Audit 409109

Finding No. 2025-002 - 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 Findinginstances Passed-through Clark County: McCallister Village (Fruit Valley) Passed-through City of Vancouver: McCallister Village (Fruit Valley) 2010-HOME-0H0 2010 1 2010-HOME-601002 2010 1 Total instances 2 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with the Compliance in HOME Rental Projects Guide from HUD. Condition In connection with our lease file review, we noted two instances of six tenants tested where management did not provide support that they performed a third-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 the Compliance in HOME Rental Projects Guide from HUD 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, two of the six tenants tested did not have a 3rd party income verification performed in accordance with policy. Repeat Finding: Yes - Finding 2024-002 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 the Compliance in HOME Rental Projects Guide from HUD. Views of Responsible Officials REACH’s 2024 consolidated audit report was issued in mid-November 2025. REACH has policies and procedures in place to monitor compliance of recertifications, and correct income verification procedures are performed timely. Once we were notified of this finding, Compliance Management Compliance team conducted a full review of all HOME regulatory agreements in the portfolio, including County, City and Commerce HOME funding. Compliance Management also created a spreadsheet to track which units are due for the appropriate HOME recertification.

Finding No. 2025-003 - 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 Findinginstances Passed-through Clark County: Covington Commons - HUD 2011-HOME-11H01 2011 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 in one property out of three tested. 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 three 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 three 4-bedroom units (there are two). Repeat Finding: Yes - Finding 2024-003 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 REACH’s 2024 consolidated audit report was issued in mid-November 2025. Once we were notified about this audit finding, Compliance Management conducted an in-depth review of this finding and determined that one extra 3-bedroom and one fewer 4-bedroom at Covington Commons were incorrectly set up in our Yardi system. REACH have since corrected this issue in the Yardi system. REACH will continue to monitor vacant two-bedrooms at Cascadia Village as they become available. There are only two 2-bedrooms that are not designated as HOME. We noted that unit #72 was not set up properly in our Yardi system. REACH have corrected this issue in the system.

Finding No. 2025-004 - 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 IdentifyingNumber Initial Year Findinginstances 2011-HOME-11H01 2011 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 in one property of the three tested. 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. 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 three properties tested did not meet the contracted HOME units size portfolio (a tenant is over the max HOME income limit allowed)). Repeat Finding: Yes - Finding 2024-004 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 Once REACH was notified about this audit finding, Property Management established a new review process to review the HOME units that would be re-classified the next time there is a vacant unit of the corresponding size/type. This is a “next available unit” rule. It will be addressed when the existing resident moves out. Our third-party Property Management company will continue to monitor this finding.

Finding No. 2025-005 - 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 Findinginstances Passed-through State of Washington: Addy Street - HUD Passed-through Clark County: Addy Street - HUD 09-47104-001 2009 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 units that are available to and/or rented to HOME qualified tenants that specifies 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 property management company 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, for one of the three properties tested management was unable to provide a listing for us to be able to test that they met 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: Yes - Finding 2024-005 Recommendation Management should ensure and monitor that the 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 Once REACH Asset Management Team was notified of this audit finding, our Asset Management team communicated this finding to Ad-West. They would set up a new process to ensure the reporting of HOME units, HOME unit types, and compliance would be met on all HOME units.

Finding No. 2025-001 - Uniform Guidance Compliance Requirement Code: E - Eligibility - Significant Deficiency Housing Trust Fund Federal Assistance Listing Number #14.275 Housing Trust Fund Entity IdentifyingNumber Initial Year Findinginstances Passed through Oregon Department of Housing &Community Services: Rose Apartments The Mary Ann Apartments 3356 2019 1 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 two tenants tested where management did not provide support that they performed a third-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 two tenants tested did not have a third-party income verification performed in accordance with policy. Repeat Finding: Yes - 2024-006 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 REACH’s 2024 consolidated audit report was issued in mid-November 2025. REACH Compliance Management reviewed the Oregon Housing and Community Services (OHCS) Housing Trust Fund (HTF) program manual and did not find any specific requirements about certifications other than at move-in. REACH reached out to OHCS and did not receive any clarifications. REACH operated with the available guidance for HTF at the time. OHCS have since updated the HTF manual as of June 2026. REACH now have an updated HTF manual which outlines when full recertification with income verifications are required and will follow those rules going forward.

Finding No. 2025-006 Uniform Guidance Compliance Requirement Code: E-Eligibility - Significant Deficiency HUD Low Income Housing Preservation and Resident Homeownership Act of 1990 Federal Assistance Listing Number #99.999 Low Income Housing Preservation and ResidentHomeownership Act of 1990 - Capital Grant Entity IdentifyingNumber Initial Year Findinginstances Beacon 126-35062 1996 2 Total instances 2 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with the HUD issued Use Agreement subject to the Low Income Homeownership Act of 1990 ("HUD Use Agreement"). Condition In connection with our lease file review, we noted two instances out of the three 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, eligibility and the maintenance of tenant lease files in accordance with the HUD Use Agreement 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 the LIHPRA units testing, two of the three 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 the HUD issued Use Agreement subject to the Low Income Homeownership Act of 1990. Views of Responsible Officials REACH has policies in place to ensure recertifications and income verification are performed timely, tenant eligibility is correctly determined, and the tenant files are properly maintained. During the second quarter of 2026, REACH outsourced property management and compliance functions to a third-party management company to address the outstanding compliance issues.

Finding No. 2025-007 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 ResidentHomeownership Act of 1990 - Capital Grant Entity IdentifyingNumber Initial Year Findinginstances Beacon 126-35062 1996 2 Total instances 2 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 2025 for two out of three tenant files tested. 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, 2025. 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 2 instances of the 3 files tested where the support of passing HQS inspections were not performed/provided during the year ended December 31, 2025. Repeat Finding: Yes - Finding 2024-007 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 REACH has policies in place for annual unit inspections. Management created a new unit inspection form to capture inspection, work orders, and re-inspection in 2025. Portfolio Managers reviewed these new forms with site teams and provided training on how to complete these forms. Property management team also sent emails and Teams reminders to the site team to ensure unit inspection, work orders, and re-inspections are completed on time and properly. During the second quarter of 2026, REACH outsourced both property management and compliance functions to a third-party management company to address outstanding compliance issues.