Audit 400934

Finding No. 2025-001 - E - Eligibility for Uniform Guidance - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: 126EE044, program year is 2024. 126-33044, program year is 2005. Name of Pass-through Entity (if applicable): Not Applicable 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: In connection with our lease file review we noted: -one out of four tenants did not have income verification with the use of EIV. -three out of three tenant files tested did not have a timely recertification performed. 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 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. Context: One out of four tenants tested did not have income verification with the use of the EIV performed. Three out of three tenant files tested did not have a timely recertification performed. Auditor Noncompliance Code: Z-Other for REAC filing Identification as a Repeat Finding: Yes, 2024-001 Questioned Costs: N/A Recommendation: Management should establish procedures and monitor compliance with those procedures to ensure that EIVs and recertifications are performed timely, inspections are completed, waitlists are being completed and followed, 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. 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 at the property continued to have issues with timely completion of income certifications in 2025. In 2026, property management will be outsourced to a third-party management company to address outstanding compliance issues.

Finding No. 2025-002 - N - Special Tests and Provisions for Uniform Guidance - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: 126EE044, program year is 2024. 126-33044, program year is 2005. Name of Pass-through Entity (if applicable): Not Applicable 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 one tenant that moved out of the project during the year, we noted one 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. Context: One move out tenant of one tested did not have their security deposit refund returned timely. Auditor Noncompliance Code: M-Security deposits for REAC filing Identification as a Repeat Finding: No Questioned Costs: N/A Recommendation: Management should establish procedures and monitor compliance with those procedures to ensure that move out inspections are performed timely, security deposits are returned timely 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. Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to return security deposits in a timely manner but was delayed in issuing the security deposit refund for this unit due to staffing issues. In 2026, property management will be outsourced to a third-party management company to address any outstanding compliance issues.