Sacramento City Council
February 24, 2026

CITY COUNCIL
Kevin McCarty, Mayor
Lisa Kaplan, District 1
Roger Dickinson, District 2
Karina Talamantes, Vice Mayor, District 3
Phil Pluckebaum, District 4
Caity Maple, District 5
Eric Guerra, Mayor Pro Tem, District 6
Rick Jennings, II, District 7
Mai Vang, District 8

CHARTER OFFICERS
Mindy Cuppy, City Clerk
Gustavo Limón Martinez, City Attorney
Farishta Ahrary, City Auditor
Maraskeshia Smith, City Manager
John Colville, City Treasurer

City Council
Financing Authority
Housing Authority
Public Financing Authority
Redevelopment Agency Successor Agency
City Hall Complex
915 I Street, Sacramento, CA 95814
Published by the Office of the City Clerk
(916) 808-7200

SUPPLEMENTAL MATERIAL

Description: Attached is supplemental material received after publishing the agenda, adding attachment 6-SHRA Federal Single Audit Report to Discussion Item 18.

For the Meeting of: Tuesday, February 24, 2026, at 2:00 p.m.

Agenda Item: Discussion Item 18

18. Sacramento Housing and Redevelopment Agency Annual Comprehensive Financial Report for the Year Ended December 31, 2024, and Single Audit

File ID: 2026-00569

Location: Citywide

Recommendation: Receive and file.

Contact: Kay Giunta, Assistant Director of Finance, (916) 449-6325, [email protected], Sacramento Housing and Redevelopment Agency

City of SacramentoCity Council - 2PM Report915 I Street Sacramento, CA 95814www.cityofsacramento.orgFile ID:2026-00569 2/24/2026Sacramento Housing and Redevelopment Agency Annual Comprehensive Financial Report forthe Year Ended December 31, 2024, and Single AuditFile ID: 2026-00569Location:CitywideRecommendation:Receive and file.Contact:Kay Giunta, Assistant Director of Finance, (916) 449-6325, [email protected], SacramentoHousing and Redevelopment AgencyPresenter: Kay Giunta, Assistant Director of Finance, (916) 449-6325, [email protected],Sacramento Housing and Redevelopment AgencyAttachments:1-Description/Analysis2-ACFR-SHRA3-SHARP AFS4-Norwood AFS5-Presentation6-SHRA Federal Single Audit ReportDescription/AnalysisIssue Detail:The audit firm of CliftonLarsonAllen has audited the basic financial statements of theSacramento Housing and Redevelopment Agency (SHRA) and issued its unmodified (clean) opinionthat these documents for the year ending December 31, 2024, are fairly presented in accordancewith Generally Accepted Accounting Principles (GAAP) in the United States of America.The Annual Comprehensive Audit Report (ACFR) is organized into four major sections. First is theIntroductory Section, which includes a transmittal letter summarizing economic conditions, budgetinitiatives, and other related documents. Next is theFinancial Section, which is comprised of theindependent auditor’s report and the Management Discussion and Analysis (MD&A), which providesa narrative overview of the financial statements and compares changes from year to year. The basicfinancial statements follow the MD&A and report on the financial position and results of operations ofSHRA as a whole and the financial performance of SHRA’s governmental funds, proprietary funds,and component units. Footnotes to the financial statements are included to provide additionalinformation. TheRequired Supplementary Information is unaudited and includes data on thePage 1 of 3 File ID:2026-00569 2/24/2026Agency’s changes in Other Post-Employment Benefits (OPEB) and pension obligations. Finally, theSupplementary Information Section provides detailed supporting data that goes beyond the basicfinancial statements and required supplementary information (RSI), which includes financialschedules required by the U.S. Department of Housing and Urban Development, and statistical datasummarizing selected financial, demographic, and operational trends. The audit includes the following entities:Sacramento Housing and Redevelopment AgencyHousing Authority of the City of SacramentoHousing Authority of the County of SacramentoNorwood Avenue Housing Corporation (NAHC)Sacramento Housing Authority Asset Repositioning Program, Inc. (SHARP)Sacramento Housing Development CorporationShasta Hotel CorporationPolicy Considerations:There are no policy implications as a result of this informational report.Economic Impacts:None.Environmental Considerations:California Environmental Quality Act (CEQA):Pursuant to Cal. Code Regs., tit. 14., section 15378subds. (b)(2) and (5), the recommended action is not considered a “project,” as it constitutes anadministrative activity that will not result in direct or indirect physical changes to the environment.Alternatively, if a determination is made that the action does constitute a project subject to CEQA, therecommended action is exempt pursuant to Cal. Code Regs., tit. 14, section 15061(b)(3), as it doesnot have the potential to have a significant effect on the environment.National Environmental Policy Act (NEPA): Pursuant to 24 C.F.R. section 58.34(a)(1) and (3)(2025), the recommended action is considered an administrative and management activity exemptfrom NEPA review. With respect to the laws and authorities specified in section 58.6, therecommended action does not involve activity that would require compliance with:24 C.F.R. section 51.300-305;16 U.S.C. section 3501 (Coastal Barrier Resources Act); or42 U.S.C. sections 4001-4128, 5154(a) (Flood Disaster Protection Act and NationalFlood Insurance Reform Act).Sustainability:Not applicable.Commission/Committee Action: The Sacramento Housing and Redevelopment Commissionreceived this report at its meeting on December 3, 2025.Rationale for Recommendation:Receive and file only as an informational report.Page 2 of 3 File ID:2026-00569 2/24/2026Financial Considerations:Not applicable.Local Business Enterprise (LBE)/M/WBE & Section 3 Considerations:The items discussed inthis report have no M/WBE or Section 3 impact; therefore, M/WBE and Section 3 considerations donot apply.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY FEDERAL SINGLE AUDIT REPORT YEAR ENDED DECEMBER 31, 2024 SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY TABLE OF CONTENTS YEAR ENDED DECEMBER 31, 2024 INDEPENDENT AUDITORS’ 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 1 INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM, REPORT ON INTERNAL CONTROL OVER COMPLIANCE, AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE 3 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 8 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 10 CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. SeeCLAglobal.com/disclaimer.

CliftonLarsonAllen LLPCLAconnect.com
(1)
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH Honorable Members of the Sacramento City Council, Housing Authority of the City of Sacramento, County Board of Supervisors, Housing Authority of the County of Sacramento, and Sacramento Housing and Redevelopment Commission Sacramento Housing and Redevelopment Agency Sacramento, California We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities and the aggregate discretely presented component units of the Sacramento Housing and Redevelopment Agency (the Agency), as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements, and have issued our report thereon dated September 26, 2025. Our report includes a reference to other auditors who audited the financial statements of the Norwood Avenue Housing Corporation and Affiliated Entities (a blended component unit) as described in our report on the Agency’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Agency’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Honorable Members of the Sacramento City Council, Housing Authority of the City of Sacramento, County Board of Supervisors, Housing Authority of the County of Sacramento, and Sacramento Housing and Redevelopment Commission Sacramento Housing and Redevelopment Agency (2)
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs as item 2024-001 that we consider to be a material weakness. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Sacramento Housing and Redevelopment Agency’s Response to Finding Government Auditing Standards require the auditor to perform limited procedures on the Agency’s response to the findings identified in our audit and described in the accompanying schedule of findings and questioned costs. The Agency’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Agency’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Agency’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

CliftonLarsonAllen LLP Roseville, California September 26, 2025 CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. SeeCLAglobal.com/disclaimer.

CliftonLarsonAllen LLPCLAconnect.com
(3)
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM, REPORT ON INTERNAL CONTROL OVER COMPLIANCE, AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE Honorable Members of the Sacramento City Council, Housing Authority of the City of Sacramento, County Board of Supervisors, Housing Authority of the County of Sacramento, and Sacramento Housing and Redevelopment Commission Sacramento Housing and Redevelopment Agency Sacramento, California Report on Compliance for Each Major Federal Program Qualified and Unmodified Opinions We have audited the Sacramento Housing and Redevelopment Agency’s (the Agency) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on the Agency’s major federal programs for the year ended December 31, 2024. The Agency’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Qualified Opinion on Housing Voucher Cluster In our opinion, except for the noncompliance described in the Basis for Qualified and Unmodified Opinions section of our report, the Agency complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on the Housing Voucher Cluster the year ended December 31, 2024. Qualified Opinion on Public and Indian Housing Program In our opinion, except for the noncompliance described in the Basis for Qualified and Unmodified Opinions section of our report, the Agency complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on the Public and Indian Housing Program the year ended December 31, 2024. Unmodified Opinion on Each of the Other Major Federal Programs In our opinion, the Agency complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its other major federal programs identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs for the year ended December 31, 2024.

Honorable Members of the Sacramento City Council, Housing Authority of the City of Sacramento, County Board of Supervisors, Housing Authority of the County of Sacramento, and Sacramento Housing and Redevelopment Commission Sacramento Housing and Redevelopment Agency (4)
Basis for Qualified and Unmodified Opinions We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditors’ Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the Agency and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified and unmodified opinion on compliance for each major federal program. Our audit does not provide a legal determination of the Agency’s compliance with the compliance requirements referred to above. Matter Giving Rise to Qualified Opinion on the Housing Voucher Cluster As described in the accompanying schedule of findings and questioned costs, the Agency did not comply with requirements regarding Assistance Listing No. 14.871/14.879 Housing Voucher Cluster as described in finding 2024-002 for Eligibility. Matter Giving Rise to Qualified Opinion on the Public and Indian Housing Program As described in the accompanying schedule of findings and questioned costs, the Agency did not comply with requirements regarding Assistance Listing No. 14.850 Public and Indian Housing Program as described in finding 2024-005 for Eligibility. Compliance with such requirements is necessary, in our opinion, for the Agency to comply with the requirements applicable to the programs. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the Agency’s federal programs. Auditors’ Responsibility for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Agency’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the Agency’s compliance with the requirements of each major federal program as a whole.

Honorable Members of the Sacramento City Council, Housing Authority of the City of Sacramento, County Board of Supervisors, Housing Authority of the County of Sacramento, and Sacramento Housing and Redevelopment Commission Sacramento Housing and Redevelopment Agency (5)
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the Agency’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of the Agency’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Other Matters The results of our auditing procedures disclosed other instances of noncompliance, which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as items, 2024-003, 2024-004 and 2024-006. Our opinion on each major federal program is not modified with respect to these matters. Government Auditing Standards requires the auditor to perform limited procedures on the Agency’s response to the noncompliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The Agency’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Our consideration of internal control over compliance was for the limited purpose described in the Auditors’ Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies.

Honorable Members of the Sacramento City Council, Housing Authority of the City of Sacramento, County Board of Supervisors, Housing Authority of the County of Sacramento, and Sacramento Housing and Redevelopment Commission Sacramento Housing and Redevelopment Agency (6)
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2024-002 and 2024-005 to be material weaknesses. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2024-003, 2024-004 and 2024-006 to be significant deficiencies. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. Government Auditing Standards requires the auditor to perform limited procedures on the Agency’s response to internal control over compliance findings identified in our audit described in the accompanying schedule of findings and questioned costs. The Agency’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Honorable Members of the Sacramento City Council, Housing Authority of the City of Sacramento, County Board of Supervisors, Housing Authority of the County of Sacramento, and Sacramento Housing and Redevelopment Commission Sacramento Housing and Redevelopment Agency (7)
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the business-type activities and the aggregate discretely presented component units of the Agency as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements. We issued our report thereon dated September 26, 2025, which contained unmodified opinions on those financial statements. Our report includes a reference to other auditors who audited the financial statements of the Norwood Avenue Housing Corporation and Affiliated Entities, which is a blended component unit, as described in our report on the Agency’s financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on the results of our audit and the reports of other auditors, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

CliftonLarsonAllen LLP Roseville, California September 26, 2025 SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED DECEMBER 31, 2024 See accompanying Notes to Schedule of Expenditures of Federal Awards. (8) Assistance AmountsFederal Grantor/Pass through Grantor/ Listing Pass-through Provided toProgram or Cluster Title Number Identifying Number Expenditures SubrecipientsDepartment of Housing and Urban Development Direct Programs:Community Development Block Grants/Entitlement Grants:Community Development Block Grants/Entitlement Grants (Entitlements) 14.218 N/A 10,862,757$ 1,095,973$ Community Development Block Grants/Entitlement Grants (New Loans) 14.218 N/A 6,018,273 - Community Development Block Grants/Entitlement Grants (Program Income) 14.218 N/A 267,852 - Community Development Block Grants/Entitlement Grants (Beginning Loan Balance) 14.218 N/A 20,012,679 - Community Development Block Grants - Neighborhood Stabilization Program:Neighborhood Stabilization Program 3 (Entitlements) 14.218 N/A 2,330 - Neighborhood Stabilization Program 3 (Program Income) 14.218 N/A 6,627 - Neighborhood Stabilization Program 1 (Beginning Loan Balance) 14.218 N/A 8,099,888 - Total Community Development Block Grants/Entitlement Grants 45,270,406 1,095,973 Community Development Block Grants - Section 108 Loans (Beginning Loan Balance) 14.218 N/A 5,499,991 - Community Development Block Grants - Section 108 Loans (Beginning Debt Balance) 14.218 N/A 9,969,000 - Community Development Block Grants - Section 108 Loans (Current Year Loan Draws) 14.218 N/A 1,595,000 - Total Community Development Block Grants - Section 108 17,063,991 - Total Community Development Block Grants Cluster 62,334,397 1,095,973 Emergency Solutions Grant Program 14.231 N/A 939,385 628,744 Home Investment Partnerships Program:Home Investment Partnerships Program (Entitlements) 14.239 N/A 4,094,954 - Home Investment Partnerships Program (New Loans) 14.239 N/A 14,316,330 - Home Investment Partnerships Program (Beginning Loan Balance) 14.239 N/A 139,987,831 - Total Home Investment Partnerships Program 158,399,115 - Housing Opportunities for Persons with AIDS (Entitlements) 14.241 N/A 1,825,686 930 Continuum of Care Program 14.267 N/A 5,995,912 - Public and Indian Housing 14.850 N/A 9,524,410 - Section 8 Project-Based Cluster:Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation 14.856 N/A 132,083 - Resident Opportunity and Supportive Services - Service Coordinators 14.870 N/A 180,111 - Housing Voucher Cluster:Section 8 Housing Choice Vouchers 14.871 N/A 219,322,171 - Emergency Housing Vouchers 14.871 N/A 9,013,173 - Mainstream Vouchers 14.879 N/A 4,049,426 - Total Housing Voucher Cluster 232,384,770 - Public Housing Capital Fund 14.872 N/A 7,998,438 - PH Family Self-Sufficiency Program 14.896 N/A 110,060 - PH/HCV Family Self-Sufficiency Program 14.896 N/A 189,089 - 299,149 - Lead Based Paint 14.900 N/A 178,109 - Total Department of Housing and Urban Development 480,191,565 1,725,647 U.S. Department of Treasury Direct ProgramPassed Through from:Sacramento County COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027 Agreement # 52538 6,600,000 - COVID-19 Emergency Rental Assistance 21.023 N/A 8,294,139 - Total U.S. Department of Treasury 14,894,139 Total Expenditures of Federal Awards 495,085,704$ 1,725,647$ SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED DECEMBER 31, 2024 (9)
NOTE 1 BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of the Sacramento Housing and Redevelopment Agency (Agency) under programs of the federal government for the year ended December 31, 2024. The information in this Schedule is presented in accordance with the requirements of 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Agency, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Agency. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. NOTE 3 LOAN PROGRAMS WITH CONTINUING COMPLIANCE REQUIREMENTS The Agency participates in the Community Development Block Grants/Entitlement Grants, Community Development Block Grants – Section 108 Loans and Home Investment Partnerships federal loan programs. The balance of the loans from previous years and current year loan activity, as required under the Uniform Guidance, are presented in the Schedule of Expenditures of Federal Awards. The following is a summary of changes in federal loan balances for the year ended December 31, 2024: Balance at Payments/ Balance at January 1, 2024 Additions Adjustments December 31, 2024Revolving Loan Funds:Community Development Block Grants/Entitlement Grants 28,112,567$ 6,018,273$ (401,976)$ 33,728,864$ Community Development Block Grants - Section 108 Loans 5,499,991 - - 5,499,991 Home Investment Partnerships Program 139,987,831 14,316,330 1,784,072 156,088,233 173,600,389 20,334,603 1,382,096 195,317,088 HUD Loans Payable:Community Development Block Grants - Section 108 Loans 9,969,000 1,595,000 (808,902) 10,755,098 Totals 183,569,389$ 21,929,603$ 573,194$ 206,072,186$ NOTE 4 INDIRECT COSTS The Agency did not elect to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2024 (10)
Section I – Summary of Auditors’ Results Financial Statements 1. Type of auditors’ report issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified 2. Internal control over financial reporting: Material weakness(es) identified? x yes no Significant deficiency(ies) identified? yes x____ none reported 3. Noncompliance material to the financial statements noted? yes x no Federal Awards 1. Internal control over major federal programs: Material weakness(es) identified? x yes no Significant deficiency(ies) identified? x yes none reported 2. Type of auditors’ report issued on compliance for major federal programs: Unmodified for all major programs except for the Housing Voucher Cluster Public and Indian Housing, which are qualified. 3. Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? x yes no Identification of Major Federal Programs Assistance Listing Number(s) Name of Federal Program or Cluster 14.850 Public and Indian Housing 14.871/14.879 Housing Voucher Cluster 14.872 Capital Fund Program 14.218 Community Development Block Grants 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.023 COVID-19 Emergency Rental Assistance Dollar threshold used to distinguish between Type A and Type B programs: $ 3,000,000 Auditee qualified as low-risk auditee? yes x no SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2024 (11)
Section II – Financial Statement Findings Finding 2024-001 FINANCIAL CLOSE PROCESS Type of Finding: Material Weakness in Internal Control Over Financial Reporting and Correction of Error Condition: The trial balance provided for the audit required significant reconciliations and additional adjustments to properly reflect the financial activity for the year. The Agency does not have a policy in place to provide reasonable assurance that the trial balance is prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP); therefore, the potential exists that a material misstatement of the annual financial statements could occur and not be prevented, or detected and corrected on a timely basis, by the organization’s internal controls. In addition, the financial close process needs to be assessed and ensure that accounts are being reconciled on an ongoing basis throughout the calendar year and not just at yearend. Criteria or Specific Requirement: The Internal Control-Integrated Framework (COSO Report) requires adequate internal controls over financial reporting to ensure that transactions are properly recorded and accounted for to permit the preparation of reliable financial statements and demonstrate compliance with laws, regulations and other compliance requirements. Internal controls should be in place to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Effect: The lack of controls in place over the financial reporting function increases the risk of misstatements, fraud, or errors occurring and not being detected and corrected on a timely basis. Ineffective controls over the financial reporting and close process could result in inaccurate account balances, a significant number of audit adjustments or restatements or a lack of timely financial information. Inaccurate reporting to HUD could adversely affect the Agency’s funding. Specifically, we noted the following: Significant entries to cash and investments due to bank reconciliations not being completely on a timely basis and not incorporating outstanding checks. Adjusting beginning net position to account for prior year adjustments not recorded. Elimination of intercompany transactions. Significant entries to loan receivables and accrued interest. Significant entries to various revenue and expense accounts. Significant entries to payroll accounts due to a change in payroll systems and lack of reconciliations. Cause: The Agency did not properly establish and implement sufficient internal controls over financial reporting to ensure the timely and accurate recording of financial transactions. In addition, the Agency lacks sufficient staffing in the accounting department. Repeat Finding: Yes (2023-001) SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2024 (12)
Section II – Financial Statement Findings (Continued) Finding 2024-001 FINANCIAL CLOSE PROCESS (Continued) Recommendation: The Agency should evaluate its financial reporting and close processes and controls to determine whether additional controls over the preparation of the final trial balances and related schedules can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. We recommend the Agency to review its current procedures for reconciliations and year end close procedures. We recommend the Agency evaluate the number of staff assigned to various accounting functions to ensure that staffing is appropriate and staff have adequate training to ensure accurate financial reporting. Views of Responsible Officials: There is no disagreement with the audit finding.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2024 (13)
Section III – Federal Award Findings and Questioned Costs 2024-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Choice Voucher Cluster Assistance Listing Number: 14.871/14.879 Federal Award Identification Number and Year: CA007 2024 Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or Specific Requirement: Eligibility The PHA must reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24 CFR section 982.516). Condition: The Agency did not have adequate internal controls designed to ensure that reexaminations of family income and composition were performed at least once every 12 months. Questioned Costs: $251,056 Context: Testing of 60 HCVP files indicated that 23 instances where the annual recertification was not processed within regulatory period of 12 months. Cause: The Agency failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy. Effect: The Agency is not in compliance with federal regulations regarding the recertification of household circumstances within 12 months. Repeat Finding: Yes, (2023-002) Recommendation: We recommend that management should implement a quality control review over a sampling of tenant files recertified each month. The purpose of the review is to determine if the tenant files were prepared in accordance with internal policies and verify the compliance deficiencies have been corrected. Views of Responsible Officials: There is no disagreement with the audit finding.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2024 (14)
Section III – Federal Award Findings and Questioned Costs (Continued) 2024-003 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Choice Voucher Cluster Assistance Listing Number: 14.871/14.879 Federal Award Identification Number and Year: CA007 2024 Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance and Other Matters Criteria or Specific Requirement: Special Tests and Provisions-HQS Enforcement For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must abate HAP payments beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: The Agency did not have adequate internal controls designed to ensure that failed inspections are were completed in accordance with compliance requirements. Questioned Costs: $1,479 Context: During the testing of the HCV tenant files, certain special provision compliance deficiencies were noted in 1 of 40 files: -Inspection was cancelled, and in the process of rescheduling, it was not rescheduled for reinspection in a timely manner. Cause: The Agency failed to follow their HQS Enforcement procedures. Effect: The Agency was not in compliance with federal regulations regarding minimum housing quality standards and was paying housing assistance for units that did not meet these standards. Repeat Finding: Yes, (2023-003) Recommendation: We recommend management should designate one person to oversee the inspection process to ensure that all inspections are being performed in a timely manner. Furthermore, management should ensure no HAP payments are issued for units that have not meet requirements associated with HQS housing inspections. Views of Responsible Officials: There is no disagreement with the audit finding.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2024 (15)
Section III – Federal Award Findings and Questioned Costs (Continued) 2024-004 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Choice Voucher Cluster Assistance Listing Number: 14.871/14.879 Federal Award Identification Number and Year: CA007 2024 Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance and Other Matters Criteria or Specific Requirement: Special Tests and Provisions-Housing Quality Standards Enforcement The PHA must inspect the unit leased to a family at least biennially to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Condition: The Agency did not have adequate internal controls designed to ensure that NSPIRE inspections were completed in accordance with compliance requirements. Questioned Costs: None Context: During the testing of 60 inspections, 1 instance was noted where no annual inspection had been completed since November 2022. Cause: The Agency failed to follow their inspection procedures. Effect: The Agency is not in compliance with federal regulations regarding minimum housing quality standards and was paying housing assistance for a unit that did not meet these standards. Repeat Finding: No Recommendation: We recommend that the Agency review the controls in place to ensure that the inspections team can complete the reinspections in a timely manner and are knowledgeable of all internal procedures in place over inspections. Views of Responsible Officials: There is no disagreement with the audit finding.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2024 (16)
Section III – Federal Award Findings and Questioned Costs (Continued) 2024-005 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Public and Indian Housing Assistance Listing Number: 14.850 Federal Award Identification Number and Year: CA005/CA007 2024 Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or Specific Requirement: Eligibility The PHA must do the following: (1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 960.259). (2) For both family income examinations and reexaminations, obtain and document in the family file third party verification of (a) reported family annual income, (b) the value of assets, (c) expenses related to deductions from annual income, and (d) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 960.259). (3) Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third-party verification (24 CFR sections 960.253, 960.257, and 960.259). Condition: The Agency did not have adequate internal controls designed to ensure eligibility requirements were being met for City and County. Questioned Costs: Unable to determine. Context: During the testing of the public housing program files for eligibility, the following deficiencies were noted in 16 of 40 files: - City : 8 instances where the annual certification was not completed on an annual basis. - County : 7 instances where the annual certification was not completed on an annual basis. - County: 1 instance where the annual recertification was not completed in 2024. The most recent annual recertification had been conducted in 2022. Cause: The Agency failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy. Further, staff changes and tenants providing documentation in a delayed manner contributed to the issues observed.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2024 (17)
Section III – Federal Award Findings and Questioned Costs (Continued) 2024-005 (Continued) Effect: The Agency is not in compliance with federal regulations regarding the recertification of household circumstances within 12 months. Repeat Finding: Yes, (2023-005) Recommendation: We recommend that management should designate one person to review a sample of the files that have been recertified each month. The purpose of the review is to determine if the tenant files were prepared in accordance with internal policies and verify the compliance deficiencies have been corrected. Views of Responsible Officials: There is no disagreement with the audit finding.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2024 (18)
Section III – Federal Award Findings and Questioned Costs (Continued) 2024-006 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Emergency Solutions Grants Program Assistance Listing Number: 14.231 Federal Award Identification Number and Year: CA005/CA007 2024 Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance and Other Matters Criteria or Specific Requirement: Special Tests and Provisions-Subrecipient Payments The recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient’s complete payment request. This requirement also applies to each subrecipient that is a unit of general-purpose local government (24 CFR section 576.203). Condition: The Agency did not have adequate internal controls designed to ensure that subrecipient payments are paid in accordance with compliance requirements. Questioned Costs: N/A Context: In 2023, 10 out of 29 payments to subrecipients were not done within 30 days as required by the grant. A follow-up selection was made in 2024 which also was not paid on time. Cause: The Agency did not sufficiently monitor controls to ensure compliance with program requirements over payments to subrecipients. Effect: The Agency is not in compliance with rules covering payments to subrecipients and the required 30 days. Repeat Finding: Yes, (2023-007) Recommendation: We recommend that management ensure that internal controls are in place to ensure subrecipient payments are paid timely and within program requirements. Views of Responsible Officials: There is no disagreement with the audit finding.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY CORRECTIVE ACTION PLAN YEAR ENDED DECEMBER 31, 2024

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT The Sacramento Housing and Redevelopment Agency (the Agency) respectfully submits the following corrective action plan for the year ended December 31, 2024. Audit period: January 1, 2024 – December 31, 2024 The findings from the schedule of findings and questioned costs are discussed below. FINDINGS—FINANCIAL STATEMENT AUDIT MATERIAL WEAKNESS 2024-001 Financial Close Process Recommendation: The Agency should evaluate its financial reporting and close processes and controls to determine whether additional controls over the preparation of the final trial balances and related schedules can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. We recommend the Agency to review its current procedures for reconciliations and year end close procedures. We recommend the Agency evaluate the number of staff assigned to various accounting functions to ensure that staffing is appropriate and staff have adequate training to ensure accurate financial reporting. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: In response to the recommendation to strengthen financial reporting and close processes, the Finance Department will undertake a comprehensive evaluation of its current procedures and internal controls related to the preparation of final trial balances and supporting schedules. This review will aim to identify process gaps, inefficiencies, and opportunities for improvement to ensure financial statements are prepared in accordance with U.S. GAAP. As part of this effort, the Finance Department will enhance its reconciliation procedures and year-end close activities by implementing a standardized process with checklist that includes detailed timelines. To further support accurate financial reporting, the Finance Department will develop and implement a training plan to ensure accounting staff receive adequate and ongoing training in U.S. GAAP, internal controls, and financial reporting best practices. Finally, the Finance Department will establish a regular review process to monitor the effectiveness of the improvements and make adjustments as needed, using internal feedback and audit findings to drive continuous improvement. Full implementation expected by end of 2025. Name(s) of the contact person(s) responsible for corrective action: James Shields, Deputy Director of Adminstrator, Director of Finance Planned completion date for corrective action plan: December 31, 2025 SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY CORRECTIVE ACTION PLAN YEAR ENDED DECEMBER 31, 2024

FINDINGS—FEDERAL AWARD PROGRAMS AUDITS U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 2024-002 Housing Choice Voucher Cluster – Assistance Listing No. 14.871/14.879 Recommendation: We recommend that management should implement a quality control review over a sampling of tenant files recertified each month. The purpose of the review is to determine if the tenant files were prepared in accordance with internal policies and verify the compliance deficiencies have been corrected. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: We would like to provide additional context. The challenge is not due to a lack of monitoring efforts, but rather staffing constraints that have impacted our ability to meet recertification timelines. Specifically, the Agency is currently operating with an insufficient number of staff to manage the full caseload effectively. Additionally, a significant portion of the team responsible for processing recertifications consists of new hires who are still in training and not yet able to carry a full workload, which has temporarily reduced the overall output of the team. In response, we are actively working to streamline internal processes, prioritize core functions, and improve overall operational efficiency. These efforts are intended to increase the number of timely recertifications completed and ensure compliance with HUD requirements moving forward. Name(s) of the contact person(s) responsible for corrective action: MaryLiz Paulson, Director, Housing Choice Vouchers Planned completion date for corrective action plan:: December 31, 2025 2024-003 Housing Choice Voucher Cluster – Assistance Listing No. 14.871/14.879 Recommendation: We recommend management should designate one person to oversee the inspection process to ensure that all inspections are being performed in a timely manner. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Public Housing Authority (PHA) has designated the Owner Services Supervisor to oversee the inspection This role ensures that all inspections are completed in a timely and consistent manner. The supervisor is also responsible for verifying that Housing Assistance Payments (HAP) are only released for units that fully meet Housing Quality Standards (HQS) requirements. These measures strengthen oversight, improve accountability, and ensure compliance with federal regulations.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY CORRECTIVE ACTION PLAN YEAR ENDED DECEMBER 31, 2024

Name(s) of the contact person(s) responsible for corrective action: MaryLiz Paulson, Director, Housing Choice Vouchers 2024-004 Housing Choice Voucher Cluster – Assistance Listing No. 14.871/14.879 Recommendation: We recommend that the Agency review the controls in place to ensure that the inspections team can complete the re-inspections in a timely manner and are knowledgeable of all internal procedures in place over inspections. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Reports have been implemented to track the scheduling and completion of inspections. These reports are reviewed regularly by the Owner Services Supervisor to ensure that all required inspections are completed on schedule. This tracking process strengthens internal controls and provides timely oversight, ensuring compliance with HUD’s inspection requirements. Name(s) of the contact person(s) responsible for corrective action: MaryLiz Paulson, Director, Housing Choice Vouchers Planned completion date for corrective action plan: December 31, 2025 2024-005 Public and Indian Housing – Assistance Listing No. 14.850 Recommendation: We recommend management should designate one person to review a sample of the files that have been recertified each month. The purpose of the review is to determine if the tenant files were prepared in accordance with internal policies and verify the compliance deficiencies have been corrected. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: To prevent a recurrence of the issue, we have implemented a comprehensive corrective action plan. Staff developed a Quality Control Audit Checklist for Recertifications, written Standard Operating Procedures (SOP’s) for interviewing tenants; conducting income examinations and re-examinations; verifying income eligibility using third-party verification; and determining income eligibility and calculating the tenant’s rent payment. Additionally, SHRA recently held and certified our staff with Public Housing Specialist training through a certified vendor. We will continue to provide refresher trainings to assist staff with accurately determining program eligibility. Name(s) of the contact person(s) responsible for corrective action: Cecette Hawkins, Assistant Director Planned completion date for corrective action plan: December 31, 2025 SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY CORRECTIVE ACTION PLAN YEAR ENDED DECEMBER 31, 2024

2024-006 Emergency Solutions Grants Program – Assistance Listing No. 14.231 Recommendation: We recommend that management ensure that internal controls are in place to ensure subrecipient payments are paid timely and within program requirements. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: To prevent recurrence, the following actions will be taken: All future ESG contracts will be directly managed by the ESG Program Manager and Program Analyst, ensuring appropriate oversight and compliance with program requirements. All program analysts will be retrained on invoice processing requirements. The Program manager will evaluate the potential use of an online system for receiving and tracking invoices. Name(s) of the contact person(s) responsible for corrective action: Stephanie Green, Program Manager Planned completion date for corrective action plan: January 01, 2026 If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call James Shields at (916) 440-1308.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED DECEMBER 31, 2024

U.S. Department of Housing and Urban Development The Sacramento Housing and Redevelopment Agency respectfully submits the following summary schedule of prior audit findings for the year ended December 31, 2024. Audit period: January 1, 2024 – December 31, 2024 The finding from the prior audit’s schedule of findings and questioned costs is discussed below. The findings are numbered consistently with the number assigned in the prior year. FINDINGS—FINANCIAL STATEMENT AUDIT There were no financial statement findings in the prior year. 2023 – 001 Financial Close Process Condition: Financial statements were delayed and there were multiple adjusting journal entries and correction of errors for prior periods recorded during the audit. In addition, there were delays in receiving audit documentation. This is indicative of a lack of internal controls over the financial reporting and financial close processes. The Agency does not have a policy in place to provide reasonable assurance that trial balance is prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP); therefore, the potential exists that a material misstatement of the annual financial statements could occur and not be prevented, or detected and corrected on a timely basis, by the organization’s internal controls. Status: See current year finding 2024-001. Reason for finding’s recurrence: The finding's recurrence is attributed to limited staffing levels affecting the period tested. This situation posed a significant challenge in supporting staff to effectively manage their current workloads while also addressing the backlog of prior-year data. Corrective Action: In response to the recommendation to strengthen financial reporting and close processes, the Finance Department will undertake a comprehensive evaluation of its current procedures and internal controls related to the preparation of final trial balances and supporting schedules. This review will aim to identify process gaps, inefficiencies, and opportunities for improvement to ensure financial statements are prepared in accordance with U.S. GAAP. As part of this effort, the Finance Department will enhance its reconciliation procedures and year-end close activities by implementing a standardized process with checklist that includes detailed timelines. To further support accurate financial reporting, the Finance Department will develop and implement a training plan to ensure accounting staff receive adequate and ongoing training in U.S. GAAP, internal controls, and financial reporting best practices. Finally, the Finance Department will establish a regular review process to monitor the effectiveness of the improvements and make adjustments as needed, using internal feedback and audit findings to drive continuous improvement. Full implementation expected by end of 2025.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED DECEMBER 31, 2024

FINDINGS— FEDERAL AWARD PROGRAMS AUDITS 2023 – 002 - HCVP Eligibility Condition: The Agency did not have adequate internal controls designed to ensure HCV eligibility requirements were being met. During the testing of the HCV tenant files for eligibility, deficiencies were noted in 21 of 40 files, including 21 instances where the annual certification was not processed within regulatory period of 12 months, and 1 instance where a tenant’s income, assets, and expenses were not supported. Status: See current year finding 2024-002. Reason for finding’s recurrence: The Agency is currently operating with an insufficient number of staff to manage the full caseload effectively. Additionally, a significant portion of the team responsible for processing recertifications consists of new hires who are still in training and not yet able to carry a full workload, which has temporarily reduced the overall output of the team. Corrective Action: In response, we are actively working to streamline internal processes, prioritize core functions, and improve overall operational efficiency. These efforts are intended to increase the number of timely recertifications completed and ensure compliance with HUD requirements moving forward. 2023 – 003 HCVP – Housing Quality Standards Enforcement Condition: The Agency did not have adequate internal controls designed to ensure that inspections were completed in accordance with HQS compliance requirements. During the testing of the tenant files, certain special provision compliance deficiencies were noted in 4 of 40 files, including 3 instances where the re-inspection was not completed and/or documented within 30 calendar days of the first failed inspection, 1 instance where the file did not contain documentation of the repairs have been made, 2 instances where the Agency failed to properly abate HAP payments after the second failed inspection, 1 instance where the Agency did not enforce its Administrative Plan-family obligations for tenant noncompliance, and 1 instance where the file did not contain documentation showing the Agency provided landlord and tenant a notice of fail inspection. Status: See current year finding 2024-003. Reason for finding’s recurrence: The housing authority failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy. Corrective Action: : The Public Housing Authority (PHA) has designated the Owner Services Supervisor to oversee the inspection This role ensures that all inspections are completed in a timely and consistent manner. The supervisor is also responsible for verifying that Housing Assistance Payments (HAP) are only released for units that fully meet Housing Quality Standards (HQS) requirements. These measures strengthen oversight, improve accountability, and ensure compliance with federal regulations. 2023 – 004 HCVP – Allowable Costs – Payroll Condition: The Agency did not have adequate internal controls designed to ensure that allowable costs are recorded in accordance with compliance requirements. Out of the 40 files tested, 1 file was not charged to the correct program.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED DECEMBER 31, 2024

Status: Corrective action has been taken. 2023 – 005 Public and Indian Housing – Eligibility Condition: The Agency did not have adequate internal controls designed to ensure LIPH eligibility requirements were being met for City and County. Out of the 60 files tested, 2 were not reexamined timely in accordance with the compliance requirements. Status: See current year finding 2024-005. Reason for finding’s recurrence: The Agency failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy. Corrective Action: To prevent a recurrence of the issue, we have implemented a comprehensive corrective action plan. Staff developed a Quality Control Audit Checklist for Recertifications, written Standard Operating Procedures (SOP’s) for interviewing tenants; conducting income examinations and re-examinations; verifying income eligibility using third-party verification; and determining income eligibility and calculating the tenant’s rent payment. Additionally, SHRA recently held and certified our staff with Public Housing Specialist training through a certified vendor. We will continue to provide refresher trainings to assist staff with accurately determining program eligibility. 2023 – 006 Continuum of Care – Period of Performance Condition: The Agency did not have adequate internal controls designed to ensure that period of performance requirements were being met. Out of the 5 costs tested, one cost was incurred prior to the period performance start date. Status: Corrective action has been taken. 2023 – 007 Emergency Solutions Grants Program – Subrecipient Payments Condition: The Agency did not have adequate internal controls designed to ensure that subrecipient payments are paid in accordance with compliance requirements. Out of the 29 payments to subrecipients tested, 10 payments were not paid within 30 days. Status: See current year finding 2024-006. Reason for finding’s recurrence: The Agency did not sufficiently monitor controls to ensure compliance with program requirements over payments to subrecipients. Corrective Action: To prevent recurrence, the following actions will be taken: All future ESG contracts will be directly managed by the ESG Program Manager and Program Analyst, ensuring appropriate oversight and compliance with program requirements. All program analysts will be retrained on invoice processing requirements. The Program manager will evaluate the potential use of an online system for receiving and tracking invoices.

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED DECEMBER 31, 2024

2023 – 008 Community Development Block Grants/Entitlements Grants – FFATA Condition: The Agency did not submit the required Federal Funding Accountably and Transparency Act report for the first-tier subawards from funding received under the program. Status: Corrective action has been taken. 2023 – 009 Emergency Solutions Grants Program – Earmarking Condition: The Agency did not have adequate internal controls designed to ensure that earmarking requirements are met in accordance with compliance requirements. For the 2021 City ESG, the Agency drew $68,345 for administration of the $416,062 project costs or 16.4% of project costs, however, the recipient may use up to 7.5 percent of its ESG program project costs for the payment of administrative costs related to the planning and execution of ESG activities Status: Corrective action has been taken. 2023 – 010 HOME Investment Partnerships Program – Wage Rate Requirements Condition: The Agency did not have adequate internal controls designed to ensure that wage rate requirements are met in accordance with compliance requirements. For two of the five projects, the Agency does not have a monitoring process in place to ensure that the consultant hired to perform the duties related to certified payrolls does those actions correctly and in compliance with federal requirements. For one of the five projects, the Agency was unable to provide supporting documentation evidencing compliance with wage rate requirements. Status: Corrective action has been taken.