City auditors find delays, contract and accounting problems in ARPA neighborhood beautification program

The Office of the Auditor General presented its audit of the American Rescue Plan Act Neighborhood Beautification Initiative to the Budget Finance Audit Standing Committee on March 11, finding that while many projects met their stated objectives, the program suffered from delays, contract-amendment discrepancies and accounting weaknesses that increase the risk of misstatement and late payments.

“In our audit we concluded that the project team achieved its project goals and objectives as stipulated in the project plan,” Auditor General Laura Goodspeed said in the committee meeting, but the presentation quickly pivoted to areas needing improvement. Chief Auditor Kevin Asadi told council members the audit covered July 1, 2021, through Dec. 31, 2026, the federal spending deadline for ARPA funds.

The audit team reported a total neighborhood-beautification appropriation of about $28,500,000 and cited Office of the Chief Financial Officer figures showing cumulative spending of roughly $25,800,000 as of Nov. 30, 2025. The report reviewed 10 initiatives funded under the program, including ACE Arts Alley, Blight to Beauty corridors and trees, a SEED real-estate gap-financing program administered through the Detroit Economic Growth Association (DGA), slow-streets improvements and Warren Avenue streetscape work.

Asadi summarized four primary observations and recommendations:

• Missed performance milestones: The DGA subrecipient missed required compliance milestones for underwriting, project rosters, beneficiary finalization and establishing beneficiary payment processes. The audit showed delays measured in months for multiple milestones and recommended a joint review with DGA to identify systemic causes and solutions.

• Contract-amount discrepancy in Oracle: Auditors found that a $1,512,000 original contract value for Lim Walker Tree and Snow had been reallocated in practice — with $512,000 moved to Detroit Grounds Crew and the Lim Walker purchase order reduced to $1,000,000 — but the city’s Oracle Enterprise Resource Planning system still reflected the original $1,512,000. Auditors recommended updating Oracle to reflect contract amendments and performing periodic reconciliations to prevent overpayments.

• Late invoice payments: The audit sampled Arts Alley project invoices and found 11 of 16 were paid beyond contract terms (net 30 or 45 days), potentially violating contract terms or the city’s prompt-payment requirements. The office recommended training project teams on the ARPA vendor payment portal and expediting invoice approvals.

• Inaccurate cost-center reporting: Auditors flagged outdated cost centers still used to report ACE Arts Alley transactions, producing budget and actuals misalignment. They recommended discontinuing obsolete cost centers, transferring balances to correct accounts and formalizing cost-center policies and quarterly reviews for active ARPA projects.

Committee members asked for the full audit report; Asadi said the document is posted on the Office of the Auditor General website and was attached to the council and committee agendas. When asked whether vacant-lot activation was part of the neighborhood-beautification initiative, auditors said that program is separate and that the audit only addressed the neighborhood-beautification initiative as scoped.

Several members asked about the SEED program’s status and the audit’s note of DGA noncompliance with the SEED subrecipient agreement. Asadi said the audit captured the status at the time of review and that follow-up questions to the Detroit Economic Growth Association and project administrators would be appropriate during budget review or a separate follow-up.

Councilmember Mary Waters pressed for clarity about enforcement and whether noncompliant programs would have funds returned or reallocated; the committee voted unanimously to request that the Office of the Chief Financial Officer and other relevant entities appear before the committee next week to answer those questions.

The audit’s recommendations center on improving contract oversight, updating ERP records to reflect amendments, addressing late payments and tightening financial reporting controls to ensure ARPA funds are spent as authorized and reported transparently. The committee said it would pursue follow-up with OCFO, DGA and other parties to ensure the recommendations are implemented and to clarify consequences for noncompliance.