West Palm Beach Nonprofit Being Investigated for Misuse of HOME Funds

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December 15, 2011; Source: Florida Courier Based on the content of this article from the Florida Courier, we cannot conclude that the charges against the community development corporation associated with the Redemptive Life Fellowship Church in West Palm Beach are true or false. The City of West Palm Beach wants as much as $1.1 million of $1.6 million in HOME funds back from the nonprofit, because of 21 alleged violations of federal regulations during the nonprofit’s construction of 22 affordable homes between 2003 and 2009. Among the possible violations are charges that the group failed to select subcontractors by competitive bidding, that there might have been conflicts of interest between contractors and the bishop of Redemptive Life, Harold Ray, and that there were improper payments to board members.

This review was obviously spurred by HUD’s suddenly getting tough on local governments that were receiving and spending federal HOME funds but somehow not producing any habitable housing. In this instance, however, Redemptive Life built 22 units in the historic Coleman Park area using the HOME funds.

But this audit is for funding that goes back to 2003 for a project or projects that were finished in 2009. HUD hadn’t conducted a review of West Palm Beach’s HOME program since 2007, until this year, when it began ordering West Palm Beach to pay back funds that had been misspent or spent without any product to show. The city for its part admits that it hadn’t conducted a review of Redemptive Life or any HOME sub-recipients for several years. Now that HUD has slapped West Palm Beach with a bill for over $2 million, the city is scrambling to find grant recipients like Redemptive Life it can squeeze.

Here’s what strikes us about the story. If it is true that Redemptive Life was spending money in violation of typical, standard HUD requirements such as competitive bidding and other issues, where was the city all along? Didn’t the city know that Redemptive Life wasn’t doing competitive bidding? It’s hard to imagine that program officers in the West Palm Beach housing and community development department wouldn’t have known that, or that they would have missed the nonprofit’s contracting with firms related to Bishop Ray. When a city government doles out HOME funds to a nonprofit, it’s like a partnership. The city is usually functional enough to work with the nonprofit to identify regulatory issues to be addressed or to request regulatory waivers if needed.

If there is any truth to these charges about Redemptive Life, then the city ought to be partially culpable for having failed to live up to its role in the HOME-funded partnership between the city and the nonprofit. Remember the official, full name of this federal funding program—the HOME Investment Partnerships Program. Note the word “partnerships.” It seems like the city—and HUD perhaps—failed to fulfill their statutory roles in making the HOME investment in West Palm Beach’s Coleman Park succeed.—Rick Cohen