A report by the California state auditor gives the Department of Housing and Community Development (HCD) and the California Housing Finance Agency (CalHFA) generally good marks for overseeing nearly $5 billion in bond funds approved by voters.

Voters approved a $2.1 billion housing bond (Proposition 46) in 2002, and the agencies had awarded nearly all of that money by December 2008, when the audit commenced. Voters approved a $2.85 billion housing bond (Proposition 1C) in 2006, and the agencies have awarded a portion of funds in eight of ten program areas.

Auditors found HCD had not awarded any Proposition 1C money for emergency housing and assistance, or for affordable housing innovations. The department said Proposition 46 provided enough money to fund all applications for emergency housing and assistance through December 2008. The department delayed the housing innovation program so that it could focus on an $850 million regional planning, housing and infill incentive program, and on a $300 million transit-oriented development program (see CP&DR Insight, August 2008). Auditors accepted HCD's explanations and noted that the state budget mess slowed the issuance of general obligation bonds and the disbursement of bond funds.

Auditors found that travel restrictions prevented HCD from conducting on-site monitoring visits for some projects. The auditors recommended HCD visit higher risk projects, an idea that HCD said it has already adopted. The audit also raised questions about regular reporting and ongoing monitoring to ensure grantees use funds as required. And auditors found that CalHFA did not always have proof that recipients of residential loan development grants had recorded covenants restricting the occupancy of funded units to low-income households. CalHFA said it would complete its files and require grantees to provide copies of restrictive covenants in the future.

The full audit is available at http://www.bsa.ca.gov.