Audit 4022

Federal program information: Funding agency: U.S. Department of Housing and Urban Development Titles: Continuum of Care Program Assistance listing number: 14.267 Award number: 202201401 Award year: 7/1/2022 – 6/30/2023 Criteria: When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents (FMR). Grant funds in an amount up to one month’s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition: Catholic Charities entered into a lease agreement for one tenant for the lease of an apartment at a monthly rate that was within HUD FMR. However, the monthly rent charged to Catholic Charities by the landlord exceeded the monthly rent amount stated in the lease agreement. Additionally, we noted that rent reasonableness was not performed for two other tenants, although the monthly rents paid for these tenants did not exceed HUD FMR. Context: One of 25 tenants had monthly rents paid above the amount stated in the lease agreement and HUD FMR. Two of 25 tenants did not have documentation that rent reasonableness was verified. Questioned Costs: $4,205 Cause: There has been turnover in various positions within this program at Catholic Charities. Additionally, Catholic Charities inherited several new tenants after terminating its relationship with a subrecipient, and the original determination of rent reasonableness for these tenants was not performed according to Catholic Charities’ Partners in Housing policies and procedures. Effect: Catholic Charities is not in compliance with HUD FMR requirements and its Partners in Housing policies and procedures. Auditor’s Recommendation: Management should enforce its Partners in Housing policies and procedures for rent reasonableness and HUD FMR requirements. Additionally, management should consider creating a checklist of all documentation that is required to be completed before a new tenant is accepted into the program and prior to a landlord being paid for monthly rent. Management’s Response: Catholic Charities understands and acknowledges the finding listed regarding our COC programming. As stated, there has been considerable turnover in the Center of Self Sufficiency and Housing Assistance. While there was a questionable concern in regard to releasing funds higher than the lease amount, Catholic Charities has worked with landlords and property managers across the City of Albuquerque for nearly a decade. When the lease was questioned, the property management company itself was under some high turnover and the temporary leasing agent had made a mistake in regard to the active lease. Catholic Charities has other leases with this management company and has evidence in those leases that the security deposit and base rent should indeed reflect the same amounts. While we gave the property management company more than sufficient time to correct the lease, they did not make the necessary adjustments. Catholic Charities has implemented a new procedure to ensure that we are only following the lease agreement amounts that include our case managers going over the lease to ensure all amounts are accurate, and then meeting as a team once a month to go over the check requests while reviewing leases that we will release funds for. The additional rent has been reimbursed to the City of Albuquerque and Catholic Charities is attempting to be reimbursed by the landlord. In regard to the FMR/rent reasonableness concerns, these files were constructed with previous management and are unaccounted for. Under new management, the client files have a checklist for each of the six parts that are in the client files to ensure accuracy moving ahead. The Center has also implemented a weekly case plan review to verify that all client documents have been obtained and accounted for.

Federal program information: Funding agency: U.S. Department of Housing and Urban Development Titles: Continuum of Care Program Assistance listing number: 14.267 Award number: 202201401 Award year: 7/1/2022 – 6/30/2023 Criteria: When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents (FMR). Grant funds in an amount up to one month’s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition: Catholic Charities entered into a lease agreement for one tenant for the lease of an apartment at a monthly rate that was within HUD FMR. However, the monthly rent charged to Catholic Charities by the landlord exceeded the monthly rent amount stated in the lease agreement. Additionally, we noted that rent reasonableness was not performed for two other tenants, although the monthly rents paid for these tenants did not exceed HUD FMR. Context: One of 25 tenants had monthly rents paid above the amount stated in the lease agreement and HUD FMR. Two of 25 tenants did not have documentation that rent reasonableness was verified. Questioned Costs: $4,205 Cause: There has been turnover in various positions within this program at Catholic Charities. Additionally, Catholic Charities inherited several new tenants after terminating its relationship with a subrecipient, and the original determination of rent reasonableness for these tenants was not performed according to Catholic Charities’ Partners in Housing policies and procedures. Effect: Catholic Charities is not in compliance with HUD FMR requirements and its Partners in Housing policies and procedures. Auditor’s Recommendation: Management should enforce its Partners in Housing policies and procedures for rent reasonableness and HUD FMR requirements. Additionally, management should consider creating a checklist of all documentation that is required to be completed before a new tenant is accepted into the program and prior to a landlord being paid for monthly rent. Management’s Response: Catholic Charities understands and acknowledges the finding listed regarding our COC programming. As stated, there has been considerable turnover in the Center of Self Sufficiency and Housing Assistance. While there was a questionable concern in regard to releasing funds higher than the lease amount, Catholic Charities has worked with landlords and property managers across the City of Albuquerque for nearly a decade. When the lease was questioned, the property management company itself was under some high turnover and the temporary leasing agent had made a mistake in regard to the active lease. Catholic Charities has other leases with this management company and has evidence in those leases that the security deposit and base rent should indeed reflect the same amounts. While we gave the property management company more than sufficient time to correct the lease, they did not make the necessary adjustments. Catholic Charities has implemented a new procedure to ensure that we are only following the lease agreement amounts that include our case managers going over the lease to ensure all amounts are accurate, and then meeting as a team once a month to go over the check requests while reviewing leases that we will release funds for. The additional rent has been reimbursed to the City of Albuquerque and Catholic Charities is attempting to be reimbursed by the landlord. In regard to the FMR/rent reasonableness concerns, these files were constructed with previous management and are unaccounted for. Under new management, the client files have a checklist for each of the six parts that are in the client files to ensure accuracy moving ahead. The Center has also implemented a weekly case plan review to verify that all client documents have been obtained and accounted for.