Community Development:

HUD's Decision To Restrict Philadelphia's Block Grant Funds

RCED-87-64FS: Published: Nov 21, 1986. Publicly Released: Nov 21, 1986.

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In response to a congressional request, GAO provided information on the Department of Housing and Urban Development's (HUD) decision to restrict Philadelphia's Community Development Block Grant (CDBG) funds.

GAO found that, between 1984 and 1986, HUD had issued several reports to and held discussions with officials of Philadelphia's Office of Housing about the weaknesses in the city's management of CDBG funds. The HUD regional office found that the city had: (1) deficiencies in its financial management controls, program cost allocations, and program activity monitoring; (2) not established a follow-up system to help ensure that the reported deficiencies were being properly corrected; and (3) not taken corrective measures applicable to all organizations assisting in the city's CDBG activities but only corrected identified weaknesses. HUD notified Philadelphia's Director of Housing that the city could not make any new agreements with assisting organizations or obligate any additional funds until it established controls to prevent further occurrence of the deficiencies. Although the regional office approved the fiscal year 1986 $52 million grant, it conditionally withheld $13 million until the city implemented effective management systems to control and monitor its program.

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