Audit 400927

Finding No. 2025-001 - E. Eligibility for Uniform Guidance - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: 126EH124, program year is 2024. 126EH124-WAH-CA, program year is 1993. Name of Pass-through Entity (if applicable): Not applicable Criteria: Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition: In connection with our lease file review, we noted that: -one out of three tenants' income verification was not performed at all with the use of the HUD Enterprise Income Verification ("EIV"). -three out three tenants' recertifications were not performed timely. Cause: Management's policies with respect to recertifications and eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect: The procedures for determining tenant recertification eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs: N/A Context: One out of four tenants' tenants tested did not have the EIV run timely. Three out of three tenants tested did not have recertification performed timely. Auditor Noncompliance Code: Z-Other for REAC filing Identification as a Repeat Finding: Yes, 2024-001 Recommendation: Management should establish procedures and monitor compliance with those procedures to insure that recertifications are performed timely and signed, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to complete EIVs and recertifications in a timely manner but due to staffing shortages and tenant noncompliance issues, the Property continued to have issues with timely completion of income certifications in 2025. In 2026 property management will be outsourced to a third-party management company to address outstanding compliance issues.

Finding No. 2025-002 - N. Special Tests and Provisions for Uniform Guidance - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: 126EH124, program year is 2024. 126EH124-WAH-CA, program year is 1993. Name of Pass-through Entity (if applicable): Not applicable Criteria: Management is required to maintain compliance with HUD guidelines including the Property’s physical condition, the quality of management and tenant services and annual financial reporting requirements. This includes managements obligation to address all deficiencies identified in the NSPIRE Physical Inspection within a defined period of time. Condition: The Company failed to respond to and address all deficiencies noted in the NSPIRE Physical Inspection within the time frame specified by HUD and could not provide evidence that the deficiencies had been resolved. Cause: The procedures to ensure compliance with HUD guidelines regarding physical condition were not followed. Effect or Potential Effect: The Property may not be in compliance with HUD guidelines relating to the Property’s physical condition. Questioned Costs: N/A Context: Findings from NSPIRE Physical Inspection were not responded to in a timely manner and management could not provide evidence that all deficiencies had been resolved. Auditor Noncompliance Code: Z-Other for REAC Code Identification as a Repeat Finding: No Recommendation: Management should address all deficiencies identified in the NSPIRE Physical Inspection in a timely manner to ensure compliance with HUD regulations. Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to address deficiencies identified in the NSPIRE Physical Inspections but due to staffing shortages was having issues addressing them in a timely manner. REACH has cleared all deficiencies and submitted all requested materials to HUD and is awaiting the close-out confirmation letter.