145 SOUTH 3RD STREET HDFC

Finding No. 2024-001 - Distributions to Owners - Material Weakness 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: 2024-001 Criteria The terms of the regulatory agreement require payments/repayments of related party loans to be limited to available surplus cash computed on an annual basis unless approved by HUD. Condition In March 2024, the Sponsor provided a loan to the Organization in the amount of $15,000. On December 31, 2024, the Organization repaid the loan totaling $15,000 in excess of surplus cash available for distribution without HUD approval. Cause Procedures were not in place to ensure that distributions of cash were limited to available surplus cash computed in accordance with HUD regulations. Effect or Potential Effect The payment of $15,000 was an unauthorized distribution and therefore considered to be a questioned cost. Questioned Costs Unauthorized distributions of $15,000 Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should implement procedures to limit distributions of project cash to the annual surplus cash calculation amount required by the regulatory agreement. In addition, management should immediately reimburse the project's cash account for the unauthorized distribution. Auditor Noncompliance Code: H. Unauthorized distribution of project assets Finding Resolution Status: In process Views of Responsible Officials Management will immediately reimburse the property’s operating account for the unauthorized distribution and procedures will be implemented to ensure that all future loan repayments and cash distributions comply with HUD surplus cash requirements and the regulatory agreement. Department of Housing and Urban Development

Finding No. 2024-002 - Eligibility - Material Weakness 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: 2024-001 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: For four out of six tenants tested the annual recertification was not performed in a timely manner. For one out of six tenants tested, the EIV system was not run in a timely manner. Cause Management's policies with respect to the determination of tenant 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. Questioned Costs None Context A sample of 6 tenant files from a population of 59 were selected. We identified exceptions in 4 out of the 6 files tested. The sample is not a statistically valid sample. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number: 2023-002). Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that 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: In process Views of Responsible Officials Management has implemented corrective actions to address the deficiencies noted in tenant file maintenance and eligibility determinations.

Finding No. 2023-001; Supportive Housing for the Elderly - Section 202, Listing 14.157 Criteria 145 South 3rd Street Housing Development Fund Corporation is required to submit the audit reporting package and data collection form to the Federal Audit Clearinghouse (FAC) within the earlier date of either 30 days after receipt of the auditor's report or nine months after the end of the audit period. Condition 145 South 3rd Street Housing Development Fund Corporation failed to the submit single audit reporting package and data collection form for the year ended December 31, 2022 to the Federal Audit Clearinghouse (FAC) by the due date. Cause An administrative error caused the filing to be overlooked. Effect or Potential Effect Failure to timely file the reporting package with FAC can result in incomplete data collection by Federal Audit Clearinghouse's Single Audit Database for use with oversight, monitoring, and assessment of U.S. federal assistance. Questioned Costs None. Identification as a Repeat Finding No Recommendation Management should establish internal control policies and monitor compliance with those procedures to ensure that the audit reporting package and data collection form are submitted to the Federal Audit Clearinghouse in a timely manner. Management should consider adding to the administrative calendar of required filings the submission of the single audit reporting package and data collection form. HUD Auditor Noncompliance Code: Other Finding Resolution Status: Resolved. Views of Responsible Officials We did not in the past, but we will submit in the future.

Finding No. 2023-002; Supportive Housing for the Elderly - Section 202, Listing 14.157 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: For one out of six tenants tested the annual recertification was not performed in a timely manner. For five out of six tenants tested, the EIV system was not run in a timely manner. Cause Management's policies with respect to the determination of tenant 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. Questioned Costs None. Identification as a Repeat Finding No Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that 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: Internal control deficiencies Finding Resolution Status: In process. Views of Responsible Officials Management will implement a plan to strengthen recertification and EIV compliance. Management will enhance staff training and accountability and provide ongoing monitoring of compliance measures.

Finding No. 2023-003; Supportive Housing for the Elderly - Section 202, Listing 14.157 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 1 tenant that moved out of the project during the year, we noted one instance where management failed to refund the tenant security deposit within thirty days after the move-out date. Cause Management followed the local laws regarding timely refunding of tenant security deposits which require refunds or notice to occur within 45 days after the move-out date rather than the 30 day requirement established by HUD. 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. Questioned Costs None. Identification as a Repeat Finding No Recommendation Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: Security deposits Finding Resolution Status: In process. Views of Responsible Officials Management will implement a plan to ensure that tenant security deposit refunds are issued within 90 days.