Audit 387791

2023-001 - Eligibility Federal Awards Finding – Significant Deficiency - Eligibility Federal Programs: Home Investment Partnership Program Assistance Listing Number 14.239 Department of Housing and Urban Development Condition: During our testing of tenant eligibility and rent compliance under the HOME Investment Partnerships Program, we noted one instance in which a tenant's income exceeded the HUDestablished income limits. Despite the tenant becoming overincome, the Organization did not adjust the tenant’s rent in accordance with HUD regulations. The tenant continued to pay rent at a rate below the allowable adjusted rent level. Criteria: In accordance with 24 CFR § 92.252(i), if a tenant in a HOMEassisted unit becomes over-income (i.e., their income exceeds 80% of Area Median Income), the Organization must adjust the tenant’s rent to 30% of their adjusted monthly income or take other steps to ensure compliance. This ensures that the HOME program continues to meet affordability requirements and remains in compliance with federal regulations. Cause: The Organization did not have a procedure in place to monitor tenant income changes. Additionally, there was a lack of understanding by property management staff regarding the regulatory requirement to adjust rent when a tenant becomes over-income. Effect: As a result, the Organization was not in compliance with HUD rent limitation requirements, and the affected tenant continued to occupy a HOME-assisted unit at a rent level that did not meet program guidelines. This noncompliance could jeopardize the affordability status of the unit and overall project compliance under the HOME program. Federal Programs: Home Investment Partnership Program Assistance Listing Number 14.239 Department of Housing and Urban Development Recommendation: We recommend the Organization implement controls to monitor and recertify tenant income annually, and to take appropriate action when tenants become over-income, including adjusting tenant rent. Staff involved in property management should receive ongoing training on HOME compliance requirements, particularly those relating to income eligibility and rent limits. Response: Management concurs with the finding. The Organization revised its tenant monitoring procedures to ensure timely annual recertification of income and compliance with HUD rent adjustment requirements. Training is being provided to all property management staff, and management has implemented procedures to ensure all required actions are taken when a tenant becomes over-income.

2023-002 - HQS Federal Awards Finding – Material Weakness - Failure to perform Housing Quality Standards Inspections Condition: During the audit, it was identified that the Organization did not perform the required on-site inspections to determine compliance with housing quality standards for properties and units funded with HOME funds during the period of affordability for 4 out of 6 units Criteria: 24 CFR sections 92.209(i), 92.251(f), and 92.504(d) require participating jurisdictions to perform on-site inspections to ensure compliance with property standards and housing quality standards. Cause: The noncompliance was due to lack of staffing and oversight. Effect: Failure to perform the required inspections increases the risk that properties and units do not meet housing quality standards or property standards, potentially jeopardizing the health and safety of tenants and placing the Organization at risk of noncompliance with federal requirements. Recommendation: We recommend the Organization: 1. Develop and implement a monitoring system to track and schedule required inspections. 2. Allocate sufficient resources to ensure timely inspections are conducted. 3. Provide training for staff on the inspection requirements Response: During 2020 – 2022, HOMECorp’s management team was significantly impacted by COVID and despite PPP loan retention efforts we lost all our staff and transitioned our HUD Certified Housing Counselor to Property Manager. Due to staffing shortages and restricted to access to apartments as a result of health concerns, our property manager was unable to perform Housing Quality Standards Inspections. The new Executive Director has contracted with a General Contractor to help assist our property manager with Housing Quality Standards Inspections. These inspections are conducted annually with detailed inspection logs for HVAC, Painting, Fire Safety, and major unit renovations maintained and tracked in our digital database. These logs are reviewed and updated on a quarterly basis to ensure timeliness in compliance and maintenance requests.