HUD clears city’s expenses in street project; Agency finds San Benito properly used federal money

Downtown San Benito

SAN BENITO — A federal agency has cleared the city in a case in which it had been ordered to pay back $738,000 stemming from a street project 15 years ago.

Based on the city’s response, the U.S. Department of Housing and Urban Development found officials properly spent federal Community Development Block Grant money to pave streets in low-income areas.

“ The city had taken appropriate corrective action,” Elva Garcia, director of HUD’s office of Community Planning and Development program in San Antonio, stated in a June 18 letter to City Manager Manuel De La Rosa.

The city “provided a detailed assessment on the street improvement project along with the methodology used to conduct that assessment,” she wrote.

Garcia wrote, “the street improvement costs charged to the CDBG program by the city can now be supported by data that identifies these costs. Since these costs are now considered eligible costs, the city will not be required to make a repayment.”

Garcia recommended the city’s CDBG staff, which has undergone turnover amid changes in city administrations during the last 15 years, take training.

“ We hope that all personnel involved in this matter have learned the importance of good record-keeping and attention to detail,” Garcia wrote. “It is important for your CDBG staff to continue to learn the CDBG regulatory requirements by participating in many HUD-sponsored on-line training opportunities as well as being able to participate in off-site training events when available to allow for further collaboration with other CDBG staff employees throughout the country.”

Digging up documentation

For months, city officials worked to review documents to justify a previous administration’s use of federal money to fund the project undertaken in 2004.

“ I am very proud of staff’s work on this assessment,” Assistant City Manager Fred Bell stated last week. “It took many employees and a lot of time to locate, review and summarize the documents dating back to 2004. In the end, the internal audit conducted by staff further supported the position that the city of San Benito has not and did not misappropriate any funds provided by HUD.”

How we got here

In a December letter to De La Rosa, Garcia had stated the agency’s on-site monitoring system had found the city spent $738,060 worth of Community Development Block Grant money to fund street repairs in sections of town that did not quality as low-income areas.

About a year ago, a HUD monitor found the city spent CDBG money to help fund street repairs along South Bowie, South Travis, Chapman, South Fannin and Arlington, an area which included 39.13 percent of low- to moderate-income residents — below the agency’s 51-percent eligibility benchmark — based on 2006-2010 U.S. Census data.

“ The city did not conduct surveys but instead inappropriately proceeded with the street projects when the data at the time showed a 39.13 percent low-mod population well outside of the 51-percent regulatory requirements,” Garcia wrote in her December letter to De La Rosa.

HUD administers CDBG money aimed at improving living standards in low-income areas.


In 2004, the city borrowed $5.2 million through the sale of certificates of obligation to fund a street repair project while earmarking CDBG money to pay back about 30 percent of expenditures, according to Valley Morning Star articles published in 2004.

As part of the project, the city used $96,489 to fund repairs along South Bowie, from Turner to Wentz; $132,144 along South Travis from Ballenger to Turner; $23,805 along Chapman, from Fannin to Sam Houston; $264,288 along Chapman from Sombra to Fannin; $110,666 along South Fannin from Ballenger to Interstate 69; and $110,666 along Arlington, from Ballenger to I-69, according to HUD’s data.