ANCHOR COMMUNITY, INC. DBA REDI ANCHOR APTS 101-HD029

Assistance Listing (Federal award identification number and year): Supportive Housing for Persons with Disabilities, Assistance Listing No. 14.181 (Project identification number 101-HD029, 2004) Auditor non-compliance code: N - Reserve for Replacements Deposits Finding resolution status: Cleared Universe population size: 12 months of reserve for replacements deposits. Sample size information: 12 months of reserve for replacements deposits. Statistically valid sample: N/A Name of Federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $5,634 Statement of condition 2025-001: The Corporation did not make $5,634 of the total required reserve for replacements deposits during the year ended March 31, 2025. Criteria: Section 26(c) of the PRAC requires monthly deposits into a separate reserve for replacements account. Effect: The Corporation is not in compliance with the terms of the PRAC. At March 31, 2025, the reserve for replacements account is underfunded by $5,634. Cause: Management did not make the required monthly reserve for replacements deposits. Recommendation: Management should make all required deposits to the reserve for replacements fund. Management should transfer $5,634 from the operating account to the reserve for replacements fund. Management's response: Agreed. Management concurs with the finding and the auditor's recommendation. The Corporation made additional deposits totaling $5,634 to the reserve for replacements fund.

Assistance Listing (Federal award identification number and year): Supportive Housing for Persons with Disabilities, Assistance Listing No. 14.181 (Project identification number 101-HD029, 2004) Auditor non-compliance code: N - Reserve for Replacements Deposits Finding resolution status: Cleared Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Statistically valid sample: N/A Name of Federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: N/A Statement of condition 2025-001: At March 31, 2025, the Corporation's reserve for replacements fund was not invested in an interest bearing account. Criteria: The Regulatory Agreement requires that the reserve for replacements fund be held in a separate, interest-bearing account. Effect: The Corporation is not in compliance with the terms of the Regulatory Agreement. Cause: The Corporation did not invest the reserve for replacements fund in an interest-bearing account. Recommendation: Management should transfer the reserve for replacements fund into an interestbearing account. Management Response: Agreed. Management concurs with the finding and auditor's recommendation.

Finding reference number: 2024-001 Assistance Listing (Federal award identification number and year): Supportive Housing for Persons with Disabilities, Assistance Listing No. 14.181 (Project identification number 101-HD029, 2004) Auditor non-compliance code: N – Reserve for Replacements Deposits Finding resolution status: Cleared Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Statistically valid sample: N/A Name of Federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $15,188 Statement of condition 2024-001: The Corporation did not make $7,284 of the total required reserve for replacement deposits during the year ended March 31, 2024. Additionally, the Corporation did not make the required reserve for replacements deposits of $6,943, $579, and $382 to correct the underfunded amount for the years ended March 31, 2023, 2022, and 2021, respectively. Criteria: Section 26(c) of the PRAC requires monthly deposits into a separate reserve for replacements account. Effect: The Corporation is not in compliance with the terms of the PRAC. At March 31, 2024, the reserve for replacements account is underfunded by $15,188. Cause: Management did not make the required monthly reserve for replacements deposits. Recommendation: Management should make all required deposits to the reserve for replacements fund. Management should transfer $15,188 from the operating account to the reserve for replacements fund. Management's response: Agreed. Management concurs with the finding and the auditor's recommendation. The Corporation made additional deposits totaling $15,188 to the reserve for replacements fund on June 14, 2024 and July 9, 2024.

Finding reference number: 2024-002 Assistance Listing (Federal award identification number and year): Supportive Housing for Persons with Disabilities, Assistance Listing No. 14.181 (Project identification number 101-HD029, 2004) Auditor non-compliance code: P – Other Finding resolution status: Cleared Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Statistically valid sample: N/A Name of Federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: N/A Statement of condition 2024-002: The Corporation did not furnish HUD a complete annual financial report within ninety (90) days following the end of the fiscal year ending March 31, 2023. Additionally, Form SF-SAC Single Audit Data Collection Form for the year ended March 31, 2024 was not submitted to the federal audit clearinghouse in the required timeframe. Criteria: Pursuant to the Regulatory Agreement, within ninety (90) days, or such period established in writing by HUD, following the end of each fiscal year, the Corporation shall engage an independent, licensed Certified Public Accountant to audit the Corporation's annual financial report and to produce and furnish HUD an audit report in accordance with the requirements established by HUD. Additionally, pursuant to Uniform Guidance, the Corporation is required to submit Form SF-SAC Single Audit Data Collection Form within the earlier of 30 days after the receipt of the auditor's report or nine months after the end of the audit period. Effect: The Corporation was not in compliance with the Regulatory Agreement and Uniform Guidance. Cause: The Corporation did not timely file a complete annual financial report with HUD and did not timely submit the Form SF-SAC Single Audit Data Collection Form. Recommendation: The Corporation should submit the annual financial statements to HUD and Form SF-SAC Single Audit Data Collection Form for the years ended March 31, 2024 as soon as practical. Management's response: Management concurs with the finding and recommendation. The audited financial statements have been submitted to HUD and the federal clearinghouse. No further action is required.

Finding reference number: 2024-003 Assistance Listing (Federal award identification number and year): Supportive Housing for Persons with Disabilities, Assistance Listing No. 14.181 (Project identification number 101-HD029, 2004) Auditor non-compliance code: A – Activities Allowed or Unallowed Finding resolution status: Cleared Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Statistically valid sample: N/A Name of Federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $10,000 Statement of condition 2024-002: For the year ended March 31, 2024, the Corporation repaid $10,000 to a related entity without HUD approval. Criteria: The HAP Contracts do not permit the Corporation from making any distributions or payments to related entities from operating cash without the written approval of HUD. Effect: The Corporation is not in compliance with the terms of the Regulatory Agreement and Uniform Guidance and the Corporation's cash position at March 31, 2024 has been reduced by $10,000. Cause: The Corporation did not obtain HUD approval prior to making payments to the related entity. Recommendation: The related entity should repay $10,000 to the Corporation. The Agent should obtain written approval from HUD prior to making any future distributions or payments to related entities. Management's response: Agreed. The Agent concurs with the finding and agrees with the auditor's recommendation. The related entity repaid $10,000 to the Corporation on January 2, 2025.

Finding reference number: #2023-001 Assistance Listing title and number (federal award identification number and year): Supportive Housing for Persons with Disabilities, Assistance Listing No. 14.181 (101-HD029 and 2004) Auditor non-compliance code: N – Reserve for Replacements Deposits Finding resolution status: In process Universe population size: In universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Statistically valid sample: N/A Name of Federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $7,904 Statement of condition #2023-001: The Corporation did not make $6,943 of the total required reserve for replacement deposits during the year ended March 31, 2023. Additionally, the Corporation did not make the required reserve for replacements deposits of $579 and $382 to correct the underfunded amount for the years ended March 31, 2022 and 2021, respectively. Criteria: Section 26(c) of the PRAC requires monthly deposits into a separate reserve for replacements account. Effect or potential effect: The Corporation is not in compliance with the terms of the PRAC. At March 31, 2023, the reserve for replacements account is underfunded by $7,904. Cause: Management did not make the required monthly reserve for replacements deposits. Recommendation: Management should make all required deposits to the reserve for replacements fund. Management should transfer $7,904 from the operating account to the reserve for replacements fund. Completion date: March 31, 2024 Management response: Agreed. Management concurs with the finding and the auditor's recommendation. The Corporation will make an additional deposit of $7,904 to the reserve for replacements fund.

Finding reference number: #2023-002 Assistance Listing title and number (federal award identification number and year): Supportive Housing for Persons with Disabilities, Assistance Listing No. 14.181 (101-HD029 and 2004) Auditor non-compliance code: Z – Other Finding resolution status: In process Universe population size: In universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Statistically valid sample: N/A Name of Federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: N/A Statement of condition #2023-002: The Corporation did not furnish HUD a complete annual financial report within ninety (90) days following the end of the fiscal year ending March 31, 2023. Additionally, Form SF-SAC Single Audit Data Collection Form for the years ended March 31, 2023 and 2022 was not submitted to the federal audit clearinghouse in the required timeframe. Criteria: Pursuant to the Regulatory Agreement, within ninety (90) days, or such period established in writing by HUD, following the end of each fiscal year, the Corporation shall engage an independent, licensed Certified Public Accountant to audit the Corporation's annual financial report and to produce and furnish HUD an audit report in accordance with the requirements established by HUD. Additionally, pursuant to Uniform Guidance, the Corporation is required to submit Form SF-SAC Single Audit Data Collection Form within the earlier of 30 days after the receipt of the auditor's report or nine months after the end of the audit period. Effect or potential effect: The Corporation was not in compliance with the Regulatory Agreement and Uniform Guidance. Cause: The Corporation was late to provide the CPA firm (Dauby, O'Connor, & Zaleski, LLC) with open items required to complete the audited financial statements. Recommendation: The Corporation should submit the annual financial statements to HUD and Form SF-SAC Single Audit Data Collection Form for the years ended March 31, 2023 and 2022 as soon as practical. Completion date: April 30, 2024 Management response: Management concurs with the finding and recommendation. The audited financial statements have been submitted to the federal clearinghouse. No further action is required.