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We audited Little Haiti Housing Association as a result of a complaint received regarding its administration of the multifamily activity funded under the Neighborhood Stabilization Program 2 (NSP2). Our objective was to determine whether Little Haiti used NSP2 funds in compliance with Federal regulations. Specifically, we focused on determining whether (1) Little Haiti complied with Federal regulations when selecting and using the developer, contractor, and management company in the purchase, rehabilitation, and management of the multifamily property; (2) NSP2 funds were used for eligible program costs and were sufficiently supported; and (3) obvious deficiencies occurred in the rehabilitation work performed on the multifamily property.

We found no evidence that the allegations in the complaint were valid. However, Little Haiti did not fully comply with Federal requirements when administering its multifamily activity under NSP2. It reimbursed itself for tenant certification services, although the co-developer fee that Little Haiti received covered this service. In addition, it did not ensure that energy efficiency and water conservation standards were met and failed to comply with the affordable rent definition stated in the consortium’s NSP2 application to HUD. Little Haiti believed that the fee earned was not required to be spent on the multifamily development costs, that it complied with green improvement standards, and was unaware of the rent policy established in the grantee’s NSP2 application. In addition, Neighborhood Housing Services did not monitor Little Haiti to ensure compliance with the latter two NSP2 requirements. As a result, $20,183 in NSP2 funds was inappropriately reimbursed to Little Haiti, tenants may have paid higher utility costs, and 31 tenants paid excess rent amounts totaling $34,869.

We recommend that the Director of Community Planning and Development of the Miami field office require the grantee to repay $20,183 to its NSP2, provide documentation to support that products purchased for the multifamily development complied with energy efficiency and water conservation standards, and repay $34,869 in excess rent to tenants.