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he U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited Gruening Park Apartments, a 96-unit apartment complex in Juneau, AK, owned and operated by Alaska Housing Development Corporation, Inc., to determine whether the owner administered the project and its programs in compliance with the regulatory agreement and other HUD requirements. We selected this project primarily due to its having a significantly deficient surplus cash position of negative $294,058.

The owner generally administered the project and its programs in compliance with the regulatory agreement and other HUD requirements. However, it did not comply with HUD rules and regulations regarding its waiting list, security deposit collections, rent calculations, mortgage insurance premium payments, or management fee calculations. The owner made changes to the project’s waiting list aimed at addressing our concerns and reimbursed the project for its overpaid management fees.

We recommend that HUD require the owner to implement policies and procedures to improve its waiting list documentation, security deposit collections, recertification review process, and automatic withdrawals. We also recommend that the owner reimburse tenants and HUD for all overpayments, reconcile the mortgage insurance premium overpayment with the lender, and accurately calculate its management fee.