Audit 361007

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2024-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION The Project’s bank account balances exceeds the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. CRITERIA HUD requires the Project’s bank balances not to exceed the FDIC limit due to the risk of loss in the event the bank were to fail. EFFECT OF CONDITION The Project’s accounts with Westfield Bank totaled over the FDIC limit at September 30, 2024. CONTEXT Bank balances were reviewed to ensure the Project is properly managing bank accounts’ limit and exposure. Balances at one bank were over the $250,000 FDIC limit. CAUSE OF CONDITION The Project’s bank accounts exceeded the FDIC limit at September 30, 2024. RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Carrasquillo Management LLC assumed management of the Project on March 9, 2024. At the time of transition, all existing bank accounts were already established with Westfield Bank. Management has since reviewed the account structure and balances to assess compliance with FDIC coverage requirements. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Management fees were overcharged by $13,884. CRITERIA HUD Handbook 4381.5 Revision 2 for HUD Subsidized Multifamily Housing Programs (HUD Handbook) specifies the types of income that may be treated as income when determining the management fee allowed. EFFECT OF CONDITION During the changeover of management companies, income was incorrectly calculated twice for one month causing the management fee to be overcharged for the year ended September 30, 2024. CONTEXT Management fees were tested for compliance with allowable management fees from project funds criteria. Both management companies charged a management fee at the time of changeover resulting in a higher calculated management fee. CAUSE OF CONDITION Both management companies charged a management fee resulting in a overcharged management fee per the HUD Handbook. RECOMMENDATION The auditor recommends management review the HUD Handbook on determining eligible income included in the management fee calculation. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the auditor’s finding regarding the overcharged management fee of $13,884 for the fiscal year ended September 30, 2024. The overcharge occurred during the management transition in March 2024. The outgoing management company, Mount Holyoke Management LLC, issued and received a management fee payment for the full month of March despite their services ending early in the month. Carrasquillo Management LLC officially took over management of the Project on March 9, 2024, and also received the management fee for services rendered during the remainder of that month. This resulted in both management companies receiving compensation for the same period, causing the annual management fee to exceed HUD’s allowable limits. Corrective Actions: 1. Fee Review and Adjustment Carrasquillo Management LLC is working with the auditor and ownership to correct the management fee overcharge in the Project’s financial records. Any necessary adjustments or reimbursements will be made to bring the project into compliance. 2. HUD Handbook Compliance Training Management has reviewed the relevant guidance in HUD Handbook 4381.5 Revision 2 and is ensuring that all future management fee calculations strictly follow HUD’s criteria for eligible income and fee limits. 3. Transition Protocols To prevent this issue from recurring during future management transitions, Carrasquillo Management LLC has developed a formal transition protocol that includes a reconciliation of income and fees and written confirmation of responsibilities to avoid any overlapping charges. 4. Oversight and Internal Controls All future management fee calculations will be reviewed and approved by the Regional Manager and Accounting Department to verify accuracy and compliance with HUD guidelines prior to disbursement. Carrasquillo Management LLC remains committed to ensuring proper financial stewardship of HUD program funds and maintaining compliance with all applicable regulations.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION There was an unauthorized withdrawal of funds from the residual receipts reserve account during the year ended September 30, 2024. CRITERIA HUD Handbook 4370.2 Revision 1 for HUD Subsidized Multifamily Housing Programs requires funds to be released from the Project’s residual receipts account only with prior written approval from HUD. EFFECT OF CONDITION Management withdrew funds from the residual receipts account without prior written approval from HUD. CONTEXT During audit fieldwork, the residual receipts account was tested for compliance with required approved withdrawals from HUD. An unapproved withdrawal of $163,679 was made during the year ended September 30, 2024. CAUSE OF CONDITION Management withdrew the 2023 surplus cash that was deposited into the residual receipts account without HUD approval. RECOMMENDATION The auditor recommends the Property receive HUD approval before withdrawing funds from its residual receipts account and repay the $163,679 to the residual receipts account. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the finding regarding the unauthorized withdrawal of $163,679 from the Project’s residual receipts account during the fiscal year ended September 30, 2024. This withdrawal was related to surplus cash from fiscal year 2023 that had been deposited into the residual receipts account. Due to miscommunication and misunderstanding during the transition between management companies, the withdrawal was made without obtaining prior written approval from HUD, as required under HUD Handbook 4370.2 Revision 1. Corrective Actions: 1. Repayment Agreement with HUD Carrasquillo Management LLC has been in direct communication with the Project’s HUD Account Executive, Nyal McDonough, of the Northeast Region Asset Management Division. HUD has agreed to allow the Project to repay the full $163,679 through monthly installments as part of an interest-free repayment plan until the balance is fully restored to the residual receipts account. This agreement is currently being implemented and tracked in coordination with HUD. 2. Internal Compliance Controls To ensure full compliance going forward, Carrasquillo Management LLC has updated internal policies and procedures to strictly prohibit any withdrawals from the residual receipts account without explicit written authorization from HUD. All future requests for residual receipts will be submitted through HUD’s formal request channels, and no funds will be accessed without prior written approval. 3. Staff Training Relevant personnel have received training on HUD Handbook 4370.2 and HUD financial controls regarding restricted accounts. Additional safeguards are in place to ensure management and accounting teams confirm HUD approval documentation before any restricted account disbursement. 4. Monthly Monitoring and Reporting Carrasquillo Management LLC will include the residual receipts repayment schedule in its monthly financial reporting to ownership and will maintain communication with HUD to ensure full transparency throughout the repayment period. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION Five tenant files, out of 38 files reviewed, had incorrectly accounted for tenant’s income. Two tenants were overcharged a total of $2 a month in rent. Three tenants were undercharged a total of $118 a month in rent. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to properly calculate tenants rent derived from the appropriate documents on file for the tenants. EFFECT OF CONDITION Two tenants were improperly overcharged $14 of rent and HUD was undercharged $14 of rental assistance payments for the year ended September 30, 2024. Three tenants were improperly undercharged $826 of rent and HUD was overcharged $826 of additional rental assistance payments for the year ended September 30, 2024. CONTEXT During audit fieldwork, thirty-eight tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, income for five tenants was incorrectly accounted for, resulting in the wrong calculation of tenant rent and HUD tenant assistance payments. CAUSE OF CONDITION Management mistakenly did not ensure the proper income was used to calculate the tenant’s rent. RECOMMENDATION The auditor recommends ensuring all tenant’s paperwork is thoroughly reviewed and accurately used in the calculation of the tenant’s required monthly rent and HUD’s tenant assistance payments. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the audit finding related to rent miscalculations for five tenant files during the fiscal year ended September 30, 2024. These errors resulted in both minor tenant overcharges and undercharges, as well as corresponding discrepancies in HUD’s rental assistance payments. Corrective Actions: 1. Financial Corrections ○ The Project will reimburse the two affected tenants a total of $14 to correct the overcharges. ○ The Project will submit a request to HUD to repay the $14 in overpaid rental assistance associated with these tenants. ○ For the three tenants who were undercharged a total of $826, the Project will bill the tenants for the rent differential in accordance with HUD regulations and provide HUD with reimbursement of the $826 in excess rental assistance paid. 2. File Review and Quality Control Measures Management has implemented a secondary file review process for all certifications and recertifications to ensure that income is correctly verified, entered, and calculated in accordance with HUD Handbook 4350.3 requirements. All tenant income documentation will be double-checked by the compliance team prior to finalizing certifications. 3. Staff Training All staff involved in income verification and rent calculation have been retrained on HUD rent calculation guidelines, including handling of paystubs, Social Security statements, and other income documentation. Training includes real-case scenarios and common error prevention techniques. 4. Compliance Oversight Moving forward, Carrasquillo Management LLC will conduct quarterly internal audits of a random sample of tenant files to verify the accuracy of income calculations and ensure compliance with HUD regulations. Carrasquillo Management LLC remains committed to ensuring the accuracy of tenant rent determinations and maintaining compliance with HUD’s income calculation requirements. All necessary reimbursements and corrective actions will be completed promptly and documented for HUD’s records.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 STATEMENT OF CONDITION 30 tenant files, out of 38 files reviewed, had the following items noted: • 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely; • 28 files had late tenant signatures on the recertifications; • 4 files did not use the 6-month average to calculate the checking account balances; • 1 file charged the tenant the wrong security deposit; • 4 files did not contain the date and time-stamp on the tenant applications; • 3 files did not contain the original lease in the file; • 3 files did not contain the tenant application in the file; • 3 files did not include move-in inspection reports. CRITERIA HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance. EFFECT OF CONDITION 30 tenant files, out of 38 files reviewed, had the above items noted. CONTEXT During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above. CAUSE OF CONDITION Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move -Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding, 2024-007: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Significant Deficiency STATEMENT OF CONDITION The Project is required to be in compliance with each of its major programs. EFFECT OF CONDITION The Project was not adequately following internal controls over compliance with each of its major programs. CONTEXT During audit fieldwork, findings 2024-002 through 2024-006 were noted. CAUSE OF CONDITION The Project’s internal controls over compliance with each of its major programs were not functioning properly. RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.