Finding Text
Criteria or specific requirement: The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 10% decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507).
Condition: The Authority did not have adequate internal controls designed to ensure that rent reasonableness was completed in accordance with compliance requirements.
Questioned costs: $3,817
Context: During the testing of the HCV tenant files, certain special provision compliance deficiencies were noted in 3 of 46 files:
(1) 1 out of 29 tenant’s rent reasonableness determination was not found in file.
(2) 2 out of 17 tenants’ rent per 50058 and HAP contract did not match that on the rent reasonableness determination.
Cause: The Authority faced high turnover rates in the case management department, causing a lot of issues to go unaddressed.
Effect: The Authority is not in compliance with federal regulations regarding rent reasonableness determination.
Recommendation: We recommend management designate one person to oversee the rent reasonableness determination for new tenants and contract rent changes to ensure rent reasonableness is completed properly and accurately flows to the HAP contract and HUD-50058 form.
Views of responsible officials: There is no disagreement with the audit finding.