Home repair program audit highlights 'questionable' management
Home repair program audit highlights 'questionable' management
SCITUATE - Although there is no evidence of criminal wrongdoing, a state audit of the now-defunct Western Rhode Island Home Repair Program found a host of highly questionable practices that happened because neither the state nor the three participating communities monitored it adequately enough.
The office of Auditor General Dennis E. Hoyle released the 23-page audit last week, reviewing the financial statements of the home repair program involving Scituate, Glocester and Foster from July 1, 2010, to March 31, 2013, and issuing recommendations for improvement of similar programs in the future.
State Rep. Michael J. Marcello, a Democrat representing Scituate and Cranston and a former Scituate town councilman, requested the audit in May when the state pulled the plug on the program due to reports of funding irregularities. The program provided federally funded loans and grants to low-income residents for home repairs.
The Town of Glocester administered the program for the three towns, under the auspices of a six-member volunteer non-compensation board of directors, with two members from each of the three communities. The program had five employees: an executive director, administrative assistant and three inspectors.
Marcello told The Valley Breeze & Observer that he found the results of the audit "shocking" and, in his capacity as chairman of the state House Committee on Oversight, may call for formal hearings before his committee in the summer or fall to further probe the situation. "This is something the voters in my district will want to know more about," he said. He also mentioned referring the matter to the state attorney general.
He cited one finding he found particularly disturbing. The Scituate site inspector, who is not named, received $16,528 in compensation from the program during the near-three-year term of the audit, but the report says the compensation should have been $3,500 for a total of just seven inspections. "I'm concerned about people getting paid five times the amount they should have been paid," Marcello said.
He also noted that the audit covers a period of just under three years and he wondered what the program's finances were like before that. The program began in 1987.
Although the audit indicates that problems arose due to sloppy record-keeping and a lack of knowledge regarding program guidelines and reporting requirements, Marcello said that's no excuse. "This is shocking to any voter or taxpayer," he said. "Ignorance of program guidelines is not an excuse." He stressed that the funds involved are taxpayers' money and added: "Sloppy management is just as bad as criminal malfeasance."
Others, however, see it differently. "I don't find it shocking at all," said David M. D'Agostino, town solicitor. Although the audit does highlight "questionable administrative practices," D'Agostino said, "I think 'shocking' is a term you would use if you found wrongdoing or malfeasance, things of that nature, none of which was found in this report."
The audit says $552,567 was spent over nearly three years to fund 41 loans/grants to repair 31 homes, with seven loans in Scituate for $87,102; 10 in Foster for $97,311; and 24 in Glocester, $368,154, mostly for mobile homes.
One Glocester mobile-home project cost $62,000, far more than allowed by program guidelines, the audit said. Noting that the home in question was in "extremely poor condition resulting in unhealthy living conditions," the audit suggested that a "social service solution" or "comprehensive home renovation" would have better addressed this situation than the WRIHRP.
Other findings include:
* An audit was never done of the program;
* No professional legal advice nor accounting advice was ever obtained, so the program did not utilize an attorney to prepare loan documents, for instance, nor did it use accounting software to facilitate record keeping;
* The program's status as a nonprofit expired, leaving the status of WRIHRP legal agreements in question including liens to guarantee loan repayments (the program has 117 outstanding loans);
* In addition to the $62,000 repairs, four other mobile homes in Glocester were repaired at costs ranging from 55 percent to 78 percent of the assessed property value, far above the 25 percent limit.
Although earlier reports indicated that there had been administrative expenses beyond the 20 percent allowed by the state, auditors found no direct evidence of that because neither the state Office of Housing and Community Development which oversees such programs for the state, nor WRIHRP had the necessary documentation to prove compliance. "Analyses to definitively determine compliance would require extensive effort that may not be warranted at this point," the audit said.
The audit endorsed the idea of forming consortiums to operate programs like WRIHRP in several communities at once as a way to save money and effort, but it recommended that the state and the communities keep much closer track of such programs in the future. An annual audit and the improved tracking of compliance with administrative expenditure limits are two key recommendations.
As of March 31, the program had $127,640 cash, which the audit recommends go to the state for further use within the federal Community Development Block Grant program. Other assets are $1.34 million in loans receivable. Total administrative costs during nearly three years were $191,605, with the lion's share, $173,276, for personnel. Scituate incurred $52,652 in administrative costs, with Foster at $36,725 and Glocester, $94,516.
Hoyle, asked to comment on Marcello's "shocking" assessment, said: "I wouldn't describe it as 'shocking' from my perspective. The problem is that we have one of those situations that didn't receive the oversight it should have over the years" and that, Hoyle suggested, may explain why the state representative finds it "shocking."
D'Agostino and Town Councilwoman Kathleen Knight-Bianchi announced about two weeks ago the start of Scituate's own low-income home repair program (see related story above), to be administered by NeighborWorks Blackstone River Valley, a housing development program based in Woonsocket since the mid-1980s.
Regarding the audit's recommendations, D'Agostino noted that the town's agreement with NeighborWorks includes requirements for quarterly reports to the Town Council and annual audits. Also, he said, "our office (Gorham & Gorham Inc.) is in the process of reviewing existing loan agreements assigned to the Scituate Home Repair program" to ensure their legality, and he said he knows of none in default.