The U.S. Department of Homeland Security has threatened to withhold more than $21 million from the state unless Colorado officials promptly resolve a long-running dispute over how previous grants were spent.
After months of delays by the state, the federal government this week demanded that Colorado fix problems with its homeland-security grants within 15 days.
One of the specific problems that the federal government wants the state to “remedy” is $1.5 million that was spent on a disaster-response center in Centennial.
A state audit found that Colorado officials inappropriately used federal grant dollars to remodel and acquire the office space. Federal officials concurred with that audit.
The issues have been pending since January, when federal officials warned the state to provide a remedy. Now, the federal government said it “will be compelled to freeze all (Department of Homeland Security) accounts until resolution can be made.”
The warning was included in a Monday letter from Nancy Anne Baugher, director of the department’s office of grant operations.
Deborah Smith, spokeswoman for Gov. Bill Owens on homeland security matters, said the state is working diligently on finding “acceptable remedies.”
Smith declined to say whether the state would pay back money that federal officials consider misspent or would forgo future grants to match the amount.
“We’ve received this document, and right now we are working to understand the requirements and to seek further guidance from the Department of Homeland Security,” Smith said.
Marlene Phillips, spokeswoman for the U.S. Department of Homeland Security, declined to discuss the details of the demand. Federal officials delivered their initial report on state handling of homeland- security funding in January and gave the state 90 days to resolve the multitude of issues it raised.
Federal officials concluded that the emergency-response center was funded with money intended to help local governments prepare for emergencies. In addition, the state “did not ensure a level playing field in awarding the funds” to South Metro Fire and Rescue, which owned the building where the response center was constructed.
In April, the state responded that it “respectfully disagrees” with the federal government’s conclusion that the funding for the emergency-response center was inappropriate.
Staff writer Mark P. Couch can be reached at 303-820-1794 or mcouch@denverpost.com.
