OFFICE OF AUDIT DRAFT REGION 7 For Discussion and Comment Only - Subject to Review and Revision KANSAS CITY, KS Windridge Apartments Wichita, KS Section 221(d)(4) Multifamily Insurance Program 2014-KC-1001 November 7, 2013 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF INSPECTOR GENERAL Issue Date: November 7, 2013 Audit Report Number: 2014-KC-1001 TO: Joseph D. Pennel, Acting Director, Kansas City Office of Multifamily Housing, 6AHMLAS //signed// FROM: Ronald J. Hosking, Regional Inspector General for Audit, 7AGA SUBJECT: Windridge Apartments Did Not Administer Its Program in Accordance With HUD Rules and Regulations and Its Own Policies and Procedures Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) final results of our review of Windridge Apartments. HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on recommended corrective actions. For each recommendation without a management decision, please respond and provide status reports in accordance with the HUD Handbook. Please furnish us copies of any correspondence or directives issued because of the audit. The Inspector General Act, Title 5 United States Code, section 8L, requires that OIG post its publicly available reports on the OIG Web site. Accordingly, this report will be posted at http://www.hudoig.gov. If you have any questions or comments about this report, please do not hesitate to call me at 913-551-5870. Office of Audit Region 7 400 State Avenue, Suite 501, Kansas City, KS 66101 Phone (913) 551-5870, Fax (913) 551-5877 Visit the Office of Inspector General Web site at www.hudoig.gov. November 7, 2013 Windridge Apartments Did Not Administer Its Program in Accordance With HUD Rules and Regulations and Its Own Policies and Procedures Highlights Audit Report 2014-KC-1001 What We Audited and Why What We Found We selected Windridge Apartments in The property (1) did not obtain three written cost Wichita, KS, for audit based on a estimates for goods or services expected to exceed referral from the Region 7 Office of $10,000, (2) did not provide proper notice and start Multifamily Housing due to high tenant eviction procedures for nonpayment of rent, and (3) receivables and excessive travel paid more than $39,000 in travel expenses for expenses. Our audit objectives were to individuals not employed by the property. determine whether Windridge Apartment Associates, L.P., (1) followed U.S. Department of Housing and Urban Development (HUD) rules and regulations when it procured products and services, (2) followed HUD rules and regulations and its own policies and procedures for rent collection, and (3) followed HUD rules and regulations when charging travel expenses to the operating account. What We Recommend We recommend that HUD require the property to provide cost justification for $200,362 spent on goods or services and have the management agent reimburse the property for $39,466 in ineligible travel expenses. TABLE OF CONTENTS Background and Objectives 3 Results of Audit Finding 1: The Property Did Not Obtain Three Written Cost Estimates 4 for Goods or Services Expected To Exceed $10,000 Finding 2: The Property Did Not Provide Proper Notice and Start 6 Eviction Procedures for Nonpayment of Rent Finding 3: The Property Paid for Travel Expenses for Individuals Not 8 Employed by the Property Scope and Methodology 10 Internal Controls 11 Appendixes A. Schedule of Questioned Costs 13 B. Auditee Comments and OIG’s Evaluation 14 C. Ineligible and Unsupported Costs Detail 22 D. Criteria 23 2 BACKGROUND AND OBJECTIVES Windridge Apartments is located at 2502 Wildwood Lane, Wichita, KS. The property is a 136- unit housing project insured under the U.S. Department of Housing and Urban Development’s (HUD) section 221(d)(4) of the National Housing Act. HUD regulates the property’s rent charges and operating methods. HUD’s control over the property is exercised by a regulatory agreement, form HUD-92466, signed on September 13, 2007. The agreement outlines terms and conditions for the HUD- insured mortgage, such as what expenses can be paid with project funds. The property is owned by Windridge Apartments Associates, L.P., and the general partner is Windridge-Michaels, LLC. The property’s management agent, Interstate Realty Management Company, is an identity-of-interest management agent. A majority of the property’s day-to-day activities are managed at the property, while the bulk of the financial operations are managed at the management agent’s home office in Marlton, NJ. The property receives a material portion of its revenue under a Federal Section 8 rent subsidy program for 133 of its 136 units. This program provides for direct rent subsidy payments to the property on behalf of certain tenants who qualify under the program’s rules. Between January 1, 2010, and March 31, 2013, the Property received more than $2.9 million in housing assistance payments. Our audit objectives were to determine whether Windridge Apartment Associates, L.P., (1) Followed HUD rules and regulations when it procured products and services for the property, (2) Followed HUD rules and regulations and its own policies and procedures for rent collection, and (3) Followed HUD rules and regulations when charging travel expenses to the operating account for travel to the property in preparation for a management review. 3 RESULTS OF AUDIT Finding 1: The Property Did Not Obtain Three Written Cost Estimates for Goods or Services Expected To Exceed $10,000 The property did not obtain written cost estimates from at least three contractors for goods or services expected to exceed $10,000. This condition occurred because the property did not have adequate procurement policies and procedures. As a result, it could not ensure that more than $200,000 spent on goods or services were reasonable. The Property Did Not Obtain Written Cost Estimates The property did not obtain written cost estimates from at least three contractors for goods or services exceeding $10,000. It had one contract for trash collection and waste management, and it used a sourcing company to negotiate this contract. However, neither the property nor the sourcing company obtained written cost estimates from at least three contractors for this service. In 2011 and 2012, the property spent $32,511 on waste management. Further, although the property had only the one contract in place, it received ongoing supplies or services for grounds maintenance, wall repair and painting, carpet and carpet installation, security and protection services, and audit services. The amount paid for each of these supplies or services exceeded $10,000 for calendar years 2011 and 2012; however, the property did not receive written cost estimates from at least three contractors. In 2011 and 2012, it spent $167,851 for ongoing supplies and services. The property’s expenses are detailed in the table below. Goods or services 2011 2012 Total Audit services $11,250 $12,350 $23,600 Grounds 10,350 * 10,350 Trash collection & waste 14,496 18,015 32,511 management Security & protection ** 14,352 14,352 services Wall repair & painting 42,812 26,933 69,745 Carpet & carpet 13,308 36,496 49,804 installation Total $92,216 $108,146 $200,362 * Funds spent in 2012 did not exceed $10,000 threshold ** Funds spent in 2011 did not exceed $10,000 threshold 4 In total, the property spent more than $200,000 for goods or services without obtaining at least three written cost estimates. According to HUD Handbook 4381.5, paragraph 6.50, when contracting for goods or services, the property was expected to solicit written cost estimates for any contract, ongoing supply, or service that was expected to exceed $10,000 per year This condition occurred because the property did not have adequate procurement policies and procedures. Its contract policy consisted of guidelines for contracts and did not provide guidance for establishing cost reasonableness for contracts and ongoing supplies or services. As a result, the property could not ensure that more than $200,000 spent on goods or services were reasonable. Recommendations We recommend that the Acting Director of HUD’s Kansas City Office of Multifamily Housing require the property to 1A. Provide cost justification for the $200,362 spent on goods or services in fiscal years 2011 and 2012 and any goods or services expected to exceed $10,000 in fiscal year 2013 by obtaining written cost estimates from at least three contractors or reimburse the unsupported amount to the property’s operating account from non-project funds. 1B. Develop and implement procurement policies and procedures to ensure compliance with HUD regulations, including Handbook 4381.5, paragraph 6.50. 5 RESULTS OF AUDIT Finding 2: The Property Did Not Provide Proper Notice and Start Eviction Procedures for Nonpayment of Rent The property did not provide proper notice and start eviction procedures for nonpayment of rent in accordance with its policy. This condition occurred because the property manager disregarded the rent collection policy. As a result, the property lacked funds in its operating account to pay other property expenses. The Property Did Not Provide Proper Notice and Start Eviction Procedures The property did not provide notice and start eviction procedures for nonpayment of rent in accordance with its policy. The property’s rent collection policy required it to provide tenants with an initial notice of late rent, allowing the tenant 10 days to meet with the property manager and discuss the pending lease termination for nonpayment of rent. According to the property’s policy, the property manager should serve a second notice 7 days from the initial notice, allowing the tenant 3 days to pay rent or vacate the property. If the tenant still had not paid the rent, the property should begin eviction procedures 3 days following the second notice. This condition occurred because the property manager disregarded the rent collection policy. The property manager served tenants with a 3-day notice to pay or vacate for nonpayment of rent without mentioning that the tenant had 10 days to discuss the termination with property staff. Additionally, the tenants were not served with a second notice if rent remained unpaid after 7 days, in accordance with its policy. Instead, the property waited until the tenant did not pay for a second month before serving a second notice and starting eviction procedures. As a result of not collecting rent and not starting eviction procedures in accordance with its policy, the property lacked funds in its operating account to pay other property expenses. As of December 31, 2012, the property owed its management agent more than $298,000 at a time when the property had $46,136 in tenants’ accounts receivable, including $18,268 due to nonpayment of rent. 6 Recommendations We recommend that the Acting Director of HUD’s Kansas City Office of Multifamily Housing 2A. Require the property to implement its existing rent collection policy. 2B. Perform additional monitoring to ensure the rent collection policy is properly implemented by the property. 7 RESULTS OF AUDIT Finding 3: The Property Paid for Travel Expenses for Individuals Not Employed by the Property The property paid travel expenses for individuals not employed by the property. This condition occurred because the property did not have a travel expense policy. As a result, it did not have over $39,000 in its operating account to pay other property expenses. The Property Paid for Travel Expenses for Nonemployees The property paid for travel expenses for individuals who were not front line employees of the property. In discussions with property staff, we learned that the individuals traveled to the property to prepare for monitoring reviews and physical inspections. Further, after receiving an unsatisfactory rating during a management review in 2011, the property had these individuals travel to the property to help clean up the physical property and tenant files. These files and the physical property should be properly maintained by front line staff. Preparation before and correction of deficiencies found after a review or inspection should not be necessary if they are adequately performing their front line duties. If their performance is not adequate, this is a management problem to be dealt with at the management agent level and at a cost to the management agent. The table below outlines the property’s travel expenses, and the table in Appendix C includes a more detailed breakdown. Year Travel Expenses 2011 $37,560 2013 1,905 Total $39,465 Note: In 2012, the property did not incur any travel expenses for nonemployees. This condition occurred because the property did not have a travel expense policy that ensured only travel costs related to the project were paid. The property’s management agent charged the travel expenses to the property because it incorrectly classified the travel as an allowable front-line travel expense, such as meeting with contractors or making bank deposits. However, according to HUD Handbook 4381.5, paragraph 6.39(b)(1), costs for designing procedures/systems to keep the project running smoothly and in conformity with HUD requirements should be paid out of management fee funds. Furthermore, paragraph 6.39(b)(5) states fees associated with monitoring projects by visiting the project should be 8 taken from the management fee and not charged to the operating account. Therefore, the property’s management agent should have paid for the travel expenses and not the property. As a result of the improper payment, the property did not havethese funds available to pay other property expenses. In 2011 and 2013, the property spent more than $39,000 on travel expenses for individuals not employed by the property. Recommendations We recommend that the Acting Director of HUD’s Kansas City Office of Multifamily Housing require 3A. The management agent to reimburse the property for the $39,465 in ineligible travel expenses. 3B. The property to create and implement a travel expense policy to ensure compliance with HUD Handbook 4381.5. 9 SCOPE AND METHODOLOGY Our review generally covered the period January 1, 2011, through March 31, 2013. We performed onsite work from April 29 through June 21, 2013, at Windridge Apartments, located at 2502 Wildwood Lane, Wichita, KS. To accomplish our objectives, we • Reviewed applicable Federal regulations and HUD handbooks, as well as the property’s tenant selection plan, rent collection policy, and other internal policies and procedures; • Reviewed the property’s audited financial statements; • Reviewed the property’s general ledger and monthly accounting reports; • Reviewed support for the property’s travel expenses for January 1, 2011, through March 31, 2013; and • Interviewed property and HUD Kansas City Office of Multifamily Housing staff. We reviewed a sample of 40 of 216 tenant files (18.5 percent). We selected 2 of the 40 tenants because they had the largest credit balances as of December 31, 2012, and we selected another 35 of the 40 due to the tenants’ owing the highest amount of rent and damages to the property. Additionally, we randomly selected one tenant who was written off as uncollectible in 2012, and we randomly selected the last two tenants from the 2012 tenants’ accounts receivable listing. As of December 31, 2012, the tenants selected collectively owed $14,823 in unpaid rent and $23,687 in damages, totaling $38,510 in tenants’ accounts receivable. As of December 31, 2012, the property had $46,136 in tenants’ accounts receivable, but before that date, the property wrote off more than $35,000 in 2012 and $49,000 in 2011. We also reviewed a sample of 194 invoices totaling $76,615. We randomly selected 29 of the 194 invoices from the property’s general ledger after reviewing the ledger for expenses exceeding $10,000 annually. The other 165 invoices represented 100 percent of invoices for 2011 and 2012 for three vendors that performed heating and air conditioning repair for the property. The population from which we selected our sample consisted of 1,072 invoices totaling $380,329. We sampled more than 20 percent of the total dollar amount of the population. We relied, in part, on accounting data provided by the property. Although we did not perform a detailed assessment of the reliability of the data, we determined that the computer-processed data were sufficiently reliable to be used in meeting our objectives because the data in the sampled items were corroborated by documentary evidence that the property supplied for the sampled vendors. We conducted the audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. 10 INTERNAL CONTROLS Internal control is a process adopted by those charged with governance and management, designed to provide reasonable assurance about the achievement of the organization’s mission, goals, and objectives with regard to • Effectiveness and efficiency of operations, • Reliability of financial reporting, and • Compliance with applicable laws and regulations. Internal controls comprise the plans, policies, methods, and procedures used to meet the organization’s mission, goals, and objectives. Internal controls include the processes and procedures for planning, organizing, directing, and controlling program operations as well as the systems for measuring, reporting, and monitoring program performance. Relevant Internal Controls We determined that the following internal controls were relevant to our audit objectives: • Controls over procurement, rent collection, travel, and damage assessment. We assessed the relevant controls identified above. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, the reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or efficiency of operations, (2) misstatements in financial or performance information, or (3) violations of laws and regulations on a timely basis. Significant Deficiencies Based on our review, we believe that the following items are significant deficiencies: • The property did not have adequate procurement policies and procedures to ensure that HUD funds were expended in compliance with HUD rules and regulations (see finding 1). • The property did not have adequate travel expense policy to prevent travel for nonemployees from being charged to the property’s operating account (see finding 3). 11 Separate Communication of Minor Deficiencies We reported minor deficiencies to the auditee in a separate management memorandum. 12 APPENDIXES Appendix A SCHEDULE OF QUESTIONED COSTS Recommendation Ineligible 1/ Unsupported 2/ number 1A $200,362 3A $39,465 1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity that the auditor believes are not allowable by law; contract; or Federal, State, or local policies or regulations. 2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program or activity when we cannot determine eligibility at the time of the audit. Unsupported costs require a decision by HUD program officials. This decision, in addition to obtaining supporting documentation, might involve a legal interpretation or clarification of departmental policies and procedures. 13 Appendix B AUDITEE COMMENTS AND OIG’S EVALUATION Ref to OIG Evaluation Auditee Comments Comment 1 14 Ref to OIG Evaluation Auditee Comments Comment 1 15 Ref to OIG Evaluation Auditee Comments 16 Ref to OIG Evaluation Auditee Comments 17 Ref to OIG Evaluation Auditee Comments Comment 2 18 Ref to OIG Evaluation Auditee Comments Comment 3 Comment 3 19 Ref to OIG Evaluation Auditee Comments 20 OIG Evaluation of Auditee Comments Comment 1 The property did not provide documentation to support they obtained cost estimates from additional contractors, nor were they able to provide support that the sourcing company had obtained cost estimates from other vendors. Further, the property did not take steps to ensure that the prices provided by Buyers Access were reasonable by obtaining cost estimates from at least three contractors. Comment 2 The rent collection procedures provided by the property and posted in the property’s office were the only procedures that stated the steps the property would take to collect the rent. Additionally, the property’s rent agreement states that all termination notices must specify the date the agreement will be terminated and advise the tenant that he/she has 10 days to discuss the proposed termination of tenancy with the landlord. The property served tenants with a three-day notice to pay or evict, and did not follow through with evictions in accordance with the notice when tenants failed to pay rent. Comment 3 The fees owed to the management agent are considered property expenses and should be paid timely. As of December 31, 2012, the property’s accounts payable balance included $298,756 payable to its management agent for management fees, bookkeeping fees, and payroll and related expenses. This amount increased more than $63,000 from 2011. 21 Appendix C INELIGIBLE AND UNSUPPORTED COSTS DETAIL Finding 3 – Travel expenses Employee 2011 2013 1 $3,223 $0 2 7,577 0 3 300 0 4 1,722 0 5 427 0 6 1,962 0 7 4,378 0 8 2,507 942 9 1,781 963 10 2,076 0 11 2,836 0 12 468 0 13 559 0 14 684 0 15 876 0 16 225 0 17 178 0 18 492 0 19 210 0 20 5,079 0 Total $37,560 $1,905 Note: The property did not incur any travel expenses for nonemployees in 2012. 22 Appendix D CRITERIA Form HUD-9839-B – Project Owner’s/Management Agent Certification 3. We agree to: a. Comply with this project’s Regulatory Agreement, Mortgage & Mortgage Note, and any Subsidy Contract or Workout/Modification Agreement. b. Comply with HUD handbooks, notices or other policy directives that relate to the management of the project. 4. The Agent agrees to: a. Ensure that all expenses of the project are reasonable and necessary. b. Exert reasonable effort to maximize project income and take advantage of discounts, rebates and similar money-saving techniques. c. Obtain contracts, materials, supplies and services, including the preparation of the annual audit, on terms most advantageous to the project. d. Credit the project with all discounts, rebates or commissions (including any sales or property tax relief granted by the State and local government) received. e. Obtain the necessary verbal or written cost estimates and document the reasons for accepting other than the lowest bid. f. Maintain copies of such documentation and make such documentation available for your inspection during normal business hours. g. Invest project funds that HUD policies require to be invested and take reasonable effort to invest other project funds unless the owner specifically directs the Agent not to invest those other funds HUD Handbook 4381.5, REV 2 – The Management Agent Handbook, Chapter 6 6.39 Management Costs Paid from the Management Fee a. Expenses for services that are not front-line activities must be paid out of management fee funds, except for centralized accounting and computer services. b. Salaries, fringe benefits, office expenses, fees, and contract costs for the following activities must be paid out of management fee funds. These costs include: (1) Designing procedures/systems to keep the project running smoothly and in conformity with HUD requirements (2) Preparing budgets required by the owner or HUD, exclusive of rent increase requests and MIO (Management Improvement and Operating) Plans. (3) Recruiting, hiring, and supervising project personnel. (4) Training for project personnel that exceeds the line item budget for training expenses. (5) Monitoring project operations by visiting the project or analyzing project performance reports. (6) Analyzing and solving project problems. (7) Keeping the owner abreast of project operations. 23 (8) Overseeing investment of project funds. (9) Ensuring that project positions are covered during vacations, sickness, and vacancies. 6.50 Contracting Guidelines a. When an owner/agent is contracting for goods or services involving project income, an agent is expected to solicit written cost estimates from at least three contractors or suppliers for any contract, ongoing supply or service which is expected to exceed $10,000 per year, or the threshold established by the HUD Area Office with jurisdiction over the project. b. For any contract, ongoing supply or service estimated to cost less than $5,000 per year, the agent should solicit verbal or written cost estimates in order to assure that the project is obtaining services, supplies and purchases at the lowest possible cost. The agent should make a record of any verbal estimate obtained. c. Documentation of all bids should be retained as a part of the project records for three years following the completion of the work. Windridge Rent Collection Policy 1. All rent must be paid by money order or check (NO CASH ACCEPTED) on or before the first (1st) day of each month and will be considered late after the fifth (5th) day. 2. All rent not paid by the fifth (5th) day of each month will be subject to a $5.00 late fee on the sixth (6th) day of the month. Thereafter, management may collect $1.00 for each additional day that rent remains unpaid during the month it is due. All rents not paid by the tenth (10th) of each month will result in eviction proceedings beginning on the eleventh (11th) day of the month. Residents shall pay a service charge of $30.00 on the second or each additional time a check is not honored for payment (bounces). It is a policy of Interstate Realty that we do not accept check from Residents after they have had two returned checks. All rent must be paid by a money order or cashier’s check after having two returned checks. 3. At the time late charges are assessed (the close of the 5th day), a notice will be served in accordance with HUD regulations. This notice will allow ten (10) days for Lessee(s) to meet with the community manager and discuss the pending lease termination for non- payment of rent. In no way does this policy state or imply that additional time has been granted for payment of rent. All arrangements for deferred payments must be made prior to the time that rent is due on the 1st of each month 4. Seven (7) days from service of the initial notice of lease termination, a second notice will be served in accordance with the state law. This notice will allow three (3) days to vacate the premises. If the rent remains unpaid, legal action will be taken by the community office filing a forcible entry and detainer for possession of the premises and all rents are due. Failure to respond to this court summons and/or a decision for possession by the judge will require that you vacate the apartment and pay all charges and penalties awarded by the courts decision. 24 NO RENT WILL BE ACCEPTED AFTER THE FORCIBLE ENTRY AND DETAINER HAS BEEN FILED, EXCEPT THROUGH THE DIRECTION OF THE COURT. 5. As stated in item 3 above, all arrangements, for deferred payments must be made prior to the first of the month that rent is due. After the rent is delinquent, partial payments of rent cannot be accepted. All rents due must be paid in full. Any resident wishing to retain his/her rights of occupancy after the official three (3) day notice (required by the state) is served, must pay all delinquent rent, all late charges, all court costs (if any), and any damage charges. In addition, the rent for the following month must be paid. After the forcible entry and detainer is filed, no payment will be accepted except as directed by the court. It is not the policy or practice of this apartment community to use local courts as a collection agency. Any court action filed for possession of the premises and all accrued charges permitted under state law. Any resident may present a legal defense at any hearing that affects his/her occupancy at said property. Windridge Landlord/Tenant Agreement Paragraph 23 Termination of Tenancy: a. To terminate this Agreement, the Tenant must give the Landlord 30-days written notice before moving from the unit. b. Any termination of this Agreement by the Landlord must be carried out in accordance with HUD regulations, State and local law, and the terms of this Agreement. c. The Landlord may terminate this Agreement for the following reasons: (1) the Tenant's material noncompliance with the terms of this Agreement; (2) the Tenant's material failure to carry out obligations under any State Landlord and Tenant Act; (3) drug related criminal activity engaged in on or near the premises, by any tenant, household member, or guest, and any such activity engaged in on the premises by any other person under the tenant's control; (4) determination made by the Landlord that a household member is illegally using a drug; (5) determination made by the Landlord that a pattern of illegal use of a drug interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents; (6) criminal activity by a tenant, any member of the tenant's household, a guest or another person under the tenant's control: (a) that threatens the health, safety, or right to peaceful enjoyment of the premises by other residents (including property management staff residing on the premises); (b) or that threatens the health, safety, or right to peaceful enjoyment of their residences by persons residing in the immediate vicinity of the premises; (7) if the tenant is fleeing to avoid prosecution, or custody or confinement after conviction, for a crime, or attempt to commit a crime, that is a felony under the laws of the place from which the individual flees or that in the case of the State of New Jersey is a high misdemeanor; (8) if the tenant is violating a condition of probation or parole under Federal or State law; 25 (9) determination made by the Landlord that a household member's abuse or pattern of abuse of alcohol threatens the health, safety, or right to peaceful enjoyment of the premises by other residents; (10) if the Landlord determines that the tenant, any member of the tenant's household, a guest or another person under the tenant's control has engaged in the criminal activity, regardless of whether the tenant, any member of the tenant's household, a guest or another person under the tenant's control has been arrested or convicted for such activity. d. The Landlord may terminate this Agreement for other good cause, which includes, but is not limited to, the tenant's refusal to accept change to this agreement. Terminations for "other good cause" may only be effective as of the end of any initial or successive term. The term material noncompliance with the lease includes: (1) one or more substantial violations of the lease; (2) repeated minor violations of the lease that (a) disrupt the livability of the project; (b) adversely affect the health or safety of any person or the right of any tenant to the quiet enjoyment to the leased premises and related project facilities, (c) interfere with the management of the project, or (d) have an adverse financial effect on the project (3) failure of the tenant to timely supply all required information on the income and composition, or eligibility factors, of the tenant household (including, but not limited to, failure to meet the disclosure and verification requirements for Social Security Numbers, or fail me to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies), and (4) Non-payment of rent or any other financial obligation due under the lease beyond any grace period permitted under State law. The payment of rent or any other financial obligation due under the lease after the due date but within the grace period permitted under State law constitutes a minor violation. e. If the Landlord proposes to terminate this Agreement, the Landlord agrees to give the Tenant written notice and the grounds for the proposed termination. If the Landlord is terminating this agreement for "other good cause," the termination notice must be mailed to the Tenant and hand-delivered to the dwelling unit in the manner required by HUD at least 30 days before the date the Tenant will be required to move from the unit and in accordance with State law requirements. Notices of proposed termination for other reasons must be given in accordance with any time frames set forth in State and local law. Any HUD required notice period may run concurrently with any notice period required by State or local law. All termination notices must: • specify the date this Agreement will be terminated; • state the grounds for termination with enough detail for the Tenant to prepare a defense; • advise the Tenant that he/she has 10 days within which to discuss the proposed termination of tenancy with the Landlord. The 10-day period will begin on the earlier of the date the notice was hand-delivered to the unit or the day after the date the notice is mailed. If the Tenant requests the meeting, the Landlord agrees to discuss the proposed termination with the Tenant; • and advise the Tenant of his/her right to defend the action in court. f. If an eviction is initiated, the Landlord agrees to rely only upon those grounds cited in the termination notice required by paragraph e. 26
Windridge Apartments Did Not Administer Its Program in Accordance With HUD Rules and Regulations and Its Own Policies and Procedures
Published by the Department of Housing and Urban Development, Office of Inspector General on 2013-11-07.
Below is a raw (and likely hideous) rendition of the original report. (PDF)