A housing cooperative that was once the national model for affordable homes may have to repay nearly $23 million to the Department of Housing and Urban Development, thanks to faulty bookkeeping, a government watchdog reported Friday.
The Chicago-based Carmen-Marine Cooperative bought and renovated a dilapidated apartment building with a $23 million HUD award and sold shares to tenants for membership, but the group was missing documents that showed it complied with the grant’s requirements, according to a HUD inspector general report.
“The cooperative is at risk of having to reimburse HUD nearly $22.7 million in program funds as allowed by the grant agreement,” the report said. “These weaknesses occurred because the cooperative and management agent lacked adequate procedures and controls to ensure that the project was operated in accordance with HUD’s requirements and the grant agreement.”
The apartment building overlooking Lake Michigan “was hailed as a model for affordable housing,” the Chicago Tribune reported in 2006.
The co-op was supposed to pay HUD 50% of any of the initial membership sales.
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