Audit 354355

Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted the following deficiencies: 2 out of 10 new and existing tenants tested did not utilize the Enterprise Income Verification (EIV) system timely. 2 out of 9 existing tenants tested did not complete the HUD Form 50059 timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant security deposits and eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs: None Context A sample of 10 tenant files from a population of 83 were selected. We identified exceptions in 3 out of the 10 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: Resolved Views of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that the EIV Income Report and annual certifications are completed according to HUD guidelines. The site now has updated its file set-up review to make sure reports have been completed within HUD guidelines and new company policy as well as implementing corporate compliance monitoring.

Criteria Any balance in Avondale's residual receipts reserve account greater than $250 per unit must be remitted to HUD's Accounting Center upon termination of the PRAC, in accordance with the Consolidated Appropriations Act, 2016 enacted on December 18, 2015 applicable for projects with PRAC expiration dates through September 30, 2025. Termination is defined as expiration of the contract term which for most PRACs is the annual contract anniversary date. Avondale’s PRAC contract expired on June 30, 2024. The PRAC contract was renewed for the period July 1, 2024 through June 30, 2029. Condition During the year ended December 31, 2024, management did not submit Form HUD-9250, "Fund Authorization" to HUD upon termination of the PRAC. As a result, management did not remit excess residual receipts of $25,999 to HUD. Cause The amount held in the residual receipts reserve was not returned to HUD due to management not submitting Form HUD-9250 on a timely basis. On March 13, 2025, management submitted to HUD a request for approval to transfer $27,061 from the residual receipt reserve to HUD. Effect or Potential Effect The holding of the excess funds in the residual receipts reserve is a violation of HUD's required release of funds above the declared threshold of $250 per unit. Questioned Costs:None Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should immediately submit the Form HUD-9250, "Fund Authorization" and disburse any excess funds from the residual receipts reserve to HUD upon approval of Form HUD-9250. Auditor Noncompliance Code: Z - Other Finding Resolution Status: Resolved Views of Responsible Officials Management agrees that when prior Management agent submitted the PRAC renewal for 2024, they failed to include a return to HUD for the balance of the residual receipts above $250 per unit. Current management has submitted a 9250 to HUD for approval of release of Residual Receipt funds above $250 per unit to be returned to HUD. As part of the PRAC renewal process, current management will follow HUD guidelines that require a submission of a 9250 residual receipt request with the renewal submission.

Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted the following deficiencies: 2 out of 10 new and existing tenants tested did not utilize the Enterprise Income Verification (EIV) system timely. 2 out of 9 existing tenants tested did not complete the HUD Form 50059 timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant security deposits and eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs: None Context A sample of 10 tenant files from a population of 83 were selected. We identified exceptions in 3 out of the 10 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: Resolved Views of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that the EIV Income Report and annual certifications are completed according to HUD guidelines. The site now has updated its file set-up review to make sure reports have been completed within HUD guidelines and new company policy as well as implementing corporate compliance monitoring.

Criteria Any balance in Avondale's residual receipts reserve account greater than $250 per unit must be remitted to HUD's Accounting Center upon termination of the PRAC, in accordance with the Consolidated Appropriations Act, 2016 enacted on December 18, 2015 applicable for projects with PRAC expiration dates through September 30, 2025. Termination is defined as expiration of the contract term which for most PRACs is the annual contract anniversary date. Avondale’s PRAC contract expired on June 30, 2024. The PRAC contract was renewed for the period July 1, 2024 through June 30, 2029. Condition During the year ended December 31, 2024, management did not submit Form HUD-9250, "Fund Authorization" to HUD upon termination of the PRAC. As a result, management did not remit excess residual receipts of $25,999 to HUD. Cause The amount held in the residual receipts reserve was not returned to HUD due to management not submitting Form HUD-9250 on a timely basis. On March 13, 2025, management submitted to HUD a request for approval to transfer $27,061 from the residual receipt reserve to HUD. Effect or Potential Effect The holding of the excess funds in the residual receipts reserve is a violation of HUD's required release of funds above the declared threshold of $250 per unit. Questioned Costs:None Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should immediately submit the Form HUD-9250, "Fund Authorization" and disburse any excess funds from the residual receipts reserve to HUD upon approval of Form HUD-9250. Auditor Noncompliance Code: Z - Other Finding Resolution Status: Resolved Views of Responsible Officials Management agrees that when prior Management agent submitted the PRAC renewal for 2024, they failed to include a return to HUD for the balance of the residual receipts above $250 per unit. Current management has submitted a 9250 to HUD for approval of release of Residual Receipt funds above $250 per unit to be returned to HUD. As part of the PRAC renewal process, current management will follow HUD guidelines that require a submission of a 9250 residual receipt request with the renewal submission.