Baltimore's Office of Human Services mismanaged a $9.5 million federal grant for helping the homeless by failing to oversee programs and awarding cash for services that may not have been eligible, auditors announced Thursday.

The U.S. Department of Housing and Urban Development audit found that city officials did not understand their responsibilities and did not develop a plan before rapidly awarding money from the American Recovery and Reinvestment Act, President Barack Obama's signature 2009 stimulus plan.

The audit calls on the city to demonstrate that the grant money was used properly or reimburse the federal government.

The city disputes the findings. Kate Briddell, director of Baltimore's homeless services, said the city did not do enough to monitor the spending by individual programs because it lacked resources to conduct more oversight. Moreover, Briddell said, the grant was difficult to administer.

The federal housing department "consistently stated, 'We are building this plane as we are flying it,' " Briddell wrote in letter disputing the audit findings. "Guidance was negligible, at best. While some of the paperwork was not completed or kept in a standard we would like … no waste, fraud or abuse was conducted," Briddell wrote.

The audit found that the city monitored only five of 15 programs contracted to provide the services, and in three of those cases it did so only when federal authorities flagged possible problems.

Nationally, the stimulus plan provided $1.5 billion for homeless prevention and intervention efforts, including temporary rental assistance, money for security and utility deposits, housing relocation and credit counseling.

Olivia D. Farrow, director of the mayor's Office of Human Services, said the city will work closely with federal officials to prove the money was spent appropriately, including working with the service providers to produce records.

"The dollars supported efforts to prevent and end homelessness for nearly 10,000 vulnerable people," Farrow said.

The city wrote an agreement with the United Way of Central Maryland to manage about 93 percent of the money, or $8.8 million. The local United Way would then administer contracts with service providers selected by the city.

The auditors say the city paid United Way a prorated amount rather than reimbursing the money based on actual expenses, as the grant required.

Mark Furst, president of the United Way of Central Maryland, said the nonprofit was in full compliance with its agreement with the city.

One of the service providers, the Prisoners Aid Association of Maryland, could not produce files to show how $270,550 was spent, the audit found. United Way terminated its contract with the defunct organization in July 2011.

Frank Marchant, former director of Prisoners Aid, said he couldn't provide proof of the spending because his files were stolen. He said no money was misspent and that it was he who alerted the federal government to double billing that he blamed on a former employee.

"When I saw what was going on … I reported it to everyone involved," he said.

Another service provider, the Public Justice Center, used stimulus cash to pay its legal staff salaries and didn't produce time sheets to show their time was spent specifically on tasks allowed under the terms of the grant, according to the audit. It also found that the center did not independently verify whether the individuals they served were poor enough to qualify for help.

In all, the Public Justice Center received $336,000.

John Nethercut, the nonprofit's director, said the center's staff helped more than 800 tenants and their families from being evicted, including cases in which their landlords' property went into foreclosure. He said that the center followed all the procedures requested by the city.

Nethercut noted that the audit does not question the quality of the services provided.

"The many tenants we serve will attest to the value of having legal advice at a time of personal crisis in their lives," Nethercut said.

ywenger@baltsun.com

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