Audit finds flaws in state affordable housing spending

Some voter-approved funds for affordable housing have been put to questionable uses, including projects that don’t fulfill the promise to voters, because of poor oversight by the California Department of Housing and Community Development (HCD), an audit said Thursday.

California voters passed the Housing and Emergency Shelter Trust Fund Acts of 2002 and 2006 to provide nearly $5 billion in bonds for financing affordable housing for low- to moderate-income Californians.

“Because it does not provide an adequate level of monitoring, HCD often does not know if recipients used funds in accordance with program requirements or if programs benefited targeted populations,” State Auditor Elaine Howle wrote to Gov. Jerry Brown and the Legislature.

The audit found that the state awarded funds to one project that used the money to build outdoor green space instead of increasing affordable housing.

In another case, the department awarded funds to a project with a cost per housing unit of more than $411,000 “even though its own data identified comparable projects in the area as costing only $264,000 per housing unit, and HCD did not determine whether the increased cost was justified.”

Auditors found that the state agency advanced funds to several developers that did not provide evidence of how the money was spent for years.

“When HCD finally asked one of these recipients to return a portion of an advance six years after HCD disbursed it, the recipient no longer had the funds and had to enter into a payment plan with HCD,” the audit said.

In response to the audit, HCD Director Claudia Cappio said her agency was continuing to improve its operations to address issues of concern, and several of the auditor’s recommendations “are either an enhacement to standard practice or already in the process of being implemented.”