oversight

Reflection5 LLC, Pocatello, ID, Did Not Always Retain Tenant Files, Perform Recertifications, Obtain Verifications, or Support Hardship Exemptions

Published by the Department of Housing and Urban Development, Office of Inspector General on 2016-09-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

         Reflection5 LLC, Pocatello, ID
       Section 8 Housing Assistance Payments Program




Office of Audit, Region 10      Audit Report Number: 2016-SE-1004
Seattle, WA                                     September 12, 2016
To:            Thomas W. Azumbrado, Director, San Francisco Multifamily Housing Hub,
               9AHMLAP
               //signed//
From:          Ronald Hosking, Regional Inspector General for Audit, 0AGA
Subject:       Reflection5 LLC, Pocatello, ID, Did Not Always Retain Tenant Files, Perform
               Recertifications, Obtain Verifications, or Support Hardship Exemptions


Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
General’s (OIG) final results of our review of Reflection5 LLC’s Section 8 housing assistance
payments program.
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 8M, 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.
                    Audit Report Number: 2016-SE-1004
                    Date: September 12, 2016

                    Reflection5 LLC, Pocatello, ID, Did Not Always Retain Tenant Files, Perform
                    Recertifications, Obtain Verifications, or Support Hardship Exemptions



Highlights

What We Audited and Why
We audited Reflection5 LLC’s Section 8 housing assistance payments program because of the
results of a previous audit of another multifamily property. The person responsible for housing
assistance program issues at the other property was also involved with the housing assistance
program at Reflection5. Our objectives were to determine whether Reflection5 maintained
documentation supporting its assistance calculations and performed the required tenant
recertifications.

What We Found
Reflection5 did not always retain tenant files for tenants who moved out, document its decision
to grant hardship exemptions, conduct required recertifications, or obtain and review third-party
verifications of income. As a result, it overcharged the U.S. Department of Housing and Urban
Development (HUD) almost $169,000.

What We Recommend
We recommend that the Director of the San Francisco Office of Multifamily Housing Programs
require Reflection5 to (1) provide support for the almost $133,000 in assistance that was based
on missing tenant files and reimburse HUD for the amount that remains unsupported; (2) provide
support for the almost $250 in assistance that was based on unsupported hardship exemptions
and reimburse HUD for the amount that remains unsupported; (3) provide support for the almost
$36,000 in assistance that was based on unperformed or missing annual recertifications and
reimburse HUD for the amount that remains unsupported; and (4) conduct periodic reviews of
tenant files to ensure that its manager or management agent maintains the tenant files, completes
the required annual recertifications, and adequately supports hardship exemptions in accordance
with HUD requirements.
Table of Contents
Background and Objectives ....................................................................................3

Results of Audit ........................................................................................................4
         Finding: Reflection5 Did Not Always Maintain Supporting Documentation or
         Perform Recertifications .................................................................................................. 4

Scope and Methodology ...........................................................................................7

Internal Controls ......................................................................................................8

Appendixes ................................................................................................................9
         A. Schedule of Questioned Costs .................................................................................... 9
         B. Auditee Comments and OIG’s Evaluation ............................................................. 10
         C. Assistance for Tenants Whose Files Were No Longer Available ......................... 14
         D. Unsupported Assistance Amounts by Tenant ........................................................ 15
         E. Criteria ....................................................................................................................... 16




                                                                     2
Background and Objectives
Reflection5 LLC
Reflection5 LLC is the owner of five multifamily properties in Pocatello, ID. Reflection5
purchased its properties in May 2013, and a related company, Solace LLC, served as the
management agent. During this time, Solace employed a manager in Pocatello as well as a
manager for its own property in Rexburg, ID. The manager in Rexburg submitted the monthly
requests for assistance for Reflection5’s properties and was the manager responsible for housing
assistance issues reported by our office in audit report number 2016-SE-1002. On October 1,
2015, Reflection5 entered into an agreement with the Housing Authority of the City of Pocatello
to replace Solace as management agent.
The U.S. Department of Housing and Urban Development (HUD) made housing assistance
payments to Reflection5 under five Section 8 contracts that covered all 55 units. During our
audit period, HUD provided Reflection5 more than $946,000 in Section 8 housing assistance
payments.

                                                                        Assistance
             Property name         Address                      Units
                                                                        payments
             El Rancho Heights     549 El Rancho Boulevard         16     $291,167
             Franklin Heights      747 Franklin Avenue             16      216,479
             Hawthorne Terrace     3731 Hawthorne Road              8      126,329
             Stockman Terrace      3641 Stockman Road               7      135,569
             Swisher Terrace       1221 Swisher Road                8      176,528
             Total                                                 55      946,072

Section 8 Housing Assistance Payments Program
The project-based Section 8 housing assistance payments program provides rental assistance to
low-income individuals and families, enabling them to live in affordable, decent, safe, and
sanitary housing. HUD makes the assistance payment to the owner of an assisted unit on behalf
of an eligible family, defined as having income at or below 80 percent of the area median income
adjusted for family size. The family pays the higher of (1) 30 percent of its monthly adjusted
income, (2) 10 percent of its monthly income, (3) welfare rent (if applicable), and (4) $25
minimum rent. The owner or management agent calculates the amount of the assistance
payment, which is the difference between the contract rent and the family’s share of the rent.
The owner is responsible for reexamining the family’s income and composition at least once
each year and adjusting the amount of assistance payments accordingly.
Our objectives were to determine whether Reflection5 maintained documentation supporting its
assistance calculations and performed the required tenant recertifications.




                                               3
Results of Audit

Finding: Reflection5 Did Not Always Maintain Supporting
Documentation or Perform Recertifications
Reflection5 did not always retain tenant files for tenants who moved out, document its decision
to grant hardship exemptions, conduct required recertifications, or obtain and review third-party
verifications of income. This condition occurred because the Reflection5 owner did not
periodically review the quality of the property manager’s work. As a result, it could not support
the housing assistance it charged to HUD of almost $169,000.
Missing Tenant Files
Reflection5 did not retain tenant files for 23 of the 48 tenants who moved out during our audit
period. Handbook 4350.3 requires owners to maintain documentation of all verification efforts
throughout the term of each tenancy and for at least 3 years after the tenant moves out. We
asked for files for the 48 tenants who moved out between June 1, 2013, and December 31, 2015,
and all of the 48 tenant files should have still been available when we performed our fieldwork in
February 2016.
Unsupported Hardship Exemptions
For two of the nine tenant files reviewed, the former manager adequately documented the
tenants’ zero income but did not document his decision to grant hardship exemptions. A
hardship exemption waives a tenant’s $25 minimum rent requirement, and Handbook 4350.3
requires owners to maintain documentation on all requests and determinations regarding
hardship exemptions. The assistance calculation certifications in the tenant files showed that
Reflection5 waived the minimum rent, but nothing in the file documented the tenants’ requests
for the hardship exemptions or explained the manager’s reasons for granting them.
Unperformed Recertifications & Unverified Income
For two of the nine tenant files reviewed, the former manager did not always conduct the
required annual recertifications. To ensure that assisted tenants pay rents according to their
ability to pay, HUD Handbook 4350.3 requires owners to recertify tenant income and household
composition at least annually. While the interim certification process involves verifying the
specific item that changed, such as income or family composition, the annual recertification
involves verifying all information. However, the two tenant files reviewed contained no
documentation for some of the required recertifications. For example, for one tenant, although
interim certifications were processed, the required annual recertifications for June 2014 and June
2015 were missing.
For five of the nine tenant files reviewed, the former manager did not always obtain third-party
verifications of income and verify the tenant’s information to that supporting documentation. In
addition to requiring owners to recertify tenant income and household composition at least
annually, HUD Handbook 4350.3 requires them to keep the third-party verifications of income in



                                                4
the tenant files. However, for some of the required recertifications, Reflection5’s files included
only the assistance calculation certification form with none of the necessary verification
documentation.
The following table summarizes the assistance payment issues identified in the available tenant
files.

                                 Unsupported
Property &                                                Unperformed
               Tenant              hardship                                    Unverified income
unit                                                     recertifications
                                  exemptions
El Rancho #4   Tenant 1               X                         X                       X
El Rancho #5   Tenant 2               X
Franklin #4    Tenant 3                                                                 X
Hawthorne #4   Tenant 4                                         X
Hawthorne #4   Tenant 5                                                                 X
Swisher #1     Tenant 6                                                                 X
Swisher #8     Tenant 7                                                                 X
Totals                                  2                       2                       5

Inadequate Review Process
The Reflection5 owner did not periodically review the quality of the property manager’s work.
The manager’s immediate supervisor was the owner. During his visits to the properties, the
owner reviewed their financial positions but did not examine the tenant files. Although the
Reflection5 owner replaced the management agent with the Housing Authority of the City of
Pocatello, the owner is still ultimately responsible for maintaining the tenant files, completing
the required annual recertifications, and adequately supporting hardship exemptions in
accordance with HUD requirements.
Unsupported Assistance
Reflection5 charged HUD more than $132,000 in housing assistance for tenants whose files were
no longer available. Appendix C includes a table showing how much assistance Reflection5
charged for each of these 23 tenants during our audit period.
In addition, Reflection5 charged HUD nearly $250 in housing assistance based on unsupported
hardship exemptions. We calculated the unsupported amount by multiplying the $25 minimum
rent requirement by the number of months the hardship exemptions were in effect (2.24 months
in one case and 7.68 months in the other). Appendix D shows how much assistance Reflection5
charged for each of the two affected tenants.
Finally, Reflection5 charged HUD more than $28,000 in housing assistance based on unverified
income and almost $7,900 in housing assistance based on unperformed or missing annual
recertifications. Without the required, completed verifications in the tenant file, all of the
assistance based on these recertifications was unsupported. We calculated these numbers by
taking the assistance Reflection5 calculated for these annual recertifications and multiplying
those amounts by the number of months Reflection5 charged them. Appendix D shows the
unsupported assistance amounts Reflection5 charged for each of the six affected tenants.


                                                 5
Recommendations
We recommend that the Director of the San Francisco Office of Multifamily Housing Programs
require Reflection5 to
       1A.    Provide support for the $132,759 in assistance that was based on the missing
              tenant files and reimburse HUD for the amount that remains unsupported.
       1B.    Provide support for the $248 in assistance that was based on the unsupported
              hardship exemptions and reimburse HUD for the amount that remains
              unsupported.
       1C.    Provide support for the $35,890 in assistance that was based on the unperformed
              or missing annual recertifications and reimburse HUD for the amount that
              remains unsupported.
       1D.    Conduct periodic reviews of tenant files to ensure that its manager or management
              agent maintains the tenant files, completes the required annual recertifications,
              and adequately supports hardship exemptions in accordance with HUD
              requirements.




                                              6
Scope and Methodology
We performed our fieldwork in February 2016 at the Housing Authority of the City of Pocatello
located at 711 North 6th Avenue, Pocatello, ID. Our audit period covered June 1, 2013, through
December 31, 2015.

To accomplish our objectives, we performed the following steps:

      Reviewed applicable requirements.
      Interviewed staff from HUD, the Housing Authority of the City of Pocatello, and the
       HUD contract administrator responsible for managing Section 8 assistance in Idaho.
      Obtained and reviewed housing assistance payment data.
      Reviewed the sampled files.
      Recalculated the amount of housing assistance supported by the sampled files.
      Determined the amount of housing assistance requested for tenants whose files were no
       longer available.

Sample Selection
We randomly selected a sample of 7 of Reflection5’s 55 units to evaluate tenant assistance
calculations and their accompanying support. Due to turnover in the units, these 7 units involved
12 different tenants. We found that 3 of the 12 tenants had moved out of their units and their
files were not available. Therefore, we reviewed the tenant files for the other 9 tenants. We
randomly selected the units because we wanted our observations to be representative. However,
given the amount of time required to review each unit, selecting a larger statistically valid sample
would not have been cost effective. Therefore, we did not project the results of this review to the
universe and are reporting only what we found in our sample.

We selected all tenants that had moved out of their units to evaluate the existence of tenant files.
Since the tenant files were missing for 3 of the 12 originally sampled tenants, we expanded our
review to determine how many files were missing for all 48 tenants who moved out during our
audit period. These results represent the entire universe without projection.

We relied on computer-processed data when determining the assistance payments made for
tenants whose files were no longer available. We confirmed the validity of this data source by
testing against the documentation in the 9 available tenant files that we reviewed. We did not
rely on computer-processed data for our other conclusions but, rather, relied on supporting
documentation in the sampled tenant files and from HUD’s contract administrator.

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.



                                                 7
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:

      Policies and procedures for maintaining documentation supporting housing assistance
       payments.

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 Deficiency
Based on our review, we believe that the following item is a significant deficiency:

      Reflection5 did not periodically review the quality of the property manager’s work.
       (finding)

Separate Communication of Minor Deficiencies
We reported minor deficiencies to the auditee in a separate management memorandum, dated
September 12, 2016.




                                                8
Appendixes

Appendix A
                              Schedule of Questioned Costs


                           Recommendation
                                                  Unsupported 1/
                               number
                                  1A                 $132,759
                                  1B                      248
                                  1C                   35,890
                                 Totals               168,897


1/   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.




                                              9
Appendix B
                  Auditee Comments and OIG’s Evaluation



Ref to OIG                                  Auditee Comments
Evaluation




                                                                                                         
              
             Ronald J. Hosking 
             Regional Inspector General for Audit 
             U.S. Department of Housing and Urban Development Office of Inspector General Office 
             of Audit (Region 10) 
             909 1st Avenue, Suite 126 
             Seattle, WA 98104 
              
             Dear Mr. Hosking, 
Comment 1    Thanks for giving me the opportunity to give you a brief back story on the situations at 
             Rexburg Plaza (40 units‐Solace) and Pocatello Portfolio (55 units‐Reflection5).   
              
             When I purchased the Rexburg Plaza in 2006 I inherited the on site manager of the 
             property at the time.  Idaho Housing was familiar with her and gave her high marks.  I 
             hired her as my manager and for over the past ten years I have been pleased with her 
             capability and her performance.  I believe all of her Management review scores with 
             Idaho Housing have been above average, if not excellent.   
              
             In 2013 I purchased my second section 8 property in Southeastern Idaho, the 55 unit 
             Pocatello Portfolio. My Rexburg Plaza manager had been asking for more responsibility 
             and more opportunity to grow so I hired a local on site manager and a local 
             maintenance man at the new Pocatello property, which is one hour or so away from 
             Rexburg, and my Rexburg on site manager with a decade of experience, could oversee 
             and manage the staff and property.  For the first year or so the property ran smoothly as 
             the woman I hired as the Pocatello manager did a great job, under my Rexburg 
             manager’s supervision and direction.  After a year, My Pocatello manager left the 
             Pocatello area for personal reasons.  During this transition my maintenance man at 
             Pocatello filled in for the manager and did a great job.  I believe in the low income 
             housing program and the benefits it provides.  In the same vein, I also believe in giving 
             my employees every opportunity to grow and progress.  So, I decided to promote the 
             maintenance man to be the full time manager, with my Rexburg manager continuing to 
             oversee him as a regional manager, and hire a new maintenance man.  The mianenance 
             man had been so much more than just a maintenance man.  He had helped extensively 
             in the office with paperwork and was the point man with the tenants since he had been 
             on the ground working with them.  According to both the former Pocatello manager and 
             the Rexburg manager, the maintenance man was capable and already helping with the 
             office side of the management.  I reviewed his resume closely and his background in the 
             US Army and his administrative experience there, and other experience, and he was well 




                                              10
Ref to OIG                                  Auditee Comments
Evaluation


             qualified for the position.  In retrospect I was loyal to a fault as my new Pocatello 
             manager was overwhelmed in his new position.  At the same time, unbeknownst to me, 
             my Rexburg manager had taken a second job at a section 8 senior housing complex 
             about thirty minutes for Rexburg.   Despite my training and numerous phone calls and 
             directives and reminders the Pocatello and Rexburg managers were not working 
             together to get the job done as it needed to be.  I wanted the properties run smoothly 
             and correctly so I proactively fired the Pocatello manager, reached out to Idaho Housing 
             for their insight and hired immediately on their recommendation the top management 
             company in the city, Pocatello Housing Authority.  But it was too late and many of the 
             tenant files were left incomplete. One month after hiring the new property manager I 
             received word of the audit with OIG.  An audit that was apparently initiated due to work 
             my Rexburg manager was doing at the elderly section 8 property I was unaware of.   
              
             Since day one, Pocatello Housing Authority has done an excellent job of stepping in, 
             completing the appropriate paperwork and keeping detailed files.  I look forward to a 
             long and successful partnership with them.  My Rexburg manager has benefitted from 
             not having to oversee employees in Pocatello and is doing a good job just managing 
             Rexburg Plaza for me.  I feel both properties are in great condition now and things are 
             running very, very well.  
              
             That leaves us with a window of time where paperwork was not done correctly, or not 
             at all and things I was responsible for overseeing were missed by my employees.  At the 
             end of day, the files were left incomplete and important paperwork undone.  As a result, 
             I cannot disagree with OIG’s findings about missing paperwork pertaining to occupancy, 
             re‐certifications, and other eligibility requirements to support proof of the tenants’ 
             eligibility for low income assistance and the subsequent payment of that Assistance 
             received by Solace and Reflection5.  As owner, I take full responsibility for the 
             incompetence of these employees as I was the one that gave them the opportunity and 
             responsibility.  However, despite the missing and incorrect paperwork, I can attest that I 
Comment 2    am 100% confident that there were tenants living in the units where housing assistance 
             was being paid to Solace and Reflection5.  We were always 100% occupied.  I am also 
             very confident that these tenants were eligible for housing assistance payments.  Both 
             properties have always maintained a waiting list of tenants equal to a 1‐2 year wait 
             period.  As vacant units opened up, I am certain the Pocatello manager and the Rexburg 
             manager were putting new tenants in from the wait list.  Because of that, and because 
             of my personal physical inspections to these properties during the time in question, it is 
             my belief that not only were they filled but they were filled with tenants that qualified 
             and deserved housing assistance.  I believe many of the tenants in question had been 
             long time tenants where the recertification and other paperwork was simply just not 
             completed on their behalf.   Per the OIG inspection, the auditor found that ALL tenants 
             occupying the property during the review, where the paperwork was completed, were 
             shown to be HAP assistance eligible.   




                                              11
Ref to OIG                                  Auditee Comments
Evaluation


             In the case of Rexburg Plaza (Solace) some honest occasional calculation errors were 
             made dealing with the exact move in or move out date, or similar oversights.  In the case 
             of Pocatello (Reflection5) there was a period where the tenant files were left incomplete 
             and many important and required aspects of the housing assistance requirements were 
             simply not executed correctly. I believe this was an unfortunate lesson of promoting the 
             wrong employee from within and not overseeing his development and training and 
             performance as closely as I should have and as closely as I was lead to believe my 
             Rexburg manager was.  I want to assure you that the moment I realized these errors I 
             made immediate changes.  I can also promise you no fraud or other or theft of 
             services/housing payments for ineligible tenants was ever conceived or committed on 
             my part.  I can tell you due to these events and audits we are more dedicated than ever 
             to running these properties as perfectly as possible going forward and eliminating any 
             errors whatsoever.  I apologize for the oversights on my part and on the part of my staff.  
             We have made internal changes to process and procedures to improve our process and 
             proactively hired outside management companies for the properties to assure this never 
             happens again.  I humbly request that HUD give us the chance to prove that without 
             inflicting such a large monetary penalty.  These properties are 45 years old and need and 
             deserve capital improvements for the tenants’ benefit.  I am not sure how we could 
             cope with such a large financial set back.   
              
             I am sincerely sorry and embarrassed for this situation.  I have been an owner of section 
             8 housing for over a decade.  I believe in the program and I believe in providing low 
             income housing and I want to be involved long term in HUD’s efforts to provide housing 
             for those who stand in need.   
              
             Sincerely, 


                            
             Greg Barratt 
             Managing member of Solace, LLC and Reflecion5, LLC 




                                              12
                         OIG Evaluation of Auditee Comments


Comment 1   Mr. Barratt provided these comments in response to this report as well as to our
            report 2016-SE-1003 on Solace, LLC, the owner entity of his Rexburg, ID
            property. He generally agreed with our findings.
Comment 2   We did not find any eligibility issues with the 9 tenants whose files we reviewed
            for the calculation of tenant assistance. However, we did not review the
            eligibility of all of the Solace and Reflection5 tenants as Mr. Barratt states here.
            Also, as stated in the finding, Reflection5 did not retain some tenant files so we
            could not determine whether those tenants were eligible.




                                             13
Appendix C
        Assistance for Tenants Whose Files Were No Longer Available


                                                        Housing
         Property &                      Period of
                         Tenant                        assistance
         unit                            payments
                                                        charged
         El Rancho #2    Tenant A    06/2013-04/2014        $4,772
         El Rancho #2    Tenant B    04/2014-01/2015         4,405
         El Rancho #3    Tenant C    06/2013-04/2014         7,173
         El Rancho #4    Tenant D    06/2013-06/2013            18
         El Rancho #5    Tenant E    06/2013-01/2015         7,590
         El Rancho #6    Tenant F    06/2013-09/2013         2,261
         El Rancho #8    Tenant G    10/2013-12/2014         7,629
         El Rancho #9    Tenant H    06/2013-07/2013         1,190
         El Rancho #9    Tenant I    07/2013-02/2015        13,856
         El Rancho #12   Tenant J    06/2013-05/2014         8,393
         El Rancho #12   Tenant K    05/2014-10/2014         3,903
         El Rancho #13   Tenant L    06/2013-03/2015         7,521
         El Rancho #15   Tenant M    06/2013-01/2015        15,624
         Franklin #1     Tenant N    06/2013-07/2014         3,806
         Franklin #3     Tenant O    06/2013-10/2014        12,037
         Franklin #9     Tenant P    06/2013-06/2013           235
         Franklin #11    Tenant Q    06/2013-03/2014         6,558
         Franklin #13    Tenant R    10/2013-10/2014         3,775
         Franklin #16    Tenant S    06/2013-01/2015         4,343
         Hawthorne #2    Tenant T    06/2013-10/2014         4,956
         Hawthorne #2    Tenant U    10/2014-01/2015         1,831
         Hawthorne #7    Tenant V    11/2013-06/2014         5,098
         Stockman #4     Tenant W    06/2013-05/2014         5,785
         Totals                                           132,759




                                    14
Appendix D
                     Unsupported Assistance Amounts by Tenant


                              Unsupported           Unsupported
                                                                     Unsupported
 Property &                     assistance           assistance
                Tenant                                                 hardship
 unit                      due to unperformed     due to unverified
                                                                      exemptions
                             recertifications          income
 El Rancho #4   Tenant 1                 $5,692                 $912          $56
 El Rancho #5   Tenant 2                                                      192
 Franklin #4    Tenant 3                                       3,685
 Hawthorne #4   Tenant 4                 2,167
 Hawthorne #4   Tenant 5                                      6,809
 Swisher #1     Tenant 6                                     10,425
 Swisher #8     Tenant 7                                      6,200
 Totals                                  7,859               28,031          248




                                        15
Appendix E
                                            Criteria


HUD Handbook 4350.3 – Occupancy Requirements of Subsidized Multifamily Housing
Programs

5-23 – Record-Keeping Procedures
   A. Owners must keep the following documents in the tenant’s file at the project site:
       1. All original, signed forms HUD 9887 and HUD 9887-A;
       2. A copy of signed individual consent forms; and
       3. Third-party verifications.
   B. Owners must maintain documentation of all verification efforts throughout the term of
       each tenancy and for at least three years after the tenant moves out.
   C. The tenant’s file should be available for review by the tenant upon request or by a third
       party who provides signed authorization for access from the tenant.

5-26 – Procedures for Determining Tenant Contribution for Section 8, PAC [Project Assistance
Contract], PRAC [Project Rental Assistance Contract], RAP [Rental Assistance Payments], and
Rent Supplement Properties
   D. Section 8 Minimum Rent
       Tenants in properties subsidized through the Section 8 program must pay a minimum
       TTP [Total Tenant Payment] of $25.
       3. Financial hardship exemptions.
              b. Implementing an exemption request.
                  4. If the hardship is determined to be long term, the owner must exempt the
                      tenant from the minimum rent requirement from the date the owner
                      granted the suspension. The suspension may be effective until such time
                      that the hardship no longer exists. However, the owner must recertify the
                      tenant every 90 days while the suspension lasts to verify that
                      circumstances have not changed. The length of the hardship exemption
                      may vary from one family to another depending on the circumstances of
                      each family. The owner must process an interim recertification to
                      implement a long-term exemption. Owners must maintain documentation
                      on all requests and determinations regarding hardship exemptions.

7-4 – Key Requirements
    A. To ensure that assisted tenants pay rents commensurate with their ability to pay, HUD
       requires the following:
       1. Owners must conduct a recertification of family income and composition at least
          annually. Owners must then recompute the tenants’ rents and assistance payments, if
          applicable, based on the information gathered.

9-7 Data Collection and Processing Procedures
    E. Record-Keeping Requirements for HUD-50059, HUD-50059-A and Vouchers


                                               16
1. Owners must keep the signed HUD-50059(s) and copies of the HUD-50059-A(s) for
   tenants from the time of move-in to move-out and for a minimum of three years
   thereafter. Owners may move older records offsite when files get large, however,
   upon request, the files must be made available for review by HUD or the Contract
   Administrator.




                                     17