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Housing funding audit highlights City Council discord
Avena Bella
HUD conducted an audit of the City of Turlock’s Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) management, which includes funds for low-income housing projects like Avena Bella (Journal file photo).

A report on the results of a review of how the City of Turlock is managing federal Housing and Urban Development (HUD) funds led to a few heated comments on the dais by Turlock City Council members.

From May 31, 2022 through June 14, 2022, HUD conducted remote monitoring of the City of Turlock’s Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) in order to assess the City’s performance and compliance with applicable federal requirements.

The Monitoring Report contained seven open prior year Findings (from 2010, 2014, and 2019) that are still outstanding.  In addition, six new Findings and one Concern were identified as part of the recent monitoring.  A “Finding” is “a deficiency in program performance based on a violation of statutory or regulatory requirement.” In contrast, a “Concern” is “a deficiency in program performance that is not based on a statutory or regulatory requirement but is brought to the grantee’s attention.”

Corrective Actions were identified for all Findings and Recommended Actions identified for the Concern.  The City was provided 30 days from the date of the release of the report to provide a response to HUD. 

The City of Turlock receives annual CDBG and HOME funds, which are then allocated towards affordable housing, housing rehabilitation, first-time homebuyer, public facilities and improvements, and public service activities that benefit the Central Valley’s low-and-moderate-income population. These activities are administrated by the City of Turlock’s Economic Development and Housing Department. The City of Turlock is currently the lead agency of the Turlock/Stanislaus HOME Consortia, which includes the Stanislaus Urban County: Ceres, Newman, Oakdale, Patterson, Waterford and Unincorporated Stanislaus County.

The City of Turlock provides overall management and direction to consortia activities. It has the overall responsibility for ensuring the program is carried out as required.

The current Findings identified by the HUD monitors included:

Finding: The City of Turlock incorrectly classified a $1,000 grant to allow a homeowner to rent a portable storage unit to store their furniture and other personal items while their home was being rehabilitated.

Corrective Action: Return the $1,000 and then reapply for the funds under the correct CDBG activity.

Finding: The City of Turlock lacks a current Residential Anti-displacement and Relocation Assistance Plan.

Corrective Action: City of Turlock must update its current Displacement Plan to reflect new requirements and submit it to HUD.

Finding: There is an absence of dated signatures of all parties on the beneficiary written agreement for a Ceres First-Time Homebuyer project as well as Turlock’s Avena Bella Phase II project.

Corrective Action: Submit a revised HOME policies and procedures to include specific requirements that written agreements include dated signatures of all parties.

Finding: There is an absence of many federally required provisions in the City of Turlock’s loan agreement with Avena Bella.

Corrective Action: Submit an amended loan agreement to include the requirements.

Finding: The amount of HOME funds invested in the Avena Bella Phase II project was not at or below the applicable maximum per-unit subsidy limit. The limit was exceeded by $133,625.

Corrective Action: City of Turlock must repay the $133,615 to the HOME Investment Trust Fund account.

Finding: The City of Turlock does not have comprehensive written policies and procedures as required under HOME regulation.

Corrective Action: The City must submit a revised HOME policies and procedures to meet all requirements.

One “Concern” was also noted. The City of Turlock appears to overlook complying with a requirement that recipients of HUD funding must direct employment, training and contracting opportunities to low-income individuals and the businesses that employ these persons within their community.

HUD did not find fault with all of the City’s management. The review stated that “the City’s manuals for housing rehabilitation are exemplary.”

“These findings are fixable; they are not reflecting any intention of malice intent or to fudge numbers because there’s no one who is benefitting from it. The only people who benefit from these programs are people who are in need of affordable housing programs and affordable houses being built here in the City of Turlock,” said City Council member Nicole Larson, who went on to say that the HUD monitor said the findings were “normal.”

Vice Mayor Pam Franco did not share Larson’s view on the report. Franco was the one who pushed for the audit and she said it was “worse than she thought it would be.” She berated the City staff for every finding and concern and stated in the public meeting that they are “flat out not doing their job.”

“This administration was staff’s responsibility and they acted almost indignant when I would ask them questions — 13 findings and one concern going back to 2010, I mean you’ve got no written policies, no monitoring, subsequent agreements lack no mandated provisions…

“We had…no dates on signatures. That, my friends, is elementary. That is Contract Law 101. You don’t have a date on that signature, it’s not valid. Anybody who knows anything about contracts knows that.  That department should know contracts and if they didn’t, they should have asked our city attorney,” said Franco.

Council member Rebecka Monez said she did not appreciate the “cavalier attitude” to the report.

“When you look at this many unacceptable facts for this many years, and we’re sitting here being asked Why didn’t you build? Why didn’t you do something; you had millions of dollars? It’s really hard to sit here and not help,” said Mayor Amy Bublak. “Community, we let you down. We had millions of dollars and we’ve done nothing with it in I don’t know how many years. I’m sorry and I hope we can from here to putting some product out there so we can actually get some housing put together.”

Council member Larson said that the way Franco, Monez and Bublak characterized how the mistakes were made was unfair. She said that the majority of mistakes made were due to changing federal regulations, not malfeasance by City staff.

“I think the one thing that is being lost is I hope is that we all want to increase the inventory of affordable housing. I pray to God that at the end of the day, whatever happens in the future of our city that we get our act together and improve. There are disagreements on how we can get there. I vehemently disagree with the nature of how we’ve done it because all I’ve heard from outsiders in the nonprofit sector, in other agencies in neighboring cities and our county, the other people who could have potentially carried this burden is that we have had a City staff with incredible capacity and have innovated and have done incredible good for our community with affordable senior housing, large-scale affordable housing that otherwise wouldn’t have happened,” said Council member Andrew Nosrati.

“I’ve pled with this Council to cooperate, to collaborate to try and doing anything together on housing. And I’ve witnessed how this Council has berated staff member after staff member that’s represented housing. It’s a hostile environment and it doesn’t lend itself to high work product. People are afraid to speak their mind,” Nosrati continued.

Turlock Development Services Director Katie Quintero also informed the City Council on Tuesday that its request to relinquish its role as the lead agency for the Turlock/Stanislaus HOME Consortia to Stanislaus County would not be allowed to occur until June 30, 2023 because the mandatory three-year program terms went through June 2023. This means the City of Turlock will have to amend its annual plan to include the $1,730,311 HOME allocation for the 2022-23 program year.