Federal funding for Detroit's Motor City Match small business grant program has been halted as the Department of Housing and Urban Development reviews whether the city improperly used funds, according to The Detroit News.
The four-year-old program distributes $500,000 each quarter-year to merchants for growth and to landlords for building upogrades.
Federal dollars for the program come in the form of Community Development Block Grants, which the city can put toward a variety of initiatives.
HUD has identified a number of issues with how Detroit spent the money, The News says.
In the fall, HUD issued [a] report showing there were insufficient records to support Motor City Match program activities met an objective to target low-to-moderate income areas.
A second finding showed the city lacked records to show economic development underwriting and public benefit standard requirements for the program. According to HUD, the city also provided CDBG funds directly to for-profits without performing required financial underwriting.
In a third finding, HUD said that the city did not maintain sufficient oversight to ensure costs complied with CDBG-eligible activity.
Also at issue, according to the News, is inadequate documentation on how much time staff spent on CDBG-eligible activities, specifically. HUD is also looking at a 2017 payment for $153,000, of which it says only $20,000 was used directly for the businesses.
It's common for the federal government to monitor how its funds are allocated.
Founded in 2015, Motor City Match has spent $7 million helping more than 150 businesses and aspiring entrepreneurs either open brick-and-mortar locations or gain additional skills.
According to The News, $800,000 from the city's general fund will go toward the program this coming fiscal year.
The city froze CDBG payments to the program at HUD's request. It has plans to continue the program with help from CDBG dollars and is aiming to respond to HUD's inquiry by December.
Donald Rencher, director of Detroit's Housing and Revitalization Department, said his department has started to provide responses to HUD's findings.
“We’ve been working through that monitoring report and how we’ve actually taken documentation and provide evidence of invoices,” he said.