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Miami Beach could lose more than $500,000 for housing because it lost track of the money

Miami Beach has to give back more than half a million dollars of federal grant money meant for housing projects because the city didn’t spend it within the required time frame.

A department head lost her job over the issue, and the city is appealing to get the money back.

Every year, Miami Beach gets about $3 million from the U.S. Department of Housing and Urban Development (HUD) to spend on different housing programs, according to the city’s website. One of those programs is HOME, which provides about $1.1 million to Miami Beach for housing projects. The city, in turn, allocates the money to qualifying people or organizations to fix up apartments for low-income renters, or help people buy homes, among other projects.

The money comes with many strings attached. One of the requirements for the HOME program is that recipients — in this case, Miami Beach — must commit all of their award money within two years of receiving it, according to a HUD official.

HUD requires the money be spent in a timely way “to avoid accumulated unspent funds since the program is meant to meet the housing needs of the community,” Armando Fana, Miami HUD Field Office Director, wrote in an email.

“When certain HUD funds are not obligated or spent in a timely fashion on eligible projects we may request that a city, county or state return the unused funds...It’s is not something that happens often but does occur on occasion both nationally and in south Florida,” Fana wrote.

Anna Parekh was in charge of Miami Beach’s Real Estate, Housing and Community Development department when HUD notified the city that it hadn’t followed the timeline for spending the federal money. According to a city memo:

In September 2012, Parekh got a letter from HUD saying the city had to properly allocate all of the money it has received from the federal agency, or risk losing it — a process that HUD calls “de-obligation.” The feds gave Miami Beach until October to comply.

The deadline passed, and the city failed to properly allocate the funds. It wasn’t until February, “long after the de-obligation took effect,” that Parekh let her higher-ups know what had happened, according to a memo by City Manager Jimmy Morales.

Parekh was fired. In a long email she sent to city officials, Parekh wrote that the city’s issues with HUD are a “direct result of the city’s co-mingling” of HOME funds. The practice meant that “there is no accounting of exactly what HOME grant funding was received, or when, prior to 2004,” she wrote. Parekh was hired in 2008, according to her email.

She went on to write that she tried for two months to determine how much money came in and was spent on the HUD program in question, but was “ obtain complete City financial reports.”

Parekh did not respond to requests for comment.

Maria Ruiz, who is now overseeing the department, wrote in an email that the problems arose because Parekh did not request any account reconciliations from HUD.

“Had these periodic reconciliations taken place and had the former Department Director heeded warnings issued by HUD in September 2012, the City would have retained these funds,” Ruiz wrote.

Meanwhile, the city has been sorting out how and why the money went unused, according to Morales’ memo. What city officials discovered was that the shortfall of committed funds goes back as long as 13 years. But because of the way HUD tracks the money, it’s impossible to determine the years in which the shortfall (or shortfalls) occurred, the memo states.

HUD will take the money back from the two most recent years of HOME funding: $208,000 from the 2011/2012 fiscal year, and $370,000 from the 2012/2013 fiscal year. Miami Beach discovered it had $503,045 in a line of credit with HUD dating back to 2000/2001, according to Morales’ memo, dated June 7. The city says it will tap that money to make up for the lost funds.

Beach officials are appealing HUD’s de-obligation of the funds. Ruiz wrote that the department now has a series of checks and balances, and mandates monthly reconciliations, to avoid the problem in the future.

If the Beach’s appeal is unsuccessful and the money isn’t paid back, Fana, the Miami HUD official, wrote that the Beach’s future awards may be reduced.

“HUD will continue to work with the City of Miami Beach to insure that they stay on track with future allocations and projects,” he wrote.

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