Audit 309769

Title: NOTE 2 - MORTGAGE PAYABLE - FEDERAL FUNDS Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal expenditure activity of Better Homes of Seaford, Inc. and Affiliates, under programs of the federal government for the year ended December 31, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the entity, it is not intended to and does not present the entity’s financial position, changes in net assets, or cash flows. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: Management did not elect to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The Corporation has entered into the following loan agreements: USDA - RD: Long-term debt instruments were provided by RD pursuant to its Rural Housing Program under Section 515 of the National Housing Act of 1949 for Charleston Place Apartments and Yorktowne Woods Apartments. The long-term debt instruments are secured by an interest in real and personal property and an assignment of income to be derived from the Projects. Under the loan agreements, the amount of interest charged is reduced to 1% so there is a lower payment made on a monthly basis. DSHA - HOME: Long-term debt instruments were provided by DSHA pursuant to the HOME program for Charleston Place Apartments, Chandler Heights, Williamsburg Manor Apartments, and Yorktowne Woods Apartments. The long-term debt instruments are secured by an interest in real and personal property and an assignment of income to be derived from the Projects. No repayments on the long-term debt instruments are required unless there is available cash flow, as defined in the DSHA Regulatory Agreements. HUD: The long-term debt instrument was provided by HUD per Section 202 for Virginia Crest Apartments. The debt is secured by an interest in real and personal property and an assignment of income to be derived from the Project. No repayments on the debt are required unless there is noncompliance with the provisions of the loan agreement.

Title: NOTE 3 - OTHER AWARDS Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal expenditure activity of Better Homes of Seaford, Inc. and Affiliates, under programs of the federal government for the year ended December 31, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the entity, it is not intended to and does not present the entity’s financial position, changes in net assets, or cash flows. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: Management did not elect to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. Subsidy revenues for low-income, elderly, or disabled tenants are provided under housing assistance payment contracts. These contracts require tenants to contribute a portion of the contract rent. The difference between the calculated tenant rent and the contract rent is paid by the awarding agency. During 2023, Charleston Place and Yorktowne Woods received rental assistance from RD in the amounts of $42,357 and $175,166, respectively. Chandler Heights earned rental assistance from a HUD Section 8 contract in the amount of $333,327. Virginia Crest earned HUD Section 202 rental assistance of $48,910. In addition, Better Homes of Seaford, Inc. was awarded an operating grant from HUD’s Community Housing Development Organization in the amount of $50,000.