Finding No. 2024-001; Federal Assistance Listing Number 14.157
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 that three out of four tenants' income
verification was not performed timely with the use of the HUD Enterprise Income Verification
("EIV").
Cause
Management's policies with respect to recertifications and eligibility and the maintenance of
tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for determining tenant recertification eligibility and maintaining tenant lease files
were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy
Requirements of Subsidized Multifamily Housing Programs. This could result in units being
rented to ineligible tenants or errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Context
Three out of four tenants' tenants tested did not have the EIV run timely.
Identification as a Repeat Finding
Yes: 2023-001
Recommendation
Management should establish procedures and monitor compliance with those procedures to
insure that recertifications are performed timely and signed, 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: E - Eligibility for Uniform Guidance
Finding Resolution Status: Unresolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to complete certifications in a timely manner but due to staffing
shortages and tenant noncompliance issues the Property continued to have issues with timely
completion of income certifications in 2024. As new staff are brought onboard training is
provided and annual HUD training is completed by all staff. Management will continue to
coordinate and provide assistance to on-site staff to ensure that the properties are in
compliance.
Finding No. 2024-002; Federal Assistance Listing Number 14.157
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, within 30 days after the move-out date (or shorter time if required by state
and/or local laws), management must either: refund the full security deposit plus accrued
interest to a tenant that does not owe any amounts under the lease; or provide the tenant with
an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along
with a statement of the tenant's rights under state and local laws.
Condition
In connection with the procedures applied to a sample of 1 tenant that moved out of the project
during the year, we noted 1 instance where management failed to refund the tenant security
deposit and/or provide the tenant with an itemized list of charges deducted from the deposit
within thirty days after the move-out date.
Cause
Management's policies with respect to move outs and security deposit refunds were not
consistently followed.
Effect or Potential Effect
Management failed to comply with the HUD occupancy requirement to timely refund the tenant
security deposits or to provide the tenant with a list of charges. The Property owes the tenant
security deposit back to the tenant.
Questioned Costs
N/A
Context
In connection with our lease file testing one out of one move-out tenant files tested did not
maintain a move out inspection on file nor provide written notice of any deductions from the
tenant's security deposit timely.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should change its policies and procedures related to refunding of tenant security
deposits to comply with the thirty-day timeline required by HUD regulations.
Auditor Noncompliance Code: M - Security Deposits for REAC
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that the return of tenant security deposits are done in a
timely manner. Staffing shortages at the Property had an impact on the timeliness of the return
of security deposits. As new staff are brought onboard training is provided and training is
provided to on-site staff to ensure that the return of security deposits are being completed and
properties are in compliance. Management will continue to coordinate and provide assistance to
on-site staff to ensure that the properties are in compliance.
Finding No. 2024-004; Federal Assistance Listing Number 14.157
Criteria
The Section 202 agreement requires that the Company make monthly deposits to its
replacement reserve.
Condition
During the year ended December 31 2024, the project did not make the required monthly
deposits to the replacement reserve in the amount of $857 per month from January through
August. The project is required to make monthly deposits to the reserve in the amount of $918 a
month commencing September 1, 2024. Deposits from September 2024 through December
2024 were made in accordance with HUD requirements.
Cause
The Company was making monthly deposits at an old rate and did not increase the monthly
deposit amounts in accordance with the agreement from January through August.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding the replacement reserve and a
violation of the agreement.
Questioned Costs
N/A
Context
In connection with testing the withdrawals from reserves we noted HUD correspondence
signaling there had been an increase in the required monthly deposit and that the months of
January to August 2024 were underfunded.
Identification as a Repeat Finding
No
Recommendation
Management should establish procedures to ensure the correct amount is being transferred into
the replacement reserve account monthly.
Auditor Noncompliance Code: N - Special Tests and Provisions for Uniform Guidance
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
During 2024 when a rental increase was approved it came to management's attention that the
correct amount was not being deposited into the replacement reserve. Management had not
received any previous notification from HUD that the deposits were insufficient and began
payment of the agreed upon amount in September, 2024. The entity does not have the funds to
adjust for payments prior to September, 2024.
Finding No. 2024-005; Federal Assistance Listing Number 14.157
Criteria
Management is responsible for determining tenant eligibility and maintaining lease files in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs.
Condition
During the procedures applied to a sample of one tenant lease file, we noted the following
instances of noncompliance with HUD regulations regarding tenant eligibility and the
maintenance of lease files. There was one instance where the project did not maintain move out
inspection form in the lease file.
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
Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or
errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Context
In connection with the procedures applied to tenant file testing there was one instance of the
one file tested where the move out inspection was not performed.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should establish procedures and monitor compliance with those procedures to
ensure that the determination of tenant eligibility and the maintenance of lease files are in
accordance with guidelines specified by HUD.
Auditor Noncompliance Code: E - Eligibility Uniform Guidance
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that move out inspections are done in a timely manner.
Staffing shortages at the property had an impact on the timeliness of the move out. As new staff
are brought onboard training is provided and training is provided to on-site staff to ensure that
the inspections are being completed and properties are in compliance. Management will
continue to coordinate and provide assistance to on-site staff to ensure that the properties are in
compliance.
Finding No. 2024-001; Federal Assistance Listing Number 14.157
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 that three out of four tenants' income
verification was not performed timely with the use of the HUD Enterprise Income Verification
("EIV").
Cause
Management's policies with respect to recertifications and eligibility and the maintenance of
tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for determining tenant recertification eligibility and maintaining tenant lease files
were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy
Requirements of Subsidized Multifamily Housing Programs. This could result in units being
rented to ineligible tenants or errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Context
Three out of four tenants' tenants tested did not have the EIV run timely.
Identification as a Repeat Finding
Yes: 2023-001
Recommendation
Management should establish procedures and monitor compliance with those procedures to
insure that recertifications are performed timely and signed, 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: E - Eligibility for Uniform Guidance
Finding Resolution Status: Unresolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to complete certifications in a timely manner but due to staffing
shortages and tenant noncompliance issues the Property continued to have issues with timely
completion of income certifications in 2024. As new staff are brought onboard training is
provided and annual HUD training is completed by all staff. Management will continue to
coordinate and provide assistance to on-site staff to ensure that the properties are in
compliance.
Finding No. 2024-002; Federal Assistance Listing Number 14.157
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, within 30 days after the move-out date (or shorter time if required by state
and/or local laws), management must either: refund the full security deposit plus accrued
interest to a tenant that does not owe any amounts under the lease; or provide the tenant with
an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along
with a statement of the tenant's rights under state and local laws.
Condition
In connection with the procedures applied to a sample of 1 tenant that moved out of the project
during the year, we noted 1 instance where management failed to refund the tenant security
deposit and/or provide the tenant with an itemized list of charges deducted from the deposit
within thirty days after the move-out date.
Cause
Management's policies with respect to move outs and security deposit refunds were not
consistently followed.
Effect or Potential Effect
Management failed to comply with the HUD occupancy requirement to timely refund the tenant
security deposits or to provide the tenant with a list of charges. The Property owes the tenant
security deposit back to the tenant.
Questioned Costs
N/A
Context
In connection with our lease file testing one out of one move-out tenant files tested did not
maintain a move out inspection on file nor provide written notice of any deductions from the
tenant's security deposit timely.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should change its policies and procedures related to refunding of tenant security
deposits to comply with the thirty-day timeline required by HUD regulations.
Auditor Noncompliance Code: M - Security Deposits for REAC
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that the return of tenant security deposits are done in a
timely manner. Staffing shortages at the Property had an impact on the timeliness of the return
of security deposits. As new staff are brought onboard training is provided and training is
provided to on-site staff to ensure that the return of security deposits are being completed and
properties are in compliance. Management will continue to coordinate and provide assistance to
on-site staff to ensure that the properties are in compliance.
Finding No. 2024-004; Federal Assistance Listing Number 14.157
Criteria
The Section 202 agreement requires that the Company make monthly deposits to its
replacement reserve.
Condition
During the year ended December 31 2024, the project did not make the required monthly
deposits to the replacement reserve in the amount of $857 per month from January through
August. The project is required to make monthly deposits to the reserve in the amount of $918 a
month commencing September 1, 2024. Deposits from September 2024 through December
2024 were made in accordance with HUD requirements.
Cause
The Company was making monthly deposits at an old rate and did not increase the monthly
deposit amounts in accordance with the agreement from January through August.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding the replacement reserve and a
violation of the agreement.
Questioned Costs
N/A
Context
In connection with testing the withdrawals from reserves we noted HUD correspondence
signaling there had been an increase in the required monthly deposit and that the months of
January to August 2024 were underfunded.
Identification as a Repeat Finding
No
Recommendation
Management should establish procedures to ensure the correct amount is being transferred into
the replacement reserve account monthly.
Auditor Noncompliance Code: N - Special Tests and Provisions for Uniform Guidance
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
During 2024 when a rental increase was approved it came to management's attention that the
correct amount was not being deposited into the replacement reserve. Management had not
received any previous notification from HUD that the deposits were insufficient and began
payment of the agreed upon amount in September, 2024. The entity does not have the funds to
adjust for payments prior to September, 2024.
Finding No. 2024-005; Federal Assistance Listing Number 14.157
Criteria
Management is responsible for determining tenant eligibility and maintaining lease files in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs.
Condition
During the procedures applied to a sample of one tenant lease file, we noted the following
instances of noncompliance with HUD regulations regarding tenant eligibility and the
maintenance of lease files. There was one instance where the project did not maintain move out
inspection form in the lease file.
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
Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or
errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Context
In connection with the procedures applied to tenant file testing there was one instance of the
one file tested where the move out inspection was not performed.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should establish procedures and monitor compliance with those procedures to
ensure that the determination of tenant eligibility and the maintenance of lease files are in
accordance with guidelines specified by HUD.
Auditor Noncompliance Code: E - Eligibility Uniform Guidance
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that move out inspections are done in a timely manner.
Staffing shortages at the property had an impact on the timeliness of the move out. As new staff
are brought onboard training is provided and training is provided to on-site staff to ensure that
the inspections are being completed and properties are in compliance. Management will
continue to coordinate and provide assistance to on-site staff to ensure that the properties are in
compliance.
Finding No. 2024-003; Federal Assistance Listing Number 14.239
Criteria
During the period of affordability (i.e., the period for which the nonfederal entity must maintain
subsidized housing) for HOME assisted rental housing, the participating jurisdiction must
perform on-site inspections to determine compliance with property standards and verify the
information submitted by the owners no less than (a) every three years for projects containing
one to four units, (b) every two years for projects containing five to 25 units, and (c) every year
for projects containing 26 or more units. The participating jurisdiction must perform on-site
inspections of rental housing occupied by tenants receiving HOME/HOME-ARP-assisted tenantbased
rental assistance to determine compliance with housing quality standards (24 CFR
sections 92.209(i), 92.251(f), and 92.504(d)).
Condition
The owner did not ensure passing HQS inspections were performed in 2024.
Cause
Management did not have in place proper procedures and controls to ensure that HQS
inspections were performed during the year ended December 31, 2024.
Effect or Potential Effect
Housing units may be out of compliance with HUD Quality Standards.
Questioned Costs
N/A
Context
In connection with the procedures applied to tenant file testing there were 3 instances of the 3
files tested where the passing HQS inspections were not performed during the year ended
Identification as a Repeat Finding
Yes: 2023-004
Recommendation
Management should establish procedures and monitor compliance with those procedures to
insure that recertifications are performed timely and signed, 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: N-Special tests and provisions for Uniform Guidance
Finding Resolution Status: Unresolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that HQS inspections are done in a timely manner.
Staffing shortages at the Property had an impact on the completion of HQS inspections in 2024.
As new staff are brought onboard training is provided and management will continue to
coordinate and provide assistance to on-site staff to ensure that the inspections are being
completed and properties are in compliance.
Finding No. 2024-001; Federal Assistance Listing Number 14.157
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 that three out of four tenants' income
verification was not performed timely with the use of the HUD Enterprise Income Verification
("EIV").
Cause
Management's policies with respect to recertifications and eligibility and the maintenance of
tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for determining tenant recertification eligibility and maintaining tenant lease files
were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy
Requirements of Subsidized Multifamily Housing Programs. This could result in units being
rented to ineligible tenants or errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Context
Three out of four tenants' tenants tested did not have the EIV run timely.
Identification as a Repeat Finding
Yes: 2023-001
Recommendation
Management should establish procedures and monitor compliance with those procedures to
insure that recertifications are performed timely and signed, 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: E - Eligibility for Uniform Guidance
Finding Resolution Status: Unresolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to complete certifications in a timely manner but due to staffing
shortages and tenant noncompliance issues the Property continued to have issues with timely
completion of income certifications in 2024. As new staff are brought onboard training is
provided and annual HUD training is completed by all staff. Management will continue to
coordinate and provide assistance to on-site staff to ensure that the properties are in
compliance.
Finding No. 2024-002; Federal Assistance Listing Number 14.157
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, within 30 days after the move-out date (or shorter time if required by state
and/or local laws), management must either: refund the full security deposit plus accrued
interest to a tenant that does not owe any amounts under the lease; or provide the tenant with
an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along
with a statement of the tenant's rights under state and local laws.
Condition
In connection with the procedures applied to a sample of 1 tenant that moved out of the project
during the year, we noted 1 instance where management failed to refund the tenant security
deposit and/or provide the tenant with an itemized list of charges deducted from the deposit
within thirty days after the move-out date.
Cause
Management's policies with respect to move outs and security deposit refunds were not
consistently followed.
Effect or Potential Effect
Management failed to comply with the HUD occupancy requirement to timely refund the tenant
security deposits or to provide the tenant with a list of charges. The Property owes the tenant
security deposit back to the tenant.
Questioned Costs
N/A
Context
In connection with our lease file testing one out of one move-out tenant files tested did not
maintain a move out inspection on file nor provide written notice of any deductions from the
tenant's security deposit timely.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should change its policies and procedures related to refunding of tenant security
deposits to comply with the thirty-day timeline required by HUD regulations.
Auditor Noncompliance Code: M - Security Deposits for REAC
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that the return of tenant security deposits are done in a
timely manner. Staffing shortages at the Property had an impact on the timeliness of the return
of security deposits. As new staff are brought onboard training is provided and training is
provided to on-site staff to ensure that the return of security deposits are being completed and
properties are in compliance. Management will continue to coordinate and provide assistance to
on-site staff to ensure that the properties are in compliance.
Finding No. 2024-004; Federal Assistance Listing Number 14.157
Criteria
The Section 202 agreement requires that the Company make monthly deposits to its
replacement reserve.
Condition
During the year ended December 31 2024, the project did not make the required monthly
deposits to the replacement reserve in the amount of $857 per month from January through
August. The project is required to make monthly deposits to the reserve in the amount of $918 a
month commencing September 1, 2024. Deposits from September 2024 through December
2024 were made in accordance with HUD requirements.
Cause
The Company was making monthly deposits at an old rate and did not increase the monthly
deposit amounts in accordance with the agreement from January through August.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding the replacement reserve and a
violation of the agreement.
Questioned Costs
N/A
Context
In connection with testing the withdrawals from reserves we noted HUD correspondence
signaling there had been an increase in the required monthly deposit and that the months of
January to August 2024 were underfunded.
Identification as a Repeat Finding
No
Recommendation
Management should establish procedures to ensure the correct amount is being transferred into
the replacement reserve account monthly.
Auditor Noncompliance Code: N - Special Tests and Provisions for Uniform Guidance
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
During 2024 when a rental increase was approved it came to management's attention that the
correct amount was not being deposited into the replacement reserve. Management had not
received any previous notification from HUD that the deposits were insufficient and began
payment of the agreed upon amount in September, 2024. The entity does not have the funds to
adjust for payments prior to September, 2024.
Finding No. 2024-005; Federal Assistance Listing Number 14.157
Criteria
Management is responsible for determining tenant eligibility and maintaining lease files in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs.
Condition
During the procedures applied to a sample of one tenant lease file, we noted the following
instances of noncompliance with HUD regulations regarding tenant eligibility and the
maintenance of lease files. There was one instance where the project did not maintain move out
inspection form in the lease file.
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
Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or
errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Context
In connection with the procedures applied to tenant file testing there was one instance of the
one file tested where the move out inspection was not performed.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should establish procedures and monitor compliance with those procedures to
ensure that the determination of tenant eligibility and the maintenance of lease files are in
accordance with guidelines specified by HUD.
Auditor Noncompliance Code: E - Eligibility Uniform Guidance
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that move out inspections are done in a timely manner.
Staffing shortages at the property had an impact on the timeliness of the move out. As new staff
are brought onboard training is provided and training is provided to on-site staff to ensure that
the inspections are being completed and properties are in compliance. Management will
continue to coordinate and provide assistance to on-site staff to ensure that the properties are in
compliance.
Finding No. 2024-001; Federal Assistance Listing Number 14.157
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 that three out of four tenants' income
verification was not performed timely with the use of the HUD Enterprise Income Verification
("EIV").
Cause
Management's policies with respect to recertifications and eligibility and the maintenance of
tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for determining tenant recertification eligibility and maintaining tenant lease files
were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy
Requirements of Subsidized Multifamily Housing Programs. This could result in units being
rented to ineligible tenants or errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Context
Three out of four tenants' tenants tested did not have the EIV run timely.
Identification as a Repeat Finding
Yes: 2023-001
Recommendation
Management should establish procedures and monitor compliance with those procedures to
insure that recertifications are performed timely and signed, 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: E - Eligibility for Uniform Guidance
Finding Resolution Status: Unresolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to complete certifications in a timely manner but due to staffing
shortages and tenant noncompliance issues the Property continued to have issues with timely
completion of income certifications in 2024. As new staff are brought onboard training is
provided and annual HUD training is completed by all staff. Management will continue to
coordinate and provide assistance to on-site staff to ensure that the properties are in
compliance.
Finding No. 2024-002; Federal Assistance Listing Number 14.157
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, within 30 days after the move-out date (or shorter time if required by state
and/or local laws), management must either: refund the full security deposit plus accrued
interest to a tenant that does not owe any amounts under the lease; or provide the tenant with
an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along
with a statement of the tenant's rights under state and local laws.
Condition
In connection with the procedures applied to a sample of 1 tenant that moved out of the project
during the year, we noted 1 instance where management failed to refund the tenant security
deposit and/or provide the tenant with an itemized list of charges deducted from the deposit
within thirty days after the move-out date.
Cause
Management's policies with respect to move outs and security deposit refunds were not
consistently followed.
Effect or Potential Effect
Management failed to comply with the HUD occupancy requirement to timely refund the tenant
security deposits or to provide the tenant with a list of charges. The Property owes the tenant
security deposit back to the tenant.
Questioned Costs
N/A
Context
In connection with our lease file testing one out of one move-out tenant files tested did not
maintain a move out inspection on file nor provide written notice of any deductions from the
tenant's security deposit timely.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should change its policies and procedures related to refunding of tenant security
deposits to comply with the thirty-day timeline required by HUD regulations.
Auditor Noncompliance Code: M - Security Deposits for REAC
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that the return of tenant security deposits are done in a
timely manner. Staffing shortages at the Property had an impact on the timeliness of the return
of security deposits. As new staff are brought onboard training is provided and training is
provided to on-site staff to ensure that the return of security deposits are being completed and
properties are in compliance. Management will continue to coordinate and provide assistance to
on-site staff to ensure that the properties are in compliance.
Finding No. 2024-004; Federal Assistance Listing Number 14.157
Criteria
The Section 202 agreement requires that the Company make monthly deposits to its
replacement reserve.
Condition
During the year ended December 31 2024, the project did not make the required monthly
deposits to the replacement reserve in the amount of $857 per month from January through
August. The project is required to make monthly deposits to the reserve in the amount of $918 a
month commencing September 1, 2024. Deposits from September 2024 through December
2024 were made in accordance with HUD requirements.
Cause
The Company was making monthly deposits at an old rate and did not increase the monthly
deposit amounts in accordance with the agreement from January through August.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding the replacement reserve and a
violation of the agreement.
Questioned Costs
N/A
Context
In connection with testing the withdrawals from reserves we noted HUD correspondence
signaling there had been an increase in the required monthly deposit and that the months of
January to August 2024 were underfunded.
Identification as a Repeat Finding
No
Recommendation
Management should establish procedures to ensure the correct amount is being transferred into
the replacement reserve account monthly.
Auditor Noncompliance Code: N - Special Tests and Provisions for Uniform Guidance
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
During 2024 when a rental increase was approved it came to management's attention that the
correct amount was not being deposited into the replacement reserve. Management had not
received any previous notification from HUD that the deposits were insufficient and began
payment of the agreed upon amount in September, 2024. The entity does not have the funds to
adjust for payments prior to September, 2024.
Finding No. 2024-005; Federal Assistance Listing Number 14.157
Criteria
Management is responsible for determining tenant eligibility and maintaining lease files in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs.
Condition
During the procedures applied to a sample of one tenant lease file, we noted the following
instances of noncompliance with HUD regulations regarding tenant eligibility and the
maintenance of lease files. There was one instance where the project did not maintain move out
inspection form in the lease file.
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
Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or
errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Context
In connection with the procedures applied to tenant file testing there was one instance of the
one file tested where the move out inspection was not performed.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should establish procedures and monitor compliance with those procedures to
ensure that the determination of tenant eligibility and the maintenance of lease files are in
accordance with guidelines specified by HUD.
Auditor Noncompliance Code: E - Eligibility Uniform Guidance
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that move out inspections are done in a timely manner.
Staffing shortages at the property had an impact on the timeliness of the move out. As new staff
are brought onboard training is provided and training is provided to on-site staff to ensure that
the inspections are being completed and properties are in compliance. Management will
continue to coordinate and provide assistance to on-site staff to ensure that the properties are in
compliance.
Finding No. 2024-003; Federal Assistance Listing Number 14.239
Criteria
During the period of affordability (i.e., the period for which the nonfederal entity must maintain
subsidized housing) for HOME assisted rental housing, the participating jurisdiction must
perform on-site inspections to determine compliance with property standards and verify the
information submitted by the owners no less than (a) every three years for projects containing
one to four units, (b) every two years for projects containing five to 25 units, and (c) every year
for projects containing 26 or more units. The participating jurisdiction must perform on-site
inspections of rental housing occupied by tenants receiving HOME/HOME-ARP-assisted tenantbased
rental assistance to determine compliance with housing quality standards (24 CFR
sections 92.209(i), 92.251(f), and 92.504(d)).
Condition
The owner did not ensure passing HQS inspections were performed in 2024.
Cause
Management did not have in place proper procedures and controls to ensure that HQS
inspections were performed during the year ended December 31, 2024.
Effect or Potential Effect
Housing units may be out of compliance with HUD Quality Standards.
Questioned Costs
N/A
Context
In connection with the procedures applied to tenant file testing there were 3 instances of the 3
files tested where the passing HQS inspections were not performed during the year ended
Identification as a Repeat Finding
Yes: 2023-004
Recommendation
Management should establish procedures and monitor compliance with those procedures to
insure that recertifications are performed timely and signed, 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: N-Special tests and provisions for Uniform Guidance
Finding Resolution Status: Unresolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that HQS inspections are done in a timely manner.
Staffing shortages at the Property had an impact on the completion of HQS inspections in 2024.
As new staff are brought onboard training is provided and management will continue to
coordinate and provide assistance to on-site staff to ensure that the inspections are being
completed and properties are in compliance.