HUD hit fuels city outrage

Audit puts new funding at risk

By Michele Morgan Bolton
Globe Correspondent / October 25, 2009

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Brockton officials are trying to repair the damage from a scathing federal audit that criticized Building a Better Brockton Inc.’s management of millions of dollars in federal grants, revealed possible conflicts of interest among board members, and prompted the resignation of its chief executive officer.

The audit findings have fueled outrage in the Brockton City Council and concerns that the controversy surrounding the nonprofit BBB might have jeopardized its chances of receiving a $21 million federal neighborhood revitalization grant.

The US Department of Housing and Urban Development found fault with the nonprofit’s procurement and staffing policies, as well as its financial reporting of Community Development Block Grants and Neighborhood Stabilization funds. HUD said it had concerns about BBB’s ability to administer the next round of grant money, and sent Brockton a list of recommendations for righting the embattled agency.

Last week, after Building a Better Brockton’s CEO Don Walsh resigned in the audit’s fallout, the city’s chief financial officer, John Condon, defended the agency before city councilors, meeting as Brockton’s Finance Committee. “There is a political division we need to resolve and show HUD that the city is of one mind,’’ he said in a lengthy presentation at City Hall Monday. “We are in a transition time.’’

HUD recommended that Building a Better Brockton hire a compliance expert, but since no one knows who will be mayor after Nov. 3, Condon suggested holding off on a hire until after the election. In the interim, he suggested using Eric Kinsherf, a certified public accountant who is a former town manager in Braintree.

Other HUD recommendations have already been put in place, Condon said. They include: hiring a special program manager; splitting the nonprofit from its sister organization, the 21st Century Corp.; developing and improving the allocation of costs; securing board approvals of allocations; tracking expenses; and assembling a list of payouts to ensure nothing is overlooked.

Many city councilors were outraged to learn that BBB’s Walsh had neither informed them of the federal audit nor its results. Walsh, who resigned Oct. 13, could not be reached for comment.

The flap has fueled a war of words between Mayor James E. Harrington, who created the nonprofit last year to replace the city’s Redevelopment Authority and Planning Department, and mayoral challenger Linda Balzotti, a city councilor at large who opposed the move.

Condon said the audit was initiated nationally, not just in Brockton, because HUD wanted to know that institutions receiving federal stimulus money have a structure in place to receive and distribute it.

“We’ve had public embarrassment, but the findings reinforce work our own auditors did,’’ he said. “We have to get the problems addressed, or there will be more problems.’’

No money is missing, Condon said. And HUD’s recommended checks and balances are things Building a Better Brockton’s own internal audit already identified and began correcting, including the need for more experienced staff. “They weren’t bad people. Just untrained,’’ Condon said.

While councilors said they appreciated Condon’s report, they were miffed why Walsh did not tell them about the audit or its results.

“It’s a shame we got to this spot,’’ Balzotti said. “If one individual had been more forthcoming, we might not have been at this point.’’

Condon argued that Walsh was working on a report of the audit’s findings but held off on discussing it with city leaders until he received advice from the city solicitor.

Councilor at large Robert Sullivan said: “Mr. Walsh made a gross error in judgment and paid dearly for it. Now we need to take a best practices approach and move forward.’’

Brockton reviews all expenditure requests and then passes funds to the agency, said Condon. “BBB has no authority to access the city’s entitlement for these funds,’’ he said. “It’s under our control how they spend that money.’’

Harrington said under the old system, federal funding went directly to the Brockton Redevelopment Authority, which spent it as it saw fit. “When I set this up, I insisted that the city get the money,’’ he said. “The City Council is screaming and hollering about accountability. And there is accountability.’’

Building a Better Brockton was initially created because HUD had threatened to freeze funding unless a stronger framework was created, Harrington said. It was also a cost-cutting move in tough economic times.

The nonprofit was originally focused on handling about $1.5 million in federal grant money, Condon and Harrington have said, but problems mounted when the city received more money than expected and the balance rose to more than $7 million.

Along with recommending that firmer financial controls be implemented, HUD said the nonprofit’s board of directors and others who serve the 21st Century Corp. must recuse themselves from conflict or resign.

Ward 6 Councilwoman Michelle DuBois said she was irked with the nonprofit because, her queries in May about potential conflicts of interest between board members and those receiving grant funds were ignored.

Condon said there is only a small pool of senior-executive-level talent in the Brockton area and many already overlap on boards and committees. However, he said, “All board members are filling out new disclosure forms, and we’re trying to catch up on that.’’

Michele Morgan Bolton can be reached at