According to 24 CFR 982.503(d) (3), "A PHA may establish exception payment standard amounts between 110 percent and 120 percent of the applicable FMR for such duration as HUD specifies by notice upon notification to HUD that the PHA meets at least one of the following criteria: (i) Fewer than 75 per...
According to 24 CFR 982.503(d) (3), "A PHA may establish exception payment standard amounts between 110 percent and 120 percent of the applicable FMR for such duration as HUD specifies by notice upon notification to HUD that the PHA meets at least one of the following criteria: (i) Fewer than 75 percent of the families to whom the PHA issued tenant‐based rental vouchers during the most recent 12‐month period for which there is success rate data available have become participants in the voucher program; (ii) More than 40 percent of families with tenant‐based rental assistance administered by the agency pay more than 30 percent of adjusted income as the family share; or (iii) Such other criteria as the Secretary establishes by notice." Additionally, The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 10 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). For 2023, the Authority was approved by HUD to use 120% FMRs. During the audit, we found that the Authority's approved payment standards for 2024 continued to use 120% of the HUD's FMR standard. They were using this without continued approval from HUD. During the audit, the auditor selected 40 tenants to test for eligibility and special tests. Out of the 40, 13 tenants on the 50058 used the 120% payment standard. Management continued to use the 120% threshold after the HUD approval had expired. The Authority did not get required approval to continue beyond 2023 to use the 120% FMR threshold. The Authority used incorrect FMR's to approve payments for HAP. This resulted in more HAP expense and revenue because tenants were housed in housing over the hUD approved 120% FMR rate. The Auditor recommends the Auhtority return to the 110% threshold approved by HUD.