Audit 332980

Title: 2.       INVESTMENTS Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE The Association was permitted to transfer used reserve funds remaining from the 2012 refinancing to an unrestricted non-project account controlled by the board of directors. Substantially all investments consisted of exchange traded funds and mutual funds, which are presented at fair value on the statement of financial position. The amortized cost of investments at May 31, 2024 was $1,166,485. Investments sold during the year and the proceeds were transferred to cash accounts. Investments fees amounted to $13,011 for the year ended May 31, 2024. For the year ended May 31, 2024 net investment income (loss) - net consists of the following: Earned interest and dividends $ 120,818 Realized gains/losses on sale of investments 3,476 Unrealized increase/(decrease) in fair value 152,376 Investment fees (13,011) Total $ 263,656

Title: 4.       ESCROWS AND RESERVES Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE As part of the original mortgage loan refinancing done in 2012, all existing reserves and escrows were closed, and the following were funded: Escrow Deposits The Association is required by HUD regulations to make monthly payments to escrow accounts restricted for the payment of real estate taxes and property insurance, and required by the mortgagee to make monthly payments to an escrow account restricted for the payment of mortgage insurance. Reserve for Replacements The Association is required by HUD regulations to make monthly payments to a reserve for replacements which is used to fund capital improvements and repairs to the Project. Withdrawals from the reserve are subject to HUD approval. Residual Receipts Residual receipts are any excess funds at the end of the Project's fiscal year after the payment of all Project obligations, including payments on the mortgage notes and required deposits to escrow and reserves. Residual receipts of the Project, if any, are required to be deposited in a reserve account within sixty days of year-end. Withdrawals are subject to HUD approval. Residual receipts for the year ended May 31, 2024 amounted to $0.

Title: 4.       MORTGAGE NOTE PAYABLE Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE On March 1, 2022, the existing mortgage note payable with a balance of $10,202,809 was refinanced with a new HUD Section 223(f) mortgage loan in the amount of $16,140,200 with an interest rate of 2.60% per annum payable to Walker & Dunlop. The note is secured by a multifamily mortgage, assignment of leases and rents and security agreement. Consecutive monthly installments of principal and interest in the amount of $58,569 are required. The mortgage note payable matures on due April 1, 2057. The mortgage note is subject to prepayment penalties if paid in whole or part prior to May 1, 2032. Long-term debt at May 31, 2024 consisted of the following: Mortgage loan payable $15,534,635 Less unamortized debt issuance costs (343,426) Long-term debt, less unamortized debt issuance costs 15,191,209 Less current portion (302,518) Long-term debt, less current portion $14,888,691 Annual maturities of these notes for the next five years are summarized as follows: Year Ending May 31, Amount 2025 $ 302,518 2026 310,477 2027 318,647 2028 327,031 2029 335,636 Thereafter 13,940,326 $15,534,635

Title: 5. NET ASSETS WITH DONOR RESTRICTIONS Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE Net assets with donor restrictions represent resources currently available for use but expendable only for those defined activities specified by the funding sources, which in this case are HUD and the Federal Home Loan Bank of Boston. These restrictions are scheduled to be released in September 2035, subject to the Association’s satisfactory adherence to the regulatory and mortgage requirements throughout the forty-year compliance period. At May 31, 2024, net assets with donor restrictions consisted of the following grants which funded the cash portion of the purchase price of the property in 1995: HUD GAP and Equity grants $5,310,786 FHLBB Affordable Housing grant 210,000 Total $5,520,786

Title: 6. TRANSACTIONS WITH MANAGEMENT AGENT Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE Prior to the refinancing of the mortgage note payable the management fees were approved by the board of directors and were not based on a percentage of rents or rents collected. In connection with the mortgage note payable refinance, a new management agreement went into effect on February 1, 2022 and continues unless terminated by either party. Under the new agreement management fees are calculated as a percentage of effective gross rental income, as defined within the management agreement. The annual fee was $171,741 for the year ended May 31, 2024. The management agent is also reimbursed for payroll costs and other expenses pertaining to the operations of the Project.

Title: 7. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE The Association's primary asset is a 200-unit apartment complex and its operations are concentrated in the real estate market. In addition, the Project operates in a heavily regulated environment. The operations of the Project are subject to rules and regulations of federal, state and local regulatory agencies, including HUD. Such rules and regulations are subject to change, which may occur with little notice or inadequate funding to pay for the related costs, including the additional administrative burden, to comply with change. The escrows and reserves held by Walker & Dunlop described in Note 4 potentially subject the Association to risk.

Title: 8. LIQUIDITY AND AVAILABILTY Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE The Association has $6,064,655 of financial assets available to meet cash needs for general expenditures within one year of the balance sheet date, consisting of cash of $4,640,057, investments of $1,318,861 and accounts receivable (net of an allowance for doubtful accounts) of $105,737. None of the financial assets are subject to donor or other contractual restrictions. In addition, there is $1,636,446 in reserve and escrow deposits held by the Project to cover taxes, insurance and repairs. These funds are used for the benefit of the tenants and/or the Project. Some of these funds may be withdrawn only with the approval of HUD. Such funds are not considered by the Association to have donor restrictions. Cash needs of the Project are expected to be met on a monthly basis from the rents of the project units. In general, the Association maintains sufficient financial assets on hand to meet at least one months’ work of normal operating expenses.

Title: 9. SUBSEQUENT EVENTS Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE The Association has performed an evaluation of subsequent events through August 2, 2024, which is the date the Association's financial statements were available to be issued. No material subsequent events have occurred since May 31, 2024 that require recognition or disclosure in these financial statements.

Title: 10. FUNCTIONAL ALLOCATION OF EXPENSES Accounting Policies: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Association's financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States (GAAP). Financial Statement Presentation Net asset, revenues, gains, and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor or certain grantor restrictions. Net Assets With Donor Restrictions Net assets subject to donor or certain grantor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resources was restricted has been fulfilled, or both. Certain restrictions may need to be maintained in perpetuity. Tenant Accounts Receivable, Allowance for Bad Debt and Bad Debt Expense Tenant accounts receivable represent amounts due from tenants for prior months' rent. The Association provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal tenant account receivables are due on the first of the month and are considered overdue at the end of the month. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the tenant. Based on the evaluation of the possible collection of the past due rent, an allowance for doubtful accounts is recorded. The allowance for doubtful accounts balance is $30,190 at May 31, 2024 and management believes this is an adequate amount based on the evaluation performed on the account balance. Bad debt expense was $48,062 for the year ended May 31, 2024, which represents uncollectible rent balances that were written off. All of the tenant receivable balances are owed by low income tenants who are working with rental assistance agencies, to provide rental payment funds for the past due balances. Management believes that the entire amount of past due rent will be collected and the allowance for doubtful accounts balance of $30,190 is properly reflected at May 31, 2024. Revenue Recognition The Association accounts for its leases with its residents as operating leases. For lease agreements that provide for rent concessions and (or) scheduled fixed and determinable rent increases, rental income is recognized on a straight-line basis over the noncancellable term of the lease. The Association’s residential lease term is generally one year. Rental payments received in advance are deferred until earned. The Association recognizes revenue for new rental related income, not included as components of a lease, as well as for non-rental related income, as earned. Contributions are recognized in accordance with FASB ASC 958 (formerly SFAS No. 116, Accounting for Contributions Received and Contributions Made). under this standard, contributions received are generally recognized as revenue in the period received at their fair values. Conditional promises to give are recognized when they become unconditional; that is, when conditions are substantially met. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Major improvements and betterments to existing property are capitalized. Expenditures for maintenance and repairs which do not extend the lives of the applicable asses are expensed as incurred.Financing Costs Financing costs relate to obtaining a mortgage loan. These costs are amortized over the life of the related loan using the straight-line method. When a loan is refinanced any costs that have not been amortized are fully expensed. Financing costs are reported as a direct deduction from the face amount of the mortgage loan payable. Further, the current year's amortization expense is included with interest expense. Impairment of Long-Lives Assets The Association reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flows expected to be generated by the rental property and estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of such real estate exceeds the fair value. As of May 31, 2024, management has determined that there has been no impairment of the Association's assets. Fair Value Measurements The Association reports its qualifying assets and liabilities in accordance with ASC 620, Fair Value Measurement and Disclosure. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This fair value framework prioritizes the inputs and assumptions used to measure fair value. The three levels of the fair value framework are as follows: • Level 1- Inputs that reflect unadjusted quoted prices inactive markets for identical assets or liabilities at the measurement date. • Level 2 - Inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs that are unobservable. A qualifying assets or liabilities level within the framework is based upon the lowest level of any input that is significant to the fair value measurement. The Association qualifying assets and liabilities are recorded at fair value using Level 1 inputs. Financial instruments for which the carrying amount approximates fair value include cash, investments accounts receivable, accounts payable and accrued expenses due to their short-term maturities. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents, which are neither held for nor restricted by building projects for long term purposes, to be cash equivalents. Cash and highly liquid financial instruments restricted to building projects, tenant deposits held in trust, escrow deposits and other funded reserves that are perpetual in nature or other long-term purposes are excluded from this definition. The Association places its cash and temporary cash investments with financial institutions which management considers to be of high quality; however, at times such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit. Management has not experienced any losses in such accounts. Management believes the Association is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash, including tenant security deposits, escrow deposits and reserve for replacements are included in cash and restricted cash for statement of cash flow purposes. Income Taxes The Association is exempt from income taxes as a non-profit corporation under Section 501(c)(3) of the U.S. Internal Revenue Code. The Association evaluates tax positions taken or expected to be taken in its tax returns to determine whether they are more-likely-than-not of being sustained by the applicable taxing authority. Tax positions not deemed to meet that threshold would be recorded as a current expense along with any related interest and penalties. There was no impact on the current financial statements as a result of implementing these provisions. Management does not believe its financial statements include any uncertain tax positions within any of its open tax years. Advertising Advertising costs are expensed when incurred. De Minimis Rate Used: N Rate Explanation: THE AUDITEE DID NOT USE THE DE MINIMIS COST RATE Expenditures incurred in connection with project operations and expenditures made for corporate purposes have been summarized on a functional basis in the statement of activities.