Auditors reviewing Augusta Housing and Community Development’s handling of federal grants have shifted their focus to how Emergency Rental Assistance dollars were managed, zeroing in on payments involving United Way of the CSRA and HCD’s oversight of contractors.
The ERA funds are at the center of the controversy that led to former HCD Director Hawthorne Welcher’s resignation May 23. He had been on leave since Apr. 2, a day after the Augusta Commission voted to return about $6.5 million in pandemic rental aid that was not spent on rent or utilities, plus penalties.
New correspondence between the city and Cherry Bekaert Advisory, obtained Friday by The Augusta Press, sheds some light on the city’s assessment of events that preceded the refund, though many questions remain.
At an Aug. 20 audit meeting recapped in emails, officials said Augusta had received a combined $12 million in ERA 1 funding, but when the grant period closed on Dec. 31, 2022, $5.4 million remained unspent.
In 2024, while other U.S. Department of Housing and Urban Development reimbursements were delayed, HCD reported it “borrowed” against the $5.4 million to maintain department “operations,” the documents said. When the HUD funds arrived, they were not enough to cover what HCD had spent. Last year, the U.S. Treasury demanded repayment of the unspent ERA balance and added a 30 percent penalty. Treasury recouped part of the debt by taking back $1.4 million from an ERA 2 award, and the city refunded the remainder from other sources, according to the recap.
Auditors are now focused on “subrecipient monitoring” and on reconciling HCD’s records of ERA payments to United Way with United Way’s ledgers, according to the documents. The transactions appear to differ significantly. United Way served as the primary distributor of the rental assistance.
A second audit track is to account for how all ERA 1 funds were actually used.
Follow-up emails from Cherry Bekaert requested a broad set of records from HCD and United Way, including grant award and closeout documents, subrecipient agreements and monitoring reports, a detailed ledger of payments to United Way for 2023-2025, and general ledger data for 2021-2024.
A reconciliation prepared by Cherry Bekaert in an email lists nine city ERA payments ranging from $140,000 to $206,690 that United Way recorded as received but that did not appear in the city’s records.
Auditors also flagged inconsistencies in the ERA 1 checking activity. Registers for 2021 and 2022 show about $59,798.66 in disbursed checks, with a combined $55,075 reversed shortly thereafter. Larger reversals involved payments to a technology firm, a realty office and a home design service.
Correspondence cites additional warning signs. Augusta’s 2021 financial audit by Mauldin and Jenkins noted large “interfund payables” from HCD to the city’s general fund. A 2021 Single Audit found the city charged unallowable costs to ERA 1 and lacked internal controls to ensure federal funds were spent properly.
