In a major setback to The Journey Home, the mayor’s signature homeless program, the Board of Estimates is scheduled to allocate nearly $4 million in general funds to reimburse the federal government for mishandling homeless funds spent between 2009 and 2011.

The settlement, listed on Wednesday’s board agenda, will end a nearly two-year battle with the U.S. Department of Housing and Urban Development (HUD) over the use of $9.5 million in Homelessness Prevention and Rapid Re-Housing funds awarded to Baltimore as part of President Obama’s 2009 Recovery Act.

Following a critical audit by HUD’s Inspector General, the agency made a final determination that $3,756,025.35 of the funds given to non-profit grantees as part of The Journey Home program violated federal eligibility requirements or were not part of the program’s terms and conditions.

City Hall Deflects Blame

A dozen providers – including Prisoner’s Aid Association; People Encouraging People (PEP); AIDS Interfaith Residential Services (AIRS); the city’s Community Action Centers; Jobs, Housing and Recovery (JHR) and St. Vincent de Paul – could not document if millions of dollars were used according to the grant’s terms.

The Mayor’s Office of Human Services administered the funds, and United Way of Central Maryland served as fiscal agent for The Journey Home program.

Both groups allowed federal funds to be dispersed to providers on a predetermined basis before any documentation of spending was received, according to HUD’s Inspector General.

HUD reported that several subgrantees had conflicts of interest, and the city’s Homeless Services office hired a top employee based on an “oral contract” that was paid for with federal funds. In response, Olivia D. Farrow, director of Human Services, and Kate Briddell, Homeless Services chief, insisted that the city would document and account for all of the spending.

Even last month, Mayor Stephanie Rawlings-Blake was denying that the matter was anything more serious than misplaced paperwork and confusion caused by a federal program that was hastily set up to address the Great Recession and mortgage crisis.

The mayor said other cities also failed to document funds for the program, but a review of HUD inspection reports by The Brew indicated that Baltimore was, by far, the worst offender. Following media reports, officials from St. Vincent De Paul, Catholic Charities and Health Care for the Homeless stood alongside the mayor last month to defend the program.

Asked who was to blame for the debacle, the Mayor told The Brew:

“I tend to think blame is someone else’s game. This to me is about serving homeless individuals, and this was done. Serving families in need, and that was done. For me, at the end of the day, it’s about reputable service providers providing good services for people in need.”
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OUR COVERAGE OF THE DISPUTED FUNDS

• What a federal audit tells us about city spending (12/5/12)
• City reserves $7 million to repay mismanaged federal homeless grant (12/3/13)
• Questions but no answers on mismanaged homeless services grant (1/8/14)
• HUD tells city to repay nearly $4 million in misspent homeless funds (2/25/14)
• Documents show: HUD last year ordered review of 64 homeless grants (2/26/14)
• Mayor and homeless providers praise grants faulted by HUD (2/26/14)
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During the February 26 news conference, the mayor cautioned reporters that the city may not have to reimburse HUD in cash. She said, “There are a lot of ways to get to that 3.7 [million dollars]. At this point, it is not clear whether it has to be dollar-for-dollar.”

Asked if the city was seeking a special deal with HUD, she answered, “It’s too early to say.” In its still-unreleased report (The Brew obtained excerpts of the report), HUD’s Baltimore field office stipulated that the money had to come from non-federal city funds, meaning from the taxpayer-financed general fund.

This week’s Board of Estimates agenda shows that the federal government hasn’t backed down – and is demanding its money right down to the penny.