Modesto Needs to Repay $1.9 Million in Federal Housing Money

The Modesto Bee reports that a federal audit faults Modesto for how it spent federal housing money, and recommends the city repay the U.S. Department of Housing and Urban Development nearly $258,000 and explain how it spent an additional $1.69 million or repay that money as well.

The Office of the Inspector General released the federal audit of Modesto’s community development block grant on July 5. The federal government provides Modesto with approximately $1.8 million annually, which the city spends to help low- and moderate-income residents and neighborhoods.

The audit for 2015-16 and 2016-17 found the city “did not follow HUD's and its own requirements for its rental and homeowner rehabilitation projects ... provided false information to HUD, (and) spent HUD funds inefficiently."

Other findings:

  • Modesto failed to support that the $993,880 it spent on four projects to rehabilitate multifamily rental properties met HUD requirements.

  • Modesto did not do its own independent cost estimates to determine whether costs were reasonable.

  • The city did not have written agreements for the four projects and made payments before the work was completed.

City officials said the repayment cannot come from the federal money, and must come from the city’s general fund.

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