Urban Action Grants:

Lansing, Michigan's Grant Requires Action

RCED-89-85: Published: Apr 11, 1989. Publicly Released: May 12, 1989.

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Pursuant to a congressional request, GAO investigated a Lansing, Michigan, Urban Development Action Grant project, focusing on whether changes to the project's scope complied with the Department of Housing and Urban Development's (HUD) regulations and procedures.

GAO found that: (1) HUD approved the $3.3-million grant for financing the purchase and installation of fixed capital equipment in a technology and research center to be constructed in a township near Lansing; (2) after concluding that the industrial revenue bonds being used for financing covered the project's costs, HUD reduced the grant amount to $889,785, the minimum amount needed to protect the bonds' tax-exempt status; (3) the project developer requested permission to expand the project to include office space leasing after failing to lease space to a large research institute which would have attracted similar firms; (4) the developer also estimated that the project would only create 60 new jobs from conventional office leasing, and not the 600 it believed possible with research firms; (5) township officials objected to the grant reduction and sought to terminate the grant; (6) HUD regulations and procedures allowed for such revisions, which HUD believed were not unusual; (7) HUD had not released the grant funds to Lansing, since its officials had not submitted required documentation; and (8) Lansing and HUD officials agreed to establish new deadlines for the developer to purchase the equipment and Lansing officials to submit the required documentation.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: This recommendation was completed with the purchase and installation of captial equipment and approval of documentation.

    Recommendation: The Secretary of Housing and Urban Development should direct HUD officials to implement their plan to set new deadlines for the City of Lansing to submit the remaining documentation and for the developer to purchase the capital equipment with the Urban Development Action Grant funds. If either the City of Lansing or the developer does not meet the new deadlines, HUD should take all actions needed to resolve this matter, including termination of the grant, if appropriate.

    Agency Affected: Department of Housing and Urban Development

 

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