HUD lead removal grants lack oversight

Topline: Eleven state and local governments that received a collective $45 million from the federal government to remove lead from houses were never flagged as “high risk” grantees that need additional oversight, even though a Jan. 27 audit found they have been underperforming for years.

Key facts: The Department of Housing and Urban Development awarded $353 million in grants to 101 state and local governments from 2020 to 2022 through its Office of Lead Hazard Control and Healthy Homes, which pays to remove lead-based paint from low-income households with young children.

Every fiscal quarter, HUD evaluates the grant recipients’ progress in removing lead and awards a score out of 100. A score below 70 is considered “poor performance.” If a local government scores below 70 for two quarters in a row, HUD marks them as “high risk,” which allows for increased oversight and check-ins twice per month.

Federal auditors reviewed 17 of the grant recipients and found that HUD properly marked six of them as high risk. But the other 11 were never flagged, even though records show they likely should have been, according to the audit.

All 11 government agencies had scores below 70 for at least four consecutive quarters. One even had a score below 10 for six consecutive quarters — including two quarters with a score of 1 — but was still not marked as high risk.

HUD explained that penalties for poor performance were loosened because states were struggling during the Covid-19 pandemic, but the repercussions of that decision are still being felt.

Two of the local governments failed to meet their goals. They were supposed to remove lead from 375 homes by July 2025 but only visited 243 homes. They were not paid for the work they did not perform — worth $3.8 million — but the money is still set aside in a funding account and unavailable for other grants, according to the audit.

The other nine governments have deadlines in 2026, but they are seemingly not on track to meet their goals. For example, one city received $5 million in 2021 for work that must be completed by Sept. 1 of this year. It had only spent $1.6 million as of August 2025.

One local government was essentially rewarded for its mistakes. It received $8 million in 2022 but earned a score below 70 for seven fiscal quarters in a row. In 2024, the government gave it another $7 million.

In July 2025, HUD announced another $365 million of funding for the lead safety program.

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com. 

Summary: HUD should be applauded for monitoring the performance of its grant recipients, but it will not accomplish much if it does not claw back money from those not using it effectively.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com