A federal report critical of Dayton's oversight of a housing program could force repayment of $3.2 million.

Dayton faces deadline on potential loss of $3.2M in federal funds

Turner’s letter critical of city alleges ‘misuse and mismanagement’ of HUD money.

The city has one week left to respond to a federal agency that has asked for proof that Dayton used federal funds properly or repay $3.2 million or more.

City officials and leaders dispute some of the U.S. Department of Housing and Urban Development’s (HUD) findings and say the city possesses records and documentation that means it will not have to repay that amount.

“We are working on a response, and we disagree with a lot of information in the (HUD) report,” said Todd Kinskey, Dayton’s director of planning and community development. “We’ll have a lot of information to refute their claims.”

RELATED: Feds say Dayton may need to repay $3.2M

On Thursday, U.S. Rep. Mike Turner, R-Dayton, sent Dayton Mayor Nan Whaley a letter saying that forensic auditors hired by the city confirmed HUD’s findings that it does not have records to support the city’s voucher revisions in a grant payment system.

Turner slammed the city for its “misuse and mismanagement” of a federal program that helps create and maintain affordable housing.

“Assuming the city is unable to provide all the necessary documents to HUD, as the city’s own forensic audit suggests, our community could see a reduction in funds available to our police, fire and other essential services,” Turner wrote. “This is a travesty for families within the city.”

Earlier this month, the Dayton Daily News reported that HUD told the city it will be asked to repay at least $3.2 million if it does not provide documentation showing that projects and expenses were eligible for federal HOME funds.

The city’s administration of the HOME program has been under HUD’s microscope of for more than a year and a half, and late last year, federal authorities subpoenaed records related to the Dayton/Kettering Consortium use of HUD funds as part of an FBI criminal investigation.

Dayton and Kettering jointly apply for funds for housing stabilization projects as part of a consortium. As the lead partner, the city of Dayton is responsible for compliance with federal rules and regulations.

HUD inspectors who visited Dayton last year say they could not find records demonstrating how the city used some federal HOME funds and whether federal funds were used for eligible projects and costs, according to a federal monitoring report and other documents obtained by this newspaper.

HUD staff said the city made “extensive” revisions to vouchers in the federal grant payment system that it could not explain or justify with proper record-keeping, and there’s evidence of at least 10 years of noncompliance with program regulations.

New details: Federal subpoenas show extensive reach of FBI case in Dayton

The monitoring report says the city failed to comply with HOME regulations, lacked internal controls and a financial management system that accurately identified and tracked costs and did not maintain records demonstrating the eligibility or costs of each project funded by HOME.

HUD sent the city of Dayton its monitoring report of the HOME program earlier this month.

The agency has asked for information showing how the city has met the requirements of the findings in the monitoring report, and the deadline for the city to respond is July 5, officials said.

Kinskey said the city believes there are errors, misunderstandings and assertions that are not accurate in the monitoring report. Kinskey said the city is still finishing its analysis and working on its response, and he doesn’t know if the city will have to repay any funds.

In a statement, Whaley said the city does not believe it will have to repay $3.2 million because of documentation it possesses.

“Since receipt of the monitoring letter from HUD, we have been working to gather documentation to support our position,” the mayor said. “We will be submitting our detailed response within the 30-day time frame.”

MORE: Why a federal agency says Dayton spent $166K on ‘unallowable’ costs

Turner’s letter urged the city to respond to HUD by the deadline and take corrective action to address what he says are the many deficiencies HUD identified.

Turner said the city is in jeopardy of not receiving future HOME funds and the “city’s mismanagement has put at risk nearly $170 for every household in Dayton living below the poverty line.”

Turner has lashed out against the mayor and city administration in the past for problems with the federal HOME program.

Turner also said the forensic audit the city paid for failed to address HUD’s concerns but indicates the city does not have important supporting documents.

HUD’s monitoring report states that conclusions in a city-funded forensic audit, by the firm GBQ Consulting, were “meaningless” because they did not try to determine if federal funds were used for allowable costs.

“GBQ confirmed the city does not have records to support the extensive voucher revisions in IDIS,” which is the grant payment system, the report states.

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