Finding Text
Section 223(f), Assistance Listing Number14.155 Criteria: Paragraph 5.(a) of the Regulatory Agreement with HUD states that the Project will deposit a HUD-approved monthly amount into the reserve for replacement account. The Project’s HAP Contract renewal letter stated that the monthly amount should be $3,861 effective July 1, 2023 and that the owner was required to submit a HUD 9250 reflecting this monthly deposit change to the HUD Office for execution and mortgagee notification. Statement of Condition: For the year ended June 30, 2024, the owner did not submit a HUD 9250 reflecting the increased monthly deposit amount to the HUD Office, and the Project did not make the full amount of the required annual deposit into the reserve for replacement account, per the Project’s Regulatory Agreement with HUD and the HAP Contract renewal letter. Context: Management did not make the entire monthly reserve for replacement deposit for July 2023 through June 2024. Cause: The failure to submit a HUD 9250 reflecting the new monthly deposit to the HUD office and to make the increased deposit amount into the reserve for replacement account was an oversight by management. Effect: At June 30, 2024, the reserve for replacement account was underfunded by $996, based on the requirements in the Regulatory Agreement and the HAP Contract renewal letter. Recommendation: We recommend that Management fund the reserve for replacement account fully as soon as possible, and we recommend that Management institute procedures to ensure that required HUD 9250 forms are prepared and submitted to HUD and that required deposits are made into the reserve for replacement account on a timely basis. Views of Responsible Officials: Management agrees with the finding and the recommendation. The Project made the required deposits on March 7, 2025. Management will implement procedures to ensure that the effective date of the Form 9250 is adhered to when there are changes in the amount of funding required for the reserve for replacement account.