There’s a cease-fire between the City of El Paso and the El Pasoans Fighting Hunger Food Bank after last week’s dueling allegations that the food bank failed to keep proper documentation for spent coronavirus relief funds.
Late Monday, the two groups issued a joint press release, saying both sides will continue discussions over the funding, and that neither would comment publicly during the process.
That’s an about-face from last week’s battling press conferences, when the city said the food bank’s noncompliance put the city’s federal standing at risk that could lead the federal government forcing the city to return the $3.7 million line of credit. City officials also warned El Paso could possibly lose out on future federal funding. The food bank maintains that it documented all of its transactions with information for the estimated 2 million distributions kept on paper records.
Details of the ongoing negotiations are scarce, but additional documents have shed light on issues raised by both sides.
According to documents obtained by El Paso Matters, the food bank followed the city’s contract, but federal agencies maintain the documentation is insufficient for the federal standard — leaving the city on the hook.
In March 2020, the federal government passed the Coronavirus Aid, Relief, and Economic Security, or CARES, Act, that provided money directly from the U.S. Department of the Treasury to local governments. The City of El Paso received nearly $119 million, which it used to maintain testing sites and provide payroll relief to small businesses, among other community recovery programs.
The city overspent that funding by $1.1 million, according to an internal audit published in June. As part of the audit procedure, the Internal Audit Office reviewed documentation for three of the 96 recipients of relief funds from the city. One of those was El Pasoans Fighting Hunger; the other recipients were unnamed.
The auditors found the food bank failed to submit required reports and client data for three separate relief grants totaling $3.7 million. Without that documentation, the auditors could not verify that the food bank held up its end of the contract to provide a certain amount of food to a certain number of people.
City officials told the auditors the Department of Community and Human Development monitored the food bank, and flagged the lack of “back-up documentation.”
The Department of Community and Human Development told auditors staff would subsequently perform a proxy review and inspect all of the food bank’s expenses from August 2020. That proxy review was sent to the U.S. Department of Housing and Urban Development at the end of September, according to the audit.
Earlier this month, the Fort Worth HUD office notified El Paso officials that the city’s proxy review of the food bank’s activities violated federal procedure. HUD found that the city’s analysis did not ensure that low-and moderate-income level clientele were 51% of the food bank’s operations, saying the city’s proxy analysis had insufficient documentation.
“The City’s continued failure to demonstrate compliance with a national objective for its foodbank activities may result in the HUD requiring the City to reimburse its line of credit,” wrote Shirley Henley, HUD’s regional community planning and development director.
The City Council voted unanimously Oct. 20 to declare the food bank in default of its agreements with the city, and start a “settlement agreement” negotiation with the nonprofit.
A separate, city-administered federal grant to build a community kitchen for $1.5 million has been placed “on hold” until the negotiations end.
What’s the fight about?
The unprecedented speed of CARES Act fund distribution, paired with lagging federal guidance on how to spend it, caused confusion across the United States, said Bill Schute, who leads the Washington Center for the LBJ School of Public Affairs at the University of Texas at Austin.
Federal agencies passed CARES Act funds to primary contractors, such as cities, who then subcontracted those out to services. Cities were responsible for ensuring the other entities, like nonprofits, are compliant with federal standards, Schute said.
“The compliance on spending CARES Act funding was significantly delayed. The guidance coming out of the Treasury, and the Office of Management and Budget was six to eight months later, and then revised several times,” Schute said.
At the crux of the fight are bankers boxes full of documents. Contracts between the city and the food bank show copies of the same application form — which list names, addresses, race, family size and income — used to meet federal requirements.
El Pasoans Fighting Hunger CEO Susan Goodell said at the Oct. 21 press conference that the food bank “followed the contract to the letter,” showing requirements for keeping documents in “a safe and secure place.”
However, in the program scopes of the three grant projects with the city, the food bank agreed to distribute a minimum number of boxes to a minimum “unduplicated eligible clients.”
Unduplicated clients simply means not tracking the same person for multiple benefits, which Schute said was a requirement for a lot of HUD contracts.
“The federal government wanted the money to be spread as broadly as possible to reach as many people as possible,” Schute said. “That’s where record keeping would be really important.”
For both the City of El Paso and the food bank, the paper records pose a major problem because of the time required to digitize or hand-review thousands of pages.
“Uncollated data in banker boxes does not qualify as compliance for the federal government,” Nicole Ferrini, the city’s chief resilience officer, said in an emailed statement following the food bank’s press conference last week.
The contract between the city and the food bank is important for laying out compliance and expectations, Schute said.
“If the city didn’t require electronic filing, either at the inception of the subcontract, or in certain agreed-upon amendments added later, then who’s to say the food bank is right or wrong?” Schute said.
Cover photo: El Pasoans Fighting Hunger Food Bank’s headquarters on Plaza Circle. (Danielle Prokop/El Paso Matters)
Disclaimer: El Paso Matters CEO Robert Moore is a board member for El Pasoans Fighting Hunger Food Bank. Moore was not involved in the reporting or editing of this story.