Finding Text
2024-003 Contract Rent Reasonableness
Condition: The Authority failed to substantiate that contract rents are reasonable for new
admissions.
Criteria: Per 24 CFR section 982.4, the Authority must determine and the document that the rent to
an owner is reasonable at the initial leasing.
Context: From our sample 13 new admissions, six files indicated that rent was not considered to be
reasonable compared to the existing data in the software system.
Effect: Without the ability to verify that the contract rent amounts are reasonable, a potential exists
for HAP payments to be higher than permitted.
Recommendation: We recommend that the Authority contact their software provider to determine
whether there is an option to update the contract rent amounts to permit a better rent reasonable
comparison. Otherwise, the Authority will need to review their procedures to determine a new
approach to determine that new contract rents are reasonable.
Response: All HAP payments are considered reasonable. We will implement processes to ensure that
current rent data is entered into the software system so that rent reasonableness can be calculated
correctly.