Audit 350727

Federal Program Title: HOME Investment Partnership Program Federal Catalog Number: 14.239 Federal Agency: Department of Housing and Urban Development Category of Finding: Eligibility Criteria: The City entered into loan agreements with developers to provide affordable housing within the City using HOME Investment Partnership Program funds. The loan agreements contain continuing compliance requirements to 1) restrict occupancy of the housing units to low-income or very low income households, and 2) to limit the monthly rent to certain amounts, among other requirements. The City should monitor the developer's compliance with these requirements. Pursuant to the Office of Management and Budget (OMB) 24 CFR. Only low-income or very low-income persons, as defined in 24 CFR section 92.2, can receive housing assistance (24 CFR section 92.1). Therefore, the participating including all persons in the household, as provided for in 24 CFR section 92.203. Participating jurisdictions must maintain records for each family assisted (24 CFR section 92.508). Condition: The City was unable to provide evidence that it has conducted any monitoring activities to determine whether the developers were in compliance with the eligibility requirements. Cause: Lack of internal controls and record maintenance over federal requirement for eligibility. Effect or Potential Effect: Due to the lack of evidence, we were unable to obtain reasonable assurance on the City's compliance with the eligibility requirement. As such, our opinion on this particular compliance requirement is qualified. Questioned Cost: None Context: During the audit, we requested records to prove that individuals were eligible under the HOME program, but the City was unable to provide such records. Statistical Sampling Validity: Not applicable. No sampling was performed Repeat of a Prior-Year Finding: No. Recommendation: We recommend the City establish and design internal controls over eligibility, which should include monitoring each developer's compliance with HOME requirements and maintaining copies of records and reports submitted for the audit. Management Response and Corrective Action Plan City's Response: The City concurs with the recommendation. Corrective Action Plan: The City will work with vendor to provide hard copies of all work done to assist in compliance. Planned Implementation Date: Implemented during Quarter 1 of Fiscal Year 2025

Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Catalog Number: 21.027 Federal Agency: U.S. Department of Treasury Category of Finding: Reporting Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance Supplement May 2024 Part 4 21.027 Coronavirus State and Local Fiscal Recovery Funds (page 4-21.027-7), the annual reporting requirement for Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) is through the submission of the initial Interim Report, quarterly Project and Expenditure Report, and the Recovery Plan Performance Report. The interim report is a one-time report that provides an initial overview of status and use of funding. The Project and Expenditure Report details the financial data, projects funded, expenditures and contracts over $50,000. The Recovery Plan Performance report is not a required report for the City due to their population size falling under the 250,000 requirement. Condition: During our audit, the City was unable to provide evidence that the project and expenditure report for quarter April through June 2024 was submitted. Cause: Lack of appropriate control over reporting, mainly due to turn-over in City personnel. Effect or Potential Effect: Noncompliance may result in termination of the grants, reduction in future payments or funding amounts, repayment of federal funds already received and spent, imposed fines and penalties, reputational damage, special status for oversight and reviews, need for corrective action plan, and/or suspension or debarment. Questioned Cost: None. Context: According to City's consultant, the report was drafted but not submitted. Statistical Sampling Validity: Not applicable. No sampling was performed. Repeat of a Prior-Year Finding: Yes, 2023-002, 2022-001, and 2021-003 Recommendation: The City should design and establish internal controls over reporting, which should include maintaining copies of reports submitted for audit. Management Response and Corrective Action Plan The City concurs with the recommendation. Corrective Action Plan: City is onboarding qualified individuals to ensure reports are submitted in a timely manner and retained by the City. Planned Implementation Date: Implemented during Quarter 1 of Fiscal Year 2025

Federal Program Title: HOME Investment Partnership Program Federal Catalog Number: 14.239 Federal Agency: Department of Housing and Urban Development Category of Finding: Eligibility Criteria: The City entered into loan agreements with developers to provide affordable housing within the City using HOME Investment Partnership Program funds. The loan agreements contain continuing compliance requirements to 1) restrict occupancy of the housing units to low-income or very low income households, and 2) to limit the monthly rent to certain amounts, among other requirements. The City should monitor the developer's compliance with these requirements. Pursuant to the Office of Management and Budget (OMB) 24 CFR. Only low-income or very low-income persons, as defined in 24 CFR section 92.2, can receive housing assistance (24 CFR section 92.1). Therefore, the participating including all persons in the household, as provided for in 24 CFR section 92.203. Participating jurisdictions must maintain records for each family assisted (24 CFR section 92.508). Condition: The City was unable to provide evidence that it has conducted any monitoring activities to determine whether the developers were in compliance with the eligibility requirements. Cause: Lack of internal controls and record maintenance over federal requirement for eligibility. Effect or Potential Effect: Due to the lack of evidence, we were unable to obtain reasonable assurance on the City's compliance with the eligibility requirement. As such, our opinion on this particular compliance requirement is qualified. Questioned Cost: None Context: During the audit, we requested records to prove that individuals were eligible under the HOME program, but the City was unable to provide such records. Statistical Sampling Validity: Not applicable. No sampling was performed Repeat of a Prior-Year Finding: No. Recommendation: We recommend the City establish and design internal controls over eligibility, which should include monitoring each developer's compliance with HOME requirements and maintaining copies of records and reports submitted for the audit. Management Response and Corrective Action Plan City's Response: The City concurs with the recommendation. Corrective Action Plan: The City will work with vendor to provide hard copies of all work done to assist in compliance. Planned Implementation Date: Implemented during Quarter 1 of Fiscal Year 2025

Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Catalog Number: 21.027 Federal Agency: U.S. Department of Treasury Category of Finding: Reporting Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance Supplement May 2024 Part 4 21.027 Coronavirus State and Local Fiscal Recovery Funds (page 4-21.027-7), the annual reporting requirement for Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) is through the submission of the initial Interim Report, quarterly Project and Expenditure Report, and the Recovery Plan Performance Report. The interim report is a one-time report that provides an initial overview of status and use of funding. The Project and Expenditure Report details the financial data, projects funded, expenditures and contracts over $50,000. The Recovery Plan Performance report is not a required report for the City due to their population size falling under the 250,000 requirement. Condition: During our audit, the City was unable to provide evidence that the project and expenditure report for quarter April through June 2024 was submitted. Cause: Lack of appropriate control over reporting, mainly due to turn-over in City personnel. Effect or Potential Effect: Noncompliance may result in termination of the grants, reduction in future payments or funding amounts, repayment of federal funds already received and spent, imposed fines and penalties, reputational damage, special status for oversight and reviews, need for corrective action plan, and/or suspension or debarment. Questioned Cost: None. Context: According to City's consultant, the report was drafted but not submitted. Statistical Sampling Validity: Not applicable. No sampling was performed. Repeat of a Prior-Year Finding: Yes, 2023-002, 2022-001, and 2021-003 Recommendation: The City should design and establish internal controls over reporting, which should include maintaining copies of reports submitted for audit. Management Response and Corrective Action Plan The City concurs with the recommendation. Corrective Action Plan: City is onboarding qualified individuals to ensure reports are submitted in a timely manner and retained by the City. Planned Implementation Date: Implemented during Quarter 1 of Fiscal Year 2025