Finding Text
U.S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 2022-001 ? Replacement Reserves Special Tests and Provisions Supportive Housing for the Elderly (Section 202) Assistance Listing #14.157 Reportable Noncompliance Statement of Condition The Project did not make replacement reserve deposits in the required amount, of which, $2,167 was not funded. Criteria The Project Rental Assistance Contract (PRAC) requires the Project to make monthly deposits of $2,167 to its replacement reserve. Cause Management did not prioritize the replacement reserve deposit ahead of monthly payables. Effect or Potential Effect The Project is not in compliance with the PRAC, and the lack of a sufficient replacement reserve puts the Project at risk. Recommendation The Project should make the required replacement reserve deposits immediately to bring the account into compliance and management should establish a procedure to ensure that reserve deposits are given priority payment treatment going forwards. Management?s Response Management agrees with the finding, see Corrective Action Plan for plan of action.