Mississippi – September 20, 2010

The content below was excerpted from the Mississippi Appendix (PDF, 29 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

We obtained information on four programs funded under the Recovery Act—Public Housing Capital Fund Formula Grants, Public Housing Capital Fund Competitive Grants, the Tax Credit Assistance Program (TCAP), and the Grants to States for Low–income Housing Projects in Lieu of Low–income Housing Credits Program under Section 1602 of division B of the Recovery Act (Section 1602 Program). Our work focused primarily on the status of program funding and the use of funds. As part of our review of public housing, we visited three public housing authorities, located in Meridian, Gulfport, and Picayune. Our work with TCAP and the Section 1602 Program included visits to the Mississippi Home Corporation located in Jackson and two housing projects, one in Pickens and the other in Pascagoula. For descriptions and requirements of the covered programs, see appendix XVIII of GAO-10-1000SP.

Our work in Mississippi also included meeting with Tupelo city officials to determine the amount of Recovery Act funds the city had received or will receive directly from federal agencies and to learn how those funds are being used. We chose to visit Tupelo because its unemployment rate was above the state's average and it is one of the largest cities in Mississippi.

Finally, we updated information we previously reported on Mississippi's fiscal condition and on the efforts that the state has undertaken to ensure accountability of the Recovery Act funds that it has received.

What We FoundBack to top

Public Housing

The Meridian Housing Authority (MHA) received an $8.5 million Recovery Act Public Housing Capital Fund Competitive Grant. MHA plans to use this grant to help renovate a 113–unit public housing development. As of August 7, 2010, MHA had obligated $520,356 and drawn down $335,134 of the obligated funds. Also as of August 7, the Mississippi Regional Housing Authority Number VIII (MRHA–8), which is located in Gulfport, Mississippi, had received a $3,783,351 Recovery Act Public Housing Capital Fund Formula Grant and had expended a total of $1,168,969. MRHA–8 is using the funds to remodel the office space at one housing development, re–roof 73 housing authority buildings, and conduct various renovations in 140 individual housing units. The Picayune Housing Authority (PHA) received a total of $697,630 in Recovery Act funds from the Public Housing Capital Fund Formula Grant, and as of August 7, 2010, it had expended the full amount. PHA used the funds to renovate the bathrooms and kitchens in 22 units, as well as to replace the heating, ventilation, and air conditioning systems in another 92 units.

TCAP and the Section 1602 Program

The Recovery Act established two funding programs that provide capital investments in Low–income Housing Tax Credit (LIHTC) projects: (1) TCAP administered by the U.S. Department of Housing and Urban Development (HUD) and (2) the Section 1602 Program administered by the U.S. Department of Treasury (Treasury)[2] . Before the credit market was disrupted in 2008, the LIHTC program provided substantial financing in the form of third–party investor equity for affordable rental housing units[3]. As the demand for tax credits declined, so did the prices investors were willing to pay for them, which created funding gaps in projects that had received tax credit allocations in 2007 and 2008. TCAP and the Section 1602 Program were designed to fill financing gaps in planned tax credit projects and jump–start stalled projects.

HUD awarded the Mississippi Home Corporation (MHC) $21,881,803 in TCAP Recovery Act funding, and Treasury awarded MHC $29,664,458 in Section 1602 Program funds. In turn, MHC awarded all TCAP and Section 1602 Program funds to 32 projects, with 15 receiving TCAP funds, 4 receiving Section 1602 Program funds, and 13 receiving a combination of TCAP and Section 1602 Program funds. According to HUD data, as of August 1, 2010, MHC had disbursed $4,606,010 or 21 percent of the awarded TCAP funds. In addition, according to HUD data, as of July 31, 2010, MHC had not disbursed any Section 1602 Program funds.

MHC officials indicated that they are not concerned about disbursing seventy–five percent of TCAP funds by the February 2011 deadline. However, because of delays, MHC officials told us that project owners receiving Section 1602 Program funds may not meet the requirement of spending thirty percent of eligible project costs by the December 31, 2010 deadline. If a project owner fails to meet this deadline, then MHC must stop disbursing any additional Section 1602 Program funds to the project owner. MHC expects that it will not begin disbursing Section 1602 Program funds to projects until mid– to late–August.

Tupelo's use of Recovery Act funds

Tupelo received six Recovery Act grants which totaled $6,355,279. According to city officials, funds provided by the Recovery Act benefited the city. However, the officials told us that the city did not apply for some funds that would have helped the city meet its critical needs. Although officials identified water and sewer line improvements as a critical city need, Tupelo did not apply for Recovery Act funds for such improvements that were available through the Mississippi Clean Water and Drinking Water State Revolving Funds. According to a city official, the city chose not to apply for the funds because the city did not have 1) shovel–ready projects that met the objectives of the fund or 2) the resources to devote to quickly developing a project.

State fiscal condition

Mississippi continues to experience significant fiscal challenges due to a decline in state revenues. Tax revenue collections for fiscal year 2010 were $404 million, or 8.2 percent below expectations. The Governor stated that while preparing the fiscal year 2011 budget was a difficult process because of declining revenue, fiscal year 2012 will be even more challenging because federal stimulus funding will have ended.

Accountability

The Mississippi Office of the State Auditor (OSA) and the Department of Finance and Administration (DFA) have contracted with national accounting firms to monitor and oversee Recovery Act funds. Through April 2010, BKD, the firm contracted by OSA, has tested 80 grants received by 34 grant recipients and reported a total of 101 instances where recipients did not comply with Recovery Act requirements. The greatest lack of compliance was with quarterly recipient reporting. KPMG, the firm contracted by DFA, is assessing selected state agencies for their compliance with Recovery Act provisions. As of June 30, 2010, KPMG had completed site visits at 12 state agencies and reviewed approximately 39 different grants. Similarly to BKD, KPMG found compliance problems with recipient reporting requirements.

Full September ReportBack to top

Recovery Act: Opportunities to Improve Management and Strengthen Accountability over States' and Localities' Uses of Funds
GAO-10-999
Recovery Act: Opportunities to Improve Management and Strengthen Accountability over States' and Localities' Uses of Funds
(Appendixes)
GAO-10-1000SP
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] State housing finance agencies allocate low–income housing tax credits to owners of qualified rental properties who reserve all or a portion of their units for occupancy for low income tenants. Once awarded tax credits, owners attempt to sell them to investors to obtain funding for their projects. Investors can then claim tax credits for 10 years if the property continues to comply with program requirements.
  • [3] Many affordable housing tax credit projects rely on LIHTCs together with other forms of subsidies such as HOME Investment Partnerships Program funds (HOME), Community Development Block Grant (CDBG) funds, and state funds.
GAO Contact
portrait of of John K. Needham

John K. Needham

Director, Acquisition and Sourcing Management

needhamjk1@gao.gov

(202) 512-5274