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XbqXXXXbqXXXbq  _0p x (#X0K\(XXK$ (#X(#$֣XXbqMarch2004QHousingChoiceVoucherProgram!!H(#HUDXbqX֣Ԉ X K((XKB.` hp x (#(#B  ^R)..      XbqXXXXbqXXXbq  _0p x (#X0K_(XXK6p x (#X(#6֣XXbqA133ComplianceSupplement6p x (#X(#6Q414.871  7  XbqX֣ r ZR'..      XbqXXXXbqXXXbq  _0p x (#X0K\(XXK$ (#X(#$֣XXbqMarch2004Qgg)_CFP_Ԉ!!H(#HUD X K((XKB.` hp x (#(#BXbqX֣  ^R)..      XbqXXXXbqXXXbq  _0p x (#X0K_(XXK6p x (#X(#6֣XXbqA133ComplianceSupplement6p x (#X(#6Q{{414.872  10  XbqX֣#|x(O$(r~_$..      XoXXXXoXXXo0&d9 Z6Times New Roman RegularX3#37=CIQYag1.a.i.(1)(a)(i)1)a)i)0 }0:i+00U                  ~_!..      XbqXXXXbqXXXbq  _       Y]XXXX  DEPARTMENTOFHOUSINGANDURBANDEVELOPMENT     <( hp x (#X< _CFDA_Ԁ14.157 SUPPORTIVEHOUSINGFORTHEELDERLY(SECTION202) ^ H.` hp x (# X(#HI.  PROGRAMOBJECTIVES   \ TheobjectiveofSupportiveHousingfortheElderlyistoprovideFederalcapitaladvancesand   projectrentalassistanceunderSection202oftheNationalHousingActof1959fordevelopment   ofhousingprojectsservingelderlyhouseholds.    II.  PROGRAMPROCEDURES  4   Priorto1991ElderlyandDisabled  2  Loans   Priorto1991theDepartmentofHousingandUrbanDevelopment(HUD)provideddirectloans >  tofinancetheconstructionorrehabilitationofsupportivehousingfortheelderlyanddisabled, $t  includingthecostofrealpropertyacquisition,conversion,demolition,relocation,andother  Z  relatedexpenses. @  Assistance   TheprojectbasedrentalassistanceisprovidedunderSection8(notpartofthis_CFDA_Ԁ14.157) L andisthecalculationofprojectoperatingcostsincludingdebtservicing.Hence,therental 2 assistanceincludespaymentstoprincipalandinterestonthedirectloan.TheFairMarketRent h (_FMR_)isusedasanupperlimitconstraintontheamountofrentalassistance.Generally,the N rentalassistancemaynotexceed_FMR_ԀunlesstheprojectobtainsHUDapprovaltoapplyafactor 4 ofupto120percentofgrossrent.  TheborrowerreceivesassistancefromHUDonvacantrentalassistanceunitsatarate80percent x ofthecontractrentunderforthefirst60daysofvacancy,givencertainconditionsaremet ^ (24_CFR_Ԁsection891.650).Forvacanciesexceeding60days,theownermayapplyforpayment D  inanamountequaltothedebtservicingprincipleandinterestpaymentsrequiredtoamortizethat *!z portionofthedebtserviceattributabletothevacantunit(24_CFR_Ԁsection891.650). "`  Subsequentto1990ElderlyOnly  # CapitalAdvances l%  After1990,underPub.L.101625(November28,1990),HUDcapitaladvancesreplacedthe 'j" directloanmethodoffundingprojectconstructionandtheassistancetoprojectsforthedisabled (P# weremovedto_CFDA_Ԁ14.181SupportiveHousingforPersonswithDisabilities(Section811). (6$ Thecapitaladvancesareawardedtononprofitorganizationsandareusedtofinancethe )% constructionorrehabilitationofsupportivehousingfortheelderly,includingthecostofreal *&  propertyacquisition,conversion,demolition,relocation,andotherrelatedexpenses. +&  Theownerentityisrequiredtoputupaminimumcapitalinvestmentunderthecapitaladvance   program.ThisamountisonehalfofonepercentoftheHUDapprovedcapitaladvance.The  ownersinvestmentmaynotexceed$10,000,or$25,000iftheownerhasanationalsponsoror | cosponsor(24_CFR_Ԁsection891.145). b TheamountofthecapitaladvanceapprovedbyHUDmaynotexceedanappropriate  ` developmentcostlimit,determinedbyHUD.Ownersincurringtotaldevelopmentcostsunder  F thislimitmayretain50percentofthisdifference,whichisrequiredtobedepositedintoa  , reserveforreplacementaccount.A75percentretentionisallowedwheretheowneraddsenergy   efficiencyfeatures(24_CFR_Ԁsection891.140).   NorepaymentisrequiredundertheCapitalAdvanceProgramsolongastheownercomplies V  withtheRegulatoryAgreementwithHUDtomakeavailablerentalhousingtoverylowincome <  elderlypersonsfor40years(24_CFR_Ԁsection891.170). "r  RentalAssistance   TheprojectbasedrentalassistanceisprovidedunderaProjectRentalAssistanceContract ~  (_PRAC_)andiscalculatedbasedonoperatingcoststandardsestablishedbyHUD(24_CFR_ d section891.150).TheownersubmitsmonthlyvoucherstoHUDforpaymentofrental J assistance.ThetotalamountofassistanceequalstotalHUDapprovedoperatingexpensesfor 0 theprojectminusthetenantpaymentsreceivedforallunits(_PRAC_Ԁparagraph2.4(f)(1)). f Tenantsaregenerallyrequiredtopayrent,whichisthehighestof30percentofadjustedgross  income,10percentofgrossincome,ortheportionofwelfareassistancedesignatedtomeet  housingcosts(42_USC_Ԁ1437a).  TheownerreceivesassistancefromHUDonvacantrentalassistanceunitsatarateof50percent > ofOperatingExpenseforaunitunder_PRAC_Ԁ(_PRAC_Ԁparagraph2.4b)forthefirst60daysof $t vacancy,givencertainconditionsaremet(24_CFR_Ԁsection891.445).  Z  SourceofGoverningRequirements   ThisprogramisauthorizedunderSection202oftheHousingActof1959,asamended,whichis f! codifiedat12_USC_Ԁ1701q.Implementingregulationsforthisprogramare24_CFR_Ԁpart891, L" _subparts_ԀA,B,andD. 2#  III.  COMPLIANCEREQUIREMENTS  $0   Indevelopingtheauditprocedurestotestcompliancewiththerequirementsforafederal &! program,theauditorshouldfirstlooktoPart2,MatrixofCompliancerequirements,to t'" identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are Z(#  applicableandthenlooktoParts3and4forthedetailsoftherequirements.  @)$  & F  A.  ActivitiesAllowedorUnallowed     E.` ` hp x (#X(#E1. ` Theprojectshallprovidethenecessaryservicesfortheoccupants,whichmay ^ include,butnotlimitedto,health,education,welfare,informational,recreational, D homemaking,meals,counseling,andreferralservices(12_USC_Ԁ1701q;24_CFR_ *z sections891.225and891.500).'F   ` 2. ` Projectfundsmaybeusedonlyforexpensesthatarereasonableandnecessaryto   theoperationoftheprojectasprovidedforintheRegulatoryAgreementbetween   HUDandtheprojectowner.   3. ` Projectfacilitiesmaynotincludeinfirmaries,nursingstations,orspacesfor 8  overnightcare(24_CFR_Ԁsection891.220). n  4. ` Projectmustbemodestindesignandassuch,thefollowingarenottobefunded   withcapitaladvancefunds:individualunitbalconiesordecks,dishwashers,   washers,dryers,trashcompactors,swimmingpools,saunas,and_jacuzzis_.   Sponsorsmayincludecertainexcessamenitiesbutthesemustbepaidforwith ~  otherthancapitaladvancefunds.Associatedoperatingcostsmustalsobepaid d forbysourcesotherthantheprojectrentalassistancecontract(24_CFR_Ԁsection J 891.120). 0   E.` hp x (#` X(#E E.  Eligibility  .  X 1. ` EligibilityforIndividuals    X E.` ` hp x (#X(#ESection202(_CFDA_Ԁ14.157)oftheNationalHousingActwasdesignedtoprovide : housingfortheelderlyanddisabled(priorto1991).Section811(_CFDA_Ԁ14.181)  p oftheNationalHousingActwascreatedtoprovideseparatefundingforhousing V forpersonswithdisabilities(subsequentto1990). < Toqualifyaselderly,oneormoremembersofthehouseholdmustbe62yearsof  ageormoreatthetimeofinitialoccupancy(24_CFR_Ԁsection891.205).   Toqualifyasdisabled(priorto1991Section202s),thehouseholdmustconsist ."~ ofatleastonepersonwhoisanadult(18yearsorolder)withadisability,twoor #d morepersonswithdisabilitieslivingtogether,orasurvivinghouseholdmember #J undercertaincircumstances(42_USC_Ԁ1437a(b)(3);24_CFR_Ԁsection891.505). $0  Verylowincomeeligibilityappliestotheelderlysubsequentto1990andthe &! ownerisresponsibletoannuallyreexamineincomesforhouseholdsoccupying t'" assistedunitsorresidentialspaceandmakeappropriateadjustmentstothetenant Z(# paymentandtheprojectrentalassistancepayment(24_CFR_Ԁsection891.410). @)$  Assistanceapplicantsshallsubmitsignedconsentformsuponinitialapplication &*v%! andatreexamination(24_CFR_Ԁsection5.230).  +\&"   2. ` EligibilityofGroupofIndividualsorAreaofServiceDelivery 󀄀Not , (# Applicable -($  X E.` hp x (#` X(#E 3. ` Eligibilityfor_Subrecipients_ 󀄀NotApplicable   X N.  SpecialTestsandProvisions  ^   E.` ` hp x (#X(#E 1. ` UseofProjectFunds   \   XE.` hp x (#` X(#E ComplianceRequirement 󀄀Ownersarerequiredtoestablishandmaintainaseparate   projectaccountinfederallyinsureddepository.Allrents,charges,income,andrevenues   arisingfromtheprojectoperationshallbedepositedintothisaccount.Projectfunds   mustbeusedfortheoperationoftheproject(includingrequiredinsurancecoverage),to l  makerequiredprincipalandinterestpaymentsontheSection202loan,andtomake R  requireddepositstoreplacementreserveandtheresidualreceiptsaccounts(24_CFR_ 8  sections891.400(e)and891.600(e)). n   AuditObjectives 󀄀Determinewhethertheprojectfundwasproperlyestablished,   requireddepositsweremadeintothisfund,anddisbursementswereonlyforallowed   purposes.    X XE.` hp x (#X(#E& z SuggestedAuditProcedures F   X E.` ` hp x (#X(#E a. ` Ascertainiftheprojectfundsreceiptsaccounthasbeenestablishedinafederally D insureddepository.'zF+3 * b. ` Performteststoascertainifallrents,charges,income,andrevenuesarisingfrom  theprojectoperationweredepositedintothefund. n c. ` Testasampleofdisbursementsfromthefundascertainiftheywereusedonlyfor l theoperationoftheprojectortomakerequireddepositstothereplacement R reserveortheresidualreceiptsaccount. 8  2. ` ReplacementReserve     XE.` hp x (#` X(#E ComplianceRequirement 󀄀Ownersshallestablishandmaintainareplacementreserve D  toaidinfundingextraordinarymaintenanceandrepairandreplacementofcapitalitems. *!z Thereplacementreservefundsmustbedepositedinafederallyinsureddepositoryinan "` interestbearingaccount . Allearningsincludinginterestonthereservemustbeaddedto "F thereserve.AnamountasrequiredbyHUDwillbedepositedmonthlyinthereserve #, fund(RegulatoryAgreement,item5A).Alldisbursementsfromthereservemustbe $  approvedbyHUD(24_CFR_Ԁsections891.405and891.605). %   AuditObjectives 󀄀Determinewhetherthereplacementreservewasproperlyestablished, V'" requiredmonthlydepositsweremade,anddisbursementswereonlyforHUDapproved <(#  purposes. ")r$  X XE.` hp x (#X(#E&   SuggestedAuditProcedures    X E.` ` hp x (#X(#Ea. ` Ascertainifareplacementreserveaccounthasbeenestablishedinafederally ^ insureddepositoryinaninterestbearingaccount. D b. ` Ascertainiftherequiredmonthlydepositshavebeenmadetothereplacement B reserveaccount.'C;  ( c. ` Ascertainifinterestearningsfromthereservewereretainedinthereplacement   reserveaccount. l  d. ` Testasampleofdisbursementsfromthereplacementreserveaccountand j  ascertainiftheywereapprovedbyHUDandweremadefortheapproved P  purpose. 6   3. ` ResidualReceiptsAccount      XE.` hp x (#` X(#E ComplianceRequirement 󀄀Anyfundsintheprojectfundsaccount(includingearned B  interest)attheendofthefiscalyearshallbedepositedinafederallyinsuredaccount (x  within60daysfollowingtheendofthefiscalyear.Withdrawalsfromthisaccountmay ^  bemadeonlyforprojectpurposesandwiththeapprovalofHUD(24_CFR_Ԁsections D 891.400(e)and891.600(e)). *  AuditObjectives 󀄀Determinewhethertheresidualreceiptsaccountwasproperly  established,therequireddepositwasmadewithin60daysfollowingyearend,and n disbursementswereonlyforprojectpurposesandtheapprovalofHUD. T  X XE.` hp x (#X(#E& z SuggestedAuditProcedures  R  X E.` ` hp x (#X(#Ea. ` Ascertainifresidualreceiptsaccounthasbeenestablishedinafederallyinsured  depository.'zB  b. ` Ascertainiftherequiredannualdepositwasmadewithin60daysfollowingyear D  end. *!z c. ` Testasampleofdisbursementsfromtheresidualreceiptsaccountandascertainif "( theywereusedforprojectpurposesandapprovedbyHUD. #   E.` hp x (#` X(#E IV.  OTHERINFORMATION  l%   XE.` hp x (#X(#E& J Toprotectitsinterestinacapitaladvance,HUDrequiresanoteandmortgage,generally 'j" fora40yearterm.Theownerisnotrequiredtorepaytheprincipalorpayinterestand (P# thenoteisforgivenatmaturity,aslongastheownerprovideshousingforthedesignated (6$ classofpeopleinaccordancewithapplicableHUDrequirements.However,thefull )% outstandingbalanceonthenoteshouldbeconsideredFederalawardsexpended,included *& indeterminingTypeAprograms,andreportedasloansontheScheduleofExpenditures +&  ofFederalAwardsoraccompanyingnotesinaccordancewithOMBCircularA133.'J'vF  ~,'! `Ya] X  DEPARTMENTOFHOUSINGANDURBANDEVELOPMENT    $   E. X hp x (#X(#E _CFDA_Ԁ14.181 SUPPORTIVEHOUSINGFORPERSONSWITHDISABILITIES ^ (SECTION811)  D  $ K+ ` hp x (# X X(#K I.  PROGRAMOBJECTIVES  B E.` hp x (#X(#ETheobjectivesofSupportiveHousingforPersonswithDisabilitiesareto:(1)provideFederal   capitaladvancesunderSection811oftheNationalAffordableHousingAct(_NAHA_)for   developmentofhousingprojectsservingpersonswithdisabilities;and(2)providetenantbased l  rentalassistancetolowincomepersonswithdisabilitiesforpaymentofhousingontheprivate R  market. 8  B+ ` hp x (#X(#B II.  PROGRAMPROCEDURES  6  E.` hp x (#X(#E CapitalAdvances    After1990,underPub.L.101625(November28,1990),DepartmentofHousingandUrban B  Development(HUD)capitaladvancesreplacedthedirectloanmethodoffundingproject (x  constructionundertheSection202oftheNationalHousingAct(NHA)(12_USC_Ԁ1702etseq). ^  Section811of_NAHA_Ԁwascreatedasaseparateprogramforthedevelopmentofhousingfor D personswithdisabilities.Capitaladvancesareawardedtononprofitorganizationsandareused * tofinancetheconstructionorrehabilitationofsupportivehousingforpersonswithdisabilities  (24_CFR_Ԁsection891.300).  NorepaymentisrequiredundertheCapitalAdvanceProgramaslongastheownercomplies T withtheRegulatoryAgreementwithHUDtomakeavailablerentalhousingtoverylowincome : personswithdisabilitiesforatleast40years.Anychangeinownershipduringthe40year  p periodmustbeapprovedbyHUD(24_CFR_Ԁsection891.170). V  RentalAssistance   ProjectrentalassistanceisusedtocoverthedifferencebetweentheHUDapprovedoperating b  costsoftheprojectandthetenantscontributionstowardrent(24_CFR_Ԁsection891.410). H! ProjectrentalassistanceisprovidedunderaProjectRentalAssistanceContract(_PRAC_)andis "F calculatedbasedonoperatingcoststandardsestablishedbyHUD(24_CFR_Ԁsection891.150). #, TheownersubmitsmonthlyvoucherstoHUDforpaymentofrentalassistance.Thetotalamount $  ofassistanceequalstotalHUDapprovedoperatingexpensesfortheprojectminusthetenant %  paymentsreceivedforallunits(_PRAC_Ԁparagraph2.4(f)(1)). &! TenantsaregenerallyrequiredtopayrentinaccordancewiththeHousingAssistancePayment <(# Contract. ")r$ TheownerreceivesassistancefromHUDonvacantrentalassistanceunitsatarateof50percent * &  ofOperatingExpenseforaunitunder_PRAC_Ԁ(_PRAC_Ԁparagraph2.4b)forthefirst60daysof +'! vacancy,givencertainconditionsaremet(24_CFR_Ԁsection891.445). ,'" & ` SourceofGoverningRequirements   ThisprogramisauthorizedunderSection811oftheNationalAffordableHousingAct(42_USC_ ^ 8013).Implementingregulationsforthisprogramare24_CFR_Ԁpart5,subpartH,andpart891, D _subparts_ԀA,C,andD.'`Y *z B+ ` hp x (#X(#B III.  COMPLIANCEREQUIREMENTS   ( E.` hp x (#X(#E Indevelopingtheauditprocedurestotestcompliancewiththerequirementsforafederal   program,theauditorshouldfirstlooktoPart2,MatrixofCompliancerequirements,to l  identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are R  applicableandthenlooktoParts3and4forthedetailsoftherequirements.  8  B+ ` hp x (#X(#B A.  ActivitiesAllowedorUnallowed  6    E.` ` hp x (#X(#E1. ` Projectfundsmaybeusedonlyforexpensesthatarereasonableandnecessaryto   theoperationoftheprojectasprovidedforintheRegulatoryAgreementbetween z  HUDandtheprojectowner(24_CFR_Ԁsection891.400(e)). `  2. ` Projectfacilitiesmaynotincludeinfirmaries,nursingstations,spacesdedicatedto ^  thedeliveryofmedicaltreatmentorphysicaltherapy,paddedrooms,orspacefor D respitecareorshelteredworkshops,evenifpaidforfromsourcesotherthanthe * HUDcapitaladvance.Exceptforofficespaceusedbytheownerexclusivelyfor  theadministrationoftheproject,projectfacilitiesmaynotincludeofficespace.  (24_CFR_Ԁsection891.315).  3. ` Projectmustbemodestindesignand,assuch,thefollowingarenottobefunded : withcapitaladvancefunds;individualunitbalconiesordecks,dishwashers,  p washers,dryers,trashcompactors,swimmingpools,saunas,or_jacuzzis_. V Sponsorsmayincludecertainexcessamenitiesbutthesemustbepaidforwith < otherthancapitaladvancefunds.Associatedoperatingcostsmustalsobepaid " forbysourcesotherthantheprojectrentalassistancecontract(24_CFR_Ԁsection  891.120).     B+ ` hp x (#` X(#B E.  Eligibility  L"  X?( ` hp x (#X(#? 1. ` EligibilityforIndividuals  #J  XE.` ` hp x (#` X(#ESection202(_CFDA_Ԁ14.157)oftheNationalHousingActwasdesignedtoprovide %  housingfortheelderlyanddisabled(priorto1991).Section811(_CFDA_Ԁ14.181) &! oftheNationalHousingActwascreatedtoprovideseparatefundingforhousing t'" forpersonswithdisabilities(subsequentto1990)(42_USC_Ԁ8013). Z(# Toqualifyasdisabled(priorto1991Section202),thehouseholdmustconsistof *X%  atleastonepersonwhoisanadult(18yearsorolder)withadisability,twoor *>&! morepersonswithdisabilitieslivingtogether,orasurvivinghouseholdmember +$'" undercertaincircumstances(42_USC_Ԁ1437a(b)(3);24_CFR_Ԁsection891.505). , (# Verylowincomeeligibilityappliestopersonswithdisabilitiessubsequentto  1990andtheownerisresponsibletoannuallyreexamineincomesforhouseholds  occupyingassistedunitsorresidentialspaceandmakeappropriateadjustmentsto | thetenantpaymentandtheprojectrentalassistancepayment(24_CFR_Ԁsection b 891.410).Assistanceapplicantsshallsubmitsignedconsentformsuponinitial H applicationandatreexamination(24_CFR_Ԁsection5.230). . ~   2. ` EligibilityforGroupofIndividualsorAreaofServiceDelivery 󀄀Not  , Applicable    3. ` Eligibilityfor_Subrecipients_ 󀄀NotApplicable p    B+ ` hp x (#` X(#B N.  SpecialTestsandProvisions  n    E.` ` hp x (#X(#E 1. ` UseofProjectFunds      XE.` hp x (#` X(#E ComplianceRequirement 󀄀Ownersarerequiredtoestablishandmaintainaseparate z  projectaccountinfederallyinsureddepository.Allrents,charges,income,andrevenues `  arisingfromtheprojectoperationshallbedepositedintothisaccount.Projectfunds F  mustbeusedfortheoperationoftheproject(includingrequiredinsurancecoverage),and ,| tomakerequireddepositstoreplacementreserveandtheresidualreceiptsaccounts(24 b _CFR_Ԁsection891.400(e)). H  AuditObjectives 󀄀Determinewhethertheprojectfundwasproperlyestablished,  requireddepositsweremadeintothisfund,anddisbursementswereonlyforallowed  purposes. r  SuggestedAuditProcedures   p   XE.` ` hp x (#X(#Ea. ` Ascertainiftheprojectfundsreceiptsaccounthasbeenestablishedinafederally  insureddepository.  b. ` Performteststoascertainifrents,charges,income,andrevenuesarisingfromthe b  projectoperationweredepositedintothefund. H! c. ` Testasampleofdisbursementsfromthefundtoascertainiftheywereusedonly "F fortheoperationoftheprojectortomakerequireddepositstothereplacement #, reserveortheresidualreceiptsaccount. $    XE.` hp x (#` X(#E 2. ` ReplacementReserve  p&!  ComplianceRequirement 󀄀Ownersshallestablishandmaintainareplacementreserve (n# toaidinfundingextraordinarymaintenanceandrepairandreplacementofcapitalitems. )T$ Thereplacementreservefundsmustbedepositedinafederallyinsureddepositoryinan ):% interestbearingaccount . Allearningsincludinginterestonthereservemustbeaddedto * &  thereserve.AnamountasrequiredbyHUDwillbedepositedmonthlyinthereserve +'! fund(RegulatoryAgreement,item5(a)).Alldisbursementsfromthereservemustbe ,'" approvedbyHUD(24_CFR_Ԁsection891.405). -(#  AuditObjectives 󀄀Determinewhetherthereplacementreservewasproperlyestablished,  requiredmonthlydepositsweremade,anddisbursementswereonlyforHUDapproved  purposes. |  SuggestedAuditProcedures  *z   XE.` ` hp x (#X(#Ea. ` Ascertainifareplacementreserveaccounthasbeenestablishedinafederally  ( insureddepositoryinaninterestbearingaccount.   b. ` Ascertainiftherequiredmonthlydepositshavebeenmadetothereplacement l  reserveaccount. R  c. ` Ascertainifinterestearningsfromthereservewereretainedinthereplacement P  reserveaccount. 6  d. ` Testasampleofdisbursementsfromthereplacementreserveaccountand   ascertainiftheywereapprovedbyHUDandweremadefortheapproved z  purpose. `   3. ` ResidualReceiptsAccount  ^    XE.` hp x (#` X(#E ComplianceRequirement 󀄀Anyfundsintheprojectfundsaccount(includingearned   interest)attheendofthefiscalyearshallbedepositedinafederallyinsuredaccount  within90daysfollowingtheendofthefiscalyear.Withdrawalsfromthisaccountmay  bemadeonlyforprojectpurposesandwiththeapprovalofHUD(24_CFR_Ԁsection n 891.400(e)). T  AuditObjectives 󀄀Determinewhethertheresidualreceiptsaccountwasproperly R established,therequireddepositwasmadewithin90daysfollowingyearend,and 8 disbursementswereonlyforprojectpurposesandtheapprovalofHUD.   SuggestedAuditProcedures  |   XE.` ` hp x (#X(#Ea. ` Ascertainifresidualreceiptsaccounthasbeenestablishedinafederallyinsured *!z depository. "` b. ` Ascertainiftherequiredannualdepositwasmadewithin90daysfollowingyear # end. $ c. ` Testasampleofdisbursementsfromtheresidualreceiptsaccountandascertainif R&!  theywereusedforprojectpurposesandapprovedbyHUD. 8'"   B+ ` hp x (#` X(#B&   IV.  OTHERINFORMATION    XE.` hp x (#X(#EToprotectitsinterestinacapitaladvance,HUDrequiresanoteandmortgage,generally ^ fora40yearterm.Theownerisnotrequiredtorepaytheprincipalorpayinterestand D thenoteisforgivenatmaturity,aslongastheownerprovideshousingforthedesignated *z classofpeopleinaccordancewithapplicableHUDrequirements.However,thefull  ` outstandingbalanceonthenoteshouldbeconsideredFederalawardsexpended,included  F indeterminingTypeAprogramsandreportedasloansontheScheduleofExpenditures  , ofFederalAwardsoraccompanyingnotesinaccordancewithOMBCircularA133.'e    b`ca X  E.` hp x (#X(#E r@DEPARTMENTOFHOUSINGANDURBANDEVELOPMENT    $   B+ hp x (#X(#B_CFDA_Ԁ14.182 SECTION8NEWCONSTRUCTIONANDSUBSTANTIAL ^ REHABILITATION D _CFDA_Ԁ14.195 SECTION8HOUSINGASSISTANCEPAYMENTSPROGRAM *z SPECIALALLOCATIONS  ` _CFDA_Ԁ14.856 LOWERINCOMEHOUSINGASSISTANCEPROGRAMSECTION8  F MODERATEREHABILITATION  ,  _CFDA_Ԁ14.249 SECTION8MODERATEREHABILITATIONSINGLEROOM   OCCUPANCY     $ K.` hp x (#  X(#K I.  PROGRAMOBJECTIVES  V  TheobjectiveoftheSection8rentalassistanceprogramsistohelpeligiblelowincomefamilies T  orindividualsobtaindecent,safe,andsanitaryhousingthroughasystemofrentalsubsidies :  (24_CFR_Ԁsections880.101,881.101,882.401,882.801,883.101,884.101,886.101,and886.301).    II.  PROGRAMPROCEDURES  ~  Underthisprojectbasedcluster,therentalsubsidyistiedtoaspecificunitandwhenafamily ,| movesfromtheunit,ithasnorighttocontinuedassistance. b CertainprojectbasedprogramsareadministeredbyState,local,orothergovernmentalentities  qualifyingasPublicHousingAgencies(_PHAs_).TheDepartmentofHousingandUrban  Development(HUD)entersintoannualcontributionscontractswith_PHAs_Ԁwhichenterinto  HousingAssistancePayments(HAP)contractswithprivateowners.Theownersrenthousingto r eligiblelowincomefamilieswhotypicallypayrentwhichisthehighestof30percentof X adjustedgrossincome,10percentofgrossincome,ortheportionofwelfareassistance > designatedtomeethousingcosts.Theremainingportionoftherentfortheunitispaidtothe $t ownerbythePHAorHUDthroughtheHAPcontract.ThePHAisthenreimbursedbyHUD  Z throughtheannualcontributionscontract.HUDalsoprovidesfundsforPHAadministrationof @ theSection8programs. & _PHAs_ԀarerequiredtomaintainaHAPcontractregisterorsimilarrecordinwhichtorecordthe ! PHAsobligationformonthlyhousingassistancepayments.Thisrecordshallprovide j" informationasto:thenameandaddressofthefamily;thenameandaddressoftheowner; P# dwellingunitsize;theeffectiveandexpirationdatesofthelease;themonthlycontractrent 6$ payabletotheowner;monthlyrentpayablebythefamily;andthemonthlyhousingassistance %l  payment.Therecordshallalsoprovidedataastothedatethefamilyvacatesandthenumberof &R! daystheunitisvacant,ifany.Thisrequirementisapplicableto_PHAs_Ԁthatareadministering &8"  HousingAssistancePaymentsProgramProjectspursuanttotheprovisionsofAnnual '#! ContributionsContracts.ItisnotapplicabletoSection8projectsonwhichHUDhasexecuteda ($"  HAPcontractdirectlywithanownerorPHA. )$# & v  TheModerateRehabilitation(Mod_Rehab_)program(includingtheSingleRoomOccupancy  (SRO)programforhomelessindividuals)assistslowincomefamiliesinaffordingdecent,safe  andsanitaryhousingbyencouragingpropertyownerstorehabilitatesubstandardhousingand | leasetheunitswithrentalsubsidiestolowincomefamilies.ThePHAandtheownerexecutean b AgreementtoEnterintoHousingAssistancePaymentsContractunderwhichtheowneragrees H torehabilitatetheunittobesubsidizedandthePHAagreestosubsidizetheunitsupon . ~ satisfactorycompletionofrehabilitation.Uponcompletionoftherehabilitation,thePHAand  d theownerexecuteaHAPcontract.ThePHArefersinterestedeligiblefamiliesonitsSection8  J waitinglisttotheownertofillvacanciesinmoderaterehabilitationunits.  0 Mod_Rehab_Ԁprogramassistanceisconsideredaprojectbasedsubsidybecausetheassistanceis    tiedtospecificunitsunderanassistancecontractwiththeownerforaspecifiedterm.Afamily t  thatmovesfromaunitwithprojectbasedassistancedoesnothaveanyrighttocontinued Z  assistance.'v  @  UndertheMod_Rehab_ԀSROprogram,eligibleapplicantsare_PHAs_Ԁornonprofitorganizations, >  whichmustcontractwithaPHAtoadministertherentalassistance.Eligibleindividualsmustbe $ homelessaccordingtoHUDsdefinitionandmaybelocatedthroughowneroutreachaswellas   fromthePHAwaitinglist(24_CFR_Ԁ882.808).Nosingleprojectmaycontainmorethan100  assistedunits.TheSROprogramisadministeredunderaninitial10yearHAPterm,withthe  possibilityofsubsequentoneyearrenewals.TheprogramisadministeredatHUDHeadquarters l bytheOfficeofCommunityPlanningandDevelopment(_CPD_). R InaccordancewithHUDsUniformFinancialReportingStandardsrule,annually,aPHAis P requiredtosubmititsfinancialstatement,preparedinaccordancewithgenerallyaccepted 6 accountingprinciples(_GAAP_),intheelectronicformatspecifiedbyHUD.Theunaudited  financialstatementisdue2monthsafterthePHAsfiscalyearendandtheauditedfinancial  statementisdue9monthsafteritsfiscalyearend(24_CFR_Ԁsection5.801).Thefinancial  statementmustincludethefinancialactivitiesoftheprogramsinthiscluster. ~  SourceofGoverningRequirements  ,| Theseprograms(otherthantheMod_Rehab_ԀSROprogram)areauthorizedbytheU.S.Housing  * Actof1937,asamended(42_USC_Ԁ1437a,c,andf;42_USC_Ԁ3535(d);42_USC_Ԁ12701;and42_USC_ ! 13611through13619).Implementingregulationsare24_CFR_Ԁparts880through884and24 " _CFR_Ԁpart886.TheModerateRehabilitationSROprogramisauthorizedundersection441ofthe # _McKinney_Ԅ_Vento_ԀHomelessAssistanceAct,42_USC_Ԁ11401,andissubjecttoprogram r$ regulationsat24_CFR_Ԁpart882,subpartH. X%   AvailabilityofOtherProgramInformation  'V"! HUDmaintainsapageonitswebsite(4dsiO  5  +  http://www.hu% e %e% f d.gov/hudprog.cfm+èX  6wnits  7)thatprovidesgeneral ($"  informationabouttheseprograms. )$# &   III.  COMPLIANCEREQUIREMENTS    IndevelopingtheauditprocedurestotestcompliancewiththerequirementsforaFederal ^ program,theauditorshouldfirstlooktoPart2,MatrixofComplianceRequirements,to D identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are *z applicableandthenlooktoParts3and4forthedetailsoftherequirements.   `  E.  Eligibility '3     E.` ` hp x (#X(#E 1. ` EligibilityforIndividuals  l   E. ` hp x (#` X(#Ea. ThePHAorowner,asapplicable,must: j   ` E.` hp x (# X(#E(1)  Verifytheeligibilityofapplicantsby:(a)obtainingsigned   applicationsthatcontaintheinformationneededtodetermine   eligibility(includingdesignationaselderly,disabled,orhomeless,   ifapplicable),income,rent,andorderofselection;(b)conducting z  verificationsoffamilyincomeandotherpertinentinformation `  (suchasassets,fulltimestudentandimmigrationstatus,and F  unusualmedicalexpenses)throughthirdparties;(c)documenting ,| inspectionsandtenantcertifications,asappropriate;and,(d) b determiningthattenantincomedidnotexceedthemaximumlimit H setbyHUDforthePHAsjurisdiction,asshowninHUDs . publishednoticetransmittingtheLimitsforLowIncomeandVery  LowIncomeFamiliesUndertheHousingActof1937.Forthe  Mod_Rehab_ԀSROprogram,eligibleindividualsmustbehomeless  uponentryintotheprogram.(24_CFR_Ԁsections880.603,881.601, v 882.514,882.808,833.701,884.214,886.119,and886.318) \ (2)  Determinethetotaltenantrentpaymentinaccordancewith  Z 24_CFR_Ԁsection5.613. @ (3)  Selectparticipantsfromthewaitinglistinaccordancewiththe   admissionpoliciesinitsadministrativeplanandmaintain ! documentationwhichshowsthat,atthetimeofadmission,the j" familyactuallymetthepreferencecriteriathatdeterminedthe P# familysplaceonthewaitinglist.FortheMod_Rehab_ԀSRO 6$ program,eligibleindividualsmaybereferredtothePHAfor %l  eligibilitydeterminationasaresultoftheowners/sponsors &R! outreachorthroughthePHAwaitinglist.(24_CFR_Ԁsections &8"  880.603,881.601,882.514,882.808(b)(2),883.701,884.214,and '#!  886_subparts_ԀAandC) ($" & ,  (4)  Reexaminefamilyincomeandcompositionatleastonceevery12  monthsandadjustthetotalrentpaymentandhousingassistance  payment,asnecessary(24_CFR_Ԁsections5.617,880.603,881.601, | 882.515,884.218,886.124,and886.324). b  ` E.` ` hp x (#X(#E 2. ` EligibilityforGroupofIndividualsorAreaofServiceDelivery 󀄀Not  ` Applicable',x  F  3. ` Eligibilityfor_Subrecipients_ 󀄀NotApplicable     E.` hp x (#` X(#E L.  Reporting  R   X 1. ` FinancialReporting  P   Xa. SF269,FinancialStatusReport󀄀NotApplicable     E. ` hp x (#X(#Eb. SF270,RequestforAdvanceorReimbursement󀄀NotApplicable \  c. SF271,OutlayReportandRequestforReimbursementforConstruction  Z  Programs󀄀NotApplicable @  d. SF272,FederalCashTransactionsReport󀄀NotApplicable   e. Inlieuofthestandardreports,thefollowingreportsarerequiredon L Section8projectbasedprogramsinvolvingPHA/privateownersand 2 HUD/PHAowners. h  ` E.` hp x (# X(#E(1)  HUD52663,RequisitionforPartialPaymentofAnnual  Contributions(OMBNo.25770169)󀄀submittedquarterly.  (2)  HUD52681,VoucherforPaymentofAnnualContributionsand Z OperatingStatement(OMBNo.25770169)󀄀submittedannually. @ (3)  HUD52595,BalanceSheetforSection8andPublicHousing  > (OMBNo.25770169)󀄀submittedannually. !$  ` E.` ` hp x (#X(#E 2. ` PerformanceReporting NotApplicable #  3. ` SpecialReporting  0%   E. ` hp x (#` X(#Ea. HUD50058,FamilyReport(OMBNo.25770083)󀄀ThePHAisrequired &." tosubmitthisformelectronicallytoHUDeachtimethePHAcompletes '# anadmission,annualreexamination,interimreexamination,portability (# movein,orotherchangeofunitforafamily.ThePHAmustalsosubmit )$ theFamilyReportwhenafamilyendsparticipationintheprogramor v*%  movesoutofthePHAsjurisdictionunderportability. \+&   E.` hp x (# X(#E&   KeyLineItemsThefollowinglineitemscontaincriticalinformation:    ` E.` hp x (#X(#E(1)  Line2aTypeofAction'| ^ (2)  Line2bEffectiveDateofAction  \ (3)  Line3b,3cNames   (4)  Line3eDateofBirth h  (5)  Line3nSocialSecurityNumbers  f (6)  Line5aUnitAddress   (7)  Line5h,5iUnitInspectionDates r  (8)  Line7iTotalAnnualIncome  p  (9)  Line13hContractRenttoOwner   (10)  Line13kor13xTenantrent |   ` E. ` hp x (#X(#Eb. HUD50059,OwnersCertificationofComplianceWithHUDsTenant *z  EligibilityandRentProcedures(OMBNo.25020204)󀄀Thisreportis `  submittedelectronicallytoHUD. F  c. ForModerateRehabilitationSROonly:HUD40118,AnnualProgress  Report(OMBNo.25060145)!ThisreportisduefromeachnonFederal  recipientofassistancewithin90daysaftertheendofitsoperatingyear p (24_CFR_Ԁsection882.808(p)). V   E.` hp x (# X(#EKeyLineItems: T  g (03/ /""  XE.` hp x (#X(#E   ` X9" hp x (#X(#972(  1  )3      Line4!Nonhomelesspersons7݌   Ќ ` $ X(#X(#$   ""  XE.` hp x (#X(#E   ` X9" hp x (#X(#92(  2  )3      Line6b!Chronicallyhomelesspersons݌ `" Ќ ` $ X(#X(#$   ""  XE.` hp x (#X(#E   ` X9" hp x (#X(#92(  3  )3      Line10!PriorLivingSituation݌ $^ Ќ ` $ X(#X(#$   ""  XE.` hp x (#X(#E   ` X9" hp x (#X(#92(  4  )3      Line11!AmountandSourceofMonthlyIncomeatEntryandat % ! Exit݌ &! Ќ ` $ X(#X(#$   ""  XE.` hp x (#X(#E   ` X9" hp x (#X(#92(  5  )3      Line12a,b!LengthofStayinProgram݌ P(#  ` $ X(#X(#$   ""  XE.` hp x (#X(#E   ` X9" hp x (#X(#92(  6  )3      Line14Destination݌ )N% Ќ ` $ X(#X(#$   &   N.  SpecialTestsandProvisions     E.` ` hp x (#X(#E 1. ` ContractRentAdjustments  ^   XE.` hp x (#` X(#E ComplianceRequirement ThePHAorownerappliesorensuresannualadjustmentsto  \ contractrentsareapplied.TheHAPcontractspecifiesthemethodtobeusedto B determinerentadjustments.Adjustmentsmustnotresultinmaterialdifferencesbetween  ( rentschargedforassistedunitsandcomparableunassistedunitsexceptasthose   differencesexistedatcontractexecution.Specialadjustmentstocontractrentsmayalso   bemadetotheextentdeemednecessarybythePHAorHUD(24_CFR_Ԁsections880.609,   881.601,882.410,883.701,884.109,886.112,and886.312).'  p   AuditObjective 󀄀Determinewhethercontractrentsarebeingadjustedproperly. n  & z SuggestedAuditProcedures      XE.` ` hp x (#X(#Ea. ` Reviewtheproceduresforapplyingannualadjustmentfactorsandhandling z  specialadjustmentrequests.'z `  b. ` Selectasampleofcontractsandtherelatedfileswithannualandspecialrent ^  adjustmentsandtestthesupportingdataandcertificationsthatweresubmittedto D supporttheadjustments. * c. ` ReviewtheselectedHAPcontractfilesortenantfilestoverifythatannualand  specialadjustmentswereappliedcorrectlyandthatrentadjustmentsdidnotresult n inmaterialdifferencesbetweentherentschargedforassistedandcomparable T unassistedunits. :  2. ` TenantUtilityAllowances 8   XE.` hp x (#` X(#EComplianceRequirement 󀄀ThePHAorownermust(a)establishorensuretenant  utilityallowancesbasedonutilityconsumptionandratedataforvarioussizedunits, | structuretypes,andfueltypes,(b)makeanannualreviewoftenantutilityallowancesto b  determinetheirreasonableness,and(c)adjusttheallowances,whenappropriate(24_CFR_ H! sections5.603,880.610,881.601,882.510,883.701,884.220,886.126,and886.326). ."~  AuditObjective 󀄀Determinewhethertenantutilityallowancesareproperlyestablished. #,  X XE.` hp x (#X(#E SuggestedAuditProcedures  %   X E.` ` hp x (#X(#Ea. ` Examinetheproceduresusedtoestablishandannuallyreviewutilityallowances, 8'" handleadjustmentrequests,andnotifytenantsofutilityallowanceadjustments. (n# b. ` Selectasampleofunitswithtenantutilityallowancesandtheirrelatedtenant )% filesforreview. *& c. ` Testownerrequests,PHAdeterminations,andsupportingdocumentationfor `,'  utilitydeterminations. F-(! @     d. ` Verifythattheallowanceswereappliedtotenantscorrectly.   3. ` HousingQualityStandards  ^   XE.` hp x (#` X(#E ComplianceRequirement ThePHAorownermustprovidehousingthatisdecent,  \ safe,andsanitary.Toachievethisend,thePHAmustperformhousingquality B inspectionsatthetimeofinitialoccupancyandatleastannuallythereaftertoassurethat  ( theunitsaredecent,safe,andsanitary(24_CFR_Ԁsections880.612,881.601,882.516,   883.701,884.217,886.123,and886.323).    AuditObjective 󀄀DeterminewhetherthePHAorownerperformstherequired R  inspectionstoassurethatunitsmeethousingqualitystandards. 8   X XE.` hp x (#X(#E SuggestedAuditProcedures  6   X E.` ` hp x (#X(#Ea. ` ExaminetheproceduresusedbythePHAorownertoidentifythoseunitson   whichhousingqualityinspectionsaredue. z  b. ` SelectasampleofunitsonwhichHAPcontractswereexecutedandexamine (x  inspectionreports. ^  c. ` ExaminerecordsandascertainthatthePHAorownerassuresthattheinspections   andanyneededrepairsarecompletedtimely.  d. ` VerifythatthePHAreviewedtheevidenceofcompletionsubmittedbytheowner P onnewlyconstructedorrehabilitatedunitsacceptedforoccupancy. 6  4. ` VacantUnits  4   XE.` hp x (#` X(#E ComplianceRequirement ThePHAorownermustreduceclaimsforassistanceon  vacantunitsundercertaincircumstances.However,thereareinstanceswherespecial x claimsareallowedforvacancylosses,unpaidrent,andtenantdamagesoneligibleunits ^ (24_CFR_Ԁsections880.611,881.601,882.411,883.701,884.106,886.109,and886.309). D   AuditObjective 󀄀Determinewhetherpaymentstoownersarereducedforvacantunits !B andwhetherpaymentsforspecialclaimsareproper. "(  SuggestedAuditProcedures  $   XE.` ` hp x (#X(#Ea. ` ExaminetheproceduresusedbythePHAorownertoprovidethecurrent 4&! occupancystatusoftheunitsreceivingSection8assistance. 'j" b. ` Selectasampleofunitsthatwerevacatedduringtheauditperiodandverifythat ($ paymentstoownerswerereduced,asprescribed. )$ c. ` Selectasampleofpaymentsforspecialclaimsandverifythatdocumentation \+&  existstosupportthepayments. B,'  &   5. ` ReplacementReserve     XE.` hp x (#` X(#E ComplianceRequirement 󀄀Theownershallestablishandmaintainareplacement ^ reservetoaidinfundingextraordinarymaintenanceandrepairandreplacementofcapital D items.Thereplacementreservefundsmustbedepositedinaninterestbearingaccount .  *z Allearningsincludinginterestonthereservemustbeaddedtothereserve.All  ` disbursementsfromthereservemustbeasapprovedordirectedbyHUDortheState  F Agencyfor24_CFR_Ԁpart883projects,asapplicable.AnamountasrequiredbyHUDor  , theStateAgencyfor24_CFR_Ԁpart883projects,asapplicable,shallbedepositedmonthly   inthereservefundinaccordancewiththeRegulatoryAgreementorHAPcontract   (24_CFR_Ԁsections880.601,880.602,881.601and883.701).'       AuditObjectives 󀄀Determinewhetherthereplacementreservewasproperlyestablished, <  requiredmonthlydepositsweremade,anddisbursementswereonlyforapproved "r  purposes. X   X XE.` hp x (#X(#E& B SuggestedAuditProcedures     X E.` ` hp x (#X(#Ea. ` Ascertainifreservehasbeenestablishedinaninterestbearingaccount. d b. ` Ascertainiftherequiredmonthlydepositshavebeenmadetothereserve.'B* b c. ` Ascertainifinterestearningsfromthereservewereretainedinthereserve.  d. ` Testasampleofdisbursementsfromthereserveandascertainiftheyweremade n foranapprovedpurpose. T  6. ` ResidualReceiptsAccount  R   XE.` hp x (#` X(#E ComplianceRequirement 󀄀Anyprojectfundsintheprojectfundsaccount(including  earnedinterest)attheendofthefiscalyearshallbedepositedwiththemortgageeor  otherHUDapproveddepositoryinaninterestbearingaccount.Forprojectsunder24 | _CFR_Ԁpart883,thefundsmustbedepositedwiththeStateAgencyorotherAgency b  approveddepositoryinaninterestbearingaccount.Withdrawalsfromthisaccountmay H! bemadeonlyforprojectpurposesandwiththeapprovalofHUDortheStateAgencyfor ."~ 24_CFR_Ԁpart883projects,asapplicable(24_CFR_Ԁsections880.601,881.601,and #d 883.701). #J  AuditObjectives 󀄀Determinewhethertheresidualreceiptsaccountwasproperly %  established,therequireddepositwasmadewithin60daysfollowingyearend,and &! disbursementswereonlyforapprovedprojectpurposes. t'"  X XE.` hp x (#X(#E& z SuggestedAuditProcedures  ")r$  X E.` ` hp x (#X(#Ea. ` Ascertainifresidualreceiptsaccounthasbeenestablishedinaninterestbearing * &   depository.'z")C +'! r     b. ` Ascertainiftherequiredannualdepositwasmadewithin60daysfollowingyearend.   c. ` Testasampleofdisbursementsfromtheresidualreceiptsaccountandascertainif ^ theywereusedforanapprovedprojectpurpose. D  3p x (#` X(#3  B r@r@_ib_jc   H.` hp x (#X(#H DEPARTMENTOFHOUSINGANDURBANDEVELOPMENT    $   ?( hp x (#X(#?_CFDA_Ԁ14.218 COMMUNITYDEVELOPMENTBLOCKGRANTS/ENTITLEMENT ^ GRANTS D  _CFDA_Ԁ14.219 COMMUNITYDEVELOPMENTBLOCKGRANTS/SMALLCITIES *z PROGRAM (HUDAdminister(SmallCities)  `  $ XH.` hp x (#  X(#H I.  PROGRAMOBJECTIVES      XE.` hp x (#X(#ETheprimaryobjectiveoftheCommunityDevelopmentBlockGrant(_CDBG_)Entitlement l  Program(largecitiesandurbancounties)(24_CFR_Ԁpart570subpartD)andHUDAdministered R  SmallCitiesPrograms(24_CFR_Ԁpart570subpartF)istodevelopviableurbancommunitiesby 8  providingdecenthousing,asuitablelivingenvironment,andexpandedeconomicopportunities, n  principallyforpersonsoflowandmoderateincome.Thisobjectiveistobeachievedintwo T  ways.First,agranteecanonlyusefundstoassisteligibleactivitiesthatmeetoneofthree :  nationalobjectivesoftheprogram:benefitlowandmoderateincomepersons,aidinthe   preventionoreliminationofslumsandblight,ormeetcommunitydevelopmentneedshavinga   particularurgency.Second,thegranteemustspendatleast70percentofitsfunds,overaperiod  ofuptothreeyearsasspecifiedbythegranteeinitscertification,foractivitiesthataddressthe  nationalobjectiveofbenefittinglowandmoderateincomepersons(24_CFR_Ԁsections570.1, h 570.200,570.420,and570.430). N   XE.` hp x (#X(#E II.  PROGRAMPROCEDURES  L   XE.` hp x (#X(#EThe_CDBG_ԀEntitlementProgramprovidesgrantstometropolitancitiesandurbancountieswhich  mustsubmitcertaincertificationsandaoneyearactionplanastohowtheyproposetousethe  fundsforcommunitydevelopmentactivities.Thegrantamountisdeterminedbythehigherof v twoformulasthatconsideracommunityspopulation,povertylevel,extentofovercrowded \ housing,ageofhousing,andgrowthlag(24_CFR_Ԁsection570.4). B IntheEntitlementProgram,anonFederalentitymayuse,withcertainlimitations,_undisbursed_ @ fundsinitslineofcreditandits_CDBG_Ԁprogramaccountthatarebudgetedinstatementsor & actionplansforoneormoreotheractivitiesthatdonotneedfundsimmediately.Thisfinancing   techniqueiscommonlyreferredtoasafloatloanandisusedwiththeexpectationthatthe ! activitytemporarilyfinancedwillgeneratesufficientincometofundtheactivityinitially " programmed.Theactivityassistedthroughthefloatisconsidered_CDBG_Ԅassistedand, n# therefore,mustcomplywithall_CDBG_Ԁprogramrequirements(24_CFR_Ԁsection570.301). T$ OnlytheStateofHawaiiisanongoingparticipantintheHUDAdministeredSmallCities &R! ProgrambecausethisStatecontinuestoelecttohaveHUDadministerthe_nonentitlement_ &8"  portionofits_CDBG_ԀProgram.InHawaii,HUDprovides_CDBG_Ԁfundsto_nonentitlement_Ԁunits '#! ofgenerallocalgovernmentusingaformuladescribedin24_CFR_Ԁsection570.429.TheStateof ($" NewYorkalsoparticipatedintheHUDAdministeredSmallCitiesProgramthroughitsFY1999 )$# funding.InFY2000,theStateofNewYorkbeganreceivingandadministeringitsown *%$ _nonentitlement_ԀareafundsthroughtheStateAdministeredSmallCitiesProgramdescribedunder f+&% _CFDA_Ԁ14.228.Therequirementsof14.219asdescribedinthissupplementcontinuetoapplyto L,'& theStateofNewYorksHUDadministeredprojectsfundedbeforeFY2000andrelated 2-(' programincome.The_CDBG_ԀEntitlementProgramandtheHUDAdministeredSmallCities  ProgramcoveringtheStateofHawaiiandpre2000activitiesfortheStateofNewYorklargely  shareregulatoryrequirementsinthefollowingareas:definitions,eligibleactivities,grants | administration,andperformancereviews. b  SourceofGoverningRequirements  `  TheseprogramsareauthorizedbyTitleIoftheHousingandCommunityDevelopmentActof   1974,asamended(42_USC_Ԁ5301).Implementingregulationsarelocatedat24_CFR_Ԁpart570.     XE.` hp x (#X(#E& T III.  COMPLIANCEREQUIREMENTS R    XE.` hp x (#X(#EIndevelopingtheauditprocedurestotestcompliancewiththerequirementsforaFederal P  program,theauditorshouldfirstlooktoPart2,MatrixofComplianceRequirements,to 6  identifywhichofthe14typesofcompliancerequirementsdescribedinPart3are   applicableandthenlooktoParts3and4forthedetailsoftherequirements.     XE.` hp x (#X(#EA.  ActivitiesAllowedorUnallowed `   XE.` ` hp x (#X(#E 1. ` Allactivitiesundertakenmustmeetoneofthreenationalobjectivesofthe_CDBG_ ^  program,i.e.,benefitlowandmoderateincomepersons,preventoreliminate D slumsorblight,ormeetcommunitydevelopmentneedshavingaparticular * urgency(24_CFR_Ԁsections570.200and570.208).'T R ;  2. ` _CDBG_Ԁfundsaretobeusedforthefollowingactivities:(a)theacquisitionofreal n property;(b)theacquisition,construction,reconstruction,rehabilitationor T installationofpublicworks,facilitiesandsites,orotherimprovements,including : removalofarchitecturalbarriersthatrestrictaccessibilityofelderlyorseverely  p disabledpersons;(c)clearance,demolition,andremovalofbuildingsand V improvements;(d)paymentstohousingownersforlossesofrentalincome < incurredintemporarilyholdinghousingfortherelocated;(e)dispositionofreal " propertyacquiredunderthisprogram;(f)provisionofpublicservices(subjectto  limitationscontainedinthe_CDBG_Ԁregulations);(g)paymentofthenonFederal   shareforanothergrantprogramforactivitiesthatareotherwiseeligible; ! (h)interimassistancewhereimmediateactionisneededpriortopermanent j" improvementsortoalleviateemergencyconditionsthreateningpublichealthand P# safety;(_i_)paymenttocompleteaTitle1FederalUrbanRenewalproject; 6$ (j)relocationassistance;(k)planningactivities;(l)administrativecosts; %l  (m)acquisition,construction,reconstruction,rehabilitation,orinstallationof &R! commercialorindustrialbuildings;(n)assistancetocommunitybased &8"  developmentorganizations;(o)activitiesrelatedtoprivatelyownedutilities; '#! (p)assistancetoprivate,forprofitbusinesses,whenappropriatetocarryoutan ($" economicdevelopmentproject;(q)constructionofhousingassistedunderSection )$# 17oftheUnitedStatesHousingActof1937;(r)reconstructionofproperties; *%$ (s)direct_homeownership_Ԁassistancetolowandmoderateincomehouseholdsto f+&% facilitateandexpand_homeownership_;(t)technicalassistancetopublicorprivate L,'& entitiesforcapacitybuilding(exemptfromtheplanning/administrationcap); 2-(' (u)housingservicesrelatedtoHOMEfundedactivities;(v)assistanceto  institutionsofhighereducationtocarryouteligibleactivities;(w)assistanceto  publicandprivateentities(includingforprofits)toassistmicroenterprises; | (x)paymentforrepairsandoperatingexpensesforacquired inRemproperties; b and(y)residentialrehabilitation,includingcodeenforcementindeterioratedor H deterioratingareas,leadbasedpainthazardevaluation,andremoval(24_CFR_ . ~ sections570.200through570.207).  d 3. ` Eachfloatfundedactivitymustmeetallofthesamerequirementsthatapplyto   _CDBG_Ԅassistedactivitiesgenerally(24_CFR_Ԁsection570.301).   4. ` EntitlementandHUDAdministeredSmallCitiesProgramgranteesmayhave V  loansguaranteedbyHUDunderSection108oftheHousingandCommunity <  DevelopmentActof1974,(42_USC_Ԁ5308).Theguaranteedloanfundsaretobe "r  usedonlyforthefollowingactivities:(a)acquisitionofrealproperty;(b)housing X  rehabilitation;(c)rehabilitationofpubliclyownedrealproperty;(d)eligible >  _CDBG_Ԁeconomicdevelopmentactivities;(e)relocationpayments,(f)clearance, $ demolition,andremoval;(g)paymentofinterestonSection108guaranteed   obligations;(h)paymentofissuanceandothercostsassociatedwithprivatesector  financingunderthissubpart;(_i_)sitepreparationrelatedtoredevelopmentoruse  ofrealpropertyacquiredorrehabilitatedpursuanttothissubpartorforeconomic l developmentpurposes;(j)constructionofhousingbynonprofitorganizationsfor R homeownershipunderSection17(d)oftheU.S.HousingActof1937(12_USC_ 8 1715(l))orTitleVIoftheHousingandCommunityDevelopmentActof1987; n (11)debtservicereserve;and(k)acquisition,construction,reconstruction, T rehabilitationorinstallationofpublicworksandsiteorotherimprovements : whichserve _colonias_(asdefinedinSection916oftheHousingActof1990and   amendedbySection810oftheHousingandCommunityDevelopmentActof  1992)(24_CFR_Ԁsections570.700through570.710).  5. ` Alltheactivitiesthatagranteeundertakesduringits_CDBG_Ԁprogramyearmustbe J identifiedinanactionplanoranamendedactionplan(24_CFR_Ԁsections91.220 0  and570.301).IntheHUDAdministeredSmallCitiesPrograminNewYork, !f onlynonhousingactivitiesmustbeincludedintheabbreviatedconsolidatedplan. !L TheStateofNewYorkspreviouslyapprovedHUDAdministeredSmallCities "2 actionplanscontinuetocontroltheuseofFY1999andpriorallocationsunder #  thisProgram.Planamendmentisonlyrequiredtoreflectsignificantchangesin $! activitiesorfundingdecisionsfortheseyears(24_CFR_Ԁsections91.235and % " 570.427). z&!# 6. ` _CDBG_Ԁfundingcanonlybeusedforspecialeconomicdevelopmentprojectsthat ((x#$ meetthecriteriain24_CFR_Ԁsection570.203.Granteesmusthavedatatosupport )^$% thatassistanceprovidedtocarryoutspecialeconomicdevelopmentprojectsis )D%& appropriatebymeetingthepublicbenefitstandardsforjobcreationandprovision **&'  ofgoodsandservicesdescribedin24_CFR_Ԁsection570.209. +'( @     7. ` When_CDBG_Ԁfundsareusedtofinancerehabilitation,therehabilitationistobe   limitedtoprivatelyownedbuildingsandimprovementsforresidentialpurposes,  lowincomepublichousingandotherpubliclyownedresidentialbuildingsand | improvements,publiclyorprivatelyownedcommercialorindustrialbuildings b undercertaincircumstances,aswellasmanufacturedhousingwhenitconstitutes H partofthecommunityspermanenthousingstock(24_CFR_Ԁsection570.202). . ~   B+ ` hp x (#` X(#B&  G.  Matching,LevelofEffort,Earmarking  ,  X?( ` hp x (#X(#?1. ` Matching NotApplicable' A    2. ` LevelofEffort 󀄀NotApplicable 8    XE.` ` hp x (#` X(#E&  3. ` Earmarking  6   E. ` hp x (#` X(#Ea. Notlessthan70percentofthefundsmustbeusedoveraperiodofupto   threeyears,asspecifiedbythegranteeinitscertification,foractivities z  thatbenefitlowandmoderateincomepersons.Indetermininglowand `  moderateincomebenefits,thecriteriasetforthin24_CFR_Ԁsections F  570.200(a)(3)and570.208(a)areusedintheEntitlementProgram.The ,| criteriasetforthin24_CFR_Ԁsections570.420(e)and570.430(e)areusedin b theHUDAdministeredSmallCitiesProgram.'.C H b. Notmorethan20percentofthetotalgrant,plus20percentofprogram  incomereceivedduringaprogramyear,maybeobligatedduringthatyear  foractivitiesthatqualifyasplanningandadministrationpursuantto r 24_CFR_Ԁsections570.205and570.206(24_CFR_Ԁsection570.200(g)).In X theHUDAdministeredSmallCitiesPrograminHawaiipriortoFY1995, > the20percentplanningandadministrationlimitwasappliedto $t expendituresratherthanobligations(24_CFR_Ԁsection570.430(a)).  Z c. Theamountof_CDBG_Ԁfundsobligatedduringtheprogramyearforpublic  servicesmustnotexceed15percentofthegrantamountreceivedforthat   yearplus15percentoftheprogramincomeitreceivedduringthe ! precedingprogramyear,exceptthatanonFederalentitythatobligated j" more_CDBG_Ԁfundsforpublicservicesthan15percentofitsgrantfunded P# fromFederalFiscalYears1982or1983appropriations(excluding 6$ programincomeandanyassistancereceivedpursuanttoPublicLaw988) %l  mayobligatemore_CDBG_Ԁfundsthan15percentaslongastheamount &R! obligatedinanyprogramyeardoesnotexceed15percentoftheprogram &8"  incomeitreceivedduringtheprecedingprogramyearplusthepercentage '#! oramountobligatedinFederalFiscalYear1982or1983,whichever ($" __method_Ԁofcalculationyieldsthehigheramount(24_CFR_Ԁsection )$# 570.201(e)).IntheHUDAdministeredSmallCitiesPrograminNew *%$ York,the15percentpublicservicescapappliestoeachyearsallocation f+&%  ofnonentitlementfundsfortheState(24_CFR_Ԁsection570.421). L,'& r      B+ ` hp x (# X(#B&   J.  ProgramIncome     E.` ` hp x (#X(#E1. ` Thegranteemustaccuratelyaccountforanyprogramincomegeneratedfromthe ^ useof_CDBG_Ԁfundsandmusttreatsuchincomeasadditional_CDBG_Ԁfundswhich D aresubjecttoallprogramrules.Programincomedoesnotincludeincome *z receivedinasingleprogramyearbythegranteeandallofits_subrecipients_Ԁifthe  ` totalamountofsuchincomedoesnotexceed$25,000(24_CFR_Ԁsections570.426,  F 570.500,570.504,and570.506).'5P  , 2. ` Makingloansandcollectingthepaymentsonthoseloanscanbeasignificant   sourceofprogramincomeforgrantees.Theuseofincomederivedfromloan p  paymentsissubjecttoprogramrequirements.Thiscarrieswithitthe V  responsibilityforgranteestohavealoanoriginationandservicingsystemin <  effectwhichassuresthatloansareproperlyauthorized,receivablesareproperly "r  established,earnedincomeisproperlyrecordedandused,andwriteoffsof X  uncollectibleamountsareproperlyauthorized(24_CFR_Ԁsections570.500, >  570.501,570.504,570.506,and570.513). $ 3. ` IntheHUDAdministeredSmallCitiesPrograminNewYork,anyprogram  incomereceivedaftercloseoutofthegrantmustbeaccountedforunderanother h grantifano