INDEPENDENCE COMMUNITIES INC

Findings reference number: 2025-001 -Title and AL Number of Federal Program: Supportive Housing for Persons with Disabilities, AL 14.181 -Type of finding: Compliance -Resolution Status: Completed. -Population size: N/A - Sample size: N/A - Repeat finding: Yes - Criteria: Monthly deposits to the replacement reserve must be made in a timely manner. - Condition: The monthly deposit for repayment of loan from the replacement reserve was not done for December 2025. - Cause: Management inadvertently transferred the amount to the replacement reserve account of another project managed by the management company. - Effect: The repayment of the loan is not on schedule. - Noncompliance code: N. - Questioned costs: $769. --Reporting views of officials: Auditee agrees with the finding. -Contract Number: 114HD024 - Context: This was noted while performing audit procedures on the replacement reserve. - Recommendation: Management should ensure that all deposits required to be made to the replacement reserve be made on a timely basis to the correct entity. - Auditee's comments: Auditee agrees with the finding, but asserts that it was due to an inadvertent error. The correcting deposit has been made on February 11, 2026. - Auditors' summary of auditee's comments: They are in agreement. - Completion date: February 11, 2026 - Response: Management plans to make all repayments of the loan from the replacement reserve in a timely manner.

Findings reference number: 2025-002 - Title and AL Number of Federal Program: Supportive Housing for Persons with Disabilities, AL 14.181 - Type of finding: Compliance - Resolution Status: In process -population size: N/A - Sample size: N/A - Repeat finding: No - Criteria: Per the HUD management fee schedule for owners and agents, the basic rate for management fees is $50 per unit per month (pupm). The Project qualifies for add-on fees of $10 pupm for having 1 to 15 units in property and $3 pupm for being a Sec 811 property with the total cap of management fees at $63 pupm. - Condition: Management fees for the year ended December 31, 2025 were paid in excess of the monthly pupm cap. - Cause: Management oversight. - Effect: Management miscalculated the management fees for the year ended December 31, 2025, and hence, fees were paid in excess of the cap by $2,629. A receivable was Recorded for the overpaid management fees. - Noncompliance code: J. Unauthorized management fees - Questioned costs: $2,629. - Reporting views of officials: Auditee agrees with the finding, - Context: This was noted while performing audit procedures on management fees during the audit. -Recommendation: Management should ensure that management fees are paid in accordance with HUD limits. - Auditee's comments: Auditee agrees with the finding and will repay the overcharged fees. - Auditors' summary of auditee's comments: They are in agreement. - Completion date: 12/31/26. - Response: Management plans to repay the overcharged fees as soon as possible.

Findings reference number: 2025-003 - Title and AL Number of Federal Program: Supportive Housing for Persons with Disabilities, AL 14.181 - Type of finding: Compliance - Resolution Status: In process - Population size: N/A - Sample size: N/A - Repeat finding: No - Criteria: Under the Section 811 Project Rental Assistance program, the Project is responsible for establishing, maintaining, and protecting detailed, up-to-date tenant files in compliance with HUD Handbook 4350.3. - Condition: During the year ended December 31, 2025 four tenant move-out files of former tenants could not be located by the staff and management at the Project site. - Cause: Change in community director at site. - Effect: The Project is not in compliance with the compliance requirements of the program. - Noncompliance code: Z. Other - Questioned costs: None. - Reporting views of officials: Auditee agrees with the finding, - Context: This was noted while performing audit procedures on tenant eligibility during the audit. - Recommendation: Management should ensure that all tenant files are maintained in a safe and secure manner in accordance with HUD rules. - Auditee's comments: Auditee agrees with the finding, but asserts that this was a one-time incident where the previous community director, at the time of leaving, may have inadvertently destroyed or misplaced the files for tenants who had moved out. - Auditors' summary of auditee's comments: They are in agreement. Completion date: 12/31/26. - Response: Management will make sure to maintain all tenant files in a safe and secure manner.

Findings reference number: 2024-001 - Title and AL Number of Federal Program: Supportive Housing for Persons with Disabilities, AL 14.181 - Type of finding: Compliance - Resolution Status: Completed. - Population size: N/A - Sample size: N/A - Repeat finding: Yes. - Criteria: Monthly deposits to the replacement reserve must be made in a timely manner. - Condition: The required deposits to the replacement reserve for December 2024 was not done. - Cause: Management oversight. - Effect: There was a shortfall in the monthly deposits to the replacement reserve as required by the Regulatory Agreement. - Noncompliance code: N. - Questioned costs: $900. - Reporting views of officials: Auditee agrees with the finding. - Contract Number: 114HD024 - Context: This was noted while performing audit procedures on the replacement reserve. - Recommendation: Management should ensure that all deposits required to be made to the replacement reserve be made on a timely basis. - Auditee's comments: Auditee agrees with the finding and made the required deposit on February 5, 2025. - Auditors' summary of auditee's comments: They are in agreement. - Completion date: February 5, 2025 - Response: Management plans to make all deposits in a timely manner.