Audit 405444

Federal Program: Supportive Housing for the Elderly (AL #14.157) Federal Award: Section 202 Direct Loan Federal Agency: U.S. Department of Housing and Urban Development Criteria: In accordance with HUD Handbook 4350.3 Rev-1, Chapter 7, Owners of HUD multifamily assistance housing properties must perform annual recertifications of income and family composition and adjust tenant rent accordingly. Compliance with HUD occupancy requirements is mandatory for continued subsidy payments. Condition: During the review of tenant files for the year ended September 30, 2025, 3 out of 6 sampled tenant files lacked timely annual recertifications. For these sampled files, the managing agent did not complete the annual Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent Procedures by the required anniversary date. Cause: Staff turnover contributed to the delay in completion of the annual recertifications. Effect: Failure to complete annual recertifications timely may result in incorrect tenant rent, improper subsidy payments and potential HUD enforcement actions, including repayment of overpaid assistance. Recommendation: Management should train staff regarding annual recertification rules and implement procedures to ensure timely completion of annual recertifications. Management’s Views and Corrective Action Plan: Management agrees with the finding and will implement procedures to train staff as well as procedures to ensure timely completion of annual recertifications.

Federal Program: Supportive Housing for the Elderly (AL #14.157) Federal Award: Section 202 Direct Loan Federal Agency: U.S. Department of Housing and Urban Development Criteria: In accordance with HUD Handbook 4350.3 Rev-1, Chapter 6, Owners of HUD multifamily assistance housing properties must return tenant security deposits within 30 days after the move-out date or shorter time if required by state and/or local laws. According to New York law, tenant security deposits must be returned within 14 days of the move-out date. Condition: During the review of tenant files for the year ended September 30, 2025, the tenant security deposit for the one move-out testing selection was not returned within 14 days as required by New York State law. Cause: Staff turnover contributed to the delay in the return of the security deposit. Effect: The noncompliance may expose the Project to tenant claims, statutory penalties and legal costs and could result in liabilities requiring recognition or disclosure in the financial statements. Additionally, it may lead to regulatory consequences affecting operations. Recommendation: Management should establish and implement procedures to ensure timely return of tenant security deposits in the event of staff turnover. Management’s Views and Corrective Action Plan: Management agrees with the finding and will implement procedures to ensure timely return of tenant security deposits.