Finding 1116865 (2024-002)

Finding 2024-002 – HOME Loans Affordable Period Monitoring Program: Home Investment Partnerships Program (HOME) Assistance Listing No.: 14.239 Federal Agency: Department of Housing and Urban Development (HUD) Passed Through: N/A – Direct Program Award Year: Fiscal Year 2023-2024 Compliance Requirement: Special Tests and Provisions Questioned Costs: $0 Criteria According to 24 Code of Federal Regulations (CFR) § 92.252, participating jurisdictions must enforce affordability requirements during the specified period through mechanisms such as regulatory agreements, deed restrictions, or similar instruments. This includes conducting on-site inspections of HOME-assisted rental housing to determine compliance with property standards and to verify information submitted by owners. Condition Five instances were identified where the affordable period monitoring procedures were not performed by the County. Cause of Condition The Department experienced 100% staff turnover for HOME in 2023 and historical knowledge and organizational experience were lost at that time. Due to this fact current staff were unaware of this requirement. Repeat Finding No. Effect of Condition Noncompliance may necessitate the repayment of misused or improperly monitored HOME funds to HUD. For instance, if a county fails to enforce affordability requirements, HUD can demand the return of funds associated with the noncompliant units. Persistent noncompliance can jeopardize a county's eligibility for future HOME allocations. HUD may withhold or reduce funding until compliance issues are resolved, impacting the county's ability to finance affordable housing projects. Recommendation Management should develop and implement a system to ensure the HOME Loans under the Affordability Period are properly monitored. Each procedure performed should be documented and reviewed to ensure monitoring procedures were performed. The County should develop standardized monitoring checklist aligned with HUD’s HOME program guide for file reviews, inspections, and affordability compliance. A cloud-based tracking system (or similar options) should be used to maintain compliance records and send alerts for inspections. The County should provide annual training for monitoring staff to ensure they stay updated on HUD regulations. Additionally, offer technical assistance to property owners and homebuyers to support compliance. Management Response and Corrective Action Plan The Department will provide training to staff on HOME monitoring requirements, updating policies and procedures, as necessary, to address all current regulatory requirements. The Department’s multifamily monitoring for all projects in the HOME period of affordability will be completed prior to June 30, 2025. As part of the monitoring process, the Department will document all records requiring annual or semi-annual oversight and review for compliance with HOME requirements. Should the monitoring result in any findings requiring corrective action, the Department will ensure all findings are addressed by September 30, 2025.