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Audit finds Colorado may have erroneously distributed up to $4.4M in pandemic relief funds

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Robert Davis | The Center Square contributor

(The Center Square) – A state audit found that a Colorado state agency may have erroneously distributed up to $4.4 million of funds through a popular rent aid program.

The Property Owner Preservation Program (POP) was administered by the Department of Local Affairs' (DOLA) Division of Housing to provide relief to landlords and tenants, allowing property owners "to apply for overdue rent owed by tenants affected by the pandemic," according to the audit.

The Colorado Office of the State Auditor's report on the POP program found that 10 of 62 transactions reviewed included overpayments of approximately $16,000 each. Some of the problems identified with the payments included duplicate payments, unpaid rent that was due before the pandemic, and payment for fees that were not covered under the program’s guidelines.

In all, the auditor estimated that the overpayments totaled between $650,000 and $4.4 million, adding that approximately $2.39 million was “most likely paid in error.” The $2.39 million total represents about 5% of the POP program’s total funding distributed through March 31.

“The program was important for helping tenants and property owners affected by the pandemic,” Audit Supervisor Heidi Wagner said in a press release. “Because the program was new and implemented quickly, we used this audit to look at the accuracy of payments and ensure they were being used for their intended purpose.”

Colorado allocated more than $92.5 million in emergency relief funds to the Department of Local Affairs' (DOLA) Division of Housing, which was responsible for administering the program, during fiscal year 2021, according to the audit.

Other issues the audit identified include that DOLA did not obtain rental agreements in four of the 60 reviewed files. The Division of Housing also did not send timely tenant notification letters in 17 of the 60 files as required under House Bill 20-1410.

The audit recommended that DOLA implement a sufficiently detailed review procedure for POP payments and develop a process for tracking whether a payment has been sent. It also recommended that DOLA reach out to those who received overpayments and request that they return the funds.

DOLA Deputy Executive Director Dionne Williams defended the program in a statement to The Center Square, saying POP "stabilized the lives of more than 24,000 Colorado households during a crisis."

"Time was of the essence, and this program efficiently distributed funds by paying rent to keep people housed, so landlords could operate their properties and pay their mortgages," Williams said. "We are proud of the POP program and consistently received positive feedback from property owners about the program for its speed, efficiency and reasonable documentation requirements. As a state, we believe strongly that it is important to conduct regular audits to ensure that we are spending taxpayer dollars effectively and efficiently, and we are working to improve programs like POP every day."

Even though the program ended in June, the audit said DOLA should work to correct the errors so they don’t occur in other relief programs the agency is responsible for administering.

“When the Division does not ensure that it pays out the correct amount of rental assistance to applicants, it means that the funds are not being used for their intended purpose and it reduces the amount of funds available for other applicants who are in need of assistance,” the audit concluded.