The Project has received a U.S. Department of Housing and Urban Development capital advance under Section 202 of the National Housing Act. The capital advance balance outstanding at the beginning of the year is included in the total federal expenditures presented in the Schedule. The outstanding capital advance balance as of September 30, 2025 was $4,953,000.
Federal Program: Supportive Housing for the Elderly (AL #14.157) Federal Award: Section 202 Capital Advances / Project Rental Assistance Payments Federal Agency: U.S. Department of Housing and Urban Development Criteria: In accordance with HUD Handbook 4350.3 Rev-1, Chapter 7, Owners of Project Rental Assistance Contract 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, 5 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.