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Federal relief money lost on state housing projects in “difficult neighborhoods”

A federal audit criticized Connecticut housing officials for failing to finish a number of projects supported with $25 million in grant money, with one official blaming “difficult neighborhoods” for the failures.

The state of Connecticut was given $25 million in funds to purchase and rehabilitate houses and buildings that were abandoned or foreclosed during the housing market collapse. However the audit cited instances where work was never completed and properties were left abandoned and falling down.

Dimple Desai, director of the Small-Cities Community Development Block Grant which is part of the Connecticut Department of Housing, cited “difficult neighborhoods,” in his response to the audit.

The auditor cited several instances in which buildings remained abandoned, incomplete or nearly collapsing.

  • A contract in August 2010 to build seven modular homes in Bridgeport by 2012 was amended to only three units and remained incomplete when auditor’s inspected the building in March of 2016. The auditors state “the walls and ceilings appeared to be covered in mold and another property appeared to have a squatter living in the property.”
  • A subcontractor was awarded $104,882 to “stabilize” a blighted building in Bridgeport. However, upon inspection the building was only “boarded up.”
  • A subcontractor was awarded $50,828 toward tearing down an old house and constructing a new two-family house in New Haven but the property remained empty.

 

The audit recommended the state pay back $666,668 in ineligible costs and provide documentation for another $1.8 million.

The Office of Small Cities-Community Development Block Grant and Technical Services, disagreed with the auditor’s findings on the incomplete properties. In his response, Desai wrote “The projects identified are all associated with failed attempts at redeveloping difficult properties in difficult neighborhoods where the original developer either went out of business in mid-development, or experienced other issues which led to the current condition.” Desai claims the department is “actively working” with the communities to complete the projects.

However, the auditors cite the fact that years have passed since the projects shut down with no further progress made.

“These properties should have been completed within a reasonable timeframe,” the auditor’s responded to Desai’s comments, “or the activities should have been canceled and the funds deobligated and reprogrammed.”

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Marc E. Fitch

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