Finding Text
Finding 2024-001
Questioned Costs: $27,281
Information on Universe and Population Size: N/A
Sample Size Information: N/A
Noncompliance Information: The Project withdrew funds from the Reserve for Replacement (RFR)
account without prior HUD approval.
Condition: RFR withdrawals exceeded HUD approved withdrawal requests by $27,281 for the year
ended December 31, 2024.
Criteria: The HUD Regulatory Agreement requires that the Project receive prior HUD approval for all
RFR account withdrawals.
Cause: Management experienced a great deal of problems finding a cost-effective replacement solution
for the original PTAC units. In addition to a very warm summer with more PTAC units failing than
expected, elderly tenants complaining of the heat, and staffing shortages, the Project experienced a
shortfall in available operating cash to make the RFR deposits because HUD delayed subsidy payments
for the months September - December 2024 while not communicating to Management in a timely matter
during Management’s repeated attempts to respond to HUD and resolve the situation that the Project's
UEI number needed re-verified.
Effect or Potential Effect: The 9250 Funds Authorization form was not submitted and the Project made
unauthorized RFR withdrawals used to fund replacement of the PTAC units for the year ended December
31, 2024.
Recommendation: Management should submit a Form 9250 Fund Authorization for the 2024
unapproved withdrawals and receive approval. Future RFR requests should be in amounts necessary for
specific funding requests and spending should be monitored to ensure that funds are not withdrawn from
the RFR account in excess of specific HUD-approved amounts.
Reporting Views of Responsible Officials: Management submitted a Form 9250 Fund Authorization on
March 26, 2025 for combined 2024 unapproved withdrawals and additional 2025 fund requests.
Management is awaiting approval.