Dallas may have to pay back $4 million to feds over housing fund misuse

The City of Dallas may have to pay back $4.2 million to the U.S. Department of Housing and Urban Development after the feds found the city misspent tax dollars.

The federal audit says Dallas was hasty and rushed projects. It claims the city misspent $1.3 million and got millions more in matching money for things that did not qualify for the funds.

Photos in the audit show defective and substandard construction paid for with taxpayer money. The frame of one home extended over the slab by several inches and two other homes had flooding issues due to construction flaws. Despite the contractor's lack of experience, the city awarded it eight reconstruction projects.

“We end up having to pay money back that we really don't have to pay back, and it puts a stain on the City of Dallas when something like this happens,” said Councilman Kevin Felder.

The audit began after the city's own auditor found poor record keeping of how $30 million in HUD money was spent.

When FOX4 asked to see the city's records last year, the city said it would cost $2,200 for copies. So fox4 viewed six boxes of records at city hall and found much of HUD's required documentation, like final inspection reports, were missing.

Councilman Tennell Atkins is now the chair of the housing committee. He was not on the city council during the time period HUD audited.

“I think we're going to clean it up, hire the right people, train the right people and make sure it doesn't happen again,” Atkins said.

The audit also found a city employee tampered with a document during the review, prompting an email to staff that "original documents should never be deleted or altered.”

The city does not dispute that $1.3 million was misspent, but does argue that since thirteen homes were built it should not have to repay the money. The city did agree to pay for repairs to the homes.

City officials also released a statement that states the city has begun to address the problems by developing more rigorous internal controls.

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