Finding Text
Program: HOME Investment Partnerships Program (HOME)
ALN #: 14.239
Federal Agency: Department of Housing and Urban Development
Federal Award Number: M22-MC250202
Award Year: July 1, 2022–June 30, 2023
Eligibility/Subrecipient Monitoring
Type of finding: Noncompliance
Prior-year finding: No
Statistically valid sample: No
Criteria
24 CFR 92.252, Qualification as affordable housing: Rental housing
(e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period specified in the following table, beginning after project completion.
(1) The affordability requirements:
(i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership
(ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure)
(iii) Must be recorded in accordance with State recordation laws.
(2) The participating jurisdiction may use purchase options, rights of first refusal, or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure in order to preserve affordability.
(3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties obtains an ownership interest in the project or property.
4) The termination of the restrictions on the project does not terminate the participating jurisdiction’s repayment obligation under § 92.503(b).
(h) Tenant income. The income of each tenant must be determined initially in accordance with § 92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must reexamine each tenant’s annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. 24 CFR92.203 Income determinations
(a) The HOME program has income-targeting requirements for the HOME program and for HOME projects. Therefore, the participating jurisdiction must determine each family is income eligible by determining the family’s annual income.
(1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (a)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with § 92.252(h):
(ii) Obtain from the family a written statement of the amount of the family’s annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.
Additionally, the 2 CFR sections 200.332(d) through (f) provide the principles to be applied to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals.
Condition
During our testwork, we noted there were two individuals residing in a facility financed with a City HOME loan who did not meet the low-income requirements and were therefore determined not to be eligible.
Cause
The City’s property manager failed to ensure that another unit, or the next available unit, within the building would be designated as a HOME-floating unit as required in its loan agreement with the City.
Effect
Ineligible recipients could potentially cause the City to not be in compliance with HUD requirements.
Questioned Costs
Not determinable
Recommendation
We recommend the City work collaboratively with its property managers to ensure that the correct number of units are being designated as HOME-assisted units.
Views of Responsible Officials and Corrective Actions
The two individuals determined to have incomes in excess of HOME Program limits were noted in our FY23 monitoring of properties assisted with HOME funds. The HOME Program allows for a unit to be occupied by a household who was initially eligible and whose income later increases, but requires that a comparable unit be designated as a HOME unit and leased to an eligible household when one is available. Owners of each property were made aware of the circumstance when City monitoring was completed. Each will designate comparable units to be HOME units when available and lease them to eligible households.
Implementation Date
Dependent on when residents move and/or appropriate units are available.
Responsible Officials
Chris Cotter, Housing Director & Judith Tumusiime, Federal Grants Manager, Cambridge Community Development Department