Worcester CDC letter to HUD, re: HUD audit of City of Worcester’s Executive Office of Neighborhoods and Economic Development, block grant funding

editor’s note: First: letter to Worcester City Council from Main South CDC. Next: letter to HUD from the Main South CDC’s executive director, Steve Teasdale. We have made bold some paragraphs. R. T.
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To Worcester City Councillors:

As you are probably now aware, the City is undergoing an internal audit from HUD regarding its administration of the CDBG program. Particular focus has been placed on the housing delivery programs that are run by local CDC’s. We would suggest that this scrutiny is largely due to the internal problems EONS is facing with regard to the 5 May Street property and one of the Lead paint program inspectors who is facing criminal charges for bribery.

The result is that funds that are owed to the Main South CDC and other local CDC’s have been frozen and no new contracts for the year starting 6/30/2012 have been approved. Furthermore the Telegram and Gazette articles by Sutner, who as usual is long on misrepresentation and short on fact, continue to damage our credibility with the uninformed reader.

I am forwarding a copy of our agency’s response to HUD regarding their recent findings. I have asked for a meeting with HUD to clarify the situation and see what can be done to allow us to once again receive Block Grant funding. Our agency will cease operations as presently exist if funding is not renewed.

Whether you support the work that the Main South CDC has done or not, I respectfully suggest that the Council Sub-Committee on Community Development should convene ASAP to hold hearings on these findings. In the interim any councillor is welcome to come to our office to review our documentation to determine first hand whether or not the Main South CDC complied with the terms of its CDBG contracts.

Main South CDC
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Copy of Communication to HUD Regional Offices:

Dear Sirs:

I am writing on behalf of the Main South CDC one of Worcester’s neighborhood non-profit housing developers whose future operations are being seriously jeopardized as a result of HUD’s ongoing audit of the City of Worcester’s Executive Office of Neighborhood’s and Economic Development. Furthermore the manner in which the local press is reporting the findings of this audit is misleading and untrue and damaging to our agencies. Please see the attached article.

I would like to make several points:

Firstly nobody at HUD has asked to meet with the Main South CDC to review any of our records. The City is missing most of the documentation that has previously been supplied to them that would address the very findings that the HUD audit is raising with regard to the Main South CDC. As a result they have not been able to answer the questions you raise.

Specifically:

1. The IDIS reporting from the City was minimal and did not represent what the Main South CDC had produced. The lack of satisfactory reporting by the City is not the fault of our agency who has produced what it was contracted to do… The funds we received were spent on housing delivery services as outlined in our CDBG contracts.

2. Our proposals for each CDBG funding cycle were approximately twelve pages long and explained in detail what our performance goals would be and how they met the National Objectives for eligibility under CDBG regulations. We did not prepare the final scope of services in the contracts, the City did that but we produced what we said we would in our proposals. We have detailed records available that are available for review.

3. CDBG funds were spent to support only positions listed in our budget proposals. Again full records are available.

4. We have an internal analysis available for your review of the cost of our housing delivery programs on an annual basis. For each year that is the subject of your audit the cost of our housing delivery programs exceeded the amount of CDBG funds plus overhead fees associated with HOME funded programs. This analysis is available for review and so is the supporting documentation.

The fact is that all federal HOME and CDBG funds owed to our agency have now been frozen. We have a twenty-two unit LIHTC project underway that is nearing completion and are awaiting payment of over $600,000 from the City. We can not access it. We are still owed CDBG funds from last year’s contract, these are now frozen. We cannot bridge this operating loss because lenders want a commitment letter from the City showing we will be receiving the CDBG funds and the City is now not in a position to do this.

I would ask any of you or your staff to come to Main South and see the transformation of this neighborhood that has taken place over the last several years. It has been supported through CDBG funding and the product has been produced.

I respectfully request a meeting with senior HUD staff at the Regional Office to present our case. Years of work have gone into the revitalization of this neighborhood. Work that has had the direct support of our congressional delegation. The economic climate is difficult enough at present without these added challenges. We believe we have fulfilled our contractual obligations in accordance with CDBG regulations.

Thank you in advance for your attention to this matter

J.Stephen Teasdale, Executive Director
Main South CDC

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