHOME revised its Desk & Operations Manuals to include an improved reports collection process (Attachment AF4b-1, AF4b-2 red text), which includes processes for ensuring report collection and tracking, recipient correspondence documentation, and follow up for non-compliance.

Local Housing Trust Fund Program monitors the status of recipient activities via the LHTF Disbursement Request Form (Attachment AF4c-1). Recipients who have not requested a disbursement are not required to submit a status update since there are no changes to report. The status of LHTF disbursements/reporting is updated on Attachment AFc-2.

Serna - DFA management reviews the status of the CAPES Annual Reports and Operating Budget submission compliance monthly. (AF4d).

  • Completion Date: February 2015
  • Response Date: March 2015

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Although HCD provided support that it had modified its policies for the BEGIN and CalHome programs to address our concern, it did not do so for the Local Housing Trust Fund (LHTF) program or the Joe Serna, Jr. Farmworker Housing program. As we note in our report, the LHTF's policy of waiting for a recipient to request funds is insufficient for monitoring its awards because of the significant amount of time that may elapse between award of funds and a request for disbursement. Further, the documentation provided for the Farmworker Housing program shows only that HCD is tracking required reports; it does not indicate what HCD will do when recipients fail to submit required reports, as documentation HCD provided to us shows has already occurred.

  • Auditee did not substantiate its claim of full implementation
  • Auditee did not address all aspects of the recommendation

60-Day Agency Response

DFA is evaluating and developing a centralized reporting process. One option currently under consideration is a report generated from HCD's internal database, CAPES. Consequences for recipients who do not comply are being reviewed on a program by program basis, taking into consideration the fact that existing programs do not have the same reporting requirements.

  • Estimated Completion Date: 3/30/2015
  • Response Date: November 2014

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2014-037

Agency responses received are posted verbatim.