Pasadena : City to Return HUD Funds

City officials must return $38,955 in federal housing rehabilitation funds because the money was awarded to a project that was foreclosed upon before the reconstruction work was completed, City Directors were informed Tuesday.

The money, from the federal Department of Housing and Urban Development, was allocated to the city’s Rental Rehabilitation Program, which awarded a $50,000 loan it to a contractor who planned to reconstruct a vacant, 10-unit apartment complex using an additional $350,000 loan from a private lender.

But poor construction management led to delays in the work schedule and cost overruns, a city report said. The contractor was unable to repay the $350,000 loan and was foreclosed upon. Since the incident, new loan safeguards have been set up by the city.