FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101

AUDITED FINANCIAL STATEMENTS DECEMBER 31, 2019 FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 FOR THE YEAR ENDED DECEMBER 31, 2019

CONTENTS

Page

Independent Auditor's Report…………………………………………....…………………………………...………………………………………………1-2

Financial Statements Statement of Financial Position………………………………….…………………………..…..…………………………………………………………………………………………..3 Statement of Activities and Changes in Net Assets (Deficit)………………………………………………………….……………………………………...………………………………………………..4 Statement of Cash Flows…………………………………………………..………………..…………………………………………………………………………………….5

Notes to the Financial Statements……………………..……………………………...………………………………………………………………….6-9

HUD Supplemental Schedules Statement of Financial Position Data……..……………………………………………………….………………………………………………………………………………….10 Statement of Profit and Loss Data………………………………….………………………………………………………………………………………………..11-12 Statement of Changes in Net Assets (Deficit) Data………………………………………………………………………………………………………………….13 Statement of Cash Flows Data……………………………………………...……………………………………………………………………………………….14 HUD Supplemental Data……………………………………………………….………………………………………………………………………………….15 Computation of Surplus Cash, Distributions, & Residual Receipts………...…………………………………………………………………………………………………………..16

Schedule of Expenditures of Federal Awards………………………………………….………………………………………………………………………………….17

Independent Auditor's Report on Internal Control Over Financial Reporting on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards…………………………………………………………………………………………………………………………………………………….18-19

Independent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance………………………………………………………….…………………………………………….20-21

Schedule of Findings, Questioned Costs, and Recommendations………………………………………………………………...……………………………………………………………….22-23

Corrective Action Plan…………………………………..………………………………………….………………………………………………………………….24

Managing Agent and Owner's Certification………………………………………………………………………………………………………………….25 Independent Auditor's Report March 24, 2020

To the Board of Directors Franklin Foundation of Kettering Park Four, Inc. DBA Acorn Walk Columbus, OH

Report on the Financial Statements

We have audited the accompanying financial statements of Franklin Foundation of Kettering Park Four, Inc., HUD Project No. 046-EE101, which comprise the statement of financial position as of December 31, 2019, and the related statements of activities, changes in net assets, and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Franklin Foundation of Kettering Park Four, Inc., as of December 31, 2019, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

- 1 - Franklin Foundation of Kettering Park Four, Inc. Auditor's Report Page two

Emphasis of Matter

As discussed in Note I to the financial statements, the organization adopted Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. Our opinion is not modified with respect to this matter.

Other Matters

Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information shown on pages 10-16 is presented for purposes of additional analysis as required by the Uniform Financial Reporting Standards issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, and is not a required part of the financial statements. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the 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 financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 24, 2020 on our consideration of Franklin Foundation of Kettering Park Four, Inc.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Franklin Foundation of Kettering Park Four, Inc.'s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Franklin Foundation of Kettering Park Four, Inc.'s internal control over financial reporting and compliance.ABCD Stemen, Mertens, Stickler, CPAs & Associates Certified Public Accountants Columbus, Ohio E.I.N. 20-5511881

- 2 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2019

ASSETS

Current Assets Cash in Bank - Operating $ 1,852 Prepaid Property Insurance 6,692 Total Current Assets 8,544

Restricted Deposits and Funded Reserves Tenant Security Deposits Held in Trust 10,024 Restricted Cash 109,390 Total Restricted Deposits and Funded Reserves 119,414

Rental Property Land 447,158 Buildings and Improvements 2,233,427 Furnishings and Equipment 98,485 Total Fixed Assets 2,779,070 Accumulated Depreciation (508,581) Net Fixed Assets 2,270,489

Total Assets $ 2,398,447

LIABILITIES AND NET ASSETS (DEFICIT)

Current Liabilities Accounts Payable $ 5,127 Accrued Wages Payable 1,410 Accrued Payroll Taxes Payable 181 Accrued Management Fees Payable 5,847 Accrued Real Estate Taxes 40,020 Tenant Security Deposits Held In Trust (Contra) 7,057 Total Current Liabilities 59,642

Total Liabilities 59,642

Net Assets With Donor Restrictions - Capital Advance 2,663,600 With Donor Restrictions - Pre-Development Grant 159,050 Net Assets (Deficit) (Without Donor Restrictions) (483,845) Total Net Assets (Deficit) 2,338,805

Total Liabilities and Net Assets $ 2,398,447

The accompanying notes are in integral part of these financial statements.

- 3 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 2019

Revenues Rentals $ 167,001 Interest 489 Laundry and Vending 1,602 Other 2,090 171,182

Expenses Administrative 30,844 Management Fees 15,619 Utilities 22,562 Operating & Maintenance 39,078 Taxes 44,895 Insurance 8,791 Depreciation 81,793 243,582

Change in Net Assets (Deficit) Without Donor Restrictions (72,400)

Net Assets (Deficit) Without Donor Restrictions -Beginning of Year (411,445)

Net Assets (Deficit) Without Donor Restrictions -End of Year $ (483,845)

The accompanying notes are in integral part of these financial statements.

- 4 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2019

Cash Flow from Operating Activities: Increase (Decrease) in Net Assets $ (72,400) Adjustments to Reconcile Net Assets to Net Cash Provided by (Used in) Operating Activities Depreciation 81,793 Change In: Prepaid Expenses - Funded (264) Accounts Payable - Trade (891) Accrued Expenses 1,029 Tenant Security Deposits Held in Trust (Contra) 231 Net Cash Provided by (Used in) Operating Activities 9,498

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 9,498 Beginning of Period Cash 111,768 End of Period Cash $ 121,266

Reconciliation to Statement of Financial Position Cash - Operating $ 1,852 Tenant Security Deposits Held In Trust 10,024 Restricted Cash 109,390 Total Cash $ 121,266

The accompanying notes are in integral part of these financial statements.

- 5 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019

A. Summary of Significant Accounting Policies

1 Franklin Foundation of Kettering Park Four, Inc., DBA Acorn Walk, a non-profit corporation, was formed on August 4, 2010 to construct, own, and operate an apartment community under Section 202 of the National Housing Act. The project is located in Kettering, Ohio and consists of 24 units for the elderly and handicapped. The project's major programs are its Section 202 Capital Advance, its Project Rental Assistance Contract (PRAC) rent subsidy, and its Section 202 Pre- Development Grant.

The management of the Corporation and the ongoing management of Acorn Walk are vested in the Board of Trustees. The Corporation has hired Franklin Senior Housing Management, LLC, an affiliate of the Corporation, to provide day to day management for the property. Compensation for such services is as determined under the Articles of Incorporation and Management Agreement.

2 The accounting policies of the Corporation are as required by the Federal Housing Commissioner pursuant to the regulatory agreement for insured multi-family housing projects under Section 202 of the National Housing Act and the applicable instructions issued by the Federal Housing Administration (FHA).

a This project is regulated by HUD as to rent charges and operating methods.

b Surplus cash can only be paid after the end of an annual fiscal period. Cash distributions in the current year may not exceed surplus cash of the prior year as calculated. As stated in the Regulatory Agreement, the project is a non-profit project and any surplus cash available is deposited into a replacement reserve or residual receipts account.

3 Rental property is recorded at cost and depreciation is computed over estimated useful lives as follows:

Buildings & Improvements 40 years straight line Land Improvements 20 years straight line Furnishings & Equipment 10 years straight line

The Corporation reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flow expected to be generated by the rental property and any estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the real estate exceeds the fair value of such property. There were no impairment losses recognized in 2019.

4 The Corporation was organized as a non-profit organization exempt under Section 501(c)(3) of the Internal Revenue Code. Therefore, no provision has been made for income taxes.

The Corporation's Form 990, Return of Organization Exempt from Income Tax, for the years ending 2016, 2017, and 2018 are subject to examination by the IRS, generally for three years after they were filed. The Corporation believes it is no longer subject to income tax examinations for years prior to 2016.

5 The financial statements include only the assets, liabilities, changes in net assets, and cash flows of the project.

6 The accompanying financial statements have been prepared on the accrual basis of accounting. Income is recorded when earned and expenditures when incurred.

7 The Corporation considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

- 6 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019

A. Summary of Significant Accounting Policies (continued)

8 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

9 All costs related to marketing and advertising, including such costs as signs, rental brochures, newspaper, radio and television advertising, are expensed as incurred.

10 Tenant account receivables are carried at their estimated collectable amounts and are periodically evaluated for collectability based on past credit history with tenants and their current financial condition. Any provision for losses is determined on the basis of loss experience and aged receivable balance. Amounts are written off as they are deemed uncollectable.

11 Restricted cash consists of tenant security deposits, tax and insurance escrow and replacement reserve. The restricted cash has been established in amounts considered by management to be adequate and in accordance with the HUD Regulatory Agreement and Capital Advance agreement. Use of the accounts is restricted as defined in the HUD Regulatory Agreement, and therefore, has been excluded from cash in the accompanying Statement of Financial Position.

12 Functional Expenses

The costs of providing various programs and other activities are summarized on a functional basis as follows:

Program Services - HUD assisted elderly housing project $ 197,119 Supporting Services - General and Administrative 46,463 $ 243,582

General and administrative consists of allocated costs as follows:

Management Fee $ 15,619 Tenant Activity Expense 2,971 Training 874 Advertising and Marketing 47 Manager Salary 15,047 Office Supplies 5,940 Auditing 4,525 Bookkeeping Fees/Accounting Services 1,440 $ 46,463

13 The financial statements and related disclosures include evaluation of events up through and including March 24, 2020, which is the date the financial statements were available to be issued.

B. Liquidity and Availability of Financial Assets

The Corporation has $1,852 of financial assets available within one year of the statement of financial position date to meet cash needs for general expenditures, consisting of cash of $1,852. None of these amounts are subject to donor or other contractual restrictions that make them unavailable for general expenditure within one year of the statement of financial position.

The Corporation manages liquidity needed for operations primarily through budgeted monthly cash inflows and outflows. Cash inflows can be easily predicted since they are comprised mostly of rent and subsidy receipts. Cash outflows are planned accordingly so as not to exceed those expected inflows. A minimal amount of excess cash is on hand in the event of unexpected outflows. In addition, the Corporation maintains funds in a reserve for replacement for planned property improvements, and may be used only with the approval of HUD.

- 7 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019

C. Federal Grant - Capital Advance Program

The Corporation entered into a Capital Advance Agreement with the U.S. Department of Housing and Urban Development for a total grant amount of $2,663,600. Such draws are insured by the Department of Housing and Urban Development under Section 202 of the Housing Act of 1969, as amended.

The capital advance bears no interest and repayment is not required so long as the housing remains available for very low- income elderly persons for a period of forty (40) years. The capital advance is secured by a mortgage deed. If the advance becomes payable, the project’s property and equipment will be regarded as collateral.

D. Grant Agreement

The Corporation has entered into a Grant Agreement with HUD under the Section 202 Demonstration Pre-Development Grant Program. The agreement provides funds totaling $159,050. The Corporation, upon maintaining compliance with the Grant Agreement, was able to remain eligible for the maximum grant amount. The Corporation has elected to account for the Grant Agreement in a manner similar to the Capital Advance Agreement as Temporarily Restricted Net Assets.

E. Related Party Transactions

Management Fee

The Corporation has entered into a Management Agreement with Franklin Senior Housing Management, LLC, (FSHM) to manage the rental operations of the project. The management fee calculation is based on 8.57% of gross collections as defined in the Management Agreement. Property management fees charged to the project totaled $15,619 for the year ended December 31, 2019. As of December 31, 2019, management fees payable totaled $5,847.

Management Services As part of a recurring relationship, the management agent provides bookkeeping services to the Corporation for which the project incurred expenses of $1,440 for the year ended December 31, 2019. In addition, the management agent is to be reimbursed for the costs of site employee payroll and benefits. At December 31, 2019, payroll costs charged to the project totaled $34,139. As of December 31, 2019, accrued management service fees payable to FSHM totaled $1,591.

F. Commitments and Contingencies

Project Rental Assistance Contract (PRAC)

The Corporation entered into a one year renewal Project Rental Assistance Contract with HUD to provide rental assistance to the residents of the apartment community. This agreement provided for an additional $95,178 of budget authority. The balance remaining on the contract as of December 31, 2019 totaled $73,144. The current contract expires September 30, 2020.

G. Current Vulnerability Due to Certain Concentrations

The Corporation’s sole asset is Acorn Walk. The Corporation’s operations are concentrated in the multifamily real estate market. In addition, the Corporation operates in a heavily regulated environment. The operations of the Corporation are subject to the administrative directives, rules and regulations of federal, state and local regulatory agencies, including, but not limited to, HUD. Such administrative directives, rules and regulations are subject to change by an act of congress or an administrative change mandated by HUD. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change.

HUD rental assistance revenue during the year ended December 31, 2019 totaled $88,093, an increase of $5,343 compared to the previous year's $82,750. HUD rental assistance represented 51.6% of total rental revenue in the current year compared with 50.8% of total rental revenue in the previous year.

- 8 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019

H. Concentration of Credit Risk

The Corporation maintains its cash in financial institutions insured by Federal Deposit Insurance Corporation. Deposit accounts, at times, may exceed federally insured limits. The Corporation has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

I. Change in Accounting Principle

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The Statement of Cash Flows was changed to eliminate the reporting of transfers between cash and restricted cash from the activities previously presented under the former guidance. This resulted in the inclusion of restricted cash within the beginning and ending cash balances shown on the Statements of Cash Flows. A presentation on the face of the Statement of Cash Flows provides a reconciliation of cash and restricted cash as reported on the Statement of Financial Position to the balances reported on the Statement of Cash Flows.

- 9 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 STATEMENT OF FINANCIAL POSITION DATA AS OF DECEMBER 31, 2019

ASSETS

Current Assets 1120 Cash in Bank - Operating $ 1,852 1200 Miscellaneous Prepaid Expenses 6,692 1100T Total Current Assets 8,544

Deposits Held in Trust - Funded 1191 Tenant Security Deposits Held in Trust 10,024

Restricted Deposits and Funded Reserves 1310 Escrow Deposits 27,181 1320 Reserve for Replacements 82,065 1330 Other Reserves 144 1300T Total Deposits 109,390

Rental Property 1410 Land 447,158 1420 Buildings and Improvements 2,233,427 1460 Furnishings and Equipment 98,485 1400T Total Fixed Assets 2,779,070 1495 Accumulated Depreciation (508,581) 1400N Net Fixed Assets 2,270,489

1000T Total Assets $ 2,398,447

LIABILITIES AND NET ASSETS (DEFICIT)

Current Liabilities 2110 Accounts Payable $ 5,127 2120 Accrued Wages Payable 1,410 2121 Accrued Payroll Taxes Payable 181 2123 Accrued Management Fees Payable 5,847 2150 Accrued Real Estate Taxes 40,020 2122T Total Current Liabilities 52,585

Deposit Liabilities 2191 Tenant Security Deposits Held In Trust (Contra) 7,057

2000T Total Liabilities 59,642

Net Assets (Deficit) 3133 Net Assets (Deficit) (With Donor Restrictions) 2,822,650 3131 Net Assets (Deficit) (Without Donor Restrictions) (483,845) 3130 Total Net Assets 2,338,805

2033T Total Liabilities and Net Assets $ 2,398,447

- 10 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 STATEMENT OF PROFIT AND LOSS DATA FOR THE YEAR ENDED DECEMBER 31, 2019

Revenues: Rental Revenue 5120 Rent Revenue - Gross Potential $ 82,715 5121 Tenant Assistance Payments 88,093 5100T Total Rent Revenue 170,808

Vacancies 5220 Apartments (3,807) 5200T Total Vacancies (3,807) 5152N Net Rental Revenue 167,001

Financial Revenue 5410 Interest Income - Project Operations 105 5440 Revenue from Investments - Replacement Reserve 384 5400T Total Financial Revenue 489

Other Revenue 5910 Laundry and Vending Revenue 1,602 5920 Tenant Charges 14 5990 Miscellaneous Revenue 2,076 5900T Total Other Revenue 3,692 5000T Total Revenue 171,182

Expenses: Administrative Expenses 6203 Conventions and Meetings 874 6210 Advertising and Marketing 47 6250 Other Renting Expenses 2,971 6311 Office Expenses 5,940 6320 Management Fees 15,619 6330 Manager or Superintendent Salaries 15,047 6350 Audit Expenses 4,525 6351 Bookkeeping Fees/Accounting Services 1,440 6263T Total Administrative Expenses 46,463

Utilities Expenses 6450 Electricity 13,153 6451 Water 2,399 6452 Gas 3,890 6453 Sewer 3,120 6400T Total Utilities Expense 22,562

Operating & Maintenance Expenses 6510 Payroll 14,555 6515 Supplies 5,616 6520 Contracts 15,964 6525 Garbage and Trash Removal 1,558 6546 Heating/Cooling Repairs and Maintenance 1,200 6548 Snow Removal 185 6500T Total Operating and Maintenance Expenses $ 39,078

- 11 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 STATEMENT OF PROFIT AND LOSS DATA FOR THE YEAR ENDED DECEMBER 31, 2019

Expenses: Taxes & Insurance 6710 Real Estate Taxes $ 40,020 6711 Payroll Taxes 4,537 6720 Property & Liability Insurance 8,791 6722 Workmen's Compensation 138 6790 Miscellaneous Taxes, Licenses, Permits and Insurance 200 6700T Total Taxes and Insurance 53,686

Operating Results 6000T Total Cost of Operations before Depreciation 161,789 5060T Profit (Loss) before Depreciation 9,393 6600 Depreciation Expense 81,793 5060N Operating Profit or (Loss) (72,400)

Change in Total Net Assets from Operations 3250 Increase (Decrease) in Total Net Assets $ (72,400)

Part II S1000-010 Total mortgage (or bond) principal payments required during the audit year (12 monthly $ - payments). This applies to all direct loans and HUD-held and fully insured mortgages. Any HUD approved second mortgages should be included in this figure.

S1000-020 Total of 12 monthly deposits in the audit year into the Replacement Reserve account, as $ 9,842 required by the Regulatory Agreement even if payments may be temporarily suspended or reduced.

S1000-030 Replacement Reserves, or Residual Receipts and Releases which are included as $ - expense items on this Profit and Loss statement.

S1000-040 Project Improvement Reserve releases under the Flexible Subsidy Program that are $ - included as expense items on this Profit and Loss statement.

- 12 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 STATEMENT OF CHANGES IN NET ASSETS (DEFICIT) DATA FOR THE YEAR ENDED DECEMBER 31, 2019

S1100-060 Net Assets (Deficit) Without Donor Restrictions - December 31, 2018 $ (411,445) 3247 Increase (Decrease) in Net Assets Without Donor Restrictions (72,400) 3131 Net Assets (Deficit) Without Donor Restrictions - December 31, 2019 $ (483,845)

S1100-080 Net Assets (Deficit) With Donor Restrictions - December 31, 2018 $ 2,822,650 3133 Net Assets (Deficit) With Donor Restrictions - December 31, 2019 $ 2,822,650

S1100-050 Total Net Assets (Deficit) - December 31, 2018 $ 2,411,205 3250 Increase (Decrease) in Total Net Assets (72,400) 3130 Total Net Assets (Deficit) - December 31, 2019 $ 2,338,805

- 13 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 STATEMENT OF CASH FLOWS DATA FOR THE YEAR ENDED DECEMBER 31, 2019

Cash Flow from Operating Activities: S1200-010 Rental Receipts $ 167,001 S1200-020 Interest Receipts 489 S1200-030 Other Operating Receipts 3,692 S1200-040 Total Receipts 171,182

S1200-050 Administrative (15,863) S1200-070 Management Fees (12,579) S1200-090 Utilities (23,188) S1200-100 Salaries and Wages (29,320) S1200-110 Operating and Maintenance (24,722) S1200-120 Real Estate Taxes (42,307) S1200-140 Property Insurance (9,055) S1200-150 Miscellaneous Taxes and Insurance (4,881) S1200-160 Tenant Security Deposits (1,346) S1200-230 Total Disbursements (163,261)

S1200-240 Net Cash Provided by (Used in) Operating Activities 7,921

Cash Flow from Investing Activities: S1200-245 Net Deposits to the Tax & Insurance Escrow 3,925 S1200-250 Net Deposits to the Reserve for Replacement (10,226) S1200-350 Net Cash Provided by (Used in) Investing Activities (6,301)

S1200-470 Net Increase (Decrease) in Cash and Cash Equivalents 1,620 S1200-480 Beginning of Period Cash 232 S1200T End of Period Cash $ 1,852

- 14 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 SUPPLEMENTAL DATA FOR THE YEAR ENDED DECEMBER 31, 2019

1. Reserve for Replacements

In accordance with the provisions of the Regulatory Agreement, restricted cash is to be used for replacement of property with the approval of HUD as follows:

Reserve for Replacements: 1320P Balance, December 31, 2018 $ 71,839

1320DT Monthly Deposits $ 9,842 1320INT Interest 384 10,226

Balance, December 31, 2019 Confirmed by Bank $ 82,065

2. Changes in Rental Property Balance Balance 12/31/2018 Additions Deletions 12/31/2019 Assets 1410 Land $ 447,158 $ - $ - $ 447,158 1420 Buildings and Improvements 2,233,427 - - 2,233,427 1460 Furnishings and Equipment 98,485 - - 98,485 $ 2,779,070 $ - $ - $ 2,779,070

Balance Balance 12/31/2018 Additions Deletions 12/31/2019

Accumulated Depreciation $ 426,788 $ 81,793 $ - $ 508,581

Net Book Value $ 2,270,489

3. Profit and Loss Statement

Line 5990 Other Revenue Tenant Damages $ 2,076 $ 2,076

Line 6790 Miscellaneous Taxes, Licenses & Permits Ohio Attorney General Filing Fee $ 200 $ 200

- 15 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS, AND RESIDUAL RECEIPTS FOR THE YEAR ENDED DECEMBER 31, 2019

Part A - Compute Surplus Cash

Cash S1300-010 Cash $ 11,876 S1300-040 Total Cash 11,876

Current Obligations S1300-075 Accounts Payable - 30 days 5,127 S1300-100 Accrued Expenses (not escrowed) 1,591 2191 Tenant Deposits Held In Trust 7,057 S1300-110 Other Current Obligations - Accrued Management Fees 5,847 S1300-140 Total Current Obligations 19,622

S1300-150 Surplus Cash (Deficiency) $ (7,746)

Part B - Compute Distributions to Owners and Required Deposit to Residual Receipts

S1300-200 Amount Available for distribution during next fiscal period $ - S1300-210 Deposit Due Residual Receipts $ -

- 16 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER 31, 2019

Schedule of Expenditures of Federal Awards

Federal CFDA Federal Grantor/Program Title Number Expenditures

MAJOR PROGRAMS

Department of Housing and Urban Development Section 202 Capital Advance Program 14.157$ 2,663,600

Department of Housing and Urban Development Project Rental Assistance Contract (PRAC) 14.157 88,093

Department of Housing and Urban Development Section 202 Pre-Development Grant 14.157 159,050

Total Programs $ 2,910,743

Note A - Basis of Presentation

The accompanying schedule of expenditures of federal awards includes the federal award activity of Franklin Foundation of Kettering Park Four, Inc., HUD Project No. 046-EE101 under programs of the federal government for the year ended December 31, 2019. The information in this schedule is presented in accordance with the 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). Because the schedule presents only a selected portion of the operations, it is not intended to and does not present the financial position, changes in net assets or cash flows of Franklin Foundation of Kettering Park Four, Inc.

Note B - 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 Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

Note C - Indirect Cost Rate

The Corporation has elected not to use the 10% de minimis cost rate allowed under the Uniform Guidance.

Note D - Loan and Loan Guarantee Programs

The outstanding balance of loan and loan guarantee programs at December 31, 2019 with continuing compliance requirements which are reported as federal expenditures on the accompanying schedule of expenditures of federal awards was $2,822,650.

- 17 - 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

March 24, 2020

To the Board of Directors HUD Field Office Franklin Foundation of Kettering Park Four, Inc. Detroit, MI DBA Acorn Walk Columbus, OH

We have audited, in accordance with the 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 Franklin Foundation of Kettering Park Four, Inc., HUD Project No. 046-EE101, which comprise the statement of financial position as of December 31, 2019, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated March 24, 2020.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Franklin Foundation of Kettering Park Four, Inc.’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Franklin Foundation of Kettering Park Four, Inc.'s internal control. Accordingly, we do not express an opinion on the effectiveness of the Franklin Foundation of Kettering Park Four, Inc.'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 Organization’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.

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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Franklin Foundation of Kettering Park Four, Inc.'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 determination of financial statement amounts. 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.

- 18 - Franklin Foundation of Kettering Park Four, Inc. Report on Internal Control Page two

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 Franklin Foundation of Kettering Park Four, Inc.'s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Franklin Foundation of Kettering Park Four, Inc.'s internal control and compliance. Accordingly, this communication isABCD not suitable for any other purpose. Stemen, Mertens, Stickler, CPAs & Associates Certified Public Accountants Columbus, Ohio

- 19 - Independent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance

March 24, 2020

To the Board of Directors HUD Field Office Franklin Foundation of Kettering Park Four, Inc. Detroit, MI DBA Acorn Walk Columbus, OH

Report on Compliance for Each Major Federal Program

We have audited Franklin Foundation of Kettering Park Four, Inc., HUD Project No. 046-EE101's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of DBA Acorn Walk's major federal programs for the year ended December 31, 2019. Franklin Foundation of Kettering Park Four, Inc.'s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Franklin Foundation of Kettering Park Four, Inc.’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued 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). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Franklin Foundation of Kettering Park Four, Inc.’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of DBA Acorn Walk's compliance.

Opinion on Each Major Federal Program

In our opinion, Franklin Foundation of Kettering Park Four, Inc., 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 major federal programs for the year ended December 31, 2019.

- 20 - Franklin Foundation of Kettering Park Four, Inc. Report on Compliance Page two

Report on Internal Control Over Compliance

Management of Franklin Foundation of Kettering Park Four, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Franklin Foundation of Kettering Park Four, Inc.’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program 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 internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Franklin Foundation of Kettering Park Four, Inc.’s internal control over compliance.

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 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. 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 goverance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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 suitableABCD for any other purpose. Stemen, Mertens, Stickler, CPAs & Associates Certified Public Accountants Columbus, Ohio

- 21 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 SCHEDULE OF FINDINGS, QUESTIONED COSTS, AND RECOMMENDATIONS FOR THE YEAR ENDED DECEMBER 31, 2019

Part I - Summary of Auditor's Results

Financial Statement Section

Type of auditor's report Issued: Unmodified

Yes No Internal control over financial reporting: Material weaknesses identified? X Significant deficiencies identified not considered to be material weaknesses? X Noncompliance material to financial statements noted? X

Federal Awards Section

Internal control over financial reporting: Material weaknesses identified? X Significant deficiencies identified not considered to be material weaknesses? X

Type of auditor's report on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? X

Identification of major programs:

CFDA Number Name of Federal Program or Cluster

14.157 Department of Housing and Urban Development Section 202 Capital Advance Program

14.157 Department of Housing and Urban Development Project Rental Assistance Contract (PRAC)

Dollar threshold used to determine Type A programs $ 750,000

Yes No

Auditee qualified as low-risk auditee? X

- 22 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 SCHEDULE OF FINDINGS, QUESTIONED COSTS, AND RECOMMENDATIONS FOR THE YEAR ENDED DECEMBER 31, 2019

Part II - Financial Statement Finding Section

This section identified the significant deficiencies, material weaknesses, and instances of noncompliance related to the financial statements that are required to be reported in accordance with Chapter 5.18 of Government Auditing Standards.

None Noted

Part III - Federal Award Findings and Questioned Costs Section

This section identified significant deficiencies, material weaknesses, and instances of noncompliance, including questioned costs, related to the audit of major federal programs, as required to be reported by the Uniform Guidance. Where practical, findings should be organized by federal agency or pass-through entity.

None Noted

Auditor's Comments on Resolution Matter Related to HUD Programs

There were no unresolved prior audit findings noted during our audit of the 2019 financial statements. There were no compliance findings noted during our audit of the 2019 financial statements relating to physical inspections or management reviews.

- 23 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 CORRECTIVE ACTION PLAN FOR THE YEAR ENDED DECEMBER 31, 2019

There are no 2019 audit findings or unresolved issues for physical inspections or management reviews. Accordingly, no plan is submitted.

- 24 - FRANKLIN FOUNDATION OF KETTERING PARK FOUR, INC. DBA ACORN WALK HUD PROJECT NO. 046-EE101 MANAGING AGENT AND OWNER'S CERTIFICATION FOR THE YEAR ENDED DECEMBER 31, 2019

Managing Agent’s Certification

I hereby certify that I have examined the accompanying financial statements and supplemental data of Franklin Foundation of Kettering Park Four, Inc., DBA Acorn Walk, HUD Project No. 046-EE101 and to the best of my knowledge and belief, the same is complete and accurate.

BY: Ellen M. Hayden

TITLE: President

FIRM: Franklin Senior Housing Management, LLC 2000 Bethel Road, Suite D Columbus, Ohio 43220

E.I.N.: 20-1175515

Resident Manager: None

DATE: March 24, 2020

Owner’s Certification

I hereby certify that I have examined the accompanying financial statements and supplemental data of Franklin Foundation of Kettering Park Four, Inc., DBA Acorn Walk, HUD Project No. 046-EE101 and to the best of my knowledge and belief, the same is complete and accurate.

Franklin Foundation of Kettering Park Four, Inc. DBA Acorn Walk E.I.N.. 27-3262725

BY: Lynn D. Dalton

TITLE: President

DATE: March 24, 2020

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