Toledo Municipal Court failed to follow rules when it doled out thousands of federal grant dollars for home repairs, and the city of Toledo did not keep tabs on contractors renovating homes, according to a federal audit released recently.
The U.S. Department of Housing and Urban Development Office of Inspector General audited the city after a Blade investigation into the city’s department of neighborhoods and after a request by U.S. Rep. Marcy Kaptur (D.,Toledo). The agency recommended that Toledo be forced to reimburse nearly $82,000 of Block Grant funding and to provide proper documentation regarding $24,000 in spending or pay back that amount.
“The city did not ensure that federal regulations and its own policies were followed in the administration of” the Code Violation Abatement Program administered by municipal housing court Judge C. Allen McConnell, according to the audit.
“The city did not ensure that the Toledo Municipal Court conducted independent cost estimates and obtained sufficient price quotes for housing rehabilitation services and completed work specifications that sufficiently detailed the services for program projects,” it stated.
Miss Kaptur said she was glad the inspector general acted quickly on her request for an investigation after The Blade brought the issue to light.
"Taxpayers deserve to know whether their tax dollars are being used wisely and whether the funds are being administered properly," she said in a statement issued on Monday. "Now that we have learned of these serious deficiencies, we must insist that the city implement the necessary reforms so the funds are not being misused."
The abatement program is funded by federal dollars and provides up to $4,500 to income-qualified homeowners to bring their properties into compliance with city code.
The audit also claimed that the city did not make sure contractors did the work, that the costs were reasonable, that federal rules about lead-based paint were followed, or that the homeowners helped under the program were income-qualified.
In a letter to Toledo City Council on Friday, City Neighborhoods Director Lourdes Santiago acknowledged the audit and the possibility that the city could be forced to repay $105,991 that was spent on more than 40 homes.
“Fortunately, the policies, procedures, and controls deemed lacking in the report have already been implemented by the [Bell] administration,” she wrote.
When Ms. Santiago took over as neighborhoods director in January, 2012, she promised to overhaul the department swiftly. An internal investigation completed the following month detailed allegations of bid-rigging, favoritism, misuse of funds, and document falsification. It concluded most of the accusations could not be verified fully.
The 19-page city report painted a picture of a deeply dysfunctional department in which problems included an off-the-books petty cash fund, intimidation of a police officer who was investigating a department employee, an employee running his or her own contracting business, licensed contractors lending their names to unlicensed contractors, and a “probability” that one contractor was given access to another’s sealed bids.
Ms. Santiago said she has enacted new bidding procedures, follow-up monitoring procedures, and income eligibility criteria.
The city probe, prompted by a Blade investigation, took two months to complete and was conducted by city Law Director Adam Loukx and Special Projects Manager Dan Hiskey.
The report also acknowledged a federal investigation encompassing the Code Violation Abatement Program.
Judge McConnell said he disagreed with the audit findings.
“My reliance has always been on audits that the department of neighborhoods conducted at the end of the year, and I have many reports that say everything was in compliance,” the judge said.
“If the allegation is that certain things did not occur, it was because they did not inform us."
The federal audit started in mid-2012, Judge McConnell said.
In the wake of the audit, the judge said he terminated the abatement program at the end of last year. It had included a maximum of about $100,000 a year to give homeowners.
“Many of these things were complied with,” Judge McConnell said. “They stated very clearly the process estimates were reasonable, the costs were reasonable, so I don’t think that it’s fair that we will have to repay those types of dollars.”
The audit included pictures of homes renovated under the program. The photos show peeling paint, deteriorating chimneys, windows without proper weather-sealing, among other issues.
Among the allegations is that the city used $9,000 to help homeowners who were not income-eligible.
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