Finding Text
Finding No. 2022-001: HUD Supportive Housing for Persons with Disabilities Section 811 program, Assistance Listing Number 14.181 Criteria: The owner shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repairs and replacement of capital items. The replacement reserve funds must be deposited in an interest bearing account. All earnings including interest on the reserve must be added to the reserve. All disbursements from the reserve must be as approved or directed by HUD or the State Agency for 24 CFR part 883 projects, as applicable. An amount as required by HUD or the State Agency for 24 CFR part 883 projects, as applicable, shall be deposited monthly in the reserve fund in accordance with the Regulatory Agreement or HAP contract 24 CFR sections 880-601, 880-602, 881-601 and 883-701. Condition: The required monthly deposits to the replacement reserve were not made on a timely basis for two months and the amount was not deposited for another two months. Context: A review of deposits to the replacement reserve was performed. Cause: The Organization had insufficient cash flows. Effect: The Project is not in compliance with the Regulatory Agreement. Recommendation: The Project should make the required deposit into the replacement reserve account each month. Response: Management concurs with the finding and has implemented procedures to resolve the issue.