Finding Text
2022-001 Criteria: Owners shall not, without the prior written consent of HUD, convey, assign, transfer, dispose of, or encumber any of the mortgaged property or permit the conveyance, transfer, or encumbrance of such property. Condition: In connection with applying for the conversion of assistance under the Rental Assistance Demonstration (RAD), the Organization filed a certificate of merger on March 14, 2022 with the Ohio Secretary of State to effectively merge the operations of Alexia Manor Housing Corporation (owner of the Project) with another not-for-profit entity controlled by the same Board of Trustees. HUD has not issued an approval of the transfer of physical assets in connection with the RAD transaction. Questioned Costs: None Cause: In anticipation of a RAD for PRAC conversion of the existing PRAC contract, the Board of Trustees approved a plan to begin the process with HUD. The certificate of merger was filed prior to securing consent from HUD. Effect: The Project was not in full compliance with its Regulatory Agreement regarding unauthorized change in ownership. Recommendation: Management should continue to work with HUD to obtain an approval of the RAD conversion and written consent of the merger of operations of Alexia Manor Corporation with Lourexis, Inc.