Corrective Action Plans

Finding #2025-004 14.225 CDBG – Endtitlement Grants Cluster B23ST660001, COVID-19 B20SW660001, B20ST660001 Reporting - CDBG Financial Summary Report Views of Responsible Officials and Planned Corrective Action Management’s Position: Management partially concurs with the finding. Management acknowledges that supporting documentation explaining differences between the PR26 – CDBG Financial Summary Report, PR26 – CDBG-CV Financial Summary Report, and the Authority’s accounting records can be further strengthened. However, management does not concur that the identified differences resulted in noncompliance with CDBG expenditure requirements or applicable Public Service (PS) and Planning and Administration (PA) expenditure limitations. Explanation of Disagreement: Management notes that the PR26 report referenced in the finding is not the final CDBG Financial Summary Report submitted for Program Year 2024. Management requests that the PR26 report submitted in response to audit request #204 be considered for purposes of evaluating the reported CDBG financial activity. Management also notes that the FY2025 expense detail does not represent the full amount of CDBG expenditures reflected in FY2025 draw activity. This is because certain payroll expenditures incurred during FY2024 were drawn during FY2025 and are therefore included in FY2025 cash activity reported through HUD. Management notes that the purpose of the PR26 reports is to summarize CDBG and CDBG-CV financial activity and demonstrate compliance with applicable program expenditure limitations, including the Public Service and Planning and Administration caps. Management has reviewed these calculations and confirmed, in coordination with HUD representatives, that the applicable caps were not exceeded. Management further notes that differences between the PR26 reports and the Authority’s accounting records may occur due to differences in reporting methodologies. The PR26 reports are prepared based on cash activity reported through HUD, while the Authority’s financial records are maintained on an accrual basis. As a result, differences may occur due to timing of draws, prior-period expenditures drawn during the current reporting period, and other applicable reconciling items. Based on the above, management maintains that the identified differences are attributable to reporting basis and timing differences rather than noncompliance with CDBG expenditure requirements. The final CDBG Financial Summary Reports and supporting documentation have been provided for the auditor’s consideration. Corrective Actions: Management will enhance existing PR26 preparation procedures by maintaining supporting documentation identifying significant reconciling items between HUD-reported activity and the Authority’s accounting records. The purpose of this documentation will be to explain differences resulting from reporting methodology, timing of draws, prior-period expenditures drawn during the current reporting period, and other applicable reconciling items. The RPE Accounting Department, will be responsible for maintaining supporting documentation for PR26 reporting and documenting significant reconciling items. Supervisory review will continue to be performed prior to submission of future PR26 reports to ensure reported information is supported and appropriately documented. Responsible Party: Katherine Taitano, Chief Planner Anticipated Date of Completion: The enhanced documentation procedures will be implemented beginning with the next PR26 reporting cycle.

Finding #2025-003 14.871 Section 8 Housing Choice Vouchers Special Tests and Provisions – Reasonable Rent Views of Responsible Officials and Planned Corrective Action Management’s Position: Management respectfully disagrees with this finding. GHURA’s HCV program remains committed the regulations 24 CFR 982.507 and is fully knowledgeable of the process when determining rent reasonableness with comparable units in the private market and properly document all comparables. Before executing a HAP Contract, a rent reasonableness analysis is conducted for all units. This analysis includes assessing comparable unassisted units taking into account the location, size, type, and age of unit, as well as any amenities (such as septic, sewer, air conditioning, etc.), and utility responsibilities. We have standard operating procedures and methodologies in place to conduct these analyses and certify that comparable rents are reasonable. Any identified errors are likely due to isolated oversights during the data entry process. Explanation of Disagreement: Listed below are the discrepancies with accompanying comments. Out of the seven (7) entries provided, one (1) was identified as a calculation error. TOTAL: 07 entries (table provided to support explanation) 1. 4 Rent Reasonableness entries were completed correctly. 2. 2 Rent Reasonableness entries were system input errors. 3. 1 Rent Reasonableness analysis was an administrative error. Voucher Number Effective Date Auditor Comment Section 8 HCV Response HCV2828 2/1/2025 Per examination of the Rent Reasonableness reports, it was noted the comparables are not within similar area locations. We noted that the unit is located in Yigo (Northern), while the comparable units used in the rent reasonableness determination were located in the Southern area. To properly check the unit comparisons, the rent reasonableness module was updated to reflect the correct location and the three highest scoring comparable units were selected based on the applicable comparison factors. From the revised analysis, the average rent of the comparable unassisted units were $1,924, which is less than the initial calculated average of $2,966.67. SYSTEM INPUT ERROR: Location of the Proposed Unit was inputted as 'Southern' when the Yigo unit is a 'Northern' located unit. As a result, comparables for units located in the southern location were pulled. SOLUTION: All Section 8 assisted units in the system will be assessed to verify location accuracy based off of village and zip code. NED0444 10/1/2024 The Authority did not rely on the comparable contract rents reflected in the Rent Reasonableness Determination Report (average $949.33), but instead recalculated contract rent using gross rent less a utility allowance, resulting in $1,000. This methodology is not directly supported by the market comparables presented in the report. ADMINISTRATIVE ERROR: The amount of $949.33 should have been the contract rent amount. SOLUTION: Review discrepancy with team to ensure errors will not happen in the future. HCV2796 1/1/2025 Per Mark McCormick on the Rent Reasonable Determination Report and Request for Tenancy Approval (RFTA), the documents indicate no comparable unassisted units were available in the proposed unit's area; however, a nearby unassisted unit in the RFTA is at Ladera Tower and appears reasonably comparable based on proximity. 12a. Owner’s Certification 1. Ladera Towers - Date rented: 9/1/24 - Rental amount: 2,450 2. Washington Dr - Date rented: 10/21/21 - Rental amount: 1,850 3. Quichocho St Villa - Date rented: 1/21/23 - Rental amount: 1,850 RR DETERMINED CORRECTLY: (1) Rent Determination Documents has a note that the unassisted units are not on premises. (2) The units listed in the RFTA-12A were not located on the premises of the unit to be under HAP contract which is why it was not referenced. (3) The Ladera Towers may or may not be in the unassisted units database; is was not in the database at the time the comparables were made. HCV2876 6/30/2025 The approved contract rent of $1,400 was calculated using the average column in the Rent Reasonableness Determination Report (exception); however, the three comparable unassisted units listed on the RFTA are each $1,200, which is lower than the approved amount. Owners Certification: 138 (#347) and 148 (#363) Chalan totche $1,200 132 Chalan Guihan #402 $1,200 RR DETERMINED CORRECTLY: RFTA lists LITHC properties. LITHC unit rates are not used in comparables. 6-05-0050- 56262 9/1/2025 The owner proposed rent of $2,500 was determined to be rent reasonable based on the average comparable unassisted units of $3,774 and Fair Market value of $2,964. However, it was noted that the unit is located in Chalan Pago (Central), while one of the comparable units used in the rent reasonableness determination was located in the Northern area. To properly check the unit comparisons, the rent reasonableness module was updated to reflect the correct location and the three highest scoring comparable units were selected based on the applicable comparison factors. From the revised analysis, the average rent of the comparable unassisted units were $1,870, which is less than the initial calculated average of $3,774. SYSTEM INPUT ERROR: Location of unassisted unit was labelled as 'Central' when the village and zip code indicates that unit is located in the 'Northern' area. SOLUTION: All Section 8 unassisted units in the system will be assessed to verify location accuracy based off of village and zip code. 6-08-0353- 60378 1/1/2025 Per examination of the rent determination report, we noted the approved rent exceeds the rent reflected in the owner-certified lease for a comparable unit; however, no documentation was provided to support or justify the variance between the approved and contracted rent amounts. RR DETERMINED CORRECTLY: Tenant exercised the rent burden rule for this contract. The $100 amount does not exceed the tenant's 40% of AMI. NED0070 11/1/2024 Rent determination documentation indicates an approved amount of $940; however, the executed lease agreement (dated 10/29/2024) reflects a rent of $942 as requested by the landlord. No supporting documentation was provided to justify the variance between the approved rent and the amount charged. RR DETERMINED CORRECTLY: Approved amount for the contract was $942; which aligns with landlord's request. Corrective Actions: (1) SYSTEM INPUT ERRORS: All Section 8 unassisted and assisted units in the system will be assessed to verify location accuracy based off of village and zip code. (2) ADMINISTRATIVE ERRORS: Review discrepancy with team to identify the cause of this issue and ensure similar errors do not happen in the future. Preventive Measures: Closely assess rent determination calculations to ensure accuracy and certified rental amounts are correct. Responsible Party: Nicole Alejandro, Section 8 Administrator Anticipated Date of Completion: Timeline for Resolution: (1) SYSTEM INPUT ERRORS: • 6/18/2026: Request report from MIS to provide list of units with location in the systems. • 6/22/2026: Received report from MIS, consisting of 4,922 units. • 6/22-6/10/2026: Review report, identify deficiencies, and create plan to correct deficiencies. • 6/13/2026: Assign staff to update system with accurate data to address any location deficiencies. • 7/31/2026: Complete assignment. Preventive Measures: Pull quarterly report for assisted and unassisted units in the system and review list of units and ensure location is accurate based off of village and zip code of unit. (2) ADMINISTRATIVE ERRORS: Review discrepancy with team to identify the cause of this issue and ensure similar errors do not happen in the future. • 6/17/2026: Review and discuss discrepancy with HCV Inspection Supervisor • 6/18/2026: Conduct Inspection Team Meeting to address discrepancy with HCV Inspection Team to identify the cause of the issue. Review SOP with team to ensure similar errors do not happen in the future • 6/18/2026: Assignment completed.

Finding #2025-002 14.871 Section 8 Housing Choice Vouchers Special Tests and Provisions - National Standards for the Physical Inspection of Real Estate (NSPIRE)/Housing Quality Standards Inspection Views of Responsible Officials and Planned Corrective Action Management’s Position: Management respectfully disagrees with this finding. GHURA’s HCV program remains committed to our biennial inspection requirements and are fully compliant with all applicable regulations. When a unit fails inspection, we work quickly to resolve the issues and ensure housing standards are met, as outlined in 24 CFR Part 982. In accordance with 24 CFR 982.405(d), we provide both participants and landlords adequate time to correct deficiencies, which is documented in our system. We remain compliant in our conduct and oversight of these requirements. Should there be a late HQS biennial inspection, this should not interrupt the HAP. Suspending these payments creates an undue burden for participants and strains our partnership with landlords. Unless a unit is deemed unsafe, HAP will continue. HAP abatement and reimbursement policies are in place should they need to be activated to retrieve HAP in instances where it was not entitled. Explanation of Disagreement: The list provided below is insufficient to claim any finding in HQS due to the following: TOTAL: 32 entries (table provided to support explanation) 17 families ended their participation before the biennial inspection was due. 5 families were port-out participants before the biennial inspection was due. 5 units were recorded to have inspections completed before the biennial inspection due date and passed inspection. 1 unit inspection was completed on time, but failed on the first inspection. 1 unit inspection was completed on time, but was a no entry on the first attempted inspection. 1 family moved out of the unit before the biennial inspection. 1 family had incorrect dates in this list and was recorded to have met the biennial inspection and passed inspection. 1 family’s inspection was late by 17 days, however, the inspection was completed and passed in that same month, which did not affect the HAP. Voucher Latest HQS Inspection Activity Sum of Amount Section 8 HCV Response 6-01-0105-926 09/28/23 $ 220.00 EOP: 1/31/25 6-01-0212-58183 04/13/23 $ 13,824.00 EOP: 3/31/25 6-03-0198-2327 4/4/2022 (should be 9/19/22) $ 27,648.00 NOTE: Latest HQS Inspection Activity is 9/19/22 and inspection passed on 9/11/24. The 4/4/22 Inspection Date is for Voucher #6-04-0171-47367 (different tenant). 6-05-0005-42278 07/12/22 $ 25,320.00 NO ENTRY: 7/9/24 | PASSED: 8/21/24 6-05-0145-47900 07/18/22 $ 12,794.00 PASSED: 7/9/24 6-05-0241-46089 08/29/23 $ 2,280.00 OUTSEARCHING: 4/1/25 6-07-0028-2139 07/19/22 $ 23,996.00 FAILED: 7/17/24 | PASSED: 8/19/24 6-07-0115-1927 09/11/23 $ 6,278.00 EOP: 2/28/25 6-07-0289-52502 05/06/22 $ 28,316.00 PASSED: 5/6/24 EHV0132 08/23/23 $ 1,076.00 PORT-OUT: 10/31/24 FUP0156 08/21/23 $ 17,607.00 EOP: 5/31/2025 HCV0134 01/05/22 $ (402.65) PORT-OUT: 6/30/22 HCV0521 04/22/22 $ 18,997.00 PASSED: 4/3/24 HCV0561 08/16/23 $ 14,409.00 EOP: 6/30/25 HCV0735 12/09/22 $ 1,227.00 EOP: 11/30/24 HCV0874 04/17/23 $ 4,383.00 EOP: 12/31/24 HCV1038 03/17/22 $ 5,130.00 PASSED: 1/17/24 HCV1083 9/12/2022 (should be 2/15/22) $ 17,987.00 PASSED: 1/17/24 HCV1333 08/17/23 $ 4,686.00 EOP: 12/31/24 HCV1699 10/18/22 $ (90.40) PORT-OUT: 8/10/23 HCV1704 09/12/23 $ 5,596.00 EOP: 1/31/25 HCV1811 08/31/23 $ 9,096.00 EOP: 3/31/25 HCV1873 07/11/23 $ 1,096.00 EOP: 11/30/24 HCV2024 07/06/22 $ 22,875.00 PASSED: 7/23/24 (LATE) HCV2110 07/19/23 $ 8,344.00 PORT-OUT: 4/30/25 HCV2452 08/02/23 $ 6,256.00 EOP: 1/31/25 HCV2457 07/13/23 $ (1,681.00) PORT-OUT: 7/5/24 HCV2466 08/31/23 $ 1,374.00 EOP: 6/30/25 MS0028 04/05/23 $ 1,449.00 EOP: 10/31/24 MS0031 04/14/23 $ 1,026.00 EOP: 4/30/25 NED0213 07/11/23 $ 9,642.00 EOP: 3/31/25 VASH0149 08/03/23 $ 6,272.00 EOP: 7/31/25 Corrective Actions: Due to my explanation above, there are no corrective actions needed for Finding No.: 2025-001. Due to my explanation above, there are no corrective actions needed for Finding No.: 2025-001. Due to my explanation above, there are no corrective actions needed for Finding No.: 2025-001. Responsible Party: Nicole Alejandro, Section 8 Administrator Anticipated Date of Completion: Due to my explanation above, there are no corrective actions needed for Finding No.: 2025-001.

Finding No. 2025-001 - Replacement Reserve Deposit Increases Planned Corrective Action - Management has since implemented additional procedures to ensure that future replacement reserve deposit changes are implemented by the mortgage servicer. Management has made the 2025 shortage deposit to the replacement reserve. Anticipated Completion Date - June 2026 Responsible Contact Person - Stephen Hoover, President, Board of Directors, E-mail: sbhoover@outlook.com

a. Management is negotiating a solution with the State of Utah and HUD for a refund of the payment.

CORRECTIVE ACTION PLAN -For FY 2025 Audit Finding FINDING: 2025-002-ALN 14.872: U.S. Department of Housing and Urban Development’s (HUD’s) Capital Fund Program CRITERIA: 24 CFR 905.202(j) requires financial assistance to make improvements to existing public housing units. CONDITION: During the audit, it was discovered a purchase of a maintenance vehicle was made with funds under Budget Line Item 1480, “General Capital Activity”. HUD has issued guidance stating such purchase is considered an operational cost and CFP 1480 BLI cannot be used for such purchase. PLAN FOR CORRECTION: Management has reviewed 24 CFR 905.200 and 24 CFR 905.202 and will ensure no future purchases of maintenance vehicles, or equipment, will be planned to use any funds under the CFP BLI 1480, “General Capital Activity”. CONTACTS FOR PLAN: Chris Wallen – Finance Manager Ph. (503) 623-8387 Ext. 332 cwallen@wvpha.org Christian Edelblute - Executive Director Ph. (503) 623-8387 Ext. 314 cedelblute@wvpha.org

CORRECTIVE ACTION PLAN -For FY 2025 Audit Finding FINDING: 2025-001-ALN 14.871 & 14.879: U.S. Department of Housing and Urban Development’s (HUD’s) Section 8 Housing Choice Voucher (HCV) Program & Housing Quality Standards Inspection/HQS Enforcement CRITERIA: 24 CFR 982.405 & 983.103 require units leased, under the HCV Program, to be inspected at least biennially to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. CONDITION: During the audit, three (3) failed HQS inspections, with life threatening issues as defined by the WVHA’s Administrative Plan, was found that did not receive a pass in conformance with the Criteria noted above and no HAP abatement process was enforced. Additionally, two (2) HCV units were found to have not been inspected at least biennially. PLAN FOR CORRECTION: Inspection Protocols- With the limitation of time imposed by the 24-hour remedy period, staff were calling and/or emailing the landlords as soon as they noted a Life, Health & Safety deficiency. Inspection staff have been informed that all Life Health and Safety deficiencies will immediately trigger a letter to the landlord (with a copy to the HCV caseworker) stating that Housing Assistance Payments will be placed in abatement and the HCV caseworkers will perform such abatement action as soon as the 24-hour period has elapsed (unless informed by the inspector that the property has subsequently corrected the deficiencies). Documentation- Physical inspection records will be provided to each HCV caseworker and be added to the tenant household’s HCV file within 24 hours of the inspection. HCV caseworkers are required to ensure all inspection documentation is properly located within each HCV file and such documentation is in accordance with the program’s rules and regulations. CONTACTS FOR PLAN: Cheryl Slagle – Housing Programs Manager Ph. (503) 623-8387 Ext. 328 cslagle@wvpha.org Christian Edelblute - Executive Director Ph. (503) 623-8387 Ext. 314 cedelblute@wvpha.org

The agency submitted and received a formal waiver for the prior two years PILOT. To prevent future deficiencies, PILOT waiver requests have been incorporated into the Authority's annual budget process, and payment status will be reviewed annually to ensure waivers are permitted or payment was submitted as part of the financial close process.

Management has strengthened its recordkeeping practices to ensure that all revenues are fully supported by appropriate source documentation and are readily available for audit, monitoring, and financial reporting purposes. The Finance Director has conducted a review of current revenue documentation procedures to identify any gaps in record retention and establish standardized filing requirements for all revenue sources, including tenant rent, HUD operating subsidies, Capital Fund reimbursements, Housing Assistance Payments (HAP), administrative fees, miscellaneous income, grant revenues, and other receipts. Where documentation is incomplete, management has made reasonable efforts to obtain or recreate supporting records from available internal and external sources.

Recommendation: Management should strengthen its tenant file review and monitoring procedures to ensure that reasonable rent determinations and utility allowance calculations are completed, documented, and reviewed in accordance with the Housing Authority’s policies and applicable program requirements. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to the finding: The Authority will address the identified deficiencies and prevent recurrence by strengthening file review procedures, enhancing staff training, and improving internal controls. A standardized quality control process will be implemented to ensure required tenant file elements are accurate, complete, and properly reviewed prior to approval, along with periodic monitoring to identify and correct errors in a timely manner. Staff will receive targeted and refresher training to reinforce key requirements, calculations, and documentation standards. Additionally, the Authority will evaluate opportunities to improve system controls to reduce the likelihood of errors or missed steps. Name(s) of the contact person(s) responsible for corrective action: Lowel Krueger, Executive Director. Planned completion date for corrective action plan: December 31, 2025.

Memo: Cause and Corrective Action Plan for Finding 2025-003 This correspondence serves as Cook County Health (CCH) and Cook County Department of Public Health (CCDPH) response to Finding 2025-003. During the FY2025 Single Audit, one audit finding was identified by Washington, Pittman & McKeever, LLC. The root cause and corrective action plan is identified below. Condition During the current audit period, the Cook County Department of Public Health (DPH) did not comply with federal regulations regarding the use and reporting of program income as it relates to funds awarded through the RWHAP Root Cause Analysis The HIV grants transitioned to CCH from an external organization in July 2025. Award amounts were granted in multiple phases, requiring four budget revisions, with the final revision approved in December 2025. The contractual period covered March 2025 through December 2025. During the transition period, CCH lacked formal operational procedures to identify, record, and track program income. Several operational and administrative challenges contributed to this issue, including: • No written internal procedures were in place to define or track program income requirements. • No formal transition teams were established to identify core grant obligations, resulting in unclear interpretation of sponsor requirements. • CCH had not yet identified the appropriate internal systems or interdepartmental collaborations necessary to retrieve and reconcile program income data. • Organizational priorities during the transition focused on maintaining existing deliverables, including vouchering, budget compliance, hiring, and onboarding of direct and administrative staff. • Staffing Shortages, CCH onboarded personnel quickly as contractual employees, direct staff transitioned onboard as CCH employees in phases upon execution of grant contracts. Corrective Action Plan CCH Director of Grants Accounting is implementing formal written processes and procedures to ensure compliance with Federal Uniform Guidance requirements related to program income. The corrective action plan includes: • Developing standardized written procedures that clearly define program income requirements and tracking responsibilities. • Establishing shared roles and responsibilities across departments to support consistent data collection, reconciliation, and reporting. • Identifying the specific data elements required to accurately record and monitor program income. • Formalizing interdepartmental collaboration processes necessary to retrieve and validate program income information. • Defining the systems and reporting tools that will be used to track and maintain program income records. • Providing staff training on program income requirements, documentation standards, and compliance expectations. These actions will strengthen internal controls and ensure timely, accurate identification and tracking of program income moving forward, official approval/implementation is expected December 2026

The Housing Authority has addressed the staffing levels for the program and is working with HUD to secure reimbursements for under funded HAP remittances. Additionally, the Authority is working with HUD to utilize reserve funds to alleviate the issue.

2025-001 Finding SDSI Housing Corporation, Inc. (SDSI Housing) received reimbursement from the reserve for replacements of $135,824 for roof repairs that were previously funded with insurance proceeds. The reserve for replacements is under funded by $135,824 due to the reimbursement of ineligible items. A reimbursement request was submitted for major roof repairs which are traditionally contemplated as eligible for draws under HUD Occupancy Handbook 4350.3 REV-1. However, management did not consider the fact that such repairs had already been funded by insurance proceeds, so the major roof repairs resulted in no cost to the Project. Comments on Finding and Recommendations Management agrees with the finding and recomendations. Actions Taken Management returned ineligible funds of $135,824 to reserve for replacements on April 16, 2026.

Tyler Luce, Executive Vice President & CFO, respectfully submits the following corrective action plan for the year ended September 30, 2025. Name and address of independent public accounting firm: Maner Costerisan, P.C. 2425 E. Grand River Ave, Ste 1 Lansing, MI 48912 Audit period: October 1, 2024 – September 30, 2025 The findings from the September 30, 2025 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Finding 2025-001 Recommendation: The entity should design and implement stronger internal controls over project funds, including enhanced segregation of duties, documented procurement procedures, conflict-of-interest monitoring, and periodic independent review of project expenditures to ensure compliance with Uniform Guidance. Management Comments: We agree with the facts and circumstances of this finding. Management has taken corrective action in response to this finding. The employees involved are no longer employed in connection with the project, and the matter was reported to the HUD Office of Inspector General. Management has reviewed and strengthened the project's controls over conflict-of-interest monitoring and enforcement of existing time-clock policies. In addition, we have and will continue to perform independent reviews of project expenditures to ensure compliance with Uniform Guidance.

A Purchasing Policy was drafted to require sealed bids for any purchases that are $50,000 or more whether they are construction or not.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Material Weakness RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. ACTION TAKEN Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. ACTION TAKEN Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications and Move-in Certification A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification and move-in certification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move-In Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 RECOMMENDATION The auditor recommends the replacement reserve be properly funded and the minimum balance be assessed on a monthly basis. ACTION TAKEN Carrasquillo Management LLC acknowledges the finding regarding the required deposits to the replacement reserve account and ensuring the replacement reserve is fully funded. Corrective Actions: 1. Make the necessary deposits to comply. 2. Internal Compliance Controls. 3. Staff Training. 4. Monthly Monitoring and Reporting - Staff will confirm at the end of the month that the monthly deposit to the replacement reserve has been made with each closing to ensure no deposit has been missed. We will increase the monthly deposits to make sure we maintain the accurate balance in the replacement reserve account. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all Project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. ACTION TAKEN Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. This will be completed shortly after the refinance of the mortgage takes place in the next few months. Westfield Bank also uses Positive Pay systems to avoid any fraud to occur on the accounts. Any transactions coming out of the units have to be entered prior to being made and have to be approved. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

CORRECTIVE ACTION PLAN Name of auditee: Bellflower Oak Street Manor Name of audit firm: Propp Christensen Caniglia LLP Period covered by the audit: October 1, 2024 through September 30, 2025 CAP prepared by: Name: Sean Calendar Position: Director of Accounting Telephone: (916) 357-5300 Comments: Management agrees with the 2025-001 – 2025-003 findings. Actions: Management has agreed to enhance processes, controls, and personnel training under the newly engaged property management company to ensure ongoing compliance with HUD regulations. Additionally, management has agreed to deposit $9,912 into the replacement reserve account to fully fund the current-year requirement and transfer $44,273 into the residual receipts account to address the 2024 surplus cash requirement.

Corrective Action Plan - Interfund receivables and payables. Contact person - Executive Director, Rhonda Baxter., Executive Director, at the Bastrop Housing Authority, 502 Farm Street, Bastrop TX 78602, telephone number (512) 312-3398. Corrective action planned - Interfund receivables and payables will be liquidated each month. Anticipated completion date - Within the next year.

Corrective Action Plan - Individual charge tickets not attached to credit card statements. Contact person - Executive Director, Rhonda Baxter., Executive Director, at the Bastrop Housing Authority, 502 Farm Street, Bastrop TX 78602, telephone number (512) 312-3398. Corrective action planned - Individual charge tickets will be attached to credit card statements each month. Anticipated completion date - Within the next fiscal year.

Finding 2025-005: Special Test – Utility Allowance Schedule Housing Choice Vouchers View of responsible officials: The City agrees with the finding. Corrective action plan: The City will maintain and update utility allowance schedules based on current date and adequately demonstrate segregation of duties over preparation and approval of the schedule. Implementation dates: September 30, 2026 Responsible person: Lola Ogunremi, Chief Financial Officer

Finding 2025-004: Special Test – Reasonable Rent Housing Choice Vouchers View of responsible officials: The City agrees with the finding. Corrective action plan: The City will determine that the rent to owner is reasonable prior to approving the lease and executing the HAP contract. Implementation dates: September 30, 2026 Responsible person: Lola Ogunremi, Chief Financial Officer

Finding 2025-003: Reporting – SEMAP Housing Choice Vouchers View of responsible officials: The City agrees with the finding. Corrective action plan: SEMAP certifications must be formally approved by the City’s governing board and signed by appropriate management prior to submission. Implementation dates: September 30, 2026 Responsible person: Lola Ogunremi, Chief Financial Officer