Audit 373851

Finding No. 2024-001 - Uniform Guidance Compliance Requirement Code: N-Special Tests and Provisions - Significant Deficiency HUD HOME Investment Partnerships Program Federal Assistance Listing Number #14.239 HOME Investment Partnership Program Entity Identifying Number Initial year Finding instances Passed-through City of Portland, Portland Housing Bureau: Allen Freemont 3110013 2015 1 Passed-through State of Washington: Cascadia Village - HUD 02-40420-008 2002 1 Addy Street - HUD 09-47104-001 2009 1 Passed-through Clark County: Covington Commons - HUD 2011-HOME-11H01 2011 2 Addy Street - HUD 2008-HOME-08H15 2008 1 McCallister Village (Fruit Valley) 2010-HOME-0H0 2010 1 Passed-through City of Vancouver: McCallister Village (Fruit Valley) 2010-HOME-601002 2010 1 Total instances 8 Criteria During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners no less than (a) every three years for projects containing one to four units, (b) every two years for projects containing five to 25 units, and (c) every year for projects containing 26 or more units. The participating jurisdiction must perform on-site inspections of rental housing occupied by tenants receiving HOME/HOME-ARP-assisted tenant-based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)). Condition The owner did not ensure passing HQS inspections were performed during 2024. Cause Management did not have in place proper procedures and controls to ensure that HQS inspections were performed and properly documented during the year ended December 31, 2024. Effect or Potential Effect Housing units may be out of compliance with HUD Quality Standards. Questioned Costs: Not applicable. Context In connection with the procedures applied to tenant file testing there were 8 instances of the 8 files tested where the passing HQS inspections were not performed during the year ended December 31, 2024. Repeat Finding: Yes - Finding 2023-001 Recommendation Management should establish procedures to ensure that all units are inspected timely, that they meet the HUD Housing Quality Standards and that the responses to any findings are cleared timely and that the full process is documented in tenant files. Views of Responsible Officials ________________OPEN FOR REACH REPLY.

Finding No. 2024-002 - Uniform Guidance Compliance Requirement Code: E-Eligibility - Significant Deficiency HUD HOME Investment Partnerships Program Federal Assistance Listing Number #14.239 HOME Investment Partnership Program Entity Identifying Number Initial Year Finding instances Passed-through City of Portland, Portland Housing Bureau: Allen Freemont 3110013 2015 1 Passed-through State of Washington: Cascadia Village - HUD 02-40420-008 2002 1 Passed-through Clark County: Covington Commons - HUD 2011-HOME-11H01 2011 2 McCallister Village (Fruit Valley) 2010-HOME-0H0 2010 1 Passed-through City of Vancouver: McCallister Village (Fruit Valley) 2010-HOME-601002 2010 1 Total instances 6 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with the Compliance in State of Oregon Housing and Community Services HOME Program Compliance Manual. Condition In connection with our lease file review, we noted six instances of eight tenants tested where management did not provide support that they performed a 3rd party income verification in accordance with policy. Cause Management's policies with respect to recertifications and eligibility and the maintenance of tenant lease files in accordance with Compliance in State of Oregon Housing and Community Services HOME Program Compliance Manual were not consistently followed. Effect or Potential Effect This could result in units being rented to ineligible tenants. Questioned Costs: Not applicable. Context In connection with the procedures applied to our HOME units testing, six of the eight tenants tested did not have a 3rd party income verification performed in accordance with policy. Repeat Finding: Yes - Finding 2023-002 Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that recertifications and correct income verification procedures are performed timely, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of Compliance in State of Oregon Housing and Community Services HOME Program Compliance Manual. Views of Responsible Officials ________________OPEN FOR REACH REPLY.

Finding No. 2024-003 - Uniform Guidance Compliance Requirement Code: E-Eligibility - Significant Deficiency HUD HOME Investment Partnerships Program Federal Assistance Listing Number #14.239 HOME Investment Partnership Program Entity Identifying Number Initial Year Finding instances Passed-through Clark County: Cascadia Village - HUD 2001-HOME-01H1 2002 1 Covington Commons - HUD 2011-HOME-11H01 2011 1 Total instances 2 Criteria Each owner must comply with the requirements set forth in 24 CFR Part 92 regulations as outlined in the "Compliance in HOME Rental Projects: A Guide for Property Owners" published by HUD which requires the property to maintain the contracted number of HOME units as well as the designated splits in bedroom size and High Home/Low Home unit ratios. Condition The owner did not make available to HOME tenants the contracted number and type of HOME units. Cause Management's policies with respect to maintaining the number and split of contracted HOME units were not consistently followed. Effect or Potential Effect The procedures for determining and maintaining the correct HOME units within the property were not applied. This could result in ineligible tenants occupying HOME designated units. Questioned Costs: Not applicable. Context In connection with the procedures applied to our HOME units testing, two of the five properties tested did not meet the contracted HOME units size portfolio as follows: Along with other unit bedroom types that are in compliance, in Covington Commons: there should be four 3-bedroom units (there are 5); and there should be three 4-bedroom units (there are 2); Cascadia Cadia: there should be five 2-bedroom units (there are 4). Repeat Finding: Yes - Finding 2023-003 Recommendation Management should follow procedures in place to ensure consistent application and adherence to the requirements in accordance with the "Compliance in HOME Rental Projects: A Guide for Property Owners" published by HUD. Views of Responsible Officials Appropriate units will be re-classified the next time there is a vacant unit of the corresponding size/type.

Finding No. 2024-004 - Uniform Guidance Compliance Requirement Code: E-Eligibility - Significant Deficiency HUD HOME Investment Partnerships Program Federal Assistance Listing Number #14.239 HOME Investment Partnership Program Entity Identifying Number Initial Year Finding instances Passed-through Clark County: McCallister Village (Fruit Valley) 2010-HOME-0H0 2010 1 Total instances 1 Criteria Each owner must comply with the requirements set forth in 24 CFR Part 92 regulations as outlined in the "Compliance in HOME Rental Projects: A Guide for Property Owners" published by HUD which requires the property to maintain the contracted number of HOME units as well as the designated splits in bedroom size and High Home/Low Home unit ratios. Condition The owner did not make available to HOME tenants the contracted number and type of HOME units. This is considered a temporary noncompliance as follows: "Next Available Unit" rule: The owner must rent the next comparable or smaller unit that becomes vacant to a low-income household. Temporary noncompliance: The unit is temporarily out of compliance with HOME requirements, but the property can regain compliance by following the "next available unit" rule. Unit conversion: If the owner fails to comply and rents a comparable vacant unit to a non-low-income tenant, the over-income unit loses its low-income status and the building's compliance is reduced. A two bedroom unit did become available in 2024 and this tenant was not relocated. Cause Management's policies with respect to maintaining the number and split of contracted HOME units were not consistently followed. Effect or Potential Effect The procedures for determining and maintaining the correct HOME units within the property were not applied. This could result in ineligible tenants occupying HOME designated units. Questioned Costs: Not applicable. Context In connection with the procedures applied to our HOME units testing, one of the five properties tested did not meet the contracted HOME units size portfolio (a tenant is over the max HOME income limit allowed)). Repeat Finding: No Recommendation Management should follow procedures in place to ensure consistent application and adherence to the requirements in accordance with the "Compliance in HOME Rental Projects: A Guide for Property Owners" published by HUD. Views of Responsible Officials ________________OPEN FOR REACH REPLY

Finding No. 2024-005 - Uniform Guidance Compliance Requirement Code: E-Eligibility – Material Weakness HUD HOME Investment Partnerships Program Federal Assistance Listing Number #14.239 HOME Investment Partnership Program Entity Identifying Number Initial Year Finding instances Passed-through State of Washington: Addy Street - HUD 09-47104-001 2009 Passed-through Clark County: Addy Street - HUD 2008-HOME-08H15 2008 Total instances 1 Criteria Each owner must comply with the requirements set forth in 24 CFR Part 92 regulations as outlined in the "Compliance in HOME Rental Projects: A Guide for Property Owners" published by HUD which requires the property to maintain the contracted number of HOME units as well as the designated splits in bedroom size and High Home/Low Home unit ratios. Condition The owner was unable to provide a listing that detailed the available to HOME tenants the contracted number and type of HOME units and therefore we were unable to test the HOME program compliance for the audit year. Cause Management did not ensure that the new property management company retained in 2024 was tracking HOME units and HOME compliance. Effect or Potential Effect The procedures for determining and maintaining the correct HOME units within the property were not applied. This could result in ineligible tenants occupying HOME designated units. Questioned Costs: Not applicable. Context In connection with the procedures applied to our HOME program testing, one of the five properties tested did not provide a listing for us to be able to test that they meet the contracted HOME units size portfolio (for the State of Washington contract there should be 20 Low HOME units and for the Clark County contract there should be 3 High HOME and 1 Low HOME for a total of 24 HOME units amongst various number of bedroom sized units). Repeat Finding: No Recommendation Management should ensure and monitor that 3rd party property management company is able to establish reports showing all HOME units, HOME unit types and that compliance is being met on all HOME units. Views of Responsible Officials ________________OPEN FOR REACH REPLY

Finding No. 2024-006 - Uniform Guidance Compliance Requirement Code: E-Eligibility - Significant Deficiency Housing Trust Fund Federal Assistance Listing Number #14.275 Housing Trust Fund Entity Identifying Number Initial Year Finding instances Passed through Oregon Department of Housing & Community Services: Rose Apartments 3356 2019 1 The Mary Ann Apartments 3404 2020 1 Total instances 2 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with the Compliance in State of Oregon Housing and Community Services HTF Program Compliance Manual. Condition In connection with our lease file review, we noted two instances of four tenants tested where management did not provide support that they performed a 3rd party income verification in accordance with policy. Cause Management's policies with respect to recertifications and eligibility and the maintenance of tenant lease files in accordance with Compliance in State of Oregon Housing and Community Services HTF Program Manual were not consistently followed. Effect or Potential Effect This could result in units being rented to ineligible tenants. Questioned Costs: Not applicable. Context In connection with the procedures applied to our HTF units testing, two of the four tenants tested did not have a 3rd party income verification performed in accordance with policy. Repeat Finding: No Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that recertifications and correct income verification procedures are performed timely, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of Compliance in State of Oregon Housing and Community Services HTF Program Manual. Views of Responsible Officials ________________OPEN FOR REACH REPLY

Finding No. 2024-007 Uniform Guidance Compliance Requirement Code: N-Special Tests and Provisions - Significant Deficiency HUD Low Income Housing Preservation and Resident Homeownership Act of 1990 Federal Assistance Listing Number #99.999 Low Income Housing Preservation and Resident Homeownership Act of 1990 - Capital Grant Entity Identifying Number Initial Year Finding instances Beacon 126-35062 1996 2 Taylor 126-55017 1996 1 Total instances 3 Criteria In accordance with the Use Agreements, Housing Quality Standards require that the Owner shall maintain the property in good repair and condition. Condition The owner was unable to provide support that they ensured passing HQS inspections were performed during 2024. Cause Management did not have in place proper procedures and controls to ensure that HQS inspections were performed and properly documented during the year ended December 31, 2024. Effect or Potential Effect Housing units may be out of compliance with HUD Quality Standards. Questioned Costs: Not applicable Context In connection with the procedures applied to tenant file testing there were 3 instances of the 3 files tested where the support of passing HQS inspections were not performed/provided during the year ended December 31, 2024. Repeat Finding: Yes – Finding 2023-004 Recommendation Management should establish procedures to ensure that all units are inspected timely, that they meet the HUD Housing Quality Standards and that the responses to any findings are cleared timely and that the full process is documented in tenant files. Views of Responsible Officials ________________OPEN FOR REACH REPLY