Finding 1160121 (2024-003)

Special Tests and Provisions; Supportive Housing for the Elderly, Federal Assistance Listing Number 14.157 Criteria - HUD regulatory agreement for Section 202 Supportive Housing for the Elderly requires that the project make timely monthly deposits to its replacement reserve. Condition - During the year ended December 31, 2024, the monthly deposits of $5,500 were not timely made. One payment was not made until February 2025. Cause - The project does not generate sufficient cash flow to make the required monthly deposits. Effect or Potential Effect - Failure to make monthly payments resulted in underfunding the replacement reserve and a violation of the regulatory agreement. Questioned Costs - None Context - The deposits were not made timely and only eleven deposits were made as of December 31, 2024. The twelfth deposit was made in February 2025. Identification as a Repeat Finding - This is a repeat finding (see prior year finding number 2023-003). Recommendation - Management should review the project budget to ensure that the replacement reserve is funded timely and in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: Completed. Views of Responsible Officials - The last amount of $5,500 of the reserve funding for 2024 was accounted for in February 2025 to fully fund for the 2024 year.