PRESERVATION OF AFFORDABLE HOUSING, INC.Non-Profit

Finding No. 2025-001 – Program Income Name of Federal Agency: U.S. Department of the Treasury, Community Development Financial Institutions Fund Federal Program Name and Assistance Listing Number: Capital Magnet Fund, No. 21.011 Federal Award Identification Number and Year: 181CM050459, 2018 Criteria In accordance with 3.4(d) of the FY2018 Capital Magnet Fund Assistance Agreement, with respect to project(s) financed/supported by Program Income Reinvestment, the entity must achieve Project Completion within 36 months of commitment deadline or by the Investment Period End Date, whichever is later. Condition The entity did not achieve project completion for three projects financed by Program Income Reinvestment. Cause Receipt of leveraged funding and tax credits were delayed by regulatory agencies. Effect or Potential Effect The entity is not in compliance with the fiscal year 2018 Capital Magnet Fund Assistance Agreement. Questioned Costs: Not applicable. Context Temple Landing II, Columbia Crossing, and Terri Manor, three of five projects tested, did not achieve project completion. CDFI Fund provided a one-year cure period to March 31, 2027. Repeat Finding: No Recommendation Management should complete construction on the projects and submit required documentation to the Community Development Financial Institutions Fund within the cure period. Views of Responsible Officials Temple Landing II was funded with PRI with a completion deadline of March 2024. The project applied several times for LIHTC from the Massachusetts EOHLC. With the project unfunded, Management notified CDFI of the delays in the project and the missed completion deadline in April 2025 and again in March 2026. The project has since been awarded 9% LIHTC and is scheduled to close in August 2026. Columbia Crossing was funded with PRI with a completion deadline of April 2025. The project applied several times for LIHTC from the Massachusetts EOHLC. Management notified CDFI of the delays in the project and the missed completion deadline in March 2026. The project was awarded 9% LIHTC and gap financing from MA EOHLC and closed in April 2026. Terri Manor was funded with PRI with a completion deadline of April 2025. The project applied several times for gap financing from the Ohio state HFA. Management notified CDFI of the delays in the project and the missed completion deadline in March 2026. The project won a funding award from HUD’s GRRP program and after delays in program funding is scheduled to close in December 2026. On April 20, 2026, CDFI Fund provided a one-year cure period to March 31, 2027 for all three projects. While it is expected that each project will have closings in 2026, construction will not be completed on Temple Landing II and Columbia Crossing until 2027 and Terri Manor until 2028.

Finding No. 2024-001 – Period of Performance Name of Federal Agency: U.S. Department of the Treasury, Community Development Financial Institutions Fund Federal Program Name and Assistance Listing Number: Capital Magnet Fund, No. 21.011 Federal Award Identification Number and Year: 181CM050459, 2018 Criteria In accordance with the fiscal year 2018 Capital Magnet Fund (“CMF”) Assistance Agreement, Section 3.2 (j), the entity shall achieve project completion with respect to projects financed/supported by its entire CMF Award by no later than March 27, 2024. Condition The entity did not achieve project completion for all projects financed by the entity’s CMF Award by the due date. Cause Construction was delayed due to COVID 19 and local permitting challenges. Effect or Potential Effect The entity is not in compliance with the fiscal year 2018 Capital Magnet Fund Assistance Agreement. Questioned Costs: Not applicable. Context One of four projects did not achieve project completion. The production targets of the fiscal year 2018 Capital Magnet Fund Assistance Agreement were met without the incomplete project. Repeat Finding: No Recommendation Management should complete construction on the project and submit required documentation to the Community Development Financial Institutions Fund. Views of Responsible Officials One of the four CMF funded projects, Barry Farm, is a two-phase project. The construction start was delayed due to local permitting challenges and COVID-related issues which resulted in the project not being completed by the original Project Completion date of March 27, 2024. Management informed CDFI Fund of the delays in the project and on May 16, 2024, CDFI Fund provided a one-year cure period to March 31, 2025. At that time, Management informed CDFI Fund that the second phase of the Barry Farm project would require a longer cure period due to a 30-month delivery schedule, driven by the incorporation of a large geothermal system, with delivery set for late 2026. CDFI Fund directed Management to report on the second phase’s progress with a new cure period request annually until project completion. During the cure period, Barry Farm’s first phase was completed, and is now leased up and operating. In March 2025, Management informed CDFI of the project status for phase two which is now 24% complete and remains on schedule for completion in November 2026. CDFI Fund provided a one-year cure period until March 31, 2026. Management has otherwise significantly exceeded the grant’s performance targets and will request cure period extensions until project completion.

Finding No. 2023-001 U.S. Department of the Treasury, Community Development Financial Institutions Fund Federal Assistance Listing Number #21.011 Capital Magnet Fund - Compliance Requirement: J – Program Income Criteria In accordance with 2 CFR, Part 200.305(9), interest earned on advance payments in excess of $500 per year must be remitted annually to the Department of Health and Human Services, Payment Management System. Condition During our testing, we noted that the Organization did not remit interest earned on advance payments. Cause Interest earned on advance payments was calculated, however the Organization did not have adequate procedures and controls in place to ensure the interest was remitted. Effect or Potential Effect Failure to remit interest earned on advance payments could result in misuse of funds. Questioned Costs: Not applicable. Context For two program income samples out of a total two tested, management did not remit a total of $148,180 related to 2023 interest earned on advance payments. Repeat Finding: No Recommendation Management should establish controls to ensure the annual remittance of interest earned on advance payments in excess of $500. Views of Responsible Officials In 2024, all required interest refunds were remitted. Additionally, management established a policy to remit annual calculated interest refunds by March 31st of the subsequent year.

Finding No. 2022-001 U.S. Department of the Treasury, Community Development Financial Institutions Fund Federal Assistance Listing Number #21.011 Capital Magnet Fund - Compliance Requirement: E - Eligibility Criteria 2016 Capital Magnet Fund Assistance Agreement Section 5.2(b) Rental Affordability Qualifications: Project-level targeted income requires at least 20% of all rental units in each project to be occupied by tenants at or below 50% of Area Median Income (?AMI?). Condition The internal controls over tracking the income limitation on one of the six properties tested was not consistently followed. Cause One of the six properties tested had tenants certified by a housing authority, so management followed alternate procedures on tracking income. Effect or Potential Effect Project-level targeted income of at least 20% units occupied by tenants at or below 50% of AMI may be below the requirement. Questioned Costs: Not applicable. Context In connection with the procedures applied to a sample of six projects, one project?s income verification process followed alternate procedures which could result in error. Repeat Finding: No Recommendation For the project which followed an alternate process, management should follow the same procedures utilizing Yardi that they follow on the other projects. Management should input the income restrictions into Yardi and should also input the annual tenant income data into Yardi for this project.

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