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MO: St. Louis should pay back HUD, auditors say

By   /   October 1, 2012  /   No Comments

YOU OWE US: HUD auditors say St. Louis should repay the federal government a portion of the nearly $1.4 million it wrongly awarded to contractors.

By Johnny Kampis | Missouri Watchdog

ST. LOUIS — The U.S. Department of Housing and Urban Development’s audit team doesn’t like the way St. Louis used some of its stimulus money, and it wants the money back.

HUD’s auditors also knocked the city’s lack of transparency in how it reported the use of the money. This complaint comes in a public audit from HUD that contains plenty of redacted and vague information.

In a report released Thursday by HUD’s Office of Inspector General, the city’s Office of Community Planning and Development was criticized for awarding two contracts for nearly $1.4 million without accepting bids.

That St. Louis department also did not ensure that people who received work through the contracts were paid adequate wages and failed to file timely reports updating use of the American Recovery and Reinvestment Act money with FederalReporting.gov, according to the audit.

The auditors’ biggest issue was with how contracts were awarded for $1.1 million in work on the rehabilitation of a community center and $275,000 for various public works projects.

In the former, the city allowed a subcontractor to do the work because it had a prior contractual relationship with the design builder, mistakenly believing that this negated the need to solicit bids.

In the latter, the city wanted to complete sidewalk construction work and other projects before the start of a school year at a local college, and canceled the call for bids to complete the project more quickly. The contract was awarded to a company with which the city had a working relationship.

Because the city did not perform the required contract cost analysis and did not allow competition for the projects, it could not show that the price tag for the work was reasonable, auditors wrote.

The HUD Office of Inspector General says the city needs to support that the contracts were awarded at a reasonable cost or repay the U.S. Treasury “any amount determined to be unreasonable” using non-federal funds.

HUD OIG spokeswoman Marta Metelko told Missouri Watchdog the audit is not binding.

“We will make the recommendation, but it’s HUD who will make the final determination,” she said.

The city’s reasoning for its actions is outlined in a letter from Jill Claybour, acting director for the Office of Community Planning and Development, which cites the names of the companies and school involved.

HUD included the letter in the audit, but redacted those names from the report.

“If it’s not in the audit report it’s not information we can share freely,” Metelko said.

Claybour did not return a call from Watchdog on Monday.

The audit says the city approved 14 contracts worth more than $4 million that were subject to prevailing wage requirements. Because the city did not monitor enforcement of labor standards it had no assurances that those employed by the contractors received appropriate wages.

St. Louis also was cited for providing incomplete job and sub-recipient information on its stimulus money quarterly reports. It was late on two of those reports.

St. Louis has received $5.3 million in Community Development Block Grant funds since President Barack Obama signed the Recovery Act into law in 2009. The city has obligated all of those funds, and spent 63 percent  as of March 31, according to the audit.

The work has included 19 projects that range from improving parking lots to creating a farmer’s market.

The HUD OIG said it audited this city department because it received the most CDBG funds in Missouri, and was ranked highest on a risk assessment.

Contact Johnny Kampis at johnny@missouriwatchdog.org.  For more Missouri Watchdog updates, visit Facebook and Twitter, or sign up for a free newsletter.

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Johnny Kampis