Comptroller Chris Hollins Says Houston Lost $8.5 Million Due to Filing Mistakes

Houston lost at least $8.5 million in potential reimbursements for a federally funded home repair program after Hurricane Harvey because of missed deadlines and filing errors, according to a new audit by Comptroller Chris Hollins.

Program guidelines require the city to submit reimbursement claims to the Texas General Land Office within 90 days of the expenditure. Auditors from the comptroller’s office reviewed a sample of 57 such claims and found that 24 were submitted late, resulting in a loss of $2.5 million. Of the claims that were submitted on time, 14 contained errors and were rejected or withdrawn, resulting in an additional $6 million in losses, the report said.

As the city faces enormous financial challenges, Hollins and council members stressed the need to prevent such waste in the future.

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“I hate to hear about lost funding, and we’re definitely going to get more money to deal with disasters,” said City Councilmember Sallie Alcorn, chair of the city’s Budget and Fiscal Affairs Committee. “So I’m sure a lot of the recommendations in this report will help us in the future.”

The Department of Housing and Community Development, which administered the program, has since improved its reimbursement process by adding a due date for each expense and creating a standard checklist to catch common errors, according to the department’s response to the audit findings. The department also noted that some late submissions were withdrawn because of ongoing legal disputes with third-party consultants who sent the invoices.

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The latest findings have put Houston’s now-defunct Harvey Homeowner Assistance Program, a program once mired in controversy and political wrangling, back in the spotlight.

Created in 2019, the city’s program initially aimed to use about $400 million in funding from the U.S. Department of Housing and Urban Development to repair, rehabilitate and rebuild Houston homes hit by the 2017 hurricane.

However, following a series of conflicts between the Democratic-led city government and the Republican-led General Land Office, the state office took over the program in early 2021, a transition that left many participating homeowners confused and frustrated. The program ended up providing assistance to 731 local families.

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Filing issues and deadlines are not a new concern for the program. In the months leading up to the restart, General Land Office officials criticized Houston’s efforts as “extremely slow and unproductive,” saying the city was not on track to meet the deadline for distributing aid.

Former Mayor Sylvester Turner said the land office failed to provide clear guidance on what documents were required and frequently changed the process, forcing the city to refile hundreds of applications.

In addition to late and erroneous claims, the auditor’s report also identified security risks in the program’s information management system. Auditors could find no evidence that the housing department had ensured that former employees no longer had access to sensitive program data.

In response, the Housing Ministry said the information system used by the homeowner assistance program will not be used for any other program. Its human resources staff will also send out departure requests and better monitor employee access.

In addition, the auditors found that the department did not have an adequate system in place to ensure a timely response to complaints about the program. The department responded that the relevant procedures were still being developed, although the team now has a process to review such complaints regularly.

The performance audit, a project postponed from 2023, is one of the first major audits released by the new administration. Hollins recently told the Chronicle he also plans to review tax increment reinvestment zones, the permit center and how the city’s grants management works, among other programs.

“We want to conduct forensic audits that will allow us to catch those who are breaking the law within the system and those who are involved in other crimes that are costing us money,” Hollins told the Chronicle.