Community Development:

HUD Oversight of the Dallas Block Grant Program Needs Improvement

RCED-92-3: Published: Nov 27, 1991. Publicly Released: Nov 27, 1991.

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Judy A. England Joseph
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Pursuant to a congressional request, GAO determined whether the Department of Housing and Urban Development (HUD) provided adequate oversight of the Dallas Community Development Block Grant (CDBG) Program, focusing on HUD monitoring of the city's: (1) timely expenditure of CDBG funds; (2) use of CDBG funds to enforce housing codes; (3) control over subrecipients; and (4) accounting and planning and administrative costs.

GAO found that: (1) HUD guidance on monitoring Dallas's timely use of CDBG funds fails to emphasize identifying the cause of slow project spending; (2) as a result, HUD failed to determine the reasons for Dallas's noncompliance with the CDBG timeliness standard and conditioned the city's entire 1989 and 1990 grants by requiring the city to either quickly spend its CDBG funds or risk losing them; (3) in response, Dallas reprogrammed some funds to lower-priority activities in an attempt to spend funds more quickly; (4) since HUD failed to monitor annual expenditures of more than $2 million for code enforcement, it did not detect that Dallas improperly charged the CDBG program code to employees that did not work full-time on CDBG projects; (5) while HUD monitoring reports generally concluded that Dallas' subrecipient monitoring system was adequate, independent audit reports concluded that the system lacked such federally required features as formal, written monitoring procedures, adequate monitor supervision, or corrective action procedures; (6) HUD did not take effective action to correct recurring delinquent subrecipient audit problems; and (7) although Dallas reported planning and administrative (P&A) expenses at 20 percent in 1990, which is the maximum amount permitted by federal legislation and CDBG regulations, the true P&A costs may be either unknown or understated, since HUD permitted Dallas to report similar subrecipients' expenses as P&A costs.

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