Community Housing III, Inc.

Finding No. 2025-001 - E - Eligibility for Uniform Guidance - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: 126EE044, program year is 2024. 126-33044, program year is 2005. Name of Pass-through Entity (if applicable): Not Applicable Criteria: Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition: In connection with our lease file review we noted: -one out of four tenants did not have income verification with the use of EIV. -three out of three tenant files tested did not have a timely recertification performed. Cause: Management's policies with respect to recertifications and eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect or Potential Effect: The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context: One out of four tenants tested did not have income verification with the use of the EIV performed. Three out of three tenant files tested did not have a timely recertification performed. Auditor Noncompliance Code: Z-Other for REAC filing Identification as a Repeat Finding: Yes, 2024-001 Questioned Costs: N/A Recommendation: Management should establish procedures and monitor compliance with those procedures to ensure that EIVs and recertifications are performed timely, inspections are completed, waitlists are being completed and followed, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to complete certifications in a timely manner but due to staffing shortages at the property continued to have issues with timely completion of income certifications in 2025. In 2026, property management will be outsourced to a third-party management company to address outstanding compliance issues.

Finding No. 2025-002 - N - Special Tests and Provisions for Uniform Guidance - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: 126EE044, program year is 2024. 126-33044, program year is 2005. Name of Pass-through Entity (if applicable): Not Applicable Criteria: In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant’s rights under state and local laws. Condition: In connection with the procedures applied to a sample of one tenant that moved out of the project during the year, we noted one instance where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause: Management's policies with respect to move outs and security deposit refunds were not consistently followed. Effect or Potential Effect: Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Context: One move out tenant of one tested did not have their security deposit refund returned timely. Auditor Noncompliance Code: M-Security deposits for REAC filing Identification as a Repeat Finding: No Questioned Costs: N/A Recommendation: Management should establish procedures and monitor compliance with those procedures to ensure that move out inspections are performed timely, security deposits are returned timely and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to return security deposits in a timely manner but was delayed in issuing the security deposit refund for this unit due to staffing issues. In 2026, property management will be outsourced to a third-party management company to address any outstanding compliance issues.

Finding No. 2024-001; Federal Assistance Listing Number 14.157 Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted: • one out of four tenants did not have income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. • an additional one out of four tenants did not have income verification with the use of EIV at all. • one out of three tenant files tested did not have a timely recertification performed. • one out of one new tenant lease files tested did not have a move-in inspection. • one out of one new tenant lease files tested did not have an initial certification performed timely. Cause Management's policies with respect to recertifications and eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context One out of four tenants tested in a population of 31 did not have income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. One out of four tenants tested in a population of 31 did not have income verification with the use of the EIV performed at all. One out of three tenant files tested did not have a timely recertification performed, but the tenant was determined eligible. One out of one new tenant lease file tested did not have a move-in inspection. One out of one new tenant lease file tested did not have the initial certification performed timely. Repeat Finding Yes, 2023-001 Questioned Costs N/A Recommendation Management should establish procedures and monitor compliance with those procedures to insure that EIVs and recertifications are performed timely, inspections are completed, waitlists are being completed and followed, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R-Section 8 program administration. Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions REACH has policies in place to complete certifications in a timely manner but due to staffing shortages and tenant noncompliance issues the property continued to have issues with timely completion of income certifications in 2024. As new staff are brought onboard training is provided and annual HUD training is completed by all staff. Management will continue to coordinate and provide assistance to on-site staff to ensure that the properties are in compliance.

Finding No. 2024-002; Federal Assistance Listing Number 14.157 Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, management is required to admit applicants in the proper order from the wait list and to document proper admission and denial procedures. Condition Management did not select applicants from the wait list in the correct order. Cause No procedures were in place to ensure that applicants were admitted in the proper order from the wait list. Effect or Potential Effect Tenants were not admitted in accordance with HUD guidelines. Context One out of one new tenant lease files tested did not appear on the waitlist and others were on list before this one new move-in. Repeat Finding No Questioned Costs N/A Recommendation Management should establish procedures to admit applicants in order of wait list priority and document all applicants admitted and denied in accordance with HUD guidelines. Auditor Noncompliance Code: R-Section 8 program administration. Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions REACH has policies in place to admit applicants in the order of their waitlist priority. Management works with on-site property staff and provides training on the prioritization of wait list applicants. Management will continue to coordinate and provide assistance to on-site staff to ensure that the properties are in compliance with required regulations.

Finding No. 2023-001; Federal Assistance Listing Number 14.157 Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted: - two out of three tenants did not have a recertification performed timely. - one out of four tenants did not have income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. Cause Management failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant EIV eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context Two out of three tenants tested did not have an EIV performed timely and one out of four tenants did not have income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. Repeat Finding Yes, 2022-001 Questioned Costs N/A Recommendation Management should monitor compliance with procedures to insure that recertifications and EIVs are performed timely, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: E-Eligibility for Uniform Guidance; R-Section 8 program administration. Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions REACH has policies in place to complete certifications in a timely manner but due to staffing shortages and tenant noncompliance issues the property continued to have issues with timely completion of income certifications in 2023. As new staff are brought onboard training is provided and annual HUD training is completed by all staff. Additional procedures have been implemented in 2023 to coordinate and provide assistance to on-site staff to ensure that the properties are in compliance.

Finding No. 2022-001; Federal Assistance Listing Number 14.157 Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted one out of three tenants did not have a recertification performed timely or the income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. Cause The project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context One out of three tenants did not have the EIV, or recertification performed timely. Repeat Finding No Questioned Costs N/A Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that the determination of tenant eligibility and the maintenance of lease files are in accordance with guidelines specified by HUD. Auditor Noncompliance Code: E-Eligibility for Uniform Guidance; R-Section 8 program administration Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions Due to either tenant non-compliance or challenges with scheduling meetings with tenants or obtaining verifications, some recertifications were completed late. REACH has policies in place to complete recertifications timely, and will be providing ongoing training and guidance to staff to make sure the policies are being followed.

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