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HomeMy WebLinkAboutMINUTES - 02142017 -Housing Authority    CALENDAR FOR THE BOARD OF COMMISSIONERS BOARD CHAMBERS ROOM 107, COUNTY ADMINISTRATION BUILDING 651 PINE STREET MARTINEZ, CALIFORNIA 94553-1229 FEDERAL D. GLOVER, CHAIR KAREN MITCHOFF, VICE CHAIR JOHN GIOIA CANDACE ANDERSEN DIANE BURGIS FAY NATHANIEL JANNEL GEORGE-ODEN JOSEPH VILLARREAL, EXECUTIVE DIRECTOR, (925) 957-8000 PERSONS WHO WISH TO ADDRESS THE BOARD DURING PUBLIC COMMENT OR WITH RESPECT TO AN ITEM THAT IS ON THE AGENDA, WILL BE LIMITED TO TWO (2) MINUTES. The Board Chair may reduce the amount of time allotted per speaker at the beginning of each item or public comment period depending on the number of speakers and the business of the day.  Your patience is appreciated.   A closed session may be called at the discretion of the Board Chair. Staff reports related to open session items on the agenda are also accessible on line at  www.co.contra-costa.ca.us. ANNOTATED AGENDA & MINUTES February 14, 2017                 1:30 P.M. Convene and call to order.   CONSIDER CONSENT ITEMS: (Items listed as C.1 through C.5 on the following agenda ) - Items are subject to removal from the Consent Calendar by request from any Commissioner or on request for discussion by a member of the public. Items removed from the Consent Calendar will be considered with the Discussion Items.   DISCUSSION ITEMS   D. 1 CONSIDER Consent Items previously removed.    There were no items removed from consent.   D. 2 PUBLIC COMMENT (2 Minutes/Speaker)   February 14, 2017 Contra Costa County Housing Authority 1  There were no requests to speak.     D.3   CONSIDER accepting a report on the projected budget cuts to the public housing program for federal fiscal year 2017.      Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Fay Nathaniel ABSENT Commissioner Jannel George-Oden AYE   ADJOURN    Adjourned today's meeting at 1:35 p.m.   CONSENT ITEMS:     C.1   RECEIVE the Housing Authority of the County of Contra Costa’s investment report for the quarter ending DECEMBER 31, 2016.      Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Fay Nathaniel ABSENT Commissioner Jannel George-Oden AYE     C.2   DENY claim filed by Yvonne Baker.     Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Fay Nathaniel ABSENT Commissioner Jannel George-Oden AYE     C.3   ACCEPT the financial and program compliance audit report for the period April 1, 2015, through March 31, 2016, prepared by Harn & Dolan CPA's, Walnut Creek, California.        February 14, 2017 Contra Costa County Housing Authority 2 Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Fay Nathaniel ABSENT Commissioner Jannel George-Oden AYE     C.4   ACCEPT report on the procedure for submitting applications for the Low Income Public Housing program.          Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Fay Nathaniel ABSENT Commissioner Jannel George-Oden AYE     C.5   APPROVE and AUTHORIZE the Executive Director of the Housing Authority, or his designee, to execute a contract with HD Supply Facilities Maintenance in an amount not to exceed $2,000,000 to provide materials and supplies needed for the maintenance of public housing facilities. (100% U.S. Department of Housing and Urban Development funds)          Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Fay Nathaniel ABSENT Commissioner Jannel George-Oden AYE     GENERAL INFORMATION   Persons who wish to address the Board of Commissioners should complete the form provided for that purpose and furnish a copy of any written statement to the Clerk.   All matters listed under CONSENT ITEMS are considered by the Board of Commissioners to be routine and will be enacted by one motion. There will be no separate discussion of these items unless requested by a member of the Board or a member of the public prior to the time the February 14, 2017 Contra Costa County Housing Authority 3 Commission votes on the motion to adopt. Persons who wish to speak on matters set for PUBLIC HEARINGS will be heard when the Chair calls for comments from those persons who are in support thereof or in opposition thereto. After persons have spoken, the hearing is closed and the matter is subject to discussion and action by the Board. Comments on matters listed on the agenda or otherwise within the purview of the Board of Commissioners can be submitted to the office of the Clerk of the Board via mail:  Board of Commissioners, 651 Pine Street Room 106, Martinez, CA 94553; by fax:  925-335-1913; or via the County’s web page: www.co.contracosta.ca.us, by clicking “Submit Public Comment” (the last bullet point in the left column under the title “Board of Commissioners.”) The County will provide reasonable accommodations for persons with disabilities planning to attend Board meetings who contact the Clerk of the Board at least 24 hours before the meeting, at (925) 335-1900; TDD (925) 335-1915. An assistive listening device is available from the Clerk, Room 106.  Copies of taped recordings of all or portions of a Board meeting may be purchased from the Clerk of the Board.  Please telephone the Office of the Clerk of the Board, (925) 335-1900, to make the necessary arrangements. Applications for personal subscriptions to the monthly Board Agenda may be obtained by calling the Office of the Clerk of the Board, (925) 335-1900. The monthly agenda may also be viewed on the County’s internet Web Page: www.co.contra-costa.ca.us The Closed session agenda is available each month upon request from the Office of the Clerk of the Board, 651 Pine Street, Room 106, Martinez, California, and may also be viewed on the County’s Web Page.    AGENDA DEADLINE: Thursday, 12 noon, 12 days before the Tuesday Board meetings. February 14, 2017 Contra Costa County Housing Authority 4 RECOMMENDATIONS CONSIDER accepting a report on the projected budget cuts to the public housing program for federal fiscal year 2017. BACKGROUND The federal government is currently being funded through April 28, 2017 by a continuing resolution (CR), passed in December 2016 with spending levels based on the Senate's fiscal year (FY) 2017 budget resolution passed on January 12, 2017. The Senate's budget was passed with the intention of repealing the Affordable Care Act. At heart, the Senate's budget is a technical procedure that could allow the Senate to develop a special kind of legislation called a reconciliation bill. Such a bill can be used to repeal significant parts of the health law and, critically, is immune from being filibustered. What is important for this Board Order, is that the spending levels in the Senate's budget are not intended to have an impact on FY 2017 spending and it is hard to predict where final federal spending levels will be set. Based on the CR and the Senate's budget, the U.S. Department of Housing and Urban Development (HUD) is providing the Housing Authority (HACCC) with an advance of 85% of its public housing operating subsidy for calendar year 2017. Should HUD's projected funding level hold, the public housing program would sustain a loss of $957,974 for HACCC's FY 2018. Action of Board On: 02/14/2017 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, Commissioner Candace Andersen, Commissioner Diane Burgis, Commissioner Karen Mitchoff, Commissioner Federal D. Glover, Commissioner Jannel George-Oden, Commissioner ABSENT:Fay Nathaniel, Commissioner Contact: 925-957-8028 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: February 14, 2017 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: D.3 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:February 14, 2017 Contra Costa County Subject:REPORT ON PROJECTED BUDGET CUTS TO THE PUBLIC HOUSING PROGRAM FOR FEDERAL FISCAL YEAR 2017 February 14, 2017 Contra Costa County Housing Authority 5 BACKGROUND (CONT'D) Staff will provide an oral update on the impact this will have on the budget that will be presented at next month's meeting. FISCAL IMPACT The extent of the cuts is unknown at present. Based on the current HUD advance and intact spending levels, the public housing program would sustain an 8.7% loss of $957,974 for the Housing Authority's fiscal year 2018. CONSEQUENCE OF NEGATIVE ACTION None. Information item only. February 14, 2017 Contra Costa County Housing Authority 6 RECOMMENDATIONS RECEIVE the Housing Authority of the County of Contra Costa’s investment report for the quarter ending DECEMBER 31st, 2016. BACKGROUND California Government Code (CGC) Section 53646 requires the Housing Authority of the County of Contra Costa (HACCC) to present the Board of Commissioners with a quarterly investment report that provides a complete description of HACCC’s portfolio. The report is required to show the issuers, type of investments, maturity dates, par values (equal to market value here) and the current market values of each component of the portfolio, including funds managed by third party contractors. It must also include the source of the portfolio valuation (in HACCC’s case it is the issuer). Finally, the report must provide certifications that (1) all investment actions executed since the last report have been made in full compliance with the Investment Policy and; (2) HACCC will meet its expenditure obligations for the next six months. (CGC 53646(b)). The state-mandated report has been amended to indicate the amount of interest earned and how the interest was allocated. The amended report is attached. In summary, HACCC had $30,170.14 in interest earnings for the quarter ending December 31, 2016. That interest was earned within discrete programs and most of the interest earned is available only for use within the program which earned the interest. Further, interest earnings may be restricted to specific purposes within a given program. Action of Board On: 02/14/2017 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, Commissioner Candace Andersen, Commissioner Diane Burgis, Commissioner Karen Mitchoff, Commissioner Federal D. Glover, Commissioner Jannel George-Oden, Commissioner ABSENT:Fay Nathaniel, Commissioner Contact: 925-957-8028 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: February 14, 2017 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: C.1 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:February 14, 2017 Contra Costa County Subject:INVESTMENT REPORT FOR THE QUARTER ENDING DECEMBER 31, 2016 February 14, 2017 Contra Costa County Housing Authority 7 BACKGROUND (CONT'D) > The Housing Choice Voucher Program reserve as of 12/31/2013 held in cash and investments was transitioned to HUD held program reserve account. The only restricted funds remaining in investments for the Housing Voucher program is for the Family Self Sufficiency escrow account. Non-restricted interest earnings within both the voucher and public housing programs must be used solely within those programs, but such interest earnings can be used for a wider range of purposes within the individual programs. The interest earned in the State and Local fund can be used for any purpose within HACCC’s scope of operations. The interest earned for the quarter ending December 31, 2016 is shown below. A more detailed report is attached. Public Housing Housing Choice Voucher Fund Rental Rehabilitation Fund State & Local Unrestricted Interest Earned Restricted Interest Earned Unrestricted Interest Earned Unrestricted Interest Earned Unrestricted Interest Earned $6,433.01 $657.31 $17,139.63 $863.54 $5,076.65 FISCAL IMPACT None. For reporting purposes only. CONSEQUENCE OF NEGATIVE ACTION Should the Board of Commissioners elect not to accept the investment report it would result in an audit finding of non-compliance and could ultimately affect future funding from the U.S. Department of Housing and Urban Development (HUD). ATTACHMENTS Investment Report QE 12-31-2016 February 14, 2017 Contra Costa County Housing Authority 8 HOUSING AUTHORITY OF CONTRA COSTA COUNTY INVESTMENT REPORT : PORTFOLIO HOLDINGS BY TYPE For Period Ending:12/31/2016 Cantella & Company Prime Fund Capital Reserves (Cash)Money Market 50,868.61 0.01%ongoing ongoing 50,868.61 Synchrony Bank Certificate of Deposit 100,000.00 2.00%3/20/15 3/20/20 110,010.96 Fannie Mae Govt Agency 150,000.00 1.63%3/13/15 1/21/20 161,853.60 Federal Home Loan Mtg Corp Govt Agency 125,000.00 1.38%5/08/15 5/01/20 133,570.21 Discover Bank Certificate of Deposit 100,000.00 2.00%5/13/15 5/13/20 110,010.96 Goldman Sachs Bank Certificate of Deposit 149,000.00 2.35%7/08/15 7/08/20 166,526.69 Capital One, NA Certificate of Deposit 247,000.00 2.25%7/22/15 7/22/20 274,817.95 Everbank Certificate of Deposit 247,000.00 2.00%7/30/15 7/30/20 271,727.07 CIT Bank Certificate of Deposit 105,000.00 2.25%7/30/15 7/30/20 116,825.45 CIT Bank Certificate of Deposit 110,000.00 2.25%7/30/15 7/30/20 122,388.56 Worlds Foremost Bank Certificate of Deposit 100,000.00 2.40%8/20/15 8/20/20 112,013.15 Discover Bank Certificate of Deposit 135,000.00 2.35%8/26/15 8/26/20 150,879.88 Fannie Mae Govt Agency 100,000.00 1.50%11/10/15 6/22/20 106,928.77 American Express Centurian Certificate of Deposit 175,000.00 2.30%11/25/15 11/25/20 195,147.05 Sallie Mae Bank Certificate of Deposit 100,000.00 2.20%12/09/15 12/09/20 111,012.05 Sallie Mae Bank Certificate of Deposit 100,000.00 2.20%12/09/15 12/09/20 111,012.05 Celtic Bank, UT Certificate of Deposit 100,000.00 1.75%12/24/15 12/24/20 108,759.59 Goldman Sachs Bank Certificate of Deposit 100,000.00 2.30%12/30/15 1/06/21 111,556.71 Fannie Mae Govt Agency 105,000.00 1.50%12/30/15 11/30/20 112,754.18 Commenity Capital Bank Certificate of Deposit 100,000.00 1.90%1/19/16 1/19/21 109,510.41 Federal Home Loan Bank Govt Agency 210,000.00 1.88%1/28/16 12/11/20 229,191.27 Commenity Capital Bank Certificate of Deposit 100,000.00 1.60%2/22/16 2/22/21 108,008.77 BMW-Bank of North America Certificate of Deposit 97,000.00 1.70%2/26/16 2/22/21 105,235.96 BMW-Bank of North America Certificate of Deposit 150,000.00 1.70%2/26/16 2/26/21 162,763.97 Farmer Mac Govt Agency 100,000.00 1.92%3/17/16 1/07/21 109,242.30 Private Bank & Trust Certificate of Deposit 125,000.00 1.40%5/26/16 5/26/21 133,754.79 HSBC Bank USA Certificate of Deposit 100,000.00 1.70%6/10/16 6/10/21 108,504.66 Wells Fargo Bank Certificate of Deposit 100,000.00 1.75%6/17/16 6/17/21 108,754.79 J P Morgan Chase Certificate of Deposit 100,000.00 1.65%8/16/16 8/16/21 108,254.52 Wells Fargo Bank Certificate of Deposit 145,000.00 1.55%8/17/16 8/17/21 156,243.66 Federal Home Loan Mtg Corp Govt Agency 510,000.00 1.20%8/17/16 8/12/21 540,532.93 Fannie Mae Govt Agency 155,000.00 1.25%9/22/16 8/17/21 164,501.71 Synchrony Bank Certificate of Deposit 122,000.00 1.70%10/21/16 10/21/21 132,375.68 State Bank of India Certificate of Deposit 115,000.00 1.60%10/27/16 10/27/21 124,205.04 Bank of Baroda Certificate of Deposit 150,000.00 1.85%11/23/16 11/23/21 163,882.60 Capital One Bank , USA Certificate of Deposit 120,000.00 2.00%11/23/16 11/23/21 132,006.58 Capital One Bank , USA Certificate of Deposit 100,000.00 2.00%11/23/16 11/23/21 110,005.48 GRAND TOTALS 4,997,868.61 5,445,638.62 L.A.I.F. (Acct # 25-07-003)Liquid Account 1,091,940.28 0.68%ongoing ongoing 1,091,940.28 De Anza Gardens, LP Loan 1,000,000.00 3.00%1,000,000.00 GRAND TOTALS 7,089,808.89 7,537,578.90 Issuer Investment Type Amount Invested Yield Investment Date Maturity Date Estimated Value@ Maturity Date Invesment Report - QE 12-31-2016 (Investments Rpt Thru Dec 2016)Last Printed: 2/2/2017 February 14, 2017 Contra Costa County Housing Authority 9 HOUSING AUTHORITY OF CONTRA COSTA COUNTY INVESTMENT REPORT BY FUND Prime Fund Capital Reserves (Cash)50,868.61 26,046.07 5,420.84 6,523.57 12,878.13 Synchrony Bank 100,000.00 100,000.00 Fannie Mae 150,000.00 150,000.00 Federal Home Loan Mtg Corp 125,000.00 125,000.00 Discover Bank 100,000.00 100,000.00 Goldman Sachs Bank 149,000.00 149,000.00 Capital One, NA 247,000.00 247,000.00 Everbank 247,000.00 247,000.00 CIT Bank 105,000.00 105,000.00 CIT Bank 110,000.00 110,000.00 Worlds Foremost Bank 100,000.00 100,000.00 Discover Bank 135,000.00 135,000.00 Fannie Mae 100,000.00 100,000.00 American Express Centurian 175,000.00 175,000.00 Sallie Mae Bank 100,000.00 100,000.00 Sallie Mae Bank 100,000.00 100,000.00 Celtic Bank, UT 100,000.00 100,000.00 Goldman Sachs Bank 100,000.00 100,000.00 Fannie Mae 105,000.00 105,000.00 Commenity Capital Bank 100,000.00 100,000.00 Federal Home Loan Bank 210,000.00 210,000.00 Commenity Capital Bank 100,000.00 100,000.00 BMW-Bank of North America 97,000.00 97,000.00 BMW-Bank of North America 150,000.00 150,000.00 Farmer Mac 100,000.00 100,000.00 Private Bank & Trust 125,000.00 125,000.00 HSBC Bank USA 100,000.00 100,000.00 Wells Fargo Bank 100,000.00 100,000.00 J P Morgan Chase 100,000.00 100,000.00 Wells Fargo Bank 145,000.00 145,000.00 Federal Home Loan Mtg Corp 510,000.00 510,000.00 Fannie Mae 155,000.00 155,000.00 Synchrony Bank 122,000.00 122,000.00 State Bank of India 115,000.00 115,000.00 Bank of Baroda 150,000.00 150,000.00 Capital One Bank , USA 120,000.00 120,000.00 Capital One Bank , USA 100,000.00 100,000.00 4,997,868.61 1,072,046.07 1,162,420.84 155,523.57 2,607,878.13 - 1,091,940.28 641,988.65 - - 63,382.59 386,569.04 1,000,000.00 1,000,000.00 7,089,808.89 1,714,034.72 1,162,420.84 155,523.57 3,671,260.72 386,569.04 Public Housing Management Rental Rehabilitation For Period Ending 12/31/2016 Amount Invested by Fund: Amount Invested Issuer Housing Choice Voucher Housing Voucher FSS Escrow GRAND TOTALS Cantella & Company GRAND TOTALS L.A.I.F. (Acct # 25-07-003) De Anza Gardens, LP Invesment Report - QE 12-31-2016 (Investments Rpt Thru Dec 2016)Last Printed: 2/2/2017 February 14, 2017 Contra Costa County Housing Authority 10 HOUSING AUTHORITY OF CONTRA COSTA COUNTY Report per CGC 53646 CURRENT MARKET VALUE For Period Ending 12/31/2016 Cantella & Company Prime Fund Capital Reserves (Cash)Money Market ongoing 50,868.61 50,868.61 0.01% Synchrony Bank Certificate of Deposit 3/20/2020 100,000.00 101,177.00 2.00% Fannie Mae Govt Agency 1/21/2020 150,000.00 150,444.00 1.63% Federal Home Loan Mtg Corp Govt Agency 5/01/2020 125,000.00 124,031.00 1.38% Discover Bank Certificate of Deposit 5/13/2020 100,000.00 101,101.00 2.00% Goldman Sachs Bank Certificate of Deposit 7/08/2020 149,000.00 151,511.00 2.35% Capital One, NA Certificate of Deposit 7/22/2020 247,000.00 251,127.00 2.25% Everbank Certificate of Deposit 7/30/2020 247,000.00 248,401.00 2.00% CIT Bank Certificate of Deposit 7/30/2020 105,000.00 106,927.00 2.25% CIT Bank Certificate of Deposit 7/30/2020 110,000.00 112,018.00 2.25% Worlds Foremost Bank Certificate of Deposit 8/20/2020 100,000.00 101,988.00 2.40% Discover Bank Certificate of Deposit 8/26/2020 135,000.00 137,908.00 2.35% Fannie Mae Govt Agency 6/22/2020 100,000.00 99,534.00 1.50% American Express Centurian Certificate of Deposit 11/25/2020 175,000.00 177,585.00 2.30% Sallie Mae Bank Certificate of Deposit 12/09/2020 100,000.00 101,457.00 2.20% Sallie Mae Bank Certificate of Deposit 12/09/2020 100,000.00 101,457.00 2.20% Celtic Bank, UT Certificate of Deposit 12/24/2020 100,000.00 99,710.00 1.75% Goldman Sachs Bank Certificate of Deposit 1/06/2021 100,000.00 101,634.00 2.30% Fannie Mae Govt Agency 11/30/2020 105,000.00 103,683.00 1.50% Commenity Capital Bank Certificate of Deposit 1/19/2021 100,000.00 101,988.00 1.90% Federal Home Loan Bank Govt Agency 12/11/2020 210,000.00 210,668.00 1.88% Commenity Capital Bank Certificate of Deposit 2/22/2021 100,000.00 100,527.00 1.60% BMW-Bank of North America Certificate of Deposit 2/22/2021 97,000.00 97,304.00 1.70% BMW-Bank of North America Certificate of Deposit 2/26/2021 150,000.00 150,469.00 1.70% Farmer Mac Govt Agency 1/07/2021 100,000.00 99,805.00 1.92% Private Bank & Trust Certificate of Deposit 5/26/2021 125,000.00 123,231.00 1.40% HSBC Bank USA Certificate of Deposit 6/10/2021 100,000.00 98,541.00 1.70% Wells Fargo Bank Certificate of Deposit 6/17/2021 100,000.00 98,507.00 1.75% J P Morgan Chase Certificate of Deposit 8/16/2021 100,000.00 97,662.00 1.65% Wells Fargo Bank Certificate of Deposit 8/17/2021 145,000.00 141,522.00 1.55% Federal Home Loan Mtg Corp Govt Agency 8/12/2021 510,000.00 491,008.00 1.20% Fannie Mae Govt Agency 8/17/2021 155,000.00 149,802.00 1.25% Synchrony Bank Certificate of Deposit 10/21/2021 122,000.00 118,680.00 1.70% State Bank of India Certificate of Deposit 10/27/2021 115,000.00 111,882.00 1.60% Bank of Baroda Certificate of Deposit 11/23/2021 150,000.00 148,503.00 1.85% Capital One Bank , USA Certificate of Deposit 11/23/2021 120,000.00 119,635.00 2.00% Capital One Bank , USA Certificate of Deposit 11/23/2021 100,000.00 99,698.00 2.00% GRAND TOTALS 4,997,868.61 4,981,993.61 L.A.I.F. (Acct # 25-07-003)Liquid Account ongoing 1,091,940.28 1,091,940.28 0.68% De Anza Gardens, LP Loan 1,000,000.00 1,000,000.00 3.00% GRAND TOTALS 7,089,808.89 7,073,933.89 Issuer Investment Type Maturity Date Amount Invested Current Market Value (at 12/31/16) Yield Invesment Report - QE 12-31-2016 (Investments Rpt Thru Dec 2016)Last Printed: 2/2/2017 February 14, 2017 Contra Costa County Housing Authority 11 HOUSING AUTHORITY OF CONTRA COSTA COUNTY Investment Interest Earnings Report Public Housing Management Rental Rehabilitation Unrestricted Unrestricted Unrestricted Restricted Unrestricted Cantella & Company 0%100% Prime Fund Capital Reserves (Cash)50,868.61 1.25 0.63 0.13 0.16 - 0.32 Synchrony Bank 100,000.00 493.15 - - - - 493.15 Fannie Mae 150,000.00 601.03 - 601.03 - - - Federal Home Loan Mtg Corp 125,000.00 423.80 - - - - 423.80 Discover Bank 100,000.00 493.15 - 493.15 - - - Goldman Sachs Bank 149,000.00 863.38 - - 863.38 - - Capital One, NA 247,000.00 1,370.34 1,370.34 - - - - Everbank 247,000.00 1,218.08 1,218.08 - - - - CIT Bank 105,000.00 582.53 582.53 - - - - CIT Bank 110,000.00 610.27 - 610.27 - - - Worlds Foremost Bank 100,000.00 591.78 591.78 - - - - Discover Bank 135,000.00 782.26 - - - - 782.26 Fannie Mae 100,000.00 369.86 - - - - 369.86 American Express Centurian 175,000.00 992.47 - 992.47 - - - Sallie Mae Bank 100,000.00 542.47 542.47 - - - - Sallie Mae Bank 100,000.00 542.47 - - - - 542.47 Celtic Bank, UT 100,000.00 431.51 - 431.51 - - - Goldman Sachs Bank 100,000.00 567.12 - - - - 567.12 Fannie Mae 105,000.00 388.36 - - - - 388.36 Commenity Capital Bank 100,000.00 468.49 - 468.49 - - - Federal Home Loan Bank 210,000.00 970.89 - - - - 970.89 Commenity Capital Bank 100,000.00 394.52 - 394.52 - - - BMW-Bank of North America 97,000.00 406.60 406.60 - - - - BMW-Bank of North America 150,000.00 628.77 628.77 - - - - Farmer Mac 100,000.00 473.42 - 473.42 - - - Private Bank & Trust 125,000.00 431.51 - - - - 431.51 HSBC Bank USA 100,000.00 419.18 - - - - 419.18 Wells Fargo Bank 100,000.00 431.51 - - - - 431.51 J P Morgan Chase 100,000.00 406.85 - - - - 406.85 Wells Fargo Bank 145,000.00 554.18 - - - - 554.18 Federal Home Loan Mtg Corp 510,000.00 1,509.04 - - - - 1,509.04 Fannie Mae 155,000.00 477.74 - - - - 477.74 Synchrony Bank 122,000.00 403.44 - 403.44 - - - State Bank of India 115,000.00 327.67 - - - - 327.67 Bank of Baroda 150,000.00 288.90 - - - - 288.90 Capital One Bank , USA 120,000.00 249.86 - - - - 249.86 Capital One Bank , USA 100,000.00 208.22 - 208.22 - - - - 4,997,868.61 20,916.07 5,341.20 5,076.65 863.54 - 9,634.67 L.A.I.F. (Acct # 25-07-003)1,091,940.28 1,856.82 1,091.81 657.31 107.70 De Anza Gardens, LP 1,000,000.00 7,397.26 7,397.26 GRAND TOTALS 7,089,808.89 30,170.14 6,433.01 5,076.65 863.54 657.31 17,139.63 Issuer Amount Invested Interest Earned this Qtr For Period Ending 12/31/2016 Interest Earned this Quarter by Fund Housing Choice Voucher Fund Invesment Report - QE 12-31-2016 (Investments Rpt Thru Dec 2016)Last Printed: 2/2/2017 February 14, 2017 Contra Costa County Housing Authority 12 RECOMMENDATIONS DENY claim filed by Yvonne Baker. BACKGROUND * FISCAL IMPACT No fiscal impact. Action of Board On: 02/14/2017 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, Commissioner Candace Andersen, Commissioner Diane Burgis, Commissioner Karen Mitchoff, Commissioner Federal D. Glover, Commissioner Jannel George-Oden, Commissioner ABSENT:Fay Nathaniel, Commissioner Contact: Joellen Bergamini 925-335-1906 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: February 14, 2017 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: C.2 To:Contra Costa County Housing Authority Board of Commissioners From:David Twa, County Administrator Date:February 14, 2017 Contra Costa County Subject:Claims February 14, 2017 Contra Costa County Housing Authority 13 ATTACHMENTS HA Claim Y Baker February 14, 2017 Contra Costa County Housing Authority 14 February 14, 2017 Contra Costa County Housing Authority 15 February 14, 2017 Contra Costa County Housing Authority 16 February 14, 2017 Contra Costa County Housing Authority 17 February 14, 2017 Contra Costa County Housing Authority 18 February 14, 2017 Contra Costa County Housing Authority 19 February 14, 2017 Contra Costa County Housing Authority 20 February 14, 2017 Contra Costa County Housing Authority 21 RECOMMENDATIONS ACCEPT the financial and program compliance audit report for the period April 1, 2015, through March 31, 2016, prepared by Harn & Dolan CPA's, Walnut Creek, California. BACKGROUND The U. S. Department of Housing & Urban Development (HUD) requires every housing authority to have an annual independent audit conducted of its financial statements and business activities as well as of compliance with program requirements for the public housing, Housing Choice Voucher and Shelter-Plus Care programs. HACCC contracted with Harn & Dolan to prepare the audit report for the fiscal year ending March 31, 2016. Harn & Dolan’s audit identified no findings and no material weaknesses in either the financial or program compliance portions of the audit. The complete audit and the management letter are attached. FISCAL IMPACT Funding was provided for the audit contract in the Housing Authority of the County of Contra Costa’s (HACCC) Fiscal Year 2016/2017 Consolidated Operating Budget. Action of Board On: 02/14/2017 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, Commissioner Candace Andersen, Commissioner Diane Burgis, Commissioner Karen Mitchoff, Commissioner Federal D. Glover, Commissioner Jannel George-Oden, Commissioner ABSENT:Fay Nathaniel, Commissioner Contact: 925-957-8028 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: February 14, 2017 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: C.3 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:February 14, 2017 Contra Costa County Subject:FINANCIAL AND PROGRAM AUDIT FOR FISCAL YEAR ENDING MARCH 31, 2016 February 14, 2017 Contra Costa County Housing Authority 22 CONSEQUENCE OF NEGATIVE ACTION Should the Board of Commissioners elect not to accept the financial audit report as performed by the certified public accountancy firm of Harn & Dolan, it would become necessary to expend additional funds to either redo the financial audit report or contract with another certified public accountancy firm to conduct an audit of HACCC’s finances and programs. ATTACHMENTS Audit Report Management Letter February 14, 2017 Contra Costa County Housing Authority 23 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA (A Component Unit of the County of Contra Costa) BASIC FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 2016 (Including Auditors’ Report Thereon) February 14, 2017 Contra Costa County Housing Authority 24 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA BASIC FINANCIAL STATEMENTS MARCH 31, 2016 TABLE OF CONTENTS Page Independent Auditors’ Report 1 Managements Discussion and Analysis 4 Financial Statements: Statement of Net Position - Proprietary Funds 12 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds 14 Statement of Cash Flows - Proprietary Funds 15 Notes to the Basic Financial Statements 17 Required Supplementary Information 59 Supplementary Information: Schedule of Expenditures of Federal Awards 61 Notes to the Schedule of Expenditures of Federal Awards 62 Financial Data Schedule (CA011) 63 Schedule of Relevant Statistics 71 Statement of Completed Capital Fund Program Project 72 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 73 Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance 75 Status of Prior Audit Findings 77 Schedule of Findings and Questioned Costs 78 February 14, 2017 Contra Costa County Housing Authority 25 Harn & Dolan Certified Public Accountants 2423 Stirrup Court Walnut Creek, California 94596-6526 (925) 280-1693 Fax (925) 938-4829 INDEPENDENT AUDITORS’ REPORT To the Board of Commissioners Housing Authority of the County of Contra Costa Martinez, California Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities of the Housing Authority of the County of Contra Costa, component unit of the County of Contra Costa, California (the Authority), as of and for the year ended March 31, 2016, and the related notes to the financial statements, which collectively comprise the Authoritys basic financial statements as listed in the table of contents. We did not audit the financial statements of the aggregate discretely presented component units reported in the financial statements. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of HACCC Casa Del Rio, Inc, a California Nonprofit Public Benefit Corporation and CDR Senior Housing Associates, a California Limited Partnership, which represent 15.3%, -13.9% and 0.5%, respectively, of the primary governments assets, net position, and revenue. We did not audit the financial statements of DeAnza Housing Corporation, a California Nonprofit Public Benefit Corporation and DeAnza Gardens L.P. a California Limited Partnership, which are combined and reported as discretely presented component units titled Component Units in the fund financial statements. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component units and blended component units - Casa Del Rio Housing is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Authoritys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authoritys February 14, 2017 Contra Costa County Housing Authority 26 internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the aggregate discretely presented component units of the Authority, as of March 31, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Notes 1.T. and 11, the Authority implemented Government Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27, as of April 1, 2015. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the managements discussion and analysis on pages 4 through 11, schedule of proportionate share of the net pension liability on page 59 and schedule of funding progress for OPEB on page 59 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and the other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Housing Authority of the County of Contra Costa, Californias basic financial statements. The schedule of relevant statistics is presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , and is also not a required part of the basic financial statements. The accompanying Financial Data Schedules (CA 011) are presented for purposes of additional analysis as required by Uniform Financial Reporting Standards issued by the U.S. Department of Housing and Urban Development and are not a required part of the basic financial statements. Finally, the accompanying Schedule of Completed Capital Fund Program 2 February 14, 2017 Contra Costa County Housing Authority 27 February 14, 2017 Contra Costa County Housing Authority 28 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2016 The management of the Housing Authority of the County of Contra Costa (the Authority) would like to provide the readers of the Authoritys financial statements this narrative overview and analysis of the financial activities of the Authority for the fiscal year ended March 31, 2016. The Management Discussion and Analysis (MD&A) is an element of the reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement No. 34 Basic Financial Statements-and Managements Discussion and Analysis-for State and Local Governments issued in June 1999. Certain comparative information between the current year and the prior year is required to be presented in the MD&A. FINANCIAL HIGHLIGHTS Net position decreased by $8,180,427 (or 58.98%) during 2016 (see Table 1) Due to initial recognition of net pension liability $ (8,622,685) Due to normal operations 442,258 Total net pension decrease $ (8,180,427) Unrestricted net position decreased by $6,971,219 (or 106.59%) during 2016 (see Table 1). Due to initial recognition of net pension liability $ (8,622,685) Due to normal operations 1,651,466 Total net pension decrease $ (6,971,219) Total revenue increased by $8.2 million (or 8.4%) as a result of current year activities (see Table 3). Total expenditures increased $3.4 million (or 3.4%) as a result of current year activities (see Table 3). OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as introduction to the Authoritys basic financial statements. The Authoritys basic financial statements are comprised of three parts as follows: (1) Fund Financial Statements, (2) Notes to the Basic Financial Statements, and (3) Supplementary Information. FUND FINANCIAL STATEMENTS The Fund Financial Statements presentation is similar to the traditional government financial statements. The statements are the Statement of Net Position, the Statement of Revenue, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows. The focus is now on Major Funds, rather than fund types. The Authoritys funds consist exclusively of Enterprise Funds. Enterprise funds utilize the full accrual basis of accounting. The Enterprise method of accounting is similar to accounting utilized by the private sector accounting. Many of the funds administered by the Authority are provided by the Department of Housing and Urban Development. Others are segregated to enhance accountability and control. GASBs 34 and 37 require individual enterprise funds to be reported as major funds if total assets, liabilities, revenue, or expenses of that individual fund exceed 10% or corresponding element total of the Authority as a whole. In the past, the Authority reported four major funds and an aggregate column for non-major funds. Beginning April 1, 2006, the Authority reported all of its activities in one major fund titled Housing. The Authoritys mission is to provide affordable housing within the County of Contra Costa, regardless of grant or program. Therefore, we believe that reporting all activity in one fund is consistent with this mission and simpler for the readers of the Authoritys report. 4 February 14, 2017 Contra Costa County Housing Authority 29 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2016 (Continued) The Authoritys activity includes: Public Housing Under the Public Housing Program, (also titled as Low Rent-Aided Housing) the Authority rents units that it owns to very low & low-income households. The Public Housing Program is operated under an Annual Contributions Contract (ACC) with HUD. The ACC provides Operating Subsidy and Capital improvement Grant funding to enable the PHA to provide the housing at a rent that is based upon 30% of household income or at a flat rate below market rate. Public Housing Capital Fund Grant - HUD provides grants for the modernization of the Public Housing Program units. The modernization is accounted for by each grant, which is merged as a part of the Public Housing Program totals. Housing Choice Voucher Program Under the Housing Choice Voucher Program, (hereunder titled as Voucher Program) the Authority administers the program under an Annual Contributions Contract (ACC) with HUD. The ACC provides funding to the Authority to provide tenant based rental assistance to program participants. The rental assistance payment is structured so as the rental payment that the participant is obligated to pay is 30% to 40% of household income. This is a major federal program. Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation - is a U.S. Department of Housing and Urban Development funded rehabilitation program that provides project based rental assistance based on Housing Voucher methodology in determining subsidized rent and program compliance. Casa Del Rio, Associates - Casa Del Rio, Senior Housing Associates (CDR) was formed as a limited partnership on April 12, 1994, for the purpose of developing, owning and operating an 82-unit affordable housing rental complex (the project) located in Antioch, California. The Project qualifies for low-income housing tax credits under Section 42 of the Internal Revenue Service Code. Such projects are regulated under terms of a Regulatory Agreement, including rent charges, operating methods and other matters. This limited partnership is considered to be a blended component unit of the Authority. The most recent audits were for the fiscal year ended December 31, 2015. These reports can be obtained from the Authority using the information on page 11. Casa Del Rio, Incorporated - The general partner of the Casa Del Rio Partnership is HACCC Casa Del Rio, Inc., a California public benefit corporation. The officers and Board members of HACCC Casa Del Rio, Inc. are employees of the Authority, which was the developer of the Project, and is consider a blended component unit of the Housing Authority. These component units receive separate audit reports performed on a calendar year basis. The most recent audits were for the fiscal year ended December 31, 2015. These reports can be obtained from the Authority using the information on page 11. Shelter Plus Care Program is designed to provide rental assistance and supportive services to homeless and disabled individuals and their families. It is cooperatively administered by the County Health Services Department and the Housing Authority of Contra Costa County, and has the capacity to serve roughly 200 households. Participants receive rental assistance and supportive services funded by the U.S. Department of Housing and Urban Development. 5 February 14, 2017 Contra Costa County Housing Authority 30 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2016 (Continued) CDBG Rental Rehabilitation Program (RRP) - Under the RRP, the Authority executes annual funding contract with various governmental entities to fund the operations of a program that assists rental property owners with rehabilitation of housing units to help assure a supply of affordable rental apartments and homes for its Section 8/Voucher users and other low-income households. Technical assistance in determining repairs is provided by Authority staff and below-market-rate loans are made to cover part of rehabilitation costs. Program administrative costs are shared by the funding providers and the Authority. Rental Rehabilitation Program (RRP) - Under the RRP, the Authority operates a program that assists rental property owners with rehabilitation of housing units to help assure a supply of affordable rental apartments and homes for its Section 8/Voucher users and other low-income households. Technical assistance in determining repairs is provided by Authority staff and below-market-rate loans are made to cover part of rehabilitation costs. Funds from this program are to supplement the CDBG RRP for loans or administration. Management Fund & County Programs This program is often referred to as the State and Local Fund. The fund represents non-HUD resources developed from a variety of activities, including developer fees, management fees, program cost reimbursement, and other local and non local activities. This fund administers the pension and benefit programs for the agency. Central Office Cost Center - The COCC fund earns revenue from fees and services provided to various federal programs. The funds earned are considered non-HUD funds and go to cover the overhead and support services provided to the various federal programs. HUD is currently preparing rule changes that will restrict these funds to use in Federal programs only. Discretely Presented Component Unit: DeAnza Gardens L.P. (DeAnza) DeAnza was formed as a limited partnership on December 10, 2001 for the purpose of acquisition, ownership, maintenance, and operation of 180 multi-family affordable rental housing complex located in Contra Costa County. The project was built on land owned by and leased from the Housing Authority of the County of Contra Costa (the Authority). Under the terms of the lease, title to the improvements reverts to the lesser at the end of the 75-year lease. The Project qualifies for low-income housing tax credits under Section 42 of the Internal Revenue Service Code. Such projects are regulated under terms of a Regulatory Agreement, including rent charges, operating methods and other matters. DeAnza Corporation, Inc. The general partner of DeAnza Gardens L.P. is DeAnza Corporation Inc., a California public benefit corporation. The officers and Board members of the corporation are separate and apart from the Housing Authority. The only Board member position in the corporation that represents the Housing Authority is the Executive Director, who serves as one of the five board positions of the corporation. The Housing Authority has been designated as the managing general partner. The DeAnza entities, under HUD REACs direction, are to be considered by the Authority as other organizations for which the nature and significance of their relationship with the Authority are such that exclusion would cause the Authoritys financial statements to be misleading or incomplete. As such, the Authority considers these two 6 February 14, 2017 Contra Costa County Housing Authority 31 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2016 (Continued) entities to be discretely presented component units. These component units receive separate audit reports performed on a calendar year basis. The most recent audits were for the calender year ended December 31, 2015. These reports can be obtained from the Authority using the information on page 11. Also included in the Basic Financial statements are: Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the fund financial statements. Supplementary Information. Certain information is required to be included in this report by various federal agencies. This information is included after the notes to the financial statements under the title supplementary information. TABLE 1 STATEMENT OF NET POSITION The following table reflects the condensed Statement of Net Position, for the primary government, compared to prior year. The Authority is engaged only in Business-Type Activities. Increase March 31, 2016 March 31, 2015 (Decrease) % Current assets $ 9,394,876 $ 8,088,222 1,306,654 16.16% Restricted assets 1,342,600 1,165,642 176,958 15.18% Capital assets, net of depreciation 12,433,904 14,091,150 (1,657,246)11.76% Other noncurrent assets 3,458,413 3,513,657 (55,244)1.57% Total assets 26,629,793 26,858,671 (228,878) 0.85% Deferred outflows of resources 2,165,706 -2,165,706 Current liabilities 1,910,672 2,062,908 (152,236)7.38% Payable from restricted assets 633,674 684,783 (51,109)7.46% Long term liabilities 20,562,831 10,242,231 10,320,600 100.77% Total liabilities 23,107,177 12,989,922 10,117,255 77.89% Deferred inflows of resources - -- Net position: Net investment in capital assets 5,391,407 6,828,538 (1,437,131)21.05% Restricted 727,848 499,925 227,923 45.59% Unrestricted (430,933)6,540,286 (6,971,219)106.59% Total net position $ 5,688,322 $ 13,868,749 $ (8,180,427)58.98% 7 February 14, 2017 Contra Costa County Housing Authority 32 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2016 (Continued) Major Factors Affecting the Statement of Net Position The major factor affecting net assets this fiscal year was the recognition of $8,652,807 (see note 11 to the basic financial statements) of accumulated pension liability required to be reported under the Government Accounting Standards Board (GASB) Statement No. 68 Accounting and Financial Reporting for Pensions. This recognition overshadowed an operational increase in net assets in the amount of $929,724. Table 2 below presents details on the change in Unrestricted Net Position. TABLE 2 CHANGE OF UNRESTRICTED NET POSITION BY PROGRAM Change of Beginning Unrestricted Ending Balance Position this Balance 04/01/2015 Report Period 03/31/2016 Housing Choice Voucher Program $ 3,058,938 $ 1,004,565 $ 4,063,503 Public Housing (including Capital Fund) 803,586 295,967 1,099,553 Central Office Cost Center 400,442 254,235 654,677 Casa Del Rio (blended component unit) 87,924 (81,861) 6,063 Housing Assistance Section 8 Mod Rehab - 4,890 4,890 CDBG Loan - 16 16 Other State and Local 2,189,396 (8,449,031) (6,259,635) Authority totals $ 6,540,286 $ (6,971,219) $ (430,933) While the result of operations is a significant measure of the Authoritys activities, the analysis of the changes in unrestricted net position provides a clearer change in financial well-being of each of the program areas. The major change in the unrestricted net position this period was recognition of $8,652,807 of accumulated pension liability reported under GASB. 8 February 14, 2017 Contra Costa County Housing Authority 33 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2016 (Continued) TABLE 3 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION The following schedule compares the revenues and expenses for the current and previous fiscal year. The Authority is engaged only in Business-Type Activities. Actual Budget Actual Budget March 31, 2016 March 31, 2016 March 31, 2015 March 31, 2015 Operating revenue: Rental and other $ 5,553,837 $ 4,857,689 $ 5,230,979 $ 5,038,503 Non-operating revenue: Federal grants and subsidies 98,995,429 93,837,509 90,964,347 87,027,167 Capital contributions 306,752 800,664 502,549 800,864 Other revenue 223,519 1,583,239 202,234 607,300 Total revenues 105,079,537 101,079,101 96,900,109 93,473,834 Operating expenses: Administration 8,036,311 9,060,709 8,627,668 9,628,348 Tenant services 498,416 378,781 435,404 371,928 Utilities 1,875,060 2,124,989 1,778,806 2,070,651 Maintenance 4,123,891 3,554,343 4,242,994 4,707,259 General 1,270,001 1,454,982 1,169,321 1,050,701 Housing assistance payments 85,978,059 82,656,425 81,904,701 77,079,284 Depreciation 2,050,894 3,239,401 2,222,068 2,129,024 Non-operating expenses: Debt-service interest 235,480 987,931 251,257 252,000 Capital Expenses - 1,015,708 - - Loan amortization and fees 4,244 - 3,142 3,142 Total expenses 104,072,356 104,473,269 100,635,361 97,292,337 Changes in net position 1,007,181 (3,394,168) (3,735,252) (3,818,503) Net position, beginning of the year 13,868,749 13,868,749 17,604,001 17,604,001 Prior period adjustment (9,187,608)- - - Net position, end of the year $ 5,688,322 $ 10,474,581 $ 13,868,749 $ 13,785,498 Major Factors Affecting the Statement of Revenue, Expenses and Changes in Net Position The major factor affecting the Statement of Revenue, Expenses, and Changes in Net Position is related to a change in the implementation of GASB 68, recognizing unfunded pension liabilities which is reported as a prior period adjustment. The budgeted amounts reported have been adjusted to eliminate interfund activities to compare the actual operating results to the budget. (see Note 1.E.) 9 February 14, 2017 Contra Costa County Housing Authority 34 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2016 (Continued) CAPITAL ASSETS ANDDEBT ADMINISTRATION Capital Assets As of year-end, the Authority had $12.4 million invested, see also Note 5 to the basic financial statements. TABLE 4 CAPITAL ASSETS March 31, 2016 March 31, 2015 Change Land $ 1,825,993 $ 1,825,993 $ - Buildings 97,860,387 97,242,741 617,646 Equipment 2,621,168 2,480,089 141,079 Accumulated Depreciation (90,078,351) (88,027,449) (2,050,902) Construction In Progress 204,707 569,776 (365,069) Total $ 12,433,904 $ 14,091,150 $ (1,657,246) The following reconciliation summarizes the change in Capital Assets. TABLE 5 CHANGE IN CAPITAL ASSETS 2016 2015 Capital assets - beginning of year $ 14,091,150 $ 15,684,971 Additions: Capital Fund Grant 306,752 502,549 Improvements to dwelling units - 81,683 Equipment - computer upgrades 86,896 44,015 Depreciation (2,050,894) (2,222,068) Capital assets - end of year $ 12,433,904 $ 14,091,150 Notes Payable Outstanding As of year-end, the Authority had $5,317,394 of notes payable outstanding, see Note 6 to the basic financial statements. ECONOMIC FACTORS The Authority is primarily dependent upon HUD for funding operations; therefore, the Authority is affected more by the federal budget than by state or local economic conditions. The Authoritys budgets and subsidy funding requests are approved by HUD. 10 February 14, 2017 Contra Costa County Housing Authority 35 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2016 (Continued) FINANCIAL CONTACT The individual to be contacted regarding this report, and the reports of the Authoritys component units, is the Director of Finance of the Housing Authority of the County of Contra Costa, at (925) 957-8014. Specific requests may be submitted to the Director of Finance, Housing Authority of the County of Contra Costa, P.O. Box 2759, 3133 Estudillo Street, Martinez, CA 94553. 11 February 14, 2017 Contra Costa County Housing Authority 36 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF NET POSITION - PROPRIETARY FUNDS MARCH 31, 2016 Primary Component Government Units Housing ASSETS Current assets Cash and investments (Note 2 and 14) $ 8,820,559 $ 105,107 Due from other agencies 151,178 - Due from related parties - DeAnza (Note 14) 75,954 - Tenant accounts receivable 184,452 18,946 Allowance for doubtful accounts (75,982) (1,613) Miscellaneous accounts receivable - 21,117 Allowance for doubtful accounts - (4,018) Interest receivable 15,651 3,524 Notes receivable - short term (Note 4) 13,576 - Prepaid expenses 209,488 21,573 Total current assets 9,394,876 164,636 Restricted assets: Restricted cash (Note 2 and 3 and 14) 1,342,600 1,424,661 Capital assets (Note 5 and 14): Land 1,825,993 1,150,712 On site improvements - 4,028,709 Buildings 97,860,387 29,714,010 Furniture and equipment 2,621,168 488,321 Construction in progress 204,707 - Accumulated depreciation (90,078,351) (11,675,442) Total capital assets 12,433,904 23,706,310 Other noncurrent assets: Long-term notes receivable (Note 4) 376,466 - Long-term notes receivable - DeAnza (Note 4 and 14) 1,000,000 - Interest receivable on long-term notes (Note 4) 94,476 - Due from related parties - DeAnza (Note 14) 1,898,723 - Other long-term assets 60,784 - Loan costs (net of amortization of $66,179 and $311,998) 27,964 79,463 Total other noncurrent assets 3,458,413 79,463 Total assets 26,629,793 25,375,070 DEFERRED OUTFLOWS OF RESOURCES Pension (Note 11)2,165,706 - 12 February 14, 2017 Contra Costa County Housing Authority 37 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF NET POSITION - PROPRIETARY FUNDS MARCH 31, 2016 (Continued) Primary Component Government Units Housing LIABILITIES Current liabilities: Accounts payable $ 559,068 $ 62,482 Due to related parties - Authority (Note 14) - 32,444 Due to other agencies 372,591 - Accrued salaries and related costs 214,721 - Accrued interest (Note 14) - 48,207 Payable from restricted assets: Tenant security deposits 366,342 159,232 Unearned revenue (Note 8) 206,776 4,067 Current portion of compensated absences (Note 1.I.) 260,975 - Current portion of long-term debt (Note 6 and 14) 296,541 216,609 Total current liabilities 2,277,014 523,041 Other noncurrent liabilities: Long-term debt (Note 6 and 14) 5,020,853 8,345,478 Long-term debt - Authority (Note 14) - 1,000,000 Long-term portion of compensated absences (Note 1.I.) 103,273 - Payable from restricted assets: Family self sufficiency escrows 267,332 - Other noncurrent liabilities (Note 9 and 14) 2,255,175 17,019 Due to related parties - Authority (Note 14) - 1,912,659 Net pension liability (Note 11) 10,788,391 - Other post employment benefit liability (Note 12) 2,395,139 - Total noncurrent liabilities 20,830,163 11,275,156 Total liabilities 23,107,177 11,798,197 DEFERRED INFLOWS OF RESOURCES - - NET POSITION (Note 10) Net investment in capital assets 5,391,407 15,096,016 Restricted net position 727,848 1,410,036 Unrestricted net position (430,933)(2,929,179) Total net position $ 5,688,322 $ 13,576,873 The accompanying notes are an integral part of this statement 13 February 14, 2017 Contra Costa County Housing Authority 38 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED MARCH 31, 2016 Primary Component Government Units Housing Operating revenue: Rents and other tenant revenue $ 4,238,040 $ 2,058,630 Other 1,315,797 10,598 Total operating revenue 5,553,837 2,069,228 Operating expenses: Administration 8,036,311 416,738 Tenant services 498,416 - Utilities 1,875,060 242,611 Maintenance 4,123,891 468,587 General 1,270,001 108,979 Housing assistance payments 85,978,059 - Depreciation (Note 5 and 14) 2,050,894 1,017,334 Total operating expenses 103,832,632 2,254,249 Operating income (loss)(98,278,795)(185,021) Nonoperating revenue (expenses): Grants 98,995,429 - Restricted interest 1,337 20,754 Unrestricted interest 105,598 - Mortgage interest 15,538 - Mortgage interest forgiven (13,914) - Interest on notes receivable with related party (Note 4 and 14) 30,000 (30,000) Related party fees (Note 14) 84,960 (84,960) Amortization - loan fees (4,244) (11,352) Debt service - interest (Note 6 and 14) (235,480)(572,421) Net gain before contributions and transfers 700,429 (863,000) Capital contributions 306,752 - Change in net position 1,007,181 (863,000) Net position - beginning of year, as originally stated 13,868,749 14,439,873 Prior period adjustment (Note 11.D.) (9,187,608)- Net position - beginning of year, restated 4,681,141 14,439,873 Net position - end of year $ 5,688,322 $ 13,576,873 The accompanying notes are an integral part of this statement. 14 February 14, 2017 Contra Costa County Housing Authority 39 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED MARCH 31, 2016 Primary Government Housing Cash flows from operating activities: Tenant receipts $ 4,102,408 Other receipts 1,307,666 Payroll and benefit expenditures (9,407,783) Administration expenditures (1,697,459) Tenant services expenditures (117,394) Utilities expenditures (1,872,590) Maintenance expenditures (2,571,471) General expenditures (736,921) Housing assistance payment expenditures (86,251,884) Net cash used by operating activities (97,245,428) Cash flows from noncapital financing activities : Operating grants received 99,356,010 Funds returned to granting agency (14,400) Related parties transactions (46,222) Repayment of notes receivable 104,310 Notes receivable issued (9,851) Interest received on notes receivable 40,230 Net cash provided by noncapital financing activities 99,430,077 Cash flows from capital financing activities : Grants received to acquire capital assets 306,752 Acquisition of capital assets (393,648) Principal paid on debt (298,902) Interest paid on debt (156,693) Loan fees paid (1,100) Net cash used by capital financing activities (543,591) Cash flows from investing activities: Interest receipts 105,366 Interest on restricted cash 1,422 Net cash provided by investing activities 106,788 Net increase to cash 1,747,846 Cash at beginning of year 8,415,313 Cash at end of year $ 10,163,159 Cash and investments $ 8,820,559 Restricted cash 1,342,600 Total cash at year end $ 10,163,159 15 February 14, 2017 Contra Costa County Housing Authority 40 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED MARCH 31, 2016 (Continued) Primary Government Housing Reconciliation of operating loss to net cash used by operating activities: Operating loss $ (98,278,795) Adjustments to reconcile operating loss to Net cash used by operating activities: Depreciation expense 2,050,894 Prior period adjustment (9,187,608) (Increase) Decrease in: A/R other governments 10,333 Tenants accounts receivable (43,151) Prepaid expenses (7,454) Other long-term assets 36,646 Deferred outflows of resources (2,165,706) Increase (Decrease) in: Accounts payable (206,730) Due to other agencies 150,017 Tenant security deposits (1,734) Accrued salaries (246,367) Unearned revenues (9,406) FSS escrows (49,376) Compensated absences 2,567 Noncurrent liabilities (87,768) Post retirement benefits (181) Net pension liability 10,788,391 Net cash used by operating activities $ (97,245,428) Noncash transactions: Interest of $78,787 was accrued as payable to RHCP. The payments on this loan are deferred, unless the project generates surplus cash. Interest of $30,000 was accrued as receivable from DeAnza Gardens L.P. No payments were received with regards to this loan. Lease fees of $72,000 were accrued as receivable from DeAnza Gardens L.P. These fees are deferred. Interest on the Rental Rehabilitation loans of $1,624 was accrued as revenue, while none was received. The interest on these loans is due at maturity. The accompanying notes are an integral part of this statement. 16 February 14, 2017 Contra Costa County Housing Authority 41 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of The Housing Authority of the County of Contra Costa (the Authority) have been prepared in conformity with accounting principles generally accepted in the United States of America 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. The following is a summary of the Authoritys more significant accounting policies: A. Organization The Authority was established pursuant to the State Health and Safety Code in 1941. The Authority is a public entity organized under the laws of the State of Californias Health and Safety Code to provide housing assistance to low and moderate income families at rents they can afford. Eligibility is determined by family composition and income in areas served by the Authority. To accomplish this purpose, the Authority has entered into Annual Contributions Contracts with the U.S. Department of Housing and Urban Development (HUD) to operate assisted housing programs. The governing board of the Authority is the County Board of Supervisors. The Authority is a legally separate entity from the County, maintaining separate accounting records, staff, and administration facilities. In addition, there is no financial benefit/burden relationship between the County and the Authority and the County has limited or no opportunity to impose its will upon the Authority because the Authority is governed by rules and regulations imposed by the Federal government through the U.S. Department of Housing and Urban Development. The County defines the Authority as a discretely presented component unit in its Comprehensive Annual Financial Report (CAFR). A copy of this report may be obtained by contacting the Office of the Auditor-Controller, 625 Court Street, Martinez, California 94553. B. Financial Reporting Entity The Authoritys combined financial statements include the accounts of all the Authoritys operations. The criteria used in determining the scope of the financial reporting entity is based on provisions of Governmental Accounting Standards No. 61, The Financial Reporting Entity. The financial statements of the Authority include the financial activity of the Authority and any component units. The decision to include a potential component unit in the reporting entity was made based on the significance of their operational or financial nature and significance of their relationship with the Authority, including consideration of organizations for which the nature and significance of their relationship with the Authority are such that exclusion would cause the reporting entitys financial statements to be misleading or incomplete. Based on the aforementioned criteria, the Authority has blended 17 February 14, 2017 Contra Costa County Housing Authority 42 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) and discretely presented component units. The blended component units, although legally separate entities, are, in substance, part of the Authoritys operations. Discretely presented component units are reported in a separate column in the fund financial statements to emphasize that they are legally separate from the government. The component units are as follows: Blended Component Units. HACCC Casa Del Rio, Inc (A California Nonprofit Public Benefit Corporation) and CDR Senior Housing Associates (A California Limited Partnership) . HACCC Casa Del Rio, Inc. is the general partner of CDR Senior Housing Associates. The officers and Board members of HACCC Casa Del Rio, Inc. are employees of the Authority. The partnership was formed in 1994 to develop and operate an 82-unit affordable housing rental complex located in Antioch, California, which is currently known as Casa Del Rio Senior Housing. Casa Del Rio Senior Housing was placed into service in 1995. Pursuant to the Indemnification Agreement dated July 1, 1994, by and among the Authority, HACCC Casa Del Rio, Inc., CDR Senior Housing Associates, and MHIFED I Limited Partnership, the Authority could possibly be liable for unpaid taxes, interest and penalties, cost to contest, operating deficiency and expenses of enforcement as identified in the Agreement and for a sponsors operating guaranty to provide sufficient staff or equipment to the general partner, as needed and remedies against sponsor for default under the Amended HCD Agreement. Casa Del Rio Senior Housing participates in the low-income housing tax credit program under Section 42 of the Internal Revenue Code. Various agreements dictate the maximum income levels of new tenants and also provide rent restrictions through 2054. Since HACCC Casa Del Rio, Inc and CDR Senior Housing Associates have the potential to impose a financial burden on the Authority, these entities have been included in the Authoritys financial statements as blended component units. See also Note 15. Discretely Presented Component Units. DeAnza Housing Corporation (A California Nonprofit Public Benefit Corporation) and DeAnza Gardens, L.P. (A California Limited Partnership). The Authority is the General Partner and DeAnza Housing Corporation is the managing general partner of DeAnza Gardens, L.P. The partnership was formed for the purpose of acquisition, ownership, maintenance, and operation of 180 multi-family rental housing units and the provision of low-income housing through the construction, renovation, rehabilitation, operation, and leasing of an affordable housing development located in Contra Costa County, which is currently known as DeAnza Gardens. DeAnza Gardens was placed into service during 2005. It was built on land owned by and leased from the Authority. Under the terms of the lease, title to the improvements revert to 18 February 14, 2017 Contra Costa County Housing Authority 43 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) the Authority at the end of the 75-year lease. Financing for construction was obtained through notes from the Authority, Bank of America, and DeAnza Housing Corporation. DeAnza Gardens participates in the low-income housing tax credit program under Section 42 of the Internal Revenue Code. Various agreements dictate the maximum income levels of new tenants and also provide rent restrictions through 2078. Since DeAnza Housing Corporation and DeAnza Gardens L.P. are other organizations for which the nature and significance of their relationship with the Authority are such that exclusion from the financial statements would cause the Authoritys financial statements to be misleading or incomplete, these entities have been included in the Authoritys financial statements as discretely presented component units. See also Note 15. Complete audited financial statements are issued separately for each of the individual component units listed above and may be obtained from the Housing Authority of the County of Contra Costa, 3133 Estudillo Street, P.O. Box 2759, Martinez, California 94553. C. Basis of Presentation Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. The Authoritys activities are strictly business-type. The Authority has no fiduciary funds. Fund Financial Statements: Fund financial statements of the Authority are organized into funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for within a separate set of self balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenses/expenditures as appropriate. Government resources are allocated to, and accounted for, in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. A fund is considered major if it is the primary operating fund of the Authority or if total assets, liabilities, revenue, or expenses/expenditures of the individual fund are at least 10 percent of the Authority-wide total. The Authority considers all of its activity to be housing related and therefore, considers all the financial activity of the Authority to be one major fund, titled Housing. As such, the Authority has no non-major funds. PROPRIETARY FUND TYPES Enterprise Funds - Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that costs of 19 February 14, 2017 Contra Costa County Housing Authority 44 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. Enterprise funds are also used when the governing body has decided that periodic determination of revenue earned, expenses incurred, or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. The Authoritys funds are operated as enterprise funds. D. Measurement Focus and Basis of Accounting Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. The Proprietary Fund Types are accounted for on an economic resources measurement focus using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recorded at the time liabilities are incurred. Under this basis of accounting and measurement focus, the Authority applies all GASB pronouncements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses result from providing goods and services related to the funds ongoing operations. The principal operating revenue of the Authoritys enterprise funds is dwelling rental income. Operating expenses are necessary costs that have been incurred in order to provide the good or service that is the primary activity of the fund. The principal operating expenses of the Authoritys enterprise funds are employee salaries and benefits, housing assistance payments, utilities, and the costs to maintain the owned units. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When the Authority incurs an expense for which both restricted and unrestricted resources may be used, it is the Authoritys policy to use restricted resources first and then unrestricted resources as needed. E. Interfund Transactions Statement of Net Position: Short-term amounts due between funds are classified as Due from/to other funds. As of March 31, 2016, the amounts due between the various proprietary funds totaled $291,763. Operating advances made to the blended component units, HACCC Casa Del Rio, Inc and CDR Senior Housing Associates totaled $394,178 as of March 31, 2016. The interfund 20 February 14, 2017 Contra Costa County Housing Authority 45 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) balance as of December 31, 2015, was $370,464 and was reported as non-current related party payable by the other auditors. The Statement of Net Position - Proprietary Funds, reported as of March 31, 2016, shows $370,464 as both a noncurrent asset and as a noncurrent liability. The difference of $23,714, due to the timing differences in fiscal year end, is shown as other noncurrent assets (see also Note 14). A long-term note due from the Management Enterprise Fund to the blended component unit, HACCC Casa Del Rio, Inc in the amount of $185,000 is reported as long-term notes receivable and long-term debt. See also Notes 4 and 6. These interfund assets and liabilities have been eliminated from the Statement of Net Position - Proprietary Funds. For further detail, please see the Financial Data Schedule found in the Supplementary Information section of this report. Statement of Revenues, Expenses, and Changes in Fund Net Position : Participants of the Housing Choice Voucher Program have decided to occupy units owned by the Authoritys blended component unit. Housing assistance payments made by the Housing Choice Voucher and Shelter Plus Care Programs to Casa Del Rio Senior Housing (CDR) totaled $9,755 for the fiscal year ended March 31, 2016. CDR also paid the Authority $52,452 during the current fiscal year for management fees. The Authority utilizes a Central Office Enterprise Fund to account for administrative costs that are not charged to its Public Housing and Housing Choice Voucher Enterprise Funds. The Housing Choice Voucher Enterprise Fund paid management fees and bookkeeping fees in the amount of $1,383,229 and $573,396, respectively. The Public Housing Enterprise Fund paid property management, bookkeeping, and asset management fees in the amount of $1,045,031, $93,640, and $78,559, respectively. The Shelter Plus Care Enterprise Fund was allocated costs of $57,325 in lieu of fees. These costs, totaling $3,231,180, are reported as other revenue in the Central Office Enterprise Fund and administrative expenses of the Public Housing, Housing Choice Voucher, and Shelter Plus Care Enterprise Funds. Beginning in the current fiscal year, the Authority created a fund to account for the pension transactions required by GASB Statement No. 68 Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No.27". Actual payments made to the Authoritys pension plan administrator, the Contra Costa County Employees Retirement Association (CCCERA), have been expensed to the Authoritys programs based on payroll allocations effective at the time of payment. The newly established enterprise fund, accounted for within the State and Local Enterprise Fund, holds the deferred outflows of resources generated when the payments are made. The GASB 68 required accounts are 21 February 14, 2017 Contra Costa County Housing Authority 46 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) adjusted annually at each actuarial measurement date. During the current fiscal year, $2,262,987 of payments to CCCERA were recorded as expenditures of the Authoritys various programs and as revenue of the State and Local Enterprise Fund. The Authority is required by HUD to pay HAP on behalf of other authorities with Housing Choice Voucher Program participants residing within Contra Costa County. The Authority is reimbursed for this HAP from the initiating housing authority. HUD requires this HAP to be reported as an expense when paid to the landlord and as income when reimbursed from the initiating housing authority. For the current fiscal year, the Authority paid $893,787 in HAP on behalf of other housing authorities. This amount is therefore reported as revenue and expense of the Housing Choice Voucher Enterprise Fund. CDR Inc earns interest of $13,912 on its loan with the Authority of $185,000. CDR Inc has agreed to give the interest back to the Authority as a charitable contribution. This interest revenue and expense are reported within the blended component unit enterprise fund. Interfund transfers of $529,767 were made between the Authoritys funds this fiscal year. Interfund transfers of $463,426 were made within the Public Housing enterprise Fund. This represents the use of Capital Fund grants for Public Housing operating costs. Interfund transfers of $60,125 were made from the Housing Choice Voucher Enterprise Fund to the Family Self Sufficiency Enterprise Fund($26,757) and the Shelter Plus Care Enterprise Fund ($33,368) to assist in program funding short falls. Interfund transfers of $3,431 were made from the Section 8 Moderate Rehabilitation Enterprise Fund to the Housing Choice Vouchers Enterprise Fund to cover prior year funding short falls. The Rental Rehabilitation Enterprise Fund transferred $2,785 to the CDBG Rental Rehabilitation Enterprise Fund to cover operating costs. Interfund revenues and expenses of $5,556,374 have been eliminated from the Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds. This amount includes the interfund HAP, management fees, bookkeeping fees, asset management fees, and pension plan payments. The transfers net to zero and are not reported on the Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds. For further detail, please see the Financial Data Schedule found in the Supplementary Information section of this report. F. Cash and Investments Cash includes amounts in demand deposits and saving accounts. Investments are reported in the accompanying statement at market value. All of the Authoritys investments can be converted to cash in a relatively short amount of time. Therefore, all cash and investments are used in the Statement of Cash Flows. 22 February 14, 2017 Contra Costa County Housing Authority 47 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Changes in fair value that occur during a fiscal year are recognized as interest income reported for that fiscal year. Interest income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments. The Authority pools cash and investments of all programs. Each programs share in this pool is displayed in the accompanying Financial Data Schedule as cashand investments. Interest income earned by the pooled investments is allocated to the various funds based on each funds average cash and investment balance. G. Accounts Receivable Receivables are principally amounts due from HUD and tenants. Allowance for doubtful accounts has been provided based on the likelihood of the recovery. H. Capital Assets Capital assets, which include property, plant and equipment, acquired for Proprietary Funds are capitalized in the respective funds to which they apply. The Authority has an established capitalization policy, which requires all acquisitions of property and equipment in excess of $5,000 and all expenditures for repairs, maintenance, renewals, and betterments that materially prolong the useful lives of assets to be capitalized. Property and equipment are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Interest expense incurred during the development period is capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Depreciation of exhaustible capital assets used by Proprietary Funds is charged as an expense against operations, and accumulated depreciation is reported on the Statement of Net Position. Capital assets are being depreciated using the straight-line basis over the useful lives of the assets. The useful lives are generally 27.5 years for buildings, 10 years for modernization, 5 years for vehicles, furniture and equipment, and 3 years for computer equipment. Salvage value on all depreciable equipment is assumed to be insignificant and therefore valued at $0. I. Compensated Absences It is the Authoritys policy to permit employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid accumulated sick leave since the government does not have a policy to pay any amounts when employees separate from service with the Authority. All vacation pay is accrued when incurred and allocated to the 23 February 14, 2017 Contra Costa County Housing Authority 48 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) appropriate proprietary fund. Total liability for the Authority is $364,348 based on year-end hourly rates. Of this amount $260,975 is considered by the Authority to be a current liability. J. Deferred Outflows/Inflows of Resources In addition to assets, the Statement of Financial Position will sometimes include a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense) until that time. The Authoritys deferred outflows of resources consist of (1) items associated with, and referred to in, the actuarial report of the defined benefit pension plan, and (2) payments made on behalf of employees to the defined benefit pension plan after the measurement date of the actuarial report. See also Note 11. In addition to liabilities, the Statement of Financial Position will sometimes include a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The Authoritys deferred inflows of resources consist of items associated with, and referred to in, the actuarial report of the defined benefit pension plan. See also Note 11. It is the Authoritys practice to report deferred outflows and inflows of resources in the aggregate on the Statement of Net Position. K. Net Position Net position represents the differences between assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Net position consists of net investment in capital assets; restricted net position; and unrestricted net position. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of borrowing used for acquisition, construction, or improvement of those assets (excluding interfund borrowing and including accrued interest). Net position is reported as restricted when there are limitations imposed on its use through constitutional provisions or enabling legislation or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. L. Income Taxes The Authority is exempt from federal and state income taxes. The Authority is also exempt from property taxes but makes payments in lieu of taxes on owned housing. 24 February 14, 2017 Contra Costa County Housing Authority 49 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) M. Budgets and Budgetary Accounting The Board of Commissioners adopts an operating budget effective April 1 annually. This budget may be revised by the Board of Commissioners during the year to give consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the time of budget adoption. N. Estimates Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources; the disclosure of contingent assets and liabilities; and the reported revenues and expenses. Actual results could differ from those estimates. O. Encumbrances Encumbrance accounting is not employed by the Authority. P. Grant Restrictions The Authority has received loans and grants from the U.S. Department of Housing and Urban Development. The grants require that only individuals and families that meet various income, age and employment standards be housed or aided. Q. Cost Allocation Procedures Cost allocation procedures are divided into one of the following three methods, 1) Direct Costs, 2) Indirect Costs, 3) Fee for Service. Direct Allocation Method: this method is used when the cost being incurred directly benefits a specific program, region, development, project or site. Allocation at the regional, development, project or site level shall be allocated by using the ratio of number of bedrooms managed (zero bedroom units will count as 1). Allocation at the Program level will be based on a common factor within the program area, such as units within a grant, grant award amounts, or other reasonable factors where allowed. Indirect Allocation Method: this method is used when the cost being incurred is for a common or joint objective and therefore does not directly benefit a specific program, region, development, project or site. These costs will be allocated using a rationale from direct salary allocation plan consistent with OMB Circular A-87. The direct salary allocation plan will be established annually as a part of the annual budget process. 25 February 14, 2017 Contra Costa County Housing Authority 50 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Fee for Service Method: this method is used when an employee performs work outside of their budgeted allocation. The fee for service method will reduce the allocations of salary and benefits from the program that the position was originally budgeted for. This method should be documented on a time reporting process, either by way of time card or activity log or both. R. Loan Costs The Authority has implemented GASB Statement No. 65 Items Previously Reported as Assets and Liabilities. The Statement requires that debt issuance costs be reported as expenses when incurred since they no longer meet the definition of an asset. The component units are nonprofit public benefit corporations and limited partnerships and they follow the guidance of the Financial Accounting Standards Board for their financial reporting. Certain recognition criteria and presentation features are different from GASB. For instance, these entities report debt issuance costs as an asset amortized over time. No modifications have been made to the audited financial information as presented. The unamortized value of the loan costs does not have a material effect on the Authoritys net position. Net loan costs of $27,964 are reported as other noncurrent assets of the primary government, for the blended component units, and $79,463 as other noncurrent assets of the component units, for the discretely presented component units. S. Pension Plan The Authority participates in a cost-sharing multi-employer defined benefit retirement plan that is administered by the Contra Costa County Employees Retirement Association (CCCERA). Contributions to CCCERA are made on a current basis as required by the plan and are charged to expenditures. The Authority used actuarial reports supplied by CCCERA for the purpose of measuring the net pension liability, deferred outflows and inflows of resources related to the pension plan. The valuation date of the latest actuarial report was December 31, 2015. T. New GASB Pronouncements GASB Statement No. 68 Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No 27, was effective for financial statements for periods beginning after June 15, 2014. This statement improves financial reporting for pensions and results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. The Authority has implemented this statement in the current fiscal year. As a result, net pension liabilities were accrued to the books of accounts and beginning net position was adjusted by approximately $9.2 million. See also Note 11. 26 February 14, 2017 Contra Costa County Housing Authority 51 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. This statement will have a similar requirement for OPEB as the GASB Statement No. 68 had for pension plans. Beginning in 2018, government agencies will be required to record OPEB liability in a fashion similar to the recognition of the net pension liability required of GASB Statement No. 68. Management anticipates that the full implementation of this Statement will have a material impact on the financial statements beginning with the fiscal year ended March 31, 2019. Note 2 - CASH AND INVESTMENT Cash and investments as of March 31, 2016 are classified in the accompanying financial statement as follows: Statement of net position: Cash and investments $ 8,820,559 Restricted cash 1,342,600 Total Cash & Investments $ 10,163,159 Demand deposits $ 4,074,073 Investments 5,547,487 Cash held by other agencies 539,649 Cash on hand 1,950 Total Cash & Investments $ 10,163,159 Investments Authorized by the Authoritys Investment Policy Investments authorized by the Authority are empowered by the HUD Notice 99-48 and its own investment policy to invest HUD funds in the following: United States Treasury Bills, Notes and Bonds; Obligations issued by Agencies or Instrumentalities of the U.S. Government; State or Municipal Depository Funds, such as the Local Agency Investment Fund (LAIF) or pooled cash investment funds managed by County treasurers; Insured Demand and Savings Deposits, provided that deposits in excess of the insured amounts must be 100% collateralized by federal securities; Insured Money Market Deposit Accounts; Insured SUPER NOW accounts, provided that deposits in excess of the insured amount must be 100% collateralized by federal securities; Negotiable Certificates of Deposit issued by federally or state chartered banks or associations, limited to no more than 30% of surplus funds; Repurchase/Reverse Repurchase Agreements of any securities authorized by this section; securities purchased under purchase agreements shall be no less than 102% of market value; 27 February 14, 2017 Contra Costa County Housing Authority 52 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Sweep Accounts that are 100% collateralized by federal securities; Shares of beneficial interest issued by diversified management companies investing in the securities and obligations authorized by this Section (Money Market Mutual Funds); Funds must carry the highest rating of at least two national rating agencies and are limited to not more than 20% of surplus funds; Funds held under the terms of a Trust Indenture or other contract or agreement including the HUD/PHA Annual Contributions Contract, may be invested according to the provisions of those indentures or contracts; and Any other investment security authorized under the provisions of HUD Notice PIH 97-41. The Authority is empowered by the California Government Code (CGC) Sections 5922 and 53601 et seq and its own investment policy to invest non-HUD funds in the following: Bonds issued by the local entity with a maximum maturity of five years; United States Treasury Bills, Notes and Bonds; Registered state warrants or treasury notes or bonds issued by the State of California; Bonds, notes, warrants or other evidence of debt issued by a local agency within the State of California, including pooled investment accounts sponsored by the State of California, County Treasurer, other local agencies or Joint Powers Agencies; Obligations issued by Agencies or Instrumentalities of the U.S. Government; Bankers Acceptances with a term not to exceed 270 days, limited to 40% of surplus funds; no more than 30% of surplus funds can be invested in Bankers Acceptances of any single commercial bank; Prime Commercial Paper with a term not to exceed 180 days and the highest ranking issued by Moodys Investors Service or Standard & Poors Corp., limited to 15% of surplus funds; provided that if the average total maturity of all commercial papers does not exceed 31 days up to 30% of surplus funds can be invested in commercial papers. Negotiable Certificates of Deposit issued by federally or state chartered banks or associations, limited to not more than 30% of surplus funds; Repurchase/Reverse Repurchase Agreements of any securities authorized by this Section, securities purchased under these agreements shall be no less than 102% of market value. Securities purchased under reverse repurchase agreements shall be for temporary and unanticipated cash flow needs only. Medium term notes (not to exceed two years) of U.S. corporations rated AAA or better by Moodys or Standard & Poors limited to not more than 30% of surplus funds; Shares of beneficial interest issued by diversified management companies investing in the securities and obligations authorized by this Section (Money Market Mutual Funds), limited to not more than 15% of surplus funds; Funds held under the terms of a Trust Indenture or other contract or agreement may be invested according to the provisions of those indentures or agreements; Collateralized bank deposits with a perfected security interest in accordance with the Uniform Commercial Code (UCC) or applicable federal security regulations; 28 February 14, 2017 Contra Costa County Housing Authority 53 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Any mortgage pass-through security, collateralized mortgage obligation, mortgaged backed or other pay-through bond, equipment least-backed certificate, consumer receivable pass- through certificate or consumer receivable backed bond of a maximum maturity of five years, securities in this category must be rated AA or better by a national rating service and are limited to not more than 30% of surplus funds; Any other investment security authorized under the provisions of California Government Code Sections 5922 and 53601. Disclosure Related to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in the market rates. See the table shown later in this note titled Investment Disclosure for the maturity dates for each of the Authoritys investments. Disclosures related to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. See the table shown later in this note titled Investment Disclosure for the ratings assigned to the issuer for each of the Authoritys investments. Concentration of Credit Risk See the table shown later in this note titled Investment Disclosure to determine how the Authoritys investments are concentrated. These investments are owned by the following programs: Housing Choice Voucher Program $ 1,163,697 20.98% Public Housing Program 1,438,604 25.93% Other State and Local Programs 1,585,035 28.57% Central Office Cost Center 1,090,664 19.66% Rental Rehabilitation Loan Program 151,707 2.73% Casa Del Rio (blended component unit)110,505 1.99% Shelter Plus Care 7,275 0.14% Total investments $ 5,547,487 Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code and the Authoritys investment policy do not contain legal or policy 29 February 14, 2017 Contra Costa County Housing Authority 54 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) requirements that would limit the exposure to custodial credit risk for deposits, other than the following provision for deposits: The California Government Code requires California banks and savings and loan associations to secure the Authoritys deposits not covered by federal deposit insurance by pledging mortgages or government securities as collateral. The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure Authority deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Such collateral must be held in the pledging banks trust department in a separate depository in an account for the Authority. The custodial risk for investments is the risk that, in the event of the failure of the counterparty (broker-dealer, etc) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the Authoritys investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local governments indirect investment in securities through the use of mutual funds or government investment pools (such as LAIF). The Authority has executed a General Depository Agreement with WestAmerica Bank dated October 24, 2005. This agreement states that any portion of PHA funds not insured by a Federal insurance organization shall be fully (100%) and continuously collateralized with specific and identifiable U.S. Government or Agency securities prescribed by HUD. The Authoritys exposure to custodial credit risk is as follows: Demand deposits with banks, fully insured by FDIC $ 250,000 Demand deposits with banks covered by depository agreements 3,794,315 Cash held by investment companies 29,758 Deposits held by CHFA 539,649 Total demand deposits and cash held by other agencies $ 4,613,722 30 February 14, 2017 Contra Costa County Housing Authority 55 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) See the table below for information regarding the investments. Investment Disclosure - March 31, 2016 Investment Type Issuer Book Value Market Value Maturity Rate Government Security LAIF $ 936,239 $ 936,446 N/A Interest on LAIF 1,081 1,081 N/A Certif. Of Deposit American Express FSB 220,000 223,505 8/14/2019 300 Certif. Of Deposit Capital One Bank 120,000 122,400 11/05/2019 300 Certif. Of Deposit Capital One Bank 100,000 101,505 11/05/2019 300 Certif. Of Deposit Sychrony Bank 100,000 101,179 3/20/2020 300 Certif. Of Deposit Discover Bank 100,000 100,892 5/13/2020 300 Certif. Of Deposit Goldman Sachs Bank 149,000 151,707 7/08/2020 297 Certif. Of Deposit Capital One Bank 247,000 251,451 7/22/2020 300 Certif. Of Deposit Everbank 247,000 251,453 7/30/2020 214 Certif. Of Deposit CIT Bank 105,000 107,100 7/30/2020 238 Certif. Of Deposit CIT Bank 110,000 112,202 7/30/2020 238 Certif. Of Deposit Worlds Foremost Bank 100,000 102,192 8/20/2020 242 Certif. Of Deposit Discover Bank 135,000 138,000 8/26/2020 300 Certif. Of Deposit American Express Cent 175,000 177,851 11/25/2020 300 Certif. Of Deposit Sallie Mae Bank 100,000 101,612 12/09/2020 300 Certif. Of Deposit Sallie Mae Bank 100,000 101,612 12/09/2020 300 Certif. Of Deposit Celtic Bank, UT 100,000 101,612 12/24/2020 300 Certif. Of Deposit Goldman Sachs Bank 100,000 101,836 1/06/2021 295 Certif. Of Deposit Community Capital Bank 100,000 102,263 1/19/2021 300 Certif. Of Deposit Community Capital Bank 100,000 100,567 2/22/2021 300 Certif. Of Deposit BMW Bank of No. America 97,000 97,306 2/22/2021 300 Certif. Of Deposit BMW Bank of No. America 150,000 150,482 2/26/2021 300 Govt Agency Federal Home Loan Mtg Corp 150,000 150,647 10/02/2019 AAA Govt Agency Fannie Mae 150,000 152,574 1/21/2020 AAA Govt Agency Federal Home Loan Mtg Corp 125,000 125,981 5/01/2020 AAA Govt Agency Fannie Mae 735,000 747,083 9/28/2020 AAA Govt Agency Fannie Mae 100,000 101,104 6/22/2020 AAA Govt Agency Fannie Mae 105,000 105,051 11/30/2020 AAA Govt Agency Federal Home Loan Mtg Corp 210,000 215,462 12/11/2020 AAA Govt Agency Fannie Mae 100,000 103,033 1/07/2021 AAA Certif. Of Deposit Goldman Sachs Bank 110,505 110,505 6/16/2021 295 Total Investments $ 5,477,825 5,547,694 Investments reported below market value (207) Total Investments reported $ 5,547,487 The Authority is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The LAIF is a special fund of the California State Treasury through which local governments may pool investments. Each government agency may invest up to $30,000,000 in each account in the fund. Investments in LAIF are highly liquid, as deposits can be converted to 31 February 14, 2017 Contra Costa County Housing Authority 56 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) cash within twenty-four hours without loss of interest or principal. The full faith and credit of the State of California secure investments in LAIF. At March 31, 2016, an account was maintained in the name of the Housing Authority of the County of Contra Costa for $936,239. The total cost value of investment in LAIF was $936,239. The total fair value of investments in LAIF was $936,446. The fair value total includes an unrealized gain on investments of $207. The unrealized gain was based on a fair value adjustment factor of 1.00022106 that was calculated by the State of California Treasurers Office. The unrealized gain was not recorded by the Authority and is considered immaterial. Of the $936,239 invested in LAIF, $937,320 is recorded as assets of the Authority. The difference includes $1,081 of interest receivable from LAIF as of March 31, 2016, shown by the Authority as investments. LAIF is a part of the State of California Pooled Money Investment Account (PMIA). At March 31, 2016, the fair value of the State of California Pooled Money Investment Account (PMIA), including accrued interest, was $67,252,084,148. The PMIA portfolio had securities in the form of structured notes totaling $300 million and asset-backed securities totaling $968,950,000. The PMIA has policies, goals and objectives for the portfolio to make certain that the goals of safety, liquidity, and yield are not jeopardized. These policies are formulated by investment staff and reviewed by both the PMIA and LAIF Advisory Boards on an annual basis. LAIFs and the Authoritys exposure to credit, market, or legal risk is not available. During 2002, California Government code was added to the LAIFs enabling legislation stating that the right of a city, county...special district...to withdraw its deposited money from the LAIF upon demand may not be altered, impaired, or denied in any way by any state official or state agency based upon the States failure to adopt a State Budget by July 1 of each new fiscal year. In addition, it has been determined that the State of California cannot declare bankruptcy under Federal regulations. This allows other government code stating that money placed with the State Treasurer for deposit in the LAIF shall not be subject to ...transfer or loan...or impound or seizure by any state official or state agency to stand. 32 February 14, 2017 Contra Costa County Housing Authority 57 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Note 3 - RESTRICTED CASH Restricted cash consists of funds for replacement and operating reserves required by the lender and funds being held by the Authority on behalf of its clients. The balances are as follows: Tenant security deposits - Public Housing $ 329,112 Family Self Sufficiency Program participants escrow funds 267,332 HUD funds restricted in use for HAP payments (See also Note 10) 188,199 Blended component unit - Casa Del Rio: Funds held by CHFA: Replacement reserve 297,249 Operating reserve 228,508 Hazard and earthquake insurance impounds 13,892 Tenant security deposits 18,308 Total restricted cash $ 1,342,600 The funds held by the California Housing Finance Agency (CHFA) can only be used for major repairs or insurance, upon receipt of prior written approval from CHFA. These amounts are also reported as restricted net position (see also Note 10). The amounts held by the Authorities for program participants of the FSS program and for tenant security deposits are reported as payable from restricted assets. Please see the prior note to determine interest rates and credit risks for the above restricted cash. Note 4 - NOTES RECEIVABLE A schedule of changes in notes receivable is as follows: Balance Loans Loans Balance Long-term Short-term 3/31/15 Issued Repaid 3/31/16 Portion Portion CDBG Loan Program $ 419,936 $ - $ (97,500) $ 322,436 $ 322,436 $ - Rental Rehab. Program 54,030 - - 54,030 54,030 - Employee computer loans 10,535 9,851 (6,810) 13,576 - 13,576 DeAnza Gardens LP 1,000,000 - - 1,000,000 1,000,000 - 1,484,501 9,851 (104,310) 1,390,042 1,376,466 13,576 Interfund: CDR from mgmt fund 185,000 -- 185,000 185,000 - Totals $ 1,669,501 $ 9,851 $ (104,310) $ 1,575,042 $ 1,561,466 $ 13,576 Interest on these loans is a follows: Balance Interest Interest Balance Long-term Short-term 3/31/15 Accrued Repaid 3/31/16 Portion Portion CDBG Loan Program $ 109,115 $ 11,440 $ (40,230) $ 80,325 $ 80,325 $ - Rental Rehab. Program 12,526 1,625 - 14,151 14,151 - DeAnza Gardens LP 420,107 30,000 - 450,107 450,107 - Totals $ 541,748 $ 43,065 $ (40,230) $ 544,583 $ 544,583 $ - 33 February 14, 2017 Contra Costa County Housing Authority 58 Note 4 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) The Authority has made deferred payment loans to individuals and organizations under the Countys Community Development Block Grant (CDBG) and Rental Rehabilitation (RR) Programs. These loans are secured by deeds of trust in the name of the County of Contra Costa or the City of Antioch. These programs are revolving loan programs administered by the Authority. Any repayments of outstanding loans, or interest on the loans, must be used for new loans or program administration as authorized by the County or the City of Antioch. These loans typically earn 3% interest per annum. These notes receivable, along with all of the accrued interest, are offset by an equal amount shown in other noncurrent liabilities (See Note 9). The Authority administers an employee loan program whereby employees can borrow funds for the purpose of purchasing a computer to be used at home. These loans accrue no interest. Payments are made through the payroll system. Pursuant to a demand note dated June 30, 1994, the Authority may be liable to HACCC Casa Del Rio, Inc for $185,000. Although the note is due upon demand, the maturity date is December 31, 2059. The note will be called prior to maturity only in the event that there are operating deficits and there is insufficient cash available to cover expenses. The Authority has also issued a note to the DeAnza Gardens, L.P., which is a discretely presented component unit of the Authority (see Note 1.B.). The note bears simple interest at the rate 3% per annum, payments are due commencing on October 1, 2005, but are payable only to the extent of the previous years excess/distributable cash, and is due June 2043. No payments, of interest or principal, have been received on this loan. Not shown on the previous schedule, the DeAnza Housing Corporation issued a note in the amount of $1,000,000 bearing simple interest at 6.8%, to be paid in full June 2043. This second note is an intra-fund transaction. DeAnza Gardens L.P. owes the DeAnza Housing Corporation. This loan has been eliminated from the discretely presented component unit column of the Statement of Net Position. Since this loan does not effect the Authority, it is not shown in the table on the prior page. 34 February 14, 2017 Contra Costa County Housing Authority 59 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Note 5 - CAPITAL ASSETS Capital asset activity for the year ending March 31, 2016. March 31, March 31, 2015 Additions Transfers Deletions 2016 Capital assets, not being depreciated: Land $ 1,825,993 $ - $ - $ - $ 1,825,993 Construction in progress 569,776 252,577 (617,646)- 204,707 Total 2,395,769 252,577 (617,646)- 2,030,700 Capital assets depreciated: Buildings and improvements 97,242,741 - 617,646 - 97,860,387 Equipment 2,480,089 141,259 - (180) 2,621,168 Total capital assets being depreciated 99,722,830 141,259 617,646 (180) 100,481,555 Total capital assets 102,118,599 393,836 - (180) 102,512,255 Accumulated depreciation: Buildings and improvements (85,679,471) (1,975,905) - - (87,655,376) Equipment (2,347,978) (74,997)- - (2,422,975) Total accumulated depreciation (88,027,449) (2,050,902)- - (90,078,351) Total capital assets depreciated, net 11,695,381 (1,909,643) 617,646 (180) 10,403,204 Total capital assets, net $ 14,091,150 $ (1,657,066) $ - $ (180) $ 12,433,904 The changes by project are as follows: March 31, March 31, 2015 Additions Transfers Deletions 2016 TOTAL CAPITAL ASSETS: Public Housing $ 90,478,821 $ 306,752 $ - $ - $ 90,785,573 Housing Choice Voucher 4,136,481 62,883 - - 4,199,364 Section 8 Moderate Rehab 168,778 -- - 168,778 CDBG Loan 3,937 -- - 3,937 Management Fund 75,115 -- - 75,115 Central Office Cost Center 146,978 24,201 - (180) 170,999 Blended Component Units: Casa Del Rio 7,108,489 -- - 7,108,489 Total capital assets 102,118,599 393,836 - (180) 102,512,255 35 February 14, 2017 Contra Costa County Housing Authority 60 Note 5 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) March 31, March 31, 2015 Additions Transfers Deletions 2016 DEPRECIATION: Public Housing (82,267,961) (1,724,242) - - (83,992,203) Housing Choice Voucher (1,725,712) (142,514) - - (1,868,226) Section 8 Moderate Rehab (168,778) - - - (168,778) CDBG Loan (3,912) (17) - - (3,929) Management Fund (75,114) - - - (75,114) Central Office Cost Center (143,940) (4,557) - - (148,497) Blended Component Units: Casa Del Rio (3,642,032) (179,572)- - (3,821,604) Total depreciation (88,027,449) (2,050,902)- - (90,078,351) Net $ 14,091,150 $ (1,657,066) $ - $ (180) $ 12,433,904 Note 6 - LONG TERM DEBT The following is a schedule of the changes in long-term debt for the current fiscal year: Balance Loans Balance Short-term Long-term Interest 3/31/2015 Issued Payments 3/31/2016 Portion Portion Payable Energy equipment lease $ 242,191 $ - $ (160,713) $ 81,478 $ 81,478 $ - $ - Office building mortgage 2,388,374 - (113,499) 2,274,875 188,526 2,086,349 - Blended component units: Casa Del Rio: CHFA 359,113 - (24,690) 334,423 26,537 307,886 - RHCP 2,626,618 -- 2,626,618 - 2,626,618 1,725,103 5,616,296 - (298,902) 5,317,394 296,541 5,020,853 1,725,103 Interfund: Mgmt Fund to CDR 185,000 -- 185,000 - 185,000 - Totals $ 5,801,296 $ -$ (298,902) $ 5,502,394 $ 296,541 $ 5,205,853 $1,725,103 Following is a schedule of debt payment requirements to maturity for the mortgages noted above that require payments: Energy Lease Loan Office Building CHFA Year ending Principal Interest Principal Interest Principal Interest Total 2017 $ 81,478 $ 1,018 $ 188,526 $ 107,693 $ 26,537 $ 25,291 $ 430,543 2018 - - 198,008 98,211 28,843 22,985 348,047 2019 - - 207,967 88,252 31,175 20,653 348,047 2020 - - 218,228 77,991 33,696 18,132 348,047 2021 - - 229,404 66,815 36,420 15,408 348,047 2022-2026 --1,232,742 149,613 177,752 29,724 1,589,831 $ 81,478 $ 1,018 $ 2,274,875 $ 588,575 $ 334,423 $ 132,193 $ 3,412,562 36 February 14, 2017 Contra Costa County Housing Authority 61 Note 6 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) On April 8, 2003, the Authority entered into an energy services agreement with EUA Citizens Conservation Services, Inc. (Citizens). Citizens prepared an energy audit which generated a report and plan of action. Citizens proposed installing certain energy saving equipment in the housing units of the Public Housing Program. The Authority agreed to pay for the purchase and installation of this equipment in an amount not to exceed $1,570,465. Citizens guaranteed the Authority a specific level of cost savings due to the installation of the equipment for a period of twelve years. The costs savings is guaranteed by Citizens to exceed the Authoritys debt service on the financing associated with the purchase and installation of this equipment. At the end of the twelve year period the title to the equipment will pass to the Authority. The $1,570,465 to fund this equipment lease and installation activity was borrowed from WestAmerica Bank. The loan was due in monthly installments of $14,003 and accrued interest at a rate of 4.330% per annum. Interest in the amount of $7,322 was paid and expensed during the fiscal year ended March 31, 2016. This loan was paid off on July 14, 2016. During December 2006, the Authority purchased an office building to house the staff of their Housing Choice Voucher Program. To facilitate this purchase, the Authority borrowed $2,847,500 from WestAmerica Bank on December 15, 2006. Originally, the interest on this loan was 6.75% per annum. The interest rate decreased to 6% in 2012 and 5.25% in 2013. On November 1, 2015, the terms of the loan agreement with WestAmerica Bank were changed. As of November 1, 2015, the $2,335,903 loan will be amortized over 120 months, is due November 1, 2025, requires monthly payments of $24,685, and accrues interest at a fixed rate of 4.850% per annum. Interest of $122,230 and loan fees of $750 were paid to WestAmerica Bank and expensed during the fiscal year ended March 31, 2016. The California Housing Finance Agency note, received through the State of California, is dated November 14, 1994. The original amount borrowed was $600,000. The loan carries a simple interest rate of 7.8% per annum. Principal and interest are payable in monthly installments of $4,319. The note is due in full December 2024. Interest in the amount of $27,141 was paid and expensed during the calendar year ended December 31, 2015. The Rental Housing Construction Program note, received through the State of California, is dated January 15, 1993. The original amount borrowed was $2,626,618. The loan accrues interest at a rate of 3% per annum. Payments are required on this loan only to the extent that the Casa Del Rio project has surplus cash. This note and interest on the note are due June 5, 2054. No principal or interest payments were made on this loan during the year ended December 31, 2015. Interest was expensed in the amount of $78,787. The amount of deferred interest accrued as payable as of the end of the fiscal year was $1,725,103. The entire amount is considered to be long-term and is shown as other noncurrent liabilities. See also Note 9. 37 February 14, 2017 Contra Costa County Housing Authority 62 Note 6 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Pursuant to a demand note dated June 30, 1994, the Authority may be liable to HACCC Casa Del Rio, Inc for $185,000. Although the note is due upon demand, the maturity date is December 31, 2059. The note will be called prior to maturity only in the event that there are operating deficits and there is insufficient cash available to cover expenses. Note 7 - PAYMENT IN LIEU OF TAXES In connection with the Public Housing Program, the Authority is obligated to make annual payments in lieu of property taxes based on the lesser of 25% of the assessable value of owned housing, times the current tax rate; or 10% of the dwelling rents, net of utilities expense. At March 31, 2016, $92,370 was expensed for payment in lieu of taxes. Approximately 75% is payable as of March 31, 2016 and is shown as Due to Other Agencies. Note 8 - UNEARNED REVENUE Unearned revenue consists of: Revolving loan funds held for future expenditures $ 186,360 Prepaid rent - Public Housing $ 12,207 Casa Del Rio 48 12,255 Program Advance - Summer Reading Program 5,323 Family Self Sufficiency Program 2,838 8,161 $ 206,776 Note 9 - OTHER NONCURRENT LIABILITIES Other noncurrent liabilities consist of: Loan liability: CDBG: Notes receivable (See also Note 4) $ 322,436 Interest on notes receivable (See also Note 4) 80,325 $ 402,761 Rental Rehabilitation: Notes receivable (See also Note 4) 54,030 Interest on notes receivable (See also Note 4) 14,151 68,181 Housing Choice Voucher Program Insurance reserves 59,130 Long term portion of the interest payable on the RHCP loan - a liability of the blended component unit, Casa Del Rio (See also Note 6) 1,725,103 $ 2,255,175 38 February 14, 2017 Contra Costa County Housing Authority 63 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Note 10 - NET POSITION A. Net investment in capital assets Net investment in capital assets consists of the following: Capital assets, net of depreciation (see Note 5) $ 12,433,904 Long term debt (omitting interfund balances) (see Note 6) (5,317,394) Accrued interest on long term debt (see Note 6 & 9) (1,725,103 ) Net investment in capital assets $ 5,391,407 B. Restricted Net Position Net position is reported as restricted when constraints placed on the net asset use are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. The Authority has reported the following as restricted net position: Housing Choice Voucher - HAP $ 188,199 Casa Del Rio Senior Housing - Reserves 539,649 Restricted net position $ 727,848 In 2012, HUD implemented cash management procedures which mitigated the accumulation of excess HAP in Net Restricted Asset accounts by PHAs. These procedures based the payment of HAP on actual need reported by PHAs in the Voucher Management System (VMS). Most excess allocation is now held by HUD until PHAs demonstrate the need for the disbursement of funds. The excess HAP funds noted above are held in the Authoritys restricted cash accounts and fully funded. See also Note 3. The restricted net position associated with the Casa Del Rio Senior Housing, represents replacement and operating reserves required by CHFA, is being held by CHFA, and is fully funded. See also Note 3. C. Deficit Unrestricted Net Position The Authoritys Other State and Local Enterprise Fund had a deficit unrestricted net position balance as of March 31, 2016, of $6,259,635. This deficit is the result of the Authoritys compliance with the new GASB Statement 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement 27. The Authoritys Other State and Local Enterprise Fund holds the deferred outflows of resources, deferred inflows of resources, and the net pension liability of the Authoritys retirement plan. These balances change annually as payments are made to the plan and as actuarial information is received regarding the plan. 39 February 14, 2017 Contra Costa County Housing Authority 64 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Note 11 - RETIREMENT PLAN A. Plan Description The Authority participates in a cost-sharing multiple-employer defined benefit retirement plan that is administered by the Contra Costa County Employees’ Retirement Association (CCCERA) under the Countys Employees Retirement Law of 1937 (1937 Act) and the Public Employees Pension Act of 2013 (PEPRA). A more detailed description of the plan and the benefits provided can be obtained from the CCCERAs Comprehensive Annual Financial Report and the CCCERAs Actuarial Valuation and Review, which are located at www.cccera.org. B. Benefits Provided All full-time employees of the Authority participate in this plan. There are currently 83 active plan members and 70 retirees or beneficiaries receiving benefits. The plan provides death, disability and service retirement benefits, in accordance with the 1937 ACT. Annual cost-of-living adjustments (COLA) to retirement benefits can be granted by the Retirement Board as provided by State statutes. The Authority has two applicable tiers, Tier 1 Enhanced and PEPRA Tier IV (3% Max COLA). Tier 1 Enhanced employees are those with a membership prior to January 1, 2013. These members are eligible to retire once they attain the age of 70 regardless of service or at age 50, with 10 or more years of retirement service credit. A member with 30 years of service is eligible to retire regardless of age. Benefits are calculated pursuant to Section 31676.16 for Enhanced Benefit Formulae. The monthly allowance is 1/50th (Enhanced) of final compensation times years of accrued retirement service credit times age factor from Section 31676.16 (Enhanced). The maximum retirement benefit is 100% of final compensation. Final average compensation consists of the highest 12 consecutive months. PEPRA Tier IV employees are those with a membership on or after January 1, 2013. These members are eligible to retire once they have attained the age of 70 regardless of service or at 52, with five years of retirement service credits. Benefits are calculated pursuant to the provisions found in California Government Code Section 7522.20(a). The monthly allowance is equal to the final compensation multiplied by years of accrued retirement credit multiplied by the age factor from Section 7522.20(a). There is no final compensation limit in the maximum retirement benefit for this tier. Final average compensation consist of the highest 36 consecutive months. C. Contributions The Authority contributes to the retirement plan based upon actuarially determined contribution rates adopted by the Board of Retirement. Employer contribution rates are adopted annually based upon recommendations received from the CCCERA actuary after the 40 February 14, 2017 Contra Costa County Housing Authority 65 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) completion of the annual actuarial valuation. The average Authority employer contribution rate as of March 31, 2016 was 46.82%. Members are required to make contributions to CCCERA regardless of the retirement plan or tier in which they are included. The average member contribution as of March 31, 2016 was 7.38%. As of March 31, 2016, the Authority owed CCCERA $214,721. This liability is short-term and represents March contributions paid in April 2016. D. Net Pension Liability The Governmental Accounting Standards 68 Actuarial Valuation based on December 31, 2015 measurement date for employer reporting as of June 30, 2016 , provided by CCCERA outlines the net pension liability (NPL) allocated to its member employers as based on the following definition of covered payroll - Only compensation earnable and pensionable would go into the determination of retirement benefits. The most recent Actuarial Report available from CCCERA had a valuation date of December 31, 2015. The Authority used the beginning NPL from this report as its balance as of the beginning of its fiscal year ended March 31, 2016. Since this is the first year of the implementation of GASB Statement No. 68 Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27, a prior period adjustment was used to establish the NPL as of April 1, 2015 as follows: Net pension liability as of the measurement date December 31, 2014 $ 8,652,807 Deferred inflows of resources - net difference between expected and actual experience in TPL 1,143,602 Employer contributions made subsequent to the measurement date and up to March 31, 2015 (608,801) Prior period adjustment April 1, 2015 $ 9,187,608 The December 31, 2015 CCCERA Actuarial Report reflects the following NPL balances: Measurement Measurement Date Date 12/31/2015 12/31/2014 NPL as the beginning of the measurement period $ 8,652,807 $ 10,648,283 Pension Expense 1,712,545 1,240,720 Employer Contributions (2,329,742) (2,092,594) Estimated Net Deferred Inflows/Outflows of Resources 2,501,164 (1,117,595) Change in Allocation of Prior Deferred Inflows/Outflows 12,100 - New Net Deferred Flows Due to Changes in Proportion (72,664) (26,007) Recognition of Prior Deferred Inflows/Outflows of Resources 304,957 - Recognition of Prior Deferred Flows Due to Change in Proportion 7,224 - NPL as of the end of the measurement period $ 10,788,391 $ 8,652,807 41 February 14, 2017 Contra Costa County Housing Authority 66 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Sensitivity of the net pension liability to changes in the discount rate The following presents the net pension liability as of December 31, 2015 calculated using the discount rate of 7.00%, as well as what the NPL liability would be if it were calculated using a discount rate that is one percentage point lower or higher than the current rate: Current 1% decrease Discount rate 1% increase 6.00% 7.00% 8.00% Housing Authority NPL $ 18,553,691 $ 10,788,391 $ 4,465,010 E. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pension Pension expense represents the change in the net pension liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, actuarial gain/loss, actuarial assumptions or method, and plan benefits as follows: 12/31/2015 12/31/2014 Service Cost $ 1,380,994 $ 1,391,284 Interest on total pension liability 4,168,551 4,061,294 Expensed portion of current-period changes in proportion and differences between employers contributions and proportionate share of contributions (20,643) (7,224) Expensed portion of current-period difference between expected and actual experience in the TPL (98,375) (288,842) Expensed portion of current-period changes of assumptions or other inputs 114,320 (119) Member contributions (611,033) (566,319) Projected earnings on plan investments (3,583,223) (3,380,531) Expensed portion of current-period differences between actual and projected earnings on plan investments 611,259 (19,334) Administrative expense 58,092 50,511 Other expenses 4,784 - Recognition of beginning of year deferred inflows of resources as pension expense (304,957) - Net amortization of deferred amounts from changes in proportion and differences between employers contribution and proportionate share of contributions (7,224)- Pension expense - measurement date 12/31 $ 1,712,545 $ 1,240,720 Deferred outflows and inflows of resources represent the unamortized portion of changes to net pension liability to be recognized in future periods in a systematic and rational manner, 42 February 14, 2017 Contra Costa County Housing Authority 67 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) In addition, deferred outflows of resources include employer contributions to the pension plan made subsequent to the measurement date, as follows: Deferred Deferred Outflows Inflows Changes in proportion an differences between employers contribution and proportionate share of contribution $ - $ 91,447 Changes in assumptions or other input 402,407 306 Net excess of projected over actual earnings on pension plan investments 2,387,664 - Difference between expected and actual experience in the TPL -1,089,139 Balances per actuarial report - measurement date 12/31/2015 2,790,071 1,180,892 Employer contributions made January thru March 2016 556,527 - Balances reported March 31, 2016 $ 3,346,598 $ 1,180,892 Deferred outflows and inflows of resources, other than the employer contributions noted above, will be recognized in future pension expense as follows: Measurement period: 2017 $ 294,380 2018 294,380 2019 411,602 2020 608,817 The amount reported as deferred outflows of resources related to employer contributions made January through March 2016, should have the effect of reducing net pension liability during the next actuarial measurement period. The Authority has reported deferred outflows and inflows of resources in the aggregate on the Statement of Net Position. F. Actuarial Assumptions The total pension liability (TPL) as of December 31, 2015, and December 31, 2014 were determined by actuarial valuations as of December 31, 2014 and December 31, 2013, respectively. The actuarial assumptions used were based on the results of an experience study for the period January 1, 2012 through December 31, 2014. They are generally the same as the assumptions used in the December 31, 2015 and the December 31, 2014 funding actuarial valuations that for GASB 68 purposes, the investment return assumption used is net of investment expenses only and is not net of administrative expenses. Measurement Date 12/31/2015 12/31/2014 Inflation 2.75%3.25% Salary increases - general 4.0% to 13.25% 4.75% to 13.5% Investment rate of return 7.00%7.25% Administrative expenses 1.14%Not applicable Cost of living adjustment 2.75%3.00% 43 February 14, 2017 Contra Costa County Housing Authority 68 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) When measuring pension liability GASB uses the same actuarial cost method (Entry Age method) and the same type of discount rate (expected return on assets) as CCCERA uses for funding. This means that the TPL measured for financial reporting shown in this report is determined on generally the same basis as CCCERAs actuarial accrued liability (AAL) measure for funding. Mortality rates for member contribution rates for members were based on the RP-2014 Healthy Annuitant Mortality Table projected to 2034 with the two-dimensional MP-2015 projection scale, weighted 30% male and 70% female. The long-term expected rate of return on pension plan investments determined in 2016 using a building-block method in which expected future real rates of return (expected returns, net of inflation) are developed for each major asset class. These returns are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage, adding expected inflation and subtracting expected investment expenses and a risk margin. The target allocation (approved by the CCCERA Board) and projected arithmetic real rates of return for each major asset class, after deducting inflation but before deducting investment expensed, used in the derivation of the long-term expected investment rate of return assumption are summarized in the following table: Target Long-term Expected Asset Class Allocation Real Rate Large Cap U.S. Equity 6.0%5.75% Developed International Equity 10.0 6.99 Emerging Markets Equity 14.0 8.95 Short-term Govt/Credit 24.0 0.20 U. S. Treasury 2.0 0.30 Real Estate 7.0 4.45 Risk Diversifying 2.0 4.30 Private Credit 17.0 6.30 Private Equity 17.0 8.10 Cash and Equivalents 1.0 -0.46 Total 100.0% The discount rate used to measure the TPL was 7% as of December 31, 2015 and 7.25% as of both December 31, 2014 and 2013. The projection of cash flows used to determine the discount rate assumed plan members contributions will be made at the current contribution rate and that employer contributions will be made as rates equal to the actuarially determined contribution rates. For this purpose, only employee and employer contributions that are intended to fund benefits for current plan members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs for future plan members and their beneficiaries, as well as projected contributions for future plan members, 44 February 14, 2017 Contra Costa County Housing Authority 69 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) are not included. Based on those assumptions, the Pension Plans Fiduciary Net Position was projected to be available to make all projected future benefit payments for current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL as of both December 31, 2015 and 2014. G. Funding Information Employees contribute to the retirement system through Biweekly payroll deductions. The rate of contribution for employees is determined by numerous factors at the time of entrance into the system. Employee contributions and interest thereon may be withdrawn only at the termination of employment or at retirement. Information on contributions for the last seven years is as follows: Fiscal Payroll As a As a Year Subject to Employer Percentage Employee Percentage Ended Contribution Contribution of Payroll Contribution of Payroll 3/31/2010 $ 5,345,205 $ 1,760,494 32.94% $ 371,528 6.95% 3/31/2011 $ 5,227,243 $ 1,806,368 34.56% $ 370,477 7.09% 3/31/2012 $ 5,057,120 $ 1,916,003 37.89% $ 322,557 6.38% 3/31/2013 $ 4,922,992 $ 1,821,886 37.01% $ 367,216 7.46% 3/31/2014 $ 4,647,605 $ 1,761,687 37.91% $ 330,230 7.11% 3/31/2015 $ 4,755,988 $ 2,239,997 47.10% $ 366,222 7.70% 3/31/2016 $ 4,833,700 $ 2,262,987 46.82% $ 356,594 7.38% The ten-year trend analysis and other disclosures required by U.S. generally accepted accounting principles are described in the financial statements of the Contra Costa County Employees Retirement Association (CCCERA). CCCERA is a component unit of the County of Contra Costa and is reported as a pension trust fund in their basic financial statements. Complete audited financial statements may be obtained from the administrative offices of CCCERA 1355 Willow Way, Suite 221, Concord, CA 94520. Note 12 - POST EMPLOYMENT HEALTHCARE PLAN Plan Description: Contra Costa County Housing Authority (CCCHA) provides a defined benefit health care program to its retired employees and their dependents. Benefits include coverage in the health and dental plans administered by CCCHA. Benefit provisions are established and amended through negotiations between CCCHA and the respective unions and employee groups. Current maximum monthly contribution toward the cost of medical and dental coverage ranges 45 February 14, 2017 Contra Costa County Housing Authority 70 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) from $345 to $980. CCCHA does not issue a publicly available financial report for the retiree health care program. Eligibility: CCCHA retirees are eligible for membership in the plans upon retirement (drawing a pension from Contra Costa County Employee Retirement Association (CCCERA) or CalPers). No provision currently exists for members in deferred retirement status. Retirees and beneficiaries receiving benefits 70 Active plan members 83 Total 153 Funding Policy: The contribution requirements of program members and CCCHA are determined by negotiations between CCCHA and the respective unions and employee groups. There is currently no requirement for employees to contribute to the plan. Beginning fiscal year 2016, CCCHA has begun funding the annual OPEB cost. CCCHA has established a trust account with the Public Agency Retirement Services (PARS) to administer the funding of the projected benefits of the OPEB plan. Monthly, CCCHA makes healthcare premium payments of its current retirees to the benefit providers. The current plan has specific limits, with the retiree contributing any necessary amount of the premium cost that exceeds the limits. CCCHA then makes deposits into their PARS trust account for the difference between the actuarially determined annual OPEB cost and the out-of-pocket payments made to the healthcare benefit providers. This funding policy assumes a discount rate of 4% up until March 31, 2016 and 7.39% beginning April 1, 2016. The change in discount rates is due to the Authoritys decision to fund the OPEB plan. Annual Other Post Employment Benefit (OPEB) Cost and Net OPEB Obligation: The CCCHAs annual OPEB costs (expense) is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of Governmental Accounting Standards Board (GASB) Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. Interest on net OPEB obligation is based on the actuarial interest rate of 4.0% and is computed on the unfunded amount. The most current actuarial report, dated April 1, 2014, calculated these amounts for the fiscal year ended March 31, 2016. The following table shows the components of the CCCHAs annual OPEB cost for the past three years, the amount actually contributed to the plan, and changes in the CCCHAs net OPEB obligation. 46 February 14, 2017 Contra Costa County Housing Authority 71 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) 3/31/2016 3/31/2015 3/31/2014 Present value of the Actuarial Accrued Liability $ 5,135,552 $ 5,016,892 $ 5,365,137 Normal costs $ 183,002 $ 183,002 $ 190,278 Amortization of UAAL 197,344 192,785 221,311 Interest on net OPEB obligation at beginning of year 95,813 91,033 96,656 ARC adjustment for current fiscal year (104,689) (87,455) (88,601) Annual OPEB cost/Annual Required Contribution 371,470 379,365 419,644 Contributions made on behalf of participants (263,850) (259,871) (291,724) Deposit made to PARS trust (107,802)- - Increase (decrease) in net OPEB obligation (182) 119,494 127,920 Net OPEB obligation - Beginning of year 2,395,321 2,275,827 2,147,907 Net OPEB obligation - End of year $ 2,395,139 $ 2,395,321 $ 2,275,827 PARS trust balance - beginning of year $ - $ - $ - Deposits made 107,802 - - Investment earning (net of expense) 182 - - PARS trust balance - end of year $ 107,984 $ - $ - The CCCHAs annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation are as follows: Percentage of Fiscal Year Annual Employer Annual OPEB Net OPEB Ended OPEB Cost Contributions Costs Contributed Obligation 3/31/2011 $ 414,017 $ 247,213 59.71% $ 1,831,697 3/31/2012 $ 433,041 $ 252,016 58.2% $ 2,012,721 3/31/2013 $ 413,319 $ 278,133 67.3% $ 2,147,907 3/31/2014 $ 419,644 $ 291,724 69.52% $ 2,275,827 3/31/2015 $ 379,367 $ 259,871 68.50% $ 2,395,321 3/31/2016 $ 371,470 $ 371,652 100.00% $ 2,395,139 Funding Status and Funding Progress: The most recent actuarial valuation dated April 1, 2014, reflects a accrued liability for benefits of $5.1 million, therefore, unfunded actuarial accrued liability as a percentage of covered payroll is 97.62%. 47 February 14, 2017 Contra Costa County Housing Authority 72 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information on page 59, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits. Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short- term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The valuation was completed using the Entry Age Normal Actuarial Cost method. This cost method allocates the present value of future benefits on a level basis over the earnings of each employee between the hire date and assumed retirement age. This valuation assumes a 3.25% annual rate of increase in payroll, an average 6.1% annual health care cost trend rate assumption, and is based on an open 30-year amortization of the Unfunded Actuarial Liability using the level percent of payroll. The valuation results were based on a 4% discount rate up until March 31, 2016, assuming that the CCCHA continues pay-as-you-go funding of its post-employment benefit program. The discount rate changed to 7.39% beginning April 1, 2016 which coincides with the Authoritys decision to fund the OPEB plan. Note 13 - DEFERRED COMPENSATION PLAN The Authority offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan is administered by Mass Mutual Financial Group. The plan, available to all regular employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are held in trust for the exclusive benefits of participants and their beneficiaries. 48 February 14, 2017 Contra Costa County Housing Authority 73 Note 13 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) A total of $2,828,589 is being held by Mass Mutual Financial Group on behalf of the Authoritys employees. These funds are not recorded as assets of the Authority since they are held in trust for the exclusive benefit of participants and their beneficiaries and are not subject to claims of the Authoritys general creditors. Note 14 - RELATED PARTIES Casa Del Rio Housing - Blended Component Unit Organization: Casa Del Rio Housing is made up of HACCC Casa Del Rio, Inc (A California Nonprofit Public Benefit Corporation) and CDR Senior Housing Associates (A California Limited Partnership). HACCC Casa Del Rio, Inc. is the general partner of CDR Senior Housing Associates. The officers and Board members of HACCC Casa Del Rio, Inc. are employees of the Authority. The partnership was formed in 1994 to develop and operate an 82-unit affordable housing rental complex located in Antioch, California, which is currently known as Casa Del Rio Senior Housing. Pursuant to the Indemnification Agreement dated July 1, 1994, by and among the Authority, HACCC Casa Del Rio, Inc., CDR Senior Housing Associates, and MHIFED I Limited Partnership, the Authority could possibly be liable for unpaid taxes, interest and penalties, cost to contest, operating deficiency and expenses of enforcement as identified in the Agreement. Pursuant to the Operating Deficit Guaranty Agreement dated July 1, 1994, by the Authority to and for the benefit of MHIFED I Limited Partnership, the Authority can possibly be liable for operating deficit and expenses of enforcement as identified in the Agreement. Pursuant to the Indemnity Agreement, dated July 1, 1994, by the Authority to and for the benefit of CDR Senior Housing Associates and MHIFED I Limited Partnership, the Authority can possibly be liable for any costs, expenses, and liabilities arising out of claims made by FPI (FPI Real Estate Group, FPI Mortgage Co. and FPI Management, Inc.) under the Development Agreement. Pursuant to the Demand Note dated June 30, 1994, from the Authority to HACCC Casa Del Rio, Inc., the Authority can possibly be liable to HACCC Casa Del Rio, Inc. for $185,000. Although the note is due upon demand the maturity date is December 31, 2059, the note will be called prior to maturity only in the event that there are operating deficits and there is not sufficient cash available to cover expenses. This note is recorded as both an interfund note receivable and note payable (see Notes 4 and 6). 49 February 14, 2017 Contra Costa County Housing Authority 74 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Pursuant to the Assignment and Assumption Agreement, the Authority can possibly be liable for any and all claims relating to the Assignment and Assumption Agreement arising prior to the date of the Assignment and Assumption Agreement. Pursuant to the Department of Housing and Community Development Rental Housing Construction Program First Amendment to the Regulatory Agreement (the Amended HCD Agreement) dated November 14, 1994, by and among the Department of Housing and Community Development, CDR Senior Housing Associates, and the Authority; the Authority can possibly be liable for a sponsors operating guaranty to provide sufficient staff or equipment to the general partner, as needed and remedies against sponsor for default under the Amended HCD Agreement. Since HACCC Casa Del Rio, Inc (CDR Inc) and CDR Senior Housing Associates (CDR Associates) have the potential to impose a financial burden on the Authority, these entities have been included in the Authoritys financial statements as a blended component unit. The fiscal year end of these blended component units is December 31. Audits were conducted on these entities as of December 31, 2015, by Linquist, Von Husen, & Joyce, LLP. The opinions were not modified. These audit reports may be obtained by contacting the Authority at the address on page 11. The Authority reports the balances for these blended component units as of December 31, 2015, which differs from that of the Authoritys fiscal year end of March 31, 2016. The balances at each fiscal year end do not differ materially. Modification were made to the audited financial statements to conform with the reporting categories of the Authority. Specifically, net assets reported in the audit were converted to the three categories of net position in conformity with the Authoritys reporting practices. Condensed Financial Statements: The condensed financial statements for HACCC Casa Del Rio, Inc. and subsidiary as of and for the year ended December 31, 2015, are as follows: STATEMENT OF NET POSITION Current assets $ 197,600 Restricted assets 557,957 Property and equipment 3,286,885 Other non-current assets 212,964 Total assets $ 4,255,406 50 February 14, 2017 Contra Costa County Housing Authority 75 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) STATEMENT OF NET POSITION (continued) Current liabilities $ 41,652 Payable from restricted assets 37,229 Long term liabilities 5,030,072 Total liabilities 5,108,953 Net investment in capital assets (1,399,259) Restricted net position 539,649 Unrestricted net position 6,063 Total net position (853,547) Total liabilities and net position $ 4,255,406 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Rental revenue $ 507,426 Interest and other revenue 23,767 Total revenue 531,193 Administrative expenses 229,953 Utility expenses 89,085 Maintenance expenses 134,979 General expenses 50,426 Depreciation 179,572 Total expenses 684,015 Operating income (loss)(152,822) Debt service interest (119,840) Amortization (3,144) Change in net position (275,806) Net position at the beginning of the year - 1/1/2015 (577,741) Net position at the end of the year - 12/31/2015 $ (853,547) STATEMENT OF CASH FLOWS Net cash provided (used) by: Operating activities $ 51,129 Noncapital financing activities 56,286 Capital financing activities (51,831) Investing activities 4,647 Net change in cash 60,231 Cash at the beginning of the year - 1/1/2015 645,665 Cash at the end of the year - 12/31/2015 $ 705,896 51 February 14, 2017 Contra Costa County Housing Authority 76 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Interfund accounting issues: Operating advances made by the Authority were $394,178 as of March 31, 2016. The interfund balance as of December 31, 2015 was $370,465 and was reported as non-current related party payable by the other auditors. The Statement of Net Position - Proprietary Funds, reported as of March 31, 2016, shows $370,465 as both a noncurrent asset and as a noncurrent liability. The difference of $23,713, due to the timing differences of the fiscal year ends, is shown as other noncurrent assets. During the fiscal year ended December 31, 2015, CDR Associates paid management fees to the Authority in the amount of $52,452. Some of the Casa Del Rio Senior Housing tenants (2 as of December 31, 2015) are also participants in the Authoritys Housing Choice Voucher or Shelter Plus Care Programs. The rent for these tenants is subsidized by HUD through the Authority. During the twelve months ended March 31, 2016, the Authoritys Housing Choice Voucher and Shelter Plus Care Programs paid a total of $9,755 in HAP payments to CDR Associates. CDR Inc earns interest of $13,912 on its loan with the Authority of $185,000. CDR Inc has agreed to give the interest back to the Authority as a charitable contribution. This interest revenue and expense are reported within the blended component unit enterprise fund. Intrafund accounting issues: The intrafund amounts which have been eliminated as of March 31, 2016, from the Casa Del Rio Blended Component Unit Enterprise Fund for inclusion into the Fund Financial Statements include: $106,330 receivable/payable between CDR Inc and CDR Associates $1,170,069 investment in partnership recorded as an liability of CDR Inc and net position of CDR Associates. $15,000 managements fees reported as revenue to CDR Inc and expenses of CDR Associates. Deficit Net Position These blended component units combined, have a deficit net position of $853,547. 52 February 14, 2017 Contra Costa County Housing Authority 77 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) DeAnza - Discretely Presented Component Units Organization: The discretely presented component units are DeAnza Housing Corporation (A California Nonprofit Public Benefit Corporation) and DeAnza Gardens, L.P. (A California Limited Partnership). The Authority is the General Partner and DeAnza Housing Corporation is the managing general partner of DeAnza Gardens, L.P. The partnership was formed for the purpose of acquisition, ownership, maintenance, and operation of 180 multi-family rental housing units and the provision of low-income housing through the construction, renovation, rehabilitation, operation, and leasing of an affordable housing development located in Contra Costa County, which is currently known as DeAnza Gardens. DeAnza Housing Corporation (DeAnza Corp) and DeAnza Gardens L.P. (DeAnza L.P.) have been reported as discretely presented component units of the Authority. The fiscal year end of these discretely presented component units is December 31. Audits were conducted on these entities as of December 31, 2015, by Linquist, Von Husen, & Joyce, LLP. The opinions were not modified. These audit reports may be obtained by contacting the Authority at the address on page 11. The Authority reports the balances for these discretely presented component units as of December 31, 2015, which differs from that of the Authoritys fiscal year end of March 31, 2016. The balances at each fiscal year end do not differ materially. Modifications were made to the audited financial statements to conform with the reporting categories of the Authority. Specifically, net assets reported in the audit were converted to the three categories of net position in conformity with the Authoritys reporting practices. Inter-agency accounting issues: The amounts shown as due to related parties consist of the following: Primary Govt Component Unit Assets Liabilities 3/31/2016 12/31/2015 Due to the Authority: Short-term for operations $ 75,954 $ 32,444 Long-term: Interest on note $ 450,107 $ 442,607 Land lease 924,000 906,000 Long-term for operations 524,616 564,052 $ 1,898,723 $ 1,912,659 Due to Boston Capital - long-term $ 17,019 53 February 14, 2017 Contra Costa County Housing Authority 78 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) The Authoritys Housing Choice Voucher Enterprise Fund loaned $1 million to DeAnza Gardens L.P. The note bears simple interest at the rate 3% per annum, payments are due commencing on October 1, 2008, but are payable only to the extent of the previous years excess/distributable cash, and is due June 2043. Interest of $30,000 was expensed during the fiscal year ended December 31, 2015. No interest has been paid to the Authority. The Authoritys Housing Choice Voucher Enterprise Fund reported $450,107 due from related parties and revenue of $30,000. See Note 4. DeAnza Gardens was built on land owned by the Authoritys Public Housing Program Enterprise Fund. Based on an agreement between DeAnza Gardens L.P. and the Authority, the land is leased for $72,000 per year, payable from excess/distributable cash. Unpaid lease amounts are carried forward without interest. The Authoritys Public Housing Program Enterprise Fund reported $924,000 due from related party for this lease, with $72,000 reported in the current fiscal year as fees charged to a related party (nonoperating revenue). During the fiscal year ended December 31, 2015, DeAnza Gardens L.P. paid management fees to the Authority in the amount of $12,960. Nonoperating revenue of $12,960 is reported in the Authoritys Statement of Revenues, Expenses, and Changes in Fund Net Position for the year ended March 31, 2016. Some of the DeAnza Gardens tenants (5 as of December 2015) are also clients of the Authoritys Housing Choice Voucher or Shelter Plus Care Program. The rent for these tenants is subsidized by HUD through the Authority. During the twelve months ended March 31, 2016, the Authoritys Housing Choice Voucher Program paid $66,590 in HAP payments to DeAnza Gardens L.P.. Intrafund accounting issues: The intrafund amounts which have been eliminated when reporting these entities in the Statement of Net Position and Statement of Revenues, Expenses, and Changes in Fund Net Position are: $1,000,000 long-term note held by DeAnza Corp from DeAnza L.P. $850,280 of interest on the long-term note held by DeAnza Corp from DeAnza L.P. $279,419 receivable recognized by DeAnza Corp from DeAnza L.P. $622 deficit investment in partnership reported by DeAnza Corp is offset by net position in DeAnza L.P. $55,250 managements fees reported as revenue to DeAnza Corp and expenses of DeAnza L.P. $68,000 interest revenue on the long-term debt is recognized by DeAnza Corp and expensed by DeAnza L.P. 54 February 14, 2017 Contra Costa County Housing Authority 79 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Cash and investments: Unrestricted Restricted Demand deposits (FDIC insured up to $250,000) $ 104,607 $ 14,625 Cash held by investment companies - 3,442 Investments - 923,624 Held by mortgagor - 482,970 Cash on hand 500 - $ 105,107 $ 1,424,661 The demand deposits are with WestAmerica bank. The total on deposit did not exceed the amount covered by FDIC as of December 31, 2015. FDIC coverage is $250,000 for 2015. Cash and investments of $927,066 are held by Cantella & Co., Inc. The investments consist of six marketable certificates of deposit with face values ranging from $108,000 to $230,000. Restricted cash includes replacement and operating reserves required by the lender and reported as restricted net assets totaling $1,410,036. Cash has also been restricted for security deposits in the amount of $14,625. The excess of the security deposit liability of $159,232, over the cash balance represents cash held as an investment in the operating reserve account. Capital assets: DeAnza Gardens was completed and placed into service during the fiscal year ended December 31, 2004. DeAnza Gardens L.P.s property and equipment are summarized as follows: 12/31/2015 12/31/2014 Building and improvements $ 29,505,562 $ 29,505,562 Land improvements 1,150,712 1,150,712 Off-site improvements 208,448 208,448 On-site improvements 4,028,709 4,028,709 Furniture and fixtures 488,321 488,321 35,381,752 35,381,752 Less accumulated depreciation (11,675,442) (10,658,108) $ 23,706,310 $ 24,723,644 Property and equipment are being depreciated on the straight-line method over the estimated useful life of the assets. The useful lives of the assets are estimated to be forty years for buildings and off-site improvements, fifteen years for on-site improvements and seven years for furniture and fixtures. 55 February 14, 2017 Contra Costa County Housing Authority 80 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) Long-term debt: Permanent financing was obtained for the costs of the DeAnza Gardens construction during 2005. The note is held by California Community Reinvestment Corporation. The original amount of the loan was $10,115,373. This loan requires monthly payments of $64,603, beginning November 1, 2005, earns interest at a rate of 6.6% per annum, and is due in full October 2023. Activity on the loan is as follows: Balance Balance S/T L/T Interest 12/31/2014 Payments 12/31/2015 Portion Portion Payable $ 8,764,899 $ (202,812) $ 8,562,087 $ 216,609 $ 8,345,478 $ 48,207 Interest expense for the fiscal year ended December 31, 2015 $ 572,421 Deficit Unrestricted Net Position While DeAnza Gardens has a positive net position in total, its unrestricted net position is in deficit as of December 31, 2015. The majority of the entitys assets are either invested in capital assets or restricted, leaving the unrestricted net position in deficit by $2,929,179. This deficit is an increase over the prior years deficit of $2,904,459. Note 15 - CONTINGENT LIABILITIES A. Grants The Authority has received funds from various federal, state and local grant programs. It is possible that at some future date it may be determined that the Authority was not in compliance with applicable grant requirements. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the Authority does not expect such disallowed amounts, if any, to materially affect the financial statements. B. Line of Credit On January 12, 2016, the Authority renewed an agreement with WestAmerica Bank for a $1 million line of credit. The interest rate is variable, but will not exceed the amount allowed by law. The initial rate for this line of credit was 4.5%. It is the Authoritys intention to use this line of credit to cover any shortage in cash flow, if any, that may arise over the term of the loan. No amounts were drawn on this line of credit during the current fiscal year. 56 February 14, 2017 Contra Costa County Housing Authority 81 Note 15 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) C. Litigation The Authority is involved in various matters of litigation. It is the Authoritys opinion that these matters of litigation will not have a material effect, if any, on the financial position of the Authority. Note 16 - ECONOMIC DEPENDENCE The Authority receives a significant portion of its revenue from the U.S. Department of Housing and Urban Development. See the Schedule of Expenditures of Federal Awards, shown as supplemental information, for the HUD programs that the Authority administers. These programs are currently on-going. However, they are dependent on the Federal budgeting processes, and therefore, funding will vary from year to year. Note 17 - RISK MANAGEMENT Workers Compensation Insurance: The Authority participates in a joint venture under a joint powers agreement (JPA) with the California Housing Workers Compensation Authority (CHWCA). CHWCA was formed to provide workers compensation insurance coverage for member housing authorities. At December 31, 2015, there were thirty-three members. The relationship between the Authority and CHWCA is such that CHWCA is not a component unit of the Authority for financial reporting purposes. Condensed CHWCA audited financial information for the year ended December 31, 2015 and 2014 are as follows: December 31, 2015 December 31, 2014 Total assets $ 25,524,673 $ 24,496,334 Total liabilities (15,818,959) (16,484,222) Net position $ 9,705,714 $ 8,012,112 Total revenues $ 5,118,049 $ 4,702,889 Total expenses (3,424,446) (3,894,815) Net change in net position $ 1,693,603 $ 808,074 CHWCA had no long-term debt outstanding at December 31, 2015. The Authoritys share of year end assets, liabilities, or retained earnings has not been calculated. The Authoritys annual premium is based on covered payroll. Premiums paid for the calendar year ended December 31, 2015 were $249,422. CHWCA issues a separate comprehensive annual financial report. Copies 57 February 14, 2017 Contra Costa County Housing Authority 82 Note 17 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2016 (Continued) of this report may be obtained by contacting Bickmore Risk Services, 6371 Auburn Boulevard, Suite B, Citrus Heights, California, 95621. Property and Liability Insurance: The Authority carries insurance for its various operations with the Housing Authority Insurance Services (HAI), the Housing Authority Risk Retention Group (HARRG), and Employment Risk Management Authority (ERMA). The property insurance limits vary by property covered, with a deductible of $25,000 per occurrence. The commercial liability limit of coverage is $5,000,000 aggregate for the policy year. The deductible is $25,000 per occurrence. The liability insurance covers bodily injury and property damage liability ($5 million limit), mold liability ($250,000 limit), and employee benefits administration liability ($1 million limit, with a deductible of $1,000 per employee). The automobile insurance limits are $4 million for liability, $1 million for non-owned hired autos, and $1 million for uninsured motorists. Employment liability insurance coverage through ERMA is $1 million with a $50,000 deductible per occurrence. Premiums paid for this coverage were approximately $312,000 for the policy year beginning June 1, 2015. 58 February 14, 2017 Contra Costa County Housing Authority 83 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA REQUIRED SUPPLEMENTARY INFORMATION AS OF MARCH 31, 2016 Schedule of Proportionate Share of the Net Pension Liability (NPL) Proportion Proportionate Covered NPL as a % Reporting of the Share of the Employee of covered Funded Date NPL NPL Payroll Payroll Ratio 6/30/2014 0.724% $ 10,648,283 $ 4,677,572 227.65% 80.04% 6/30/2015 0.724% $ 8,652,807 $ 4,691,885 184.42% 84.06% 6/30/2016 0.716% $ 10,788,391 $ 4,841,907 222.81% 80.83% Schedule of Funding Progress for OPEB Unfunded UAAL as a Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Value of Accrued Accrued Funded Covered Covered Date Assets Liability Liability Status Payroll Payroll 3/31/2008 $ - $ 16,457,000 $ 16,457,000 0% $ 5,279,413 311.72% 3/31/2009 $ - $ 8,236,801 $ 8,236,801 0% $ 5,345,205 154.10% 3/31/2010 $ - $ 8,236,801 $ 8,236,801 0% $ 5,133,982 160.44% 3/31/2011 $ - $ 4,931,685 $ 4,931,685 0% $ 5,832,771 84.55% 3/31/2012 $ - $ 5,105,240 $ 5,105,240 0% $ 5,057,120 100.95% 3/31/2013 $ - $ 5,224,097 $ 5,224,097 0% $ 5,352,272 97.61% 3/31/2014 $ - $ 5,365,137 $ 5,365,137 0% $ 5,768,742 93.00% 3/31/2015 $ - $ 5,016,892 $ 5,016,892 0% $ 4,750,311 105.61% 3/31/2016 $ 107,984 $ 5,135,552 $ 5,027,750 2% $ 5,150,586 97.62% 59 February 14, 2017 Contra Costa County Housing Authority 84 SUPPLEMENTARY INFORMATION 60 February 14, 2017 Contra Costa County Housing Authority 85 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED MARCH 31, 2016 Federal Grantor CFDA Number Expenditures Department of Housing and Urban Development (HUD): Direct Programs: Shelter Plus Care 14.238 $ 3,588,998 Public and Indian Housing 14.850 5,713,834 Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation 14.856 185,172 Housing Choice Voucher Program 14.871 87,853,845 Public Housing - Capital Fund Program 14.872 971,790 Family Self Sufficiency Program Coordinators 14.896 105,894 Subtotal federal expenditures, Dept of HUD 98,419,533 Total expenditures of federal awards $ 98,419,533 The accompanying Independent Auditors Report and notes are an integral part of this schedule. 61 February 14, 2017 Contra Costa County Housing Authority 86 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED MARCH 31, 2016 1. The schedule of expenditures of federal awards includes the federal grant activity of the Housing Authority of the County of Contra Costa, California, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organization . Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. 2. Expenditures are reported as follows: Shelter Plus Care Program - expenditures reported agree with the HUD grants earned for the year. Public and Indian Housing Program - expenditures reported consist only of the operating subsidy amount received from HUD for the fiscal year ended March 31, 2016. Moderate Rehabilitation Program - expenditures reported consist of operating expenses to the extent that federal grants were received towards these expenditures and/or that prior year funding is available for expenditure. These amounts differed from the actual annual contributions received from HUD. Housing Choice Voucher Program - expenditures reported consist of operating expenses, including capital transactions and omitting depreciation, to the extent that federal grants were received towards these expenditures and/or that prior year funding was available for expenditure. These amounts differed from the actual annual contributions received from HUD. The expenditures were determined as follows: HAP Admin Total Operating expenses $ 82,580,306 $ 6,076,764 $ 88,657,070 Adjustments: Depreciation - (142,514) (142,514) HAP reimbursed by other housing authorities (893,787)- (893,787) Transfers to other programs - 56,694 56,694 Capital additions - 62,883 62,883 Debt retired - 113,499 113,499 Total Expenditures $81,686,519 $6,167,326 $ 87,853,845 Federal grants earned $ 81,810,729 $ 6,916,248 $ 88,726,977 Prior funding available for expenditure - 3,058,938 3,058,938 Federal awards available for expenditure $ 81,810,729 $ 9,975,186 $ 91,785,915 Expenditures of Federal awards $81,686,519 $6,167,326 $87,853,845 Public Housing Capital Fund Program - expenditures reported agree with the revenue and actual expenditures (expenses, plus capital expenditures, less depreciation expense) for the current fiscal year. Family Self Sufficiency Program Coordinators - expenditures reported agree with the HUD grants earned for the year. 62 February 14, 2017 Contra Costa County Housing Authority 87 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA FINANCIAL DATA SCHEDULE (CA011) BALANCE SHEET AS OF MARCH 31, 2016 Public Houisng (including Capital Fund) PIH Family Self- Sufficiency Program Community Development Block Grant Housing Choice Vouchers Discretely Presented Component Unit - De Anza CFDA Number 14.850/14.872 14.896 14.218 14.871 $66,622 $6,477 $136,270 $2,925,052 $105,107 $190,506 $1,410,036 $329,113 $14,625 $395,735 $6,477 $136,270 $3,115,558 $1,529,768 $13,674 $125,462 $21,117 $173,470 $18,946 -$73,574 -$1,613 $0 $0 -$4,018 $3,178 $6,716 $3,524 $228,536 $0 $0 $20,390 $37,956 $1,438,604 $898,673 $265,024 $91,535 $2,096 $21,574 $291,763 $0 $2,446,173 $6,477 $136,270 $4,301,741 $1,589,298 $1,026,405 $330,791 $1,150,712 $88,156,631 $3,168,053 $29,714,010 $1,397,829 $3,937 $700,520 $488,321 -$83,992,202 -$3,929 -$1,868,226 -$11,675,442 $204,707 $4,028,709 $6,793,370 $0 $8 $2,331,138 $23,706,310 $322,436 $1,000,000 $961,069 $80,325 $450,107 $79,463 $7,754,439 $0 $402,769 $3,781,245 $23,785,773 $10,200,612 $6,477 $539,039 $8,082,986 $25,375,071 114 Cash - Tenant Security Deposits 113 Cash - Other Restricted 111 Cash - Unrestricted 125 Accounts Receivable - Miscellaneous 121 Accounts Receivable - PHA Projects 122 Accounts Receivable - HUD Other Projects 100 Total Cash 126.2 Allowance for Doubtful Accounts - Other 127 Notes, Loans, & Mortgages Receivable - Current 126 Accounts Receivable - Tenants 126.1 Allowance for Doubtful Accounts -Tenants 132 Investments - Restricted 131 Investments - Unrestricted 129 Accrued Interest Receivable 120 Total Receivables, Net of Allowances for Doubtful Accts 150 Total Current Assets 144 Inter Program Due From 142 Prepaid Expenses and Other Assets 164 Furniture, Equipment & Machinery - Administration 162 Buildings 161 Land 171 Notes, Loans and Mortgages Receivable - Non-Current 168 Infrastructure 160 Total Capital Assets, Net of Accumulated Depreciation 166 Accumulated Depreciation 167 Construction in Progress 180 Total Non-Current Assets 174 Other Assets 290 Total Assets and Deferred Outflow of Resources 200 Deferred Outflow of Resources 63 February 14, 2017 Contra Costa County Housing Authority 88 Blended Component Unit - Casa Del Rio Shelter Plus Care Rental Rehab Loan Program Other State & Local Section 8 Moderate Rehab Central Office Cost Center Subtotal Eliminations Total 14.238 14.856 $37,433 $132,067 $33,857 $173,140 $23,416 $3,763 $3,643,204 $3,643,204 $539,648 $0 $2,140,190 $2,140,190 $18,308 $0 $362,046 $362,046 $595,389 $132,067 $33,857 $173,140 $23,416 $3,763 $6,145,440 $0 $6,145,440 $0 $13,674 $13,674 $12,042 $0 $137,504 $137,504 $75,954 $0 $97,071 $97,071 $10,981 $0 $203,397 $203,397 -$2,407 $0 -$77,594 -$77,594 $0 $0 $0 -$4,018 -$4,018 $13,576 $0 $13,576 $13,576 $796 $4,723 $0 $237 $19,174 $19,174 $8,574 $12,042 $796 $94,253 $0 $237 $402,784 $0 $402,784 $110,505 $7,275 $151,707 $1,585,035 $0 $1,090,664 $5,282,463 $5,282,463 $0 $265,024 $265,024 $41,087 $2,172 $642 $71,956 $231,062 $231,062 $0 $0 $0 $0 $291,763 -$291,763 $0 $755,555 $151,384 $186,360 $1,854,600 $24,058 $1,166,620 $12,618,536 -$291,763 $12,326,773 $468,797 $0 $2,976,705 $2,976,705 $6,461,287 $74,415 $0 $127,574,396 $127,574,396 $178,405 $699 $168,779 $170,999 $3,109,489 $3,109,489 -$3,821,604 -$75,114 -$168,779 -$148,497 -$101,753,793 -$101,753,793 $0 $204,707 $204,707 $0 $4,028,709 $4,028,709 $3,286,885 $0 $0 $0 $0 $22,502 $36,140,213 $0 $36,140,213 $185,000 $54,030 $0 $1,561,466 -$185,000 $1,376,466 $27,964 $14,151 $918,794 $0 $2,531,873 -$370,464 $2,161,409 $3,499,849 $0 $68,181 $918,794 $0 $22,502 $40,233,552 -$555,464 $39,678,088 $2,165,706 $0 $2,165,706 $2,165,706 $4,255,404 $151,384 $254,541 $4,939,100 $24,058 $1,189,122 $55,017,794 -$847,227 $54,170,567 The accompanying Independent Auditors' Report and notes are an integral part of this schedule. 64 February 14, 2017 Contra Costa County Housing Authority 89 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA FINANCIAL DATA SCHEDULE (CA011) BALANCE SHEET AS OF MARCH 31, 2016 (Continued) Public Houisng (including Capital Fund) PIH Family Self- Sufficiency Program Community Development Block Grant Housing Choice Vouchers Discretely Presented Component Unit - De Anza CFDA Number 14.850/14.872 14.896 14.218 14.871 $204,111 $184,209 $62,482 $101,350 $3,639 $70,786 $48,207 $69,555 $136,253 $329,113 $159,232 $17,531 $2,838 $4,067 $81,479 $188,526 $216,609 $32,444 $111,640 $291,763 $1,206,542 $6,477 $136,253 $443,521 $523,041 $2,086,349 $8,345,478 $1,000,000 $326,462 $1,929,678 $26,513 $47,175 $402,761 $1,156,119 $871,516 $1,182,632 $0 $402,761 $3,331,502 $11,275,156 $2,389,174 $6,477 $539,014 $3,775,023 $11,798,197 $6,711,891 $8 $56,263 $15,096,016 $188,199 $1,410,036 $1,099,547 $0 $17 $4,063,501 -$2,929,178 $7,811,438 $0 $25 $4,307,963 $13,576,874 $10,200,612 $6,477 $539,039 $8,082,986 $25,375,071 312 Accounts Payable <= 90 Days 325 Accrued Interest Payable 331 Accounts Payable - HUD PHA Programs 322 Accrued Compensated Absences - Current Portion 324 Accrued Contingency Liability 313 Accounts Payable >90 Days Past Due 321 Accrued Wage/Payroll Taxes Payable 343 Current Portion of Long-term Debt - Capital Projects 344 Current Portion of LT Debt - Operating Borrowings 341 Tenant Security Deposits 342 Unearned Revenue 332 Account Payable - PHA Projects 333 Accounts Payable - Other Government 310 Total Current Liabilities 347 Inter Program - Due To 348 Loan Liability - Current 345 Other Current Liabilities 346 Accrued Liabilities - Other 355 Loan Liability - Non Current 353 Non-current Liabilities - Other 354 Accrued Compensated Absences - Non Current 351 Long-term Debt, Net of Current - Capital Projects 352 LT Debt, Net of Current - Operating Borrowings 400 Deferred Inflow of Resources 300 Total Liabilities 357 Accrued Pension and OPEB Liabilities 350 Total Non-Current Liabilities 508.4 Net Investment in Capital Assets 600 Total Liabilities, Deferred Inflows of Resources & Equity 512.4 Unrestricted Net Position 513 Total Equity - Net Assets / Position 511.4 Restricted Net Position 65 February 14, 2017 Contra Costa County Housing Authority 90 Blended Component Unit - Casa Del Rio Shelter Plus Care Rental Rehab Loan Program Other State & Local Section 8 Moderate Rehab Central Office Cost Center Subtotal Eliminations Total 14.238 14.856 $15,067 $7,355 $311 $36,376 $509,911 $509,911 $0 $214,721 $0 $214,721 $214,721 $1,664 $2,420 $731 $80,387 $260,977 $260,977 $0 $0 $48,207 $48,207 $17,879 $17,879 $17,879 $0 $148,904 $0 $354,712 $354,712 $37,230 $0 $525,575 $525,575 $48 $186,360 $0 $210,844 $210,844 $26,537 $0 $513,151 $513,151 $0 $0 $32,444 $32,444 $0 $111,640 $111,640 $0 $291,763 -$291,763 $0 $0 $78,882 $150,568 $186,360 $224,496 $18,921 $116,763 $3,091,824 -$291,763 $2,800,061 $2,934,504 $0 $13,366,331 $13,366,331 $185,000 $0 $1,185,000 -$185,000 $1,000,000 $2,095,567 $0 $4,351,707 -$370,464 $3,981,243 $816 $848 $247 $27,676 $103,275 $103,275 $68,181 $0 $470,942 $470,942 $10,788,391 $0 $367,504 $13,183,530 $13,183,530 $5,030,071 $816 $68,181 $10,974,239 $247 $395,180 $32,660,785 -$555,464 $32,105,321 $5,108,953 $151,384 $254,541 $11,198,735 $19,168 $511,943 $35,752,609 -$847,227 $34,905,382 $0 -$1,769,723 $0 $22,502 $20,116,957 $20,116,957 $539,648 $0 $2,137,883 $2,137,883 $376,526 $0 $0 -$6,259,635 $4,890 $654,677 -$2,989,655 -$2,989,655 -$853,549 $0 $0 -$6,259,635 $4,890 $677,179 $19,265,185 $0 $19,265,185 $4,255,404 $151,384 $254,541 $4,939,100 $24,058 $1,189,122 $55,017,794 -$847,227 $54,170,567 The accompanying Independent Auditors' Report and notes are an integral part of this schedule. 66 February 14, 2017 Contra Costa County Housing Authority 91 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA FINANCIAL DATA SCHEDULE (CA011) REVENUE AND EXPENSE SUMMARY FOR THE YEAR ENDED MARCH 31, 2016 Public Housing (including Capital Fund) PIH Family Self- Sufficiency Program Community Development Block Grant Housing Choice Vouchers Discretely Presented Component Unit - De Anza CFDA Number 14.850/14.872 14.896 14.218 14.871 $3,632,412 $1,932,780 $102,753 $125,850 $3,735,165 $0 $0 $0 $2,058,630 $6,376,872 $105,894 $88,726,977 $306,752 $4,678 $27,271 $75,666 $103,742 $122,203 $1,034,012 $10,598 $0 $20,754 $10,572,941 $105,894 $0 $89,940,397 $2,089,982 $760,166 $1,483 $1,799,933 $178,547 $20,392 $14,607 $17,750 $1,045,030 $1,383,229 $93,640 $573,396 $691,821 $1,080 $1,147,803 $41,723 $284,600 $416,361 $162,758 $146,757 $7 $84,773 $10,588 $2,547 $1 $695 $1,052 $35,039 $71,577 $17,280 $3,079,992 $0 $2,571 $5,492,374 $429,698 $78,559 $117,504 $66,994 $8,063 $17,011 $54,279 $47,695 $21 $190,273 $121,273 $0 $21 $0 $506,648 $4,408 $132,675 $556,574 $33,707 $23,993 $125,471 $2,863 $3,621 $525,266 $2,001 $82,322 $1,713,959 $0 $0 $42,979 $242,611 $1,063,116 $88,051 $566,892 $3,541 $97,369 $1,252,781 $24,583 $175,313 $541,276 $1 $24,877 $3,424,065 $0 $0 $28,125 $385,610 94500 Employee Benefit Contributions - Ordinary Maint 94000 Total Maintenance 94200 Ordinary Maintenance and Operations - Materials 94300 Ordinary Maintenance and Operations Contracts 94100 Ordinary Maintenance and Operations - Labor 93800 Other Utilities Expense 93000 Total Utilities 93600 Sewer 93200 Electricity 93300 Gas 93100 Water 92400 Tenant Services - Other 92500 Total Tenant Services 92200 Relocation Costs 92300 Employee Benefit Contributions - Tenant Services 92000 Asset Management Fee 92100 Tenant Services - Salaries 91000 Total Operating - Administrative 91900 Other 91700 Legal Expense 91800 Travel 91500 Employee Benefit contributions - Administrative 91600 Office Expenses 91310 Book-keeping Fee 91200 Auditing Fees 91300 Management Fee 91100 Administrative Salaries 72000 Investment Income - Restricted 70000 Total Revenue 71500 Other Revenue 71400 Fraud Recovery 71200 Mortgage Interest Income 70800 Other Government Grants 71100 Investment Income - Unrestricted 70700 Total Fee Revenue 70720 Asset Management Fee 70730 Book Keeping Fee 70610 Capital Grants 70710 Management Fee 70600 HUD PHA Operating Grants 70400 Tenant Revenue - Other 70500 Total Tenant Revenue 70300 Net Tenant Rental Revenue 67 February 14, 2017 Contra Costa County Housing Authority 92 Blended Component Unit - Casa Del Rio Shelter Plus Care Rental Rehab Loan Program Other State & Local Section 8 Moderate Rehab Central Office Cost Center Subtotal Eliminations Total 14.238 14.856 $507,425 $0 $6,072,617 -$9,755 $6,062,862 $5,206 $0 $233,809 $233,809 $512,631 $0 $0 $0 $0 $0 $6,306,426 -$9,755 $6,296,671 $3,588,998 $190,011 $2,000 $98,990,752 $98,990,752 $0 $306,752 $306,752 $0 $2,485,585 $2,485,585 -$2,485,585 $0 $0 $78,559 $78,559 -$78,559 $0 $0 $667,036 $667,036 -$667,036 $0 $0 $3,231,180 $3,231,180 -$3,231,180 $0 $0 $4,678 $4,678 $17,223 $0 $3,179 $24,137 $51 $1,983 $149,510 $149,510 $1,624 $0 $1,624 $1,624 $0 $103,742 $103,742 $6,538 $2,434,500 $0 $15,198 $3,623,049 -$2,315,438 $1,307,611 $1,337 $0 $22,091 $22,091 $531,191 $3,588,998 $11,341 $2,458,637 $190,062 $3,250,361 $112,739,804 -$5,556,373 $107,183,431 $92,997 $64,631 $4,535 $13,794 $1,385,288 $4,301,374 $4,301,374 $17,450 $1,000 $2,000 $73,199 $73,199 $42,132 $57,325 $0 $2,527,716 -$2,527,716 $0 $10,320 $0 $677,356 -$677,356 $0 $29,098 $40,830 $3,235 $1,387,891 $9,133 $930,449 $4,283,063 -$1,840,753 $2,442,310 $37,958 $1,299 $270 $74 $2,807 $303,087 $1,209,214 $1,209,214 $18 $412 $46,626 $289,181 $289,181 $16 $23 $2,680 $7,014 $7,014 $175 $19,651 $143,722 $143,722 $229,955 $164,101 $8,058 $1,387,965 $27,344 $2,689,781 $13,511,839 -$5,045,825 $8,466,014 $0 $78,559 -$78,559 $0 $0 $184,498 $184,498 $0 $8,063 $8,063 $28,364 $0 $99,654 -$37,938 $61,716 $195,887 $500 $0 $35 $244,138 $244,138 $0 $195,887 $0 $28,864 $0 $35 $536,353 -$37,938 $498,415 $18,581 $0 $662,312 $662,312 $35,954 $231 $25,895 $676,354 $676,354 $2,298 $26 $2,893 $137,172 $137,172 $32,253 $0 $559,520 $559,520 $0 $82,322 $82,322 $89,086 $0 $0 $0 $257 $28,788 $2,117,680 $0 $2,117,680 $48,219 $0 $1,199,386 $1,199,386 $28,318 $0 $22,830 $718,950 $718,950 $48,682 $181 $1,501,540 $1,501,540 $296,290 $0 $1 $862,445 -$384,296 $478,149 $125,219 $0 $0 $296,290 $181 $22,831 $4,282,321 -$384,296 $3,898,025 The accompanying Independent Auditors' Report and notes are an integral part of this schedule. 68 February 14, 2017 Contra Costa County Housing Authority 93 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA FINANCIAL DATA SCHEDULE (CA011) REVENUE AND EXPENSE SUMMARY FOR THE YEAR ENDED MARCH 31, 2016 (Continued) Public Housing (including Capital Fund) PIH Family Self- Sufficiency Program Community Development Block Grant Housing Choice Vouchers Discretely Presented Component Unit - De Anza CFDA Number 14.850/14.872 14.896 14.218 14.871 $65,980 $522,219 $59,249 $13,790 $16,997 $581,468 $0 $0 $13,790 $82,977 $217,541 $10,270 $52,624 $1,986 $61 $135,092 $1,526 $21 $39,079 $13,701 $354,619 $1,526 $21 $49,410 $66,325 $50,635 $72,000 $160,777 $9,852 $176 $133,591 $92,371 $28,887 $126,119 $13,767 $379,267 $9,852 $176 $184,226 $114,654 $7,322 $122,230 $602,421 $1,100 $11,352 $7,322 $0 $0 $123,330 $613,773 $9,809,524 $132,651 $2,768 $5,934,255 $1,935,648 $763,417 -$26,757 -$2,768 $84,006,142 $154,334 $81,686,519 $893,787 $1,724,234 $17 $142,514 $1,017,334 $11,533,758 $132,651 $2,785 $88,657,075 $2,952,982 $463,426 $26,757 $2,785 $3,431 -$463,426 -$60,125 $337,142 -$337,142 $0 $26,757 $2,785 -$56,694 $0 -$960,817 $0 $0 $1,226,628 -$863,000 $81,479 $0 $0 $107,694 $216,609 $8,772,255 $0 $25 $3,081,335 $14,439,874 $0 $4,119,764 $188,199 13931 82644 960 12293 76453 944 $347,274 $252,577 $54,175 11640 Furniture & Equipment - Administrative Purchases 11620 Building Purchases 11210 Number of Unit Months Leased 11270 Excess Cash 11180 Housing Assistance Payments Equity 11190 Unit Months Available 11170 Administrative Fee Equity 11040 Prior Period Adjustments 11020 Required Annual Debt Principal Payments 11030 Beginning Equity 10000 Excess (Deficiency) of Total Revenue Over (Under) Exp 10100 Total Other financing Sources (Uses) 10091 Inter Project Excess Cash Transfer In 10092 Inter Project Excess Cash Transfer Out 10010 Operating Transfer In 10020 Operating transfer Out 90000 Total Expenses 97350 HAP Portability-In 97400 Depreciation Expense 97300 Housing Assistance Payments 97000 Excess of Operating Revenue over Operating Expenses 96900 Total Operating Expenses 96730 Amortization of Bond Issue Costs 96700 Total Interest Expense and Amortization Cost 96710 Interest of Mortgage (or Bonds) Payable 96000 Total Other General Expenses 96400 Bad debt - Tenant Rents 96210 Compensated Absences 96300 Payments in Lieu of Taxes 96200 Other General Expenses 96140 All Other Insurance 96100 Total insurance Premiums 96120 Liability Insurance 96130 Workmen's Compensation 96110 Property Insurance 95000 Total Protective Services 95200 Protective Services - Other Contract Costs 95300 Protective Services - Other 95100 Protective Services - Labor 69 February 14, 2017 Contra Costa County Housing Authority 94 Blended Component Unit - Casa Del Rio Shelter Plus Care Rental Rehab Loan Program Other State & Local Section 8 Moderate Rehab Central Office Cost Center Subtotal Eliminations Total 14.238 14.856 $0 $65,980 $65,980 $0 $522,219 $522,219 $9,761 $58 $6,400 $106,255 $106,255 $9,761 $0 $0 $0 $58 $6,400 $694,454 $0 $694,454 $43,356 $45 $4,853 $328,689 $328,689 $666 $71,148 $73,861 $73,861 $1,691 $53 $211 $19,183 $210,557 $210,557 $49 $5,109 $5,158 $5,158 $43,356 $1,691 $53 $0 $971 $100,293 $618,265 $0 $618,265 $6,941 $0 $129,576 $129,576 $4,913 $445 $1,196 $123,976 $434,926 $434,926 $3,255 $0 $124,513 $124,513 $3,815 $0 $143,701 $143,701 $7,070 $4,913 $445 $6,941 $1,196 $123,976 $832,716 $0 $832,716 $119,835 $0 $851,808 $851,808 $3,141 $0 $15,593 $15,593 $122,976 $0 $0 $0 $0 $0 $867,401 $0 $867,401 $627,423 $366,592 $8,556 $1,720,060 $30,007 $2,972,104 $23,539,588 -$5,546,618 $17,992,970 -$96,232 $3,222,406 $2,785 $738,577 $160,055 $278,257 $89,200,216 -$9,755 $89,190,461 $3,255,774 $151,734 $85,094,027 -$9,755 $85,084,272 $0 $893,787 $893,787 $179,576 $0 $4,557 $3,068,232 $3,068,232 $806,999 $3,622,366 $8,556 $1,720,060 $181,741 $2,976,661 $112,595,634 -$5,556,373 $107,039,261 $33,368 $0 $529,767 -$529,767 $0 -$2,785 -$3,431 -$529,767 $529,767 $0 $0 $337,142 -$337,142 $0 $0 -$337,142 $337,142 $0 $0 $33,368 -$2,785 $0 -$3,431 $0 $0 $0 $0 -$275,808 $0 $0 $738,577 $4,890 $273,700 $144,170 $0 $144,170 $26,537 $0 $0 $0 $0 $0 $432,319 $432,319 -$577,741 $0 $0 $2,189,396 $0 $403,479 $28,308,623 $28,308,623 -$9,187,608 $0 $0 -$9,187,608 -$9,187,608 $0 $4,119,764 $4,119,764 $0 $188,199 $188,199 960 3532 336 102363 102363 937 3532 330 94489 94489 $0 $347,274 $347,274 $0 $0 $252,577 $252,577 $0 $0 $54,175 $54,175 The accompanying Independent Auditors' Report and notes are an integral part of this schedule. 70 February 14, 2017 Contra Costa County Housing Authority 95 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA SCHEDULE OF RELEVANT STATISTICS FOR THE YEAR ENDED MARCH 31, 2016 Fiscal year ended March 31 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Number of employees 83 79 90 99 89 99 90 107 110 103 Number of clients served: Public Housing 1,168 1,168 1,168 1,168 1,168 1,168 1,168 1,168 1,168 1,168 Housing Choice Voucher 6,371 6,297 6,287 6,359 6,400 6,359 6,234 6,400 6,394 6,206 Shelter plus Care 294 241 241 241 241 241 303 280 281 274 Section 8 Moderate Rehab 25 25 25 26 23 26 25 25 25 23 Section 8 Voucher 0 0 0 5 5 5 5 4 4 5 Component Units Casa Del Rio Senior Hsg 82 82 82 82 82 82 82 82 82 82 DeAnza Gardens 180 180 180 180 180 180 180 180 180 180 Total 8,120 7,993 7,983 8,061 8,099 8,061 7,997 8,139 8,134 7,938 Capital Asset Information: Total units 1,430 1,430 1,430 1,430 1,430 1,430 1,430 1,430 1,430 1,430 Total buildings 636 636 636 636 636 636 636 636 636 374 Total vehicles 46 46 46 46 46 46 49 49 49 49 By project: Units Bldg Last change Units Bldg 11001 Martinez 50 28 11002 Bay Point - 1 2002 83 43 11003 Antioch 36 19 11004 Brentwood 44 24 11005 Pittsburgh 171 57 11006 Richmond 71 30 11008 Oakley 30 16 11009a Richmond 81 44 11009b Richmond 56 28 11010 Rodeo 248 63 11011 Martinez 50 1 11012 Oakley 40 13 11013 Bay Point 50 14 11015 Antioch 100 4 45001 San Pablo 100 31 45002 San Pablo 41 1 Total PHA 1,168 374 Component units: Casa Del Rio Senior Hsg 82 1 DeAnza Gardens 180 22 2005 180 22 The accompanying Independent Auditors’ Report and notes are an integral part of this schedule. 71February 14, 2017 Contra Costa County Housing Authority 96 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF COMPLETED CAPITAL FUND PROGRAM PROJECT ANNUAL CONTRIBUTIONS CONTRACT SF-182 MARCH 31, 2016 CA39P01150113 Funds approved $ 1,543,584 Funds expended 1,543,584 Excess of funds approved $- Funds advanced $ 1,543,584 Funds expended 1,543,584 Excess of funds advanced $- The accompanying Independent Auditors’ Report and notes are an integral part of this statement. 72 February 14, 2017 Contra Costa County Housing Authority 97 Harn & Dolan Certified Public Accountants 2423 Stirrup Court Walnut Creek, California 94596-6526 (925) 280-1693 Fax (925) 938-4829 INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Commissioners Housing Authority of the County of Contra Costa Martinez, California We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities of the Housing Authority of the County of Contra Costa, California, as of and for the year ended March 31, 2016, and the related notes to the financial statements, which collectively comprise the Housing Authority of the County of Contra Costa, Californias basic financial statements, and have issued our report thereon dated November 17, 2016. Our report includes a reference to other auditors who audited the financial statements of the blended component units and discretely presented component units, as described in our report on the Housing Authority of the County of Contra Costa, Californias financial statements. This report does not include the results of the other auditors testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Housing Authority of the County of Contra Costa, California’s internal control over financial reporting (internal control) to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Housing Authority of the County of Contra Costa, Californias internal control. Accordingly, we do not express an opinion on the effectiveness of the Housing Authority of the County of Contra Costa, Californias internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Authoritys financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 73 February 14, 2017 Contra Costa County Housing Authority 98 February 14, 2017 Contra Costa County Housing Authority 99 Harn & Dolan Certified Public Accountants 2423 Stirrup Court Walnut Creek, California 94596-6526 (925) 280-1693 Fax (925) 938-4829 INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Commissioners Housing Authority of the County of Contra Costa Martinez, California Report on Compliance for Each Major Federal Program We have audited the Housing Authority of the County of Contra Costa, Californias compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Housing Authority of the County of Contra Costa, Californias major federal programs for the year ended March 31, 2016. The Housing Authority of the County of Contra Costa, California’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of the Housing Authority of the County of Contra Costa, California’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Housing Authority of the County of Contra Costa, California’s compliance with those requirements and performing such other procedures as we consider necessary in the circumstances. 75 February 14, 2017 Contra Costa County Housing Authority 100 February 14, 2017 Contra Costa County Housing Authority 101 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATUS OF PRIOR AUDIT FINDINGS MARCH 31, 2016 The audit report for the fiscal year ended March 31, 2015, contained no audit findings. 77 February 14, 2017 Contra Costa County Housing Authority 102 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA SCHEDULE OF FINDINGS AND QUESTIONED COSTS MARCH 31, 2016 Section I - Summary of Auditors' Results Financial Statements Type of auditors’ report issued:unmodified Is a going concern explanatory paragraph included in the audit report? no Internal control over financial reporting: Significant deficiencies identified?no Any significant deficiency reported as a material weakness?none reported Noncompliance material to financial statements noted?no Federal Awards Does the auditors report include a statements that the auditees financial statements include departments, agencies, or other organizational units expending $750,000 or more in Federal awards that have separate Uniform Guidance audits which are not included in this audit? no Dollar threshold used to distinguish between Type A and Type B programs $ 2,952,586 Auditee qualified as low-risk auditee? yes Identification of major programs: Housing Choice Voucher Program 14.871 Public Housing Capital Fund Program 14.872 Type of auditors’ report issued on compliance for major programs:unmodified Did the audit disclose any audit findings which the auditor is required to report under OMB A-133, paragraph 510(a)no Internal control over major programs: Significant deficiencies identified?no Any significant deficiency reported as a material weaknesses?none reported Are any known questioned costs reported?no Were prior audit findings related to direct funding shown in the Summary of Prior Audit Findings?no Section II - Financial Statement Findings None Section III - Federal Award Findings None 78 February 14, 2017 Contra Costa County Housing Authority 103 Harn & Dolan Certified Public Accountants 2423 Stirrup Court Walnut Creek, California 94596-6526 (925) 280-1693 Fax (925) 938-4829 November 17, 2016 To the Board of Commissioners and Executive Director Housing Authority of the County of Contra Costa Martinez, California We have audited the financial statements of the business-type activities of the Housing Authority of the County of Contra Costa, component unit of the County of Contra Costa, California (the Authority) for the year ended March 31, 2016. We did not audit the financial statements of the Authoritys component units which were audited by other auditors and the reports were furnished to us. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under U.S. Generally Accepted Auditing Standards, Government Auditing Standards and the Uniform Guidance, As stated in our engagement letter dated December 30, 2015, our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. In planning and performing our audit, we considered the Housing Authority of the County of Contra Costa, Californias internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide assurance on the internal control over the financial reporting. We also considered internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with the Uniform Guidance. As part of obtaining reasonable assurance about whether the Authoritys financial statements are free of material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants. However, providing an opinion on compliance with those provision is not an objective of our audit. Also, in accordance with the Uniform Guidance, we examined, on a test basis, evidence about the Authoritys compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on the Authoritys compliance with those requirements. While our audit provided a reasonable basis for our opinion, it does not provide a legal determination on the Authoritys compliance with those requirements. Generally accepted accounting principles provide for certain required supplementary information (RSI) to supplement the basic financial statements. Our responsibility with respect to the Management Discussion and Analysis (MD&A), which supplements the basic financial statements, is to apply certain limited procedures in accordance with generally accepted auditing standards. Our procedures consisted of inquiries February 14, 2017 Contra Costa County Housing Authority 104 Housing Authority of the County of Contra Costa November 17, 2016 Page 2 of management regarding the methods of preparing the information and comparing the information for consistency with managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI because the limited procedures do not provide us with sufficient audit evidence to express an opinion or provide any assurance. We have been engaged to report on the Schedule of Expenditures of Federal Awards, the Financial Data Schedule and the Statement of Completed Capital Fund Program Project, which accompany the financial statements but are not RSI. Our responsibility for this supplementary information, as described by professional standards, is to evaluate the presentation of the supplementary information in relation to the financial statements as a whole and to report on whether the supplementary information is fairly stated, in all material respects, in relation to the financial statements as a whole. We made certain inquiries of management and evaluated the form, content, and method of preparing the information to determine that the information complies with accounting principles generally accepted in the United State of America, the methods of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We have not been engaged to report on the Schedule of Relevant Statistics which accompanies the financial statements but is not RSI. Our responsibility with respect to this other information in documents containing the audited financial statements and auditors report does not extend beyond the financial information identified in the report. We have no responsibility for determining whether this other information is properly stated. This other information has not been audited and we did not express an opinion or provide any assurance on it. Planned Scope and Timing of the Audit The audit included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit involves judgement about the number of transactions to be examined and the areas to be tested. Our audit included obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Material misstatement may result from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. We noted no material misstatement that required communication to you during our audit. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Disclosures Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Authority are described in Note 1 to the financial statements. As described February 14, 2017 Contra Costa County Housing Authority 105 Housing Authority of the County of Contra Costa November 17, 2016 Page 3 in Note 11 to the financial statements, the Authority changed accounting policies related to its pension plans by adopting Statement of Government Accounting Standards (GASB) No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 , during the current fiscal year. As a result, the Authority recognized the net pension liability, deferred outflows of resources, and deferred inflows of resources associated with the Authoritys pension plans. Accordingly, the cumulative effect of the accounting change as of the beginning of the year was a decrease to the Authority-wide net position of $9.2 million. As described in Note 1.T. to the financial statements, the Authority considered the effect that new GASB pronouncements would have on the financial statements. Specifically, the Authority considered the effects of GASB No 75 Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, and anticipates that the full implementation of this Statement will have a material impact on the financial statements beginning with the fiscal year ended March 31, 2019. We noted no transactions entered into by the Authority during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on managements knowledge and experience about past and current events and assumptions about future events. 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 those expected. The most sensitive estimates affecting the Authoritys financial statement were: Allowance for uncollectible tenant accounts receivable: Managements estimate is based on past experience and subsequent collections. We inquired with management on the need for the amount of the allowances. Depreciation on capital assets: Managements estimate of the useful lives of its capital assets is based on historical information about similar assets, the length of time the assets are expected to meet service and technology demands, and the Authoritys maintenance policy for the assets. These estimates have remained consistent for several years. We evaluated the key factors and assumption used to develop the depreciation estimates in determining that they are reasonable in relation to the financial statements taken as a whole. OPEB liability: Managements estimate is derived from actuarial valuations obtained from experts. We agreed the OPEB liability and the other information contained in the OPEB footnote to the amounts reported in the actuarial report dated January 23, 2015, for the period beginning April 1, 2014, by Nicolay Consulting Group. Net Pension Liability and the related Deferred Inflows/Outflows of Resources: Managements estimate is derived from actuarial valuations obtained from experts. We agreed these balances and other information contained in the pension plan (CCCERA) footnote to the various documentation supplied by CCCERA. This documentation included (1) CCCERA GASB 68 Actuarial Valuation Based on December 31, 2015 Measurement Date for Employer Reporting as of June 30, 2016, (2) CCCERA GASB 68 Actuarial Valuation Based on December 31, 2014 Measurement Date for Employer Reporting as of June 30, 2015, (3) Actuarial Valuation and Review as of December 31, 2014 performed by Segal Consulting, and (4) CCCERAs CAFR as of December 31, 2015. February 14, 2017 Contra Costa County Housing Authority 106 Housing Authority of the County of Contra Costa November 17, 2016 Page 4 Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most significant disclosure affecting the financial statements were: (1) The disclosure of the related parties - component units, both blended and discreetly presented, in Note 14 to the financial statements. This disclosure describes the Authoritys relationship, including financial, with its component units (2) The disclosure of the other postemployment benefits in Note 12 to the basic financial statements. This disclosure discusses post employment benefits other than the pension plan, the funding policy, the Authoritys estimated unfunded liability, and the amounts currently recorded as liabilities. This footnote is significant due to the requirement of agencies to implement GASB Statement No 75 - Accounting and Financial Reporting for Postemployment Benefits Other than Pensions , beginning fiscal year ended March 31, 2019. This GASB Statement requires all agencies to fully record all liability associated with the plan as of that date. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion units financial statements taken as a whole. Disagreements with Management For the purpose of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors report. We are pleased to report that no such disagreement arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated November 17, 2016. Management Consultation 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 Authoritys financial statements or a determination of the type of auditors opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. February 14, 2017 Contra Costa County Housing Authority 107 February 14, 2017 Contra Costa County Housing Authority 108 RECOMMENDATIONS ACCEPT report on the procedure for submitting applications for the Low Income Public Housing program. BACKGROUND This report is intended to inform the Housing Authority of the County of Contra Costa Board of Commissioners that the Housing Authority of the County of Contra Costa (HACCC) will accept on-line applications for the Low Income Public Housing program beginning Monday, February 27, 2017, at 10:00 a.m. through Thursday March 2, 2017, closing at 4:00 p.m. Applications for all bedroom sizes (one, two, three, four and five) will be accepted online only. A link will be provided on the HACCC website to access the online application portal. Applicants can use a computer, tablet or smart-phone with internet access to apply for housing. Applications will be placed on the waiting list according to date/time and preferences. This does not indicate that the family is, in fact, eligible for assistance. A final determination for eligibility and verification of preference will be made when the family is pulled off the waiting list. Assistance is available for applicants that request a reasonable accommodation by contacting the HACCC. Action of Board On: 02/14/2017 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, Commissioner Candace Andersen, Commissioner Diane Burgis, Commissioner Karen Mitchoff, Commissioner Federal D. Glover, Commissioner Jannel George-Oden, Commissioner ABSENT:Fay Nathaniel, Commissioner Contact: 925-957-8028 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: February 14, 2017 Joseph Villarreal, Executive Director By: June Mchuen, Deputy cc: C.4 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:February 14, 2017 Contra Costa County Subject:PUBLIC HOUSING WAITING LIST OPENING February 14, 2017 Contra Costa County Housing Authority 109 FISCAL IMPACT Informational only. CONSEQUENCE OF NEGATIVE ACTION Informational only. CLERK'S ADDENDUM ATTACHMENTS Announcement February 14, 2017 Contra Costa County Housing Authority 110 February 14, 2017Contra Costa County Housing Authority 111 February 14, 2017Contra Costa County Housing Authority 112 RECOMMENDATIONS APPROVE and AUTHORIZE the Executive Director of the Housing Authority, or his designee, to execute a contract with HD Supply Facilities Maintenance in an amount not to exceed $2,000,000 to provide materials and supplies needed for the maintenance of public housing facilities. BACKGROUND This contract will primarily provide materials and services used by HACCC's Maintenance Department to complete work orders, maintain the grounds and perform preventive maintenance at our public housing properties. HUD requires housing authorities to competitively procure goods and services, a process normally undertaken by each individual agency. However, HUD permits housing authorities to award contracts to firms selected by a state or local governmental agency in a competitive solicitation process. The state or local government's selection process must meet HUD's procurement guidelines and must have been for the same goods and services sought by the housing authority. HUD encourages housing authorities to procure goods and services in this manner in order to "foster greater economy and efficiency..." If approved by the Board, the proposed contract will be awarded to HD Supply Facilities Maintenance (HD Supply). HD Supply was awarded a contract via a solicitation issued by Maricopa County, Arizona through the U.S. Communities Government Purchasing Alliance (USCGPA). Six bidders responded to Maricopa's solicitation and HD Supply was selected as the most qualified, responsible bidder. USCGPA is the leading national cooperative purchasing program, providing world class government procurement resources and solutions to local and Action of Board On: 02/14/2017 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, Commissioner Candace Andersen, Commissioner Diane Burgis, Commissioner Karen Mitchoff, Commissioner Federal D. Glover, Commissioner Jannel George-Oden, Commissioner ABSENT:Fay Nathaniel, Commissioner Contact: 925-957-8028 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: February 14, 2017 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: C.5 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:February 14, 2017 Contra Costa County Subject:CONTRACT WITH HD SUPPLY FACILITIES MAINTENANCE February 14, 2017 Contra Costa County Housing Authority 113 BACKGROUND (CONT'D) state government agencies, school districts (K-12), higher education institutions, and nonprofits looking for the best overall supplier government pricing. The benefits of using USCGPA include a no-fee-or-cost process that, by combining the potential cooperative purchasing power of up to 90,000 public agencies, enables access to the best overall supplier government pricing on quality brands that are backed by the integrity, experience and oversight by public purchasing professionals. HD Supply is one of the largest industrial distributors in North America. The company provides a broad range of products and value-added services to approximately 500,000 customers. Their leading businesses include HD Supply Facilities Maintenance, HD Supply Waterworks and HD Supply Construction & Industrial - White Cap. HD Supply has approximately 800,000 SKUs of quality, name-brand and proprietary products at competitive prices. With approximately 550 locations across 48 states and six Canadian provinces, their 13,000 associates provide localized, customer-driven services including jobsite delivery, will call or direct-ship options, diversified logistics and innovative solutions that contribute to our customers' success. In California, HD Supply maintains warehouses in the City of Industry, Sacramento, San Diego and Hayward. On January 17, 2017, HACCC's Board approved a contract in an amount not to exceed $200,000 with HD Supply. The approved contract was based on a 2011 procurement by Maricopa County/USCGPA that was scheduled to expire on July 31, 2017. After receiving Board approval, but prior to signing the contract, HD Supply informed staff that they did not wish to sign a contract with HACCC expiring on July 31, 2017, because a new contract had been agreed to with Maricopa County. The procurement for the new contract (described above) still meets all of HUD's requirements and provides HACCC the benefit of competitively sourced pricing for a longer period of time. The new Maricopa/USCGPA award to HD Supply is for February 1, 2017, through December 31, 2021. If approved by the Board, HACCC will enter into contract with HD Supply effective February 15, 2017, through December 31, 2021. The total cost of the proposed contract will not exceed $2,000,000 without additional Board approval. FISCAL IMPACT The Housing Authority’s (HACCC) cost for these materials and supplies will not exceed $2,000,000. Funding for this contract is included in HACCC's current budget using funds provided by the U. S. Department of Housing and Urban Development. CONSEQUENCE OF NEGATIVE ACTION Should the Board of Commissioners elect not to award the contract to HD Supply Facilities Maintenance, HACCC will be required to go out to bid for maintenance, repair, operating and industrial supplies. This process would be lengthier and likely more expensive than procuring via Maricopa County/USCGPA. CLERK'S ADDENDUM February 14, 2017 Contra Costa County Housing Authority 114