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HomeMy WebLinkAbout2006 HA AuditWHEAT RIDGE HOUSING AUTHORITY FINANCIAL STATEMENTS December 31, 2006 TABLE OF CONTENTS Independent Auditors' Report Basic Financial Statements Statement of Net Assets Statement of Revenues, Expenses and Changes in Net Assets Statement of Cash Flows PAGE Notes to Financial Statements 5-8 C Swanhorst & Company LLC Cc ficdithh, 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, 2006. 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 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. 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, 2006, 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. March 27, 2007 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, 2006 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 $ 753,367 $ 222,664 12,169 12,443 525,081 1,010,671 $ 1,290,617 $ 1,245,778 $ 41,055 $ 7,105 979 - 3,177 35,610 45,211 42,715 1,245,406 1,203,063 $ 1,290,617 $ 1,245,778 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, 2006 2006 2005 OPERATING REVENUES Sales of Investment Property $ 977,800 $ 242,000 Cost of Sales (844,629) (220,783) Rental 9,000 13,414 TOTAL OPERATING REVENUES 142,171 34,631 OPERATING EXPENSES Closing Costs 79,419 18,780 General and Administrative 15,392 7,046 Repairs and Maintenance 7,231 2,041 Utilities 1,592 2,072 Homeowners Dues 2,989 1,927 City Reimbursement 4,112 2,432 TOTAL OPERATING EXPENSES 110,735 34,298 OPERATING INCOME (LOSS) 31,436 333 NONOPERATING REVENUES Interest Income 10,907 952 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 42,343 1,285 CAPITAL CONTRIBUTIONS Grants - 75,000 CHANGE IN NET ASSETS 42,343 76,285 NET ASSETS, Beginning 1,203,063 1,126,778 NET ASSETS, Ending $ 1,245,406 $ 1,203,063 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, 2006 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from Sales of Investment Property $ 977,800 $ 242,000 Purchase and Rehabilitiation of Investment Property (388,608) (425,534) Cash Received from Tenants 9,000 13,414 Cash Payments to Vendors and Suppliers (78,670) (40,080) Net Cash Provided (Used) by Operating Activities 519,522 (210,200) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Loan Repayments from Homeowners 274 265 Net Cash Provided by Noncapital Financing Activities 274 265 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Grant Proceeds - 75,000 Net Cash Provided by Capital and Related Financing Activities - 75,000 CASH FLOWS FROM INVESTING ACTIVITIES Interest Income 10,907 952 Net Cash Provided by Investing Activities 10,907 952 NET INCREASE (DECREASE) IN CASH 530,703 (133,983) CASH, Beginning 222,664 356,647 CASH, Ending $ 753,367 $ 222,664 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income (Loss) $ 31,436 $ 333 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 485,590 (240,361) Accounts Payable 33,950 (1,012) Accrued Liabilities 979 (4,770) Retainage Payable (32,433) 35,610 Net Cash Provided (Used) by Operating Activities $ 519,522 $ (210,200) The accompanying notes are an integral part of the financial statements. 4 WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2006 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. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE 1: 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 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. However, complete comparative data in accordance with generally accepted accounting principles has not been presented since its inclusion would make the financial statements unduly complex and difficult to read. 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 and sold six units during 2006. The Authority previously purchased and rehabilitated a condominium complex on Quail Street. During 2005, the Authority acquired one unit from the complex, which was sold during 2006. During 2006, the Authority purchased a duplex on Parfet Street. At December 31, 2006, the property, including rehabilitation costs, is held for resale. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31. 2006 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, 2006, 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, 2006, the Authority had bank deposits of $658,672 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, 2006, 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 2006, the homeowners made principal payments totaling $274, resulting in a balance of $12,169 at December 31, 2006. WHEAT RIDGE HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE 6: PROPERTY HELD FOR RESALE Following is a summary of transactions for the property held for resale for the year ended December 31, 2006. Balance Balance 12/31/05 Additions Deletions 12/31/06 Acquisition and Rehabilitation Costs of Investment Property $ 1,010,671 $ 302,321 $ 787,911 $ 525,081 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, 2006, significant amounts of grant expenses have not been audited butthe 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.