Montebello can’t figure out where the $355,000 in federal housing money went; it won’t be the first time
Montebello officials are scrambling to find a record of how $355,000 in federal block grant income for affordable housing was spent—a gap that means the city once again runs out of future federal housing dollars. It is possible
Officials said the US Department of Housing and Urban Development’s Home Investment Partnership (HOME) program raised a total of $355,204 in funding, but there is no record of what happened to the money.
The HOME program is a large federal block grant designed to help state and local governments build affordable housing for low-income families.
“HUD has identified the money that was taken out but we can’t find it,” Joseph Palombi, director of planning and community development, said, referring to the US Department of Housing and Urban Development.
“There’s no record of it,” Palombi said. “We’re trying to be transparent about it.”
Palombi said officials from his department and the city’s finance department have been trying to figure out how the money was used for the past two years.
“But we can’t find it,” said finance director Michael Solorza. “We suspect that some accurate records have not been kept.”
Mayor Kimberly Cobos-Cavthorne said the good news is that none of the current staff had been working for Montebello since 2008–14 and therefore cannot be blamed for the problem.
City manager René Bobadilla was hired in June 2019 and other employees came later.
Still, if records of how the money was used were not found, Montebello would have to report to HUD and may have to pay it back by penalizing in future money, Palombi said.
In 2016, Montebello agreed to receive approximately $600,000 in federal housing money over the next three years to address several violations of federal regulations prior to 2008.
Issues included paying administrative costs with program money and not having the correct documentation for programs such as code enforcement and home repairs.
Another complaint involved federal housing dollars meant for low-income residents that went to a landlord who owned four properties in Hawaii.
The city’s problems first surfaced in 2011 when HUD sent a letter to the city detailing 31 breaches that auditors discovered during an April 2011 review of Montebello records.
Among the breaches: The city lied to HUD about giving federal dollars to Rehab Escrow Corp, whose owner was later convicted of embezzlement of federal housing funds, according to the letter.
Even after HUD notified the city of its investigation into the escrow company, city officials continued to give federal dollars to its owner, Belinda Exxon, according to the letter.
Exxon was later sentenced to 37 months after being found guilty of embezzling $3.9 million from cities in the Southland, including $125,000 from Montebello.
As of 2014, the city had resolved 14 of the 31 breaches, including getting back $1.3 million from Walnut-based developer Danny Koo, who was supposed to spend money for an affordable housing project. The money was returned after Montebello sued Ku.
