Corrective Action Plans

Finding Number 2023-010 Subject Heading (Financial) or AL no. and program name (Federal) TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.010 Planned Corrective Action The Office of Title Services is implementing policies and procedures to demonstrate compliance. We are strengthening our policies and procedures to ensure LEAs are submitting accurate documentation for our SNS Specialist to determine that LEAs are meeting the supplement not supplant requirements. We will ensure that all policies and procedures, as well as the Title I Supplement Not Supplant Tracking Spreadsheet, are uploaded to our internal I-Drive. Anticipated Completion Date May -25 Responsible Contact Person Tammy Smith

Finding Number 2023-027 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.019 Federal Program name: Emergency Rental Assistance Program (ERA) Planned Corrective Action AUDIT BULLET POINT “Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Eligibility exceptions: • For 22 of 89, or 24.72%, of items tested, the applicant was an Afghanistan refugee and not a renter who lived in Oklahoma at the time of applying for assistance; therefore, they were not eligible, and the payment was unallowable. The subrecipient, Communities Foundation of Oklahoma, paid for the applicant to be in a hotel and then subsequently paid for their rent and utilities. Since the applicants were not eligible all payments were unallowable; therefore, we did not determine if the payment was calculated correctly or if the assistance exceeded 15 months for ERA 1 or 18 months for ERA 2. However, of these unallowable costs, we noted the following: • Some applicants were reimbursed for monthly lawn services as part of their monthly rental payment. • Several payments were made to the applicants after the initial payment without receiving an additional application or additional funds request (AFR) form (See FAQ #10).” OMES RESPONSE: The State disagrees that payments made to Afghan refugees were unallowable. The finding asserts that 22 applicants were ineligible for Emergency Rental Assistance (ERA) because they were Afghan refugees and were not “renters who lived in Oklahoma at the time of applying.” This interpretation is inconsistent with U.S. Department of the Treasury guidance, which does not require U.S. citizenship, legal residency, or prior tenancy in Oklahoma as a condition of eligibility. • Citizenship or Legal Residency Is Not a Requirement for ERA Eligibility. It is never mentioned in the ERA statute or Treasury guidance that U.S. citizenship, lawful residency, or duration of tenancy required. The U.S. Treasury’s ERA FAQ #1 explicitly outlines the four criteria for eligibility: • The household must be obligated to pay rent on a residential dwelling; • One or more individuals within the household must have experienced financial hardship due to the pandemic; • The household must demonstrate a risk of homelessness or housing instability; • Household income must be at or below 80% of area median income (AMI). These Afghan households were invited by our government leaders to resettle in Oklahoma as part of the federal government’s Operation Allies Welcome initiative. When the Afghans arrived in Oklahoma, they immediately sought housing, being assisted by agencies such as Catholic Charities. Obviously, they were not homeowners. As tenants or households seeking to rent housing during the midst of a pandemic without any immediate means of securing employment, they were experiencing housing instability and fully met the ERA Program 1 and 2 criteria. Upon arrival: • They were not homeowners; • They had no permanent housing; • They were working with nonprofit agencies like Catholic Charities to find housing; • Because of the pandemic, they were not able to secure work and had no or extremely low income; • They were at imminent risk of homelessness. Treasury has further emphasized in FAQ #1, “… these requirements provide for various means of documentation so that grantees may extend this emergency assistance to vulnerable populations without imposing undue documentation burdens…” Again, never is the word “residence or citizen” used, even in the footnotes. This language was clearly intended to include undocumented individuals, newly arrived refugees, and others in nontraditional or transitional housing situations. Furthermore, as noted in the CFO/CCP ERA application for rental assistance previously provided to SAI, the eligibility requirements do not require residency but that only the applicant live in the State of Oklahoma. Further Support: • September 9, 2021, Email between CCP/CFO and the Director of Tax and Housing Advocacy for the National Council of State Housing Agencies. Discusses that CCP was working with housing stability service partners, specifically Catholic Charities, to help with housing Afghans when they came to Oklahoma. Emails also clarify that the Afghan refugees would only be able to apply once they moved to Oklahoma. (See attached) • Sept 29, 2021 – Email from U.S. Dept. of State, Bureau of Populations, Refugees, and Migration (PRM), U.S. Department of State, which invited a variety of Federal Agency representatives to a call to hear from the OK Catholic Charities director to speak about the Oklahoma Catholic Charities “model of utilizing CARES Act funding to support both temporary and long term housing for Afghan arrivals and an additional hour was set aside for discussion of this model. Executive Director of the Oklahoma City Catholic Charities forwarded this email to CCP asking if she would join to assist with the discussion of this model. Listed below are the agencies that had representatives on the email. the National Security Council and Subcommittees  The White House – Organization of the National Security Council and Subcommittees  Executive Office of the President.  U.S. Department  Federal FEMA Office  U.S. Citizenship and Immigration Services  Homeland Security  Catholic Charities  U.S. Conference of Catholic Bishops  Administration of Children & Families  Governors, Biden Administration point person for Afghan Parolee Assistance. (See attached) • October 3, 2021, Follow-up Email thanking people regarding the presentation and for joining the call. “The insight, creativity, and partnership is inspiring and has the potential to assist so many Afghans.” Furthermore, an email was to the attendees of the presentation clarifying ERA as the funding source for Oklahoma’s model for developing housing resource for Afghan arrival. Additionally, it was stated that “We hope that these clarifications and enclosed links will help us understand how these funds may be leveraged to house Afghans when they are resettled from the bases to other locations around the country.” (see attached) • October 24, 2021, Email from ERA Outreach Team Leader, Emergency Housing Team, U.S. Department of the Treasury, to CCP wanting to connect them with Chicago who was looking to do some work with asylum seekers/refugees and was wanting to talk to other grantees who have worked with these populations using ERA funds. Note, this is an ERA Team Leader from the Treasury wanting CCP to share CCP/CFO’s ERA model. Obviously, the Treasury would not reach out to connect CCP/CFO to speak about their Afghan refugee model if they did not approve of the use of ERA funds to assist with housing the refugees. (See attached) • Treasury FAQ #37 – Addresses how grantees can promote access to assistance for all eligible households and is clear that the Guidance contemplates serving individuals from all background and nationalities, stating that grantees “should address barriers … including by providing program documents in multiple languages.” Furthermore, the Guidance states “Grantees should also provide, whether directly or through partner organizations, culturally and linguistically relevant outreach and housing stability services to ensure access to assistance for all eligible households.” In accordance with Title VI of the Civil Rights Act of 1964 (Title VI) ERA grantees must ensure they provide meaningful access to their limited-Englishproficiency (LEP) applicants and beneficiaries of their federally assisted programs, services, and activities. Finally, “Denial of an LEP person’s access to federally assisted programs, services, and activities is a form of nationalorigin discrimination prohibited under Title VI and Treasury’s Title VI implementing regulations at 31 CFR Part 22.” • Treasury guidance on creating applications for the ERA program with no mention of citizenship or residency requirements. Allow applicants to progress and self-attest if they cannot provide documentation - At the stage when applicants are asked to provide documents to establish COVID hardship, housing instability, income, or rental obligation, applicants should also be informed that they may self-attest and move forward in the application if they do not have those documents. • Disaster Housing Recovery Coalition, C/O National Low Income Housing Coalition (NLIHC) – Published an information sheet for recipients of Federal awards in response to the COVID-19 pandemic which detailed which awards did not consider immigration status when providing assistance. Under the ERA Program, the NLIHC stated that “The law establishing the Emergency Rental Assistance Program does not impose restrictions based on immigration status.” (Attached – labeled FAQs- Eligibility for Assistance Based on Immigration Status) 2. Hotel Stays Are Allowable Options for Temporarily Displaced Households Treasury provided a Broader Reading of “Obligated to Pay Rent on a Residential Dwelling,” and determined the costs of staying in a hotel are eligible expenses, and rental assistance could be provided to temporarily displaced households living in hotels. The audit finding narrowly interprets the term “obligated to pay rent” in FAQ #1. However, multiple Treasury FAQs — including FAQ #7, #26, and #35 — demonstrate that the Department intended a flexible, inclusive interpretation, recognizing the emergency nature of the program and the housing challenges faced by displaced individuals and families and reinforces that the term “residential dwelling” is not limited to traditional apartments with leases but includes hotels and other temporary housing used in transition. • FAQ #7: Permits hotel or motel costs to be covered using ERA funds when the household lacks alternative housing options, even without a formal lease. • FAQ #26: States that rental assistance may be provided to households residing temporarily in hotels or motels when they are • displaced or between housing. FAQ #27: Allows rental assistance for rent-to- own households, further demonstrating that the key is ERA CANNOT be used for homeowners (FAQ #20). • FAQ #35: Specifically authorizes relocation assistance for households who have been evicted or otherwise displaced and are attempting to secure new permanent housing. These provisions explicitly contemplate support for individuals and families—such as Afghan refugees— who were temporarily displaced and used hotels as the only available rental housing (in truth, many Oklahomans are forced to do this) until suitable housing could be secured (rendered more difficult for larger families – up to 10+ children). As allowed under Treasury ERA FAQs #7 and #26, hotel stays were covered when used as transitional housing due to lack of available rental stock—especially for large families. Afghan refugees fell squarely within this provision. 3. Lawn Services as Part of Rent This is allowable as part of the cost of the rental of the premises. For all rentals that have a yard there is lawn maintenance, and the landlord has the option to determine how to charge (or absorb) that cost. These costs were not reimbursed as separate utility costs, but as part of the monthly rental obligation agreed to in writing. 4. Subsequent Payments Without AFR Forms • ERA guidance allows grantees to implement streamlined processes to reduce burden and deliver aid efficiently. CCP’s internal policies permitted continued rental and utility assistance without requiring new applications or additional AFR forms, so long as eligibility remained unchanged and appropriate documentation was on file. This approach is aligned with Treasury’s consistent encouragement to minimize administrative barriers in the interest of program responsiveness and urgency. Treasury guidance also stated, Only ask applicants for information that is required by the ERA statutes and Treasury’s guidance to provide them assistance. AUDIT BULLET POINT “Further, while summarizing the data on ‘applicant’, we noted one line item was made up of 498 individual payments made to hotels on behalf of the Afghanistan refugees, which consisted of 186 applicants. We identified 185 of these applicants had payments for Afghanistan refugees to live in hotels prior to applying to the ERA program. Since, at the time of the application, they were not obligated to pay rent on a residential dwelling per Department of Treasury FAQ 1 and established CCP ERA policy, the cost is unallowable. This resulted in $1,727,687.64 in questioned costs (these costs do not include payments previously questioned in the first bullet).” OMES RESPONSE: OMES disagrees with this finding. Multiple Treasury FAQs, including #7, #26, and #35, reinforces the term “residential dwelling” is not limited to traditional apartments but may include hotels and other temporary housing used in transition. Also, FAQ #8 states that a beneficiary is not required to have rental arrears to receive assistance and permits enrollment “of households for only prospective benefits.” The only restriction is that for the ERA1 program, if an applicant is requesting prospective assistance and the applicant also has rental arrears, the grantee must also provide assistance to reduce those arrears (this restriction does not apply to ERA2). Finally, per FAQ # 13, eligible households do not have to be in their current rental home when the COVID-19 public health emergency was declared, stating, “Payments under ERA are provided to help households meet housing costs that they are unable to meet as a result of the COVID-19 pandemic. There is no requirement regarding the length of tenure in the current unit.” Oklahoma Office of Management and Enterprise Services (OMES) acknowledges the Oklahoma State Auditor and Inspector Office’s (SAI) findings that OMES did not implement the proper internal controls and oversight of the ERA Program during FY2023. However, OMES has taken steps to correct these findings and follow the recommendations set forth by SAI. Beginning with FY2025, OMES has taken the following measures: • Oversight and management of the ERA program has been transferred to the OMES Grant Management Office (OMES-GMO) which has staff with several years of grant experience. OMES-GMO has recently hired additional staff, and the two staff members dedicated to the management of the ERA program have 20+ years of combined federal grant specific experience. • To ensure that the subrecipient agreement includes all the required terms under the ERA Program and that the agreement does not expire, OMES-GMO and the Communities of Foundation of Oklahoma (CFO) have recently executed a Subrecipient Grant Agreement Amendment that details the responsibilities of OMES to monitor CFO and the duties and processes that CFO must follow in regard to ERA Program, including detailed cash management policies. See Attached – Grant Agreement Amendment. • OMES-GMO required the return of the remaining ERA2 Program funds from CFO to ensure proper oversight and review of ERA expenditures is performed. • OMES-GMO has a multi-level system of internal controls for grant management and oversight that includes routine monitoring, desk review, and site visits for all projects and associated project/administrative expenditures to ensure allowability, accuracy, and assist in the detection of fraud. For example, OMESGMO’s process for disbursing funds to a subrecipient requires a written request from the subrecipient with supporting documentation, then OMES-GMO assigns a staff lead and secondary grant analyst to perform a primary and secondary review for compliance and to require additional supporting documentation if needed to approve the request. Once those reviews are completed and approved by the OMES-GMO staff, the Director of the OMESGMO must approve the request before it is sent to the OMES Finance Division, who will then verify the calculated amount(s) before completing the disbursement to the subrecipient. These internal controls and policies have been implemented for the management and oversight of the ERA Program and provide a multi-layer review that will prevent fraud and risk factors applicable to the ERA program. Additionally, the OMES-GMO staff assigned to the ERA program have the training and knowledge to ensure compliance with the Federal grant requirements. • Depending on the level of risk, OMES-GMO conducts monthly, bi-weekly or weekly meetings with each subrecipient to monitor the progress of projects and address any issues or changes that might impact the project. For the ERA Program, OMES-GMO conducts biweekly monitoring meetings with CFO and is currently reviewing documentation provided by CFO to ensure all current ERA projects are eligible under the ERA guidelines and that CFO is exercising the proper oversight over their subrecipients. OMES-GMO will continue with their current ERA monitoring steps and internal controls and will work with CFO to ensure ERA program funds are spent in accordance with ERA program guidelines and state and federal regulations. Anticipated Completion Date Ongoing throughout the life of the grant Responsible Contact Person Brandy Manek

The Corporation should file the December 31, 2023 financial statements as soon as possible and should ensure the annual financial report is filed within 90 days in future periods or within nine months of fiscal year end if an owner certified submission was furnished to HUD.

Audit Finding 2023-025 U.S. Department of Transportation Highway Planning and Construction, 20.205 COVID-19 Highway Planning and Construction, 20.205 Special Tests and Provisions – Value Engineering Significant Deficiency in Internal Control over Compliance Summary of Finding: The Nevada Department of Transportation (NDOT) is required to establish a value engineering (VE) program and ensure that a VE analysis is performed on all applicable projects. A VE analysis was not performed when required by NDOT policy because NDOT did not have adequate internal controls to ensure their VE policy was followed. Recommendation: NDOT should enhance internal controls to ensure the VE policy is followed or, if necessary, the VE policy is updated as needed and provided that it complies with federal requirements. Agency Response Does the Agency Agree with Finding: Yes Additional Comments: Current NDOT policy has a lower cost threshold (i.e. stricter) for VE analysis than the federal requirement, and the finding references and evaluated project at that lower threshold. NDOT has also had significant organizational and staffing changes since the creation of this, and many other, policies and is currently in the process of updating all agency policies. Corrective Action Action to be Taken: NDOT will update the internal policy and processes relating to VE, including roles and responsibilities and internal controls to match or exceed federal requirements and to meet agency needs and resources. Date of Completion or Estimated Completion: October 1, 2026 Contact Person: Mark Wooster, Performance Analysis Division Head, mwooster@dot.nv.gov

Corrective Action Plan (CAP) Name of auditee: MAC Housing Development Fund Corporation TIN: 014-EE134 Name of Audit Firm: EFPR Group, CPAs, PLLC Period covered by audit: September 30, 2023 CAP prepared by: Amanda Hamilton Finance Director Franklin County Community Housing Council, Inc. (518) 483-5934 Current Finding on the Schedule of Findings and Questioned Costs and Recommendations (3) Finding 2023-003 (a) Comments on the finding and recommendation: Management agrees with the finding. Management also agrees with the recommendation. Please see below for action taken. (b) Action taken: Management has deposited the underfunded amount as of the date of this report.

Corrective Action Plan (CAP) Name of auditee: MAC Housing Development Fund Corporation TIN: 014-EE134 Name of Audit Firm: EFPR Group, CPAs, PLLC Period covered by audit: September 30, 2023 CAP prepared by: Amanda Hamilton Finance Director Franklin County Community Housing Council, Inc. (518) 483-5934 Current Finding on the Schedule of Findings and Questioned Costs and Recommendations (2) Finding 2023-002 (a) Comments on the finding and recommendation: Management agrees with the finding. Management also agrees with the recommendation. Please see below for action taken. (b) Action taken: Management has deposited the underfunded amount as of the date of this report.

Corrective Action Plan - Missing tenant file documentation. Contact person - Executive Director. Corrective action planned - The PHA will use a tenant file checklist and review tenant file documentation to make sure all required documentation is present. Anticipated completion date - Within the next fiscal year.

Corrective Action Plan - ACH payments not approved by the Board. Contact person - Executive Director. Corrective action planned - The PHA will implement the control procedure of attaching ACH supporting documentation to a copy of the bank statement and obtaining approval from a Board member authorized to sign checks. Anticipated completion date - Within the next fiscal year.

Corrective Action Plan - Financial statements contained material misstatements. Contact person - Executive Director. Corrective action planned - The PHA will hire an outside fee accountant or an employee with accounting experience. Anticipated completion date - Within the next fiscal year.

Management will proceed to transfer from the operational to the reserve account $5,684 corresponding to the undeposited deficiency ($812 per month) during the period from June to December 2023. Evidence of the deposit to the reserve account will be sent to HUD office as agreed. Popular bank will be notified about the matter and while the amount is adjusted through the monthly mortgage payment, Management will continue to make monthly deposits of $812.00 through 2023 fiscal year to cover the deficiency. The responsible person for the corrective action plan is Carmen G Rivera, Blanco’s Administrative Director. The estimated completion date for the finding is May 31, 2024. Management will ensure deposits to the replacement reserve account are made on a monthly basis as stated in the use agreement.

Management will proceed to transfer from the operational to the reserve account $5,684 corresponding to the undeposited deficiency ($812 per month) during the period from June to December 2023. Evidence of the deposit to the reserve account will be sent to HUD office as agreed. Popular bank will be notified about the matter and while the amount is adjusted through the monthly mortgage payment, Management will continue to make monthly deposits of $812.00 through 2023 fiscal year to cover the deficiency. The responsible person for the corrective action plan is Carmen G Rivera, Blanco’s Administrative Director. The estimated completion date for the finding is May 31, 2024. Management will ensure deposits to the replacement reserve account are made on a monthly basis as stated in the use agreement.

U.S. Department of Housing and Urban Development – CFDA #14.871 Section 8 Housing Choice Vouchers Activities Allowed or Unallowed, Allowable Costs and Cost Principles, Eligibility, Special Test and Provisions Significant Deficiency in Internal Control over Compliance and Immaterial Instance of Noncompliance Finding Summary: The Authority was not able to locate 1 of the 61 participant files selected for audit testing. Responsible Individual: Steven Trujillo, Executive Director Corrective Action Plan: During 2023, the Housing Choice Voucher Department moved physical locations from the 10th Floor of 1414 Santa Fe to 201 S Victoria. Also, during this time, all of the historical paper files were being scanned for digital storage. During this time, paperwork for one of the participants re-certification and inspection were misplaced and not able to be located during audit fieldwork. We do not anticipate this issue in the future since there will not be another office move, and all recertification paperwork moving forward is being scanned and attached in our software Anticipate Completion Date: January 2024

The Organization documents decisions and the Board votes through corporate resolutions. Nevertheless, to better document the Board’s monitoring and control of team performance, the Organization intends to resume preparing minutes for Board meetings going forward. Meetings are to be held at least once every four months, according to the Organization’s internal regulations.

The Organization initially had difficulty identifying a qualified firm to carry out the Single Audit for the year ended December 31, 2023. During the first half of 2024, the Organization contacted a total of 17 firms to request quotes, in a process that proved especially difficult given that many did not have experience auditing Non-Profit entities or did not respond. The Organization also consulted with peer Non-Profits entities with similar budgets to obtain recommendations, and from all these efforts only one proposal was received. This prolonged search process significantly delayed the start of the audit. Nevertheless, the Organization entered into a formal agreement with a certified public accounting (CPA) firm to perform the Single Audit. In addition, as this was the Organization’s first audit, additional time was required to compile the requested documents. With a clear understanding now of the documentation requirements, the process is expected to be significantly quicker in future audits. Furthermore, the Organization has already agreed with the same firm to perform the Single Audit for subsequent years going forward.

Finding Number: 2023-005 Planned Corrective Action: The Authority has updated our allocation plan and added actual percentages to the plan. A/P was unaware that all employee benefits were at a different percentage; has since then been remedied. Anticipated Completion Date: April 15, 2025 Responsible Contact Person: Sherrie Boudinot

Finding Number: 2023-004 Planned Corrective Action: The extension was granted and the housing authority kept in contact by email to HUD in regard to the lengthy audit process due to former executive director. Our plan is to be timelier once these issues are rectified. Anticipated Completion Date: May 31, 2025 Responsible Contact Person: Sherrie Boudinot, Zackary Dye

Finding Number: 2023-003 Planned Corrective Action: The Authority has contracted with the Inspection Group and has contracted with HAPCAP to also do inspections to ensure that all inspections are done in time. The Authority has designated a staff person to keep track of abatements and to send an inspector out to do a reinspection within the permitted time frames. If the unit fails a second inspection, in most cases the HAP is abated, or a formal extension is granted on occasion. Anticipated Completion Date: October 2024 Responsible Contact Person: Erica Flanders

Finding Number: 2023-002 Planned Corrective Action: The Authority is now in contract with the Nelrod company to do Authority Rent Reasonableness. Anticipated Completion Date: August 2024 Responsible Contact Person: Zackary Dye/Erica Flanders

Management has instructed the department managers involved with grants to work with the Finance Director and Senior Accountant for all future grant accounting and reporting to ensure that grant expenditures are properly recorded and reported in the correct period. The Senior Accountant will complete GFOA’s Generally Accepted Accounting Principles for Grants in August 2026. As of the date of this letter, Management is working to identify other grants-related training appropriate for the Senior Accountant, the Utility Manager, and the Director of Development Services and Capital Projects, all of whom are involved in grant proposals, management, expenditures, accounting and required reporting. Meetings with all three department managers will be scheduled to coordinate administration and deadlines for the City’s new and existing grants as grant reporting deadlines occur. Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026

Finding No. 2023-01: Tenant income is to be reconciled to reports run by the Enterprise Income Verification system (EIV) Recommendation: Management should use the EIV system properly to verify tenant employment and income during recertifications and calculate subsidy payments correctly. Action Taken or Planned: Management is conducting proper reconciliation between EIV system and tenant declared income at recertification. Responsible Person: Monique Brown, Manager Completion Date: May 31, 2023

Finding 2023.003 - Special Tests and Provisions - Sliding Fee Scale Documentation Recommendation The Center should establish a system of internal controls to ensure that all sliding fee discounts are properly calculated and supported based on family size and income. Action Taken I will work directly with the Director of Clinical Operations, Kei Wee, to conduct a comprehensive review of the Center's existing sliding fee scale policy to ensure alignment with federal guidelines and best practices, clarifying documentation requirements, including acceptable forms of income verification and definition of family size. The Clinical Operations Director, Kei Wee, will develop and implement a step-by-step standard operating procedure (SOP) for staff to consistently assess and apply sliding fee discounts. The SOP will include clear instructions for verifying documentation, calculating discount eligibility, and recording determinations in the patient's record. The Clinical Operations Director, Kei Wee's management team, will conduct monthly spot audits of a sample of sliding fee files to verify correct application and documentation. The managers will report the findings to management for corrective follow-up and provide training for registration/front-desk staff and billing personnel on the updated policy and procedures as needed.

No corrective action plan is need as this was a singular one-time event involving provider relief funding from HRSA. Person(s) Responsible: Tracy Busse and Greg Toutant Timing for Implementation: N/A

Finding No. 2023-004 HUD Low Income Housing Preservation and Resident Homeownership Act of 1990 Federal Assistance Listing Number #99.999 Uniform Guidance Compliance Requirement Code: N- Special Tests and Provisions Criteria In accordance with the Use Agreement, Housing Quality Standards require that the Owner shall maintain the property in good repair and condition. Condition Management did not have in place proper procedures and controls to ensure that HQS inspections were performed during the year ended December 31, 2023. Cause Management did not perform HQS inspections during the year ended December 31 2023. 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 passing HQS inspections were not performed during the year ended December 31, 2023. Repeat Finding: No Recommendation Management should resume making sure all units meet the HUD Housing Quality Standards and ensure that the responses to any findings are cleared timely. Views of Responsible Officials REACH did return to doing HQS Inspections in 2023, with staffing shortages it is possible that not every unit was inspected in 2023. Specifically, around the 3 instances of the 3 files tested after the finding were provided to REACH we provided the annual inspection for unit #11 at Beacon. For unit #5 at Beacon the annual inspection was not in the current resident file that was tested because the unit was vacant at the time of 2023 annual inspection. The annual inspection for the last file at Taylor this inspection was missed due to staffing changes at the time. REACH continued to reestablish our annual unit inspection process post COVID in 2024.

Finding No. 2023-003 HUD HOME Investment Partnerships Program Federal Assistance Listing Number #14.239 Uniform Guidance Compliance Requirement Code: E-Eligibility 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, one of the five properties tested did not meet the contracted HOME units size portfolio (there should be four 3-bedroom units (there are 5); and there should be three 4-bedroom units (there are 2)). Repeat Finding: Yes - Finding 2022-003 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 A unit will be re-classified the next time there is a vacant unit of the corresponding size/type.

Finding No. 2023-002 HUD HOME Investment Partnerships Program Federal Assistance Listing Number #14.239 Uniform Guidance Compliance Requirement Code: E-Eligibility 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 four 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, four of the eight tenants tested did not have the a 3rd party income verification in accordance with policy. Repeat Finding: Yes - Finding 2022-002 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 For the properties in Washington, they have several sources of HOME funds based on the issuing jurisdiction State, County or City that adds a layer of complexity to the recertification process and due to staffing turnover, both at the properties and REACH main office some of the HOME 3rd party income verifications were missed at recertification. Management has established policies and procedures for complying with the HOME program which includes a centralized tracker for HOME certifications.