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Topic: Why Flint keeps paying back HUD $
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untanglingwebs
El Supremo

The HUD reviewer was met on February 28, 2005 by Mrs. Charlotte Edwards, President of the CCDC Board of Directors and Citizen's Bank CRA official. Sylvia Campbell, the CCDC Accountant was present for much of the review of only the CDBG portion of the loan portfolio.

Available for review:

Ford Enterprise Vending
Inner City Productions
Mona's Nightclub
Sims Asphalt
Medicap Please delete me!
Total Foot and Ankle
Unreel, Inc.
Grundy's Collision

Only four of the loans were current. Three were in collection and one was in court.
Post Sun Sep 10, 2017 4:45 pm 
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untanglingwebs
El Supremo

The one in court was the Medicap Please delete me!,Ikeo Inc.. Standard Federal Bank vs Ikeo Inc. and Ikechukwu Benjamin Onowu. Onowu lost his pharmacist license after he became addicted to painkillers and then sold them on the street. He was turned down in 2007 after he applied for the restoration of his license.

HUD issued concern #4 Failure to provide Technical Support to Borrowers. There was no evidence that the resources provided in these programs (Lending Circle, Prescriptive Counseling and Business Community Partnership) to provide technical assistance to borrowers or loans to the wokshop participants.

Staff only reviewed loans when when the borrower was in default and then they sent out letters. HUD noted there was no evidence to indicate the accounts were reviewed with respect to staffing, sales, inventory, profit ,taxes, bookkeeping, etc. They cited the case of Medicap and stated there had been both staffing and inventory problems. HUD also stated the owner had been sent to prison or selling pharmaceuticals without a license. HUD showed that the Medicap owner had received loans through both the Community Development Block grants and the Small Business Administration. According to the HUD review , the owner had indicated problems existed and CCDC failed to provide "immediate and intensive assistance".


Last edited by untanglingwebs on Mon Sep 11, 2017 12:07 pm; edited 1 time in total
Post Sun Sep 10, 2017 8:30 pm 
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untanglingwebs
El Supremo

HUD went into a lengthy recitation of the rules CCDC broke by their failure to provide written notification of suspension of their activities and their failure to transfer the assets according to their contract with the City of Flint.

The Flint Area Enterprise Community,Flint major grants staff Glenda Dunlap and the law firm of Simen, Figura and Parker P.L.C. had already taken on the task had started the process of identifying and inventorying the assets of the CCDC (FAIF) and developing guidelines for the transfer of o these assets to FAEC and the City of flint.

HUD suggested Flint should also assume the CDBG loan portfolio to the City of Flint or an entity with experience in these loans.

The $31,799 in ineligible expenditures needed to be returned to the City's Community Development Block Grant line of Credit and proof needed to be provided to HUD in Detroit. (normally such payments must come from a non-federal source)
Post Sun Sep 10, 2017 8:59 pm 
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untanglingwebs
El Supremo

Finding 8 Failure to report program income

"With the Community Development Block Grant funded loan programs, the CCDC received monthly loan payments. These monthly payments were to to be posted to the CDBG loan account , reported to the City of Flint and used for program eligible activities." After a review the records, CCDC did not report any income after the 2001 program year. From January 2004 through December 2004, CCDC records showed $38,809.72 in program income and $65.68 in interest earned from the block grant loan account. Charlotte Edwards, President of the CCDC Board of Directors showed the HUD reviewer an account balance of of $19,941 in the account as of January 2005. Loan payments were not shown for February and March.

CCDC failed to comply with their contract with Flint. The terms of the contract indicated that the failure of CCDC to comply with the requirements involving program income meant the agency was to return all program income to the City of Flint.
Post Mon Sep 11, 2017 12:05 pm 
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untanglingwebs
El Supremo

Hud Recommended Corrective Action:

"It is recommended that the financial records for CCDC's CDBG funded loan program be reviewed to determine the amount of program income and interest for 2002, 2003, 2004 and 2005. The amount derived from the review must be returned to the City's Community Development Block Grant line of credit. Additionally, the City must explain the difference between the amount of program income and interest earned ($38,874.40) and the CCDC loan account balance of $19,941.09. The work papers used to determine the amount of program income and the account discrepancy must be submitted to CPD.

CPD- Community, Planning and Development
Post Mon Sep 11, 2017 12:24 pm 
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untanglingwebs
El Supremo

One of the most disturbing part of HUD in the City of Flint for their review was their determination to place all of the problems on Mayor Williamson. The office received a demand that Flint respond to 17 years of ur-resolved findings. That even predated the Stanley Administration. Records were hard to find as the department had been moved twice.

When Council usurped the offices being used by the Law Department , the Major Grants division was in the office adjacent to the Law Department. When the law Department took over that space, the Major Grants was moved to a space in the South Building.
Also under Peter Dobrzeniecki ( Peter D), Finance Director and Melanie Purcell, Budget, The furniture purchased by HUD was sold by these two at bargain basement prices. HUD was in the office on a regular basis, so did Peter D really believe they wouldn't notice? When Bill Ayers, Transportation Director, was given multiple job titles, he insisted that transportation be moved so the were all in the same building. Once again Peter D wanted to sell the departments furniture. After a nasty exchange of e-mails I made a point to go to the pre-audit meeting. The auditor gasped and said no because the City had finally cleared up the first finding. If the department had not finally updated their inventories, their furniture was going to be history and Flint would have another finding about assets. Money was in the budget to move them again. But trying to locate records was a challenge.
Post Mon Sep 11, 2017 1:15 pm 
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untanglingwebs
El Supremo

Council had written me out of the budget and I had just returned when HUD came for their review. They asked me to dish some dirt on the Mayor. I admired his position on trying to get rid of the corruption in Major grants plus the complaints kept coming. It seems that Flo McCormick had been calling HUD to complain about the Mayor.. In my opinion she was the one not doing her job. Staff was sent to meetings where they could not get reimbursed. Salem Housing's Director was thrilled that Council had written my position out thinking the complaints would go away.

Many of Joyce Parker's files had been thrown out. (Happened a lot in City hall) This may have been part of the reason for some of the non response.

I never would have known about the existence of strange City hall stairwells if McCormick had not used them so much on her way to and from the Mayor's office.

Williamson's decision to stop all grants until a review was completed was not wise. Since staff had to do a search for HUD , they probably never told him how many grants were out there. Over 70 grants for one person when the documents showed an entire staff did not complete reviews prior to the Williamson administration. HUD commented on the difficulty in finding information because of a clumsy filing system.


Last edited by untanglingwebs on Fri Sep 15, 2017 10:55 am; edited 1 time in total
Post Tue Sep 12, 2017 9:48 am 
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untanglingwebs
El Supremo

From the Jun 2, 2005 HUD communicatio:
"Due to delays in implementation, the City will forgo up to $4,671,717 in program and administrative funding by December 2005. There is a need to establish overall management systems. At the time of the monitoring visit, the City had not responded to six significant pieces of correspondence. This was due, in part to administrative and office location changes. An overall correspondence tracking system wold have maximized the City's response rate and shortened the response time to correspondence. Besides a correspondence tracking system for the status and timely response to HUD and citizen correspondence; there is a need for subrecipient tracking of contracting, monitoring, audit, and income earned from HUD funded projects. "
Post Tue Sep 12, 2017 4:14 pm 
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untanglingwebs
El Supremo

Community Development Block Grant

The Metro Chamber of Commerce"s Community Business Partnership project, per HUD, was misclassified as an economic development activity instead of a public service. However, HUD noted that any public benefit of the program was not tracked or evaluated. There was no measure of the program's performance.

" The City's demolition program operates smoothly due to the statutory requirements and automated information systems associated with the program. However, in January 2005, the City transferred $1,000,000 in Community Block Development Block Funds from the County's demolition fund to the City's demolition fund. During this time period, the City reduced the number of men on the demolition crew from three to two. Because of the lack of man power and the need for additional equipment to handle the increased volume of demolition, the City's demolition activity has stalled.Additionally, once the structure has been demolished and the site cleared the City does not have any plans for the redevelopmet of the lots; leaving the surrounding area looking abandoned and isolated."
Post Tue Sep 12, 2017 4:39 pm 
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untanglingwebs
El Supremo

Note: Same issue when John Carpenter was trying to obtain the funding to meet the match to demolish Heartland Manor, the former Hurley nursing facility adjacent to Carriage Town, At the time the property was in the Land Bank's hands. MSHDA wanted assurance that development plans were in place. It was determined that redevelopment at that time was not practical.

There was in place a future development plan for development along the lines of new urbanism. It is a mixed townhouse/apartment and commercial project with all the parking inside.

The remaining three houses on the block were obtained and demolished while Hurley also relocated a maintenance area. The block is now an attractive vacant greenspace. John Carpenter and his grandson painted off the graffiti on a Saturday. City crews removed the trash.


Last edited by untanglingwebs on Sun Sep 17, 2017 8:42 am; edited 1 time in total
Post Tue Sep 12, 2017 5:06 pm 
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untanglingwebs
El Supremo

Lack of subrecipent monitoring!

Mayor Williamson was so disturbed by allegations of problems within Major Grants that he forbid the staff from leaving the office. I was told by staff that they had been accused of wrongdoing and threatened with firing if they violated laws. Staff morale was down and some were fearful.

Several problems. Downsizing the department, retirements, and transfer of employees from other departments made the issues more difficult. When HUD reviewed the monitoring schedules from 2003 and 2004, (Williamson took over in 2004) the results were far from optimal.

HUD noted that several days were needed to compile the information requested and they also stated there was no central control log from which to evaluate the status of each subgrantee.
Post Fri Sep 15, 2017 11:12 am 
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untanglingwebs
El Supremo

HUD's review discussed how each subgrantee had a folder with specific files-application, audit, monitoring, pay requests, etc.. This was also the case for audits. When HUD requested the audit status was for a subgrantee, the specific audit had to be pulled. "Staff was unable to state the number of audits submitted, the number of audits with outstanding findings, or the final resolution of each finding."

When HUD met with staff to discuss these issues, the HUD reviewer was told all subgrantees had to submit an audit and an application prior to any consideration for funding, approval or execution of a contract. HUD performed a sample test and found all audits were not current, and in some years an accounting certification was allowed to be issued by either the subgrantees executive director or chief financial officer. Staff told HUD that policy was being discontinued.

Note: I also noticed that issue when trying to locate an audit for GECA. Later under Lewis, the Mayor had to intercede as the Major Grants division refused to share some information with the Mayor and City Administrator's office.
Post Fri Sep 15, 2017 11:52 am 
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untanglingwebs
El Supremo

There 3 of the 5 agencies reviewed by HUD that lacked audits back by several years.. The last reports for Catholic Social Services was June 30, 2000,; City of Flint DPW (accounting certification) November 2000; Flint NIPP June 30, 1998. Two were current CCDC and Salem Housing.


"In summary, the procedures for tracking subrecipient/subgrantee information need to be improved and become more compliant with the requirements of 24 CFR 85.40."

Recommendations included that the City of Flint develop a a monitoring control log, or tracking system that lists all subgrantees, all projected/completed monitoring visits, results of monitoring visits. Major actions or issue resolutions and dates must also be included on the tracking system as well as an audit control log for all agencies receiving federal assistance.
HUD wanted copies of both logs sent to the HUD Detroit office.
Post Fri Sep 15, 2017 12:18 pm 
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untanglingwebs
El Supremo

When the mayor asked for a review of all agencies receiving grants, no one ever knew so many issues would rise.

Salem Housing was on all of the TV stations and the Journal. In addition, there was Whistleblower complaints, and complaints from former staff contractor and irate homeowners.

Kurtz always favored kettering. When citizens couldn't get their streets cleaned, Kurtxz pulled out a street sweeper to remedy debris from student housing on Chevrolet. Flint West Village couldn't implement the programs they had and lost their private land banking efforts. I found my notes where the Genesee Land Bank staff told me The FWV Director called them and said the agency needed the properties lost to balance their financial records.

Greater Eastside had an audit from Dupuis & Ryden that stated there was concern that the agency could not continue as a viable entity. That and other issues of violating timelines and contracts.


As his final lame duck move Kurtz by resolution gave both Flint West Village and Greater Eastside Community Association substantial amounts of financing. What HUD did not acknowledge was whether these transfers constituted substantial amendments requiring a public hearing. Councils refusal to reprogram these dollars and the mayor's refusal to grant the funding by Kurtz lost these dollars.


Last edited by untanglingwebs on Sun Sep 17, 2017 8:44 am; edited 1 time in total
Post Fri Sep 15, 2017 12:35 pm 
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untanglingwebs
El Supremo

HUD asked for referrals to law enforcement. That was tried. When the State of Michigan auditor realized she had been derelict in obtaining audits for the Flint Area Investment Fund for over 2 years. Flint Area Enterprise Community Director nancy Jurkiewicz sought the mayor's help in obtaining 3 years of audits. The State was upset over the findings. This state monitor was stopped by her higher ups. Since the money came from the federal government to the state, the state had a vested interest in how this was resolved. I attended one meeting with all concerned and then the attorneys for the city, the forensic auditors and others took over. Careful negotiations minimized the end results.

The extra $15,000 check for Hinky Dinky was finally located. A typed line changed the check from Hinky Dinky to include another borrower. There was no record of the transaction. A staff member of FAIF had married the new recipient of the check, however Flint police stated they were unable to prove who altered the check.

Other violations also went by the wayside and eventually were only dealt with by HUD.
Post Fri Sep 15, 2017 1:00 pm 
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