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RED-76-111 1 (1976-05-24)

handle is hein.gao/gaobabkzk0001 and id is 1 raw text is: RELEASED RESTR.tCTED - lot t. Is released 00t8.de the Seicraf Accoarntig Cf1;¢ce oxcept on the basis ef specilac approval by too 01ico of C grestleAdal Ratlons, COMPTROLLER GCENRAL OF THF UNiTED STATES WASHINOTON. O.C. = S4S B-118718 The Honorable Walter F. Mondale U e I , United States Senate MAY 2 4 176 V1090~534 D~ar Senator Mondale: In accordance with your request of October 30, 1975, and sub3equent agreements reached with your office, we examined thefrecent rent increase supported housing project in Minneapolis, Minnesota) We confined our review to identifying reasons for the increases in operating costs thav resulted in the most recent request for higher rents and to verifying the validity of the cost increases. We held discussions with officials of the Department's area cffice -~. in St. Paul, Minnescta, and the Landtech Management Corporation, the firm - managing Oak Grove Towers. Our review of Landt..ch's cost records included an examination of invoices and supporting documen-tation for all 1974 and 1975 recorded expenses to insure that the expenses were legitimate. The increased operating costs, which res2.ted in the rental increase at the project effective March 1, 1976, were caused primarily by increases in the cost of electricity, gas and fuel, protective services, decorating expenses, and real estate ta~es. We found also that the cost increases were generally valid. We believe t!'e monthly maximum basic rents approved by the Department for the project were excessive by an average of $3.43 for each apartment because certain project income was not considered by the Department in its rent computation and actual operating expenses were less than antici- pated. Although the rents currently charged project tenants are less than the Department-approved maximum basic rents, these maximum rents should be reduced to prevent unwarranted future rent incfeases since Landtech could increase rents charged up to the limits approved by the Tepartment. Reducing the maximum basic rents by an average $3.43 would not affect rents charged project tenants unless more than $2.83 of the $3.43 reduction was allocated to one-bedroom units. We brought these matters to the attention of Department officials who agreed to consider them and take appropriate corrective actions. BEST DOCUMEIN\T AVAILABLE RED-76-111 oo3I1

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