Local News in Brief : Compton Blamed for Grant, Loan Losses

A recently released federal audit blames Compton for the loss of at least $5 million in federal grants and city loans poured into a nonprofit corporation that was to generate low-cost housing and jobs.

Compton got nothing for the money because it did not monitor spending by Hub City Urban Developers Inc. and did not require the firm to use adequate financial controls and systems, the audit said. In some cases Hub City, which was formed in 1976 by a group of city leaders, does not have any financial records to show how money was spent, the audit said.

A joint investigation into Hub City spending is being conducted by the FBI and the U.S. Department of Housing and Urban Development, said Richard L. Fix, director of the investigative unit of HUD’s office of inspector general. HUD wants the city to take over the firm’s assets in order to recoup a $2-million Urban Development Action Grant the firm received in 1978.

Members of Hub City’s board of directors said that the audit is incorrect and that they did not know about the investigation. A private developer is building homes on the former Hub City site, and about $600,000 of the sales profits will go toward repaying the grant.