The Modesto Neighborhood Stabilization Program has been audited, and the US Housing and Urban Development’s Office of Inspector General has released its report. That report cites inappropriate or illegal expenditures totaling more than $170,000 made by the program.

The city responded to the report, citing that the misappropriated federal funds were less than 1% of the total grant money that the city was set to receive and that corrective action has already been taken. And now that the city has revised its mechanisms for oversight, it has continued operating its NSP.

“The recently released audit report identifies findings which account for a very small amount of the grant expended to date ($11 million) and less than 1% of the total grant allocated to the City of Modesto ($25 million),” said the city in a statement. “The City has reviewed HUD OIG’s audit findings and disputes none of them…

“The City Manager and I have reviewed and discussed the OIG audit report and are pleased that only a hand full of transactions out of hundreds made have been identified as findings,” said Mayor Ridenour. “We hope to move forward from here and continue the good work of NSP funds – creating jobs by purchasing and renovating vacant homes that blight Modesto neighborhoods and making affordable housing available to families in our community.”

The HUD report has not closed the issue however. They discovered a conflict of interest between a city councilman and one of the companies that received federal funding. On one transaction, a city council member’s company received $62,000 in commission. That money has since been returned to the seller.

However, the OIG has the option to pursue disbarment for the council member, which would permanently eliminate him from receiving future federal money.

“We are now prepared to restart our NSP Program activities,” said Mayor Ridenour, “and (we) have tightened‐up our monitoring processes and procedures over the past few months. The recommendations found in the OIG report will be used to further enhance our monitoring processes.”