Audit 399431

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: 5 out of 10 tenants tested did not utilize the Enterprise Income Verification (EIV) system timely. 7 out of 10 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 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 86 were selected. We identified exceptions in 10 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: In-Process Views of Responsible Officials Management compliance is addressing the generating of EIV reports to align with verification dates (<120 days) rather than when annual recertification notices are generated/sent (at least 120 days). Delays in recertification completion have improved; a majority of the certifications reviewed were effective within first six months of transition while the site was still adjusting to new software and management. Additional training has been provided to emphasize the importance of timely reporting and completion.

Criteria The HUD regulatory agreement requires that the project make monthly deposits to its replacement reserve. Condition During the year ended December 31 2025, the project did not make the required monthly deposits to the replacement reserve in the amount of $10,616. Avondale is required to make monthly deposits to the reserve of $1,924. Effective July 1, 2025, the monthly deposits required by HUD increased to $2,090. Cause The project does not generate sufficient cash flow to make the required monthly deposits. Effect or Potential Effect Failure to make monthly payments resulted in an underfunding the replacement reserve and a violation of the regulatory agreement. Questioned Costs NoneContext 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 review the project budget to determine if nonessential costs can be cut (or request a loan from the owner) to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Reserve for replacements deposits Finding Resolution Status: Resolved Views of Responsible Officials All required replacement reserve deposits were brought current as of January 13, 2026. Going forward, management will implement enhanced monitoring procedures to ensure timely monthly funding in accordance with HUD requirements. In the event of cash flow constraints, management will proactively reduce nonessential expenditures or seek an owner contribution to maintain compliance with the regulatory agreement.