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HomeMy WebLinkAbout03/24/2009VAVAA WHEAT RIDGE HOUSING AUTHORITY AGENDA March 24, 2009 CITY COUNCIL CHAMBERS 4:00 P.M. Individuals with disabilities are encouraged to participate in allpublic meetings sponsored by the City of Wheat Ridge. Call Heather Geyer, Public Information Officer at 303-235-2826 at least one week in advance of a meeting ifyou are interested in participating and need inclusion assistance. A. Call Meeting to Order B. Roll Call C. Approval of the Minutes: February 24, 2009 D. Officers Reports E. Public Forum F. New Business 1. Presentation & Acceptance of Audit 2. Status of Current Properties G. Unfinished Business 1. Other J. Adjournment WHEAT RIDGE HOUSING AUTHORITY MINUTES February 24, 2009 1. 2. CALL MEETING TO ORDER The meeting was called to order by Chair Brungardt at 4`00 p.m. in the City Council Chambers of the Wheat Ridge Municipal Buildrug, 7500 West 29` Avenue, Wheat Ridge, Colorado. ROLL CALL Authority members present: Kent I Kathy Lena] 3. Others present: lk Sa11y Payne, eputy Director parry Nelson, Cornerstone Realty An Lazzeri, Recording Secretary 27, 2009 oved by KentDays and seconded by Lena Rotola to approve the of Januai 27, 20.9~s presented. The motion passed 5-0. 4. 5. 6. There Wexe_no officer reports. PUBLIC FORUM There was nne present to address the Authority. NEW BUSINESS A. Discussion of alternative marketing strategies (Larry Nelson) Larry Nelson suggested that in order to move the properties, it would be necessary to reduce the prices on the remaining Allison and Parfet units. He stated that there is a problem with finding income-eligible people who are able to afford these units. At the present prices, it would take an Housing Authority Minutes - 1 - February 24, 2009 income of $43,000 to qualify for the units. If the prices are reduced, people with reasonable credit and income of $36-38,000 could qualify for ownership. People with good credit could qualify with incomes as low as $29-38,000. Further, CHFA cannot sell bonds any more. They have also suspended their loan program for people with disabilities. He proposed reducing the price on the remaining Allison units to $195,000 and $180,000 and employ additional marketing strategies. He also proposed reducing the price for the Parfet unit to $152,000. Various marketing strategies were discussed. It was moved by Janice Thompson and secoc authorize Cornerstone Realty to reduce. pi Al - property to $152,000; and reduce the pre on properties to $195,000 and $180,000 The mot B. Status of unspent HOME A memorandum was received from Jae Jefferson County Corrunity DevelopriT Authority to return HMM-funds in the a are no plans for use of th-- & mf by the Members of the Authority C. by Kathy Nuanes to on the Parfet Allison Court INN assed 5-0. p ,tt, MBA Director of ing the Housing 112,500 since there at this time. the funds should be of reference checks on the contractors in serving as the Authority's construction manager. z~ It was mowed by I~ay Nuanes and seconded by Lena Rotola that the Housing Authority contract with BRI for a period of one year from 1'~e time a r°6morandum of understanding is signed. The motion passed 5-0.61F A 7. UNFINISHEDTUSINESS There was ndunfinished business to come before the Authority. 8. OTHER A. Special Presentation Chair Brungardt presented the following award to Kent Davis for his eight years of service on the Housing Authority: In appreciation for all your Housing Authority Minutes -2- February 24, 2009 years of dedication and service in helping to increase home ownership opportunities and neighborhood community pride in Wheat Ridge. 9. ADJOURNMENT It was moved by Lena Rotola and seconded by Kathy Nuanes to adjourn the meeting at 4:51 p.m. The motion passed 5-0. Cheryl Brungardt, Chair Ann Secretary Housing Authority Minutes -3- February 24, 2009 Swanhorst & Company LLC 8400 E. Crescent Parkway, Suite 600 Greenwood Village, Colorado 80111 We are providing this letter in connection with your audit of the financial statements of the Wheat Ridge Housing Authority as of December 31, 2008, and for the year then ended for the purpose of expressing opinions as to whether the basic financial statements present fairly, in all material respects, the financial position of the Authority and the results of its operations and the cash flows, where applicable, in conformity with accounting principles generally accepted in the United States of America. We confirm that we are responsible for the fair presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. We are also responsible for adopting sound accounting policies, establishing and maintaining internal control, and preventing and detecting fraud. We confirm, to the best of our knowledge and belief, the following representations made to you during your audit. 1. The financial statements referred to above are fairly presented in conformity with accounting principles generally accepted in the United States of America and include all properly classified funds and other financial information of the primary government and all component units required by generally accepted accounting principles to be included in the financial reporting entity. We have made available to you all- a. Financial records and related data, and all audit or relevant monitoring reports, if any, received from funding sources. b. Minutes of the meetings of the Board of Commissioners or summaries of actions of recent meetings for which minutes have not yet been prepared. 3. There have beennocommunications fromregulatory agencies concerning noncompliance with, ordeficiencies in, financial reporting practices. 4. There are no material transactions that have not been properly recorded in the accounting records underlying the financial statements. 5. We believe the effects of the uncorrected financial statement misstatements summarized in the attached schedule (if applicable) are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. 6. We acknowledge our responsibility for the design and implementation ofprograms and controls to prevent and detect fraud. 7. We have no knowledge of any fraud or suspected fraud affecting the Authority involving- a. Management, b. Employees who have significant roles in internal control, or c. Others where the fraud could have a material effect on the financial statements. 8. We have no knowledge of any allegations of fraud or suspected fraud affecting the Authority received in communications from employees, former employees, analysts, regulators, or others. 9. The Authority has no plans or intentions that may materially affect the carrying value or classification of assets, liabilities, or equity. 10. The following, if any, have been properly recorded or disclosed in the financial statements- a. Related party transactions, including revenues, expenditures/expenses, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. b. Guarantees, whether written or oral, under which the Authority is contingently liable. C. All accounting estimates that could be material to the financial statements, including the key factors and significant assumptions underlying those estimates. We believe the estimates are reasonable in the circumstances, consistently applied, and adequately disclosed. 11. We are responsible for compliance with the laws, regulations, and provisions of contracts and grant agreements applicable to us, including tax and debt limits or contracts; and we have identified and disclosed to you all laws, regulations and provisions of contracts and grant agreements that we believe have a direct and material effect on the determination of financial statement amounts, or other financial data significant to the audit, including legal and contractual provisions for reporting specific activities in separate funds. 12. There are no- a. Violations or possible violations of budget ordinances, laws and regulations (including those pertaining to adopting, approving and amending budgets), provisions of contracts and grant agreements, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the financial statements, or as a basis for recording a loss contingency, or for reporting on noncompliance. b. Unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with Financial Accounting Standards Board (FASB) Statement No. 5, Accounting for Contingencies. C. Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by FASB Statement No. 5. d. Reservations or designations of fund equity that were not properly authorized and approved. 13. The Authority has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral. 14. The Authority has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance. This includes complying with any donor requirements. 15. We have identified to you any previous financial audits, attestation agreements, performance audits or other studies related to the objectives of the audit being undertaken. 16. As part of the audit, you have prepared the draft financial statements and related footnotes. We have designated a competent management-level individual to oversee your services and have made all management decisions and performed all management functions. We have reviewed, approved, and accepted responsibility for the financial statements and related footnotes. 17. The financial statements properly classify all funds and activities. 18. All funds that meet the quantitative criteria for presentation as major are identified and presented as such and all other funds that are presented as major are particularly important to financial statement users. 19. Net asset components (invested in capital assets net of related debt, restricted and unrestricted) and fund balance reserves and designations are properly classified and, if applicable, approved. 20. Provisions for uncollectible receivables have been properly identified and recorded. 21. Expenses have been appropriately classified in, or allocated to, functions and programs in the statement of activities, and allocations have been made on a reasonable basis. 22. Revenues are appropriately classified in the statement of activities within program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal. 23. Interfund, internal, and intra-entity activity and balances have been appropriately classified and reported. 24. Deposits and investment securities are properly classified as to risk, and investment ratings and valuations are proper. 25. Capital assets, including infrastructure assets, are properly capitalized, reported, and, if applicable, depreciated. 26. Required supplementary information (RSI) is measured and presented within prescribed guidelines. 27. To the best of our knowledge and belief, no events, including instances of noncompliance, have occurred subsequent to the balance sheet date and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements. 28. We have responded fully and truthfully to all inquiries made to us by you during your audit. Signed Signed Title Title WHEAT RIDGE HOUSING AUTHORITY FINANCIAL STATEMENTS December 31, 2008 TABLE OF CONTENTS PAGE Independent Auditors' Report Basic Financial Statements Statement of Net Assets Statement of Revenues, Expenses and Changes in Net Assets Statement of Cash Flows Notes to Financial Statements 5-9 Board of Commissioners Wheat Ridge Housing Authority Wheat Ridge, Colorado INDEPENDENT We have audited the accompanying basic financial statements; of the Wheat Ridge"Housing Authority as of and for the year ended December 31, 2008. These financial statements a"r'etke responsibility of the Wheat Ridge Housing Authority's management. Our responsibility is to express an opimon pn these financial statements based on our audit. We conducted our audit in accordance with auditing standard°s"generally accepted in the United States of America. r: Those standards require that we plan and perform the audit tpfobtamreasonable 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 audia also ncludes assessing the accounting principles used and significant estimates made by mana6egmc as we l as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable bastsfdr our opinion. y The Wheat Ridge Housing P,3~ithonty has~not presented management's discussion and analysis that the Governmental Accounting Standards Board>fias determined is necessary to supplement, although not required to be part of, the basic financial statements. In our opinion, the financial statemen'Ys referred to above present fairly, in all material respects, the financial position of the Wheat Ridge Housing Authority as of December 31, 2008, and the changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. February 5, 2009 BASIC FINANCIAL STATME WHEAT. RIDGE HOUSING AUTHORITY STATEMENT OF NET ASSETS December 31, 2008 ASSETS Current Assets Cash Prepaid Expenses Loans Receivable Property Held for Resale TOTAL ASSETS LIABILITIES Current Liabilities Accounts Payable Accrued Liabilities Retainage Payable Loan Payable TOTAL LIABILITIES NET ASSETS Unrestricted TOTAL LIABILITIES AND NET ASSETS $ 479,095 $ 454,662 10 350 8,567 8,885 750,000 1,125,600 $ 1,237,672 $ 1,589,497 18,113 $ 7,279 3,036 990 123,000 134,305 1,219,559 1,455,192 $ 1,237,672 $ 1,589,497 The accompanying notes are an integral part of the financial statements. 2 WHEAT RIDGE HOUSING AUTHORITY STATEMENT OF REVENUES. EXPENSES AND CHANGES IN NET ASSETS Year Ended December 31, 2008 2008 2007 OPERATING REVENUES Sales of Investment Property $ 299,000 $ 246,900 Cost of Sales (309,401) (216,280) Rental 900 8,395 TOTAL OPERATING REVENUES (9,501) 39,015 OPERATING EXPENSES Closing Costs 19,926 13,916 General and Administrative 11,994 10,031 Repairs and Maintenance 23,858 11,248 Utilities 6,337 2,886 Homeowners Dues CI 932 3,956 City Reimbursement ~Nr Fy vd 4,258 3,667 Property Acquisition Costs , 22,030 - Unrealized Loss on Property Held for Resale 143,228 - rY TOTAL OPERATING EXPENSES 232,563 45,704 OPERATING LOSS (242,064) (6,689) ~ 6~r NONOPERATING REVENUES (EXPENSES) r3 i'^ Interest Income 10,973 30,160 Interest Expense (4,542) (1,185) TOTAL NONOPERATING REVENUES (F~CPENSES~' _ 6,431 28,975 INCOME (LOSS) BEFORE CAPITAL CONT2l1)UT[ON (235,633) 22,286 ' CAPITAL CONTRIBUTIONS A Grants 187,500 CHANGE IN NET ASSETS (235,633) 209,786 NET ASSETS, Beginning ' 1,455,192 1,245,406 NET ASSETS, Ending $ 1,219,559 $ 1,455,192 The accompanying notes are an integral part of the financial statements. 3 WHEAT RIDGE HOUSING AUTHORITY STATEMENT OF CASH FLOWS Increase (Decrease) in Cash Year Ended December 31, 2008 2008 CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from Sales of Investment Property $ 299,000 Purchase and Rehabilitiation of Investment Property (100,049) Cash Received from Tenants 900 Cash Payments to Vendors and Suppliers (59,167) Net Cash Provided (Used) by Operating Activities 140,684 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Loan Repayments from Homeowners 318 Net Cash Provided by None CASH FLOWS FROM CAPI7 Grant Proceeds Loan Proceeds Loan Principal Payments Loan Interest Payments Net Cash Provided (Used) b CASH FLOWS FROM INVE! Interest Income Net Cash Provided by Inves NET INCREASE (DECREAS CASH, Beginning CASH, Ending RECONCILIATION OF OPERATING LOSS-,TO NET C~ PROVIDED (USED) BY OPERATING ACTIVITIES Operating Loss Adjustments to Reconcile Operating Loss to Net Cash Provided (Used) by Operating Activities Changes in Assets and Liabilities Related to Operations Prepaid Expenses Property Held for Resale Accounts Payable Accrued Liabilities Retainage Payable Net Cash Provided (Used) by Operating Activities 318 (123,000) (4,542) 2007 $ 246,900 (818,986) 8,395 (77,773) (641,464) 3,284 3,284 187,500 123,000 (1,185) (127,542) 309,315 10,973 30,160 10,973 30,160 24,433 (298,705) 454,662 753,367 479,095 $ 454,662 (242,064) $ (6,689) 340 (350) 375,600 (600,519) 10,834 (33,776) (3,036) 2,057 (990) (2,187) $ 140 684 $ (641,464) The accompanying notes are an integral part of the financial statements. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Wheat Ridge Housing Authority (the "Authority") have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Following is a summary of the more significant policies. Reporting Entity In accordance with governmental accounting standards, the Authority has considered the possibility of inclusion of additional entities in its financial statements:' The definition of the reporting entity is based primarily on financial accountability. The-Authority is financially accountable for organizations that make up its legal entity. It is also, fTmancially accountable for legally separate organizations if Authority officials appoint a vogn ajority gf,the organization's governing body and either it is able to impose its will on that or=ganization or they is''a potential for benefits to, or Pr' to impose specific financial burdens on tb&sAuthoriey. The Authority may also be financially accountable for organizations that are fiscally dependent upon it. Based on the application of this cnterta the Authority=does not include additional organizations within its reporting entity. Measurement Focus, Bngi%4f,Accoun4ng, and Financial Statement Presentation 11 The Authority uses 2n'enterprtsetfund t¢"account for its operations. Enterprise funds are used to account for operations that are fnanced and operated in a manner similar to private business enterprises, where theintent ofthe governing body is that costs of providing goods or services to the ss a lic on a coriftnumg bass be financed or recovered primarily through user charges. general pub i The financial statements are reported using the economic resources measurement focus and the accrual basis of acvoz~7ng. Revenues are recorded when earned and expenses are recorded when m the liability is incunlc~, regardless of the timing of related cash flows. Grants and similar 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 statements to the extent that those standards do not conflict with or contradict guidance of the GASB. Governments also have the option of following subsequent private-sector 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 nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the fund'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 nonoperating revenues and expenses. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 1: NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) 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. Property Held For Resale Property held for resale includes the acquisition and rehabilitation costs of investment property, and is reported at the lower of cost or market value. Risk Management The Authority is exposed to various risks of loss of assets; errors and omissions; and natural disc, i to torts; theft of, damage to, and destruction The Authoritv'`carries commercial insurance for these risks of loss. Comparative Data Comparative data for the prior year ha order to provide an understanding of However, complete comparative data has not been presented, dike its=s'nclus r difficult to read a„„a ggtedin the accompanying financial statements in ffie Authority's financial position and operations. nce with generally accepted accounting principles make the financial statements unduly complex and Budgetary A budget is adopteA"for the Authority as a management control devise, but is not legally required. information is not presented in the financial statements. Therefore, budgetary NOTE 3: DEVELOPMENT PROJECTS The Authority previously purchased and rehabilitated a condominium complex on Quail Street, a ten-unit condominium complex known as Carnation Square, and an eight-unit townhome complex known as Parkside. During 2006, the Authority purchased a duplex on Parfet Street. At December 31, 2008, one unit of the duplex, including rehabilitation costs, was held for resale. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 3: (Continued) During 2007, the Authority purchased a triplex on Allison Court, and a duplex on 41" Avenue. The Authority obtained grant funding and loan financing to purchase and rehabilitate the properties. At December 31, 2008, the properties, including rehabilitation costs, were held for resale. NOTE 4: CASH Deposits The Colorado Public Deposit Protection Act (PDPA) requi'i deposit cash in eligible public depositories. Eligibility isAte on deposit in excess of federal insurance levels must be o' determined by the PDPA. PDPA allows the financtal astituti all public funds held. The pool is to be maintained by another uninsured public deposits as a group. The rnii tet valite of th 102% of the uninsured deposits. At Decemb`e"4, 2008, $229,705 collateralized with securities held by the fmanci Authority's name. Investments es that all units of local government aimed by State regulations. Amounts ollateralized by eligible collateral as 6k1p create a single collateral pool for irisfiufion, or held in trust for all the e collateral must be at least equal to the Authority had bank deposits of al institution's agent but not in the The Authority is requ ed t6~&mply w~.rState statutes which specify investment instruments meeting defined rafist''g,°,matunty= custodial and concentration risk criteria in which local governments may invest, which iticludi the following: • Obligations of the U#.ited Stakes and certain U.S. Agency securities • Certain ilitemational agency securities • General obligation and revenue bonds of U.S. local government entities • Bankers' acceptances of certain banks • Commercial page"r • Written repurckase agreements collateralized by certain authorized securities • Certain money market funds • Guaranteed investment contracts • Local government investment pools Interest Rate Risk - State statutes generally limit investments to an original maturity of five years unless the governing board authorizes the investment for a period in excess of five years. Credit Risk - State statutes limit investments to those with specified ratings, as provided by nationally recognized statistical rating organizations, depending on the investment type. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 5: NOTE 6: NOTE 7: LOANS RECEIVABLE During 2002, the Authority approved a loan, totaling $10,250, to assist a homeowner with closing costs related to a condominium purchase. The loan requires monthly payments of $50, including interest at 3.5% per annum, through September, 2012. This loan is secured by the condominium unit. During 2008, the homeowner paid principal on the loan totaling $318, leaving an outstanding balance of $8,567 at December 31, 2008. PROPERTY HELD FOR RESALE Following is a summary of transactions for the property 31, 2008. Balance 1-- Acquisition and Rehabilitation Costs of Investment Property At December 31, 2008, management detemrined exceeded the estimated market value`rtAccgrding LOAN PAYABLE A summary of ch presented below. FirstBank Loan for the year ended December Balance 12/31/08 474,659 $ 750,000 carrying value of property held for resale rrying value has been reduced $143,228. debt for the year ended December 31, 2008, is Balance Balance 12/31/07 Additions Deletions 12/31/08 $ 123,000 $ 123,000 $ During 2007, the Authority obtained financing from FirstBank to purchase a duplex on 4V Avenue. Interest accrued on the outstanding balance of the loan at 7.5% per annum. Principal and interest was paid in full in November, 2008. NOTE 8: COMMITMENTS AND CONTINGENCIES Management Agreement The Authority had a management agreement with the Jefferson County Housing Authority (JCHA) for contracted services. Under the terms of this agreement, the Authority contracted for personnel expertise in housing management, operations and administration. The management agreement was terminated during 2008. The contracted services have been classified as functional expenses in the financial statements for better reporting purposes. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 8: Cooperation Agreement (Continued) 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 Authority. Claims and Judgements The Authority participates in federal programs that are from other governmental entities. Expenses financ appropriate grantor government. If expenses are d"s program regulations, the Authority may be rec,ixgd° December 31, 2008, significant amounts of grant exper believes that subsequent audits will not have.4 atenaF Authority. Tabor Amendment Colorado voters passed an several limitations, include state and local govemr4br Management believes tkea, funded by grants received ?y grants are subject to audit by the wed due to noncompliance with grant r eimbprse the grantor government. At have uotrb'een audited but the Authority ct on the overall financial position of the Sta"e' Constitution, Article X, Section 20, which has spending abilities, and other specific requirements of at is complex and subject to judicial interpretation. t from the provisions of the Amendment. February 5, 2009 Board of Commissioners Wheat Ridge Housing Authority Wheat Ridge, Colorado We have audited the financial statements of the Wheat Ridge 2008, and have issued our report thereon dated February 5, 20( with the following information related to our audit. Our Responsibility under Generally Accepted Auditing As stated in our engagement letter, our responsibility, our audit to obtain reasonable, but not absolute, assure the year ended December 31, ds require that we provide you )fessional standards, is to plan and perform the financial statements are free of material misstatement and are presented in accorda ice with generally accepted accounting principles. Because an audit is designed to provide reasonable, but not ebsolut6;~ assuranceand because we did not perform a detailed examination b,✓ of all transactions, there is a risk thatriiaferial misstatements or noncompliance may exist and not be detected by us. a In addition, an audit is not designed to de telp timiirafffeital misstatements or violations of laws or regulations that do not have a direct and material effect oh~the financial statements. In planning and performing ou~audit of the financial statements, we considered the Authority's internal control as a basis for designing our auditmg procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of ex 1 - n the effectiveness of the Authority's internal control. Accordingly, we do not express an opinion on the,„effectiveness of the Authority's internal control. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies usedby Authority are described inNote 1 to the financial statements. We noted no transactions entered into by the Authority during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including 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 the responses were not a condition to our retention. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's current judgements. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from management's curremjudgements. We evaluated the key factors and assumptions used to develop the significant estimates in determining that they are reasonable in relation to the financial statements taken as a whole. Management determined that its investment properties were recorded at values in excess of current market values. As a result, the carrying value of the properties was reduced by $143,228 at December 31, 2008. Significant Audit Adjustments For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. We provided management with a schedule of audit adjustments. An audit adjustment mayor may not indicate matters that could have a significant effect on the Authority's financial reporting.p'r"ocess (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, either individually or in the aggregate, indicate matters that could have a significant effect on the (authority'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 resolved to our satisfaction, concerning a financial accounting deporting, or auditing matter that could be significant to the financial statements or the auditors report. We are'pl~ased to report that no such disagreements c: + f, arose during the course of our audit. Consultations with Other Independent In some cases, management may decik similar to obtaining a "second opinio accounting principle to the Autbot,tty may be expressed on those Satementsl us to determine that the consultant has with other accountants. Difficulties Encountered in with ojiier accountants about auditing and accounting matters, N`, tuations. If a consultation involves the application of an dements or a determination of the type of auditors' opinion that onal standards require the consulting accountant to check with ant facts. To our knowledge, there were no such consultations the Audit We encountered no significant difficulties in performing our audit. Conclusion We would like to thank Dick Matthews for his assistance and cooperation during the audit. This report is intended solely for the information and use of the Board of Commissioners and management of the Wheat Ridge Housing Authority and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, Swanhorst & Company LLC Wheat Ridge Housing Authority General Fund December 31, 2008 ACCT ACCOUNT Client Adjustments Audit Audit NUMBER DESCRIPTION REF 12/31/08 DR CR - 12/31/08 - 12/31/07 ASSETS - 113 Cash - Operating C 1,875 1,875 (219) Cash - Condo Assoc. 0 0 0 - Cash - Carnation Constr Acct 0 0 0 120 Cash - Safekeeping Acct C 477,220 477,220 454,881 273,271 Loans Receivable D 8,567 8,567 8,885 Prepaid Items 10 10 350 Account Receivable - grants 0 0 0 151 Prop Held for Resale - Everett J 0 0 111,380 152 Prop Held for Resale - Allison J 464,824 74,824 390,000 388,545 153 Prop Held for Resale - Parfet J 177,072 27,072 150,000 374,343 153 Prop Held for Resale-41st J 251,332 41,332 210,000 251,332 157 Prop Held for Resale - Fruitdale J 22,030 22,030 0 0 accumulated depreciation 0 - 0 - 0 TOTAL ASSETS 1,402,930 0 165,258 1,237,672 1,589,497 LIABILITIES 300 A/P M 18,113 0 18,113 7,279 315 Retainage Payable 0 0 990 310 RE taxes payable 0 0 3,036 Home Owners Dues Escrow 0 0 0 360 Tenant deposits 0 0 0 Accrued Interest 0 0 0 note payable - construction 0 0 0 mortgage payable - long term L 0 - 0 - 123,000 TOTALLIABILITIES 18,113 0 0 - - 18,113 - 134,305 465 NET ASSETS, Beginning SALY 1,455,192 1,455,192 1,245,406 INCOME (LOSS) (70,375) 309,401 (309,401) - (70,375) - 209,786 NET ASSETS, Ending 1,384,817 309,401 (309,401) - 1,384,817 - 1,455,192 TOTAL LIAB AND NET ASSETS 1,402,930 309,401 (309,401) 1,402,930 1,589,497 0 (165,258) 0 INCOME Intergovernmental 0 0 0 530 Rental Income U 900 900 8,395 500 Proceeds-Sale of Units U2 299,000 299,000 246,900 535 Interest Income C 10,973 10,973 30,160 Other 0 0 0 564 Grant Income - CDBG/HOME 0 0 187,500 Gain on Sale of Condo Units 0 309,401 (309,401) (216,280) TOTAL INCOME 000 310,873 309,401 0 1,472 256,675 Wheat Ridge Housing Authority General Fund December 31, 2008 ACCT ACCOUNT Client Adjustments Audit Audit NUMBER DESCRIPTION - REF 12/31/08 DR CR 12/31/08 12/31/07 - EXPENSES General 551 Beginning Cost of Units Sold 0 0 0 0 0 599 Ending Costs of Units Sold- C J 210,342 0 309,401 (99,059) (816,799) 555 Property Acquisition 0 0 735,900 573-580 Property Rehab J 71,216 71,216 61,967 562 Acquisition cost - title fees 0 0 7,011 563 Architecture J 22,030 22,030 0 565 Condo map 0 0 3,682 567 Const Period Maintenance 264 264 185 568 Cosntmction Management J 3,559 3,559 5,145 570 Garages 0 0 0 571 Homeowners Association 1,500 1,500 2,750 581 Supplies/Materials 490 490 292 Other 0 0 - 0 - 0 Subtotal 309,401 0 309,401 - 0 - 133 700 Selling cost/Buyers Incentives U2 5,574 5,574 4,223 Zoning 0 0 0 Commissions U2 14,352 - 14,352 - 9,693 Subtotal 19,926 0 0 - 19,926 - 13,916 G/A 720 Homeowners Assoc Capital 40 40 (175) G/A 750 Accounting & Legal 8,200 8,200 6,700 G/A 754 Appraisal Fees 0 0 0 G/A 762 Bank Charges 1,243 1,243 1,165 G/A 775 Conference and meeting 133 133 75 G/A 777 Contract Services 0 0 0 G/A 787 Dues, Books, Subs 100 100 60 G/A 825 Office Supplies 0 0 0 G/A 832 Postage 13 13 51 G/A Other 874 874 250 Insurance 1,942 1,942 1,732 RE Taxes (551) - (551) - 173 Subtotal 11,994 0 0 - 11,994 - 8,126 Housing 0 0 0 802 Gardening & Maintenance 4,273 4,273 2,183 804 Homeowners Assoc. Dues 932 932 3,956 843 Repairs 19,585 0 19,585 8,932 865 Trash removal 0 0 0 G/A 872 Utilities 6,337 6,337 2,886 G/A 771 City Reimbursement M 4,258 4,258 3,667 Unrealized Loss on Property HFResale 0 143,228 143,228 Cost on Failed Property Acquis ition 0 - 22,030 22,030 Subtotal 35,385 0 0 35,385 23,529 Capital Outlay - 0 - 0 0 Debt Service 0 0 0 Principal 0 0 0 Interest to 4,542 4,542 1,185 Subtotal - 4,542 0 0 4,542 1,185 TOTAL EXPENSES - 381,248 0 309,401 71,847 46,889 NET INCOME (70,375) 309,401 (309,401) (70,375) 209,786 Wheat Ridge Housing Authority Audit Adjustments December 31, 2008 Ref Account # Description (1) J J Gain on Sale of Condo Units 599 Ending Cost of Units Sold For reporting purposes only to reclassify COGS to income. J (2) Costs on Failed Property Acquisition 551 Property Held for Resale DR CR 309,401.00 309,401.00 22,030.00 22,030.00 To record expense for failed property acquisition. (3) J Unrealized Loss on Property Held for Resale Allison Parfet 41 st Avenue 143,228.00 To record market value adjustment on Property Held for Resale. 74,824.00 27,072.00 41,332.00