The director of the Little Rock Field Office for the U.S. Department of Housing and Urban Development plans to formally recommend that an independent arm of its department investigate activities related to the spending of more than $500,000 of federal grant money Pine Bluff awarded a local nonprofit to build low-income housing, HUD spokesman Patricia Campbell said Thursday.

Campbell said the decision came after the director met with city officials Thursday morning in response to a Commercial investigation that found both the city and the nonprofit failed to ensure the money, awarded each year out of a share of the city’s annual HOME program grant, went to help the city’s poor become homeowners.

She said the recommendation, in the form of a referral letter, will be sent to HUD’s Office of Inspector General.

In the meantime, Mayor Carl A. Redus Jr. said that he is now overseeing the city’s community and economic development department, including daily reviews of the activities and money spent by the local nonprofit, Progressive Southeast Arkansas Housing Development Corp. He said the nonprofit is finishing construction on one of the houses it has nearly ready to go on the market.

“I agree there are some things that are questionable,” Redus said. “Until HUD provides the results of its investigation, I will continue to provide oversight to the HOME program and community development overall.”

He declined to discuss the status of Donald Sampson, the head of the department, who was still at work Thursday. Several aldermen have said they believe Sampson should be suspended until an investigation is conducted.

“That’s inappropriate to discuss at this time,” Redus said.

He said, though, that changes to the department are “imminent.”

Both HUD’s announcement and Redus’ response follows a Commercial investigation that found that half of the six homes Progressive has built and sold for the city over the past decade went to people with incomes too high to qualify for the subsidized housing. One other was sold to the daughter of one of Progressive’s co-founders — at a deep discount and in violation of HUD’s conflict of interest regulations. Progressive also spent money the city awarded it on the purchase of a piece of property owned by the co-founder’s mother.

In most cases, The Commercial found, those activities were reported to officials with the city’s community and economic development department, which is charged with overseeing the spending of the grant money. The city also failed to notice and question discrepancies in the paperwork documenting inspections of the homes, construction costs and the sale prices of the homes, The Commercial reported.

James Black, the president of Progressive’s board and one of its three co-founders, declined to comment on the additional review his organization is receiving from the city.

He said he believes an investigation by HUD will “vindicate” his organization.

“I think once HUD comes in and does their review, a lot of this stuff will be straightened out,” he said.