MID-CITY TOWERS II, INCNon-Profit

S3800-010: Finding Reference Number 2025-001 (Material Weakness) S3800-011: Program Information Federal Program: Supportive Housing for the Elderly (Sec 202) Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.157 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Findings: A/B - Activities Allowed or Unallowed and Allowable Costs/Cost Principles, C – Cash Management, E – Eligibility, L – Reporting, and N – Special Tests and Provisions S3800-015: Type of Finding Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size Unknown S3800-018: Sample Size Information N/A S3800-019: Identification of Repeat Finding and Finding Reference Number N/A S3800-020: Criteria Per CFR 200.510(b), the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with § 200.502. Per CFR 200.514(d)(1)… the auditor must determine whether the auditee has complied with Federal statutes, regulations, and the terms and conditions of Federal awards that may have a direct and material effect on each of its major programs. Also, the regulatory agreement requires that the Organization’s books and records are maintained in accordance with generally accepted accounting principles (GAAP). S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended June 30, 2025 federal award program, we obtained evidence that according to the Regulatory Agreement and information provided by HUD, the major federal award program is ALN 14.155 Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Rental Housing - (Section 207 - 223f) and not ALN 14.157 Supportive Housing for the Elderly (Sec 202). S3800-032: Cause Management is not accurately preparing the Schedule of Expenditures of Federal Awards (SEFA) or reviewing supporting documentation for accuracy. S3800-033: Effect or Potential Effect Management is misclassifying federal award programs on the SEFA, which causes the Auditor to select an incorrect major federal program and perform inaccurate compliance procedures. S3800-035: Auditor Non-Compliance Code Z - Other S3800-040: Questioned Costs Unknown S3800-045: Reporting Views of Responsible Officials No reason stated S3800-050: Context The Organization is required to classify federal award programs accurately and in accordance with the regulatory agreement. S3800-080: Recommendation We recommend that Management use the correct federal award program / ALN in accordance with the regulatory agreement. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Can’t determine, as no reason stated S3800-130: Response Indicator Unresolved S3800-140: Completion Date or Proposed Completion Date June 30, 2026 S3800-150: Response See Corrective Action Plan

S3800-010: Finding Reference Number 2025-002 (Significant Deficiency) S3800-011: Program Information Federal Program: Supportive Housing for the Elderly (Section 202) Federal Agency: U.S. Department of Housing and Urban Development (HUD) Assistance Listing #: 14.157 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Finding: N - Special Tests and Provisions S3800-015: Type of Finding Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size N/A S3800-018: Sample Size Information N/A S3800-019: Identification of Repeat Finding and Finding Reference Number N/A S3800-020: Criteria In accordance with the regulatory agreement subsection 5(a), the Organization is required to deposit $3,010 for July 2024 and $3,208 from August 2024 to June 2025 to the reserve for replacement account. S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended June 30, 2025 federal award program, we noted the Organization failed to make the required monthly deposits into the reserve for replacement account for six out of the twelve months. S3800-032: Cause The Organization failed to make the required monthly deposits into the reserve for replacement account, as required. S3800-033: Effect or Potential Effect The Organization was not in compliance with the regulatory agreement to make required monthly deposits into the reserve for replacement account. S3800-035: Auditor Non-Compliance Code: N - Reserve for replacement deposits S3800-040: Questioned Costs $1,188 S3800-045: Reporting Views of Responsible Officials Management agrees with the finding. S3800-050: Context The Organization deposited $37,110 into the reserve for replacement account during the year ended June 30, 2025. The Organization was required to deposit $38,298 for the year. The $1,188 questioned costs only account for the current fiscal year underfunding. S3800-080: Recommendation We recommend that management deposit the required monthly reserve for replacement amount as soon as possible and should review funding of the reserve for replacement account around the 20ᵗʰ of each month to avoid any shortfalls in the deposits. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Auditee agreed with our recommendation. S3800-130: Response Indicator Unresolved S3800-140: Completion Date or Proposed Completion Date June 30, 2026 S3800-150: Response See Corrective Action Plan

S3800-010: Finding Reference Number 2025-003 (Material Weakness) S3800-011: Program Information Federal Program: Supportive Housing for the Elderly (Sec 202) Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.157 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Findings: A/B - Activities Allowed or Unallowed and Allowable Costs/Cost Principles, C – Cash Management, E – Eligibility, L – Reporting, and N – Special Tests and Provisions S3800-015: Type of Finding Financial Statement and Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size Unknown S3800-018: Sample Size Information N/A S3800-019: Identification of Repeat Finding and Finding Reference Number N/A S3800-020: Criteria The regulatory agreement requires that the Organization’s books and records are maintained in accordance with generally accepted accounting principles (GAAP). S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended June 30, 2025 financial statements and federal award program, we noted the below concerns regarding completeness of the financial records and adherence to compliance requirements: • Supporting documentation to evaluate Activities Allowed or Unallowed and Allowable Costs/Cost Principles was not available • Supporting documentation to evaluate Cash Management was not available • Supporting documentation to evaluate Eligibility was not available • Supporting documentation to evaluate Reporting was not available • Supporting documentation to evaluate Special Tests and Provisions for the following criteria were not available: o Contract rent adjustments, tenant utility allowances, vacancy / move-outs (security deposits), waitlist applicants and rejected / denied applicants, and work-orders / maintenance requests S3800-032: Cause Complete records were not provided by the predecessor management company. S3800-033: Effect or Potential Effect We have not obtained sufficient audit evidence to express an opinion on the accompanying financial statements and federal award program due to the inability to perform substantive auditing procedures. S3800-035: Auditor Non-Compliance Code Z - Other S3800-040: Questioned Costs Unknown S3800-045: Reporting Views of Responsible Officials Management reported that the failure(s) involved records related to the period managed by the predecessor management company. S3800-050: Context The Organization is required to maintain books and records in accordance with GAAP. The Organization terminated its agreement with the predecessor management agent and the current management agent took over this property on January 1, 2025. S3800-080: Recommendation We note these non-compliant findings involve records related to the period managed by the predecessor management agent; therefore, we do not have a recommendation regarding the period managed by the predecessor management agent. However, the current management agent should request and keep all required documentation from HUD and establish processes and procedures to ensure compliance with the Regulatory Agreement. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Agree S3800-130: Response Indicator In-process S3800-140: Completion Date or Proposed Completion Date June 30, 2026 S3800-150: Response See Corrective Action Plan