Core Issue: The Project failed to make required reserve deposits of $36,540 as mandated by the Regulatory Agreement.
Impacted Requirements: Non-compliance with HUD regulations and the terms of the Regulatory Agreement regarding funding of the replacement reserve.
Recommended Follow-Up: Ensure delinquent deposits are made or request a suspension from HUD; establish a plan for timely future deposits.
Finding Text
S3800-011 - Title and ALN Number of Federal Program - 14.157 - Supportive Housing for the Elderly; S3800-015 - Type of Finding - Federal Award Finding; S3800-016 - Finding Resolution Status - In process; S3800-017 - Information on Universal Population Size - N/A; S3800-018 - Sample Size Information - N/A; S3800-019 - Identification of Repeat Finding and Finding Reference Number - N/A; S3800-020 - Criteria - Pursuant to the requirements of the Regulatory Agreement, The Project is required to comply with all HUD regulations and other requirements. The Regulatory Agreement establishes the requirement to fund a replacement reserve in an amount deteremined by HUD; S3800-030 - Statement of Condition - During the year ended September 30 2025, the reserve deposits totaling $36540 were not made as required by the Regulatory Agreement; S3800-032 - Cause - The Project did not fund the replacement reserve account during the year ended September 30 2025; S3800-033 - Effect or Potential Effect - The Project is not in compliance with the terms of the Regulatory Agreement; S3800-035 - Auditor Non-Compliance Code - N. Reserve for Replacement Deposits; S3800-040 - Questioned Costs - $36540; S3800-045 - Reporting Views of Responsible Officials - The monthly deposits were not made following change in management agent; S3800-050 - Context - The Project did not make all the required m onthly deposits; S3800-080 - Recommendation - The delinquent deposits should be funded or a deposit suspension requested from HUD. All Future deposits should be made timely; S3800-090 - Auditor's Summary of the Auditee's Comments on the Findings and Recommendation - Auditor agrees with the auditee's comments on the finding and recommendations; S3800-130 - Response Indicator - Agree; S3800-140 - Completion Date - 09/30/2026; S3800-150 - Response - The Salvation Army submitted a BBRI which requested increased rents and releases from reserves to pay accounts payable as well as approval of loans from the Sponsor to cover accounts payable that could not be paid from reserves. This would enable the reserves to be paid on a go forward basis. In addition, the next step will be a BBRI for the RAD for PRAC conversions.
Corrective Action Plan
The Salvation Army submitted a BBRI which requested increased rents and releases from reserves to pay accounts payable as well as approval of loans from the Sponsor to cover accounts payable that could not be paid from reserves. This would enable the reserves to be paid on a go forward basis. In addition, the next step will be a BBRI for the RAD for PRAC conversion.