A housing program in Chicago spent millions of taxpayer dollars on projects that should have been covered by income from the rent it was collecting, a watchdog report found.

Local officials instead deposited income into a Chicago city government account, failing to report millions to the Department of Housing and Urban Development.

The federal government's HOME Investment Partnerships program allows states and municipal governments to spend federal block grant funds on housing projects for low-income families and individuals as long as they match a quarter for every dollar HUD awards.

"HOME is the largest federal block grant to state and local governments designed exclusively to create affordable housing for low-income households," according to HUD.

Through a series of 60 withdrawals, Chicago officials "inappropriately" spent $25.2 million in funds from the program account, according to the HUD inspector general.

Among the costs of their action was $30,000 in interest costs on the misused funds.

IG auditors also found the city lacked a system for ensuring the residents of its projects were income-eligible, living in units that actually qualified them for assistance and not paying "excessive rents."

Go here to read the full HUD IG report.