Audit 47410

Finding No. 2022-001; Federal Assistance Listing Number 99.999 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 our lease file testing one out of one tenant files tested did not have a security deposit refunded timely. Cause Management does not consistently follow procedures to refund tenant security deposits within the time requirement established by HUD. 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. Questioned Costs N/A Context One out of one tenant files tested did not have security deposit refunded timely. Repeat Finding No Recommendation Management should follow its policies and procedures related to refunding of tenant security deposits to comply with the timeline required by HUD regulations. Auditor Noncompliance Code: N. Special Tests and Provisions; M. Security Deposits Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions Generally, security deposits are refunded timely unless there are unique circumstances. Management will follow appropriate procedures in refunding security deposits on a timely basis. Fiscal will work with property management department to notify them if a security deposit is outstanding after a tenant has moved in.

Finding No. 2022-002; Federal Assistance Listing Number 99.999 Criteria Funds are to be spent only on approved property expenses. Condition During the year ended December 31, 2022, the project paid expenses in the amount of $447 on behalf of an affiliate. The amount due to the project as of December 31, 2022 is $447 and is recorded as a receivable from affiliate at year ended December 31, 2022. Cause Management did not follow its procedures to ensure that cash disbursements of project funds were limited to project operating costs prior to disbursement. Effect or Potential Effect The payments of $447 was not an authorized expense for the Property and if not corrected by Company could result in an unauthorized distribution of funds. Questioned Costs None Context The Company paid $447 of expenses for another affiliated entity; however, they caught this before year end and reversed the expense and recorded the receivable from that entity. Repeat Finding No Recommendation Management should implement procedures to ensure that bills paid are for the Property only prior to payment being made and should ensure the $447 is reimbursed from the affiliate. Auditor Noncompliance Code: B. Allowable Costs; Z. Other Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions The receivable was repaid in March 2023. REACH will make process improvement to prevent this from re-occurring by raising more awareness with the fiscal staff to better understand the procedures and operational agreements and the uniform guidance.

Finding No. 2022-003; Federal Assistance Listing Number 99.999 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted that one out of two tenants tested did not have income verification in connection with the preparation of the recertification. Cause Management's policies with respect to the determination of income support 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 support of tenant income and 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. Questioned Costs N/A Context One out of two tenants tested did not have verified income maintained in the tenant file. Repeat Finding No Recommendation Management should follow procedures and monitor compliance with those procedures to insure that tenant security deposits are correctly recorded, 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. Auditor Noncompliance Code: E. Eligibility; R. Section 8 Program Administration Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions Due to either tenant noncompliance or challenges with scheduling meetings with tenants or obtaining verifications, some recertifications were completed late. REACH has policies in place to complete recertifications timely and will be providing ongoing training and guidance to staff to make sure the policies are being followed.

Finding No. 2022-001; Federal Assistance Listing Number 99.999 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 our lease file testing one out of one tenant files tested did not have a security deposit refunded timely. Cause Management does not consistently follow procedures to refund tenant security deposits within the time requirement established by HUD. 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. Questioned Costs N/A Context One out of one tenant files tested did not have security deposit refunded timely. Repeat Finding No Recommendation Management should follow its policies and procedures related to refunding of tenant security deposits to comply with the timeline required by HUD regulations. Auditor Noncompliance Code: N. Special Tests and Provisions; M. Security Deposits Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions Generally, security deposits are refunded timely unless there are unique circumstances. Management will follow appropriate procedures in refunding security deposits on a timely basis. Fiscal will work with property management department to notify them if a security deposit is outstanding after a tenant has moved in.

Finding No. 2022-002; Federal Assistance Listing Number 99.999 Criteria Funds are to be spent only on approved property expenses. Condition During the year ended December 31, 2022, the project paid expenses in the amount of $447 on behalf of an affiliate. The amount due to the project as of December 31, 2022 is $447 and is recorded as a receivable from affiliate at year ended December 31, 2022. Cause Management did not follow its procedures to ensure that cash disbursements of project funds were limited to project operating costs prior to disbursement. Effect or Potential Effect The payments of $447 was not an authorized expense for the Property and if not corrected by Company could result in an unauthorized distribution of funds. Questioned Costs None Context The Company paid $447 of expenses for another affiliated entity; however, they caught this before year end and reversed the expense and recorded the receivable from that entity. Repeat Finding No Recommendation Management should implement procedures to ensure that bills paid are for the Property only prior to payment being made and should ensure the $447 is reimbursed from the affiliate. Auditor Noncompliance Code: B. Allowable Costs; Z. Other Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions The receivable was repaid in March 2023. REACH will make process improvement to prevent this from re-occurring by raising more awareness with the fiscal staff to better understand the procedures and operational agreements and the uniform guidance.

Finding No. 2022-003; Federal Assistance Listing Number 99.999 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted that one out of two tenants tested did not have income verification in connection with the preparation of the recertification. Cause Management's policies with respect to the determination of income support 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 support of tenant income and 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. Questioned Costs N/A Context One out of two tenants tested did not have verified income maintained in the tenant file. Repeat Finding No Recommendation Management should follow procedures and monitor compliance with those procedures to insure that tenant security deposits are correctly recorded, 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. Auditor Noncompliance Code: E. Eligibility; R. Section 8 Program Administration Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions Due to either tenant noncompliance or challenges with scheduling meetings with tenants or obtaining verifications, some recertifications were completed late. REACH has policies in place to complete recertifications timely and will be providing ongoing training and guidance to staff to make sure the policies are being followed.