Finding Text
Criteria: As required by the 2014 Appropriations Act, paragraph (2)(b)(i) Section 3(a) of the United States Housing Act of 1937, as amended by Section 201, establishes new parameters that PHAs must use when determining the flat rent amounts. Specifically, flat rents must now be set at no less than 80 percent of the applicable Fair Market Rent (FMR) and adjusted annually.
In addition, most recently HUD issued Notice: PIH 2021-27 which clarifies HUD’s interpretation of the statutory amendment to flat rents and procedures to obtain specific exemptions.
Condition: During our audit we noted the Authority did not adjust the flat rents during 2024 which resulted in twelve tenants not paying the appropriate amount of rent and resulted in a projected loss of income for the Authority of $3,542 for the year ended September 30, 2024.
Cause: The Authority did not adjust the flat rents annually as required or obtain an appropriate exemption to reflect current market conditions.
Effect or Potential Effect: Because the flat rents were not adjusted correctly, this resulted in an estimated loss of rental income of $3,542 and affected twelve tenants.
Recommendation: We recommend the Authority review the flat rents and adopt according to the flat rent regulations on an annual basis. The Authority should review HUD Notice PIH 2021-27 for the updated procedures on flat rents and exemptions and to implement accordingly.
View of Responsible Official: Management agrees with the Finding.