Atlantic City's Community Development Block Grant program, which is supposed to provide loans to help residents rehabilitate their homes, is leaking money and leaving some people to live amid half-finished home-improvement projects.
The most recent city audit, released last month, found that CDBG money was not being spent according to federal guidelines, which require that 70 percent of the funds - federal Housing and Urban Development grants - benefit low- and moderate-income residents and eliminate blight. Instead, too much money was spent in 2011 on planning and administration.
In an alarming finding, the audit said staffers in the Economic and Community Development Department, which includes the CDBG program, could not account for more than $729,000 in spending during a week in October 2011.
How can anyone spend $729,000 in public money without being able to account for it?
The audit also found that CityWide Rehabilitation loans may have gone to people who did not meet the qualifications.
If this all sounds familiar, it may be because Atlantic City has a history of misusing federal housing funds.
The Voluntary Improvement Program, a precursor to CDBG that also provided loans using HUD grants, was shut down in 1991 amid reports of widespread abuse. The program was restarted in 1992 and shut down again in 1997.
A 2007 audit showed that loans had been issued to politically connected people whose incomes were too high to qualify for them.
Twice, in 2009 and 2011, city officials made emergency trips to Washington to avoid losing CDBG grants.
This troubled history is all the more dismaying because the goal of these block grants - to help lower-income residents fix up their homes - is so important and so necessary in Atlantic City. Under the program, residents can get rehabilitation loans, and, if they stay in their homes for five years and follow other guidelines, the loans don't have to be repaid.
Clearly, a wider investigation of CDBG spending is warranted. In the past, findings similar to those in the city audit have led to indictments.
The audit comes at a time when the city is entering its third year of fiscal monitoring by the state Department of Community Affairs, and when public sniping between Gov. Chris Christie and Atlantic City Mayor Lorenzo Langford has taken on an especially ugly tone.
City officials are fond of blaming Trenton's interference for the city's problems, but CDBG is a program completely managed by the city that seems to be - once again - out of control.
The audit report bolsters the argument of those who say state oversight of Atlantic City finances has not gone far enough.