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HomeMy WebLinkAbout06/22/2005HOUSING AUTHORITY MEETING June 22, 2005 LOBBY CONFERENCE ROOM 7:00 P.M. A. Call Meeting to Order B. Roll Call C. Approval of the Minutes: February 23, 2005 D. Officers Reports E. Public Forum F. Unfinished Business G. New Business 1. Presentation & acceptance of audit 2. IJpdate on Park Side Townhomes Project H. Other 1. Adjournment CITY OF WHEAT RIDGE HOUSING AUTHORITY Minutes of Meeting February 23, 2005 A. CALL MEETING TO ORDER The meeting was called to order at 7:00 p.m. by Vice Chair Davis. B. ROLL CALL Authority Members Present Cheryl Brungardt Kent Davis Kathryn Fulton Kathy Nuanes Authority Members Absent: Jerry DiTullio Others Present: Alan White, Community Development Director Larry Nelson, Comerstone Realty Ann Lazzeri, Recording Secretary C. APPROVAL OF MINUTES It was moved by Kathy Nuanes and seconded by Cheryl Brungardt to approve the minutes of December 1, 2004. The motion passed 4-0. D. OFFICERS REPORTS There were no officer reports. E. PUBLIC FORUM There was no one to appear before the Authority. F. UNFINISHED BUSINESS • Larry Nelson reported that one unit remains to be sold at Camation Square. In response to a question from Alan White, Larry Nelson explained that a unit at Quail Square has gone into foreclosure and is now owned by US Bank. The bank did not respond to a purchase offer submitted on behalf of the Authority. While the covenants contain a provision that the units must be owner- occupied, concern was expressed by the Authority that, because the unit is in foreclosure, it could possibly be sold as rental property. Housing Authority Minutes ' 1 - 02-23-OS It was moved by Cheryl Brungardt and seconded by Kathryn Fulton to direct the City Attorney to draft a letter to US Bank on behalf of the Housing Authority reminding the bank of the covenants and that the purpose of these units are to provide affordable housing and should not be marketed as a rental property. The motion passed 4-0. G. NEW BUSINESS 1. Discussion of Bids for Condo Conversion at 45`h and Everett Street There was a short discussion of bids for the 45`h and Everett project. Namin¢ of Proiect at 45'h and Everett Following discussion, it was moved by Kathryn Fulton and seconded by Cheryl Brungardt that the 5rst choice of names for the 45`h and Everett Project is Parkside Townhomes nt Clear Creek with the second choice being Boyd Crossing Townhomes at Clear Creek. The motion passed 4-0. Authorization to hire Swanhorst & Cutler to aerform Audit It was moved by Kathy Nuanes and seconded by Kent Davis to hire Swanhorst & Cutler to perform the audit for Wheat Ridge Housing Authority. The motion passed 4-0. H. OTHER • Cheryl Brungardt announced that the National Association of Housing and Rehabilitation Officials (NAHRO) will be holding its annual meeting in Pueblo some time in May and encouraged Authority members to attend. Members may contact Cheryl for further information. 1. ADJOURNMENT The meeting was adjourned at 7:32 p.m. Kent Davis, Vice Chair Ann Lazzeri, Secretary Housing Authority Minutes 02-23-OS Wheat Ridge Housing Authority Memorandum TO: Wheat Ridge Housing Aut6ority FROM: Kathy Field SUBJECT: 2004 Draft Audit DATE: June 17, 2005 Enclosed are the 2004 Draft Financial Statements for the Housing Authority. Please review before your next meeting on June 22nd. cc: Alan White, Community Development Director Alan Feinstein, Jefferson County Housing Authority Henry Wehrdt, Jefferson CounTy Housing Authority Larry Nelson & Betty Maybin, Comerstone Realty Jerry Dahl, City Attorney Randy Young, City Manager Dick Matthews, Accountant c wo~ .m sat~uunrMr ~vcnnywomn ~y,meeM ~~omfi,we..wpa WHEAT RIDGE HOUSING AUTHORITY FINANCIAL STATEMENTS December 31, 2004 TABLE OF CONTENTS Independent Auditors' Report Basic Financial Statements Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows Notes to Financial Statements PAGE 2 3 4 5-9 Board of Commissioners Wheat Ridge Housing Authoriry Wheat Ridge, Colorado INDEPENDENT AUDITORS' REPORT We have audited the accompanying basic financial statements of the Wheat Ridge Housing Authority as of and for the year ended Decarr►b431, 2004. These financial statements are the responsibility of the Wheat Ridge Housing Authorrty s,7nhn~tment. Our cesponsibility 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statement6 tef~ed to above present fairly, in ali material respects, the financial position ofthe Wheat Ridge Housing Audi~ty as of December 31, 2004, and the changes in its financial position and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 9 to the financial statements, the Wheat Ridge Housing Authoriry adopted the standards of Govemmental Accounting Standards Board Statements No. 34 and 38 for the year ended December 31, 2004. The Wheat Ridge Housing Authority has not presented managemenYs discussion and analysis that the Govemmental Accounting Standards Board has determined is aecessary to supplement, although not required to be part of, the basic financial statements. February 2005 BASIC FINANCIAL STATEMENTS WHEAT RIDGE HOUSING AUTHORITY STATEMENT OF NET ASSETS December 31, 2004 2004 - 2003 ASSETS Cash $ 356,647 $ 533,756 Grants Rectiv8blt - 20,000 PrepaidFacpenses - 1,996 Loans Receivable 12,708 12,963 Property Held for Resale 770,310 773,665 7'OTAL ASSETS _ 1.139,665 _ _1,342,410_ LIABILITIES AccountsPayable 8>>» 19'~~~ Retainage Payable ' Z~•3~ ~ Accrued Liabilities 4,770 569 Loan Payable - 173,298 TOTAL LIABILITIES _ 12,887 220,888 NET ASSETS UnresVicted ~1267, 78 _ I,121,522 The accompanying notes are an integral part of the financial statements. 2 WHEAT RIDGE HOUSING AUTHORITY STATEMENT OF REVENUPS EXPENSES AND CHANGES IN FUND NET ASSETS Year Ended December 31, 2004 OPERATING KEVENUES Rental Other TOTAL OPERA'I'ING REVENUES OPERATING EXPENSES General and Administrative Repairs and Maintenance Utilities Homeowners Dues . CiryReimbursement TOTAL OPERATING EXPENSES OPERATING MCOME (LOSS) NONQPERATING REVENUES (EXPENSES) Interest Income lnterest Expense Gain (Loss) on Sale of Investment Property TOTAL NONOPERATiNG REVENUES (EXPENSES): . INCOME (LOSS) BEFORE CAPITAL CONTRIB(!jlONS CAPITAL CONTRIBUTIONS Grants CHANGE IN NET ASSETS NET ASSETS, Beginning NET ASSETS, Ending --.-_2004 _ - 2003 ~ 13,606 $ 10,570 -_..55.. 13,606 10,625 8,043 7,404 3,266 - 5,726 1,541 1,200 1,258 3,125 2,506 21,360 12,739 (7,754) (2,114) 599 1,063 (60) (2,449) 12,471 (12,286) 13,010 (13,672) 5,256 (15,786) - 31,581 5,256 15,795 1,121,522 1,105,727 1,126,776 $-_-,_1,121,522 The accompanying notes are an integal part of [he financial statemen[s. 3 WHEAT RIDGE HOUSING AUTHORITY STATEMENT OF CASH FLOWS Increase (Decrease) in Cuh Year Ended December 31, 2004 2004 2003 CASH FLOWSFROM OPERATING ACTIVITIES Cash Retxived.fiinn Tenants and Others $ 13,606 $ 10,625 Cash PSyInFfltS io Suppliers and Others (26,756) (13,730) Ne[ Cash Provided (Used) by Operating Activities _ (13,150) (3,105) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES I,oan Repayments from Homeotimers 255 247 Net Cash Provided by Noncapital Financing Activities 255 247 CASH FLOWS FROM CAPITALANflItELATED FINANCING ACTIVITIES ; psingCbsts of lnvestment Property Purchase, Rehabilitation and.Gl (776,966) (1,013,707) , Proceeds from Sale of Imestine+lt.Property 965,481 639,000 Grant Proceeds 20,000 11,581 Loan Proceeds (773,298) 173,298 Loan Principal Payments - - Loan lnterest Payments (60) (1449) Net Cash Provided (Used) by Capital and Related Financing Activities (164,843) _ (192,277) CASH FLOWS FROM INVESTING ACTIVITIES Interest Income 599 1,063 Net Cash Provided by Investing Activities _ 599 _1,063 NET TNCREASE (DECREASE) IN CASH (177,139) (194,072) CASH,Beginning 533,786 _ 727,858 CASH,Ending $ 356,647 $ 533,786 RECONCIUATION OF OPERATING TNCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTTViTIES , Operating Income (Loss) $ (7,754) $ (2,114) Adjustmenls to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Changes in Asse[s and Liabilities Related to Operations Prepaid Expenses 7,996 (1,996) AccountsPayable (11,593) 2,986 Accrued Liabilities 4,201 569 Homeowners Dues Escrow (2,550) Net Cash Provided (Used) by Operating Activi[ies S ~(13,150) S_ _(3,105) The accompanying notes are an integal part of the financial statements. 4 WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2004 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ` The financial statements of the Wheat Ridge Housing Authority (the "Au[hority") have been - prepared in conformiry with generally accepted accounting principles (GAAP) as applied to govemmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Authority's accounting policies are described below. Reporting Entity In accordance with govemmenta] accounting standards, the Authority has considered the possibiliry of inclusion of additional entities in its financial statements. The definition of the reporting entity is based gcm='ly on financial accountability. The Authoriry is financially accountable for organiz8tioq~s~i2t make up its legal entity. It is also financially accountable for legally separate organizaCimis if Authority officials appoint a voting majority of the organization's goveming body and either it is able to impose its will on that organization or there is a potential for benefits to, or to impose specific financial burdens on the Authority. The Authoriry may also be financially accountable for organizations that are fiscally dependent upon it. Based on the application of this criteria, the Authority does not include additional organizations within its reporting entity. Measurement Focus, Basis QY;A,etounting, and Financial Statement Presentation xa. .n The Authoriry uses an entet~M'ise fund to account for its operations. The fnancial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when the liability is incurred, regardless of the timing of related cash flows. Grants and similaz items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in the financial statemenu t#~e extent that those standards do not conflict with or contradict guidance of the Govemmentai-/~~nting Standazds Board. Governments also have the oprion of following subsequent privaUe-sdctor guidance for their enterprise funds, subject to this same limitation. The Authority has elected not to follow subsequent private-sector guidance. Enterprise funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the Authority's principal ongoing operations. Operating expenses include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the Authority's practice to use restricted resources first, then unrestricted resources as they are needed. WHEAT RIDGE HOUSING AUTHOR]TY NOTES TO FINANCIAL STATEMENTS December 31, 2004 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Prepaid Expenses h Payments to vendors for services which will beneft periods afrer December 31 are recorded as prepaid items. Property Held For Resale Property held for resale includes the purchase and rehabilitation costs of investment property, and is recorded at cost. Risk Mauagement The AutFloiiry is exposed to various risks of loss related to torts; thefr of, damage to, and destruction of assets; enors and omissions; and namral disasters. The Authority carries commercial insurance for these risks of loss. NOTE 2: STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY Budgetary InTormation The Authority prepares annval budgets for management purposes. However, because the Authority is not legally required to btu*t its activities, no budgetary statements are presented in the financial statements. NOTE 3: DEVELOPMENT PROJECTS During 2004, the Authority purchased an eight-unit townhome complex for the purpose of establishing and providing a homeownership propr#R to low-income residents of the City Wheat Ridge. The Authority will rehabilitate the um~qf+Qi`"resale to qualified buyers. During 2003, the Authority purchased a ten- unit condominium complex known as Carnation Square to provide a homeownership program to low-income residents of the Ciry of Wheat Ridge. The Authority rehabilitated the units for resale to qualified buyers and sold rivo units during 2003. During the year ended December 31, 2004, six units were sold at sales prices of $124,000 and $133,500. The average unit cost to the Authoriry, including purchase, rehabilitation and broker commissions was approximately 115,OOQ resulting in a gain of $12,471. Two units were held for resale at December 31, 2004. WHEAT WDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2004 NOTE 4: CASH + Deposits The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government deposit cash in eligible public depositories. Eligibility is determined by state regulations. Amounts on deposit in excess of federal insurance levels must be collateralized by eligible collateral determined by the PDPA. The institution is allowed to create a single collateral pool for al1 public funds held. The pool is to be maintained by another institution or held in trust for all the uninsured public deposits as a group. The market value of the collateral must be at least equal to 102% of the uninsured deposits. Deposits are cat4orized to give an indication of risk assumed by the AuthoriTy at the end of the year. Categaty l; includes deposits that are insured, Category 2 includes collateralized deposits with securities held by the pledging institution's trust department or agent in the Authority's name, and Category 3 includes uncollateralized, uninsured deposits. At December 31, 2004, the Authority's deposits had a carrying balance of $356,647 and a corresponding bank balance as follows: Bank Balance Insured (Category 1) $ 100,000 Collateralized (Category 2) 257,073 Total $ 357.073 NOTE 5: LOANS RECENABLE During 2002, the Authority approved loans, totaling $13,210, to assist two homeowners with closing costs related to their condominium purchases. One loan requires monthly payments of $50, including interest at 3.5% per annum, through Septpmber, 2012. The second loan requires one payment of $3,525, including interest at 3.5% pet'annum, due in October, 2007. These loans are secured by the condominium units. During200d;`thehomeownersmadeprincipalpaymentstotaling $255, resulting in a balance of $12,708 at December 31, 2004. NOTE 6: PROPERTY HELD FOR RESALE Following is a summary of transactions related to the property held for resale for the year ended December 31, 2004. Balance Balance 12/31/03 Additions Deletions 12/31/04 Purchase and Rehabilitation Costs of Investment Property $ 773,665 $ 549.527 $ 552.882 $ 770.310 WHEAT WDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2004 NOTE 7: LOAN PAYABLE Following is a summary of loan transactions for the year ended December 31, 2004. Balance Balance 12/31/03 Additions Pavments 12/31/04 Loan Payable - Vectra Bank $ 173Z98 $ 84,462 $ 257,760 $ - During 2003, the Authority obtained a$325,000 loan to provide short-term financing for rehabilitation ofthe Camation Square condominium complex. At December 31, 2003, the Authority had drawn $173;298 on the loan. During 2004, the Authority had drawn an additional $84,462 on the loan,;;'ihe.loan accrues interest at 335% per annum and is secured by land and buildings. The loan wes oakl in full on the maturiry date, May 19, 2004. NOTE 8: COMMTTMENTS AND CONTINGENCIES Management Agreement The Authority has a management agreement with the Jefferson County Housing Authoriry (JCHA) for contracted services. Under tlue,terms of this agreement, the Authority contracts for labor and expertise in housing authority,th9nagement, operation and administration, etc. The contracted services have been classifiedes functional expenses in the financial statements for better reporting purposes. Cooperation Agreement The Authority has entered into an agreement with the City of Wheat Ridge for contracted services. Under the terms of this agreement, the City will provide legal, planning, engineering services, etc., as deemed necessary by the Authority. Under the terms of this agreement, the City Manager or his designee will act as the Executive Director of the AuWority. Claims and Judgements The Authority participates in federal programs that aze fully or partially funded by grants received from other governmental units. Expenses financed by grants are subject to audit by the appropriate grantor government. If expenses are disallowed due to noncompliance with grant program regulations, the Authority may be required to reimburse the grantor govemment. As of December 31, 2004, significant amounts of grant expenses have not been audited but the Authority believes that subsequen[ audits will not have a material effect on the overall financial positioo of the Authority. Tabor Amendment Colorado voters passed an amendment to the State Constitution, Article X, Section 20, which has several limitations, including revenue raising, spending abilities, and other specific requirements of state and local govemment. The Amendment is complex and subject to judicial interpretation. Management believes the Authority is exempt from the provisions of the Amendment. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2004 NOTE 9: CHANGE IN ACCOUNTING PRINCIPLE For the year ended December 31, 2004, the Authority adopted the standards of Governmental ' Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis for State and Local Governments. In addition, the AuthoriTy has revised or added certain note disclosures in accordance with GASB Statement No. 38, Certain Financial Statement Note Disclosures. Februaryk, 2005 Board of Commissioners Wheat Ridge Housing Authority Wheat Ridge, Colorado We have audited the basic finaqcial statements of the Wheat Ridge Housing Authority for the year ended December 31, 2004, and have issued outiCp4rt thereon dated February 1, 2005. Professional standards require that we provide you with the followiug,}nfotingtion related to our audit. Our Respoosibility under Generally Accepted Auditing Standards As stated in our engagement letter, our responsibility, as described by professional standards, is to plan and perform our audi[ to obtain reasonable, but not absolute, assurance about whether the basic financial statements aze free of materiai misstatement and are presented in accordance with generally accepted accounting principles. Because an audit is designed to provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or regulations that do not have a direct and tltate[ial effect on the financial statements. As part of our audit, we considered the intemal control of the Authority. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such intemal control. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accoun[ing policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting pol icies and their application. The significant accounting policies used by Aathority pii5 ilescribed in Note 1 to the financial statemeMS. We noted no transactions entered into by the Authority duriug di'e'year that were both significant and unusual, and of which, under professional standards, we are required to infortn you, or transactions for which there is a lack of authoritative guidance or consensus. During the year ended December 31, 2004, the Authoriry adopted the standards of Governmental Accounting Standards Board (GASB) Statement No. 34. Significant Audit Adjustments For purposes of this Ietter, professional standards define a significant audit adj ustrnent as a proposed correction of the basic financial statements that, in our judgment, may not have been detdCted except through our auditing procedures. We provided management with a schedule of audit adjustments. An audit adjustment may or may not indicate matters that could have a sign ificant effect on the Authority's financial reporting process (that is, cause future financial statements to be materially misstated). Management has determined that the effects of the uncorrected misstatements are immaterial, both individually and in the aggregate, to the basic financial statements taken as a whole. In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the Authority, either individually or in the aggregate, indicate matters that could have a s ignificant effect on the Authoriry's financial reporting process. Disagreements with Management For purposes'of this letter, professional standards define a disagreement with management as a matter, whether or not re9olVed #b our sa[isfaction, concerning a financial accounting, reporting, or auditing matter that could be significaM to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a"second opinion° on certain situations. If a consultation involves application of an accounting principle to the Authority's financial statements or a determination of the type of auditors' opinion that may be expressed on those statements; Our professional standards require the consulting accountantto check with us to determine that the consithaAtfias all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, inciuding the application of accounting principles and auditing standards, with management each year prior to retention as the Authority's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the Aadit We encountered no significant difficulties inperforming our audit. Conclusion We would like to thank Alan White and Dick Matthews for their assistance and cooperation during the audit. This information is intended solely for the use of the Board of Commissioners and management of the Wheat Ridge Housing Authoriry and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, Swanhorst & Company LLC 2