RENAISSANCE GARDENS, INC.

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: - One out of one new tenants tested did not have EIV in file and performed move in inspection late; - One out of nine existing tenants tested had incorrect income calculated for form 50059; - One out of nine existing tenants tested the EIV report was provided to the accountant via email which is not permitted by EIV guidelines. Cause Management's policies with respect to 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 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 N/A Identification as a Repeat Finding This is a repeat finding. 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 Z. Other. View of Responsible Officials FG Companies has a procedure in place that requires all tenant files to be reviewed by the compliance team that is in line with the community’s tenant selection plan that outlines the tenant eligibility requirements. All annual certifications are submitted and reviewed by compliance in accordance with the requirements of the HUD Handbook4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. FG Companies has also implemented a bi-weekly file audit system that will continue to be completed by the Regional Manager. This system is to ensure all files are current with certifications and all required state and local forms are completed and filed accordingly. Finding Resolution Status: Resolved

FG Companies has a procedure in place that requires all tenant files to be reviewed by the compliance team that is in line with the community’s tenant selection plan that outlines the tenant eligibility requirements. All annual certifications are submitted and reviewed by compliance in accordance with the requirements of the HUD Handbook4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. FG Companies has also implemented a bi-weekly file audit system that will continue to be completed by the Regional Manager. This system is to ensure all files are current with certifications and all required state and local forms are completed and filed accordingly.

2024-001

Criteria The regulatory agreement requires that the project make monthly deposits to its replacement reserve. Condition During the year ended June 30 2025, the project did not make the required monthly deposits to the replacement reserve in the amount of $6,414 The project is required to make monthly deposits to the reserve in the amount of $3,207. Cause The project does not generate sufficient cash flow to make the required monthly deposits. Effect or Potential Effect Failure to make monthly payments resulted in an underfunding the replacement reserve and a violation of the regulatory agreement. Questioned Costs $6,414 Identification as a Repeat Finding This is not a repeat finding. Recommendation Management should review the project budget to determine if nonessential costs can be cut to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code N. Reserve for replacements deposits Views of Responsible Officials Management has reviewed the current nonessential costs that have resulted in the community not being able to fund the replacement reserve in accordance with the regulatory agreement. We have suspended services that will be maintained by the site staff. These services includes the common area cleaning and unit turn overs. Finding Resolution Status: Unresolved

Management has reviewed the current nonessential costs that have resulted in the community not being able to fund the replacement reserve in accordance with the regulatory agreement. We have suspended services that will be maintained by the site staff. These services includes the common area cleaning and unit turn overs.

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: - 1 out of 1 lease files for new tenants did not follow EIV guidelines, no EIV report was generated for move-in certification. - 2 out of 6 lease files for existing tenants did not follow EIV guidelines, EIV report was not generated for recertification for one tenant and for the second tenant the report was generated outside of the allowed 120-day period. - 2 out of 6 lease files for existing tenants did not contain necessary documentation, both files were missing gross rent change forms and latest executed versions of HUD-50059 form, one file was also missing support for medical expenses presented on corrected HUD-50059 form. - 1 out of 6 lease files for existing tenants did not contain necessary documentation to support medical deductions. - 1 out of 1 lease files for former tenants had security deposit refund that exceeded 30-day post move-out window. Cause Management's policies with respect to the determination of 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 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. 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 View of Responsible Officials Management agrees with the finding. Managements Plan of Action for Non-Compliance of the HUD Guidelines includes the immediate steps below:  Provide additional training and resources to ensure that the staff has a clear understanding of HUD requirements that will include the importance of adhering to procedures and guidelines with a specific focus on the EIV requirements and reporting, along with the timely processing of annual recertifications.  Implement increased monitoring and oversight mechanisms to detect and correct compliance issues.  Establish clear accountability measures for not following procedures through appropriate corrective actions.  Effectively communicate the importance of following procedures to all staff, emphasizing the impact on organizational efficiency and compliance.  Encourage a culture of continuous improvement where procedures are regularly reviewed, communicated with the staff and provide regular training of changing circumstances or best practices. Finding Resolution Status: Resolved

Management agrees with the finding. Managements Plan of Action for Non- Compliance of the HUD Guidelines includes the immediate steps below: 1. Move in EIV’s – All move in files are sent to our in house compliance department and Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all move files and the EIV specialist also sends out the 90 day reminders for all move in. 2. Existing Tenant EIV – It is the policy that all existing tenant EIV & 120-day reports are run per the 4350 guidelines. The Community Manager for Renaissance Gardens has been provided the HUD Trainings and have noted on her daily task reminder from One Site to pull all reports as required. The RM is required during monthly visits to spot check at least 5 existing tenants. 3. Gross Rent Change & Medical Reporting – The policy states that all Gross Rent Changes are to be completed as approved by the new rent schedule – The Community Manager is required to scheduled appointments with all residents to sign the effective gross rent change and file in tenants files, it is also required that residents 50059s are signed and in the file, the Community Manager has taken the latest HUD training with our in house HUD Compliance Manager- The Regional Manager will also spot check files to be certain that all Gross Rent Changes are in it’s 6 part file folders. Medical reporting records were discussed in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again, the RM will continue to spot check files during the monthly required inspections. All HUD Communities were required to participate in the HUD Training as a reminder tool. 4. Security Deposit – Franklin Companies has a policy that all security deposit refunds must be submitted within the 3 days move out period. This situation was due to the changeover in Management. In closing it is the Franklin Companies policy to always follow the HUD guidelines of the 4350. We will continue to train, and connect our team members with the in house HUD Compliance Specialist for support.

1. Management is responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 2. Management is responsible for timely submission of audited financial statements to Federal Audit Clearinghouse ("FAC"). Condition 1. The accounting records required numerous material adjustments to be proposed and recorded in order for the financial statements to be fairly presented in accordance with generally accepted accounting principles in the United States of America. 2. Single Audit reports are required to be submitted to the FAC pursuant to the audit requirement of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30, 2023 financial statements was not completed within specified time frame. Cause Management did not have sufficient controls over financial reporting. Effect or Potential Effect Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial statements such that they are not in accordance with accounting principles generally accepted in the United States of America. Condition 2 results in auditee being designated as not a low-risk auditee, which may have an effect on future federal grants and program eligibility. Recommendation 1. Management should undertake a review of internal controls over financial reporting and ensure that financial data is properly recorded in the books and records of the Project to prevent misstatements from occurring in the future. 2. Management should implement procedures to ensure that required filing is completed timely. Auditor Noncompliance Code S. Internal control deficiencies Views of Responsible Officials 1. Management agrees with the finding and recommendation and has implemented reviews of the financial statements by senior management prior to closing books to ensure accuracy of information. 2. Management agrees with the finding and recommendation and will ensure required filing is completed timely. Finding Resolution Status: Resolved

1. Management agrees with the finding and recommendation and has implemented reviews of the financial statements by senior management prior to closing books to ensure accuracy of information. 2. Management agrees with the finding and recommendation and will ensure required filing is completed timely.

Criteria During the year ended June 30, 2024, the Project paid management fees of $13,346 in excess of the amount approved by HUD. Condition Management fee payments are limited to amounts determined in accordance with the terms of the HUD approved management agreement. Cause There were 2 different management agreements and management did not follow the HUD approved management agreement when paying management fees from operations. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs The payments of $13,346 were unauthorized loans and therefore considered to be questioned costs. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation The management company should reimburse the Project for overpaid management fee in the amount of $13,346 and implement procedures to ensure that the management fee paid does not exceed the amount determined in accordance with the HUD approved management agreement. Auditor Noncompliance Code J. Unauthorized management fees Views of Responsible Officials Management agrees with the finding and is working with ownership on reimbursements to the property. Management will collect in accordance with HUD going forward. Finding Resolution Status: Unresolved

Management agrees with the finding and is working with ownership on reimbursements to the property. Management will collect in accordance with HUD going forward.

Finding No. 2022-001; Section 202 Supportive Housing for the Elderly, Assistance Number 14.157 Criteria Residual receipts reserve deposits should be made within 90 days of year end. Condition During the year ended June 30, 2021, management did not make the required residual receipts reserve deposit in the amount of $32,447 within 90 days of year end, as required by HUD. The residual receipts amount was deposited on March 30, 2022. Cause Controls are not in place to ensure that required residual receipts reserve deposits are made timely. Effect or Potential Effect The Company is not in compliance with the requirements of the regulatory agreement. Questioned Costs $32,447. Identification as a Repeat Finding This is not a repeat finding. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor Noncompliance Code: B - Failure to make required residual receipts deposits. Finding Resolution Status: Resolved. Views of Responsible Officials The residual receipts deposit was not made timely due to a turnover in staff. Management has trained all accounting staff on this process and the controller has implemented tracking procedures to ensure timely deposits.

Finding 2022-001 a. Comments on the Finding and Each Recommendation Management agrees with the finding. b. Action(s) Taken or Planned on the Finding The Residual Receipts deposit was not made timely due to a turnover in staff. Management has trained all accounting staff on this process and the Controller has implemented tracking procedures to insure timely deposits.

A. Summary of Auditor's Results 1. The auditor's report expresses an unmodified opinion on whether the financial statements of Renaissance Gardens Inc. were prepared in accordance with generally accepted accounting principles. 2. No significant deficiencies related to the audit of the financial statements were reported in the Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. No material weaknesses were reported. 3. No instances of noncompliance material to the financial statements of Renaissance Gardens Inc., which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. 4. A significant deficiency in internal control over the major federal awards program was disclosed during the audit and reported in the Independent Auditor's Report on Compliance for the Major Program and on Internal Control over Compliance Required by the Uniform Guidance. No material weaknesses were reported. 5. The auditor's report on compliance for the major federal award program for Renaissance Gardens Inc. expresses a qualified opinion on the major federal program. 6. There is one audit finding required to be reported in accordance with 2 CFR Section 200.516(a) in the Schedule. 7. The program tested as a major program was: U.S. Department of Housing and Urban Development Supportive Housing for the Elderly CFDA No.14.157 8. The threshold for distinguishing between Type A and B programs was $750,000. 9. Renaissance Gardens Inc. was not determined to be a low-risk auditee. B. Findings - Financial Statements Audit None C. Findings and Questioned Costs - Major Federal Award Program Audit Department of Housing and Urban Development Finding No. 2021-001; Section 202 Supportive Housing for the Elderly, CFDA 14.157 Statement of Condition In connection with our lease file review we noted the following deficiencies: Two out of seven tenants tested did not have annual recertification completed by the required due date. 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. Questioned Costs NA 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. 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. Recommendation Management should establish procedures and monitor compliance with those procedures to insure 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 administration Finding Resolution Status: Resolved. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and the auditor's recommendation have been implemented.

PA-HUD-201 CORRECTIVE ACTION PLAN Project Legal Name: Renaissance Gardens, Inc. HUD Project No.: 052-EE065 Audit Firm: Cohn Reznick Period covered by the audit: July 1, 2020-June 30, 2021 Corrective Action Plan prepared by: Name: Sheri McGowan Position: CFO Telephone Number: 443-259-4932 The following is a recommended format to be followed by the auditee for preparing a corrective action plan: A. Current Findings on the Schedule of Findings, Questioned Costs and Recommendations 1. Finding 2021-1 a. Comments on the Finding and Each Recommendation We agree with the finding and recommendations b. Action(s) Taken or Planned on the Finding Renaissance Gardens had a turnover in office personnel and the late certifications were addressed by the new staff. The new office staff have been trained in the correct policy and procedures and are being monitored by our Compliance Department to ensure compliance with HUD regulations. B. Status of Corrective Actions on Findings Reported in the Schedule of the Status of Prior Year Findings, Questioned Costs and Recommendations There are no prior year findings.