Finding 1057285 (2022-002)

Finding No. 2022-002; Supportive Housing for the Elderly (Section 202), CFDA 14.157 Criteria The regulatory agreement required that the project make monthly deposits to its replacement reserve. Condition During the year ended November 30, 2022, the project did not make the required monthly deposits to the replacement reserve as disclosed. The project was required to make monthly deposits to the reserve in the amount of $5,000 and $9,160 related to Finding 2021-1. Total cumulative deposits due to the replacement reserve during the year ended November 30, 2022 were $69,160 of which the project made deposits of $54,569 leaving an amount remaining due to the reserve of $14,431. Cause Due to COVID-19, the Property experienced delays in receiving its annual PRAC renewal and monthly PRAC subsidy funding. Effect or Potential Effect Underfunding of the replacement reserve and a noncompliance of the regulatory agreement. Questioned Costs: $14,431 Recommendation Management should make timely deposits to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Special Tests and Provisions Finding Resolution Status: Open Views of Responsible Officials and Planned Corrective Actions: Due to COVID-19, delays were encountered by HUD while reviewing and renewing the annual PRAC which did not afford management enough time to settle outstanding vendor payments and make the increased reserve for replacement deposit.