Summary: Pursuant to a congressional request, GAO investigated a Lansing, Michigan, Urban Development Action Grant project, focusing on whether changes to the project's scope complied with the Department of Housing and Urban Development's (HUD) regulations and procedures.
GAO found that: (1) HUD approved the $3.3-million grant for financing the purchase and installation of fixed capital equipment in a technology and research center to be constructed in a township near Lansing; (2) after concluding that the industrial revenue bonds being used for financing covered the project's costs, HUD reduced the grant amount to $889,785, the minimum amount needed to protect the bonds' tax-exempt status; (3) the project developer requested permission to expand the project to include office space leasing after failing to lease space to a large research institute which would have attracted similar firms; (4) the developer also estimated that the project would only create 60 new jobs from conventional office leasing, and not the 600 it believed possible with research firms; (5) township officials objected to the grant reduction and sought to terminate the grant; (6) HUD regulations and procedures allowed for such revisions, which HUD believed were not unusual; (7) HUD had not released the grant funds to Lansing, since its officials had not submitted required documentation; and (8) Lansing and HUD officials agreed to establish new deadlines for the developer to purchase the equipment and Lansing officials to submit the required documentation.
