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HomeMy WebLinkAboutR-93-0787J-93-754 12/16/93 RESOLUTION NO. 93— 787 A RESOLUTION, WITH ATTACHMENTS, AUTHORIZING THE CITY MANAGER TO EXECUTE AMENDMENTS TO EXISTING AGREEMENTS, IN SUBSTANTIALLY THE ATTACHED FORM, WITH TEN (10) NEIGHBORHOOD ECONOMIC DEVELOPMENT ORGANIZATIONS FOR THE PERIOD OF JANUARY 1 THROUGH MARCH 31, 1994, FOR AMOUNTS AS SPECIFIED HEREIN, TO CONTINUE IMPLEMENTATION OF ECONOMIC DEVELOPMENT PROGRAMS, SUBJECT TO PROVISIONS CONTAINED HEREIN; ALLOCATING FUNDS THEREFOR FROM THE NINETEENTH (19TH) YEAR COMMUNITY DEVELOPMENT BLOCK GRANT FOR SAID PROGRAMS. BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The City Manager is hereby authorized to execute ten (10) amendments to existing agreements, in substantially the attached form, with the following ten (10) Neighborhood Economic Development Organizations (CBOs), for the period of January 1 through March 31, 1994, in amounts as specified herein, to continue implementation of Neighborhood Economic Development Programs, with funds therefor hereby allocated from the Nineteenth (19th) Year Community Development Block Grant, subject to the provision that no funds will be disbursed until all contractual and/or administrative requirements and Commission directives have been complied with: Ile I 'r PA C df, A, RV 7 CITY COIV USSION NEETLVC OF DEC 1 6 1393 Resolution No. 93— 787 "\\ Allapattah Business Development Authority, Ino. C000nut Grove Looal Development Corporation, Ino. Downtown Miami Partnership, Ino. f/k/a Downtown Miami Business Association, Ino. Edgewater Economic Development Corporation, Ino. Greater Biscayne Boulevard Chamber of Commeroe, Inc. Latin Quarter Association, Ino. Little Havana Development Authority, Inc. Martin Luther King Economic Development Corporation, Ino. New Washington Heights Community Development Conference, Inc. $12,193 12,193 12,193 12,193 12,193 12,193 12,193 12,193 12,193 Small Business Opportunity Center, Ino. 12,193 Seotion 2. This Resolution shall become effective immediately upon its adoption. PASSED AND ADOPTED this 16th day of December, 1993. ST11bHEN P. CLA , MAYOR AT/T T: MATTY HIRAI CITY CLERK PREPARED AND APPROVED BY: CARMEN L. LEON ASSISTANT CITY ATTORNEY CLL:osk:M4092 APPROVED AS TO FORM AND CORRECTNESS: p A. IN cT NES, III CITY ATJ NEY -2- 93- 787 AMENDMENT N0 3 THIS AMENDMENT is entered into as of this day of 1993, amending the Agreement dated:;ren between the City of Miami, a municipal corporation of the State of Florida ( "CITY" ), and AGENCY, a F1 on da not -for --profit corporation ("CONTRACTOR"). WHEREAS, the City Commission is desirous of continuing the neighborhood economic development program and funds are available from the Nineteenth (19th) Year Community Development Block Grant for such purpose; and WHEREAS, On July 8, 1993, the City Commission adopted Resolution No 93•-463, which approved the allocation of funds For the CONTRACTOR only for the period of July 1 1993 through Augut 31, 1993; and WHEREAS, on September 7. 1993, the City Commission adopted Resolution No. 93-538, which approved the allocation of funds for the CONTRACTOR for the period of September 1, 1993 through September 30, 1993; and WHEREAS, on October 14, 1993, the City Commission adopted i Resolution No. 93-656, which approved the allocation of funds For the CONTRACTOR for the period of October 1, 1993 through December 31, 1993,subject to the provision that no funds will be dibursed until all contractual and/or administrative requirements and City Commision directives have been complied with; 93- 787 WHEREAS on uecember 16 1993 the City Commission adopted Resolution No. 93 which approved the allocation of funds for the CONTRACTOR for the period of January 1, 1994 through March 31, 1994, subject to the aforementioned provision; NOW, THEREFORE, it is agreed by the CITY and the CONTRACTOR: 1. The recitals set forth above are hereby incorporated herein as if fully set forth in this Section. 2. The Agreement is hereby amended as follows: TERM OF AGREEMENT: January 1, 1994 - March 31, 1994 AMOUNT: $12,193.00 3. The term of the Agreement will only be extended, and the amount of the fund allocation increased, by approval of the City Commission. 4. No extensions or amendments to the Agreement shall be binding on either party unless in writing and signed by both parties. 5. All terms and conditions contained in the Agreement and Amended shall remain in full force and effect without modification except to the extent modified in this Agreement. 6. CONTRACTOR certifies that it possesses the legal authority to enter into this Amendment by way of a resolution, motion, or similar action that has been duly adopted or passed as an official act of the CONTRACTOR's governing body, authorizing the execution of the Amendment, including all understanding and assurances contained herein, and directing and authorizing the person identified as the official representative of the CONTRACTOR, to act in connection with the Amendment. WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by the respective officials thereunto duly authorized on the first date above written. ATTEST: CITY CLERK ATTEST WITNESS: CITY OF MIAMI, a municipal corporation of the State of Florida: CITY MANAGER CONTRACTOR: AGENCY SEAL: APPROVED AS TO FORM AND CORRECTNESS - A. 93- 787 8. 9. 10. 11. 12. 13. i, CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM Honorable Mayor and Members To: of the City Commission 35 DATE : D.P�� r 993 FILE Continued Funding from SUBJECT : 19th Year CDBG FROM : C e s i o REFERENCES: Discussion Item CitAparDecember 2, 1993 ENCLOSURES: Pursuant to Resolution No. 93-263, adopted by the City Commission at the meeting of April 15, 1993, $800,000 was allocated for FY 1993-1994 for economic development. Pursuant to Resolution No. 93-462, adopted by the City Commission at the meeting of July 8, 1993, the City Manager was authorized to. enter into individual contracts with the following thirteen (13) neighborhood economic development organizations to provide services to their respective target areas from July 1, 1993 through August 31, 1993: 1. Aliapattah Business Development Authority, Inc. 2. Coconut Grove Local Development Corporation, Inc. 3. Downtown Miami Partnership, Inc. 4. Edgewater Economic Development Corporation, Inc. 5. Greater Biscayne Boulevard Chamber of Commerce, Inc. 6. Haitian American Foundation, Inc. 7. Haitian Task Force, Inc. Latin Quarter Association, Inc. Little Havana Development Authority, Inc. Martin Luther King Economic Development Corporation, Inc. New Washington Heights Community Development Conference, Inc. Park West Association, Inc. Small Business Opportunity Center, Inc. 3,S__ k 93- 787 Honorable Mayor and Members of the City Commission Page 2 Pursuant to Resolution No. 93-538, adopted by the City Commission at the meeting of September 7, 1993, the City Manager was authorized to extend the contracts with the aforementioned agencies for the period of September 1, 1993 through September 30, 1993. Pursuant to Resolution No. 93-656, adopted by the City Commission at the meeting of October 14, 1993, the City Manager was authorized to extend the contracts with the aforementioned agencies for the of period October 1, 1993 through December 31, 1993. The Department of Community Development (DCD) had previously recommended funding for the thirteen (13) Economic Development Community Based Organizations for a six (6) month period from July 1, 1993 through December 31, 1993, in order to allow TONYA, Inc., the Department of Housing and Urban Development's (HUD) consultant, an opportunity to evaluate and determine the eligibility of Community Based Organizations' (CBOs') Community Development Block Grant (CDBG) funded activities. This time frame would have also afforded TONYA, Inc. ample time to train CB Os and the City enough time to properly monitor each organization. During the week of December 7 - 11, 1992, TONYA, Inc. conducted a visit to review aspects of the City of Miami's CDBG funded economic development programs. The assessment confirmed the City's need for training and technical assistance in developing tools to judge economic development agencies performance, design reporting systems which would facilitate review of CBO activity, records and documentation; and methods to approve or refuse funding based upon level of performance. Similarly, subrecipients- needed assistance in increasing their overall capacity to more effectively participate as a CDBG subrecipient in the City's economic development effort. It was also noted that HUD and the City had to resolve issues related to interpretations of eligible and ineligible activities, and the extent to which flexibility existed for the City to "creatively" manage its CDBG Economic Development Program. Toward these objectives, TONYA developed and presented to HUD a proposal for comprehensive training and technical assistance effort for the City of Miami and its CDBG-funded subrecipients conducting economic development activities. 93- 787 Honorable Mayor and Members of the City Commission Page 3 The workplan was approved by HUD, and launched with an opening training session in June of 1993. Over a period of six months, an opening training session, two -group technical assistance sessions, and a series of individual CBO technical assistance sessions were conducted. The City was also provided assistance, both on -site and off . This training and technical assistance effort resulted in recommendations for revisions in: o CBO/Subrecipient Agreements to include performance milestones and incentives; o Systems for selection and documentation of eligible activities; o Procedures for ensuring National Objectives are met; and o All program forms to ensure documentation requirements are met. Based on the discussions between TONYA, HUD and the DCD and the attached status report for Economic Development Community Based Organizations, the DCD is making the following funding recommendations for the remainder of the 1993-1994 fiscal year (January 1, 1994 through June 30, 1994) with the stipulation that no funds be disbursed unless an agency is in full compliance with City and HUD's regulations, guidelines and requirements. NAME OF CBO RECOMMENDATION 1. Allapattah Business Development Probation - 3 months Authority, Inc . 2. Coconut Grove Local Development Probation - 3 months Corporation, Inc. 3. Downtown Miami Partnership, Inc. Probation - 3 months 4. Edgewater Economic Development Corporation, Inc. 5. Greater Biscayne Boulevard Chamber of Commerce, Inc. Probation - 3 months Probation - 3 months 93- 787 Honorable Mayor and Members of the City Commission Page 4 NAME OF CBO 6. Haitian American Foundation, Inc. 7. Haitian Task Force, Inc.. 8. Little Havana Development Authority , Inc. 9. Latin Quarter Association, Inc. 10. Martin Luther King Economic Development Corporation, Inc. 11. New Washington Heights Community Development Conference, Inc. 12. Park West Association, Inc. 13. Small Business Opportunity Center, Inc. RECOMMENDATION Discontinue Funding Discontinue Funding Probation - 3 months Probation - 3 months Probation - 3 months Probation - 3 months Discontinue Funding Probation - 3 months The aforementioned recommendation will be reviewed at the end of the three (3) month probationary period which is February 28, 1994. This transition period will allow the CBO's to fully and correctly implement TONYA's recommendations, based on the training received and knowledge acquired. In addition, the DCD is requesting HUD to authorize additional technical assistance from TONYA to assist during the transitional period, and assistance in the development of an incentive program for those agencies which exceed its goals. Further, TONYA will be requested to explore the relationship between Miami Capital Development, Inc. and the CBOs and to assist in the evaluation and feasibility of major projects in some areas. At the end of this period, each agency will be reevaluated based on its ability to meet the established criteria in accordance with rules and regulations by both the City of Miami and HUD. Specifically, each CBO must successfully and completely achieve the following: 1. Must meet at least three (3) National Objectives 2. Complete at least a minimum of ten (10) Commercial Facades, or 3. Complete a combination of both 93- 787 Honorable Mayor and Members of the City Commission Page 5 In order for the DCD to recommend contract continuance for the remainder of the current fiscal year and/or funding for the 1994- 95 fiscal period, the above objectives must be met. Further, each CBO must document its files with all the required_ supporting documentation, which will enable the monitor to clearly and objectively denote that said activity has met a National Objective and is complete. Each CBO will be evaluated on projects meeting the above guidelines from the period of July 1, 1993 through February 28, 1994. The DCD will provide the City Commission a status report on each agency at the March 10, 1994 meeting. /gjd '11 S 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1 TO NOVEMBER 15, 1993 ALLAPATTAH BUSINESS DEVELOPMENT AUTHORITY ACTIVITY Technical Assistance Facade CONTRACT COMPLIANCE: PROJECTS REPORTED PENDING COMPLETED n 4 Agency currently being reorganized. Executive Director, Rafael Cabezas. Agency has not reported generated revenues. No audit submitted for FY 1992-93. Insufficient supporting documentation justify meeting HUD's National Objectives. OTHER PROJECTS: NOTE: 0 64 New to Ralpheal Plaza -Has demonstrated no progress on the development plans. Construction according to City contract should have commenced by October 1992. Requested additional time to develop project to September 30, 1995. Requesting funds to demolish building and fencing the lot, approximately $15,000. Also, since they are not generating income they are also requesting a total of $7,000 to pay for 1993 and 1994 taxes. Under separate agenda item: Ralpheal Plaza -ABDA is requesting extension of current agreement, which expired 10/92, for 36 additional months to 10/95. -ABDA is requesting additional funding to demolish existing structure, fencing and real estate taxes for 1993 and 1994, $22,000. RECOMMENDATION: Probation for 3 additional months. 7 93_ 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1 TO NOVEMBER 15, 1993 COCONUT GROVE LOCAL DEVELOPMENT CORPORATION ACTIVITY Technical Assistance Facade CONTRACT COMPLIANCE: PROJECTS REPORTED PENDING COMPLETED 7 1 15 0 Agency needs to improve its justification of meeting HUD's National Objective. OTHER PROJECTS: GUTS -Loan granted 3/20/85 from $234,873 Jobs Bill Fund and $265,127 CDBG. (To be revised as per Resolution 92-748). Disbursed $ 265,127 Available $234,873 Negotiating the purchase price of property located at 3659 Grand Avenue, as part of the total Tikki Club redevelopment project. Negotiating with Constructa (a development/contractor firm) for project design. On October 14, 1993, by Motion 93-667, the City Commission approved in principle the CGLDC's request for a Section 108 loan application in the amount of $1,986,500 for the Tikki Club Project. Incubator Center Project: rehabilitation RECOMMENDATION: Probation for 3 additional months. I 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 DOWNTOWN MIAMI PARTNERSHIP, INC. (DMP) FORMERLY - DOWNTOWN MIAMI BUSINESS ASSOCIATION PROJECTS REPORTED PENDING COMPLETED Technical Assistance 1 1 Facade 70 0 CONTRACT COMPLIANCE: In the process of hiring new Executive Director. OTHER PROJECTS: None NOTE: SEE ATTACHMENT I Merger of the Downtown Miami Business Association, Inc. and the Downtown Miami, Inc. RECOMMENDATION: Probation for 3 additional months 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 EDGEWATER ECONOMIC DEVELOPMENT PROJECTS REPORTED PENDING COMPLETED ACTIVITY Technical Assistance 6 1 Facade 4 2 Performance has improved. Agency needs to improve its justification of meeting HUD's National Objective. OTHER PROJECTS: None RECOMMENDATION: Probation for 3 additional months. J.5 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 GREATER BISCAYNE BOULEVARD CHAMBER OF COMMERCE PROJECTS REPORTED PENDING COMPLETED ACTIVITY Technical Assistance 6 4 Facade 6 0 CONTRACT COMPLIANCE: Agency under new administration. OTHER PROJECTS: None RECOMMENDATION: Probation for 3 months. 93- 787 HAITIAN TASK FORCE nrTTVTPPV. Technical Assistance Facade CONTRACT COMPLIANCE: STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 PROJECTS REPORTED PENDING COMPLETED No report No report No report No report As of this writing, Agency continues to experience serious internal administrative problems. Agency has not addressed or resolved its lack of internal administrative management controls. City is not disbursing funds. Agency staff has continuously been uncooperative in working with City staff to resolve outstanding issues of concern. Agency has not submitted an agency -wide certified independent auditor's report for FY 1992-93. C.D. has requested the Dept. of Internal Audits & Reviews to conduct an agency -wide audit to include the Caribbean Marketplace, Inc. Attached is a copy of a report from the Office of the Inspector General, Department of Health & Human Services, involving a grant to the HTF from the Office of Community Services (OCS) which states serious concerns about the way funds were used and included $200,000 in unaccountable or unallowable expenses. Agency has not submitted monthly reports for August, September, and October, 1993. Agency has not submitted the required successfully completed projects quarterly report for period ending August 31, 1993. I? 93- 787 HAITIAN TASK FORCE (Continued) Even though the DCD has held several meetings with members of the Board of Directors, it appears that they are Ihot knowledgeable enough to accept their fiduciary responsibilities, leaving agency responsibility to the Executive Director. No evidence of corporate income tax filing or real estate taxes payment for 1992-93 for the Caribbean Marketplace, Inc. OTHER PROJECTS: Caribbean Market Place -$150,000 loan granted 3/3/89, amended 11/20/89. -in nonperformance status since 2/20/92. Requested moratorium. Documentation requested from Agency still pending. Insurance payment due Hurricane Andrew damage has been received. Repairs are being made at this time. RECOMMENDATION: /8' Discontinue funding. Seek another organization to replace HTF. 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 HAITIAN AMERICAN FOUNDATION ACTIVITY Technical Assistance Facade CONTRACT COMPLIANCE: PROJECTS REPORTED PENDING COMPLETED 4 *0 N/A** N/A** Agency does not comply with requirements of the City contracts. The DCD has been unable to establish a working relationship with Agency, as to the economic development contract and as to the disbursement of the $150,000 loan. As of this writing, agency has not filed IRS Form 941 or Unemployment Compensation Tax (UCT-6) for period ending September 1993. OTHER PROJECTS: City loan for $50,000 and an additional loan for $100,000 were restructured into one loan in the amount of $150,000. At this time we have disbursed approximately $92,000. Agency reports are improperly prepared and usually arrive late. * Newly funded agency ** The Commercial Facade Program is not included in the Scope of Services. RECOMMENDATION: Discontinue funding. IN 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 LATIN QUARTER ASSOCIATION PROJECTS REPORTED PENDING COMPLETED ACTIVITY Technical Assistance S 1 Facade N/A* N/A* CONTRACT COMPLIANCE: Agency experiencing staff change. Insufficient supporting documentation to justify meeting HUD's National Objectives. OTHER PROJECTS: None *The Commercial Facade Program is not included in the Scope of Services. RECOMMENDATION: Probation for 3 additional months. r31 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 LITTLE HAVANA DEVELOPMENT AUTHORITY PROJECTS REPORTED PENDING COMPLETED ACTIVITY Technical Assistance 4 I Facade 24 1 CONTRACT COMPLIANCE: Performance needs improvement. Insufficient supporting documentation to justify meeting HUD's National Objectives. OTHER PROJECTS: None RECOMMENDATION: Probation for 3 additional months. a3 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 MARTIN LUTHER KING ECONOMIC DEVELOPMENT CORPORATION PROJECTS REPORTED PENDING COMPLETED ACTIVITY Technical Assistance 3 2 Facade 17 CONTRACT COMPLIANCE: Agency continues to need substantial improvement in reporting requirements. Insufficient supporting documentation to justify meeting HUD's National Objectives. OTHER PROJECTS: Lincoln Square Building -$400,000 loan granted 12/12/82 in nonperformance status since 10/1/90. Note: MLKEDC building is in the final stage of major rehabilitation with funds received from insurance company due to hurricane damage. RECOMMENDATION: Probation for 3 additional months. as 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 NEW WASHINGTON HEIGHTS COMMUNITY DEVELOPMENT CONFERENCE PROJECTS REPORTED PENDING COMPLETED ACTIVITY Technical Assistance 3 0 Facade 4 0 No audit submitted for FY 1992-93. Performance continues to need substantial improvement. Insufficient supporting documentation to justify meeting HUD's National Objectives. OTHER PROJECTS: None RECOMMENDATION: Probation for 3 additional months. 93- 787 STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 PARK WEST ASSOCIATION Technical Assistance Facade CONTRACT COMPLIANCE: PROJECTS REPORTED PENDING COMPLETED No report No report No report No report Agency has submitted no reports for either FY 92-93 or FY 93-94. No funds were disbursed during FY 92-93 and no funds have been requested for FY 93-94. Agency has not returned executed amendments to contract. Agency has submitted no successfully completed projects report. OTHER PROJECTS: None RECOMMENDATION: Discontinue funding STATUS REPORT FISCAL YEAR 1993-94 JULY 1, TO NOVEMBER 15, 1993 SMALL BUSYNESS OPPORTUNITY CENTER PROJECTS REPORTED PENDING COMPLETED ACTIVITY Technical Assistance 11 5 Facade 14 1 CONTRACT COMPLIANCE: No audit submitted for FY 1992-93. Insufficient supporting documentation to justify meeting HUD's National Objectives. OTHER PROJECTS: Trade Center of the Americas - $117,000 loan granted 4/13/88 in nonperformance status since 5/l/92. $33,000 loan granted 5/24/88 is current. Requesting moratorium on $117,000 loan. RECOMMENDATION: Probation for 3 additional months. 3/ 93- 787 TRAINING AND EMPLOYMENT COUNCIL OF SOUTH FLORIDA 03 N.W. 82nd Avenue, Suite 300 Miami, Florida 33122-1029 RECEIVED Telephone (305) 594.7615 FAX OCT 26 1993 (305) 477-0143 COMMUNITY DEVELOPMENT MEMORANDUM TO: Members of the South Florida Em and Training ortium FROM: Joseph All Executive D' r DATE: October 22, 1993 SUBJECT: Haitian Task Force On September 13, 1993, SFETC stopped releasing funds to the Haitian Task Force due to a Writ of Garnishment that this office received. Recently we have received a report from the Office of the Inspector General, Department of Health and Human Services of a review conducted at the Haitian Task Force involving a grant from the Office of Community Services (OCS) in the amount of $472,500. This report stated serious concerns about the way funds were used and included $200,207 in unaccountable or unallowable expenses. staff will not execute a contract for refugees and entrants funds awarded -foa-five (45) days, the funds involved will be recommended for deobli at' n,_ emma.26 33 93- 787 DEPARTMENT OF HEALTH & HUMAN SERVICES# Office of Inspector General lemorandum Date •SEP 2 T 19M �- SEP 2 7 P I: 3 3 From Bryan B. Mitchell - Principal Deputy Inspector neral Subject Review of the Office of Community Services Grant t&the•-Haitian Task.::] Force (A-12-93-00017) To Laurence J. Love ra0 Acting Assistant Secretary for Children and Families Attached is our final report on the Administration fo Children and Families (ACF) oversight of an Office of Community Services (OCS) $472,500 discretionary grant. The grant was awarded on September 29, 1990 to the Haitian Task Force, Inc. (HTF) located in Miami, Florida. The OCS is a component within the ACF tasked with awarding grants for program activities that result in direct benefits to low-income people. We reviewed the grant in response to allegations initially reported to your office by a former HIF employee regarding possible fraudulent use of Federal funds. We concluded that this grant ine Jfectively. used taxpayer dollars because the HTF did not achieve the ultimate ,objective o cheating viable enterprises that could have employed 106 low-income individuals. The grantee used over $200,000 for unaccountable and unallowable purposes; however, through our audit tests, we were unable to confirm that Federal nds were used fraudulently. The case has been re erred to our investigative staff for *further review. An audit report has been issued to the grantee. However, and more importantly, the HTF grant is an example of a continuing weakness in ACF's discretionary grants'process. In our opinion, the ACF's program and financial management staff did not effectively manage the grant, monitor grantee actions, and provide adequate oversight. Within the Headquarters files, we found indications of grantee problems that should have been detected through proper monitoring and should have caused ACF to devote increased oversight and technical assistance to this project early in the grant period. For example, the ACF staff did not ensure the accomplishment of the land purchases and employment projects which the grantee agreed to do in accepting this grant. Further, the ACF did not validate that the HTF filed documents evidencing the Federal Government's revers'oi nary interest in the properties when the deeds were recorded. The documenting of the reversionary interest enables the government to recover the Federal grant investment in the event the properties are resold. The ACF staff made a site visit to this grantee; however, the monitoring was not thorough and the oversight was 93- 787 6 Im Page 2 - Laurence J. Love ineffective in turning the project around and encouraging the grantee to achieve the grant objectives. The trip report made no reference to some of the specific, significant problems that .were already evident regarding the grantee's performance. This review was coordinated with the audit work performed by our regional audit staff at the HTF in Miami. Our report provides observations on ACF's oversight for this grant and Attachment 2 is our regional office's report to the grantee. The audit of`` the grantee showed the HTF had not: (1) purchased half of the planned ro le (2) obtained committed Mr(3) rt aII a commercial -marketplace expansion, created business opportunities. and mployMentlow-income in 'v' d in the approv JFurther, we found�Iha.,HTF used S200,207 of grant funds for unaccountable orallowableexpe A draft of this report was provided to ACF officials and their comments have i been incorporated where appropriate. In responding to the draft (Attachment 1) the ACF agreed with the recommendations and indicated some improvements have been initiated already. The ACF agreed to implement the remainder of the recommendations within the limitations of current resources. i We would appreciate receiving a written response on any further actions taken i with regard to this report within the next 60 days. Should you wish to discuss this report, please call me or have your staff contact John A. Ferris, Assistant Inspector General for Administrations of Children, Family, and Aging Audits, at (202) 619-1175. Attachments • r 93- 787 Departmc,.At .of Healtl -und[ Huitan Services OFFICE OF INSPECTOR GENERAL REVIEW OF THE OFFICE OF COMMUNITY SERVICES GRANT TO THE HAITIAN TASK FORCE SERV1Q.r. G W s 0 SEPTEM 3ER 1993 .. •ram._ .93- 787 t Department of Health and Human Services OFFICE OF INSPECTOR GENERAL REVIEW OF THE OFFICE OF COMMUNITY SERVICES GRANT TO THE HAITIAN TASK FORCE SERVICrs. e x �.1 4 W W 0 A-12-934MI7 87 DEPARTMENT OF HL._,.TH 8t HUMAN SE4VICES� Office of Inspector General s Memorandum Date SEP 2 T 19M From Bryan B. Mitchell Principal Deputy Inspector neral Subject Management of the Office of Community Services Grant to the Haitian Task Force (A-12-93-00017) To Laurence J. Love Acting Assistant Secretary for Children and Families This report presents the results of our review of the Administration for Children and Families (ACF) oversight of an Office of Community Services (OCS) $472,500 discretionary grant. The grant was awarded September 29, 1990 to the Haitian Task Force, Inc. (HTF) in Miami, Florida. We made the review in response to an ACF request based on allegations by, a former HTF employee of HTF's fraudulent use of Federal funds. We were unable to substantiate fraud through our audit steps but have referred the case to our investigative staff for additional review. We determined that HTF did not achieve the grant objectives of purchasing several properties, expanding business opportunities in the marketplace, and employing more than 100 low-income people. Over $200.000 of the gran le or unallowable purposes. However, we repared this report to highlight our continuing concern ovec,ACF's weaknesses in managing grants of this type. The Headquarters' files contain early indications of the grantee's failure to comply with grant terms, problems obtaining community support, and little progress accomplishing grant objectives. These conditions should have led ACF staff to devote increased oversight and technical assistance to this grantee or to take action to minimize the loss of Federal funds. However, our review found no indication that the ACF program and financial management staff provided coordinated oversight sufficient to encourage the grantee to achieve the grant objectives and protect the Government's investment in the project. In our opinion, the ACF's program staff and their Office of Financial Management (OFM) personnel should have identified the problems associated with this grantee in the early months of the grant period and focused sufficient attention to address the risks. The audit of the files at ACF headquarters was coordinated with the audit work performed by our regional staff at the HTF in Miami. The information for the report at Attachment 2 (CIN: A-04-93-00051) on grantee activities is addressed to the grantee. The audit found the HTF failed to: (1) purchase 50 percent of the properties, (2) obtain committed community support and complete y/ 93- 787 3 Page 2 - Laurence J. Love ya the market expansion project, and (3) create business opportunities and employment for 106 low-income individuals. We determined that the HTF used $200,207 of grant funds for unaccountable or unallowable expenses. We are recommending that the ACF: • Track the receipt and filing of the grantee's reports and monitor grantees through these reports. • Where cash requirements can be predicted, ensure cash draw downs are in accordance with schedules approved in the grant applications. • Incorporate stronger controls over the grantee for responding to terms and conditions of the grant by monitoring the achievement of those terms and conditions. • Conduct coordinated site visits that assess both program and financial issues. • Include tests -of validation of filings in the ACF planned corrective action review for the reversionary interest material weakness. In responding (Attachment 1) to a draft of this report, the ACF accepted the recommendations and agreed to take steps to implement them within the limitations of current staffing resources. INTRODUCTION Background The OCS is a component within the ACF tasked with awarding grants for program activities which will result in direct benefits to low-income people. The OCS awarded a $472,500 grant to the HTF on September 29, 1990 and the grant period extended from October 1, 1990 through February 29, 1992. The purpose of the grant was to enable the HTF to: (1) purchase several parcels of real estate and expand an open air market known as the Caribbean Marketplace, operating in Miami, Florida and (2) create business opportunities and employ an additional 106 low-income individuals. The expansion was to be accomplished by purchasing 5 properties (later changed to 4 properties), demolishing existing structures, paving parking areas, constructing a small building to accommodate additional vendors and provide storage space, and expanding employment for low-income staff. The OCS award covered the Federal share of property and acquisition costs. Although matching was not a condition of this grant, the HTF had received commitments from several other sources to provide additional 93- 787 0 Page 3 - Laurence J. Love funding for portions of the expansion effort. In response to allegations regarding the fraudulent use of the Federal funds, the Director of the OCS requested that the Office of Inspector General .(OIG) conduct a review of the grant. Two offices within ACF have management responsibilities for this grant: the ACF program office and the OFM. The program staff are tasked with overseeing and assisting the grantee in achieving the grant objectives. The OFM staff are responsible for fiscal oversight of the grant funds, timeliness of draw downs, and receipt of grantee correspondence and financial reports. Scope and Methodology The audit was performed in accordance with generally accepted government auditing standards. The objective of our review was to determine the effectiveness of the ACF management of this grant and oversight provided to this grantee. The Attachment 2 review, CIN: A-04-93-00051, also assessed the achievement of the grant objectives, the allowability of expenses, and the status of properties purchased with Federal funds including whether grant requirements for recording reversionary interests were followed. Audit work was performed from November 1992 through May 1993 in Washington, D.C. at the ACF Headquarters, at the HTF offices, the HTF's Caribbean Marketplace, and the Dade County Courthouse in Miami, Florida. . The review which was conducted at the Headquarters included interviewing ACF staff, reviewing related program and OFM grant file documentation, testing relevant internal controls, and assessing correspondence to and from the grantee and related reports. Also, to assess the timeliness of cash drawn down, we analyzed transactions recorded in the Department's payment management system which enables grantees to draw grant funds as needed to meet expenditures. The control weaknesses we observed precluded our reliance on the internal control system specifically as related to the tracking of grantee reports, the draw down of grant funds, and the Federal Government's reversionary interest in properties purchased with grant funds. Our testing confirmed the continuation of weaknesses we identified in "Management of Community Services Discretionary Grants (A-12-90-00022)." The continuation of these findings may indicate that additional attention is needed before the grant related material weaknesses identified in accordance with the Federal Managers' Financial Integrity Act can be reported as corrected. For details on the methodology used by the regional audit staff at the grantee, see the Attachment 2 report. y3 t 93-- 787 Page 4 - Laurence J. Love RESULTS OF REVIEW The ACF did not adequately manage the HTF grant. Management of the grant Includes: tracking and analyzing grantee reports, monitoring progress, and providing oversight and assistance to ensure the grantee accomplishes objectives and complies with the terms and conditions of the grant. We found that the HTF failed to submit required reports, drew down the grant funds before needed to purchase the land, did not obtain the community funding described in the grant application, failed to complete the market expansion, hired few additional low- income workers, and expended grant funds for unapproved purposes; however, we were unable to confirm that the HTF had defrauded the ACF. In our opinion, the ACF should have done more to get the grantee into compliance with the grant terms or considered action against the grantee earlier. As a result of ACF inattention, the OCS grant funds were used to purchase and improve only half of the planned lots, the project has not resulted in a viable commercial enterprise, and $200,207 was used for unaccountable or unallowable expenses. Further- more, a substantial amount of the remaining grant funds (about $272,000) is tied up in real estate that has either a mortgage or a lien against it even though the grant provided sufficient funds to pay for them in full. None of the properties had the required reversionary interest clause in the deed to protect the Federal Government's investment. ACF Oversight of the Grant The program and the OFM staff provided weak and uncoordinated management over the HTF grant. The terms of the grant required the HTF to submit quarterly performance or progress reports and quarterly financial reports. We found the ACF's grant file was missing five of six progress reports and four of six financial reports. However, in our work at the grantee, we noted the grantee had file copies of most of the required financial reports. Our review of the Washington files identified little documentation that ACF had attempted to effectively manage the HTF grant. The grant file contained no documentation of ACF concern that required grantee reports were not available, or that ACF had acted to request the missing reports. The ACF files contained the first (and only) progress report which covered the period from October 1, 1990 through December 31, 1990. Additionally, we found two financial reports covering the periods October through December 1990 and January through February 1992. Sufficient action was not taken to contact the grantee for the reports and if the specified reports were not forthcoming, consider restricting the grantee from continuing to draw down the remainder of the $472,500 grant until the reports were submitted. While we could not determine whether HTF failed to submit the required reports or ACF lost or misplaced the reports from the HTF's 93- 787 Page 5 - Laurence J. Love grant file at the Headquarters, the files do not document action on the part of ACF to administer this grant. In addition, Headquarters grant files were inadequate to document oversight of the grantee. In our opinion, the staff did not adequately oversee the HTF grantee for deviations from the grant objectives. For example, in our review of the files we found the program officials were unaware or had not reacted to the fact that the grantee had failed to: (1) purchase properties needed for the grant objective, (2) file the reversionary interest documentation, and (3) create the business opportunities and employ 106 low-income individuals. The program staff made a site visit to the grantee in July 1991. The trip report indicates some technical assistance was provided to the grantee; however, the site visit did not include a compliance assessment of the use of grant funds and achievement of objectives. The files indicate that the primary focus of the trip involved a substitution of lots proposed by the HTF. Additionally, our analysis of the trip report indicates the ACF staff did not have an accurate understanding of the progress of the grantee at that time. Specifically, the trip report indicated that the grantee had acquired three pieces of property, and was on schedule as related to its time line tasks. Our review found that at the time, only one property had been purchased, and the grantee was behind on its time line tasks. Further, our analysis of the trip report could not validate *that compliance with grant objectives regarding the creation of business opportunities and employment of low-income individuals was evaluated by the ACF staff on site. Monitoring Grantee Progress The files do not document that the progress report that was received was effectively used for monitoring the grantee. When we analyzed the information contained in the progress report in light of other information available to the ACF staff at that time, indications of grantee problems were evident. For example, the financial records showed that the grantee had drawn over half of the grant funds ($250,000) on December 3, 1990, about a month after the grant was awarded, ostensibly to purchase property. While the ACF had placed no restriction or schedule on the amounts the grantee could draw through the grant, the financial plan submitted with the grant application indicated the cash would be drawn down throughout the grant period based on a projected schedule of land purchases. Further, the progress report states that HTF was having problems purchasing the required lots. In fact, no parcels had been purchased by the end of the first reporting period, December 31, 1990. The financial status report for the same period indicates the grantee had disbursed about $36,000 of the $250,000 drawn. The financial reports showed the grantee was continuing to hold excess grant i `( 93- 787 W Page 6 - Laurence J. Love funds. Both the program and OFM staff should have noted the problem and increased monitoring of this grantee. Approximately 9 months after the grant period began, a site visit was undertaken by the program staff. We noted in the program staffs trip report that ACF and HTF discussed the problems the grantee was having obtaining the land; however, the staff member neglected to address the issues related to missing reports, excess cash, what use the grantee had made of the Federal funds already expended, or the fact that the community support addressed in the grant application had not materialized. Compliance with Grant Terms The grant files lacked documents that would evidence the HTF had complied with the major grant terms and conditions. For example, the grant terms and conditions provided that statements indicating the Federal Government's reversionary interest in the HTF properties were to be made part of the property deeds when filed at the county recording office. While the HTF did purchase two properties with grant funds, the ACF had not received the required verification documentation nor followed up with the HTF to ensure that the reversionary interest was filed with the deeds. We could find no .record that this compliance issue was discussed with the grantee during the site visit. We noted that the one parcel of land now has a lien recorded against it for demolition and construction and the second parcel has a mortgage on it. As a result, the Federal interest in these properties may be subjugated to the other lenders. Additionally, the grant terms specified that the grantee must submit an audit report to the Department within 90 days after the expiration of the grant period. The OIG regional review found two audits had been completed, but no evidence the reports were submitted to ACF as required. Neither the OIG nor the ACF had received copies of the audit reports. The final audit report is overdue by almost a year. CONCLUSIONS AND RECOMN ENDATIONS The HTF failed to achieve objectives specified in the grant application of expanding the marketplace, employing 106 low-income individuals, and creating business opportunities in the area. The cognizant ACF staff need to provide more effective administration by improving monitoring and oversight of grantee activities. Better administration of the grant would have identified and acted on missing grantee reports timely. Improved monitoring could have analyzed available information and identified that the grant objectives were not being achieved. More effective oversight and technical assistance should have aided the grantee with its program early in the grant, before fund abuse occurred. If the 7(/ Page 7 - Laurence L . Love grantee failed to respond to the assistance, consideration could have been given to other actions that might have minimized losses to the Federal Government. We recommend that ACF:' • Track the receipt and filing of the grantee's reports. Monitor grantees through these reports. If required reports are not received timely, provide follow-up and oversight for grantees that have continuing problems complying with.the reporting requirements and achieving grant objectives. Restriction of cash draw downs should be considered if grantee persistently fails to report as required. • Where cash requirements can be predicted, ensure cash draw downs are in accordance with schedules approved in the grant applications. • Incorporate stronger controls over the grantee for responding to terms and conditions of the grant by monitoring, the achievement of those terms and conditions. • Conduct coordinated site visits that assess both program and financial issues for compliance with program requirements. • Include tests in the planned corrective action review for the reversionary interest material weakness to validate whether grantees are properly filing the reversionary interest statements and submitting copies of the documentation to ACF. ACF COMMENTS AND OIG RESPONSE The ACF agreed (Attachment 1) with the findings and recommendations of the report and will work towards implementation of all recommendations to the extent existing staff and other resources allow. While concurring with our third recommendation, the ACF questioned an example we provided in the draft report exemplifying the need for stronger controls over grantee responses to terms and conditions of the grant. The recommendation remains; however, we deleted the example. 47 93- 787 � ��.�, - Attachments 1 ~ ADMINMTRATION FOR CHILDREN AND F :... Offioe of the Assistant Secretary, Suite 600 370 L'Enfant Promenade. S.W. DATg ; August 23, 1993 Washington, D.C. 20447 TO Bryan B. Mitchell incipal Ins Bator eral FROM urence Acting Assistant Secretary for Children and Families SUBJECT: Response to OIG Draft Report: *Review of the Office of Commmnity Services Grant to the Baitian Task Force,Q (A-12-93-00017) Thank you for the opportunity to co®ent on this draft report. As previously discussed at the exit conference, we generally agree with the recommendations contained in'the draft report and will work towards implementation of all recommendations to the extent existing staff and other resources allow. Following are our comments to the specific recommendations on page 7 of the report. That ACF track the receipt and filing of the grantee's reports. Monitor grantees through these reports. If required reports are not received timely, provide follow-up and oversight for grantees that have continuing problems complying with the reporting requirements and achieving grant objectives. Restriction of cash draw downs should be considered if grantee persistently fails to report as required. we concur with this recommendation. ACF will continue to monitor grantees through progress and financial reports and restrict cash draw downs if delinquency is persistent. Where Cash requirements can be predicted, ensure cash draw downs are in accordance with schedules approved in the grant applications. ACF concurs with this recommendation. Where cash requirements can be predicted, cash draw downs will be monitored to see that they confirm to schedules approved in the grant. L `� 93- 787 we recommend that ACF incorporate stronger controls over the grantee for responding to terms and conditions of the grant by monitoring the achievement of those terms and conditions. For example, require grantees purchasing real property with grant funds to submit deeds showing reversionary interest when the grantee submits financial reports. We concur with this recommendation and will provide stronger controls over grantee response to terms and conditions, within the limits of available resources. However, we question the example given in the recommendation: 0... require grantees purchasing real property ....0 There is a standard condition which requires that grantees purchasing real property with grant funds. file a Notice of Record and, when that notice has been recorded, send a copy to ACF. We believe that this requirement is adequate to protect the federal interest. Also, it should be noted that this is a one time submission which is unrelated to the submission of financial reports. That ACF conduct coordinated site visits that assess both program and financial, issues for compliance with program requirements. We concur with this recommendation and will work toward the conduct 'of site visits involving both the program office and the financial office to assess program requirements. That ACF include tests in the planned corrective action review for the reversionary interest material weakness to validate whether grantees are properly filing the reversionary interest statements and submaitting copies of the documentation to ACF. We concur with this recommendation. The OCS has initiated action to assure that grantees have properly filed and submitted documentation pertaining to reversionary interests. We will initiate closeout of this grant -after the OIG report is final. The closeout will include the deobligation of grant funds commensurate with the findings of the audit and any other applicable records. 93- 787 ti J<tlV.au.. ..%J. L Department of Health and Human Services OFFICE OF INSPECTOR GENERAL REVIEW OF THE HAITIAN TASK FORCE, INCORPORATED GRANT *NO. 90-1-U R-FL-014 _ s SERV[Cle AUGUST 1993 -MA-93-Ml r 93- 787 DEPARTMENT OF -*HEALTH & HUMAN SERVICES Office of Inspector General Office of Audit Services REGION IV P.O. BOX 2047 u IZ 7 ATLANTA. GE•ORGIA 30301 Common Identification Number,A-04-93-00051 Mr. Yves Vielot, Executive Director Haitian Task Force, Inc. 8101 Biscayne Blvd., Suite 500 Miami, Florida 33138 Dear Mr. Vielot: This report provides the Results -of our Review of the Haitian Task Force, Inc. Grant 90-1-UR-FL-014 covering the period October 1, 1990 through February 28, 1992. We initiated this review at the request of the Office of Community Services (OCS). The OCS had received complaints alleging misuse of grant funds by the Haitian Task Force, Inc. (HTF). The purpose of our review was to find out if the HTF met the terms and conditions of the $472,500 grant. Specifically, our objectives were to find out: (1) whether grant objectives were met; (2) what properties were purchased by the HTF with grant funds and if the deeds for the properties included statements that the Federal government has a reversionary interest'in the properties; (3) if expenditure reports were prepared and whether an audit by a public accounting firm was completed; and (4) if funds were drawn down and expended appropriately. During our review, we found that: (1) Grant objectives were not met. Grant funds were to be used by the HTF to expand the Caribbean Marketplace and create 46 new entrepreneurial/ownership opportunities and 106 jobs for low income residents in Miami's Haitian Community. Currently, there are 10 employees and only one new merchant. (2) The HTF did not comply with the special terms and conditions of the grant concerning properties purchased with grant funds. The grant terms required HTF to have deeds recorded that include a statement that the Federal government has a reversionary interest in the properties. Deeds recorded by the HTF at the Dade County Courthouse did not include the required reversionary interest statement. S-3 P.0. box 11747 sox 20 R=Rf2052 ' Roaa 120A suits 100 eirminsh4m, Mabel— 35202-1747 51 SW First AvenH 21R M. eronow Street 7825 "Wneedowe ftY "07 bland Road r Miami, Florida 23130 Tallahassee, Florida 32301 Jacksonville. Florida 32M Raleigh, Worth Carolina 93- 787 Page 2 - Mr. Yves Vielot (3) The HTF did not usually submit required financial reports timely. The HTF did not submit timely three of the six required Financial Status Reports and none of the eight'required Federal Cash Transaction reports. For the Fiscal Years (FYs) ended June 30, 1991 and June 30, 1992, independent public accounting firms conducted financial and compliance audits at the HTF. Both audits revealed several reportable conditions, (4) The HTF did not comply with restrictions on the use of grant funds. The OCS restricted the use of grant funds to the acquisition of property, including associated acquisition costs. Based on our review of .grant expenditures, we identified $200,207 in unallowable expenditures made by the HTF. Moreover, HTF retained excess cash during most of the grant period. The Federal government's cash management policy restricts grantees from keeping excess cash. If a grantee receives its cash by Treasury check, the grantee cannot hold drawn down cash longer than 30 days. We recommend that the HTF repay the Federal government $200,207 expended on unallowable costs. We also recommend that HTF amend the deeds to include a statement showing that the Federal government has a reversionary interest in the properties purchased with grant funds. Except for our recommendation that the HTF refund to the Federal government $200,207, the HTF agreed with our findings and recommendations. The HTF officials believe that because they have received a $150,000 grant from Dade County they probably can complete the project and meet the grant objectives by November 1993. We summarized and incorporated the HTF comments into the Auditee Comments section of this report. The APPENDIX contains the comments in their entirety. BACKGROUND The HTF is a non-profit, private, locally initiated community development corporation, which owns the Caribbean Marketplace. As a commercial shopping center, the Caribbean Marketplace operates within the Haitian Community in Miami, Florida. It serves the Haitian Community by selling goods associated with the Caribbean Islands and by drawing commerce to Miami's Haitian Community. On October 1, 1990, the OCS awarded the HTF a grant (90-1-UR-FL- 014) for $472,500 to expand the Caribbean Marketplace. According to HTF officials, the Caribbean Marketplace was successful and they wanted to build upon that success by expanding it. Expansion would generate and provide opportunities market at low risk. 5Y more business for the existing merchants for new entrepreneurs to test the 93- '787 Page 3 - Mr. Yves Vielot The project proposed to accomplish the objectives by purchasing five parcels of land that were either next to or across the street from the Caribbean Marketplace. The land was to be used to provide space for a parking lot, an additional sheltered area for new merchants, and a weekend festival area. With this" project, the HTF expected to create an economic enterprise that would provide 46 new entrepreneurial/ownership opportunities and 106 jobs for low income residents in the geographic area. SCOPE In response to allegations regarding the misuse of Federal funds, the Director of the OCS requested that we conduct a review of the grant. The Administrations for Children, Family, and Aging Audits Headquarters Division (the Division) did a review at the Administration for Children and Families, OCS and Office of Financial Management in Washington, D.C.. Work by the Division suggested that the HTF may not have met significant terms and conditions of the grant. Based on their findings, the Division asked us to review the grant at the HTF in Miami, Florida. The purpose of our audit was to -find out if the HTF met the terms and conditions of the $412,500 grant awarded to the HTF by OCS. Specifically, our objectives were to find out if: (1) grant objectives were met; (2) properties were purchased by the HTF and if deeds for the properties included statements that the Federal government has a reversionary interest in the properties; (3) expenditure reports were prepared and whether an audit by a public accounting firm was completed; and (4) funds were drawn down and expended appropriately. We did our review following generally accepted government auditing standards. We obtained an understanding of relevant internal controls and performed substantive testing of financial reports and accounting records. To achieve our objectives, we met with the HTF and Caribbean Marketplace officials and discussed grant expenditures and property acquisitions. We reviewed contracts, property deeds, financial reports, and accounting records. Also, we examined property and other public records at the Dade County Courthouse. Our review covered the period October 1 February 28, 1992. For that period, we expenditures ($472,500). We conducted offices, the Caribbean Marketplace, and Courthouse in Miami, Florida. 1990 through reviewed all grant our review at the HTF the Dade County V . 93- 787 S(o Page 4 - Mr. Yves Vielot RESULTS OF AUDIT GRANT OBJECTIVES The HTF failed to meet grant objectives. The OCS awarded the $472,500 grant to the HTF to expand the Caribbean Marketplace. Expansion was to create forty-six (46) new entrepreneurial or ownership opportunities and 106 jobs for low income residents in Miami's Haitian Community. The HTF planned to: Have 40 weekend vendors, each vendor operating for 24 hours on the weekend and employing two people, creating 80 part-time jobs. Add six permanent vendors, each vendor employing two people, creating 12 jobs. Have the existing vendors add one part-time person, if business on weekends increased by 20 percent and parking was available, creating 13 jobs. - Add a weekend security/parking guard creating one job. We found that currently there are only 10 employees and only one new vendor. The HTF's inability to meet grant objectives can be attributed to a lack of operating capital. Two of the HTF's expected sources of funding did not.meet their commitments. The HTF did not receive a $75,000 grant from the Local Initiatives Support Corporation or a $50,000 loan from a private investor. Both the grant and the loan were shown on the HTF's grant application as sources of funds. Also, the HTF was counting on revenue from operations at the Caribbean Marketplace to provide operating.. funds. However, the Marketplace was having severe cash flow • problems caused by an embargo on goods from Haiti. Unexpected financial problems continued at the HTF. They had cost overruns on construction work on the expansion project. As a result, the HTF halted work on the parking lot and the weekend festival area before completion. Recommendation We recommend that the HTF notify the granting agency promptly when expected sources of funding do not materialize. Auditee Comments The HTF officials agreed with the recommendation and noted that they anticipate meeting the grant objectives by November 1993. 93- 787 Page 5 - Mr. Yves Vielot PROPERTY PURCHASED WITH GRANT FUNDS We found that the HTF did purchase properties; however; the purchase of the properties did not comply with the special terms and conditions of the grant. Though the grant provided funds to purchase properties'outright, the HTF purchased one property with a mortgage. Another property has a lien filed against it. Moreover, the government's reversionary interest in the properties has not been recorded. The approved grant proposal originally called for purchasing five parcels of land called parcels A, B, C, D and E. The HTF paid $132,015 cash for parcel A. Subsequently, a construction company filed alien for $43,401 against parcel A. The construction company had furnished drainage, electric, plumbing, site clearing, trash removal, paving, sub -base and base on parcel'A for a total cost of $98,483. According to construction company officials, $43,401 of the $98,483 remains unpaid. The HTF asked for and received a grant modification to purchase parcel F as a substitute for parcels C and D. The HTF purchased parcel F for $161,500. They paid $100,510 cash and obtained a mortgage from the seller for the balance of $61,000. The mortgage. has a rate of 10 percent. Payment is to be made in monthly installments of $587 and a balloon payment of $47,750 at the end of ten years. There is an additional provision in the mortgage deed that establishes a $39,000 debt owed by the Caribbean Marketplace to the mortgagee. This additional $39,000 debt is for a State liquor license at the Oasis Lounge/Restaurant on property owned by the Caribbean Marketplace. A default by the Caribbean Marketplace on the $39,000 debt would result in foreclosure by the seller on parcel F. The special terms and conditions of the OCS grant required the HTF to have deeds recorded. The deeds must include a statement that the Federal government has a reversionary interest in the properties. This statement provides notice that the sale or other transfer of the properties is subject to the Federal government's reversionary interests as set forth in Code of Federal Regulations (CFR) 45, Part 74, Subpart O. We found that the deeds recorded at the Dade County Courthouse for the properties the HTF purchased with grant funds did not have the required reversionary statement. An HTF official said that he was not aware of the requirement for a reversionary interest statement on the deeds. Recommendation The HTF should amend the deeds for properties purchased with grant funds to include a statement about the reversionary V interest of the Federal government. 93- 787 Page 6 - Mr. Yves Vielot Auditee Comments Agreeing with our recommendation, the HTF officials instructed their attorney to amend the deeds for properties purchased with grant funds. FINANCIAL AND INDEPENDENT AUDIT REPORTS The HTF often failed to submit Federal Cash Transaction Reports (PMS 272) and Financial Status Reports (SF 269) timely. The HTF's failure to submit financial reports timely may have prevented OCS from taking any actions to help the HTF in meeting the grant objectives. The time limits specified by OCS followed CFR 45 Parts 74.74 (d) and 74.73 (d). Part 74.74 (d) requires a grantee to submit a Federal Cash Transaction Report (PMS 272) within 15 working days following the end of each quarter. Part 74.73 (d) requires a grantee to submit a Financial Status Report (SF 269) within 30 days after the reporting period. The final SF 269 report is due 90 days after the expiration of grant support. The HTF submitted seven of the eight required PMS'272 reports. The seven reports were an average of 12 days late with delinquencies ranging from 3 to 21 days. The HTF submitted six of the seven. required SF 269 reports. Three of. the six reports were filed timely; the remaining three reports were delinquent by 49, 9 and 2 days. For the FYs ended June 30, 1991 and June 30, 1992, the HTF had financial and compliance audits done by independent public accounting firms as required by the general terms and conditions of the grant. The accounting firms issued the audit reports for FYs 1991 and 1992 on September 10, 1991 and December 2, 1992,'.. respectively. Both reports revealed several reportable conditions. Reportable conditions relating to the management of Federal funds included: - the untimely disbursement of Federal grant funds (FY 1991); - the lack of documentation to support transactions (FYs 1991 & 1992); and - the questionable ability of the'HTF to remain a going concern (FY 1992). The FY 1992 report also disclosed a material instance of noncompliance: the expenses for a City of Miami construction i�grant and the expenses for the OCS grant were combined and thus could not be readily tested. We noted the same problem in our review. J • Page 7 - Mr. Yves Vielot Recommendation We recommend that on any future grants, the HTF submit all required reports within specified time limits. Y Auditee Comments The HTF officials agreed with the recommendation. GRANT EXPENDITURES AND DRAADOWNS The terms and conditions of the OCS grant restricted the use, of grant funds to the acquisition of property, including associated acquisition cost. Associated costs, stipulated in the approved grant application, included: appraisals, legal fees, permits, insurance costs, tax escrows and other closing costs. We found that the HTF used grant funds for purposes other than the acquisition of property. Of the $472,500 in grant expenditures, $272,293 were allowable. Allowable expenditures included: $132,015 for parcel A; $100,510 for parcel F; and, $ 39,768 for associated acquisition costs. The remaining $200,207 of the $472,500 grant was used for unallowable expenditures. Unallowable expenditures included: $118,556 for improvements and repairs to the Caribbean Marketplace; $50,850 for "technical assistance" consisting of salary and fringe benefits for the Business Liaison Specialist; $17,000 transferred to the HTF's operating account and not supported by documentation; $4,576 for payments on a loan from the Local Initiatives Support Corporation; $4,150 for architectural services; $1,400 for travel expenses for the Executive Director; and, $3,675 for loan payments to the bank and bank service charges. .51 93- 787 MR Page 8 - Mr. Yves Vielot Beyond the unallowable expenditures, we found that the HTF asked for and received money before they needed it. As a result, they maintained an excess cash balance during most of the grant period. The Federal government's cash management policy restricts grantees from keeping excess cash. If a grantee receives its cash by Treasury check, the grantee cannot hold drawn down cash longer than 30 days. The HTF made -its first cash drawdown by Treasury check on December 3, 1990. This drawdown of $250,000 was to be used to purchase several parcels of property. However, the HTF had problems that resulted in delays in purchasing the property. The first parcel wasn't purchased until O'anuary 25, 1991 and the other parcels were never purchased. It was August 30, 1991 before a substitute property was bought. As a result, the HTF maintained an excessive cash balance from December 1990 through August 1991. Recommendations We recommend that the HTF repay $200,207 in unallowable expenditures to the Federal government. We also recommend that the HTF restrict its drawdowns of Federal grant funds to immediate cash needs. Grant funds, which cannot be used in a reasonable length of time, should be returned to the Federal government. Auditee comments The HTF officials did not agree that the $200,207 in unallowable costs should be refunded to the Federal Government. The HTF's written comments stated "HTF was successful in obtaining a grant of $150,000 from Dade County Office of Community Development to complete the project; that will allow HTF to meet the grant objectives by November 1993." The HTF officials agreed with the recommendation concerning the restriction of drawdowns of Federal grant funds. OIG Response: The amount we recommended for disallowance was $200,207 or $50,207 more than the HTF is getting from Dade County. It is not clear to us how the HTF is going to spend the $150,000 grant from Dade County to meet the grant objectives. According to the Freedom of Information Act (Public Law 90-23), Office of Inspector General, Office of Audit Services reports issued to the Department's grantees and contractors are made available, if requested, to members of the press and public to the extent information contained therein is not subject to exemptions in the Act which the Department chooses to exercise. Page 9 - Mr. Yves Vielot We request that you respond within 30 days from the date of,this letter to the HHS action official named below. Your response should present any comments or additional information that you believe.may have a bearing on the final determination. j r l To ease identification, please refer to the Common Identification 1 Number A-04-93-00051 in any correspondence related to this report. I Sincerely yours, 17 z14 Joseph J. Green Regional Inspector General for Audit Services, Region IV Enclosure Direct Reply To: Director, Office of Community Service 5t:h Floor Aerospace Building 370 L'Efant Promenade Washington, D.C. 20447 cc: Mr. Charles L. Lester Auditor General State of Florida P.O. Box 1735 Tallahassee, Florida 32302 r 0 7 93- 787 QHHg, ()IC., Office of Audit Services r : 05 993 REGION IV, ATLANTA. GEORGIA Y Common Identification Number A-01-93-00051 Mr -Joseph J.Green Regional Inspector General Region IV Atlanta, Georgia 30301 Dear Mr.Green: Attached you will find our written comments regarding the draft report results of the Haitian Task Force, Inc. (HTF), (Grant 90-1-UR-FL-014, covering the period October 1, 1990 through February 28, 1992.] I hope you will understand the challenge that an organization like the Haitian Task Force, with limited resources face in trying to make a project such as the Caribbean Marketplace successful. The. area is totally depressed and has a high crime rate. The Haitian Task Force is almost there in achieving this objective. Please assist and help us. If you need additional information, please call me at (305) 751-2251 or (305) 751-9783. Yves Vielot Executive Director y An Ecwiomie Developmott Community Based Orgemiuttion 8101 Biscayne Boulevard • Suite 50Q *'Miami, FL 33138 • (305) 751-2251. Fax: (305) 754-5517 T 93_ 787 Common Identification Number A-01-93-OOOs1 y Mr.Joseph J.Green Regional Inspector General Region IV Dear Mr.Green, This is in response to the draft report results of your review of the Haitian Task Force, Inc. (HTF) Grant 90-1-UR-FL-014, covering the period October 11 1990 through February 28, 1992. During your review the following determinations were made: r I) Grant objectives were not met. Grant funds were to be used by HTF to expand the Caribbean Marketplace in order to create 46 new entrepreneurial/ownership opportunities and 106 jobs for low income residents in Miami's Haitian Community. We found that currently there were 10 employees and only one new merchant. HTF Response: Even though the grant objective were not -met within the time frame specified in our proposal, Haitian Task Force will be able to complete the expansion of the Caribbean Marketplace (CM), open the Week -end Flea Market by November 1993. HTF has signed a lease with a medical center that will'be hiring 17 low income residents in the Miami's Haitian Community. The medical center will start operating in November 1993. 2) The Haitian Task Force did not comply with the special terms and conditions of the grant pertaining to properties acquired with grant funds. -.The HTF was required to have deeds recorded that include a statement that was to serve as notice to all interested parties that the Federal government has a reversionary interest in the properties. The deeds that HTF had recorded at the Dade -County Courthouse did not include the required reversionary statement. HTF Response: Haitian Task Force has instructed its attorney to include the required reversionary statement in all of the deeds. page one S 93- 787 3) The HTF did not, in most instances, submit required financial reports timely. The HTF did not submit three of the six Financial Status Reports within the time frames specified by OCS and did not submit any`of the eight required Federal Cash Transaction reports timely. HTF Response: Allthough, Haitian Task Force did not submit some of the Financial reports on•a timely basis, all of them have been submitted. 4) The HTF did not comply with restrictions on the use of grant funds. The OCS restricted the use.of grant funds s to the acquisition of property, including associated acquisition costs. Based on our review of grant expenditures, we identified $200,207 in allowable expenditures made by HTF. Moreover, excess cash had been retained by HTF during most of the grant period. The Payment Management System restricts a grantee from holding cash longer than 30 days if by Treasury check and three days if by wire transfer or direct deposit. HTF Response: The HTF did not receive a $75,000 grant from the Local Initiative Support Corporation (LISC) which was the architect of the failed business plan for the Caribbean Marketplace. LISC stopped providing technical assistance to the organization after the previous Executive Director resigned due to the failure of the initial business plan he and LISC designed. HTF obtained a grant of $150,000 from Dade County Office of Community Development to do the parking and complete the expansion of The Caribbean Marketplace. Haitian Task Force does not agree with,the recommendation that HTF refund to the Federal Government $200,207 expended because HTF wa's able to secure the additional fundings that' will allow it to complete the project and meet the grant objectives. page two 93- 787 I RESULTS OF AUDIT GRANT OBJECTIVES Y The Haitian Task Force will be meeting the grant objectives by November 1993. The HTF will complete the expansion of the Caribbean Marketplace and will be able to create forty six (46) new entrepreneurial/ownership opportunities and 106 jobs for low income residents in Miami's Haitian Community as outlined in the details of its proposal. Haitian Task Force agrees with the recommendation that on any future grant proposals, HTF should be sure that expected funding sources commit themselves in a more formal agreement. If expected funding does not materialize, the granting agency would be notified promptly so that plans can be adjusted accordingly. SPECIAL TERMS AND CONDITIONS Haitian Task Force agrees with the recommendation and has instructed its attorney to amend the deeds for properties purchased with grant *funds to include a statement pertaining to the reversionary interest of the Federal Government. FINANCIAL AND INDEPENDENT AUDIT REPORTS Haitian Task Force agrees with the recommendation that on any future grants, HTF should submit all required reports within specified time limits. GRANT EXPENDITURES AND DRAWDOWNS Haitian Task Force does not agree that it should refund $200,007 to the Federal Government. HTF was successful in obtaining a grant of $150,00 from Dade County Office of Community Development to complete the project; that will allow HTF to meet the grant objectives by November•1993. Haitian Task Force agrees with the recommendation that it restricts its drawdownsof Federal grant funds to immediate cash needs; However, we want to stress that this occured only once. page three i 93- 787 M E M 0 R A N D UM TO: Josep Alfano,.Director SFET FROM: oria Bolinger M:Intergovernmental sistant DATE: October 13, 1993 SUBJECT: Inspector General Review of the community Services Grant to the Haitian Task Force Attached for your information is a copy of an HRS, Office of the Inspector General review of the Office of Community Services Grant to the Haitian Task Force along with the Haitian Task Force's response to the audit findings. Inasmuch as the review identifies issues which might be of interest to the County and the Haitian Task Force is a current subcontractor of SFETC, you may be interested in reviewing the attached document. Attachment -------------- 69 93- 787 JrC T r 1 M-13-43 T UE= 1 S 44 DDA M I AM I P Q 1 The Downtown Miam' Partnerships Inc# formerly DMB A / DMX a not.-fov-profit corporation October 12, 1993 Post.tt'" brandtax transmittal memo 787110 of pages ► To �/') L•�5.� ArJ(' From �Yi!•`P'� M ept, PNono M 5X Frank GaestafSeda Director, Department of Cummunity Development ** Via Fax ** Door Mr. Castafieda: Attached for your review'io a resolution that was passed on October 1, 1993 by the board of both the Downtown Miami ]Business Association, and Downtown Mivail Incorporated. Our two corporations have merged on a united front to form a much stronger organization with a better membership base that will work tirelessly to make Downtown Miami a better plaoe for all of us who live, work and play here. This newly farmed organization will be a not -for -profit oorporation doing business under the name "The Downtown Miami Partnership Inc.", (DMP). our main focus will be to further develop the economio growth of downtown and to provide assistanoe to businesses which serve and employ low and moderate income residents. Another one of our ongoing goals is to aid businesses in our target area with the funds available through the commercial faoade rehabilitation program to beautify Downtown Miami. We are currently funded through October 11 1993 like all of the other CBO's in the city. and we are asking for your support in continuing to receive these funds so that we may fulfill our obligations in our neighborhood. RTRF/j1a 171 93- 787 u T 1..1E Its: 45 31)DA M I AM I RESOLUTION NO. F 0 2 A RESOLUTION AUTHORIZING THE MERGER OF THE DOWNTOWN MIAMI BUSINESS ASSOCIATION (DM.B4) AND DOWNTOWN MIAMI INCORPORATED (DMI); TO FORM A NEW ORGANIZATION CALLED THE DOWNTOWN MIAMI PARTNERSHIP (DMP) . A joint Resolution of the Executive Committee of the Downtown Miami Business Association (DMBA) and Downtown Miami Incorporated (DMI) to authorize the merger of both organizations. said Organization to be known as the Downtown Miami Partnership (DMP) ; The overall goal of the DMP is to Create in Downtown Miami, a satef clean tarts] People friendly environmenL. A place where Moth residents and visitors will want to coma to shop, dine, do busiiiess, experience the arty, eujcy sports and further their education. The continued economic growth of Downtown and in particular, tho prevision of economic assistance to buuinesses which serve and employ low and moderate incoine residents will be a major focus of the Organization. Attached hereto is the paramu tern for said merger. PASSED AND ;ADOPTED THIS 't OF October, 1993. Taow owri fnami Bus noes Assoc. U06-town—m5—mi Incorpor RaXd Terc'lla Ratael Kapustin P esidenL President RFSO : DMBA/DMI/x 1, f, 93— 787