Menorah Home and Hospital for the Aged and Infirm dba Menorah CTR 01243208Non-Profit

Reference Number: 2020-002 Program name: Mortgage Insurance - Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities Assistance listing number: 14.129 Criteria or specific requirement: The HUD operator regulatory agreement does not allow for the project to enter into loans without HUD approval. Condition: The HUD operator entered into a $7,701,372 loan under the CARES Act Paycheck Protection Program (PPP) with a bank without obtaining HUD approval. Questioned Costs: N/A Context: During review of the HUD regulatory agreement and inquiry with management, it was determined management had not obtained HUD approval for the PPP loan. Identification of prior year finding: N/A Effect: The HUD operator incurred a liability without getting approval, as required by the project's HUD Regulatory Agreement. Such violation could expose the project to administrative sanctions. Cause: Management did not want to risk PPP funds running out, therefore, made the decision to pursue relief under the CARES Act to continue to keep staff on payroll and maintain appropriate staffing levels during the pandemic so that the care to its residents and patients were maintained. Recommendation: We recommend management to work with HUD in obtaining retroactive approval. Views of responsible officials and planned corrective action: See attached.