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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Sunset Manor Apartments to evaluate the allegations in a complaint and determine whether the project’s owner made unauthorized distributions and repayment of advances, maintained complete, accurate, and current books and records for the project, and participated in improper procurement practices.
                                     
With the exception of an identity-of-interest allegation, the complaint was valid.  The project’s owner collected housing assistance payments for unoccupied units, incorrectly calculated a tenant’s income, made unsupported and ineligible disbursements, took unauthorized distributions and repayment of owner advances while the project was in a non-surplus cash position, did not maintain complete and accurate records, and did not always procure goods and services in accordance with HUD rules and regulations.

We recommend that HUD require the project owner to (1) reimburse HUD for $6,118 in ineligible housing assistance payments and reimburse the project’s tenant $792 for overcharged rent; (2) reimburse the project $106,030 for unauthorized distributions and repayment of loan advances, insufficient funds fees, and work that was not necessary for the operation of the project; and (3) provide support for unsupported disbursements and cost justifications for six service contracts and reimburse the project’s operating or security deposit account, as applicable, up to $338,751 for any unsupported or unreasonable amounts.  Further, we recommend that the owner obtain training on HUD’s Section 8 program rules and regulations.