U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Cleaning Up Communities
Downriver Community
Conference Achieved Results
and Expended Funds Under
Brownfields Agreement,
but Unallowable Costs
Were Claimed
Report No. 17-P-0204	May 3, 2017
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Report Contributors:	Jean Bloom
Philip Cleveland
Abbreviations
CERCLA	Comprehensive Environmental Response, Compensation, and Liability Act
CFR	Code of Federal Regulations
DCC	Downriver Community Conference
EPA	U.S. Environmental Protection Agency
OIG	Office of Inspector General
U.S.C.	United States Code
Cover photos: At left is a vacant Brownfields site in Trenton, Michigan, as of July 2009;
at right, as of November 2016, is the Visitor Center at the International
Wildlife Refuge, built on the site. (Photos courtesy of DCC)
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
17-P-0204
May 3, 2017
Why We Did This Audit
The Brownfields Revitalization
and Environmental Restoration
Act of 2001 authorized the
awarding of grants to eligible
entities for the capitalization of
revolving loan funds to assist
communities in the remediation
of Brownfields sites.
As part of our review of
Brownfields grants, we selected
Cooperative Agreement
BF00E93501 awarded by
EPA Region 5 to the Downriver
Community Conference (DCC)
for audit. DCC is a non-profit
organization that is a
partnership of 20 communities
in Wayne County, Michigan.
The objectives of our audit
were to determine whether
DCC was achieving the
environmental results under the
agreement, and expending
funds in accordance with
federal regulations.
This report addresses the
following EPA goal or
cross-agency strategy:
• Cleaning up communities
and advancing sustainable
development.
Downriver Community Conference Achieved
Results and Expended Funds Under Brownfields
Agreement, but Unallowable Costs Were Claimed
What We Found
DCC is achieving the environmental results
intended under its Brownfields agreement, but it
did not always expend funds in accordance with
federal regulations. DCC successfully remediated
the three sites selected for review.
By claiming unallowable
costs totaling $26,901,
DCC reduced the amount
of funds available for
Brownfields restorations.
However, of the $200,000 in costs claimed by DCC between January 11, 2016,
and July 27, 2016, we identified $25,523 in indirect costs that, while allowed by
DCC's accounting procedures, were not allowable under law and the terms and
conditions of the agreement. Further, after we brought this matter to DCC's
attention, it stopped billing the indirect costs, and began charging a portion of its
indirect salaries, totaling $1,378, as direct costs. We believe these costs are
indirect expenses and should not be directly charged to the grant.
Recommendations and Recipient's Response
We recommend that the Regional Administrator, EPA Region 5, determine the
allowability of the $25,523 in claimed indirect costs and $1,378 in claimed direct
costs charged by DCC for Cooperative Agreement No. BF00E93501, and
recover funds as appropriate. DCC agreed with the findings and
recommendations.
Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.gov/oia.
Listing of OIG reports.

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
May 3, 2017
MEMORANDUM
SUBJECT: Downriver Community Conference Achieved Results and Expended Funds
Under Brownfields Agreement, but Unallowable Costs Were Claimed
Report No 17-P-0204
FROM:
Arthur A. Elkins Jr.
TO:
Robert Kaplan, Acting Regional Administrator
Region 5
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). The project number for this audit was OA-FY15-0093.
This report contains findings that describe the problems the OIG has identified and corrective actions the
OIG recommends. This report represents the opinion of the OIG and does not necessarily represent the
final EPA position. Final determination on matters in this report will be made by EPA managers in
accordance with established audit resolution procedures.
Action Required
In accordance with EPA Manual 2750, you are required to provide a written response to this report
within 60 calendar days. You should include planned corrective actions and completion dates for all
unresolved recommendations. Your response will be posted on the OIG's public website, along with our
memorandum commenting on your response. Your response should be provided as an Adobe PDF file
that complies with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as
amended. The final response should not contain data that you do not want to be released to the public;
if your response contains such data, you should identify the data for redaction or removal along with
corresponding justification.
We will post this report to our website at www.epa.gov/oig.
cc: Barry Breen, Acting Assistant Administrator, Office of Land and Emergency Management

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Downriver Community Conference Achieved Results
and Expended Funds Under Brownfields Agreement,
but Unallowable Costs Were Claimed
17-P-0204
Table of C
Purpose		1
Background		1
Responsible Office		1
Scope and Methodology		2
Prior Audit Report		2
Results of Audit		3
Environmental Results		3
Cost Allocations		4
Recommendations		6
Recipient Comments and OIG Evaluation		6
Status of Recommendations and Potential Monetary Benefits		7
Appendices
A DCC Response to Draft Report	 8
B Distribution	 9

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Purpose
The objectives of this audit were to determine whether the Downriver Community
Conference (DCC) was:
•	Achieving the environmental results per Cooperative Agreement No.
BF00E93501.
•	Expending funds in accordance with federal regulations.
Background
The Brownfields Revitalization and Environmental Restoration Act of 2001 (Title
II of Public Law 107-118) authorized the awarding of grants to eligible entities to
establish revolving funds for the remediation of Brownfields sites.1 The act
defines a Brownfields site as "real property, the expansion, redevelopment, or
reuse of which may be complicated by the presence or potential presence of a
hazardous substance, pollutant, or contaminant" (42 U.S.C. § 9601(39)(A)).
DCC is a non-profit organization that is a partnership of 20 member communities
working together to identify and act on issues of mutual concern, to improve the
lives of its residents and environment in which they live. DCC operates programs
in Wayne County, Michigan, and is governed by a Board of Directors, consisting
of mayors and supervisors of member communities. An Executive Director heads
DCC's staff.
On September 30, 2009, Region 5 of the U.S. Environmental Protection Agency
(EPA) awarded $2,150,000 under DCC Agreement No. BF00E93501 to operate a
Brownfields Revolving Loan Fund program to provide eligible entities, via loans
and/or subgrants, funds to conduct cleanup activities at eligible Brownfields sites
contaminated with hazardous substances and petroleum compounds.
As of November 29, 2016, six modifications increased the total award amount
under the agreement to $6,400,000. The last modification, issued August 7, 2015,
was a no-cost modification that allowed DCC to use EPA funds prior to using
program income without a waiver.
Responsible Office
EPA Region 5's Grants Management Office and the Superfund Division,
Community and Land Revitalization Branch, are responsible for awarding the grant
and oversight of the agreement with DCC.
1 The act amended sections of the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (CERCLA).
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Scope and Methodology
We conducted this audit from February 2016 to March 2017 in accordance with
generally accepted government auditing standards issued by the Comptroller
General of the United States. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a reasonable basis
for our findings and conclusions based on the audit objectives. We believe the
evidence obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
To achieve our objectives, we performed the following steps:
•	Visited DCC's office and interviewed staff to gain an understanding of
their accounting system, internal controls and project management.
•	Held meetings with recipient officials to gain a better understanding of the
systems and policies of the Brownfields program as administered.
•	Selected drawdowns and reviewed supporting documentation to ensure the
claimed costs were properly supported and complied with applicable
federal laws and regulations, and terms and conditions of the agreement.
•	Obtained a listing of the Brownfields projects completed under the
agreement, and selected three sites using different funding mechanisms to
determine whether the work specified in the agreement was accomplished.
•	Held meetings with EPA Region 5 officials to obtain an understanding of
how they ensured the desired environmental results were achieved.
•	Reviewed quarterly and final reports submitted by DCC to the EPA
Region 5 Project Officer.
•	Confirmed whether the selected sites achieved the desired environmental
results by reading quarterly and final reports, interviewing the EPA
Project Officer, and reviewing newspaper articles related to the sites.
•	Reviewed single audit information from fiscal years 2011 through 2015
for unresolved audit findings.
Prior Audit Report
The single audit report on DCC for fiscal year 2015, dated March 28, 2016,
included a finding to improve monitoring of funds for subrecipients receiving
pass-through funds related to the EPA Brownfields program. DCC agreed with
the finding and to put processes in place to monitor subrecipients. While
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subrecipient monitoring falls outside the scope of our audit, we found that DCC
implemented processes for subrecipient monitoring.
Results of Audit
Although DCC is achieving the environmental results intended under Cooperative
Agreement No. BF00E93501, it did not always expend funds in accordance with
federal regulations. Based on our review, we found that DCC successfully
remediated the three sites reviewed in accordance with its agreement. However,
of the $200,000 in costs that DCC claimed between January 11, 2016, and
July 27, 2016, we identified $25,523 in costs that, although allowed by DCC's
accounting policies and procedures, were not allowable under the terms and
conditions of the agreement and Section 104(k)(4)(B) of CERCLA (42 U.S.C. §
9604(k)(4)(B)).
Environmental Results
The agreement provided DCC with funding to operate a Brownfields Revolving
Loan Fund program to provide eligible entities with funds to remediate
Brownfields sites to productive use while protecting human health and the
environment. Under the agreement, DCC awarded to others a total of $6,227,341
through subgrants and loans for the cleanup of 14 sites. As of March 2017, 11 of
these sites have completed remediation, and the remaining three are in progress, as
shown in Table 1:
Table 1: Projects funded under Cooperative Agreement No. BF00E93501

Project name
Sub-grant
amount
Loan
amount
Projects completed
1
Beverly and I-94
$260,000

2
Former Quality Inn
200,000

3
VenTower

$2,208,535
4
Trenton
1,175,889

5
Port of Monroe Battlefield
$375,000

6
Dearborn City Hall

179,000
7
Willow Run Hanger 2

600,000
8
Melvindale Park
150,000

9
American Sunroof
100,000

10
Water Street Development
174,760

11
Consolidated Lumber
186,418

Projects in progress
12
3896 Oakwood Blvd.
16,000

13
Federal Screw Works

301,739
14
Monroe Pump House

300,000

Totals
$2t638,067
$3,589,274
Source: Office of Inspector General (OIG) analysis of DCC data.
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Based on our review of three sites—Former Quality Inn, VenTower and Trenton—
DCC achieved the intended results of the agreement, as all three sites were
remediated. The status of the sites follows:
•	Former Quality Inn: The city of Dearborn, Michigan, was awarded funds to
remove asbestos from a former Quality Inn site. The city demolished the
buildings and prepared the site for a mixed-use redevelopment.
•	VenTower: The site, located in Monroe, Michigan, was previously a landfill
that had various soil contaminant concerns. The soil was removed, and a
100,000-square-foot wind turbine tower manufacturing facility was
constructed on the site.
•	Trenton: The site, located in Trenton, Michigan, was previously an automotive
brake and paint plant that had vapor intrusion issues related to chemicals in the
soil. DCC's funds were used for a portion of the cleanup activities (45 of
450 acres); the overall project was a joint effort with the U.S. Department of the
Interior, which was responsible for the remainder of the site. The cleanup
activities related to shoreline restoration, and resulted in the achievement of
final grade for 4 acres of the Wayne County International Wildlife Refuge
gateway
Cost Allocations
DCC claimed costs of $200,000 between January 11, 2016, and July 27, 2016,
under its Brownfields agreement. Of this amount, we identified $25,523 claimed
as cost allocations allowed under DCC's accounting policies and procedures, but
not under the terms and conditions of the agreement and Section 104(k)(4)(B) of
CERCLA (42 U.S.C. § 9604(k)(4)(B)).
DCC developed a Cost Allocation Plan in December 2015 based on DCC's
interpretation that the Office of Management and Budget's Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (2 CFR § 200) allowed DCC to claim certain costs previously not
claimed.
The Cost Allocation Plan defines an allocable cost as "those costs that are
incurred for a common benefit of more than one program. These costs are not
readily identifiable as benefiting one single program." The costs are pooled
together and allocated out based on goods and/or services received. Examples of
costs that are allocated through cost pooling include "salaries, fringes, supplies,
rent, maintenance, travel, copier expense, liability insurance, audits and
telephones, etc."
The Cost Allocation Plan identifies five cost pools, of which two—Central Cost
and Economic Development—are used by the Brownfield's program:
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•	The Central Cost pool is used to allocate expenses when all funding
sources benefit from the expense and/or are used by the Central, Fiscal
and/or Computer Operations Departments. These costs are allocated based
on a percentage of agency direct program/fund hours.
•	The Economic Development cost pool is used to allocate expenses when
the economic development grants, which include the Brownfields
revolving program, benefit from the expenses of the Economic
Development Department. The costs are allocated based on the number of
hours charged directly by Economic Development employees. According
to DCC officials, prior to the new allocating, the Economic Development
direct costs were absorbed by the Economic Development Department and
not billed to the EPA.
We found that DCC claimed on its drawdown requests indirect costs totaling
$9,559 under the of Central Cost Allocation, and $15,964 under the Economic
Development Allocation, for a total of $25,523. Table 2 summarizes the claimed
indirect cost allocations:
Table 2: Claimed indirect cost allocations


Central
Economic
Total indirect
Draw
Draw
Cost
Development
cost allocation
date
amount
Allocation
Allocation
costs
1/11/16
$18,500
$1,771
$6,742
$8,513
1/13/16
4,000
0
0
0
1/27/16
17,500
0
0
0
2/2/16
56,000
856
5,626
6,482
2/8/16
9,500
0
0
0
2/26/16
12,500
0
0
0
3/2/16
1,500
449
878
1,327
3/21/16
12,000
0
0
0
5/18/16
30,500
4,627
1,084
5,711
6/3/16
4,000
844
674
1,518
7/1/16
9,000
0
0
0
7/27/16
25,000
1,012
960
1,972
Totals
$200,000
$9,559
$15,964
$25,523
Source: OIG analysis of DCC data.
Section III, Part (C)(2), of DCC's original agreement specifically states that in
accordance with CERCLA regulations, all indirect and administrative costs are
prohibited costs. The agreement also identified types of administrative costs that
would be ineligible under the agreement, including costs incurred in the form of
salaries, benefits, contractual costs, supplies and data processing charges.
We discussed DCC's Central Cost and Economic Development indirect costs
claimed and the use of the Cost Allocation Plan with EPA Region 5 officials, and
were informed that the Cost Allocation Plan is used in lieu of indirect cost rates
and do not apply to this agreement. Thus, we concluded that, while these costs
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may be allowable in accordance with the recipient's accounting policies and
procedures (i.e., the Cost Allocation Plan), they are expressly unallowable under
DCC's Brownfields agreement. The claiming of indirect costs could reduce the
amount of funds directly available for Brownfields restoration.
After notification of our concerns, DCC in August 2016 discontinued claiming
these costs. However, beginning on DCC's draw on September 28, 2016, and
continuing through its draw on December 7, 2016, DCC began charging a portion
of salaries related to the Controller and Fiscal Coordinator as direct charges to the
agreement, totaling $1,378. We inquired about the nature of these charges, and
DCC officials informed us that they were for tasks related to the Brownfields
program (processing accounts receivable and payables, and preparing drawdown
requests). DCC informed our office that these direct charges replaced the Central
Cost and Economic Development Allocations previously charged to the
agreement, and represented a return to the way costs were charged prior to these
allocations. Thus, DCC began claiming its indirect costs as direct costs, inferring
that these costs were direct costs prior to being billed as cost allocations.
We disagree with the actions taken by DCC. The nature of the costs in question
are indirect and related to administrative costs, which are prohibited under the
Cooperative Agreement No. BF00E93501, Section III, Part (C)(2). Furthermore,
DCC did not, as previously stated, claim these costs as direct charges prior to
establishing the Cost Allocation Plan. Accordingly, we believe these direct costs
are unallowable.
Recommendations
We recommend that the Regional Administrator, EPA Region 5
1.	Determine the allowability of the $25,523 in indirect costs claimed by
Downriver Community Conference for Cooperative Agreement No.
BF00E93501 and recover costs as appropriate.
2.	Determine the allowability of the $1,378 in direct costs charged to
Cooperative Agreement No. BF00E93501 by Downriver Community
Conference and recover costs as appropriate.
Recipient Comments and OIG Evaluation
We issued a draft report on March 31, 2017. DCC provided a written response to
the draft report and agreed with the findings and recommendations. Appendix A
provides DCC's response. As no planned completion dates have been provided,
the recommendations are considered unresolved with resolution efforts in
progress.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
Potential
Monetary
Benefits
(in $000s)
1
6
Determinethe allowability ofthe $25,523 in indirect costs
claimed by Downriver Community Conference for Cooperative
Agreement No. BF00E93501 and recover costs as appropriate.
U
Regional Administrator,
EPA Region 5

$25
2
6
Determinethe allowability ofthe $1,378 in direct costs charged
to Cooperative Agreement No. BF00E93501 by Downriver
Community Conference and recover costs as appropriate.
U
Regional Administrator,
EPA Region 5

$1
C = Corrective action completed.
R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.
17-P-0204
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Appendix A
DCC Response to Draft Report
]H> 	1ST Ft X	E Ft
Cqmmunitv Oonferenoe
15100 Northline Road, Southgate, Michigan 48195
(734) 362-3469
April 11, 2017
John M. Trefry
Director, Forensic Audits
U.S. Environmental Protection Agency
Office of Inspector General
Washington, D.C. 20460
Dear Mr. Trefry:
The Downriver Community Conference (DCC) is in receipt of the Draft Report:
Downriver Community Conference Achieved Results Under Brownfields Agreement, but
Unallowable Costs Were Claimed; Project No. OA-FY15-0093.
Given the complexity of the issues highlighted in your recommendations, we concur with
the recommendations that the Regional Administrator, EPA Region 5 determine the
allowability of the costs in question. DCC is very willing to work with the Regional
Administrator to accomplish this.
Sincerely,
James S. Perry
Executive Director
Cc: Jean Bloom
Bloom.iean@epa.gov
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Appendix B
Distribution
The Administrator
Chief of Staff
Regional Administrator, Region 5
Assistant Administrator for Land and Emergency Management
Agency Follow-Up Official (the CFO)
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Director, Office of Grants and Debarment, Office of Administration and Resources Management
Director, Grants and Interagency Agreements Management Division, Office of Administration
and Resources Management
Director, Office of Brownfields and Land Revitalization, Office of Land and Emergency
Management
Deputy Regional Administrator, Region 5
Division Director, Superfund, Region 5
Chief, Acquisition and Assistance Branch, Region 5
Chief, Land Revitalization Branch, Region 5
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Region 5
Audit Follow-Up Coordinator, Office of Land and Emergency Management
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