$4M granted to Wilmington for Affordable Housing, Despite Past Federal Grant Concerns

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Wilmington, Delaware has received over $4 million in unencumbered federal funding for affordable housing, despite an unresolved audit that found the city had improperly spent nearly $450,000 in federal grants. The audit, conducted by the U.S. Department of Housing and Urban Development (HUD) in 2021, identified issues with three federally funded affordable housing projects completed in 2020 through Wilmington’s HOME Investments Partnership Program. These issues could potentially require the city to pay back some of the $446,120 provided for the projects.

City officials had indicated they would seek a reduction in future grants to cover any repayment costs, but HUD officials have said that Wilmington never made the request. A HUD spokesperson stated in August 2022 that the agency had received “no formal request from the city of Wilmington for a reduction in future HOME funds.” If the issues with the affordable housing program’s execution are not addressed, the initial amount of HOME funding to be repaid is approximately $446,120. However, this amount could be reduced if the city can provide sufficient evidence to refute any portion of the findings requiring repayment.

HUD is currently in discussions with Wilmington to resolve the audit findings, and the $718,522 in HOME funds the city is slated to receive does not reflect the outcome of those discussions. HUD has emphasized that the recently published fiscal year 2023 HOME allocation for the city of Wilmington does not reflect the potential outcome of these ongoing discussions.

Despite these issues, Wilmington has received the most HOME funds since 2016, with $718,522 budgeted for the program this year. The HOME program is one of several federal housing programs that provide funding to communities across the country to assist with buying, building, or rehabilitating affordable housing for rent or homeownership.

HUD found that Wilmington city officials did not ensure that projects were purchased by low-income homeowners, lacked adequate record keeping, and failed to follow federal requirements and city policies and procedures when providing the grant funds. The city’s Department of Real Estate and Housing, which oversees the program’s implementation, attributed the errors to staff who were unaware of the program’s policies and procedures. The department pledged that changes to policies and procedures, additional oversight, and training would prevent the issues that the federal housing agency found when reviewing three recently completed projects.

HUD determined that Wilmington would have to pay back the misappropriated funds if the city failed to provide proof that all issues were mitigated. In turn, the city could pay the money upfront or request that future grant funding be withheld to cover the payback costs. Wilmington’s Department of Real Estate and Housing is currently working to address the issues identified in the audit to avoid having to repay the misappropriated funds.