Audit 325374

FY End

2024-06-30

Total Expended

$2.45M

Findings

4

Programs

1

Organization: Essex Properties Urban Renewal Associates (NJ)

Year: 2024 Accepted: 2024-10-21

Auditor: Cliftonlarsonallen LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
503280	2024-001	Significant Deficiency	-	N
503281	2024-001	Significant Deficiency	-	N
1079722	2024-001	Significant Deficiency	-	N
1079723	2024-001	Significant Deficiency	-	N

ALN	Program	Spent	Major	Findings
14.181	Supportive Housing for Persons with Disabilities	$755,307	Yes	1

Contacts

Name	Title	Type
RG5FVNUM7SB1	David Biship	Auditee
9738218017	Tara Del Gavio	Auditor
No contacts on file

Notes to SEFA

Title: SUBRECIPENTS Accounting Policies: Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of Essex Properties Urban Renewal Associates Inc HUD Project No. 031-EH231 (the Project) and is presented on the accrual basis of accounting. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. De Minimis Rate Used: N Rate Explanation: During the year ended June 30, 2024, the Project did not elect to use the de minimis cost rate when allocating indirect costs to its federal programs. During the year ended June 30, 2024, the Project did not provide any funds relating to its federal programs to subrecipients.

Title: LOAN AND LOAN GUARANTEE PROGRAMS Accounting Policies: Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of Essex Properties Urban Renewal Associates Inc HUD Project No. 031-EH231 (the Project) and is presented on the accrual basis of accounting. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. De Minimis Rate Used: N Rate Explanation: During the year ended June 30, 2024, the Project did not elect to use the de minimis cost rate when allocating indirect costs to its federal programs. As of June 30, 2024, $1,697,500 was outstanding on the federal loan program.

Finding Details

Finding 2024-001

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 811 Project Rental Assistance Payments and Section 811 Capital Advances Assistance Listing Number: 14.181 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to HUD regulations, Nonprofit Organizations are required to maintain a certain level of funding in their replacement reserve accounts to ensure the availability of funds for future repairs and replacements. Condition: The replacement reserve account was underfunded by $4,000. Context: The Project received a budget-based rent increase adjustment letter from HUD stating that the required replacement reserve deposit amount will be increasing from $1,350 to $1,850 effective November 10, 2023. The Project did not increase the reserve deposits to the new required amounts before year end. Therefore, the replacement reserve account was underfunded by $4,000 at year end. Cause: The required replacement reserve deposits were not increased to $1,850 per month effective November 10, 2023. This left the replacement reserve account underfunded by $4,000. Effect: Insufficient funds in the replacement reserve account could lead to the inability to cover necessary repairs and replacements, potentially affecting the quality and safety of the housing provided. Recommendation: The Project should review its budgeting process to ensure compliance with HUD funding requirements for the replacement reserve account. Additionally, they should implement regular monitoring to prevent future underfunding. Views of responsible officials: In July 2024 management identified the increase in the monthly deposits and made a deposit in July 2024 to the replacement reserve cash account for the deficiency.

Finding 2024-001

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 811 Project Rental Assistance Payments and Section 811 Capital Advances Assistance Listing Number: 14.181 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to HUD regulations, Nonprofit Organizations are required to maintain a certain level of funding in their replacement reserve accounts to ensure the availability of funds for future repairs and replacements. Condition: The replacement reserve account was underfunded by $4,000. Context: The Project received a budget-based rent increase adjustment letter from HUD stating that the required replacement reserve deposit amount will be increasing from $1,350 to $1,850 effective November 10, 2023. The Project did not increase the reserve deposits to the new required amounts before year end. Therefore, the replacement reserve account was underfunded by $4,000 at year end. Cause: The required replacement reserve deposits were not increased to $1,850 per month effective November 10, 2023. This left the replacement reserve account underfunded by $4,000. Effect: Insufficient funds in the replacement reserve account could lead to the inability to cover necessary repairs and replacements, potentially affecting the quality and safety of the housing provided. Recommendation: The Project should review its budgeting process to ensure compliance with HUD funding requirements for the replacement reserve account. Additionally, they should implement regular monitoring to prevent future underfunding. Views of responsible officials: In July 2024 management identified the increase in the monthly deposits and made a deposit in July 2024 to the replacement reserve cash account for the deficiency.

Finding 2024-001

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 811 Project Rental Assistance Payments and Section 811 Capital Advances Assistance Listing Number: 14.181 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to HUD regulations, Nonprofit Organizations are required to maintain a certain level of funding in their replacement reserve accounts to ensure the availability of funds for future repairs and replacements. Condition: The replacement reserve account was underfunded by $4,000. Context: The Project received a budget-based rent increase adjustment letter from HUD stating that the required replacement reserve deposit amount will be increasing from $1,350 to $1,850 effective November 10, 2023. The Project did not increase the reserve deposits to the new required amounts before year end. Therefore, the replacement reserve account was underfunded by $4,000 at year end. Cause: The required replacement reserve deposits were not increased to $1,850 per month effective November 10, 2023. This left the replacement reserve account underfunded by $4,000. Effect: Insufficient funds in the replacement reserve account could lead to the inability to cover necessary repairs and replacements, potentially affecting the quality and safety of the housing provided. Recommendation: The Project should review its budgeting process to ensure compliance with HUD funding requirements for the replacement reserve account. Additionally, they should implement regular monitoring to prevent future underfunding. Views of responsible officials: In July 2024 management identified the increase in the monthly deposits and made a deposit in July 2024 to the replacement reserve cash account for the deficiency.

Finding 2024-001

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 811 Project Rental Assistance Payments and Section 811 Capital Advances Assistance Listing Number: 14.181 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to HUD regulations, Nonprofit Organizations are required to maintain a certain level of funding in their replacement reserve accounts to ensure the availability of funds for future repairs and replacements. Condition: The replacement reserve account was underfunded by $4,000. Context: The Project received a budget-based rent increase adjustment letter from HUD stating that the required replacement reserve deposit amount will be increasing from $1,350 to $1,850 effective November 10, 2023. The Project did not increase the reserve deposits to the new required amounts before year end. Therefore, the replacement reserve account was underfunded by $4,000 at year end. Cause: The required replacement reserve deposits were not increased to $1,850 per month effective November 10, 2023. This left the replacement reserve account underfunded by $4,000. Effect: Insufficient funds in the replacement reserve account could lead to the inability to cover necessary repairs and replacements, potentially affecting the quality and safety of the housing provided. Recommendation: The Project should review its budgeting process to ensure compliance with HUD funding requirements for the replacement reserve account. Additionally, they should implement regular monitoring to prevent future underfunding. Views of responsible officials: In July 2024 management identified the increase in the monthly deposits and made a deposit in July 2024 to the replacement reserve cash account for the deficiency.