Information on the Federal Program: Assistance Listing Number 14.157 – Supportive Housing for the Elderly (Section 202). HUD Contract #: MA06-S071001. Compliance Requirements: Special Tests and Provisions. Type of Finding: Material Noncompliance. Criteria: Replacement Reserve – Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interestbearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 A). All disbursements from the reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition: For the year ended June 30, 2025, only $27,819 of the required $30,348 for the year was deposited into the replacement reserve. Cause: There was a deposit missed in one month. Effect or Potential Effect: As a result, SJ Senior Housing, Inc. was unable to meet the replacement reserve requirement for deposits during the year. Questioned Costs: $2,529 Context: There was one month of deposits missing for the year. Repeat Finding: No Recommendation: SJ Senior Housing, Inc. should make the deposit in 2025 to catch up. Views of Responsible Official: We will make the deposit and ensure going forward all monthly payments are made.