The State of Michigan charged a federal fund that was dedicated to housing relief and tearing down abandoned homes more than $330,000 to give employees free parking, an audit found today.
The Michigan State Housing Development Authority (MSHDA) said the charge was reasonable. It was contained in an audit that found millions in what a special inspector general in Washington characterized as unnecessary expenses that various states charged to the federal Hardest Hit Fund.
"The parking for contract employees who work in downtown Lansing — where parking is not free and is actually at a premium because it is the state capital — was essential to meet staffing levels required for the important work of helping families in Michigan avoid foreclosure," said Katie Bach, an MSHDA spokeswoman. "Not paying this expense would have put (the state) at a disadvantage in attracting and retaining the talent required."
The number of contract employees who receive the benefit has fluctuated over time, from between 65 to nearly 100 at the height of the program.
The report recommends that Michigan — as well as several other states — be required to pay back the money. Michigan officials didn't immediately respond to the suggestion.
Bach said the Michigan Homeowner Assistance Nonprofit Housing Corp., which MSHDA created to oversee the Hardest Hit Fund in the state, approved the charge, believing it was "a reasonable and customary expense of doing business, with which previous federal audits have taken no issue."
The Hardest Hit Fund, created in 2010 under the Troubled Asset Relief Program (TARP) to help keep residents in their homes and stabilize neighborhoods in the wake of the housing crisis, has committed a total of about $761 million to Michigan since its inception. About half of that has been targeted for demolitions, especially those in Detroit.
It's not the first time the inspector general has complained about Michigan's program. Last year, in a report to Congress, Michigan and Ohio's programs were singled out for "skyrocketing demolition costs," even though those costs had been brought down somewhat by the time of that report in Detroit. The inspector general's office is also said to be conducting an investigation into Detroit's dealings with demolition contractors though it has neither confirmed nor denied whether such a probe is still active.
In previous reports to Congress and the U.S. Treasury, Christy Goldsmith Romero, the special inspector general for TARP, has found instances of alleged waste. Last year, her office uncovered what it said was $8.2 million in waste and abuse in Nevada that included car allowances, rent payments and overhead expenses Romero concluded were unjustified.
In the most recent report, which was sent today to Treasury Secretary Steve Mnuchin, Romero and her auditors found that state agencies in Michigan, South Carolina, Nevada, Rhode Island, Ohio and California charged TARP more than $600,000 for transportation costs that would have been more appropriately paid for by the states.
“The Michigan state agency charged TARP $330,575 to give all employees the perk of free parking,” the audit said. “The Michigan state agency decided at a Board of Directors meeting in February 2011 to provide ‘free parking’ for employees working on the Hardest Hit Fund.”
“Every dollar spent on unnecessary expenses is a dollar that is no longer available for homeowner assistance,” the audit said.
It also noted that funds were charged to cater barbecue dinners in North Carolina and to pay back-rent on offices in Rhode Island, among other expenses.
In Michigan, the audit also found charges of $77 for refreshments for a meeting with treasury officials in 2015; $55 for gifts for employees from Bed Bath & Beyond, and some $6,000 in other charges for food and beverages over the last seven years.
The Hardest Hit Fund and the demolitions it largely funds in Detroit have become a source of controversy, with questions about costs and payments to contractors. This week, the Detroit Land Bank Authority’s demolition director resigned after just seven months on the job. A federal investigation into Detroit’s demolition program is continuing.
The city’s inspector general said this week that two contractors submitted doctored photos of sidewalk repairs done in connection with the demolition program in order to get paid.
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