Robbins Way Senior HousingNon-Profit

Federal Program – U.S. Department of Housing and Urban Development Assistance Listing Number 14.157 – Supportive Housing for the Elderly (Section 202) Noncompliance Category of Finding – Special Tests and Provisions Criteria - HUD regulations and the organization’s Project Rental Assistance Contract (PRAC) require that withdrawals from the project’s replacement reserve be approved by HUD prior to disbursement. Replacement reserve funds are restricted and may only be used for eligible purposes with documented HUD authorization, as outlined in 24 CFR Part 891 and related PRAC terms. Condition - During 2025, while the organization’s PRAC renewal was pending and housing assistance payments were temporarily not being received, the organization made five withdrawals from the replacement reserve to cover operating costs. Of these withdrawals, three were approved by HUD, while two withdrawals were made without documented HUD approval at the time of disbursement. Cause - The absence of approval for the two withdrawals was due to a federal government shutdown, which temporarily prevented HUD from processing and approving replacement reserve withdrawal requests. Management proceeded with the withdrawals to maintain project operations during the lapse in rental assistance payments. Effect (Potential Effect) - Two replacement reserve withdrawals were not in compliance with HUD approval requirements at the time they were made. This resulted in noncompliance with Special Tests and Provisions applicable to the program and increased the risk that restricted funds could be used without proper authorization. Identification of repeat finding – No Recommendation - We recommend that management continue to strengthen controls over replacement reserve withdrawals to ensure that HUD approval is obtained prior to disbursement, even during periods of operational disruption. Management should also document contingency procedures to address future interruptions in HUD operations or funding to ensure continued compliance with program requirements. Views of responsible officials and planned corrective actions - Management agrees with the finding. Due to the federal government shutdown and the temporary suspension of HUD operations, approval for two replacement reserve withdrawals could not be obtained prior to disbursement. The withdrawals were necessary to maintain essential project operations during the lapse in rental assistance payments. Management has since resumed compliance with all HUD approval requirements and will enhance documentation and contingency planning to address similar circumstances in the future.

2024-001 – Annual Income Recertifications Federal Program – U.S. Department of Housing and Urban Development Assistance Listing Number 14.157 – Supportive Housing for the Elderly (Section 202) Material Weakness & Noncompliance Category of Finding – Eligibility Criteria - The Compliance Supplement requires owners and management agents of properties with Section 202 project rental assistance contracts to complete annual income recertifications for all tenants. These recertifications must be conducted timely, with notices sent at least 120 days prior to the effective date and all required documentation collected to ensure accurate rent calculations and continued eligibility. Condition - During the audit, a review of tenant files revealed that income recertifications were either not completed or not completed in a timely manner. Specifically: • 3 out of 4 tenant files reviewed lacked completed income recertifications within the required timeframe. • 1 out of 4 tenant files reviewed did not have evidence that of recertification notices being sent out. Context - Of the total population of 36 units, 4 were tested. Questioned costs are not applicable to this finding. Based on our sample, inquiry of employees and a master list of late annual recertifications provided by management, we understand this finding to be prevalent at the Organization throughout the year. Cause - The identified deficiencies appear to be due to inadequate oversight and ineffective tracking of the recertification process by property management. Factors contributing to the issue include not utilizing a tracking system to track recertification deadlines and timely distribution of recertification notices; insufficient staff training on federal compliance requirements; and staff turnover resulting in inconsistent adherence to required procedures. Effect (Potential Effect) - Failure to complete or timely conduct income recertifications can lead to several compliance and financial risks, including: incorrect rent calculations, resulting in overpayment or underpayment of housing assistance subsidies; loss of subsidy for tenants who fail to complete recertification, potentially leading to eviction risks; increased administrative burden to resolve delayed recertifications and financial discrepancies; and risk of noncompliance findings in HUD’s Management and Occupancy Reviews (MORs), potentially leading to corrective actions or penalties. Identification of repeat finding – No Recommendation - To ensure compliance with HUD recertification requirements, management should utilize available tracking systems to monitor and enforce recertification deadlines; provide staff training on HUD Handbook 4350.3 recertification procedures and requirements; establish a quality control process to verify recertifications are completed on time and properly documented in tenant files; and conduct periodic internal audits to identify and correct any deficiencies in the recertification process. Views of responsible officials and planned corrective actions - The Organization agrees with the finding and has continued to implement strategies to address the finding. To address this finding, management has assembled and deployed a team of external consultants and temporary workers to assist site staff in completing tenant recertifications and hired a team of additional roving property management/compliance teams to cover open property management positions and to support site staff in completing tenant recertifications. Currently, management plans to transition 50% of its real estate portfolio to new property management in 2025.

Finding 2024-002 – Tenant File Documentation Federal Program – U.S. Department of Housing and Urban Development Assistance Listing Number 14.157 – Supportive Housing for the Elderly (Section 202) Material Weakness & Noncompliance Category of Finding – Eligibility Criteria - The Compliance Supplement requires that tenant files contain all necessary documentation to verify eligibility, rent calculations, and compliance with federal regulations. Required documents include, but are not limited to, original applications, verified bank accounts, resident screenings, Enterprise Income Verification (EIV) reports, unit inspections, and move-out documentation. Maintaining complete tenant files is essential for ensuring compliance with federal requirements and preventing improper subsidy payments. Condition - During the audit, a review of tenant files revealed that required documentation was either missing or incomplete. Specifically: • In 3 out of 4 tenant files reviewed, we were not provided evidence that all required documents were included in the tenant file. Missing documentation included Enterprise Income Verification (EIV) reports, security deposit documentation, and move-in inspection forms. Context - Of the total population of 36 units, 4 were tested. Questioned costs are not applicable to this finding. Based on our sample and inquiry of employees, we understand this finding to be prevalent at the Organization throughout the year. Cause - The identified deficiencies appear to be due to inadequate file management and oversight. Contributing factors may include insufficient staff training on federal documentation requirements, staff turnover resulting in inconsistencies in maintaining tenant records, and not conducting routine internal file audits to ensure compliance. Effect (Potential Effect) - Failure to maintain complete tenant files can lead to significant compliance and financial risks, including inability to verify tenant eligibility, which may result in improper subsidy payments, increased risk of findings in HUD’s Management and Occupancy Reviews (MORs) or audits, potential financial penalties or loss of subsidy funding, and risk of tenant disputes due to missing documentation. Identification of repeat finding - No Recommendation - To ensure compliance with federal requirements for tenant documentation, property management should conduct periodic internal file audits to identify and correct missing or incomplete documentation; provide staff training on proper file management and federal compliance requirements; establish a document tracking system to prevent missing files and ensure timely updates; and assign responsibility to designated staff for reviewing and maintaining complete tenant records. Views of responsible officials and planned corrective actions - The Organization agrees with the finding. Currently, management plans to transition 50% of its real estate portfolio to new property management in 2025. Management is working with the new property managers to ensure they have procedures in place to document and maintain tenant files in accordance with the Compliance Supplement and will have routine internal audits of tenant files to ensure compliance with federal regulations. For properties not transitioning to new property management, management believes the reduced volume of properties at one property manager will reduce staff turnover and more efficiently provide the proper training to existing staff to improve compliance with tenant files.

2022-001 ? Income Certifications Federal Program ? U.S. Department of Housing and Urban Development Assistance Listing Number 14.157 ? Supportive Housing for the Elderly (Section 202) Material Weakness & Noncompliance Category of Finding ? Eligibility Criteria - The Compliance Supplement requires Owners inform tenants, through written notices, about the tenants? responsibility to provide information necessary to complete annual recertifications. Owners must conduct a recertification of family income and composition at least annually. Owners must then recompute the tenants? rents and assistance payments, if applicable, based on the information gathered. Condition - Annual recertifications of family income and composition were not completed and/or were not completed timely. Context - Of the total population of 36 units, 4 were tested. Three units selected for testing at this property resulted in noncompliance. Based on our sample, inquiry of employees and a master list of late annual recertifications provided by management, we understand the finding to be prevalent at the Corporation throughout the year. Management has reported that as of December 31, 2022, there was one incomplete or late annual recertification for Robbins Way Senior Housing. Cause - Inexperienced site employees, changes in procedures for processing tenant files, and a global pandemic restricting personal interactions between site employees and tenants all contributed to multiple breakdowns in procedures, which resulted in numerous failures to timely complete the required annual recertifications. Effect - The Corporation was not in compliance with the Compliance Supplement. In addition, rental assistance may be delayed and changes in rental assistance will be effective from the tenants? annual recertification dates. Any changes in the tenant portion of rent may not take effect until the annual recertifications are complete and may result in a loss of rent. Identification of repeat finding - Yes, 2021-001 Recommendation - This is a repeat finding from 2021. Site managers should receive additional training and be reminded of the procedures in place to ensure that annual recertifications are completed timely. In addition, procedures should be put in place to ensure recertifications continue to be completed when site staff turns over at properties. Management should continue to monitor site staffing and ensure procedures are in-place as back up for site staffing shortages. Views of responsible officials and planned corrective actions - The Corporation agrees with the finding, and has continued to implement strategies to address these issues throughout 2021 and 2022, including: assembled and deployed a team of external consultants and temporary workers to assist site staff in completing tenant recertifications, hired a team of 6 additional roving property management/compliance teams to cover open property management positions and to support site staff in completing tenant recertifications, developed a new training program to onboard site staff, and developed a monitoring program to set expectations and hold employees accountable to those expectations.

2021-001 ? Income Certifications Federal Program ? U.S. Department of Housing and Urban Development Assistance Listing Number 14.157 ? Supportive Housing for the Elderly (Section 202) Material Weakness & Noncompliance Category of Finding ? Eligibility Criteria ? The Compliance Supplement requires Owners inform tenants, through written notices, about the tenants? responsibility to provide information necessary to complete annual recertifications. Owners must conduct a recertification of family income and composition at least annually. Owners must then recompute the tenants? rents and assistance payments, if applicable, based on the information gathered. Condition - Annual recertifications of family income and composition were not completed and/or were not completed timely. Context ? The Corporation was out of compliance during the year, which was noted by reviewing monthly HUD vouchers and management?s tracking schedule. Management has reported that as of December 31, 2021, there were 12 incomplete or late annual recertifications for Robbins Way Senior Housing. Cause - Inexperienced site employees, changes in procedures for processing tenant files, and a global pandemic restricting personal interactions between site employees and tenants all contributed to multiple breakdowns in procedures, which resulted in numerous failures to timely complete the required annual recertifications. Effect - The Corporation was not in compliance with the Compliance Supplement. In addition, rental assistance may be delayed and changes in rental assistance will be effective from the tenants? annual recertification dates. Any changes in the tenant portion of rent may not take effect until the annual recertifications are complete and may result in a loss of rent. Recommendation - Site managers should receive additional training and be reminded of the procedures in place to ensure that annual recertifications are completed timely. In addition, procedures should be put in place to ensure recertifications continue to be completed when site staff turns over at properties. Management should continue to monitor site staffing and ensure procedures are in-place as back up for site staffing shortages. 2021-001 ? Income Certifications (Continued) Views of responsible officials and planned corrective actions - The Corporation agrees with the finding. During 2021, management engaged a consultant to identify where processes and procedures can be improved. As a result of the consultant recommendations and managements review of processes and procedures in place, the following strategies have been or are currently being implemented: assembled and deployed a team of external consultants and temporary workers to assist site staff in completing tenant recertifications, hired a team of 6 additional roving property management/compliance teams to cover open property management positions and to support site staff in completing tenant recertifications, developed a new training program to onboard site staff, and regional property managers and developed a monitoring program to set expectations and hold employees accountable to those expectations.