THIS WAS SENT May 5, 2017 at 11:29:03 EDT

Good Morning Ms. Fusco:

I am the Asset Manager for the Derby Housing Authority State

Sponsored Housing Portfolio of properties.

My regulatory oversight extends to, Cicia Manor, Stygar Terrace

and Lakeview Apartments. As the newly appointed Board of
Directors, I am bringing to your attention several outstanding
financial matters regarding the SSHP properties.

First, the Derby Housing Authority was placed in non-monetary

default on January 11, 2017, for failing to provide CHFA/DOH with
a plan of action on how the Authority planned to repay the
$220,250 that was borrowed from the SSHP property reserves to
purchase the Baron Block Estates Apartment building.

Further, the Authority was asked to cease and desist in the use of
an unauthorized Revolving fund on their balance sheet.

As such, as per the 3/31/2017 most recent reported financial

statements submitted, the balance due back to the SSHP
program had grown $20,238 to $211,870.

Total funds to be repaid at this time is $432,120 to the State

property reserves.

While we formally requested the repayment plan after our review

of the 3/31/2016 Audit, we have made numerous additional
recommendations to the Authority regarding the fiscal health of
the SSHP properties, including increasing deposits to the SSHP
property replacement reserves.

As of the attached 4 quarter financial statement, the propertys

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reserves are well below the required regulatory minimum, of

$1000, per unit or $106,000.

Currently, the Authority has reported a replacement reserve

balance of only $18,133, which is well below the required
minimum and perilously low for any potential major emergency
repair that may arise, such as roof, plumbing or electrical
replacements.

With the reserves so low, the repayment of these funds to the

State properties is critical and we recommend it begin
immediately.

As a side note, the State property reserves are only to be used for
the operations and staff related to the operation of our State
portfolio and any other uses requires our written consent, in
advance.

Permission to borrow State funds was never sought by Derby HA,

nor was it granted by CHFA.

Also, we have not yet received the Board approved 4/1/17

budget, that was due on 1/31/2017. I have attached what we
received thus far and again, CHFA is very concerned about the
fiscal health of our properties, as the authority is proposing
charging $97,669 in office salaries and three full time
maintenance workers for $51,532, totaling $149,201 in staffing for
only 106 units.

Please review this submission with the office staff and consider
revising these operating expenses as they seem excessive for the
number of units and the size of the properties.

Lastly, we have discussed this matter with Steve Nakano, your

current Executive Director through numerous conference calls in
2015 and 2016 and more recently a meeting that was held here in
our offices in Rocky Hill on February 15, 2017, in which Michael
Santoro from the CT Department of Housing was present, and as
such we requested again a repayment plan regarding the funds
borrowed from the SSHP properties, as of today, we have not
received this plan of action.

Therefore, as per our default letter dated January 11, 2017, I am

requesting the Derby Housing Board contact CHFA immediately
with a plan of action on repaying $432,120 that was borrowed
from the State Housing property (SSHP) reserves by the Derby
Housing Authority and provide the outstanding documentation
below.

1) Signed Affidavit from the Board Chair that the March 31, 2017
4 quarter financial statements have been reviewed (workbook
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attached in email from DHA bookkeeper)

2) 4/1/2017 Completed Budget, with signature page signed by
the Board Chair.
Please contact me if you have any questions or would like to
discuss this matter further. I am open to arrange another meeting
or conference call to include DOH to continue to discuss our
concerns for the Derby HA SSHP properties with the new Board
members.

Thank you and we look forward to hearing from you soon.

Rhonda Caldwell

Rhonda Caldwell, CAM, SHCM

Asset Manager II
Connecticut Housing Finance Authority
999 West Street
Rocky Hill CT 06067-4005
Phone # (860) 571-4249
Fax # (860) 571-4371
Email: Rhonda.Caldwell@CHFA.org