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HomeMy WebLinkAbout2005 HA AuditWHEAT RIDGE HOUSING AUTHORITY FINANCIAL STATEMENTS December 31, 2005 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 PAGE 4 Notes to Financial Statements 5-8 Swanhorst & Company LLC Ccnificd Public A¢ouutau¢ Board of Commissioners Wheat Ridge Housing Authority 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 December 31, 2005. These financial statements are the responsibility of the Wheat Ridge Housing Authority's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the auditto obtain reasonable assurance about whetherthe 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. The Wheat Ridge Housing Authority has not presented management's discussion and analysis that the Governmental Accounting Standards Board has determined is necessary to supplement, although not required to be part of, the basic financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Wheat Ridge Housing Authority as of December 31, 2005, 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. February 9, 2006 8400 E. Crescent Parkway • Suite 600 • Greenwood Village, CO 80111 • (720) 528-4306 Fax: (720) 528-4307 BASIC FINANCIAL STATEMENTS WHEAT RIDGE HOUSING AUTHORITY STATEMENT OF NET ASSETS December 31, 2005 ASSETS Cash Loans Receivable Property Held for Resale TOTAL ASSETS LIABILITIES Accounts Payable Accrued Liabilities Retainage Payable TOTAL LIABILITIES NET ASSETS Unrestricted TOTAL LIABILITIES AND NET ASSETS 2005 2004 $ 222,664 $ 356,647 12,443 12,708 1,010,671 770,310 $ 1,245,778 $ 1,139,665 $ 7,105 $ 8,117 - 4,770 35,610 - 42,715 12,887 1,203,063 1,126,778 $ 1,245,778 $ 1,139,665 The accompanying notes are an integral part of the financial statements. 2 WHEAT RIDGE HOUSING AUTHORITY STATEMENT OF REVENUES. EXPENSES AND CHANGES IN FUND NET ASSETS Year Ended December 31, 2005 2005 2004 OPERATING REVENUES Sales of Investment Property $ 242,000 $ 765,481 Cost of Sales (220,783) (739,887) Rental 13,414 13,606 TOTAL OPERATING REVENUES 34,631 39,200 OPERATING EXPENSES Closing Costs 18,780 13,123 General and Administrative 7,046 8,043 Repairs and Maintenance 2,041 3,266 Utilities 2,072 5,726 Homeowners Dues 1,927 1,200 City Reimbursement 2,432 3,125 TOTAL OPERATING EXPENSES 34,298 34,483 OPERATING INCOME (LOSS) 333 4,717 NONOPERATING REVENUES (EXPENSES) Interest Income 952 - 599 Interest Expense - (60) TOTAL NONOPERATING REVENUES (EXPENSES) 952 539 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 1,285 5,256 CAPITAL CONTRIBUTIONS Grants 75,000 - CHANGE IN NET ASSETS 76,285 5,256 NET ASSETS, Beginning 1,126,778 1,121,522 NET ASSETS, Ending $ 1,203,063 $ 1,126,778 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, 2005 CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from Sales of Investment Property . Purchase and Rehabilitiation of Investment Property Cash Received from Tenants Cash Payments to Vendors and Suppliers Net Cash Provided (Used) by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Loan Repayments from Homeowners Net Cash Provided by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Grant Proceeds Loan Principal Payments Loan Interest Payments Net Cash Provided (Used) by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest Income Net Cash Provided by Investing Activities NET INCREASE (DECREASE) IN CASH CASH, Beginning CASH, Ending RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Changes in Assets and Liabilities Related to Operations Property Held for Resale Prepaid Expenses Accounts Payable Accrued Liabilities Retainage Payable Net Cash Provided (Used) by Operating Activities 2005 $ 242,000 (425,534) 13,414 (40,080) 2004 $ 765,481 (763,843) 13,606 (39,879) (210,200) (24,635) 265 255 265 255 75,000 20,000 - (173,298) (60) 75,000 (153,358) 952 599 952 599 (133,983) (177,139) 356,647 533,786 $ 222,664 $ 356,647 333 $ 4,717 (240,361) 3,355 1,996 (1,012) (11,593) (4,770) 4,201 35,610 (27,311) $ (210,200) $ (24,635) The accompanying notes are an integral part of the financial statements. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2005 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 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 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 financially accountable for legally separate organizations if Authority officials appoint a voting majority of the organization's governing 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 Authority 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 of Accounting, and Financial Statement Presentation The Authority uses an enterprise fund to account for its operations. Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The financial 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 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 Governmental Accounting Standards Board. 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 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 nonoperating 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 AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2005 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property Held For Resale Property held for resale includes the acquisition and rehabilitation costs of investment property, and is recorded at cost. Risk Management The Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The Authority carries commercial insurance for these risks of loss. Comparative Data Comparative data for the prior year has been presented in the accompanying financial statements in order to provide an understanding of changes in the Authority's financial position and operations. Certain prior year amounts have been reclassified to conform to the current year presentation. NOTE 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary Information Budgets are adopted for the Authority as a management control devise, but are not legally required. Therefore, budgetary information is not presented in the financial statements. NOTE 3: DEVELOPMENT PROJECTS During 2004, the Authority purchased an eight-unit townhome complex known as Parkside. The Authority is rehabilitating the units for resale to qualified buyers. During 2003, the Authority purchased aten- unit condominium complex known as Carnation Square to provide a homeownership program to low-income residents of the City of Wheat Ridge. The Authority rehabilitated the units for resale to qualified buyers and sold the final two units during 2005. The Authority previously purchased and rehabilitated a condominium complex on Quail Street. During 2005, the Authority acquired one unit from the complex, which is being held for resale. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2005 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. At December 31, 2005, the State regulatory commissioners had indicated that all financial institutions holding deposits for the Authority are eligible public depositories. Amounts on deposit in excess of federal insurance levels must be collateralized by eligible collateral as determined by the PDPA. PDPA allows the financial institution to create a single collateral pool for all 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. At December 31, 2005, the Authority had bank deposits of $122,864 collateralized with securities held by the financial institution's agent but not in the Authority's name. Investments The Authority is required to comply with State statutes which specify investment instruments meeting defined rating, maturity, custodial and concentration risk criteria in which local governments may invest, which include: • Obligations of the United States and certain U.S. Agency securities • Certain international agency securities • General obligation and revenue bonds of U.S. local government entities • Bankers' acceptances of certain banks • Commercial paper • Written repurchase agreements collateralized by certain authorized securities • Certain money market funds • Guaranteed investment contracts • Local government investment pools At December 31, 2005, the Authority had no investments. NOTE 5: LOANS RECEIVABLE 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 September, 2012. The second loan requires one payment of $3,525, including interest at 3.5% per annum, due in October, 2007. These loans are secured by the condominium units. During 2005, the homeowners made principal payments totaling $265, resulting in a balance of $12,443 at December 31, 2005. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2005 NOTE 6: PROPERTY HELD FOR RESALE Following is a summary of transactions for the property held for resale for the year ended December 31, 2005. Balance Balance 12/31/04 Additions Deletions 12/31/05 Acquisition and Rehabilitation Costs of Investment Property $ 770,310 $ 461,144 $ 220,783 $ 1,010,671 NOTE 7: COMMITMENTS AND CONTINGENCIES Management Agreement The Authority has a management agreement with the Jefferson County Housing Authority (JCHA) for contracted services. Under the terms of this agreement, the Authority contracts for labor and expertise in housing authority management, operation and administration, etc. The contracted services have been classified as 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 Authority. Claims and Judgements The Authority participates in federal programs that are 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 government. As of December 31, 2005, significant amounts of grant expenses have not been audited but the Authority believes that subsequent audits will not have a material effect on the overall financial position 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 government. The Amendment is complex and subject to judicial interpretation. Management believes the Authority is exempt from the provisions of the Amendment.