The current Executive Director was hired on December 4, 2024 and inherited the issues that existed at that time. A Disclaimer of Opinion was issued for the year ended September 30, 2024. (d)-The Housing Choice Voucher Program includes a separate program that was established with left over pre 2004 Section Admin fees. This was permissible prior to 2004. With part of the funds, the Program purchased a rent house. The occupant owed the authority $44,723 on a mortgage note that is continually in arrears. If this house was sold, the authority would receive a cash influx of a minimum of $100,000. (e)-Both the Low Rent and the Housing Choice Voucher Programs have an FSS program. Audit findings have been made for years that management has not properly administered this program. At year end, the HCV Program shows a liability of $53,650 with a corresponding cash account of $53,671. If the actual FSS liability verified by audit was materially correct of, for example, $10,000, the liability account would be substantially reduced. The resulting cash could be transferred to operating. (f)-The Housing Choice Voucher Program also has a Homeownership program. Audit findings have also been made for years that management has not properly administered this program. At year-end, the HCV Program shows a liability of $59,234 with a corresponding cash account of $59,234. If the actual Homeownership liability verified by audit was materially correct of, for example, $10,000, the liability account would be substantially reduced. The resulting cash could be transferred to operating. Cause The lack of due diligence during the management period of the past two Executive Directors, prior to the current one, appears to be the principal reason. Effect The authority has severe financial distress. Recommendation We have made various recommendations over the years. This year’s are reflected in the View of Responsible Officials presented below. View of Responsible Official I am Louie Alfaro, Executive Director and Designated Person to answer these findings. As noted above, I did not become E.D. until December 4, 2024. I will take the following proposed steps to the board of commissioners for approval. The steps coincide with (a) through (f) noted in Condition Found. (a) and (b)-We will continue minimize expenses when possible, to eliminate the deficits and reduce the interfund balances noted above. (c)-I understand the auditor has talked with and communicated in writing with REAC and the HUD Albuquerque Field Office regarding the CARES Act liability of $126,982 noted in (c) above. It appears HUD regulations permit a report to be filed after the deadline for expenditures. If HUD will accept and approve this report, I will request the fee accountant or other third party to determine which 2020 and 2021 Admin and Other Costs should have been timely identified with the CARES Act funds. I understand this may result in an additional fee, due to the difficulty of obtaining and reviewing the old records. Then, after review upon audit, I understand that the liability would be eliminated. (d)-I will review whether the note receivable on the rent house noted in (d) above is current. If past-due, I will consult with our attorney about avenues to foreclosure. (e)-As of mid-September 2026, we feel we have the FSS program administered properly for the Low Rent program. Principally due to lack of available man hours, we are still behind in bringing the FSS program for Housing Choice Vouchers up to date. We are working on it as time permits. (f)-As of mid-September 2026, we believe we have determined the estimate amounts owed to 8 FSS participants. However, how to bring this to resolution has not been resolved, since all 8 were ported out to El Paso Homes (El Paso Housing Authority) over a year ago. Presently, we are considering three alternatives: (a)-pay the participants in full or in part, but here are legal issues with that, (b)-establish parameters for items we will reimburse the participants-new stoves, etc., (c)-agree to a Memorandum of Understanding with El Paso Homes. We have requested a meeting with El Paso Homes to discuss the issues and a possible MOU, but they have yet to agree to a meeting. Low Rent Housing Program ALN# 14.850 and Housing Choice Voucher Program ALN# 14.871 2025-001-Financial Distress, Interfund Balances and Management’s Plans-Allowable Costs Criteria and Specific Requirement (a)-It is often impractical for an entity with multiple funds to each disburse funds for payroll and common bills. Interfund balances may exist, as long as they are kept small, and capable of being paid and zeroed out on a short-term notice. (b)-Expenses should be monitored sufficiently to keep equity balances of a positive amount. (c)-CARES Act Funds and other grants should be kept up to date, as to matching expenditures with federal advances. Condition Found (a)-The General Fund, which includes the Low Rent Program, owes the Housing Choice Voucher Program $265,569. As the Statement of Financial Position discloses, if this interfund balance was paid in full at year-end, the General Fund would only have current assets of $26,200. Conversely, the Housing Choice Voucher has an interfund receivable of $265,569 for which the collection of the majority of this balance is doubtful. (b)-At year-end, the Housing Choice Voucher Fund has a restricted HAP equity of $251,034. This balance is calculated by the cumulative portion of the HAP federal advances designated to pay HAP payments, less the actual HAP payments made. The fund should have a minimum of $251,034 of cash on hand to pay HAP payments. Instead, the Housing Choice Voucher Fund shows an overdraft of $141,044. (c)-The Housing Choice Voucher Fund includes an accounts payable to HUD for $126,982 of CARES Act funds. The authority received $66,018 and $60,964 on August 13 and September 1, respectively in 2020. The authority’s fee accountant repeatedly asked the Executive Director serving then to identify the 2020 and 2021 Admin or other costs that these CARES Act funds paid for. She would not do it. Consequently, HUD considers these funds to be due to HUD.
Low Rent Housing Program ALN# 14.850 and Housing Choice Voucher Program ALN# 14.871 2025-002-Administration of the Homeownership Program and FSS Programs-Need Improvement-Special Tests Criteria The Low Rent and Housing Choice Voucher Programs both participate in the FSS programs. Federal regulations dictate how the FSS program should work. Enrollees have a choice of goals to accomplish and thus graduate with FSS funds. The Authority should keep documentation that the FSS program has been offered to all new participants, as long as the program exists. The Homeownership program was established years ago from excess Admin fees of the program, which was permitted from the pre-2004 Admin fees. Condition FSS For years, an audit finding noted that this program was not adequately monitored. Beginning in mid -2024, after the new E.D. and a new employee was hired, the authority improved administration of the program. However, there is no established liability of the authority at year-end. Homeownership For years, an audit finding has noted that this program is not adequately monitored. Old paperwork suggests that approximately 8 tenants may have at one time been enlisted. However, with multiple E.D.s and employees, plus the port-out of all but one of the potential enrollees, the paperwork is inadequate. Cause As noted, there has been employee turnover and no emphasis by prior management to properly administer the programs. Effect The federal regulations that apply to administering these programs have not been complied with. Recommendation For the FSS program, the liability as of September 30, 2025 should be determined. Regarding the Homeownership program, we have recommended that the Board establish a policy for which expenditures will be paid to the tenant, for those that provide proof they were enrolled in the program. View of Responsible Official As noted in Finding 2025-001, I have agreed to this recommendation.
Section 8 Housing Choice Voucher Program-ALN #14.871 2025-003-Lack of quality control and SEMAP-Eligibility and Special Tests Criteria and Specific Requirement The waiting list, tenant file functions, and quality control should be documented. Condition Found The tenant files and waiting list were much improved over the prior year, for which numerous exceptions were noted. However, we did note the following: (a)-SEMAP was apparently not prepared by prior management. SEMAP is required by HUD regulations. This is a documentation that quality control was performed, broken down into subsets. Even if SEMAP was not required by HUD, at least similar documented quality control should be done and available for third party review. Statement of Auditing Standard #115, which auditors must follow, states “absent or inadequate segregation of duties within a significant account or process” is defined by the Standard as at least a significant deficiency or material weakness. Either require an audit finding. (b)-It appears that quality control inspections were not done. (c)-It appears that the last utility allowance review was done in August 2023. Federal regulations require that utility allowances be done annually. At least when any one category changes more than 10% since the last review, the allowances must be revised. Cause Apparent oversight. Effect Federal regulations were not complied with. Recommendation We have discussed the particulars with management. We have also furnished them with blank forms to complete the filing. View of responsible official We will comply with the auditor’s recommendation.