Finding 2025-001: Supportive Housing for the Elderly (Section 202), Federal Assistance Listing Number 14.157 Criteria: HUD requires Section 811 Project Rental Assistance Contract (PRAC) properties to remit residual receipts balances in excess of $250 per unit to HUD’s Accounting Center upon termination/renewal of the PRAC contract. Condition: O’Brien Road Senior Apartments 2’s residual receipts account exceeded the $250 per unit retained balance at the PRAC anniversary/renewal date, but O’Brien Road Senior Apartments 2 did not remit the excess residual receipts to HUD’s Accounting Center nor obtain HUD approval for retention or alternative use. The overage that was not submitted amounted to $14,632. Questioned Costs: The questioned costs were calculated as the residual receipts amount less the number of units (24) multiplied by $250/unit, which computes to an overage amount of $14,632. Context: O’Brien Road Senior Apartments 2 had excess residual receipts that were not remitted at renewal. Cause: There is a lack of a formal compliance control. Effect: Noncompliance with HUD PRAC residual receipts requirements, potentially resulting in improper retention of federal funds. Recommendation: We recommend that O’Brien Road Senior Apartments 2 remit the overage of $14,632 to HUD’s Accounting Center or submit HUD 9250 for HUD approved application if directed. Views of management and planned corrective action: Management concurs and will submit form HUD 9250.
Finding 2025-002: Supportive Housing for the Elderly (Section 202), Federal Assistance Listing Number 14.157 Criteria: O’Brien Road Senior Apartments 2 is required to make monthly deposits into the reserve for replacements account in accordance with the project’s regulatory agreement with HUD. Condition: During our review of the reserve for replacements activity in 2025, we noted that the property did not make the December payment until January 9, 2026. Questioned Costs: There are no questioned costs, this finding relates to timing of payments. Context: There are 12 required payments during the year with all payments being tested. Cause: Management indicated that the deposit was not made as there was insufficient operating cash available during the month the deposit was due. Effect: O’Brien Road Senior Apartments 2 is out of compliance with their regulatory agreement with HUD. Recommendation: We recommend that management ensure sufficient operating cash flow to make all required reserve for replacement deposits in the future. Views of management and planned corrective action: Management concurs. The December payment was made on January 9, 2026.