The city of Pharr is under federal review. The U.S. Department of Housing and Urban Development, or HUD, found in a 2018 review, discrepancies in how the city oversaw funds intended to help low and middle-income families.
“We aren’t here to blame anybody, we are here to clean it up and we are here to make it correct,” said Pharr Mayor Ambrosio Hernandez. “We will do what is necessary to make it right.”
Every year, the city receives about $1.2 million towards their community development block grant program or CDBG.
Nonprofits that work with low and middle-income families in the area can apply for money from that federal grant.
In 2018, HUD conducted a routine audit on CDBG.
Documents obtained by CBS 4 show the HUD review found 16 deficiencies in the city’s management of grant money dating back to 2013. The audit finding the city failed to properly oversee the nonprofits that received the grant money.
“The last time that CDBG was reviewed was back in 2009,” said Raul Garza, Director of the Grants Management and Community Development for the city. “(That) is quite a long time. Things can fall through the cracks. Practices can change, staffing can change.”
One of the nonprofits named in the HUD review is Proyecto Azteca, an organization which helps low-income families living in Hidalgo County with home restoration.
HUD found the nonprofit did not properly vet the costs of the home reconstruction projects, and the CDBG manager did not ensure they did either.
Garza submitted documents to counter the finding, but for HUD, they once again determined those were insufficient stating that there were, “missing signatures, missing dates, missing scopes of work” and called into question the, “validity of the documents,” according to the review.
Now, HUD found the city must pay back around $213,000 from non-federal sources for the money they awarded to Proyecto Azteca in 2013 and 2014.
The executive director for Proyecto Azteca declined to comment on the HUD review.
Garza, a former IRS auditor, said he has provided additional documentation for HUD’s review. If HUD deems those to be insufficient, the city will have to repay the funds on behalf of Proyecto Azteca.
“It come from (the city’s) general fund and then we would have to work on recovering those funds ourselves,” said Garza.
Meanwhile, Hernandez said the city is not responsible for the operations of nonprofits with which they partner.
“Any nonprofit or school district who works with us, they know full-well that we expect them to do their fiduciary duty of following their own board and guidelines,” he said. “It’s never been our practice, nor it will ever be our practice, to delve into operations of any organization.”
However, according to federal guidelines, HUD holds the city liable for overseeing the organizations that receives grant money; that same policy is also posted on the City of Pharr’s CDBG website.
“If it is deemed by the federal government that Proyecto Azteca did something that was illegal or non-compliant, we will take action.,” said Hernandez. “We take very seriously whether it’s a dollar or a million dollars. To us, we see it the same- its taxpayer money, not our money.”
In a statement, HUD said as of now, the city has not yet repaid the $213,000 and are working with the city to reach a settlement.