FAC Explorer

Audit 394308

FY End
2025-06-30
Total Expended
$6.56M
Findings
1
Programs
3
Organization: 1260 Housing Development Corporation (PA)
Year: 2025 Accepted: 2026-03-25
Auditor: MCKONLY & ASBURY LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1186608 2025-001 Material Weakness Yes N

Programs

ALN Program Spent Major Findings
14.218 COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS $2.14M Yes 1
14.239 HOME INVESTMENT PARTNERSHIPS PROGRAM $280,500 Yes 0
14.267 CONTINUUM OF CARE PROGRAM $60,000 Yes 0

Contacts

Name Title Type
WNDRNNAL2ER1 Michon Dinwoodie Auditee
2155578414 Jim Shellenberger Auditor
No contacts on file

Notes to SEFA

The accompanying schedule of expenditures of federal, state, and city awards (the Schedule) includes the activities of federal, state, and city awards programs of 1260 Housing Development Corporation (1260 HDC) and AppleTree Housing, Inc. (ATH) for the year ended June 30, 2025. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). All awards received directly from federal agencies as well as federal, state, and city awards passed through governmental agencies or not-for-profit organizations are required to be shown as expenditures are included on the Schedule. Because the Schedule presents only a selected portion of the operations of 1260 HDC, it is not intended and does not present the financial position, changes in net assets, or cash flows of 1260 HDC and ATH.
Federal, state, and city awards expenditures are reported on the consolidated statement of activities as expenses. In certain programs, the expenditures reported in the consolidated financial statements may differ from the expenditures reported in the Schedule, because the latter represents only the expenditures of 1260 HDC and ATH and not their consolidating subsidiaries and because not all expenditures are required to be reported on the schedule of expenditures of federal, state, and city awards. The consolidated financial statements are prepared under accounting principles generally accepted in the United States of America.
1260 HDC has received a U.S. Department of Housing and Urban Development loan through the Community Development Block Grant passed through the Redevelopment Authority of the City of Philadelphia. The loan balance outstanding at the beginning of the fiscal year is included in the federal loans presented in the Schedule. The balance of the loan outstanding at June 30, 2025, consists of: Assistance Listing 14.218, Program Name Community Developmnet Block Grants/Entitlement Grants, Outstanding Balance at July 1, 2024 - $640,998, Outstanding Balance at June 30, 2025 - $640,998. During the year ended June 30, 2017, 1260 HDC purchased leasehold property from Mid-City Residential Associates, L.P. (Mid-City). As part of the transaction, 1260 HDC agreed to assume certain obligations of Mid-City. On July 12, 2023, 1260 HDC sold Mid-City to a related entity. ATH has received a U.S. Department of Housing and Urban Development loan through the Community Development Block Grant passed through the Redevelopment Authority of the City of Philadelphia. The loan balance outstanding at the beginning of the fiscal year is included in the federal loans presented in the Schedule. The balance of the loan outstanding at June 30, 2025, consists of: Assistance Listing 14.218, Program Name Community Developmnet Block Grants/Entitlement Grants, Outstanding Balance at July 1, 2024 - $1,500,000, Outstanding Balance at June 30, 2025 - $1,500,000.
1260 HDC and ATH did not pass through any federal awards to subrecipients during the year ended June 30, 2025.

Finding Details

Finding 2025-001
Condition: The Corporation has two properties secured by CDBG loans. The properties are known as AppleTree Housing, Inc. (“ATH”) and Center West. The Corporation was unable to support that at least fifty-one percent (51%) of the tenants at the ATH property were leased to and occupied by low or very low-income persons as determined by the Federal “Section 8” Income Standards with completed tenant certifications and recertifications. At ATH, 2 of 3 occupied unit’s certifications were not completed during the year ended June 30, 2025. Criteria: All CDBG loans included in the consolidated financial statements are subject to restrictive covenants listed in a declaration of restrictive covenants, conditions, and restrictions agreement with the Redevelopment Authority of the City of Philadelphia that requires that at least fifty-one percent (51%) of the dwelling units of the project to be leased to and occupied by low or very low-income persons as determined by the Federal “Section 8” Income Standards. The owner is required to certify tenant income annually to determine compliance with this restrictive covenant. Cause: Management was unable to complete the required tenant certifications and recertifications timely. Effect: Lack of oversight of regulatory requirements could increase the risk of loss of funding and default of loans. Recommendation: Management should ensure all tenant certifications are completed timely to ensure adherence to the requirement that at least fifty-one percent (51%) of the tenants of the dwelling units of the project to be leased to and occupied by low or very low-income persons as determined by the Federal “Section 8” Income Standards. View of Responsible Officials and Planned Corrective Action: It is the goal of the Corporation to maintain compliance with regulatory requirements. Where hardships are encountered, the Corporation remains in ongoing communication with respective regulatory agencies to promote transparency and mitigate risk of loss in funding or default.