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by Mark Reutter4:13 pmFeb 25, 20140

HUD tells city to repay nearly $4 million in misspent homeless funds

City used federal stimulus funds to underwrite longstanding programs and failed to document expenses

Above: Mayor Rawlings-Blake addresses a homeless task force last month chaired by Housing Commissioner Paul Graziano (center). To his left is the director of The Journey Home homeless program, Adrienne Breidenstine.

After more than a year of wrangling, the federal government has told Baltimore to repay nearly $4 million of a $9.5 million grant aimed at helping the homeless.

“The City of Baltimore is required to reimburse HUD from non-Federal funds a total of $3,756,025.35,” said a memo based on a meeting last Thursday between the U.S. Department of Housing and Urban Development (HUD) and the Mayor’s Office of Human Services.

The repayment is by far the largest payback required by HUD following a series of audits of big cities who received grants from a homeless prevention program signed into law by President Obama as part of the 2009 Recovery Act.

Still, the reimbursement is well below the $7 million that the federal government signaled could be required just a few months ago.

The City, not Service Providers, Faulted

After publicly denying that there were any substantive issues raised by HUD, the city told homeless service grantees that they might be responsible to repay the disputed funds.

HUD officials have nixed that idea, and the city will have to pay the $3.76 million out of general revenue (taxpayer) funds, sources tell The Brew.

Wounded by HUD’s decision, the Rawlings-Blake administration is preparing to argue before the media that the funds served thousands of needy clients and were a judicious use of federal money.

What a federal audit tells us about city spending (12/5/12)

City reserves $7 million to repay mismanaged federal homeless grant (12/3/13)

Questions but no answers on mismanaged homeless services grant (1/8/14)
At issue were very specific criteria of what constituted a homeless person eligible for the stimulus funds. HUD required extensive documentation of homeless clients and called on the disbursement of federal funds only after time sheets, expenses and other costs were submitted to the city.

The city, however, went about funding the program in its own way, later saying that the federal rules were confusing and changed too often.

In 2009, the Baltimore Housing Department entered into a contract with the United Way of Central Maryland to serve as the fiscal agent of the program.

The agreement called on United Way to disperse federal funds to homeless service providers “monthly in advance,” and further stated that the “monitoring of the expenditures. . . shall be the responsibility of the department, and not the fiscal agent.”

The agreement – approved by then-City Council President Stephanie Rawlings-Blake and Mayor Sheila Dixon – was inherited by the Mayor’s Office of Human Services, which handled the grant and supervised the United Way.

HUD Started Asking Questions in 2011

As early as spring 2011, HUD’s Baltimore Office called on the city to collect documentation supporting the program’s expenditures. Such documentation was not compiled, leading to the critical November 2012 audit by the HUD Inspector General.

By general consensus, Homeless Services and United Way awarded contracts to existing service providers, many of them conducting existing homeless outreach programs that were not part of the grant’s criteria.

For example, Legal Aid used the funds to continue its existing eviction prevention activities, and Power Inside worked with chronically homeless women. Neither program fit into the federal criteria, but providers were told to continue their services with the new funds, various government sources have told The Brew.

No Evidence of Criminality

Last week, the agency reported the following undocumented expenditures from these homeless providers:

• People Encouraging People – $678,643.80
• AIDS Interfaith Residential Services (AIRS) – $600,000
• Legal Aid Bureau – $549,593
• St. Vincent de Paul of Baltimore – $523,228.54
• Prisoner’s Aid Association – $392,982
• Public Justice Center – $336,000
• Baltimore City Community Action Centers (utility assistance) – $224,014
• Power Inside – $273,644
• Jobs, Housing and Recovery (JHR) – $154,831
• Marian House – $51,964
• Baltimore Healthcare Access – $35,498.88

The report does not accuse any group or individual of stealing money; instead the above funds were not properly documented or were used for ineligible activities.

In addition, HUD found that Gabby Knighton, outreach coordinator for the homeless program, was paid $41,667 in stimulus funds on the basis of a “verbal contract” with the Mayor’s Office of Human Services. Without any documentation of the services she rendered, HUD is requiring the city to repay this money.

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