ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE FMHA Project # 06-007-348936493 FINANCIAL STATEMENTS AS OF DECEMBER 31, 2016 TOGETHER WITH INDEPENDENT AUDITORS REPORT, FEDERAL SINGLE AUDIT REPORTS, AND SUPPLEMENTARY INFORMATION

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE DECEMBER 31, 2016 TABLE OF CONTENTS INDEPENDENT AUDITORS REPORT 1 FINANCIAL STATEMENTS Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 Notes to Financial Statements 6 FEDERAL SINGLE AUDIT REPORTS Federal Internal Control and Compliance Reports 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 12 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 14 Schedule of Expenditures of Federal Awards Schedule of Expenditures of Federal Awards 17 Notes to Schedule of Expenditures of Federal Awards 18 Schedule of Federal Findings and Questioned Costs 19 Summary of Prior Year Audit Findings 21 Supplemental Data Required by the USDA Rural Development Borrower Balance Sheet (Form RD 3560-10) 22 Cash Flow Statement (Form RD 3560-7) 24 Directors Certification 29 Management Agent s Certification / Audit Firm Information 30 Borrower Self-Certification Letter (Form HB-2-3560, Attachment 4-C) 31

INDEPENDENT AUDITORS REPORT

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Acadia Housing, Inc. d/b/a Dartmouth Village as of December 31, 2016, 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. Report on Summarized Comparative Information We have previously audited Acadia Housing, Inc. d/b/a Dartmouth Village s 2015 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated March 4, 2016. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and the supplemental information required by USDA included on pages 22 through 32, inclusive, are presented for purposes of additional analysis and are 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 27, 2017 on our consideration of Acadia Housing, Inc. d/b/a Dartmouth Village 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 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 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 Acadia Housing, Inc. d/b/a Dartmouth Village s internal control over financial reporting and compliance. Hoyt, Filippetti & Malaghan, LLC Groton, Connecticut March 27, 2017-2 -

FINANCIAL STATEMENTS

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2016 (With Summarized Financial Information for 2015) ASSETS 2016 2015 CURRENT ASSETS Cash $ 12,222 $ 18,218 Prepaid expenses 10,906 10,768 Total current assets 23,128 28,986 PROPERTY AND EQUIPMENT Land 200,000 200,000 Building and improvements 1,234,639 1,234,639 Furniture and equipment 17,741 15,517 1,452,380 1,450,156 Less accumulated depreciation 145,805 111,952 Total property and equipment 1,306,575 1,338,204 RESTRICTED DEPOSITS AND FUNDED RESERVES Reserve for replacement 112,410 87,082 Escrow deposits 11,496 1,990 Security deposits 13,310 13,233 Total restricted deposits and funded reserves 137,216 102,305 Total assets $ 1,466,919 $ 1,469,495 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Current maturities of long-term debt $ 29,567 $ 28,781 Accounts payable and accrued expenses 28,877 27,508 Deferred revenue 1,874 1,632 Tenant security deposits 13,899 14,581 Total current liabilities 74,217 72,502 LONG-TERM DEBT, net 1,343,244 1,370,194 Total liabilities 1,417,461 1,442,696 NET ASSETS Unrestricted 49,458 26,799 Total net assets 49,458 26,799 Total liabilities and net assets $ 1,466,919 $ 1,469,495 The accompanying notes are an integral part of these financial statements. - 3 -

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2016 (With Summarized Financial Information for the Year Ended December 31, 2015) 2016 2015 SUPPORT AND REVENUE Net rental income $ 239,862 $ 235,250 Interest subsidy 11,481 11,961 Laundry and other income 1,195 1,790 Interest income 234 185 Total support and revenue 252,772 249,186 EXPENSES Program services: USDA-RD-assisted housing project 195,140 208,390 Supporting services: General and administrative 34,973 32,832 Total expenses 230,113 241,222 Change in net assets 22,659 7,964 UNRESTRICTED NET ASSETS, beginning of year 26,799 18,835 UNRESTRICTED NET ASSETS, end of year $ 49,458 $ 26,799 The accompanying notes are an integral part of these financial statements. - 4 -

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2016 (With Summarized Financial Information for the Year Ended December 31, 2015) 2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 22,659 $ 7,964 Adjustments to reconcile the change in net assets to net cash provided by operating activities: Depreciation 33,853 33,686 Amortization of financing costs included in interest expense 446 446 Changes in operating assets and liabilities: Increase in: Prepaid expenses (138) (451) Increase (decrease) in: Accounts payable and accrued expenses 1,369 (4,214) Deferred revenue 242 (1,030) Tenant security deposits (682) 1,474 Net cash provided by operating activities 57,749 37,875 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (2,224) (6,531) Increase in reserve for replacements (25,328) (13,106) (Increase) decrease in escrow deposits (9,506) 6,598 Increase in security deposits (77) (1,263) Net cash used in investing activities (37,135) (14,302) CASH FLOWS FROM FINANCING ACTIVITIES Long-term debt principal payments (26,610) (27,361) Net cash used in financing activities (26,610) (27,361) NET DECREASE IN CASH (5,996) (3,788) CASH, beginning of year 18,218 22,006 CASH, end of year $ 12,222 $ 18,218 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 50,828 $ 52,168 NON-CASH TRANSACTIONS Interest subsidy $ 11,481 $ 11,961 Subsidized interest expense (11,481) (11,961) $ - $ - The accompanying notes are an integral part of these financial statements. - 5 -

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Dartmouth Village (the Project) is a division of Acadia Housing, Inc. (the Company). The Company is organized as a not for profit organization formed to acquire an interest in real estate located in Columbia, Connecticut and operate thereon an apartment complex of 24 units known as Dartmouth Village, under Section 515 of the National Housing Act of 1949. Such projects are regulated by the United States Department of Agriculture Rural Development (USDA-RD), (formerly Farmers Home Administration) as to rent charges and operating methods. The Project receives federal financial assistance from the USDA-RD through subsidized interest on a mortgage held by the USDA-RD and through rental assistance payments made on behalf of qualified low income tenants. Under the program, assisted tenants pay the landlord a calculated portion of the rent and USDA-RD contracts to pay the difference. Assisted tenants pay no more than thirty percent (30%) of their adjusted gross income as rental payments. Approximately seventy-two percent (72%) of the Project s net rental income was obtained through housing assistance payments from USDA-RD for the year ended December 31, 2016. PRIOR PERIOD SUMMARIZED FINANCIAL INFORMATION The financial statements include certain prior-period summarized financial information. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Project s audited financial statements as of and for the year ended December 31, 2015, from which the summarized information was derived. Certain reclassifications have been made to the 2015 amounts in order to conform to the 2016 presentation. USE OF ESTIMATES 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 and disclosures in the financial statements. Actual results could differ from those estimates. NET ASSET CATEGORIES To ensure observance of limitations and restrictions placed on the use of resources available to the Project, the accounts of the Project are maintained in the following net asset categories: Unrestricted Unrestricted net assets represent available resources other than donor restricted contributions. Included in unrestricted net assets are grants and contracts which may be earmarked for specific purposes. -6-

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) RECOGNITION OF SUPPORT AND REVENUE Revenue Revenue is recognized monthly as rental services are provided. Rental increases must be USDA-RD approved. Contributions Contributions are defined as voluntary, nonreciprocal transfers. The Project records contributions of cash and other assets as restricted support if they are received with donor stipulations that limit the use of such assets. When a restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. The Project s policy is to present temporarily restricted net assets received during the current year whose restrictions are also met during the current year with unrestricted net assets. Contributions received that are contingent on the occurrence of a future event are presented as deferred support until such conditions are substantially met, at which time they are recognized as support. Donated Assets Donated assets, including the usage of assets such as rent, are recognized as support at their estimated fair market value. The Project reports gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as temporarily restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Project reports expirations of donor restrictions in full when the donated or acquired long-lived assets are placed in service. Donated Services The Project recognizes donated services if they create or enhance nonfinancial assets or require specialized skills and would typically need to be purchased if not provided by donation. General volunteer services do not meet the criteria for recognition in the financial statements. No donated services have been recognized in the accompanying financial statements for the year ended December 31, 2016. -7-

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing program and supporting services have been reported on a functional basis which has been allocated to program and supporting services by management for the accompanying statement of activities. CASH EQUIVALENTS For the purpose of the statement of cash flows, cash equivalents are defined as highly liquid instruments with an original maturity of three months or less, exclusive of restricted deposits and funded reserves which are not available for operations. The Project had no cash equivalents at December 31, 2016. PROPERTY AND EQUIPMENT Property and equipment are carried at cost, if purchased or at its estimated fair market value if donated. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the related assets. Depreciation expense for the year ended December 31, 2016 totaled $33,853. Maintenance, repairs and minor renewals are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets are capitalized. The Project uses the direct expense method for planned major maintenance activities. Funds for these future expenditures are accumulated in a reserve for replacement account. ALLOWANCE FOR DOUBTFUL ACCOUNTS Management asserts that all accounts receivable are fully collectable, therefore no allowance for doubtful accounts has been established. RESTRICTED DEPOSITS AND FUNDED RESERVES The Project has deposited certain amounts into escrow accounts under terms of its mortgage financing arrangement (see Note 4). Such funds are restricted for allowable purposes as approved by the United States Department of Agriculture Rural Development (USDA-RD). ADVERTISING Advertising costs are expensed as incurred. Advertising expense for the year ended December 31, 2016 was $92. -8-

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) INCOME TAXES The Company is a non-stock, non-profit corporation, which is exempt from federal and state income taxes on exempt function income as a public charity under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes has been made in the accompanying financial statements. The Project did not recognize any liability for uncertain tax positions as defined by accounting principles generally accepted in the United States of America. The Project files a consolidated tax return with Acadia Housing, Inc. d/b/a Nutmeg Park Apartments (collectively The Company ). The federal tax return of the Company for the year ended December 31, 2016 is subject to examination by the IRS, generally for three years after it has been filed. APPLICATION OF ACCOUNTING STANDARDS The Project adopted Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issue Costs ( ASU 2015-03 ) as of January 1, 2016. As required by ASU 2015-03, the Project s debt issuance costs, previously reported as intangible or other assets, are now reported as a direct reduction from the face amount of the related long-term debt. Amortization of the debt issuance costs are included in interest expense. This ASU has been applied to all periods presented. SUBSEQUENT EVENTS The Project has performed an evaluation of subsequent events through March 27, 2017, which is the date the financial statements were available to be issued. There were no subsequent events identified that require disclosure. NOTE 2 - CONCENTRATIONS CREDIT RISK Financial instruments that are exposed to concentrations of credit risk consist primarily of cash, accounts receivable, restricted deposits and funded reserves. Cash - The Project places its cash deposits with a high credit quality institution and such deposits are covered by federal depository insurance. The Project has not experienced any losses in this area and management believes its cash deposits are not subject to significant credit risk. At December 31, 2016, there were no cash deposits that were in excess of federal depository insurance. Accounts receivable Amounts due from tenants for delinquent rent are considered by management to be fully collectible. No allowance for doubtful accounts has been established. -9-

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 2 - CONCENTRATIONS (Continued) CREDIT RISK (Continued) Restricted deposits and funded reserves - Restricted deposits and funded reserves are placed with a high credit quality institution and such deposits are covered by federal depository insurance. The Project has not experienced any losses in this area and management believes its restricted deposits and funded reserves are not subject to significant credit risk. At December 31, 2016, there were no restricted deposits and funded reserves that were in excess of federal depository insurance limits. NOTE 3 - ACCOUNTS RECEIVABLE There were no receivables due from tenants at December 31, 2016. NOTE 4 - LONG-TERM DEBT The Project s long-term debt consists of a mortgage note payable to USDA in the original amount of $846,144 and a mortgage note payable to Webster Bank in the original amount of $656,700. The terms and balances of the Project s long-term debt are as follows: Webster USDA Bank Total Original amount $ 846,144 $ 656,700 $ 1,502,844 Stated interest rate 3.000% 6.250% Year of maturity 2060 2032 Monthly payment $ 2,634 $ 4,835 $ 7,469 Principal outstanding at December 31, 2016: $ 815,065 $ 573,583 $ 1,388,648 Less: Current maturities 7,253 22,314 29,567 Less: Unamortized financing costs - 15,837 15,837 Long-term debt, net $ 807,812 $ 535,432 $ 1,343,244 Future maturities Year ending December 31, 2017 $ 7,253 $ 22,314 $ 29,567 2018 7,474 23,769 31,243 2019 7,701 25,320 33,021 2020 7,936 26,881 34,817 2021 8,177 28,726 36,903 Thereafter 776,524 446,573 1,223,097 $ 815,065 $ 573,583 $ 1,388,648-10-

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 4 - LONG-TERM DEBT (Continued) In July 2016, the USDA mortgage was re-termed for and additional fifty (50) years at a rate of three percent (3) per annum. All mortgage notes are secured by the Project s real estate. Total interest incurred for the year ended December 31, 2016 was $62,639 of which $62,193 was mortgage note interest and $446 was the amortization of financing costs. The Project receives interest reduction payments from USDA-RD which reduces the effective interest rate on these notes over the life of the mortgage notes payable. This interest subsidy has been recognized on an as received basis. The interest subsidy recognized for the year ended December 31, 2016 was $11,481. NOTE 5 - RELATED PARTY TRANSACTIONS AND COMMITTMENTS The Project has a management agreement with a limited liability company owned by a Board Member of the Company. The agreement requires the payment of a management fee in the amount of $63.00 per occupied unit per month, plus $18.50 per month for administration. Other services such as maintenance are billed separately. The total amount charged by the management agent in 2016 was $17,955 for management fees, $6,913 for maintenance, and $5,328 for administration. At December 31, 2016, no balance was owed to the managing agent for services rendered. -11-

FEDERAL SINGLE AUDIT REPORTS

FEDERAL INTERNAL CONTROL AND COMPLIANCE REPORTS

COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the Project 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. 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 Project 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 Project s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Hoyt, Filippetti & Malaghan, LLC Groton, Connecticut March 27, 2017-13-

Opinion on the Major Federal Program In our opinion, the Project complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended December 31, 2016. REPORT ON INTERNAL CONTROL OVER COMPLIANCE Management of the Project 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 the Project s internal control over compliance with the types of requirements that could have a direct and material effect on the 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 the Project 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 governance. 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. REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE We have audited the financial statements of the Project as of and for the year ended December 31, 2016, and have issued our report thereon dated March 27, 2017, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. 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 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 schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. -15-

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. Hoyt, Filippetti & Malaghan, LLC Groton, Connecticut March 27, 2017-16-

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER 31, 2016 Grantor; Program Title; Description Contract Number Federal CFDA Number Expenditures U.S. DEPARTMENT OF AGRICULTURE Direct: Rural Rental Housing Loans 06-007-348936493 10.415 $ 815,065 * Rural Rental Interest Subsidy 06-007-348936493 10.415 11,481 Rural Rental Assistance Payments 10.427 173,701 Total $ 1,000,247 * Represents balance of loan at December 31, 2016. (Beginning 2016 balance was $820,829). The accompanying note is an intregal part of this schedule. - 17 -

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS DECEMBER 31, 2016 NOTE A - ACCOUNTING BASIS BASIC FINANCIAL STATEMENTS The accounting policies of Acadia Housing, Inc. d/b/a Dartmouth Village conform to accounting principles generally accepted in the United States of America as applicable to nonprofit organizations. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS The accompanying schedule of expenditures of federal awards has been prepared on the accrual basis consistent with the preparation of the basic financial statements. Information included in the schedule of expenditures of federal awards is presented in accordance with the requirements Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). For cost reimbursement awards, revenues are recognized to the extent of expenditures. Expenditures have been recognized to the extent the related obligation was incurred within the applicable grant period and liquidated within 90 days after the end of the grant period. For performance-based awards, revenues are recognized to the extent of performance achieved during the grant period. Acadia Housing, Inc. d/b/a Dartmouth Village has not elected to use the 10% de Minimis indirect cost rate. The accompanying schedule of expenditures of federal awards includes the December 31, 2016 ending U.S. Department of Agriculture loan balance of $815,065. -18-

SCHEDULE OF FEDERAL FINDINGS AND QUESTIONED COSTS

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE SCHEDULE OF FEDERAL FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2016 SECTION I SUMMARY OF AUDITORS RESULTS FINANCIAL STATEMENTS Type of auditors report issued: Unmodified Internal control over financial reporting: Material weakness(es) identified? Yes No Significant deficiency(ies) identified? Yes None reported Noncompliance material to financial statements noted? Yes No FEDERAL AWARDS Internal control over major programs: Material weakness(es) identified? Yes No Significant deficiency(ies) identified? Yes None reported Type of auditors report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? Yes No Identification of major programs: CFDA Number Name of Federal Program 10.415 Rural Rental Housing Loans $815,065 Auditee qualified as low-risk auditee? Yes No Dollar threshold used to distinguish between Type A and Type B program: $750,000 SECTION II FINANCIAL STATEMENT FINDINGS No findings are reported. -19-

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE SCHEDULE OF FEDERAL FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2016 SECTION III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No findings are reported -20-

ACADIA HOUSING, INC. d/b/a DARTMOUTH VILLAGE SUMMARY OF PRIOR YEAR AUDIT FINDINGS FOR THE YEAR ENDED DECEMBER 31, 2016 PRIOR YEAR AUDIT FINDINGS RESOLVED There were no prior year audit findings. -21-

SUPPLEMENTAL DATA REQUIRED BY USDA-RURAL DEVELOPMENT

Form RD 3560-10 (02-05) Position 3 Multi-Family Housing Borrower Balance Sheet PART1-BALANCE SHEET FORM APPROVED OMBDNO. 0575-0189 Project Name: Dartmouth Village Borrower Name: Borrowed ID and Project Number: Acadia Housing, Inc. 06-007-348936493 Current Year Prior Year Comments Beginning Dates> ( 01-01-16 ) ( 01-01-15 ) Assets Ending Dates> ( 12-31-16 ) ( 12-31-15 ) Current Assets 1. GENERAL OPERATING ACCOUNT 2. R.E. TAX & INSURANCE ACCOUNT 3. RESERVE ACCOUNT 4. SECURITY DEPOSIT ACCOUNT 5. OTHER CASH (identify) 6. OTHER (identify) 7. TOTAL ACCOUNTS RECEIVABLE ( Attach list) ACCTSRCVBL 0-30 DAYS $ ACCTSRCVBL 30-60 DAYS $ ACCTSRCVBL 60-90 DAYS $ ACCTSRCVBL OVER 90 DAYS $ 8. LESS: ALLOWANCE FOR DOUBTFUL ACCOUNTS. 9. INVENTORIES (supplies) 10. PREPAYMENTS 11. 12. TOTAL CURRENT ASSETS (Add 1thru 11) 12,222 18,218 11,496 1,990 112,410 87,082 13,310 13,233 - - - - - - - - - - - - - - 10,906 10,768 - - 160,344 131,291 Fixed Assets 13. LAND 14. BUILDINGS 15. LESS: ACCUMULATED DEPRECIATION 16. FURNITURE & EQUIPMENT 17. LESS: ACCUMULATED DEPRECIATION 18. 19. TOTAL FIXED ASSETS (Add 13 thru 18) OTHER ASSETS 20. 21. TOTAL ASSETS (Add 12, 19, and 20) LIABILITIES AND OWNERS EQUITY CURRENT LIABILITIES 22. TOTAL ACCOUNTS PAYABLE (Attach List) ACCTS PAYABLE 0-30 DAYS $ 28,877 ACCTS PAYABLE 30-60 DAYS $ ACCTS PAYABLE 60-90 DAYS $ ACCTS PAYABLE OVER 90 DAYS $ 23. NOTES PAYABLE (Attach list) - Deferred Revenue 24. SECURITY DEPOSITS 25. TOTAL CURRENT LIABILITIES (Add 22 thru 24) 200,000 200,000 1,234,639 1,234,639 (140,403) (108,582) 17,741 15,517 (5,402) (3,370) - 1,306,575 1,338,204 - - 1,466,919 1,469,495 28,877 27,508 - - - - 1,874 1,632 13,899 14,581 44,650 43,721 See Independent Auditors' Report - 22-

USDA Form RD 3560-7 Form Approved OMB NO.0575-0189 PROJECT NAME BORROWER NAME BORROWER ID AND PROJECT NO Dartmouth Village Acadia Housing, Inc. 06-007-348936493 Loan/Transfer Amount Reporting Period Budget Type Note Rate Payment Project Rental Type Profit Type IC Payment $ The following utilities X Annual Quarterly Monthly Initial X Regular Report Rent Change X Family X Elderly Full Profit Limited Profit X Non-Profit are master metered Electricity X Water I hereby request units of RA. Current Member of RA units. SMR Congregate X Sewer Borrower Accounting Method Other Servicing Group Home X Other Trash Cash X Accrual PART I - CASH FLOW STATEMENT CURRENT PROPOSED BUDGET ACTUAL BUDGET COMMENTS or (YTD) Beginning Dates> 1/1/2016 1/1/2016 ( / / ) ( - - ) Ending Dates> 12/31/2016 12/31/2016 ( / / ) ( - - ) OPERATIONAL CASH SOURCES 1. RENTAL INCOME 244,080 242,347 2. RHS RENTAL ASSISTANCE RECEIVED 3. APPLICATION FEES RECEIVED 4. LAUNDRY AND VENDING 1,500 1,195 5. INTEREST INCOME 50 234 6. TENANT CHARGES 7. OTHER- PROJECT SOURCES 8. LESS (Vacancy and Contingency Allowance) (3,661) (2,485) 9. LESS (Agency Approved Incentive Allowance) 10. SUB-TOTAL [(1 thru 7) -(8 &9)] 241,969 241,291 NON-OPERATIONAL CASH SOURCE 11. CASH-NON PROJECT (2,224) 2016 Reserve Transfer made in 2017 12. AUTHORIZED LOAN (Non-RHS) 13. TRANSFER FROM RESERVE 94,000 7,109 includes $2,224 transferred in 2017 14. SUB-TOTAL (11 THRU 13) 94,000 4,885 15. TOTAL CASH SOURCES (10+14) 335,969 246,176 OPERATIONAL CASH USES 16. TOTAL O&M EXPENSES(From Part II) 130,922 128,739 17. RHS DEBT PAYMENT 21,512 19,421 18. RHS PAYMENT (overage) 19. RHS PAYMENT (Late Fee) 20. REDUCTIONS IN PRIOR YEARS PAYABLES 21. TENANT UTILITY PAYMENTS 22. TRANSFER TO RESERVE 30,000 30,212 23. RETURN TO OWNER 1,000 0 24. SUB-TOTAL (16 THRU 23) 183,434 178,372 NON-OPERATIONAL CASH USES 25. AUTHORIZED DEBT PAYMENT (Non-RHS) 58,018 58,018 26. CAPITAL BUDGET (III 4-6) 94,000 7,109 27. MISCELLANEOUS 28. SUB-TOTAL (25 THRU 27) 152,018 65,127 USDA P & I $30,000 transferred plus $212 interest D & O ins Webster Bank P&I 29. TOTAL CASH USES (24+28) 335,452 243,499 30. NET CASH (DEFICIT) (15-29) 517 2,677 CASH BALANCE 31. BEGINNING CASH BALANCE 3,000 20,208 32. ACCRUAL TO CASH ADJUSTMENT (see Part IV) 833 33. ENDING CASH BALANCE (30+31+32) 3,517 23,718 Checking and Insurance Escrow Statement of Cash Flows Checking and Insurance Escrow See Independent Auditors' Report - 24-

PART II - OPERATING AND MAINTENANCE EXPENSE SCHEDULE CURRENT PROPOSED BUDGET ACTUAL BUDGET 1. MAINTENANCE AND REPAIRS PAYROLL 8,500 7,155 2. MAINTENANCE AND REPAIR SUPPLIES 1,400 1,845 3. MAINTENANCE AND CONTRACT 6,500 6,620 4. PAINTING AND DECORATING 5,000 3,858 5. SNOW REMOVAL 7,000 3,890 6. ELEVATORS MAINTENANCE/CONTRACT 7. GROUNDS 8,200 10,030 8. SERVICE 700 9. CPTL BGT (PART V OPERATING) 3,000 2,348 10. OTHER OPERATING EXPENSE (itemize) 11. SUB-TOTAL MAINT. & OPERATING (1 thru 10) 39,600 36,446 COMMENTS Alarm Maintenance or (YTD) 12. ELECTRICITY 7,000 4,711 13. WATER If master metered check box 4,000 6,848 14. SEWER on front 2,200 0 15. FUEL (oil/coal/gas) 16. GARBAGE AND TRASH REMOVAL 5,300 4,440 17. OTHER UTILITIES 18. SUB-TOTAL UTILITIES (12 thru 17) 18,500 15,999 19. SITE MANAGEMENT PAYROLL 5,328 5,328 20. MANAGEMENT FEE 18,144 17,955 21. PROJECT AUDITING EXPENSE 5,500 6,175 22. PROJECT BOOKKEEPING/ACCOUNTING 23. LEGAL EXPENSE 500 0 24. ADVERTISING 300 92 25. TELEPHONE AND ANSWERING SERVICE 1,200 1,743 26. OFFICE SUPPLIES 600 862 27. OFFICE FURNITURE & EQUIPMENT 250 0 28. TRAINING EXPENSE 701 29. HEALTH INS. & OTHER EMP. BENEFITS 30. PAYROLL TAX 31. WORKMAN'S COMP. 32. OTHER ADMINISTRATIVE EXPENSE 1,500 2,161 33. SUB-TOTAL ADMINISTRATIVE (19 thru 32) 33,322 35,017 Software Maint / S/D Interest 34. REAL ESTATE TAXES 20,000 19,576 35. SPECIAL ASSESSMENTS 36. OTHER TAXES, LICENSES & PERMITS 37. PROPERTY & LIABILITY INSURANCE 19,500 21,701 38. FIDELITY COVERAGE INSURANCE 39. OTHER INSURANCE 40. SUB-TOTAL TAXES AND INSURANCE (34 thru 39) 39,500 41,277 Includes D & O Insurance 41. TOTAL O&M EXPENSES (11+18+33+40) 130,922 128,739 See Independent Auditors' Report - 25-

Form RD 3560-7 Page 2 PART III - ACCOUNT BUDGETING/STATUS CURRENT BUDGET ACTUAL Reserve Account 1. BEGINNING BALANCE 81,000 87,082 2. TRANSFER TO RESERVE 30,000 30,212 TRANSFER FROM RESERVE 3. OPERATING DEFICIT (1) 4. CAPITAL BUDGET (Part V reserve) 94,000 7,109 5. EQUIPMENT REPAIR & REPLACEMENTS 6. OTHER NON-OPERATING EXPENSES (2,224) 7. TOTAL (3 THRU 6) 94,000 4,884 8. Ending Balance [(1+2)-7] 17,000 112,410 GENERAL OPERATING ACCOUNT: * BEGINNING BALANCE 18,218 ENDING BALANCE 12,222 REAL ESTATE TAX AND INSURANCE ESCROW ACCOUNT:* BEGINNING BALANCE 1,990 ENDING BALANCE 11,496 TENANT SECURITY DEPOSIT ACCOUNT: * BEGINNING BALANCE 13,233 ENDING BALANCE 13,310 *Complete upon submission of actual expenses. NUMBER OF APPLICANTS ON THE WAITING LIST RESERVE ACCT. REQ. BALANCE NUMBER OF APPLICANTS NEEDING RA AMOUNT AHEAD/BEHIND PROPOSED BUDGET COMMENTS or (YTD) Rounding 2016 Reserve Transfer made in 2017 See Independent Auditors' Report - 26-

PART IV - RENT SCHEDULE A. CURRENT APPROVED RENTS POTENTIAL INCOME FROM UNIT DESCRIPTION RENTAL RATES EACH RATE UNIT NOTE NOTE UTILITY BR SIZE TYPE NUMBER BASIC RATE HUD BASIC RATE HUD ALLOWANCE (1) 1 BR N 20 840 899 0 201,600 215,760 0 124 (1) 1 BR HC 2 840 899 0 20,160 21,576 0 124 (2) 2 BR N 2 930 992 0 22,320 23,808 0 155 CURRENT RENT TOTALS 244,080 261,144 0 BASIC NOTE HUD B. PROPOSED CHANGE TO RENTS/UTILITY ALLOWANCE UNIT DESCRIPTION UNIT BR SIZE TYPE NUMBER BASIC POTENTIAL INCOME FROM EACH RATE NOTE NOTE RATE HUD BASIC RATE HUD 0 0 0 0 0 0 0 0 0 0 0 0 RENTAL RATES CURRENT RENT TOTALS 0 0 0 BASIC NOTE HUD EFFECTIVE DATE OF RENT/UTILITY ALLOWANCE CHANGE UTILITY ALLOWANCE DETAIL CURRENT PROPOSED MONTHLY DOLLAR ALLOWANCES UNIT BR SIZE TYPE NUMBER ELECTRIC GAS WATER SEWER TRASH OTHER TOTAL 1 N 124 0 0 0 0 0 1 HC 124 0 0 0 0 0 2 N 155 0 0 0 0 0 124 124 155 See Independent Auditors' Report -27-

PART V - ANNUAL CAPITAL BUDGET PROPOSED/ACTUAL PROPOSED/ACTUAL PROPOSED/ACTUAL FROM RESERVE FROM OPERATING NUMBER OF UNITS TOTAL Appliances: Proposed Actual Proposed Actual Proposed Actual Proposed Actual Range 1,000-500 475 3 1 1,500 475 Refrigerator 1,200-1,000-4 - 2,200 - Range Hood - - - - - - - - Washers & Dryers - - - - - - - - Carpet & Vinyl: 1 Bed Room 3,000 2,224 1,500 1,873 3 3 4,500 4,097 2 Bed Room - - - - - - - - 3 Bed Room - - - - - - - - Other - - - - - - - - Cabinets: Kitchens - - - - - - - - Bathroom - - - - - - - - Doors: Exterior 1,800 - - - 2-1,800 - Interior - - - - - - - - Window Coverings: Detail - - - - - - - - Heating & Air Conditioning Heating - - - - - - - - Air Conditioning - - - - - - - - Plumbing: Water Heater 3,000 - - - 3-3,000 - Bath Sinks - - - - - - - - Kitchen Sinks - - - - - - - - Faucets - - - - - - - - Toilets - - - - - - - - Other: Septic Work - - - - - - - - Major Electrical: Systems - - - - - - - - Int. Lighting - - - - - - - - Ext. Lighting - - - - - - - - Structures: Windows - - - Screens - - - - - - - - Walls - - - - - - - - Roofing - - - - - - - - Siding - - - - - - - - Exterior Painting - - - - - - - - Power Washing 2,500 2,385 - - - - 2,500 2,385 Paving: Asphalt 5,000 - - - - - 5,000 - Concrete 2,500 - - - - - 2,500 - Seal & Stripe - - - - - - - - Other - - - - - - - - Landscape & Grounds: Landscaping - - - - - - - - Lawn Equipment - - - - - - - - Fencing - - - - - - - - Recreational Area - - - - - - - - Signs - - - - - - - - Other - - - - - - - - Accessibility Features: Accessibility Features-Detail - - - - - - - - Accessibility Features-Other - - - - - - - - Reasonable Accomodations 4,000 - - - - - 4,000 - Automation Equipment: Site Managemnt - - - - - - - - Common Area - - - - - - - - Other: Capital Needs Assessment - 2,500 - - - - - 2,500 Septic System Replacment 70,000 - - - - - 70,000 - Total Capital Expense: 94,000 7,109 3,000 2,348 15 4 97,000 9,457 See Independent Auditors' Report -28-

HB-2-3560 Attachment 4-C Page 1 of 2 Attachment 4-C Performance Standards Borrower Self-Certification Letter Date USDA Rural Development Office Address 100 Northfield Drive Address Windsor, Connecticut 06095 In accordance with the criteria specified in Section 5; Paragraph 4.32 C. of the USDA Rural Development Handbook (HB-2-3560) for the year ended the borrower must self-certify that Dartmouth Village is in compliance with the nine performance standards. The following is a summary of our compliance with the performance standards. 1. The required accounts are (are not) properly maintained and tracked separately. The accounts we maintain are marked below: Operating Account(s) Security Deposit Account Tax & Insurance Account Reserve Account Other Accounts: 2. The payments from operating account(s) are (are not) disclosed and accurately represented. 3. The reserve account(s): a. is on (not on) schedule with the Agency required minimum funding requirements; b. is (is not) maintained in a supervised bank account that requires the Agency s countersignature on all withdrawals; c. is on (not on) schedule with contributions to the reserve account for the current year with the Agency required minimum funding; and d. has no (has) encumbrances on the reserve funds. 4. The tenant security deposits accounts are (are not) fully funded and are (are not) maintained in separate accounts. 5. The payment of owner return was: paid in the amount of $ for 20XX fiscal year and was (was not) in accordancewith the Agency s requirements OR not paid during the reporting year OR not allowable due to our nonprofit status OR (02-24-05) SPECIAL PN Added (10-05-07) PN 413-31-