St. Lucy's Senior Living, Inc.Non-Profit

Finding 2025-001 Federal Assistance #14.157 Supportive Housing for the Elderly (Section 202) Information on Universe and Population Size: Noncompliance was not discovered as a result of a sampling procedure. Sample Size Information: Noncompliance was not discovered as a result of a sampling procedure. Identification of Repeat Finding: This is not a repeat finding. Criteria: In accordance with Paragraph 5(a) of the Regulatory Agreement, the Mortgagor establish and maintain a reserve fund for replacements, and will deposit an amount equal to $396.67 per month. Statement of condition: The Organization did not make any of the required deposits into the replacement reserve during 2025. Total deposits for 2025 were supposed to be $4,760. Perspective: The amount of deposits required to the replacement reserve are material to the financial statements as well as the federal program. While the Organization did not have sufficient funds at the end of the year to make such deposits, the Organization did have sufficient funds at the beginning of the year to make the required deposits. The Organization has now used those funds to pay operating costs and does not have funds available to comply with the deposit requirement. Cause: Management was not appropriately monitoring its compliance with the deposit requirement for the replacement reserve. When management did notice, there were not sufficient funds to make the deposit. Effect: The Organization was out of compliance with the Regulatory Agreement. Auditor Non-Compliance Code: N – Reserve for Replacements Deposits Amount of Questioned Costs: $0 Views of Responsible Officials: Management concurs with the finding. We will deposit the delinquent amount when there is sufficient funds to do so. Context: In 2025, the project had 2 of its 5 units turnover due to deaths. The units had significant repairs that needed to be done. This caused expenses to increase when revenue was decreasing. And then, HUD did not fund the subsidy for November and December. Recommendation: Upon HUD’s funding of subsidy for November and December 2025, if there are sufficient funds to do so, the Organization should deposit the delinquent deposits to the replacement reserve. The Organization may also consider submitting a request for reimbursement from the replacement reserve for eligible turnover costs (including the cost of installation for the carpet). Also, management should follow its processes as designed regarding deposits and draws for both the replacement reserve and the residual receipts accounts.

2021-002 14.157 Supportive Housing for the Elderly (Section 202) Information on Universe and Population Size: Noncompliance was not discovered as a result of a sampling procedure. Sample Size Information: Noncompliance was not discovered as a result of a sampling procedure. Repeat finding: This is not a repeat finding. Criteria: Under Special Tests and Provisions, monthly deposits are to be made to the Replacement Reserve account. For the period under audit, the deposits to the replacement reserve should have totaled $4,760. Statement of condition: St. Lucy's Senior Living, Inc. did not make the required deposits to the replacement reserve. Cause: The Organization had turnover during the year at the accounting and the monitoring functions with little crossover. Consequently, there was no one who was aware of the requirement to make the deposit into the replacement reserve. Effect of potential effect: St. Lucy's Senior Living, Inc. was out of compliance with the Replacement Reserve deposit requirement. Auditor Non-Compliance Code: N ? Reserve for Replacements Deposits Amount of Questioned Costs: $0 Perspective/Context: With an almost complete change in both staff and the Board of Directors, the Organization has been focused on meeting the needs of the tenants first and foremost. The Board of Directors has made a significant effort to understand HUD requirements and to ensure continued compliance. Recommendation: The Board of Directors should deposit the required funds into the replacement reserve and ensure that funds are deposited as required in the future. Views of Responsible Officials: We agree with the finding. Please see our corrective action plan. Auditor?s evaluation of the views of responsible officials: I believe the Organization?s response is appropriate.

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