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HomeMy WebLinkAboutMINUTES - 02122019 - Housing Authority    CALENDAR FOR THE BOARD OF COMMISSIONERS BOARD CHAMBERS ROOM 107, COUNTY ADMINISTRATION BUILDING 651 PINE STREET MARTINEZ, CALIFORNIA 94553-1229 JOHN GIOIA, CHAIR CANDACE ANDERSEN, VICE CHAIR DIANE BURGIS KAREN MITCHOFF FEDERAL D. GLOVER 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. SPECIAL MEETING AGENDA February 12, 2019 ***Please note time change***                 1:00 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.   February 12, 2019 Housing Authority Minutes 1  Item C.5 was discussed by the Board and subsequently adopted as presented.   D. 2 PUBLIC COMMENT (2 Minutes/Speaker)    There were no requests to speak at public comment.     D.3   CONSIDER accepting report on the relocation status of the families at the Las Deltas public housing development in North Richmond.          Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Jannel George-Oden ABSENT     D.4   RECEIVE an oral report on the effects of a possible federal shutdown on the Housing Authority of the County of Contra Costa's (HACCC) programs.       Mr. Villarreal noted the funding mechanisms are different for public housing and for housing vouchers. He expects to receive the normal amount of funding through June 1, 2019 for public housing. For Section 8 vouchers and some smaller programs, he expects funding to cover March and April, but it remains to be seen if the funds arrives in those accounts by Friday (before a possible shutdown). An extended government shutdown would place public housing in a position of not having the funds to maintain the properties sufficiently. Homeowners contracting with the County for Section 8 vouchers would be exposed to possible lack of funds from the HUD portion of the rent after March/April, placing those owners in financial risk in regard to paying the mortgage on the home. No evictions are allowed if HUD does not pay it’s portion, but the tenant keeps their obligation. An extended shutdown would not directly result in any loss of housing in the short term, but would place many vouchers and programs at risk of closure through individuals exiting the program, defaulting on mortgages, and the inability to keep legal and safety obligations to tenants.   ADJOURN    Adjourned today's meeting at 1:21 p.m.   CONSENT ITEMS:     C.1   RECEIVE the Housing Authority of the County of Contra Costa’s investment    February 12, 2019 Housing Authority Minutes 2   C.1   RECEIVE the Housing Authority of the County of Contra Costa’s investment report for the quarter ending December 31, 2018.            C.2   DENY claim filed by Daniel Flores.         Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Jannel George-Oden ABSENT     C.3   ACCEPT the financial and program compliance audit report for the period April 1, 2017 through March 31, 2018, prepared by Harn & Dolan CPA, Walnut Creek, California.          Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Jannel George-Oden ABSENT     C.4   ADOPT Resolution No. 5219 approving updates to the California Housing Workers' Compensation Authority Joint Powers Agreement.          Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Jannel George-Oden ABSENT     C.5   ADOPT Resolution No. 5220 titled "Resolution Approving the Transfer of the Richmond Housing Authority's Housing Choice Voucher and Project-Based Voucher Programs to the Housing Authority of the County of Contra Costa" and AUTHORIZE the Housing Authority of the County of Contra Costa's Executive Director to send a letter to the U.S. Department of Housing and Urban Development indicating that HACCC will accept the transfer of the Richmond    February 12, 2019 Housing Authority Minutes 3 Development indicating that HACCC will accept the transfer of the Richmond Housing Authority's Housing Choice Voucher and Project-Based Voucher Programs.       Commissioner John Gioia AYE Commissioner Candace Andersen AYE Commissioner Diane Burgis AYE Commissioner Karen Mitchoff AYE Commissioner Federal D. Glover AYE Commissioner Jannel George-Oden ABSENT     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 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 February 12, 2019 Housing Authority Minutes 4 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 12, 2019 Housing Authority Minutes 5 RECOMMENDATIONS ACCEPT report on the relocation status of the families at the Las Deltas public housing development in North Richmond. BACKGROUND As part of the RAD conversion of the Las Deltas public housing units, HACCC is required to assist the families living at Las Deltas to find new, affordable places to live. All of the residents living at Las Deltas at the time of conversion, must be assisted under the laws and regulations set forth in the Uniform Relocation Act, California Relocation Assistance Law and the California Relocation Assistance and Real Property Acquisition Guidelines. There were 81 families living at Las Deltas when it was approved for RAD. All are/were eligible for relocation benefits. In September 2017 HACCC began officially moving families out of Las Deltas. Although a few of the 81 families had moved before this date, these early movers retained eligibility for, and were offered, relocation benefits. The mover status of the Las Deltas families as of January 24, 2019 is as follows: Action of Board On: 02/12/2019 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 ABSENT:Jannel George-Oden, 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 12, 2019 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 12, 2019 Contra Costa County Subject:RELOCATION STATUS OF N. RICHMOND - LAS DELTAS RESIDENTS February 12, 2019 Housing Authority Minutes 6 BACKGROUND (CONT'D) Total Las Deltas Families Eligible for Relocation 81 Total Families That Have Moved 69 Moved to other public housing 38 Moved using voucher within HACCC jurisdiction 23 Moved using voucher outside of HACCC jurisdiction 7 Moved and left HACCC programs 1 Total Families Pending Move 12 Waiting to move to other public housing unit 3 Already issued voucher, searching for a unit 9 Waiting for voucher to be issued 0 FISCAL IMPACT Funding of approximately $1.4 million is provided in the Housing Authority's (HACCC) current PHA Annual Plan Capital Fund Program (CFP) budget for the cost of the relocation consultants and all direct relocation costs that will be provided to families (e.g., security deposits, utility transfer fees and the costs to hire movers). $1 million is targeted for direct relocation costs for the families of Las Deltas. CONSEQUENCE OF NEGATIVE ACTION None. Information item only. CLERK'S ADDENDUM February 12, 2019 Housing Authority Minutes 7 RECOMMENDATIONS RECEIVE an oral report on the effects of a possible federal shutdown on the Housing Authority of the County of Contra Costa's (HACCC) programs. BACKGROUND Staff will provide the Board with an oral update on this matter. FISCAL IMPACT The effect of a possible shutdown on HACCC's financial status will vary depending on the length of the shutdown. A short shutdown should have little, or no impact. A longer shutdown could cause some programs to cease operation. CONSEQUENCE OF NEGATIVE ACTION None. Information item only. Action of Board On: 02/12/2019 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS 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 12, 2019 Joseph Villarreal, Executive Director By: , Deputy cc: D.4 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:February 12, 2019 Contra Costa County Subject:EFFECTS OF A POSSIBLE FEDERAL GOVERNMENT SHUTDOWN ON HACCC'S PROGRAMS February 12, 2019 Housing Authority Minutes 8 CLERK'S ADDENDUM Mr. Villarreal noted the funding mechanisms are different for public housing and for housing vouchers. He expects to receive the normal amount of funding through June 1, 2019 for public housing. For Section 8 vouchers and some smaller programs, he expects funding to cover March and April, but it remains to be seen if the funds arrives in those accounts by Friday (before a possible shutdown). An extended government shutdown would place public housing in a position of not having the funds to maintain the properties sufficiently. Homeowners contracting with the County for Section 8 vouchers would be exposed to possible lack of funds from the HUD portion of the rent after March/April, placing those owners in financial risk in regard to paying the mortgage on the home. No evictions are allowed if HUD does not pay it’s portion, but the tenant keeps their obligation. An extended shutdown would not directly result in any loss of housing in the short term, but would place many vouchers and programs at risk of closure through individuals exiting the program, defaulting on mortgages, and the inability to keep legal and safety obligations to tenants. February 12, 2019 Housing Authority Minutes 9 RECOMMENDATIONS RECEIVE the Housing Authority of the County of Contra Costa’s investment report for the quarter ending December 31, 2018. 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. Action of Board On: 02/12/2019 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS 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 12, 2019 Joseph Villarreal, Executive Director By: , Deputy cc: C.1 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:February 12, 2019 Contra Costa County Subject:INVESTMENT REPORT FOR THE QUARTER ENDING DECEMBER 31, 2018 February 12, 2019 Housing Authority Minutes 10 BACKGROUND (CONT'D) In summary, HACCC had $29,556.75 in interest earnings for the quarter ending December 31, 2018. 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. The Housing Choice Voucher Program reserve as of 12/31/2013 held in cash and investments was transitioned to U.S. Department of Housing and Urban Development (HUD) held program reserve 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, 2018 is shown below. A more detailed report is attached. Public Housing Housing Choice Voucher Fund Central Office State & Local Unrestricted Interest Earned Restricted Interest Earned Unrestricted Interest Earned Unrestricted Interest Earned Unrestricted Interest Earned $10,857.16 $10,286.60 $3,949.20 $4,463.79 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 HUD. CLERK'S ADDENDUM ATTACHMENTS INVESTMENT REPORT February 12, 2019 Housing Authority Minutes 11 February 12, 2019 Housing Authority Minutes 12 February 12, 2019 Housing Authority Minutes 13 February 12, 2019 Housing Authority Minutes 14 February 12, 2019 Housing Authority Minutes 15 RECOMMENDATIONS DENY claim filed by Daniel Flores. BACKGROUND See attached. FISCAL IMPACT No fiscal impact. Action of Board On: 02/12/2019 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 ABSENT:Jannel George-Oden, Commissioner Contact: Scott Selby 925.335.1400 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 12, 2019 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: C.2 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:February 12, 2019 Contra Costa County Subject:Claims February 12, 2019 Housing Authority Minutes 16 CLERK'S ADDENDUM ATTACHMENTS Housing Claim - Flores February 12, 2019 Housing Authority Minutes 17 February 12, 2019 Housing Authority Minutes 18 February 12, 2019 Housing Authority Minutes 19 February 12, 2019 Housing Authority Minutes 20 February 12, 2019 Housing Authority Minutes 21 February 12, 2019 Housing Authority Minutes 22 RECOMMENDATIONS ACCEPT the financial and program compliance audit report for the period April 1, 2017 through March 31, 2018, 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, 2018. 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 is attached. FISCAL IMPACT None. Information item. Funding was provided for the audit contract in the Housing Authority of the County of Contra Costa’s (HACCC) Fiscal Year 2018/2019 Consolidated Operating Budget. Action of Board On: 02/12/2019 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 ABSENT:Jannel George-Oden, 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 12, 2019 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 12, 2019 Contra Costa County Subject:FINANCIAL AND PROGRAM AUDIT FOR FISCAL YEAR ENDING MARCH 31, 2018 February 12, 2019 Housing Authority Minutes 23 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. CLERK'S ADDENDUM ATTACHMENTS Harn & Dolan Audit February 12, 2019 Housing Authority Minutes 24 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA (A Component Unit of the County of Contra Costa) BASIC FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 2018 (Including Auditors’ Report Thereon) February 12, 2019 Housing Authority Minutes 25 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA BASIC FINANCIAL STATEMENTS MARCH 31, 2018 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: Schedule of Proportionate Share of the Net Pension Liability 64 Schedule of Employer Contributions to CCCERA 64 Schedule of Changes in the Net OPEB Liability and Related Ratios 65 Schedule of Employer Contributions to OPEB 65 Notes to the Required Supplementary Information 66 Supplementary Information: Schedule of Expenditures of Federal Awards 68 Notes to the Schedule of Expenditures of Federal Awards 69 Financial Data Schedule (CA011) 71 Schedule of Relevant Statistics 79 Statement of Completed Capital Fund Program Project 80 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 81 Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance 83 Status of Prior Audit Findings 85 Schedule of Findings and Questioned Costs 86 February 12, 2019 Housing Authority Minutes 26 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, 2018, 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 13.5%, -39.7% and 0.4%, 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 12, 2019 Housing Authority Minutes 27 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, 2018, 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.U. and 12, the Authority adopted the provisions of Government Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits other than Pension, as of April 1, 2017. 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, and the supplementary information required for the pension and other postemployment benefit plans on pages 64-66 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 (CA011) 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 12, 2019 Housing Authority Minutes 28 February 12, 2019 Housing Authority Minutes 29 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2018 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, 2018. 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 $1,987,330 (or 35.57%) during 2018 (see Table 1) as a result of the implementation of GASB 75. GASB 75 required the Authority to record unfunded accrued actuarial liability (UAAL) in the amount of $5,269,965. This amount was reduced by a positive actuarial change in net pension liability of $636,481 and a positive change in normal operations of $2,647,374 (see footnote 10 in the audit report). Unrestricted net position decreased by $2,844,315 during 2018 (see Table 1). The implementation of GASB 75 caused a decrease in the amount of $5,269,965 that was offset by positive changes in pension liability of $636,481 and in operations in the amount of $1,789,169. Total revenue increased by $17.5 million (or 15.5%) as a result of current year activities (see Table 3). Total expenditures increased $16.5 million (or 14.7%) 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 12, 2019 Housing Authority Minutes 30 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2018 (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 Continuum of Care Program - is a U.S. Department of Housing and Urban Development funded rehabilitation program that promotes community-wide commitment to the goal of ending homelessness. The 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. 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, 2017. 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, 2017. These reports can be obtained from the Authority using the information on page 11. Casa Del Rio Apartments, LLC - This limited liability corporation was formed to replace the limited partner Boston Capital of the Casa Del Rio Partnership. The officers and Board members of HACCC Casa Del Rio, Inc will direct the LLC. 5 February 12, 2019 Housing Authority Minutes 31 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2018 (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 federal 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 12, 2019 Housing Authority Minutes 32 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2018 (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, 2017. 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, 2018 March 31, 2017 (Decrease) % Current assets $ 8,881,830 $ 9,848,249 (966,419)9.81% Restricted assets 2,011,894 1,344,572 667,322 49.63% Capital assets, net of depreciation 11,708,383 11,904,435 (196,052)1.65% Other noncurrent assets 3,687,525 3,550,017 137,508 3.87% Total assets 26,289,632 26,647,273 (357,641) 1.34% Deferred outflows of resources 1,009,562 2,013,425 (1,003,863)49.86% Current liabilities 2,300,619 2,479,636 (179,017)7.22% Payable from restricted assets 550,659 784,364 (233,705)29.80% Long term liabilities 19,049,400 19,809,372 (759,972)3.84% Total liabilities 21,900,678 23,073,372 (1,172,694)5.08% Deferred inflows of resources 1,798,520 - 1,798,520 Net position: Net investment in capital assets 5,053,531 5,104,662 (51,131)1.00% Restricted 1,499,344 591,228 908,116 153.60% Unrestricted (2,952,879) (108,564) (2,844,315) Total net position $ 3,599,996 $ 5,587,326 $ (1,987,330)35.57% 7 February 12, 2019 Housing Authority Minutes 33 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2018 (Continued) Major Factors Affecting the Statement of Net Position The major factor affecting net position was the implementation of GASB 75. GASB 75 required the Authority to record unfunded accrued actuarial liability (UAAL) in the amount of $5,269,965. This amount was reduced by a positive actuarial change in net pension liability of $636,481 and a positive change in normal operations of $2,647,374. 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 04/01/2017 Report Period 03/31/2018 Housing Choice Voucher Program $ 3,908,751 $ 692,883 $ 4,601,634 Public Housing (including Capital Fund) 1,205,013 1,068,079 2,273,092 Central Office Cost Center 626,452 164,539 790,991 Casa Del Rio (blended component unit) (122,484) (197,686) (320,170) Rental Rehabilitation Loan Program - 574 574 Other State and Local (5,726,296) (4,572,704) (10,299,000) Authority totals $ (108,564) $ (2,844,315) $ (2,952,879) 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 a result of implementation of GASB 75 in the Other State & Local program. 8 February 12, 2019 Housing Authority Minutes 34 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2018 (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, 2018 March 31, 2018 March 31, 2017 March 31, 2017 Operating revenue: Rental and other $ 6,927,317 $ 6,560,488 $ 5,667,202 $ 3,486,808 Non-operating revenue: Federal grants and subsidies 121,501,702 101,618,382 105,487,094 99,664,495 Capital contributions 1,278,700 1,812,174 1,050,023 844,419 Sale (disposal) of real property (4,020) - - - Other revenue 121,997 592,840 151,752 1,085,122 Total revenues 129,825,696 110,583,884 112,356,071 105,080,844 Operating expenses: Administration 8,918,271 9,548,608 8,704,429 7,971,279 Tenant services 1,048,519 795,689 816,732 525,904 Utilities 2,148,376 2,111,057 2,059,458 1,813,653 Maintenance 4,502,491 3,841,069 4,539,045 4,085,259 General 1,382,897 1,539,200 1,387,597 1,263,931 Housing assistance payments 109,045,988 87,428,415 92,977,420 85,122,883 Depreciation 1,736,653 1,735,434 1,754,951 2,597,597 Non-operating expenses: Debt-service interest 203,125 203,125 217,435 291,040 Capital Expenses - - - 844,419 Total expenses 128,986,320 107,202,597 112,457,067 104,515,965 Changes in net position 839,376 3,381,287 (100,996) 564,879 Net position, beginning of the year 5,587,326 5,587,326 5,688,322 5,688,321 Prior period adjustment (2,826,706)- - - Net position, end of the year $ 3,599,996 $ 8,968,613 $ 5,587,326 $ 6,253,200 Major Factors Affecting the Statement of Revenue, Expenses and Changes in Net Position The major factors affecting the Statement of Revenue, Expenses, and Changes in Net Position was a combination of three items; the primary item being the implementation of GASB 75. GASB 75 required the Authority to record unfunded accrued liability (UAAL) in the amount of $5,269,965. This amount was offset by a positive operations change in the amount of $2,647,347 and a positive actuarial change in pension liability on the amount of $636,481. 9 February 12, 2019 Housing Authority Minutes 35 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2018 (Continued) CAPITAL ASSETS ANDDEBT ADMINISTRATION Capital Assets As of year-end, the Authority had $11.7 million invested, see also Note 5 to the basic financial statements. TABLE 4 CAPITAL ASSETS March 31, 2018 March 31, 2017 Change Land $ 1,825,993 $ 1,825,993 $ - Buildings 99,337,971 98,618,966 719,005 Equipment 3,007,222 2,871,699 135,523 Accumulated Depreciation (93,313,671) (91,740,253) (1,573,418) Construction In Progress 850,868 328,030 522,838 Total $ 11,708,383 $ 11,904,435 $ (196,052) The following reconciliation summarizes the change in Capital Assets. TABLE 5 CHANGE IN CAPITAL ASSETS 2018 2017 Capital assets - beginning of year $ 11,904,435 $ 12,433,904 Additions: Building improvements 619,005 881,903 Construction-in-progress 522,838 - Equipment 302,778 343,579 Investment in Casa Del Rio 100,000 - Loss on disposal of equipment (4,020)- Depreciation (1,736,653) (1,754,951) Capital assets - end of year $ 11,708,383 $ 11,904,435 Notes Payable Outstanding As of year-end, the Authority had $4,772,175 of notes payable outstanding, see Note 6 to the basic financial statements. 10 February 12, 2019 Housing Authority Minutes 36 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA MANAGEMENT DISCUSSION AND ANALYSIS MARCH 31, 2018 (Continued) 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. 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 12, 2019 Housing Authority Minutes 37 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF NET POSITION - PROPRIETARY FUNDS MARCH 31, 2018 Primary Component Government Units Housing ASSETS Current assets Cash and investments (Note 2 and 14) $ 7,564,426 $ 359,401 Due from other agencies 864,437 - Due from related parties - DeAnza (Note 14) 2,761 - Tenant accounts receivable 240,132 17,563 Allowance for doubtful accounts (109,835) (1,876) Miscellaneous accounts receivable - 19,992 Interest receivable 19,370 - Notes receivable - short term (Note 4) 6,085 - Prepaid expenses 294,454 20,127 Total current assets 8,881,830 415,207 Restricted assets: Restricted cash (Note 2 and 3 and 14) 2,011,894 1,563,349 Capital assets (Note 5 and 14): Land 1,825,993 1,150,712 On site improvements - 4,028,709 Buildings 99,337,971 29,714,010 Furniture and equipment 3,007,222 532,556 Construction in progress 850,868 - Accumulated depreciation (93,313,671) (13,722,172) Total capital assets 11,708,383 21,703,815 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) 116,226 - Due from related parties - DeAnza (Note 14) 2,122,529 - Other long-term assets 72,305 - Total other noncurrent assets 3,687,526 - Total assets 26,289,633 23,682,371 DEFERRED OUTFLOWS OF RESOURCES Pension (Note 11)541,114 - OPEB (Note 12)468,447 - 1,009,561 - 12 February 12, 2019 Housing Authority Minutes 38 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF NET POSITION - PROPRIETARY FUNDS MARCH 31, 2018 (Continued) Primary Component Government Units Housing LIABILITIES Current liabilities: Accounts payable $ 707,218 $ 108,038 Due to related parties - Authority (Note 14) - - Due to other agencies 381,058 - Accrued salaries and related costs 234,221 - Accrued interest (Note 14) - 44,628 Other accrued liabilities 200,051 - Payable from restricted assets: Tenant security deposits 355,308 170,137 Due to other agencies 1,768 - Unearned revenue (Note 8) 233,626 12,147 Current portion of compensated absences (Note 1.I.) 305,304 - Current portion of long-term debt (Note 6 and 14) 239,141 247,085 Total current liabilities 2,657,695 582,035 Other noncurrent liabilities: Long-term debt (Note 6 and 14) 4,533,034 7,810,288 Long-term debt - Authority (Note 14) - 1,000,000 Long-term portion of compensated absences (Note 1.I.) 88,161 - Payable from restricted assets: Family self sufficiency escrows 193,583 - Other noncurrent liabilities (Note 9 and 14) 2,434,500 16,284 Due to related parties - Authority (Note 14) - 2,158,565 Net pension liability (Note 11) 6,267,604 - Net other postemployment benefit liability (Note 12) 5,726,101 - Total noncurrent liabilities 19,242,983 10,985,137 Total liabilities 21,900,678 11,567,172 DEFERRED INFLOWS OF RESOURCES Pension (Note 11)1,786,208 - OPEB (Note 12) 12,312 - 1,798,520 - NET POSITION (Note 10 and 14) Net investment in capital assets 5,053,531 13,601,814 Restricted net position 1,499,344 1,516,117 Unrestricted net position (2,952,879)(3,002,732) Total net position $ 3,599,996 $ 12,115,199 The accompanying notes are an integral part of this statement 13 February 12, 2019 Housing Authority Minutes 39 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, 2018 Primary Component Government Units Housing Operating revenue: Rents and other tenant revenue $ 4,673,686 $ 2,098,117 Other 2,253,631 118,984 Total operating revenue 6,927,317 2,217,101 Operating expenses: Administration 8,918,271 437,255 Tenant services 1,048,519 - Utilities 2,148,376 258,996 Maintenance 4,502,491 463,443 General 1,382,897 121,353 Housing assistance payments 109,045,988 - Depreciation (Note 5 and 14) 1,736,653 1,020,549 Total operating expenses 128,783,195 2,301,596 Operating income (loss)(121,855,878)(84,495) Nonoperating revenue (expenses): Grants 121,501,702 - Restricted interest 4,922 - Unrestricted interest 495 7,854 Mortgage interest 1,620 - Interest on notes receivable with related party (Note 4 and 14) 30,000 (30,000) Related party fees (Note 14) 84,960 (84,960) Loss on disposal of equipment (Note 5) (4,020) - Debt service - interest (Note 6 and 14) (203,125)(553,966) Net gain before contributions and transfers (439,324)(745,567) Capital contributions 1,278,700 - Change in net position 839,376 (745,567) Net position - beginning of year, as originally stated 5,587,326 12,860,766 Prior period adjustment (Note 12) (2,826,706)- Net position - beginning of year, restated 2,760,620 12,860,766 Net position - end of year $ 3,599,996 $ 12,115,199 The accompanying notes are an integral part of this statement. 14 February 12, 2019 Housing Authority Minutes 40 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED MARCH 31, 2018 Primary Government Housing Cash flows from operating activities: Tenant receipts $ 4,493,413 Other receipts 2,223,759 Payroll and benefit expenditures (10,183,745) Administration expenditures (1,745,831) Tenant services expenditures (752,449) Utilities expenditures (2,151,090) Maintenance expenditures (3,061,194) General expenditures (788,838) Housing assistance payment expenditures (109,782,838) Net cash used by operating activities (121,748,813) Cash flows from noncapital financing activities : Operating grants received 122,933,940 Related parties transactions 91,393 Repayment of notes receivable 7,949 Notes receivable issued (9,000) Net cash provided by noncapital financing activities 123,024,282 Cash flows from capital financing activities : Grants received to acquire capital assets 1,278,700 Acquisition of capital assets (1,544,621) Principal paid on debt (226,848) Interest paid on debt (121,198) Net cash used by capital financing activities (613,967) Cash flows from investing activities: Interest receipts 2,069 Interest on restricted cash 2,858 Net cash provided by investing activities 4,927 Net increase to cash 666,429 Cash at beginning of year 8,909,891 Cash at end of year $ 9,576,320 Cash and investments $ 7,564,426 Restricted cash 2,011,894 Total cash at year end $ 9,576,320 15 February 12, 2019 Housing Authority Minutes 41 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED MARCH 31, 2018 (Continued) Primary Government Housing Reconciliation of operating loss to net cash used by operating activities: Operating loss $ (121,855,878) Adjustments to reconcile operating loss to Net cash used by operating activities: Depreciation expense 1,736,653 Prior period adjustment (2,826,706) (Increase) Decrease in: A/R other governments (377,669) Tenants accounts receivable 7,601 Prepaid expenses (129,203) Other long-term assets (36,143) Deferred outflows of resources 1,003,863 Increase (Decrease) in: Accounts payable (195,318) Due to other agencies 5,850 Tenant security deposits (11,320) Accrued salaries and related costs (1,662) Unearned revenues (37,982) FSS escrows (224,154) Compensated absences (28,601) Net OPEB liability 3,318,336 Net pension liability (3,895,000) Deferred inflows of resources 1,798,520 Net cash used by operating activities $ (121,748,813) 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 $1,620 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 12, 2019 Housing Authority Minutes 42 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 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 or by visiting http://co.contra-costa.ca.us/. 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 12, 2019 Housing Authority Minutes 43 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (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. Casa Del Rio Apartments LLC was formed to replace the limited partner, Boston Capital, of the Casa Del Rio Partnership. The officers and Board members of HACCC Casa Del Rio, Inc, will direct the LLC. 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 14. 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, 18 February 12, 2019 Housing Authority Minutes 44 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 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 14. 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. 19 February 12, 2019 Housing Authority Minutes 45 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 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. 20 February 12, 2019 Housing Authority Minutes 46 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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, 2018, the amounts due between the various proprietary funds totaled $1,155,044. Operating advances made to the blended component units, HACCC Casa Del Rio, Inc and CDR Senior Housing Associates totaled $542,269 as of March 31, 2018. The interfund balance as of December 31, 2017, was $535,568 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, 2018, shows $535,568 as both a noncurrent asset and as a noncurrent liability. The difference of $6,701, 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 Continuum of Care Programs to Casa Del Rio Senior Housing (CDR) totaled $19,891 for the fiscal year ended March 31, 2018. 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, Housing Choice Voucher, and Continuum of Care Program Enterprise Funds. The Housing Choice Voucher Enterprise Fund paid management fees and bookkeeping fees in the amount of $1,296,333 and $565,312, respectively. The Public Housing Enterprise Fund paid property management, bookkeeping, and asset management fees in the amount of $1,014,674, $67,999, and $119,400, respectively. The Continuum of Care Enterprise Fund was allocated costs of $53,084 in lieu of fees. These costs, totaling $3,116,802, are reported as total fee revenue in the Central Office Enterprise Fund and administrative expenses of the Public Housing, Housing Choice Voucher, and Continuum of Care Enterprise Funds. 21 February 12, 2019 Housing Authority Minutes 47 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Beginning in fiscal year 2016, 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 State and Local Enterprise Fund for Pension holds and accounts for the deferred outflows of resources generated when the payments are made. The GASB 68 required accounts are adjusted annually at each actuarial measurement date. During the current fiscal year, $1,960,938 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 established the State and Local Enterprise Fund for OPEB to account for the implementation of GASB 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB reporting for employers). The newly established enterprise fund holds and accounts for the deferred outflows of resources generated when the payments are made. During the current fiscal year, $534,467 of payments 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 $2,017,366 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 were eliminated within the blended component unit enterprise fund. Interfund transfers of $1,442,290 were made between the Authoritys funds this fiscal year. Interfund transfers of $999,084 were made within the Public Housing enterprise Fund. This represents the use of Capital Fund grants for Public Housing operating costs. Interfund transfers of $49,721 were made from the Housing Choice Voucher Enterprise Fund to the Family Self Sufficiency Enterprise Fund to assist in program funding short falls. Interfund transfers of $26,015 were made from the Section 8 Moderate Rehabilitation Enterprise Fund to the Housing Choice Vouchers Enterprise Fund to cover prior year funding short falls. Interfund transfers of $176,721 from the Continuum of Care Enterprise Fund to the Housing 22 February 12, 2019 Housing Authority Minutes 48 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Choice Voucher Enterprise Fund were made to reverse all prior transfers, per HUD request. Interfund transfers of $190,749 were made from the Central Office Cost Center Enterprise Fund to the Continuum of Care Enterprise Fund to cover these funding shortfalls. Interfund revenues and expenses of $5,684,550 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, pension plan payments, and OPEB 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. 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 23 February 12, 2019 Housing Authority Minutes 49 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 appropriate proprietary fund. Total liability for the Authority is $393,465 based on year-end hourly rates. Of this amount $305,304 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. 24 February 12, 2019 Housing Authority Minutes 50 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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. 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 accounting principles generally accepted in the United States of America. 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. 25 February 12, 2019 Housing Authority Minutes 51 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 Uniform Guidance. The direct salary allocation plan will be established annually as a part of the annual budget process. 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, prior to January 1, 2017, these entities reported debt issuance costs as an asset amortized over time. During 2017, these entities adopted new accounting guidance required by accounting principles generally accepted in the United State of America and changed its method of accounting for debt issuance costs and related amortization of such costs. The net of these costs are now reported as a direct reduction of notes payable. 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 $21,676 have been netted with long-term debt of the primary government, for the blended component units, while $56,759 have been netted with long-term debt of the component units, for the discretely presented component units. 26 February 12, 2019 Housing Authority Minutes 52 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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, 2017, with a measurement date for employer reporting as of June 30, 2018. T. Postemployment Benefits Other than Pension (OPEB) The Authority provides a defined benefit health care program to its retired employees and their dependents. The Authority has established a trust account to administer the funding of the OPEB plan. The Authority used actuarial valuation reports supplied by OPEB consultants to recognize net OPEB liability, deferred outflows and inflows of resources, and expenses related to the plan in accordance with GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions . The dates of the latest report are (1) valuation date of April 1, 2016, (2) measurement date of June 30, 2017, and (3) fiscal year end of March 31, 2018. U. New Accounting Pronouncements Pronouncements Implemented During the Current Fiscal Year GASB Statement No. 74 Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans - The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. The requirements of this Statement improve financial reporting primarily through enhanced note disclosures and schedules of required supplemental information that were presented by OPEB plans that are administered through trusts that meet the specific criteria. There was no financial impact as a result of the implementation of this Statement. GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions - The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). The primary requirements of this Statement are the recognition of the entire OPEB liability and a more comprehensive measure of OPEB expense. The implementation of this Statement resulted in a restatement, decreasing beginning net position of the primary government by $2,824,938. See also footnote 12 to the basic financial statements. 27 February 12, 2019 Housing Authority Minutes 53 Note 1 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Pronouncements to be Implemented in Subsequent Years In June 2017, the GASB issued Statement No. 87, Leases. The implementation of GASB Statement No. 87 will occur in the next fiscal year. The objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. The statement requires the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provision of the contract. The impact of this pronouncement is not know at this time. Note 2 - CASH AND INVESTMENT Cash and investments as of March 31, 2018 are classified in the accompanying financial statement as follows: Statement of net position: Cash and investments $ 7,564,426 Restricted cash 2,011,894 Total Cash & Investments $ 9,576,320 Demand deposits $ 4,030,479 Investments 4,911,420 Cash held by other agencies 632,471 Cash on hand 1,950 Total Cash & Investments $ 9,576,320 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; 28 February 12, 2019 Housing Authority Minutes 54 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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; 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; 29 February 12, 2019 Housing Authority Minutes 55 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Collateralized bank deposits with a perfected security interest in accordance with the Uniform Commercial Code (UCC) or applicable federal security regulations; 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: Public Housing Program $ 2,127,186 43.31% Housing Choice Voucher Program 1,387,870 28.26% Central Office Cost Center 897,965 18.28% Other State and Local Programs 498,399 10.15% Total investments $ 4,911,420 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 requirements that would limit the exposure to custodial credit risk for deposits, other than the 30 February 12, 2019 Housing Authority Minutes 56 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 3,740,507 Cash held by investment companies 39,972 Deposits held by CHFA 632,471 Total demand deposits and cash held by other agencies $ 4,662,950 31 February 12, 2019 Housing Authority Minutes 57 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) See the table below for information regarding the investments. Investment Disclosure - March 31, 2018 Investment Type Issuer Book Value Fair Value Maturity Rate Government Security LAIF $ 498,175 $ 496,949 N/A Interest on LAIF 1,854 1,854 N/A Certif. Of Deposit Goldman Sachs Bank 100,000 99,023 1/06/2021 295 Certif. Of Deposit Comenity Capital Bank 100,000 99,235 1/19/2021 300 Certif. Of Deposit Comenity Capital Bank 100,000 98,201 2/22/2021 300 Certif. Of Deposit Private Bank & Trust 125,000 120,976 5/26/2021 300 Certif. Of Deposit HSBC Bank USA 100,000 96,751 6/10/2021 197 Certif. Of Deposit Wells Fargo Bank 100,000 96,713 6/17/2021 294 Certif. Of Deposit JP Morgan Chase 100,000 96,078 8/16/2021 300 Certif. Of Deposit Wells Fargo Bank 145,000 139,249 8/17/2021 294 Certif. Of Deposit Sychrony Bank 122,000 116,852 10/21/2021 300 Certif. Of Deposit State Bank of India 115,000 110,149 10/27/2021 150 Certif. Of Deposit Bank of Baroda 150,000 145,575 11/23/2021 150 Certif. Of Deposit Discover Bank 105,000 103,257 1/11/2022 300 Certif. Of Deposit Sychrony Bank 100,000 98,440 2/24/2022 300 Certif. Of Deposit HSBC Bank USA 100,000 98,962 3/21/2022 197 Certif. Of Deposit Everbank 247,000 241,396 4/28/2022 214 Certif. Of Deposit American Express FSB 247,000 241,144 5/03/2022 300 Certif. Of Deposit Capital One Bank 100,000 98,277 5/10/2022 300 Certif. Of Deposit Capital One Bank 110,000 108,105 5/10/2022 300 Certif. Of Deposit Goldman Sachs Bank 149,000 146,914 6/07/2022 300 Certif. Of Deposit Medallion Bank Utah 105,000 102,401 7/05/2022 299 Certif. Of Deposit JP Morgan Chase 110,000 107,534 6/30/2022 300 Certif. Of Deposit Capital One Bank 220,000 214,997 9/20/2012 300 Certif. Of Deposit Barclays Bank - Delaware 247,000 241,334 9/27/2022 300 Certif. Of Deposit Stearns Bank 100,000 97,075 12/01/2022 300 Certif. Of Deposit Discover Bank 140,000 138,275 12/28/2022 300 Certif. Of Deposit Morgan Stanley Bank 150,000 148,773 1/13/2023 300 Certif. Of Deposit Sally Mae Bank 173,000 171,486 2/08/2023 300 Govt Agency Farmer Mac 100,000 98,363 1/07/2021 AAA Govt Agency Federal Home Loan Mtg Corp 510,000 487,188 8/12/2021 AAA Govt Agency Federal Farm Credit Bank 105,000 102,841 2/03/2022 AAA Govt Agency Fannie Mae 150,000 145,827 10/25/2022 300 Total Investments $ 5,025,029 4,910,194 Investments reported above market value 1,226 Total Investments reported $ 4,911,420 The Authority categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The 32 February 12, 2019 Housing Authority Minutes 58 Note 2 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) hierarchy for the Authoritys investments are considered Level 2, except for the LAIF investments which are not subject to fair value hierarchy. The Authority has not executed a General Depository Agreement with either the Local Agency Investment Fund (LAIF) or Cantella Investments (the Authoritys broker for investments other than LAIF). 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 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, 2018, an account was maintained in the name of the Housing Authority of the County of Contra Costa for $498,175. The total cost value of investment in LAIF was $498,175. The total fair value of investments in LAIF was $496,949. The fair value total includes an unrealized loss on investments of $1,226. The unrealized loss was based on a fair value adjustment factor of 0.997538001 that was calculated by the State of California Treasurers Office. The unrealized loss was not recorded by the Authority and is considered immaterial. Of the $498,175 invested in LAIF, $500,029 is recorded as assets of the Authority. The difference includes $1,854 of interest receivable from LAIF as of March 31, 2018, shown by the Authority as investments. LAIF is a part of the State of California Pooled Money Investment Account (PMIA). At March 31, 2018, the fair value of the State of California Pooled Money Investment Account (PMIA), including accrued interest, was $75,021,981,682. The PMIA portfolio had securities in the form of structured notes totaling $825 million and asset-backed securities totaling $1,295,137,000. 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. 33 February 12, 2019 Housing Authority Minutes 59 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (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 $ 310,961 Family Self Sufficiency Program participants escrow funds 193,583 HUD funds restricted in use for HAP payments 866,873 Interest on restricted funds due back to HUD 1,768 Blended component unit - Casa Del Rio: Funds held by CHFA: Replacement reserve 386,782 Operating reserve 231,515 Hazard and earthquake insurance impounds 14,174 Tenant security deposits 6,238 Total restricted cash $ 2,011,894 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, due to HUD, 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 3/31/17 Issued Repaid 3/31/18 Portion Portion CDBG Loan Program $ 322,436 $ - $ - $ 322,436 $ 322,436 $ - Rental Rehab. Program 54,030 - - 54,030 54,030 - Employee computer loans 5,034 9,000 (7,949) 6,085 - 6,085 DeAnza Gardens LP 1,000,000 - - 1,000,000 1,000,000 - 1,381,500 9,000 (7,949) 1,382,551 1,376,466 6,085 Interfund: CDR from mgmt fund 185,000 -- 185,000 185,000 - Totals $ 1,566,500 $ 9,000 $ (7,949) $ 1,567,551 $ 1,561,466 $ 6,085 Interest on these loans is a follows: Balance Interest Interest Balance Long-term Short-term 3/31/17 Accrued Repaid 3/31/18 Portion Portion CDBG Loan Program $ 89,579 $ 9,256 $ - $ 98,835 $ 98,835 $ - Rental Rehab. Program 15,771 1,620 - 17,391 17,391 - DeAnza Gardens LP 480,107 30,000 - 510,107 510,107 - Totals $ 585,457 $ 40,876 $ $ 626,333 $ 626,333 $ - 34 February 12, 2019 Housing Authority Minutes 60 Note 4 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (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. 35 February 12, 2019 Housing Authority Minutes 61 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Note 5 - CAPITAL ASSETS Capital asset activity for the year ending March 31, 2018. March 31, March 31, 2017 Additions Transfers Deletions 2018 Capital assets, not being depreciated: Land $ 1,825,993 $ - $ - $ - $ 1,825,993 Construction in progress 328,030 1,141,843 (619,005)- 850,868 Total 2,154,023 1,141,843 (619,005)- 2,676,861 Capital assets depreciated: Buildings and improvements 98,618,966 100,000 619,005 - 99,337,971 Equipment 2,871,699 302,778 - (167,255) 3,007,222 Total capital assets being depreciated 101,490,665 402,778 619,005 (167,255) 102,345,193 Total capital assets 103,644,688 1,544,621 - (167,255) 105,022,054 Accumulated depreciation: Buildings and improvements (89,254,226) (1,516,367) - - (90,770,593) Equipment (2,486,027) (220,286)- 163,235 (2,543,078) Total accumulated depreciation (91,740,253) (1,736,653)- 163,235 (93,313,671) Total capital assets depreciated, net 9,750,412 (1,333,875) 619,005 (4,020) 9,031,522 Total capital assets, net $ 11,904,435 $ (192,032) $ - $ (4,020) $ 11,708,383 The changes by project are as follows: March 31, March 31, 2017 Additions Transfers Deletions 2018 TOTAL CAPITAL ASSETS: Public Housing $ 91,830,196 $ 1,291,106 $ - $ (100,800) $ 93,020,502 Housing Choice Voucher 4,327,875 137,298 - (52,686) 4,412,487 Section 8 Moderate Rehab 128,077 -- (13,769) 114,308 CDBG/Rental Rehab Loan 3,937 -- - 3,937 Management Fund 75,115 2,636 - - 77,751 Central Office Cost Center 170,999 13,581 - - 184,580 Blended Component Units: Casa Del Rio 7,108,489 100,000 - - 7,208,489 Total capital assets 103,644,688 1,544,621 - (167,255) 105,022,054 36 February 12, 2019 Housing Authority Minutes 62 Note 5 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) March 31, March 31, 2017 Additions Transfers Deletions 2018 DEPRECIATION: Public Housing (85,366,714) (1,334,927) - 100,800 (86,600,841) Housing Choice Voucher (2,010,036) (209,193) - 48,666 (2,170,563) Section 8 Moderate Rehab (128,077) - - 13,769 (114,308) CDBG/Rental Rehab Loan (3,937) - - - (3,937) Management Fund (75,114) (439) - - (75,553) Central Office Cost Center (155,663) (8,658) - - (164,321) Blended Component Units: Casa Del Rio (4,000,712) (183,436)- - (4,184,148) Total depreciation (91,740,253) (1,736,653)- 163,235 (93,313,671) Net $ 11,904,435 $ (192,032) $ - $ (4,020) $ 11,708,383 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 3/31/2017 Issued Payments 3/31/2018 Portion Portion Payable Office building mortgage $ 2,086,349 $ - $ (198,008) $ 1,888,341 $ 207,967 $1,680,374 $ - Blended component units: Casa Del Rio: CHFA 307,736 - (28,844) 278,892 31,174 247,718 - RHCP 2,626,618 -- 2,626,618 - 2,626,618 1,882,677 5,020,703 -(226,852) 4,793,851 239,141 4,554,710 1,882,677 Loan costs (24,820)(21,676)(21,676) Totals $ 4,995,883 $ -$ (226,852) $ 4,772,175 $ 239,141 $4,533,034 $1,882,677 Interfund: Mgmt Fund to CDR $ 185,000 $ -$ - $ 185,000 $ - $ 185,000 $ - Following is a schedule of debt payment requirements to maturity for the mortgages noted above that require payments: Office Building CHFA Year ending Principal Interest Principal Interest Total 2019 $ 207,967 $ 88,252 $ 31,174 $ 20,657 $ 348,050 2020 218,228 77,991 33,697 18,134 348,050 2021 229,404 66,815 36,421 15,410 348,050 2022 240,942 55,277 39,366 12,465 348,050 2023 253,060 43,159 42,548 9,283 348,050 2024-2026 738,740 51,177 95,686 7,976 893,579 $ 1,888,341 $ 382,671 $ 278,892 $ 83,925 $ 2,633,829 37 February 12, 2019 Housing Authority Minutes 63 Note 6 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 $98,211 and loan fees of $2,850 were paid to WestAmerica Bank and expensed during the fiscal year ended March 31, 2018. 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 $22,987 was paid and expensed during the calendar year ended December 31, 2017. 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, 2017. 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 $1,882,677. The entire amount is considered to be long-term and is shown as other noncurrent liabilities. See also Note 9. Costs incurred in order to obtain permanent financing for the Casa Del Rio notes were $94,143 and are amortized on a straight-line basis into interest expense over the term of the loan. Interest expense amortization of permanent loan costs was $3,140 during the current fiscal year. 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, 2018, $92,763 was expensed for payment in lieu of taxes. Approximately 75% is payable as of March 31, 2018 and is shown as Due to Other Agencies. 38 February 12, 2019 Housing Authority Minutes 64 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Note 8 - UNEARNED REVENUE Unearned revenue consists of: Revolving loan funds held for future expenditures $ 186,140 Prepaid rent - Public Housing $ 25,366 Casa Del Rio 3 25,369 Program advance - Family Self Sufficiency 2,985 Prepaid portability payments received from other agencies - Housing Choice Voucher 19,132 $ 233,626 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) 98,835 $ 421,271 Rental Rehabilitation: Notes receivable (See also Note 4) 54,030 Interest on notes receivable (See also Note 4) 17,391 71,421 Housing Choice Voucher Program Insurance reserves 59,131 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) 1,882,677 $ 2,434,500 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)$ 11,708,383 Long term debt (omitting interfund balances) (see Note 6)(4,772,175) Accrued interest on long term debt (see Note 6 & 9)(1,882,677 ) Net investment in capital assets $ 5,053,531 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 39 February 12, 2019 Housing Authority Minutes 65 Note 10 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 $ 866,873 Casa Del Rio Senior Housing - Reserves 632,471 Restricted net position $ 1,499,344 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 balance in the HUD held reserves as of March 31, 2018 was approximately $400,000. The restricted net position associated with the Casa Del Rio Senior Housing represents replacement and operating reserves required by CHFA. These funds are being held by CHFA and are 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, 2018, of $10,299,000. This deficit is the result of the Authoritys compliance with GASB Statement 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement 27 and GASB Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB). The Other State and Local Enterprise Fund holds the deferred outflows of resources, deferred inflows of resources, the net pension liability, and the OPEB liability of the Authoritys plans. These balances change annually as payments are made to the plan and as actuarial information is received regarding the plan. The following detail provides as overview of the Other State and Local Enterprise Fund unrestricted net position: Beginning Ending Balance Net Balance 4/1/2017 Change 3/31/2018 GASB 68 Pension net position $ (8,149,179) $ 636,481 $ (7,512,698) GASB 75 OPEB net position - (5,269,965) (5,269,965) Operations net position 2,422,883 60,780 2,483,663 $ (5,726,296) $ (4,572,704) $ (10,299,000) The Authoritys blended component unit, Casa Del Rio, Inc had a deficit unrestricted net position of $320,172. This is an increase to the deficit of $197,688 over the prior year. 40 February 12, 2019 Housing Authority Minutes 66 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (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. CCCERA is a component unit of the County of Contra Costa. CCCERA follows accounting principles and reporting guidelines set forth by GASB. The financial statements are prepared in accordance with generally accepted accounting principles in the United States of America, under which revenues are recognized when earned and deductions are recorded when the liability is incurred. Contributions are recognized in the period due, investment income is recognized as revenue when earned, retirement benefits and refunds of contributions are recognized when due and payable in accordance with the terms of the Plan. Investments are carried at fair value. There have been no significant changes to the plan. B. Benefits Provided All full-time employees of the Authority participate in this plan. There are currently 77 active plan members and 69 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 41 February 12, 2019 Housing Authority Minutes 67 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 completion of the annual actuarial valuation. Contribution rates for Tier 1 vary based on the employees age at entry into the plan. Members are required to make contributions to CCCERA regardless of the retirement plan or tier in which they are included. The rates and contributions made during the fiscal year ended March 31, 2018 were as follows: Payroll Subject to Employer as a % of Employee as a % of Tier Contribution Contribution Contribution Contribution Contribution Classic (tier 1) $ 3,978,734 $ 1,850,205 46.50% $ 295,546 7.43% PEPRA 1,151,631 478,954 41.59% 81,295 7.06% Total $ 5,130,365 $ 2,329,159 45.40% $ 376,841 7.35% The contributions made by the Authority of $2,329,159, including $186,698 employer subvention of member contributions. As of March 31, 2018, the Authority owed CCCERA $230,696. This liability is short-term, represents March contributions paid in April 2018, and is reported as accrued salaries and related costs in the Statement of Net Position - Proprietary Funds. D. Net Pension Liability The Governmental Accounting Standards 68 Actuarial Valuation Based on December 31, 2017 Measurement Date for Employer Reporting as of June 30, 2018 , provided by CCCERA outlines the net pension liability (NPL) allocated to its member employers as based on the following definition of covered payroll - Only compensation earnable and pensionable would go into the determination of retirement benefits. The NPL was measured as of December 31, 2017 and 2016. The Plans Fiduciary Net Position was valued as of the measurement date while the TPL was determined based upon rolling forward the results of the actuarial valuations as of December 31, 2016 and 2015, respectively. In addition, any changes in actuarial assumptions or plan provisions that occurred between the valuation date and the measurement date have been reflected. 42 February 12, 2019 Housing Authority Minutes 68 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) The components of NPL for CCCERA, as a whole, are as follows: Reporting Date for employer under GASB 68 6/30/2018 6/30/2017 Measurement Date for Employer under GASB 68 12/31/2017 12/31/2016 Total Pension Liability (TPL)$ 9,202,017,660 $ 8,838,974,427 Plans Fiduciary Net Position (8,390,581,049 ) (7,438,519,504) Net Pension Liability (NPL) $ 811,436,611 $ 1,400,454,923 Plans Fiduciary Net Position as a % of TPL 91.18% 84.16% The Plan provisions used in the measurement of the NPL as of December 31, 2017 and 2016 are the same as those used in the CCCERA actuarial valuation as of December 31, 2017 and 2016, respectively. The TPL and the Plans Fiduciary Net Position include liabilities and assets held for the Post Retirement Death Benefit Reserve. The most recent Actuarial Report available from CCCERA had a valuation date of December 31, 2017. The December 31, 2017 CCCERA Actuarial Report reflects the following changes to the Authoritys NPL balances: Reporting Date for employer under GASB 68 6/30/2018 6/30/2017 Measurement Date for Employer under GASB 68 12/31/2017 12/31/2016 NPL as the beginning of the measurement period $ 10,162,604 $ 10,788,391 Pension Expense 1,324,457 1,879,712 Employer Contributions (1)(2,150,337) (2,179,232) New Net Deferred Inflows/Outflows of Resources (3,075,254) (152,748) Change in Allocation of Prior Deferred Inflows/Outflows 82,256 35,313 New Net Deferred Flows Due to Changes in Proportion (2)228,012 92,240 Recognition of Prior Deferred Inflows/Outflows of Resources (306,164) (328,939) Recognition of Prior Deferred Flows Due to Change in Proportion (2)2,030 27,867 NPL as of the end of the measurement period $ 6,267,604 $ 10,162,604 (1) Includes member subvention of employer contributions and excludes employer subvention of member contributions. (2) Includes differences between employer contributions and proportionate share of contributions. The Authoritys proportionate share of CCCERAs NPL was 0.772% as of December 31, 2017 and 0.726% as of December 31, 2016. This is an increase to the Authoritys proportionate share of 0.046%. 43 February 12, 2019 Housing Authority Minutes 69 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Sensitivity of the net pension liability to changes in the discount rate The following presents the net pension liability as of December 31, 2017 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: 1% decrease Current rate 1% increase 6.00% 7.00% 8.00% Housing Authority NPL $ 14,553,821 $ 6,627,604 $ (494,435) CCCERA NPL in total $ 2,062,148,752 $ 811,436,611 $ (209,217,746) Authority NPL as a % of CCCERA 0.706% 0.817% 0.236% 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: 12/31/2017 12/31/2016 Service Cost $ 1,652,657 $ 1,481,084 Interest on total pension liability 4,764,094 4,325,468 Expensed portion of current-period changes in proportion and differences between employers contributions and proportionate share of contributions 63,691 25,837 Expensed portion of current-period difference between expected and actual experience in the TPL (50,675) (31,910) Expensed portion of current-period changes of assumptions or other inputs - - Member contributions (1)(751,091) (648,763) Projected earnings on plan investments (4,015,580) (3,560,149) Expensed portion of current-period differences between actual and projected earnings on plan investments (723,459) (9,707) Administrative expense 71,212 62,010 Other expenses 9,474 (65,230) Recognition of beginning of year deferred outflows of resources as pension expense 789,219 740,646 Recognition of beginning of year deferred inflows of resources as pension expense (483,055) (411,707) Net amortization of deferred amounts from changes in proportion and differences between employers contribution and proportionate share of contributions (2,030) (27,867) Pension expense - measurement date 12/31 $ 1,324,457 $ 1,879,712 (1) Includes employer subvention of members contributions and excludes member subvention of employer contributions 44 February 12, 2019 Housing Authority Minutes 70 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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, 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 and differences between employers contribution and proportionate share of contribution (1)$ 294,415 $ 35,713 Changes in assumptions or other input 189,008 77 Net excess of projected over actual earnings on pension plan investments - 1,615,925 Difference between expected and actual experience in the TPL -617,916 Balances per actuarial report - measurement date 12/31/2017 483,423 2,269,631 Employer contributions made January thru March 2018 541,114 - Balances reported March 31, 2018 $ 1,024,537 $ 2,269,631 (1) Calculated in accordance with Paragraph 54 and 55 of GASB 68 Deferred outflows and inflows of resources, other than the employer contributions noted above are reported in the aggregate as net deferred inflows and will be recognized in future pension expense as follows: Measurement period: 2019 $ (279,059) 2020 (65,797) 2021 (725,440) 2022 (715,912) $ (1,786,208) The amount reported as deferred outflows of resources related to employer contributions made January through March 2018, should have the effect of reducing net pension liability during the next actuarial measurement period. F. Actuarial Assumptions The total pension liability (TPL) as of December 31, 2017, and December 31, 2016 were determined by actuarial valuations as of December 31, 2016 and December 31, 2015, 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 the same as the assumptions used in the CCCERA funding actuarial valuations as of December 31, 2017 and 2016 funding actuarial valuations for CCCERA. The following actuarial assumptions were applied to all periods included in the measurement for both the December 31, 2017 and 2016 actuarial valuations. 45 February 12, 2019 Housing Authority Minutes 71 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Valuation Date 12/31/2017 12/31/2016 Actuarial Cost Method Entry Age Entry Age Amortization Method Level % of Payroll Level % of Payroll Inflation 2.75%2.75% Salary increases - general 4.0% to 13.25% 4.0% to 13.25% Investment rate of return 7.00%7.00% Administrative expenses 1.13%1.12% Cost of living adjustment 2.75%2.75% 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 Headcount Weighted 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 2017 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. This information is 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 Strategies 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% 46 February 12, 2019 Housing Authority Minutes 72 Note 11 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) The discount rate used to measure the TPL was 7% as of both December 31, 2017 and December 31, 2016. The projection of cash flows used to determine the discount rate assumed employer and employee contributions will be made at the 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, 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, 2017 and 2016. Note 12 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSION Plan Description: Contra Costa County Housing Authority (The Authority) administers a single- employer, defined benefit health care plan. Currently, the plan provides postemployment medical and dental insurance benefits to eligible employees, and their dependents, who retire from the Authority and commence receiving their CCCERA pension at the time of retirement. Health benefit provisions for active employees are established and may be amended through negotiations between the Authority and their bargaining unit and employee groups. The Authority does not issue a separate audit report on its post retirement health benefit plan. The Contra Costa County Board of Supervisors appointed the Executive Director of the Authority as the Plan Administrator. As of March 31, 2018, Public Agency Retirement Services is the Trust Administrator. The Contra Costa County Board of Supervisors has the right at any time and for any reason, in its sole discretion, to modify, alter, or amend the Plan in whole or in any part, in any manner and without limit, including reducing or eliminating the payment of any benefits. WestAmerica Bank (Trustee) shall, upon written direction of the Plan Administrator, make distributions from the assets of the Trust to the insurers, third party administrators, health care and welfare providers or other entities providing Plan benefits or services, or to the employer for reimbursement of Plan benefits ad expenses paid by the employer. Benefits: The Authority has contracted with Kaiser Permanente, Anthem, United Healthcare, Blue Shield, and the California Public Employees Retirement System (CalPERS) to provide medical benefits and Delta Dental for dental benefits. 47 February 12, 2019 Housing Authority Minutes 73 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) The Authority contributes the cost of retiree medical and dependent medical and dental coverage up to specified limits. The maximum monthly contributions are: Coverage Level Maximum Monthly Contribution Retiree $345 Retiree +1 $679 Retiree +2 $980 These caps are not expected to increase in the future. At the retirees death a surviving spouse may elect to continue coverage. However, they must contribute 100% of the required contribution. The retiree dental plan is the same as the plan provided to active employees. Monthly dental only premiums are: Coverage Level Dental Only Premium Retiree $ 63.72 Retiree +1 $110.81 Retiree +2 $186.36 Eligibility: Eligibility for retiree medical and dental benefits generally require an employee to (1) be age 50 or older with at least 10 years of service with the Authority, (2) be age 55 or older with at least 5 years of service with the Authority, or (3) have completed 30 or more years of service with the Authority. Demographic Data for the fiscal year ended June 30, 2017: Retirees and beneficiaries receiving benefits 64 Active plan members 81 Total 145 Contributions: The contribution requirements of program members and the Authority are determined by negotiations between the Authority and the respective unions and employee groups. There is currently no requirement for employees to contribute to the plan. In 2016, The Authority established a trust account with the Public Agency Retirement Services (PARS) to administer the funding of the projected benefits of the OPEB plan. Monthly, the Authority makes healthcare premium payments for its current retirees to the benefit providers. The retiree contributes any necessary amount of the premium cost that exceeds the specific established plan limits. The Authority 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. 48 February 12, 2019 Housing Authority Minutes 74 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) The contributions made for the fiscal year ended June 30, 2017 was as follows: Contribution made to PARS $ 95,183 Payments to CalPERS for retiree premiums 275,316 Payments to CalPERS for implicit subsidy of retirees 87,824 Total employer contributions $ 458,323 Investments: The Plans policy in regard to the allocation of invested assets is established and may be amended by the Plan Administrator. Plan assets are managed on a total return basis with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the Plan. The following was the adopted asset allocation policy as of June 30, 2017: Long-Term Expected Investment Class Target allocation Real Rate of Return (1) Equity 73%5.66% Fixed Income 20%1.46% REITs 2% 5.06% Cash 5% 0.00% (1) JPMorgan arithmetic Long Term Capital Market assumptions and expected inflation of 2.26% OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources related to OPEB: Annual OPEB Expense and Net OPEB Liability - At June 30, 2017, the Authority reported $5,726,101 for the net OPEB liability. The net OPEB liability was measured as of June 30, 2017, and the total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of April 1, 2016. The actuarial report presents liabilities as of the measurement date of June 30, 2017 that are based on an interim valuation. When an interim valuation is performed, both the census data and the assumptions and methods do not need to be updated; while the assets, plan provision changes materially impacting the results, and the discount rate are updated. The Authoritys net OPEB liability was based on a projection of the Authoritys covered payroll of $5,182,762. Plan Fiduciary Net Position (plan assets) was valued as of the measurement date while the total OPEB liability was determined based upon rolling forward the total OPEB liability from actuarial valuations as of April 1, 2016. As of June 30, 2017, the Plan Fiduciary Net Position was $202,266. For the year ended March 31, 2018, the Authority recognized OPEB expense of $590,638. OPEB expense represents the change in the net OPEB liability during the measurement period, adjusted 49 February 12, 2019 Housing Authority Minutes 75 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) for service cost, interest on the total OPEB liability, and expected investment return, net of investment expense, as follows: Components of OPEB Expense Service Cost $ 183,043 Interest on the total OPEB liability 422,711 Recognized differences between expected and actual experience (3,015) Projected earnings on OPEB plan investments (11,513) Plan investments (938) Administrative expenses 350 Aggregate OPEB expense $ 590,638 The components of the net OPEB liability as of June 30, 2017, were as follows: 6/30/2017 Total OPEB Liability Service Cost $ 183,043 Interest 422,711 Differences between expected and actual experience (11,577) Benefits payments (363,140) Net change in total OPEB liability 231,037 Total OPEB liability - beginning (a) 5,715,330 Total OPEB liability - ending (b)$ 5,946,367 Plan Fiduciary Net Position Contributions - employer $ 458,323 Net investment income 16,201 Benefit payments (363,140) Administrative expenses (350) Net change in plan fiduciary net position 111,034 Plan fiduciary net position - beginning (c) 109,232 Plan fiduciary net position - ending (d)$ 220,266 Net OPEB Liability - beginning (a) - (c)$ 5,606,098 Net OPEB Liability - ending (b) - (d)$ 5,726,101 The Authority implemented GASB Statement No. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, during the current fiscal year. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense. To comply with this Statement and recognize the full amount of the Total OPEB Liability, the Authority reported a prior period adjustment of $2,824,938. Please note that this amount differs from the total prior period adjustment by $1,768, 50 February 12, 2019 Housing Authority Minutes 76 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) which represents an adjustment to recognize interest earned on restricted funds in prior years and required by HUD to be returned (see also Note 3). At March 31, 2018, the Authority reported deferred inflows of resources and deferred outflows of resources related to OPEB for the following resources: Deferred Deferred Outflows Inflows Differences between expected and actual experience in the measurement of TOL $ $ 8,562 Changes in assumptions - Net differences between projected and actual earnings of OPEB plan investments -3,750 Balances per actuarial report - measurement date 6/30/2017 - 12,312 Employer contributions made July 2017 thru March 2018 468,447 - Balances reported March 31, 2018 $ 468,447 $ 12,312 Deferred outflows and inflows of resources, other than the employer contributions noted above, will be recognized in future pension expense as follows: Measurement period: 2019 $ (3,953) 2020 (3,953) 2021 (3,470) 2022 (936) $ (12,312) The amount reported as deferred outflows of resources related to employer contributions made January through March 2018, should have the effect of reducing net pension liability during the next actuarial measurement period. 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 total OPEB liability was determined by an actuarial valuation as of April 1, 2016, with a valuation date of June 30, 2017. The Entry Age Normal actuarial cost method was used, a method under which the actuarial present value of the projected benefits of each individual included in the valuation is allocated on a level basis over the earnings or service of the individual between 51 February 12, 2019 Housing Authority Minutes 77 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) entry age and assumed exit ages. The portion of this Actuarial Present Value allocated to a valuation year is called the normal cost. The methodology used for amortization was straight-line. For assumption changes and experience gains/losses, it was assumed Average Future Working Lifetime, averages over all activities and retirees (retirees are assumed to have no future working years). Asset gains and losses are assumed 5 years. Assets are valued at the market value of assets as of the measurement date. The Authority intends to contribute the ADC to the PARS trust each year. In addition pay-as-you-go benefit payments will be paid outside of the trust. The Authority used the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Inflation 2.00% annually Payroll increases 3.25% annually Net investment return 7.39% based on PARS capital appreciation investment policy Discount rate 7.39% based on PARS capital appreciation investment policy Health care trend Year Increase in premium rates Beginning Pre 65 Post 65 2017 7.75% 5.25% 2018 7.50% 5.00% 2019 7.25% 5.00% 2020 7.00% 5.00% 2021 6.75% 5.00% 2022 6.50% 5.00% 2023 6.25% 5.00% 2024 6.00% 5.00% 2025 5.75% 5.00% 2026 5.50% 5.00% 2027 5.25% 5.00% 2028 and later 5.00% 5.00% Baseline cost Pre-Medicare $9,136 per year Post-Medicare $3,638 per year Administrative expenses Assumed no fees other than those included in premium rates. Health plan participation 90% of active employees who are currently enrolled in medical and dental coverage and retire from the Authority will elect to participate in the retiree medical and dental program. Furthermore 70% of active employees who are currently only enroled in dental coverage and retire from the Authority will elect to participate in the retiree medical and dental program. Medicare Coverage The assumption is that all future retirees will be eligible for Medicare when they reach age 65. Morbidity Factors CalPERS 2013 study Population for Curving CalPERS 2013 study 52 February 12, 2019 Housing Authority Minutes 78 Note 12 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Age weighted claim costs Age Cost 50 $ 9,380 55 $11,567 60 $13,483 65 $ 2,880 70 $ 3,341 75 $ 3,815 80 $ 4,177 85 $ 4,258 Mortality The mortality rates used are those used in the most recent CalPERS valuations, projected forward with CalPERS 2014 MP-2014 generational projections. Pre-retirement - CalPERS 2014 mortality pre-retirement, projected forward with CalPERS 2014 MP-2014 generational projections. Post-retirement - CalPERS 2014 mortality post-retirement, projected forward with CalPERS 2014 MP-2014 generational projections. Disability Because of the anticipated low incidence of disability retirements disability was not valued. Percent Married Assumption was that 80% of male retirees and 55% of female retirees were married. Retirement 2010 CCCERA experience study. Withdrawal 2010 CCCERA experience study. There have been no assumptions changes since the last measurement date. Discount Rate: The discount rate of 7.39%, is based on a blend of the long-term expected rate of return on assets for benefits covered by plan assets and a yield or index of 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or better for benefits not covered by plan assets. The following presents the Authoritys NOL if it were calculated using a discount rate 1% higher and 1% lower than the current rate: 1% decrease Current rate 1% increase 6.39% 7.39% 8.39% Authority NOL $ 6,335,045 $ 5,726,101 $ 5,208,428 Trend Rate: The following presents the Authoritys NOL if it were calculated using a trend table that is 1% point higher and 1% point lower than the current rate: 1% decrease Current 1% increase in trend rate Trend Rate in trend rate Authority NOL $ 5,150,291 $ 5,726,101 $ 6,152,578 53 February 12, 2019 Housing Authority Minutes 79 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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. A total of $3,692,741 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. 54 February 12, 2019 Housing Authority Minutes 80 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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). 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, 2017, 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, 2017, which differs from that of the Authoritys fiscal year end of March 31, 2018. 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, 2017, are as follows: STATEMENT OF NET POSITION Current assets $ 83,699 Restricted assets 638,709 Property and equipment 3,024,341 Other non-current assets 185,000 Total assets $ 3,931,749 55 February 12, 2019 Housing Authority Minutes 81 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) STATEMENT OF NET POSITION (continued) Current liabilities $ 46,366 Payable from restricted assets 44,347 Long term liabilities 5,270,905 Total liabilities 5,361,618 Net investment in capital assets (1,742,170) Restricted net position 632,471 Unrestricted net position (320,170) Total net position (1,429,869) Total liabilities and net position $ 3,931,749 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Rental revenue $ 523,684 Interest and other revenue 7,664 Total revenue 531,348 Administrative expenses 186,960 Utility expenses 84,298 Maintenance expenses 200,443 General expenses 64,263 Depreciation 183,436 Total expenses 719,400 Operating income (loss)(188,052) Debt service interest (104,914) Change in net position (292,966) Net position at the beginning of the year - 1/1/2017 (1,136,903) Net position at the end of the year - 12/31/2017 $ (1,429,869) STATEMENT OF CASH FLOWS Net cash provided (used) by: Operating activities $ 28,178 Noncapital financing activities 62,696 Capital financing activities (151,827) Investing activities 3,080 Net change in cash (57,873) Cash at the beginning of the year - 1/1/2017 727,454 Cash at the end of the year - 12/31/2017 $ 669,581 56 February 12, 2019 Housing Authority Minutes 82 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Interfund accounting issues: Operating advances made by the Authority were $542,269 as of March 31, 2018. The interfund balance as of December 31, 2017 was $535,568 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, 2018, shows $535,568 as both a noncurrent asset and as a noncurrent liability. The difference of $6,701, due to the timing differences of the fiscal year ends, is shown as other noncurrent assets. During the fiscal year ended December 31, 2017, CDR Associates paid management fees to the Authority in the amount of $52,452. Some of the Casa Del Rio Senior Housing tenants (3 as of December 31, 2017) are also participants in the Authoritys Housing Choice Voucher or Continuum of Care Programs. The rent for these tenants is subsidized by HUD through the Authority. During the twelve months ended March 31, 2018, the Authoritys Housing Choice Voucher and Continuum of Care Programs paid a total of $19,891 in HAP payments to CDR Associates. Intrafund accounting issues: The intrafund amounts which have been eliminated as of March 31, 2018, from the Casa Del Rio Blended Component Unit Enterprise Fund for inclusion into the Fund Financial Statements include: $136,330 receivable/payable between CDR Inc and CDR Associates $1,765,980 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. $13,912 interest 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 $1,429,869, including a deficit unrestricted net position of $320,170. This deficit is an increase over the prior years deficit balance in total net position of $1,136,903. 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 57 February 12, 2019 Housing Authority Minutes 83 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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, 2017, 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, 2017, which differs from that of the Authoritys fiscal year end of March 31, 2018. 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 3/31/2018 12/31/2017 Due to the Authority: Short-term for operations $ 2,761 $- Long-term: Interest on note $ 510,107 $ 502,607 Land lease 1,068,000 1,050,000 Long-term for operations 544,422 605,958 $ 2,122,529 $ 2,158,565 Due to Boston Capital - long-term $ 16,284 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, 2005, 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, 2017. No interest has been paid to the Authority. The Authoritys Housing Choice Voucher Enterprise Fund reported $510,107 due from related parties and revenue of $30,000. See Note 4. 58 February 12, 2019 Housing Authority Minutes 84 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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 $1,068,000 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, 2017, 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, 2018. Some of the DeAnza Gardens tenants (7 as of December 2017) are also clients of the Authoritys Housing Choice Voucher or Continuum of Care Programs. The rent for these tenants is subsidized by HUD through the Authority. During the twelve months ended March 31, 2018, the Authoritys Housing Choice Voucher Program paid $100,170 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. $986,280 of interest on the long-term note held by DeAnza Corp from DeAnza L.P. $402,730 receivable recognized by DeAnza Corp from DeAnza L.P. $747 deficit investment in partnership reported by DeAnza Corp is offset by net position in DeAnza L.P. $67,205 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. Cash and investments: Unrestricted Restricted Demand deposits (FDIC insured up to $250,000)$ 358,901 $ 47,232 Investments - 969,383 Held by mortgagor - 546,734 Cash on hand 500 - $ 359,401 $ 1,563,349 The demand deposits are with WestAmerica bank. The total on deposit did not exceed the amount covered by FDIC as of December 31, 2017. FDIC coverage is $250,000 for 2017. Cash and 59 February 12, 2019 Housing Authority Minutes 85 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) investments of $969,383 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 $1,516,117. Cash has also been restricted for security deposits in the amount of $47,232. The excess of the security deposit liability of $170,137, 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: 12/31/2017 12/31/2016 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 532,556 532,556 35,425,987 35,425,987 Less accumulated depreciation (13,722,172) (12,701,623) $ 21,703,815 $ 22,724,364 Capital assets 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. 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 12/31/2016 Payments 12/31/2017 Portion Portion Payable $ 8,345,478 $ (231,346) $ 8,114,132 $ 247,085 $ 7,867,047 $ 44,628 Loan costs (56,759)(56,759) Balances 12/31/2017 $ 8,057,373 $ 7,810,288 Interest expense for the fiscal year ended December 31, 2017 $ 542,614 60 February 12, 2019 Housing Authority Minutes 86 Note 14 (continued) HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) Costs incurred in order to obtain permanent financing for the De Anza notes were $391,461 and are amortized on a straight-line basis into interest expense over the term of the loan. Interest expense amortization of permanent loan costs was $11,352 during the current fiscal year. 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, 2017. The majority of the entitys assets are either invested in capital assets or restricted, leaving the unrestricted net position in deficit by $3,002,732. This deficit is an increase over the prior years deficit in unrestricted net position of $2,994,594. 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 5, 2018, 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 6.5%. 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. 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. D. Audit by Funding Agency During 2018, the Office of Housing Voucher Program, Quality Assurance Division staff conducted an on-site Financial Management Review. The final version of the report has not yet been issued. It is the Authoritys opinion that any matters of discussion will not have a material effect, if any, on the financial position of the Authority. 61 February 12, 2019 Housing Authority Minutes 87 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE BASIC FINANCIAL STATEMENTS MARCH 31, 2018 (Continued) 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, 2017, there were thirty-two 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 is as follows: December 31, 2017 December 31, 2016 Total assets $ 27,349,298 $ 26,789,732 Total liabilities (15,055,537) (15,021,154) Net position $ 12,293,761 $ 11,768,578 Total revenues $ 6,348,609 $ 5,351,150 Total expenses (5,823,426)(3,288,286) Net change in net position $ 525,183 $ 2,062,864 CHWCA had no long-term debt outstanding at December 31, 2017. 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, 2017 were $246,025. CHWCA issues a separate annual financial report, which may be obtained by contacting Bickmore Risk Services, 6371 Auburn Blvd, #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 $50,000 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 $167,600 for the policy year beginning June 1, 2017. 62 February 12, 2019 Housing Authority Minutes 88 REQUIRED SUPPLEMENTARY INFORMATION 63 February 12, 2019 Housing Authority Minutes 89 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA REQUIRED SUPPLEMENTARY INFORMATION AS OF MARCH 31, 2018 Schedule of Proportionate Share of the Net Pension Liability (NPL) for CCCERA Reporting Date Proportion Proportionate Covered NPL as a % for Employer of the Share of the Employee of covered Funded Under GASB 68 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% 6/30/2017 0.726% $ 10,162,604 $ 5,215,890 194.84% 82.73% 6/30/2018 0.772% $ 6,267,604 $ 5,183,762 120.91% 89.72% This schedule is required to present ten years of information. The information above is presented for the years currently available. A full ten-year trend will be built as the information becomes available in the future. Schedule of Employer Contributions to CCCERA Contribution in Contributions Measurement Relation to the as a Date Actuarially Actuarially Contribution Covered Percentage Year Ended Determined Determined Deficiency Employee of Covered December 31 Contributions Contributions (Excess) Payroll Payroll 2015 $ 2,329,742 $ 2,329,742 $ 0 $ 4,841,907 48.12% 2016 $ 2,179,232 $ 2,179,232 $ 0 $ 5,215,890 41.78% 2017 $ 2,150,337 $ 2,150,337 $ 0 $ 5,183,762 41.48% Contributions exclude employer subvention of member contributions. Prior to the December 31, 2016 measurement date the contributions included employer subvention of member contributions. This schedule is required to present ten years of information. The information above is presented for the years currently available. A full ten-year trend will be built as the information becomes available in the future. The actuarial methods and assumptions used to determine the actuarially determined contributions (ADC) for CCCERA were as follows: Valuation date Actuarially determined contribution rates are calculated as of December 31, two and a half years prior to the end of the fiscal year in which the contributions are reported. Actuarial cost method Entry Age Actuarial Cost Method Amortization method Level Percentage of Payroll Remaining amort period Remaining balance of 12/31/07 UAAL is amortized over a fixed period with 6 years remaining as of 12/31/16. Any changes in UAAL after 12/31/07, will be separately amortized over a fixed 18-year period effective with that valuation. Asset valuation method Market value of assets less unamortized returns in each of the last 9 semi-annual periods. Investment rate of return 7.00% net of pension plan investment expenses, including inflation. Inflation rate 2.75% Administrative expenses 1.13% of payroll allocated to both the employer and member based on the components of normal cost rates for the employer and member. Real salary increase 0.5% Projected salary increases 4.00% to 13.25% Cost of living adjustment 2.75% Other Same as those used in the 12/31/17 funding actuarial valuation. 64 February 12, 2019 Housing Authority Minutes 90 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA REQUIRED SUPPLEMENTARY INFORMATION AS OF MARCH 31, 2018 (Continued) Schedule of Changes in the Net OPEB Liability and Related Ratios Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Balance as of June 30, 2016 $ 5,715,330 $ 109,232 $ 5,606,098 Service cost 183,043 - 183,043 Interest 422,711 - 422,711 Difference between expected and actual experience (11,577)- (11,577) Benefit payments, including refunds (363,140) (363,140)- Contributions - employer - 458,323 (458,323) Net investment income - 16,201 (16,201) Administrative expenses - (350)350 Balance as of June 30, 2017 $ 5,946,367 $ 220,266 $ 5,726,101 Plan fiduciary net position as a % of total OPEB liability 3.70% Covered Payroll Not available Net OPEB liability as a % of covered payroll Not available Schedule of Employer Contributions to OPEB Contribution in Contributions Measurement Relation to the as a Date Actuarially Actuarially Contribution Covered Percentage Year Ended Determined Determined Deficiency Employee of Covered June 30 Contributions Contributions (Excess) Payroll Payroll 2017 $ 547,470 $ 458,323 $ 89,147 not available not available This schedule is required to present ten years of information. The information above is presented for the years currently available. A full ten-year trend will be built as the information becomes available in the future. The actuarial methods and assumptions used to determine the actuarially determined contributions (ADC) for OPEB were as follows: Valuation date April 1, 2016 Measurement date June 30, 2017 Actuarial cost method Entry Age Normal Amortization method Straight-line Amortization Asset valuation method Market value of assets as of the measurement date. Funding Policy The Authority intends to contribute the ADC to PARS trust each year. In addition, pay- go benefit payments (explicit and implicit) will be paid outside of the trust. Discount Rate 7.39% Net Investment Return 7.39% Inflation rate 2.00% Payroll Increases 3.25% 65 February 12, 2019 Housing Authority Minutes 91 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION MARCH 31, 2018 The Proportionate Share of Net Pension Liability presents the Authoritys portion of CCCERAs NPL as a dollar value as well as a percentage. The funded ratio represents the Authoritys proportionate share of the Plans Fiduciary Net Position as a percentage of the Authoritys proportionate share of the Total Pension Liability. GASB 68 requires this schedule to include ten-year trend analysis. The trend analysis is intended to aid the reader in determining the financial health of the pension plan. The schedule contains all currently known information and will be built prospectively as the information becomes available, until the ten year requirement has been met. This schedule was provided by CCCERA in its GAS 68 Actuarial Valuation Based on December 31, 2017 Measurement Date for Employer Reporting as of June 30, 2018". The Schedule of Employer Contributions to CCCERA presents information regarding the Authoritys required contributions to CCERA, the amounts actually contributed, and any excess or deficiency to the contributions required. This schedule reports only employer required contributions. The amounts noted are based on the Plans calendar year and not on the Authoritys fiscal year end of March 31. See also Footnote 11 to the Basic Financial Statements for the contributions, both employer and employee, for the current fiscal year. GASB 68 requires this schedule to include ten-year trend analysis. The trend analysis is intended to aid the reader in determining the financial health of the pension plan. The schedule contains all currently known information and will be built prospectively as the information becomes available, until the ten year requirement has been met. The information for this schedule was obtained from information contained in CCCERAs GAS 68 Actuarial Valuation Based on December 31, 2017 Measurement Date for Employer Reporting as of June 30, 2018". The Schedule of Employer Contributions to OPEB presents information regarding the Authoritys required contributions to their OPEB plan, the amounts actually contributed, and any excess or deficiency to the contributions required. This schedule reports only employer required contributions. The amounts noted are based on the Plans calendar year and not on the Authoritys fiscal year end of March 31. See also Footnote 12 to the Basic Financial Statements for the contributions, both employer and employee, for the current fiscal year. GASB 75 requires this schedule to include ten-year trend analysis. The trend analysis is intended to aid the reader in determining the financial health of the pension plan. The schedule contains all currently known information and will be built prospectively as the information becomes available, until the ten year requirement has been met. The information for this schedule was obtained from information contained in Housing Authority of Contra Costa Authority OPEB Plan, with a measurement date of June 30, 2017. There have been no changes in benefit terms since the previous valuation for either CCCERA or the Authoritys OPEB. There have been no changes in assumptions from CCCERAs prior year valuation, except for administrative expenses which increased from 1.12% to 1.13% of payroll. 66 February 12, 2019 Housing Authority Minutes 92 SUPPLEMENTARY INFORMATION 67 February 12, 2019 Housing Authority Minutes 93 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED MARCH 31, 2018 Passed CFDA Through to Federal Federal Grantor Number Subrecipients Expenditures Department of Housing and Urban Development (HUD): Direct Programs: Continuum of Care Program 14.267 $ 404,232 $ 5,585,045 Public and Indian Housing 14.850 5,388,086 Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation 14.856 95,027 Housing Choice Voucher Program 14.871 108,878,351 Public Housing - Capital Fund Program 14.872 2,406,233 Family Self Sufficiency Program 14.896 135,204 Subtotal federal expenditures, Dept of HUD 404,232 122,487,946 Total expenditures of federal awards $ 404,232 $122,487,946 The accompanying Independent Auditors Report and notes are an integral part of this schedule. 68 February 12, 2019 Housing Authority Minutes 94 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED MARCH 31, 2018 1.BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal award activity of the Housing Authority of the County of Contra Costa, California, under programs of the federal government for the year ended March 31, 2018. The information in this schedule is presented in accordance with the 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). Because the Schedule presents only a select portion of the operations of the Authority it is not intended to and does not present the financial position, changes in net position, or cash flows of the Authority. 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures on the schedule are reported on the accrual basis of accounting. Such expenditures are recognize following the cost principles in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Continuum of 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, 2018. 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. 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 $ 103,920,005 $ 6,803,898 $ 110,723,903 Adjustments: Depreciation - (209,192) (209,192) HAP reimbursed by other housing authorities (2,017,366)- (2,017,366) Transfer to FSS program - 49,721 49,721 Capital additions - 133,277 133,277 Debt retired - 198,008 198,008 Total Expenditures $101,902,639 $6,975,712 $ 108,878,351 Federal grants earned $ 102,665,616 $ 6,481,765 $ 109,147,381 Prior funding available for expenditure - 3,908,751 3,908,751 Federal awards available for expenditure $ 102,665,616 $ 10,390,516 $ 113,056,132 Expenditures of Federal awards $101,902,639 $6,878,351 $108,878,351 69 February 12, 2019 Housing Authority Minutes 95 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED MARCH 31, 2018 (Continued) 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 - expenditures reported agree with the HUD grants earned for the year. 3.INDIRECT COST RATE The Authority has elected not to use the 10% de minimus indirect cost rate allowed under the Uniform Guidance. 70 February 12, 2019 Housing Authority Minutes 96 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA FINANCIAL DATA SCHEDULE (CA011) BALANCE SHEET SUMMARY AS OF MARCH 31, 2018 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 $156,812 $17,153 $136,253 $1,997,743 $359,401 $870,949 $1,516,117 $310,962 $47,232 $467,774 $17,153 $136,253 $2,868,692 $1,922,750 $381,646 $316,212 $15,957 $225,252 $17,563 -$103,673 -$1,876 $0 $0 $0 $6,842 $3,284 $4,035 $444,633 $0 $0 $384,930 $35,679 $2,127,187 $1,196,595 $191,275 $209,623 $2,786 $20,127 $3,249,217 $17,153 $136,253 $4,644,278 $1,978,556 $1,026,405 $330,791 $1,150,712 $89,534,216 $3,168,053 $29,714,010 $1,609,012 $913,643 $532,557 -$86,600,841 -$2,170,563 -$13,722,172 $850,868 $4,028,709 $6,419,660 $0 $0 $2,241,924 $21,703,816 $322,436 $1,000,000 $1,133,605 $98,835 $510,107 $7,553,265 $0 $421,271 $3,752,031 $21,703,816 $10,802,482 $17,153 $557,524 $8,396,309 $23,682,372 114 Cash - Tenant Security Deposits 115 Cash - Restricted for Payment of Current Liabilities 112 Cash - Restricted - Modernization and Development 113 Cash - Other Restricted 111 Cash - Unrestricted 124 Accounts Receivable - Other Government 125 Accounts Receivable - Miscellaneous 121 Accounts Receivable - PHA Projects 122 Accounts Receivable - HUD Other Projects 100 Total Cash 128 Fraud Recovery 128.1 Allowance for Doubtful Accounts - Fraud 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 135 Investments - Restricted for Payment of Current Liability 131 Investments - Unrestricted 129 Accrued Interest Receivable 120 Total Receivables, Net of Allowances for Doubtful Accounts 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 71 February 12, 2019 Housing Authority Minutes 97 Blended Component Unit - Casa Del Rio Rental Rehab Program Other State & Local Programs Continuum of Care Program Section 8 Moderate Rehabilitation Central Office Cost Center Subtotal Eliminations Total 14.267 14.856 $30,871 $185,598 $155,254 $131,222 $33,373 $3,203,680 $3,203,680 $0 $632,471 $0 $3,019,537 $3,019,537 $6,238 $0 $364,432 $364,432 $0 $669,580 $185,598 $155,254 $131,222 $33,373 $0 $6,587,649 $0 $6,587,649 $0 $381,646 $381,646 $166,579 $0 $482,791 $482,791 $0 $2,761 $0 $18,718 $18,718 $14,881 $0 $257,696 $257,696 -$6,162 $0 -$111,711 -$111,711 $0 $0 $0 $0 $0 $0 $0 $6,085 $0 $6,085 $6,085 $0 $0 $1,117 $6,792 $0 $1,335 $23,405 $23,405 $8,719 $1,117 $15,638 $166,579 $0 $1,335 $1,058,630 $0 $1,058,630 $498,399 $0 $897,964 $4,720,145 $4,720,145 $0 $191,275 $191,275 $0 $44,108 $19 $0 $37,916 $314,579 $314,579 $0 $1,155,044 $0 $1,155,044 -$1,155,044 $0 $722,407 $186,715 $1,824,354 $297,801 $33,373 $937,215 $14,027,322 -$1,155,044 $12,872,278 $468,797 $0 $2,976,705 $2,976,705 $6,561,287 $74,415 $0 $129,051,981 $129,051,981 $178,405 $3,937 $3,336 $114,308 $184,580 $3,539,778 $3,539,778 -$4,184,148 -$3,937 -$75,553 -$114,308 -$164,321 -$107,035,843 -$107,035,843 $0 $850,868 $850,868 $0 $4,028,709 $4,028,709 $3,024,341 $0 $2,198 $0 $0 $20,259 $33,412,198 $0 $33,412,198 $185,000 $54,030 $0 $1,561,466 -$185,000 $1,376,466 $0 $17,391 $1,086,691 $0 $2,846,629 -$535,569 $2,311,060 $3,209,341 $71,421 $1,088,889 $0 $0 $20,259 $37,820,293 -$720,569 $37,099,724 $1,009,562 $0 $1,009,562 $1,009,562 $3,931,748 $258,136 $3,922,805 $297,801 $33,373 $957,474 $52,857,177 -$1,875,613 $50,981,564 The accompanying Independent Auditors' Report and Notes are an integral part of this schedule. 72 February 12, 2019 Housing Authority Minutes 98 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA FINANCIAL DATA SCHEDULE (CA011) BALANCE SHEET SUMMARY AS OF MARCH 31, 2018 (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 $382,988 $260,269 $108,037 $103,180 $14,168 $90,446 $44,628 $0 $1,768 $69,573 $136,253 $310,962 $170,137 $25,365 $2,985 $19,132 $12,147 $207,967 $247,085 $179,273 $20,759 $1,007,130 $2,078,471 $17,153 $136,253 $600,341 $582,034 $1,680,374 $7,810,288 $1,000,000 $252,713 $2,174,849 $31,258 $40,792 $421,271 $31,258 $0 $421,271 $1,973,879 $10,985,137 $2,109,729 $17,153 $557,524 $2,574,220 $11,567,171 $6,419,660 $353,583 $13,601,815 $866,873 $1,516,117 $2,273,093 $0 $0 $4,601,633 -$3,002,731 $8,692,753 $0 $0 $5,822,089 $12,115,201 $10,802,482 $17,153 $557,524 $8,396,309 $23,682,372 312 Accounts Payable <= 90 Days 325 Accrued Interest Payable 331 Accounts Payable - HUD PHA Programs 322 Accrued Compensated Absences - Current Portion 321 Accrued Wage/Payroll Taxes Payable 343 Current Portion of Long-term Debt - Capital Projects 344 Current Portion of Long-term Debt - Operating Borrowings 341 Tenant Security Deposits 342 Unearned Revenue 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 Long-term 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 and Equity - Net 512.4 Unrestricted Net Position 513 Total Equity - Net Assets / Position 511.4 Restricted Net Position 73 February 12, 2019 Housing Authority Minutes 99 Blended Component Unit - Casa Del Rio Rental Rehab Program Other State & Local Programs Continuum of Care Program Section 8 Moderate Rehabilitation Central Office Cost Center Subtotal Eliminations Total 14.267 14.856 $15,190 $7,879 $7,338 $0 $33,554 $815,255 $815,255 $234,221 $0 $234,221 $234,221 $202 $628 $12 $96,671 $305,307 $305,307 $0 $44,628 $44,628 $33,361 $35,129 $35,129 $141,872 $0 $347,698 $347,698 $44,347 $0 $525,446 $525,446 $3 $186,140 $0 $245,772 $245,772 $31,174 $0 $486,226 $486,226 $0 $0 $19 $0 $200,051 $200,051 $147,914 $0 $1,155,044 -$1,155,044 $0 $0 $90,714 $186,140 $242,321 $297,752 $33,373 $130,225 $4,394,777 -$1,155,044 $3,239,733 $2,852,660 $0 $12,343,322 $12,343,322 $185,000 $0 $1,185,000 -$185,000 $1,000,000 $2,418,245 $0 $4,845,807 -$535,569 $4,310,238 $61 $49 $0 $16,000 $88,160 $88,160 $71,422 $0 $492,693 $492,693 $11,993,705 $0 $11,993,705 $11,993,705 $5,270,905 $71,422 $12,178,766 $49 $0 $16,000 $30,948,687 -$720,569 $30,228,118 $5,361,619 $257,562 $12,421,087 $297,801 $33,373 $146,225 $35,343,464 -$1,875,613 $33,467,851 $1,798,520 $0 $1,798,520 $1,798,520 -$1,742,170 $2,198 $0 $0 $20,259 $18,655,345 $18,655,345 $632,471 $0 $0 $3,015,461 $3,015,461 -$320,172 $574 -$10,299,000 $0 $0 $790,990 -$5,955,613 -$5,955,613 -$1,429,871 $574 -$10,296,802 $0 $0 $811,249 $15,715,193 $0 $15,715,193 $3,931,748 $258,136 $3,922,805 $297,801 $33,373 $957,474 $52,857,177 -$1,875,613 $50,981,564 The accompanying Independent Auditors' Report and Notes are an integral part of this schedule. 74 February 12, 2019 Housing Authority Minutes 100 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA FINANCIAL DATA SCHEDULE (CA011) REVENUE AND EXPENSE SUMMARY FOR THE YEAR ENDED MARCH 31, 2018 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 $4,112,600 $2,098,117 $52,718 $4,165,318 $0 $0 $0 $2,098,117 $6,515,618 $135,204 $109,147,382 $1,278,700 -$26,144 $47,180 $7,854 $68,095 $92,226 $2,164,269 $118,985 -$4,020 $0 $12,025,718 $135,204 $0 $111,422,906 $2,224,956 $852,931 $2,335,956 $190,406 $26,675 $15,117 $21,675 $1,014,674 $1,296,333 $67,999 $565,312 $12,960 $8,293 $744,827 $1,220,929 $27,992 $362,148 $503,322 $164,109 $84,325 $124,412 $7,500 $3,713 $2,293 $22,922 $20,503 $17,280 $3,180,214 $0 $0 $6,084,177 $450,215 $119,400 $121,238 $103,190 $286,394 $24,354 $71,649 $59,518 $4,725 $491,504 $174,839 $0 $4,725 $0 $668,584 $6,251 $145,204 $692,752 $39,258 $18,246 $139,321 $2,695 $4,063 $482,584 $902 $91,483 $1,983,241 $0 $0 $49,106 $258,996 $1,061,540 $764 $113,663 $516,453 $4,615 $111,884 $1,310,543 $71,368 $151,530 $505,970 $566 $11,511 $3,394,506 $0 $0 $77,313 $388,588 70300 Net Tenant Rental Revenue 70610 Capital Grants 70710 Management Fee 70600 HUD PHA Operating Grants 70400 Tenant Revenue - Other 70500 Total Tenant Revenue 70700 Total Fee Revenue 70720 Asset Management Fee 70730 Book Keeping Fee 71400 Fraud Recovery 71200 Mortgage Interest Income 71100 Investment Income - Unrestricted 91100 Administrative Salaries 72000 Investment Income - Restricted 70000 Total Revenue 71500 Other Revenue 71600 Gain or Loss on Sale of Capital Assets 91500 Employee Benefit contributions - Administrative 91600 Office Expenses 91310 Book-keeping Fee 91400 Advertising and Marketing 91200 Auditing Fees 91300 Management Fee 91000 Total Operating - Administrative 91900 Other 91700 Legal Expense 91800 Travel 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 93200 Electricity 93300 Gas 93100 Water 94100 Ordinary Maintenance and Operations - Labor 93000 Total Utilities 93600 Sewer 94500 Employee Benefit Contributions - Ordinary Maintenance 94000 Total Maintenance 94200 Ordinary Maintenance and Operations - Materials and Other 94300 Ordinary Maintenance and Operations Contracts 75 February 12, 2019 Housing Authority Minutes 101 Blended Component Unit - Casa Del Rio Rental Rehab Program Other State & Local Programs Continuum of Care Program Section 8 Moderate Rehabilitation Central Office Cost Center Subtotal Eliminations Total 14.267 14.856 $523,684 $0 $6,734,401 -$19,891 $6,714,510 $4,576 $0 $57,294 $57,294 $528,260 $0 $0 $0 $0 $0 $6,791,695 -$19,891 $6,771,804 $5,585,045 $118,453 $121,501,702 $121,501,702 $0 $1,278,700 $1,278,700 $0 $2,364,091 $2,364,091 -$2,364,091 $0 $0 $119,400 $119,400 -$119,400 $0 $0 $633,311 $633,311 -$633,311 $0 $0 $3,116,802 $3,116,802 -$3,116,802 $0 -$1,842 -$1,124 $11,049 $3 $1,374 $38,350 $38,350 $1,620 $0 $1,620 $1,620 $0 $68,095 $68,095 $8 $2,560,817 $0 $1,033 $4,937,338 -$2,547,857 $2,389,481 $0 -$4,020 -$4,020 $4,922 $0 $4,922 $4,922 $531,348 $496 $2,571,866 $5,585,045 $118,456 $3,119,209 $137,735,204 -$5,684,550 $132,050,654 $53,559 $61,532 $1,596 $1,385,872 $4,881,852 $4,881,852 $17,450 -$296 $1,000 -$2,494 $79,127 $79,127 $42,132 $53,084 $0 $2,406,223 -$2,406,223 $0 $10,320 $0 $656,591 -$643,631 $12,960 $0 $8,293 $8,293 $5,021 $1 $1,652,343 $38,547 $1,016 $1,057,943 $4,748,619 -$2,115,181 $2,633,438 $58,477 $2,333 $23,160 $76 $328,098 $1,441,723 $1,441,723 $0 $22,926 $239,163 $239,163 $0 $2,914 $8,920 $8,920 $0 $2,303 $63,008 $63,008 $186,959 $1 $1,654,380 $176,323 $3,688 $2,797,562 $14,533,519 -$5,165,035 $9,368,484 $0 $119,400 -$119,400 $0 $0 $224,428 $224,428 $0 $286,394 $286,394 $53,051 $0 $100 $149,154 -$80,478 $68,676 $500 $404,232 $0 $48 $469,023 $469,023 $0 $0 $53,551 $404,232 $0 $148 $1,128,999 -$80,478 $1,048,521 $18,441 $0 $838,480 $838,480 $37,752 $0 $28,737 $816,745 $816,745 $2,140 $0 $2,993 $151,212 $151,212 $25,965 $0 $600,934 $600,934 $84,298 $0 $0 $0 $0 $31,730 $2,407,371 $0 $2,407,371 $51,499 $0 $1,227,466 $1,227,466 $50,563 $0 $4,333 $687,848 $687,848 $91,372 $0 $29,381 $1,654,194 $1,654,194 $199,836 $0 $212 $718,095 -$299,746 $418,349 $193,434 $0 $199,836 $0 $0 $33,926 $4,287,603 -$299,746 $3,987,857 The accompanying Independent Auditors' Report and Notes are an integral part of this schedule. 76 February 12, 2019 Housing Authority Minutes 102 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA FINANCIAL DATA SCHEDULE (CA011) REVENUE AND EXPENSE SUMMARY FOR THE YEAR ENDED MARCH 31, 2018 (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 $820,145 $64,958 $53,829 $15,431 $9,897 $873,974 $0 $0 $15,431 $74,855 $291,238 $7,591 $49,334 $2,004 $60 $83,307 $836 $24,293 $5,000 $4,520 $376,549 $836 $0 $36,464 $54,334 $1,911 $69,110 $72,000 $161,742 $13,364 $160,171 $92,764 $31,324 $132,302 $35,693 $388,719 $13,364 $0 $229,281 $139,017 $98,211 $553,966 $30,000 $0 $0 $0 $98,211 $583,966 $10,808,107 $189,039 $0 $6,594,708 $1,949,971 $1,217,611 -$53,835 $0 $104,828,198 $274,985 -$1,962 $11,092 $101,902,639 $2,017,366 $1,334,927 $209,192 $1,020,549 $12,152,164 $189,039 $0 $110,723,905 $2,970,520 $999,084 $49,721 $202,736 -$999,084 -$49,721 $0 $49,721 $0 $153,015 $0 -$126,446 -$4,114 $0 $852,016 -$745,564 $0 $0 $0 $207,967 $247,085 $7,668,497 $0 $0 $4,140,241 $12,860,765 $1,150,702 $4,114 $829,832 $4,955,216 $866,873 13861 75375 2160 11834 75375 2122 $70,582 $1,125,324 $165,780 96110 Property Insurance 95000 Total Protective Services 95200 Protective Services - Other Contract Costs 95300 Protective Services - Other 96200 Other General Expenses 96140 All Other Insurance 96100 Total insurance Premiums 96120 Liability Insurance 96130 Workmen's Compensation 96400 Bad debt - Tenant Rents 96210 Compensated Absences 96300 Payments in Lieu of Taxes 96700 Total Interest Expense and Amortization Cost 96710 Interest of Mortgage (or Bonds) Payable 96720 Interest on Notes Payable (Short and Long Term) 96000 Total Other General Expenses 97100 Extraordinary Maintenance 97000 Excess of Operating Revenue over Operating Expenses 96900 Total Operating Expenses 97350 HAP Portability-In 97400 Depreciation Expense 97200 Casualty Losses - Non-capitalized 97300 Housing Assistance Payments 10010 Operating Transfer In 10020 Operating transfer Out 90000 Total Expenses 10100 Total Other financing Sources (Uses) 11040 Prior Period Adj, Equity Transfers and Correction of Errors 11020 Required Annual Debt Principal Payments 11030 Beginning Equity 10000 Excess (Deficiency) of Total Rev Over (Under) Total Exp 11170 Administrative Fee Equity 11620 Building Purchases 11210 Number of Unit Months Leased 11270 Excess Cash 11180 Housing Assistance Payments Equity 11190 Unit Months Available 11640 Furniture & Equipment - Administrative Purchases 77 February 12, 2019 Housing Authority Minutes 103 Blended Component Unit - Casa Del Rio Rental Rehab Program Other State & Local Programs Continuum of Care Program Section 8 Moderate Rehabilitation Central Office Cost Center Subtotal Eliminations Total 14.267 14.856 $0 $885,103 $885,103 $7,008 $0 $6,810 $92,975 $92,975 $7,008 $0 $0 $0 $0 $6,810 $978,078 $0 $978,078 $54,664 $0 $7,274 $410,101 $410,101 $5 $97,431 $99,500 $99,500 $1,097 $24 $14,081 $128,638 $128,638 $0 $4,514 $9,034 $9,034 $54,664 $0 $0 $1,097 $29 $123,300 $647,273 $0 $647,273 $2,949 $0 $609 $146,579 $146,579 $6,558 $177 $143,728 $485,740 $485,740 $2,478 $0 $126,566 $126,566 $7,122 $0 $175,117 $175,117 $9,600 $0 $2,949 $6,558 $177 $144,337 $934,002 $0 $934,002 $104,914 $0 $757,091 $757,091 $0 $30,000 $30,000 $104,914 $0 $0 $0 $0 $0 $787,091 $0 $787,091 $640,877 $1 $1,910,716 $588,210 $3,894 $3,137,813 $25,823,336 -$5,664,659 $20,158,677 -$109,529 $495 $661,150 $4,996,835 $114,562 -$18,604 $111,911,868 -$19,891 $111,891,977 $0 $0 -$3,062 -$5,024 -$5,024 $5,043,649 $91,132 $107,048,512 -$19,891 $107,028,621 $0 $2,017,366 $2,017,366 $183,440 $440 $0 $8,659 $2,757,207 $2,757,207 $824,317 $1 $1,911,156 $5,631,859 $95,026 $3,143,410 $137,641,397 -$5,684,550 $131,956,847 $190,749 $0 $1,442,290 -$1,442,290 $0 -$176,721 -$26,015 -$190,749 -$1,442,290 $1,442,290 $0 $0 $0 $0 $14,028 -$26,015 -$190,749 $0 $0 $0 -$292,969 $495 $660,710 -$32,786 -$2,585 -$214,950 $93,807 $0 $93,807 $31,174 $0 $0 $0 $0 $0 $486,226 $486,226 -$1,136,902 $0 -$5,726,296 $0 $0 $641,788 $18,448,093 $18,448,093 $79 -$5,231,216 $32,786 $2,585 $384,411 -$2,826,707 -$2,826,707 $0 $4,955,216 $4,955,216 $0 $866,873 $866,873 960 3276 224 0 95856 95856 952 2952 208 0 93443 93443 $0 $70,582 $70,582 $0 $0 $1,125,324 $1,125,324 $0 $13,581 $179,361 $179,361 The accompanying Independent Auditors' Report and Notes are an integral part of this schedule. 78 February 12, 2019 Housing Authority Minutes 104 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA SCHEDULE OF RELEVANT STATISTICS FOR THE YEAR ENDED MARCH 31, 2018 Fiscal year ended March 31 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Number of employees 81 87 83 83 79 99 89 99 90 107 Number of households served: Public Housing 1,144 1,168 1,168 1,168 1,168 1,168 1,168 1,168 1,168 1,168 Housing Choice Voucher 6,268 6,236 6,371 6,297 6,287 6,359 6,400 6,359 6,234 6,400 Continuum of Care 317 294 294 241 241 241 241 241 303 280 Section 8 Moderate Rehab 0 25 25 25 25 26 23 26 25 25 Section 8 Voucher 0 0 0 0 0 5 5 5 4 4 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 7,991 7,985 8,120 7,993 7,983 8,061 8,099 8,061 7,997 8,139 Capital Asset Information: Total managed units 1,406 1,430 1,430 1,430 1,430 1,430 1,430 1,430 1,430 1,430 Total buildings 636 636 636 636 636 636 636 636 636 636 Total vehicles 48 48 46 46 46 46 46 49 49 49 By project: Units Bldg Last change Units lost Bldg lost 11001 Martinez 50 28 11002 Bay Point - 1 2002 83 43 11003 Antioch 34 19 11004 Brentwood 44 24 11005 Pittsburgh 171 57 11006 Richmond 54 30 2018 18 0 11008 Oakley 30 16 11009a Richmond 84 44 11009b Richmond 54 28 11010 Rodeo 242 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 1,144 374 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. 79February 12, 2019 Housing Authority Minutes 105 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATEMENT OF COMPLETED CAPITAL FUND PROGRAM PROJECT ANNUAL CONTRIBUTIONS CONTRACT SF-182 MARCH 31, 2018 CA39P01150115 Funds approved $ 1,724,419 Funds expended 1,724,419 Excess of funds approved $- Funds advanced $ 1,724,419 Funds expended 1,724,419 Excess of funds advanced $- The accompanying Independent Auditors’ Report and notes are an integral part of this statement. 80 February 12, 2019 Housing Authority Minutes 106 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, 2018, 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 30, 2018. 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. 81 February 12, 2019 Housing Authority Minutes 107 February 12, 2019 Housing Authority Minutes 108 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, 2018. 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. 83 February 12, 2019 Housing Authority Minutes 109 February 12, 2019 Housing Authority Minutes 110 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA STATUS OF PRIOR AUDIT FINDINGS MARCH 31, 2018 The audit report for the fiscal year ended March 31, 2017, contained no audit findings. 85 February 12, 2019 Housing Authority Minutes 111 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA SCHEDULE OF FINDINGS AND QUESTIONED COSTS MARCH 31, 2018 Section I - Summary of Auditors’ Results Financial Statements Type of auditors’ report issued:unmodified Is a going concern emphasis-of-matter paragraph included in the audit report? no Is a significant deficiency in internal control disclosed? no Is a material weakness in internal control disclosed? no Is a material noncompliance disclosed? 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 $ 3,000,000 Did the auditee qualified as low-risk auditee? yes Identification of major programs: Housing Choice Voucher Program 14.871 Public and Indian Housing 14.850 Continuum of Care Program 14.267 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 in accordance with Uniform Guidance part 200.516? 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 86 February 12, 2019 Housing Authority Minutes 112 RECOMMENDATIONS ADOPT Resolution No. 5219 approving updates to the California Housing Workers' Compensation Authority (CHWCA) Joint Powers Agreement. BACKGROUND CHWCA is a Joint Powers Authority (JPA) that provides a shared risk pool for workers' compensation claims to 33 housing authorities. Our Housing Authority was a founding member of CHWCA and we have received workers' compensation coverage from CHWCA since 1990. At its November 15, 2018 meeting, CHWCA's Executive Committee reviewed various proposed changes to CHWCA’s governing documents, including the By-Laws, the Financial Stability Plan, the Underwriting Guidelines and the Joint Powers Agreement. Changes to the first three were approved by the Executive Committee, as it is empowered to do. Changes to the JPA Agreement, however, require approval of two-thirds of the CHWCA Members, acting through their governing bodies. Hence, this Board Order and attached Resolution. Action of Board On: 02/12/2019 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 ABSENT:Jannel George-Oden, 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 12, 2019 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 12, 2019 Contra Costa County Subject:UPDATES TO THE CALIFORNIA HOUSING WORKERS' COMPENSATION AUTHORITY JOINT POWERS AGREEMENT February 12, 2019 Housing Authority Minutes 113 BACKGROUND (CONT'D) The proposed changes are considered relatively modest, and are as follows: Update language to capture technical differences in the terms “reinsurance” and “excess insurance;” Clarify intent as to discontinuing business if a meeting quorum is lost; Replace the self-insurance term “contribution” for the insurance term “premium;” Clarify intent in the liability and indemnification article; Update a stale reference to a Government Code section. In addition to the required Resolution, attached to this Board Order are the November 15th staff report to CHWCA's Executive Committee in support of the proposed changes, along with a copy of the JPA Agreement that highlights the proposed changes. FISCAL IMPACT None. The proposed changes are minor grammatical, clarifying and technical corrections. CONSEQUENCE OF NEGATIVE ACTION Should the Board of Commissioners elect not to approve the proposed changes to CHWCA's JPA Agreement, this could delay the improvement of CHWCA's existing Agreement. CLERK'S ADDENDUM AGENDA ATTACHMENTS Resolution 5219 - CHWCA Staff Report - CHWCA CHWCA JPA Amendments 2019 MINUTES ATTACHMENTS Signed Resolution No. 5219 February 12, 2019 Housing Authority Minutes 114 THE BOARD OF COMMISSIONERS HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA RESOLUTION NO. 5219 RESOLUTION APPROVING THE AMENDED JOINT POWERS AGREEMENT CREATING THE CALIFORNIA HOUSING WORKERS’ COMPENSATION AUTHORITY (CHWCA) WHEREAS, the Housing Authority of the County of Contra Costa is a member of the California Housing Workers’ Compensation Authority (CHWCA), a joint powers authority created pursuant to California Government Code Section 6500 et seq. for the purposes of providing workers compensation insurance for its members through joint pooling of self-insured claims or losses as permitted pursuant to California Government Code Section 990.4 and 990.8; WHEREAS, pursuant to Article 16 of the Joint Powers Agreement (Agreement), the Agreement may be amended by a vote of two-thirds of the Members, acting through their governing bodies; WHEREAS, at a regular meeting of the CHWCA Executive Committee on November 15, 2018, the Executive Committee approved the circulation to the CHWCA members of certain clarifying revisions to the Agreement; and WHEREAS, if two thirds of the CHWCA members, through their governing bodies approve the Amended Agreement, the CHWCA Board will confirm approval of the Amended Agreement at its annual meeting held in May, 2019; NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing Authority of the County of Contra Costa, the proposed Amended Joint Powers Agreement Creating the California Housing Workers’ Compensation Authority (CHWCA), attached hereto as Exhibit “A,” is approved. PASSED, ADOPTED AND APPROVED this 12th day of February, 2019 by the following vote: AYES: NOS: ABSTAIN: ABSENT: I hereby certify that this is a true and correct copy of an action taken and ent ered on the minutes of the Commissioners on the date shown. ATTESTED: February 12, 2019 Joseph Villarreal, Secretary of the Board of Commissioners and Executive Director By February 12, 2019 Housing Authority Minutes 115 February 12, 2019 Housing Authority Minutes 116 February 12, 2019 Housing Authority Minutes 117 February 12, 2019Housing Authority Minutes118 February 12, 2019Housing Authority Minutes119 February 12, 2019Housing Authority Minutes120 February 12, 2019Housing Authority Minutes121 February 12, 2019Housing Authority Minutes122 February 12, 2019Housing Authority Minutes123 February 12, 2019Housing Authority Minutes124 February 12, 2019Housing Authority Minutes125 February 12, 2019Housing Authority Minutes126 February 12, 2019Housing Authority Minutes127 February 12, 2019Housing Authority Minutes128 February 12, 2019Housing Authority Minutes129 February 12, 2019Housing Authority Minutes130 February 12, 2019 Housing Authority Minutes 131 RECOMMENDATIONS ADOPT Resolution No. 5220 titled "Resolution Approving the Transfer of the Richmond Housing Authority's Housing Choice Voucher and Project-Based Voucher Programs to the Housing Authority of the County of Contra Costa" and AUTHORIZE the Housing Authority of the County of Contra Costa's Executive Director to send a letter to the U.S. Department of Housing and Urban Development indicating that HACCC will accept the transfer of the Richmond Housing Authority's Housing Choice Voucher and Project-Based Voucher Programs. BACKGROUND As has been discussed with HACCC's Board previously, the U.S. Department of Housing and Urban Development (HUD), the City of Richmond and the Housing Authority of the City of Richmond (RHA) have been discussing for more than a year the possibility of transferring RHA's voucher programs to another housing authority. In accord with HUD Notice PIH 2018-12 (attached), HACCC has been discussed as the preferred housing authority to transfer RHA's voucher programs. This is because HACCC is in the same state as RHA, has jurisdictional authority to administer RHA's voucher programs, has the administrative capacity to manage RHA's existing voucher programs and is a High Performer under HUD's Section 8 Management Assessment Program. Action of Board On: 02/12/2019 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 ABSENT:Jannel George-Oden, 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 12, 2019 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 12, 2019 Contra Costa County Subject:VOLUNTARY TRANSFER OF THE RICHMOND HOUSING AUTHORITY'S HOUSING CHOICE VOUCHER AND PROJECT-BASED VOUCHER PROGRAMS TO THE COUNTY HOUSING AUTHORITY February 12, 2019 Housing Authority Minutes 132 BACKGROUND (CONT'D) At their meeting on February 5, 2019, the RHA Board of Commissioners agreed to formally ask HUD to transfer HACCC's voucher programs to HACCC. This request is only for RHA's voucher programs. RHA intends to keep all of their public housing along with other properties they own or manage under programs such as HOPE VI and RAD. In fact, RHA just hired a new Executive Director to convert their public housing to new, long-term subsidies and to oversee all of their physical properties. RHA's agenda item concerning the voucher transfer and relevant attachments are attached. While not a common occurrence, the transfer of voucher programs from one housing authority to another is not unusual, especially as administrative responsibilities have increased at the same time that funding has decreased. Below is an informal list (meaning there may be other transfer that were not captured here) of voucher transfers & consolidations between housing authorities in HUD's local region over the past 15 years. You will note that the first of these (in chronological terms) was HACCC's absorption of the San Pablo Housing Authority. Yuba consolidated with Sutter (2014) Hollister consolidated with Santa Cruz (2014) CA-HCD Divested its voucher program to Stanislaus, Shasta, Butte, and Sutter (1/1/2012) Nevada County consolidated with Sutter (2011) Clark County HA and Las Vegas HA transferred their programs to Southern Nevada Regional HA (2010) Mariposa County HA transferred its Section 8 program to California HCD (2010) Lassen County HA and Tehama County HA consolidated with Plumas County HA (2008 and 2009) North Las Vegas HA transferred its Section 8 program to Las Vegas HA (2009) - now Southern Nevada Regional HA. ASI Southern Nevada transferred its Section 8 program to Clark County HA (2007) - now Southern Nevada Regional HA. San Juan Bautista HA consolidated with Hollister HA (2007) Sacramento City HA consolidated its Section 8 program with Sacramento County HA (2005) San Pablo HA consolidated with Contra Costa County HA (2001) HUD's Notice PIH 2018-12, which largely lays out the process of transferring vouchers between housing authorities, states that transfers can only occur on either July 1st or January 1st of any given year. RHA is asking HUD to transfer their voucher programs to HACCC effective July 1, 2019. Staff recommend that HACCC accept the transfer of RHA's voucher programs to HACCC and are fine with the July 1st target date. Because portability restrictions will be lifted and HACCC can maintain a local office or offices, HACCC's acceptance of this transfer would provide the greatest service to RHA's clients. If another entity were to receive RHA's voucher program (if another could even legally do so) it would likely increase the bureaucratic burdens on RHA's voucher clients. HACCC's acceptance of this transfer may also increase the availability of PBVs that can be used to fund more affordable housing development. This will depend largely on how many PBVs HUD's and HACCC's program audits show that RHA has committed already and also on future HUD regulatory changes. Between now and July 1st, staff will need to work out an MOU with RHA detailing all aspects of the transfer process. This, and any other relevant documents, will be brought to the Board as they are updated. Additionally, staff will be seeking additional funding from HUD to ensure the transfer goes as smoothly as possible. It is anticipated that extra staff will have to be hired for a period of up to two years to convert RHA's tenant files into HACCC's format and to ensure that all files meet all of HUD's requirements. In addition to funding, staff will be seeking assurances from HUD that this transfer will not negatively impact HACCC's SEMAP scores or funding for RHA's former vouchers. February 12, 2019 Housing Authority Minutes 133 Depending on the outcome of staff's ongoing discussions with RHA and HUD, it is possible that staff could come back to the Board and recommend that approval for this transfer be rescinded. This is not expected, but it should be noted. Staff recommends moving forward at this time because the HUD Regional Office has informed us that it cannot request additional funding to help with the transfer from HUD Washington until both RHA and HACCC have formally requested the transfer. FISCAL IMPACT The transfer of the Richmond Housing Authority's Voucher programs would increase the Housing Authority of the County of Contra Costa's (HACCC) current contract with HUD from 6,996 vouchers to 9,000 vouchers. Should the transfer occur, it is anticipated that HACCC's projected voucher budget for FYE 2020 would increase from $117 million to between $142 million and $150 million. CONSEQUENCE OF NEGATIVE ACTION Should the Board of Commissioners elect not to approve the transfer of RHA's voucher programs to HACCC, then it is likely that RHA's voucher clients would suffer additional bureaucratic burdens. A negative action may also have the affect of costing HACCC additional PBVs that can be used to fund more affordable housing development in the County. CLERK'S ADDENDUM AGENDA ATTACHMENTS Resolution No. 5220: Richmond Housing Authority HUD PIH Notice RHA Agenda Item re Voucher Transfer to HACCC MINUTES ATTACHMENTS Signed Resolution No. 5220 February 12, 2019 Housing Authority Minutes 134 THE BOARD OF COMMISSIONERS HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA RESOLUTION NO. 5220 RESOLUTION ACCEPTING THE VOLUNTARY TRANSFER OF THE RICHMOND HOUSING AUTHORITY'S HOUSING CHOICE VOUCHER AND PROJECT-BASED VOUCHER PROGRAMS TO THE HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA WHEREAS, the U. S. Department of Housing and Urban Development (HUD) has issued policies and guidance (Notice PIH 2018-12) that authorize one housing authority (PHA) to voluntarily transfer the total budget authority and corresponding baseline units for its Housing Choice Voucher (Voucher) and Project-based Voucher (PBV) Programs to another PHA, subject to approval by HUD; and WHEREAS, due to diminishing funding allocations and operational issues, the Richmond Housing Authority - CA010 (RHA) has determined that administration of the Voucher Program by RHA has become infeasible; and WHEREAS, the Richmond Housing Authority - CA010 (RHA) has informed HUD that it desires to transfer its allocation of 2,004 Vouchers (and any attendant PBVs) to the Housing Authority of the County of Contra Costa – CA011 (HACCC); and WHEREAS, HACCC meets HUD's requirements for a receiving PHA under Notice PIH 2018-12 because, among other qualifications, HACCC is in the same state as RHA, has jurisdictional authority to administer RHA's voucher programs, has the administrative capacity to manage RHA's existing voucher programs and is a High Performer under HUD's Section 8 Management Assessment Program; and WHEREAS, HUD has expressed a preference that HACCC receive the transfer of RHA's vouchers; and WHEREAS, HACCC intends to work closely with HUD and RHA up until the transfer to ensure that the transfer will not harm HACCC's High Performer status or its financial stability or will in any other manner jeopardize HACCC; NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing Authority of the County of Contra Costa, that, effective July 1, 2019, subject to the approval of HUD and the qualifications listed above, HACCC will accept the transfer of the Richmond Housing Authority's voucher programs as provided in Notice PIH 2018-12. BE IT FURTHER RESOLVED, that the Executive Director is authorized and directed to submit a letter to HUD, in accordance with Notice PIH 2018-12, requesting approval of the transfer as set forth herein. February 12, 2019 Housing Authority Minutes 135 BE IT FURTHER RESOLVED, that the Executive Director is authorized to take any and all actions necessary to effectuate the intent of this Resolution. PASSED, ADOPTED AND APPROVED this 12th day of February, 2019 by the following vote: AYES: NOS: ABSTAIN: ABSENT: I hereby certify that this is a true and correct copy of an action taken and ent ered on the minutes of the Commissioners on the date shown. ATTESTED: February 12, 2019 Joseph Villarreal, Secretary of the Board of Commissioners and Executive Director By February 12, 2019 Housing Authority Minutes 136 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, DC 20410-5000 OFFICE OF PUBLIC AND INDIAN HOUSING www.hud.gov espanol.hud.gov _____________________________________________________________________________ Special Attention: NOTICE PIH 2018-12 Housing Choice Voucher Program Administrators; Public Housing Issued: June 28, 2018 Field Office Directors; Section 8 Financial Management Center Expires: Effective until amended, superseded, or rescinded Cross References: Notice PIH 2015-22 (HA) ________________________________________________________________________ Subject: Process for Public Housing Agency Voluntary Transfers and Consolidations of Housing Choice Vouchers and Project-Based Vouchers 1. Purpose. The purpose of this notice is to clarify the circumstances and describe the process under which HUD may approve a voluntary transfer or consolidation of budget authority (including restricted net position (RNP), unrestricted net position (UNP) and other capital assets)1 and corresponding baseline units for the Housing Choice Voucher (HCV) program from the divesting public housing agency’s (PHA) Consolidated Annual Contributions Contract (CACC) to the receiving or consolidating PHA’s CACC. In a voluntary transfer one PHA’s identifying number and CACC remains intact. In a consolidation, both or all of the PHAs’ names, CACCs and identifying numbers will be permanently terminated and replaced by a new PHA with a new name, identifying number and CACC. 2. Applicability. This notice applies to PHAs that administer the HCV program, including project-based vouchers (PBV). This notice does not cover the Public Housing Low-Rent program or the Section 8 Moderate Rehabilitation (Mod Rehab) program. This notice supersedes PIH Notice 2015-22 (HA). 3. Eligibility for HCV Transfers and Consolidations. All transfers and consolidations will be permanent and for the entire balance of one PHA’s HCV program to one or more receiving PHAs. The transfer or consolidation must be between PHAs within the same state. The receiving agency must have jurisdictional authority to administer the program in the divesting agency’s geographic location. Additionally, the receiving agency must have the administrative capacity to administer the divesting PHA’s program and must currently administer the HCV program within a reasonable proximity of the divesting PHA’s jurisdiction to prevent the receiving agency from becoming administratively overburdened. Lastly, receiving agencies are responsible for 1 Restricted net position (RNP) and unrestricted net position (UNP) are the current accounting terms for net restricted assets (NRA) and unrestricted net assets (UNA), respectively, based on GASB #63. February 12, 2019 Housing Authority Minutes 137 2 continuing the administration of the divesting PHAs program, which include serving the same population and the vouchers will continue to be utilized for their original intended purpose. Divesting, receiving, and consolidating PHAs are bound by fair housing requirements, including the responsibility to affirmatively further fair housing and to reduce racial and national origin concentrations. Transfers will be considered only for PHAs with a standard and high Section 8 Management Assessment Program (SEMAP) performance designation and permitted where a receiving PHA has complied with corrective action plans to address financial or program audit findings related to the HCV program. Transfers will only be permitted to a receiving agency that already administers the HCV program. 4. Exceptions to Eligibility for HCV transfers. The Department will consider approving voluntary partial transfers only in the following cases: (1) the transfer is for the purpose of developing PBV units in an area of low poverty concentration, or (2) for a compelling business reason. These exceptions do not apply to consolidations. 5. Application Process for Transfers and Consolidations. At least 90 calendar days before the requested effective date of the voluntary transfer or consolidation, both the divesting and receiving PHAs must submit letters to their respective field offices indicating agreement upon the part of the PHAs to the transfer or consolidation, the name and code of the divesting and receiving or consolidating PHA(s), and the date upon which the PHAs would like the transfer to occur. The divesting PHA’s letter must also include their reason for requesting the transfer. The receiving PHA’s letter must include their commitment to serving the population within the divesting PHA’s jurisdiction and their commitment to continue administering special purpose vouchers for their intended purposes. All transfers must have an effective date of either January 1st or July 1st of a given calendar year (CY). No transfers or consolidations may be retroactive. The letters must be signed by the respective Executive Directors with an accompanying board resolution. If the PHA is a unit of local government, the appropriate authorized official must sign the letter. 6. Renewal and Administrative Fee Funding Amounts for Units Transferred or Consolidated and Equity Balances. At the time of the transfer or consolidation, the divesting PHA(s) must transfer the total HAP budget authority on hand and accumulated restricted net position (RNP) balances to HUD. The divesting PHA must contact its Financial Analyst at the FMC to identify the method of payment to HUD. The divesting PHA must transfer its available administrative fees and unrestricted net position (UNP) to the receiving PHA to ensure continuity of assistance to transferred families. While reviewing the transfer of UNP to the receiving/consolidated PHA, the HUD Field Office will ensure the divesting PHA has properly procured and entered into a contract with an independent public accountant to conduct its close-out audit2, and has the funds available to cover it. HUD may assign extraordinary administrative fees (EAF), subject to availability of funds and justifiable circumstances, from the Administrative Fee set-aside funds to cover close- 2 For a PHA under the single audit threshold, a close-out audit would consist of an Independent Public Accountant (IPA) validating the ending balances prior to transfer. February 12, 2019 Housing Authority Minutes 138 3 out audit costs and may conduct a final close-out or forensic audit of a divesting PHA, either prior to or following the transfer/consolidation. The HUD Field Office must contact the Housing Voucher Financial Management Division at PIH.Financial.Management.Division@hud.gov to confirm availability of extraordinary administrative fees (EAF); however, the divesting PHA’s available administrative fee, UNP, and/or other non-federal funds must be considered first and restricted for this purpose. In extenuating circumstances, such as risk of waste or misuse of cash and other assets, the HUD Field Office will require the divesting PHA to transfer its available administrative fees and UNP balances immediately to the receiving/consolidated PHA. In these situations, the HUD Field Office will request the receiving/consolidated PHA to hold funds in escrow to be released to the divesting PHA (or the auditor) upon HUD’s acceptance of the divesting PHA’s audit. Administrative fees earned and disbursed to the divesting PHA(s) during the months not yet reconciled by the time of the transfer or consolidation (whether an underpayment owed to the PHA or an overpayment owed HUD), will be provided (or offset) to the receiving or consolidating PHA(s) based on the divesting PHA(s)’ rates. For subsequent years the renewal funding and administrative fee calculations will be considered based on the receiving or consolidating PHA’s eligibility and leasing reported, respectively, subject to the mandates of the Appropriations Bill for that year. If the divesting PHA(s) owes money to HUD or the U.S. Treasury (such as RNP used for other purposes, an executed repayment agreement, an audit finding for which a management decision has not yet been rendered or other circumstances), these funds must be repaid to HCV account or U.S. Treasury (as applicable) prior to the transfer, from the PHA’s non-federal funds, insurance or UNP. If a divesting PHA is unable to pay monies owed and the receiving/consolidated PHA refuses to assume or is prohibited from assuming the debt of a divesting PHA, where the transfer or consolidation is in the best interest of the HCV program, HUD will follow the guidance in HUD’s Debt Collection Handbook 1900 REV-4 (dated April 6, 2015). Assumption of Liabilities and Liability for Corrective Action. Under some circumstances and as permitted by State and local law, receiving/consolidated PHAs may request to be held harmless for the impacts of performance deficiencies and certain HUD liabilities sustained by divesting PHAs prior to transfer/consolidation while still under their own CACC Receiving and consolidated PHAs generally assume divesting PHAs’ liabilities, including but not limited to those arising under pending litigation associated with the 1937 Act, requirements of the Fair Housing Act, Title VI of the Civil Rights Act, or Section 504 of the Rehabilitation Act of 1973, and any tax debts. The liability for taking corrective action to resolve violations of civil rights, environmental, labor, or other requirements shall not be extinguished by a transfer or consolidation. A divesting PHA may have obligations under a current court or administrative order, voluntary compliance agreement, or other arrangement. As part of the submission requirements, HUD requires either (1) the divesting PHA takes corrective action to the satisfaction of HUD or another entity with authority to enforce a corrective action agreement or order, or (2) the receiving PHA demonstrates to HUD’s satisfaction that it has assumed liability for taking the corrective action. Notwithstanding, there may be circumstances in which the PHA may not divest itself of liability February 12, 2019 Housing Authority Minutes 139 4 for taking corrective action, even if it has transferred its program to another PHA (e.g., a court order limiting assumption of liabilities). 7. Special Purpose Vouchers. Any special purpose vouchers (HUD-Veterans Affairs Supportive Housing (VASH); Family Unification Program (FUP); Non-Elderly Disabled (NED) and Five-Year Mainstream (MS5)) must be maintained and accounted for as such by the receiving PHA(s) or consolidating PHA. The receiving agency of a program that includes special purpose vouchers is responsible for the continued administration of each of these vouchers for the purpose they were intended without exception. Information about the PHA’s FSS funding eligibility after a transfer/consolidation may be found in the applicable FSS NOFA through the following link to the FSS website: https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/fss). 8. Recommendation to Headquarters. No later than 30 calendar days after the receipt of the documents referenced in section 5 of this notice, the HUD Field Office will complete its review of the transfer or consolidation documents. If the HUD Field Office determines that the request is unacceptable, the Public Housing Director will submit a written notice to the PHA. If the HUD Field office determines that the request is acceptable, the Public Housing Director will prepare a memorandum to the Housing Voucher Financial Management Division Director within that same 30-day period and at least 60 days prior to the requested effective date with the following information: (1) name and code of the divesting and receiving or consolidating PHA(s); (2) the HUD Field Office’s determination that the receiving agency has the capacity to administer the divesting PHA’s program and can effectively operate in the divesting PHA’s jurisdiction based on the proximity of the involved PHAs’ geographic locations; (3) the requested effective date of the transfer or consolidation; (4) the number of HCVs that will be divested to each receiving PHA or combined into the new consolidated PHA; (5) confirmation that the HUD Field Office’s legal counsel has provided their jurisdictional approval, agreeing that the receiving PHA has the legal authority to administer the program within their jurisdiction; (6) the number of leased vouchers; and (7) the number of special purpose vouchers or programs by category (HUD-VASH, FUP, NED, FSS and MS5) that will be divested to each receiving PHA or combined into the new consolidated PHA. If the Public Housing Director does not have information on the number of special purpose vouchers of the divesting PHA(s), he or she may contact the respective Financial Analyst at the Financial Management Center for assistance, or may send an email to the Housing Voucher Financial Management Division, at PIH.Financial.Management.Division@HUD.gov. The Financial Management Division reserves the right to close-out incomplete transfers in cases where a request is missing critical information and documentation that is necessary to complete February 12, 2019 Housing Authority Minutes 140 5 the review. In these cases, an email will be sent to the HUD Field Office point of contact informing them that the review could not be completed within the 30-day window due to the absence of necessary information and that the transfer will have to be resubmitted once all the necessary information has been collected. Additionally, the HUD Field Office will provide information to the Financial Management Division on factors considered in the decision to recommend approval of the transfer or consolidation, including: (1) the receiving or consolidating PHAs’ most recent SEMAP performance designation; (2) underutilization based on the receiving or consolidating PHAs’ SEMAP leasing indicator regardless of performance; (3) outstanding debts to HUD and the status of the divesting, receiving or consolidating PHAs’ repayment; and (4) estimated RNP and UNP balances as of the latest audited Financial Assessment Subsystem (FASS) submission, and restricted cash and investments for all divesting or consolidating PHAs as determined by the HUD Field Office. A checklist that describes the PHA’s documentation that the HUD Field Office must provide to headquarters with their recommendation to process the transfer or consolidation request is included as Attachment 1. Attachment 2 is for the HUD Field Office to input additional information such as performance and other key information required to process the transfer. The HUD Field Office must complete and sign Attachment 2 and submit it with all the documents listed in Attachment 1. All the required information and documentation for the transfer/consolidation request must be uploaded to the FYE/Consolidations/Transfers SharePoint site, http://hudsharepoint.hud.gov/sites/reac/FYE/Fiscal%20Year%20End%20Request%20Upload/Fo rms/AllItems.aspx. For instructions of how to upload documents to the SharePoint Site: Select “Guidance” under “Documents” on the left side of the webpage then select the “HCV Transfer Information File” to find the “HCV Transfer and Consolidation Requests – Instructions for Upload to SharePoint”. Once documents are uploaded to the SharePoint, the HUD Field Office contact must send an email to PIHFinancialManangementDivision@hud.gov alerting reviewers that the request has been submitted. Finally, all transfers and consolidations are considered permanent. PHAs will not be able to de- couple from the transferred or consolidated entity to reinstate a former program or PHA. 9. Approval Notification. To the extent possible, the Financial Management Division (FMD) will approve requests for transfers or consolidations within 30 days of receiving all the required information and documentation necessary to determine if the transfer or consolidation is approvable. Once the FMD in Headquarters has approved the transfer or consolidation, the Real Estate Assessment Center (REAC) and the Public Housing Field Office and Financial Management Center (FMC) Directors will be notified through an email including the signed transfer approval memo. The Public Housing Field Office Director will notify the respective PHAs of the approved transfer or consolidation of HCV budget authority and units. The FMC February 12, 2019 Housing Authority Minutes 141 6 will prepare and transmit the requisite amendments to the CACC of all affected PHAs including a new CACC in the case of a consolidation. Finally, the REAC will move participants from the divesting PHA to the receiving PHA and will update HUD PIH systems. 10. Owner and Tenant Notification. No later than 30 days after receiving approval notification from HUD the receiving or consolidated PHA must notify owners and participants of the transfer or consolidation. The PHAs may not notify owners and participants of the transfer until they receive the HUD notification of approval. 11. HCV HAP Contracts. New tenant-based HAP contracts must be executed for families currently under HAP contracts signed by the divesting PHA. The receiving or consolidated PHA must execute new HAP contracts with the existing owners no later than at the family’s next regular recertification or one year following the effective date of the transfer or consolidation, whichever date comes first. The family’s regular recertification date will not change due to the transfer. No other changes to the HAP contracts will be required. Please review to Section 16 for information on new PBV HAP contracts. 12. Receiving or Consolidated PHA Management Responsibilities. At the time of the family’s next regular reexamination, the receiving or consolidated PHA may apply its occupancy and subsidy standards and any other applicable administrative policies. However, if the payment standards of the receiving or consolidated PHA are lower than those of the divesting PHA(s), the receiving or consolidated PHA must follow its administrative policies and the requirements under 24 CFR § 982.505(c) regarding payment standard decreases. In addition, the receiving or consolidating PHA must comply with all reasonable accommodation waivers and exceptions. If there are issues with the reasonable accommodation waivers or exceptions, they should be addressed with the field office. 13. Public Housing Information Center (PIC) Data. The REAC will complete the transfer or consolidation of all Family Reports (form HUD-50058) in PIC, so that all affected families will be recorded under the receiving PHA’s code or consolidated PHA’s new code with the last action code (field 2a on the Family Report) that was entered by the divesting PHA. 14. Voucher Management System (VMS) Data Entry. Starting with the effective date of the transfer or consolidation, the receiving or consolidated PHA will begin including the transferred or consolidated units for the applicable month in its next VMS submission. Conversely, the divesting PHA(s) will stop including any divested units starting with the effective month of the transfer. 15. HUD Self-Reported Systems. PHAs that are transferring, or consolidating will be responsible for submitting their individual financial statements through FASS and other financial or program data to self-reported HUD systems, such as VMS and PIC, for periods prior to the effective date of the transfer or consolidation. 16. PBV Units. All provisions in sections 1 through 15 will apply. However, PBV HAP contracts must be executed as soon as possible between the receiving or consolidated PHA and the owner with the expiration date and all terms and conditions unchanged. February 12, 2019 Housing Authority Minutes 142 7 17. Information Contact. Inquiries about this notice should be directed to your field office Public Housing Director or Financial Management Center representative. 18. Paperwork Reduction Act. The information collection requirements contained in this document have been submitted to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1955 (44 U.S.C. 3501-3520) and assigned OMB control number 2577-0169. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number. ___________/s/_______________ Dominique Blom General Deputy Assistant Secretary for Public and Indian Housing Attachments February 12, 2019 Housing Authority Minutes 143 February 12, 2019Housing Authority Minutes144 February 12, 2019Housing Authority Minutes145 February 12, 2019Housing Authority Minutes146 February 12, 2019Housing Authority Minutes147 February 12, 2019Housing Authority Minutes148 February 12, 2019Housing Authority Minutes149 February 12, 2019Housing Authority Minutes150 February 12, 2019 Housing Authority Minutes 151 February 12, 2019 Housing Authority Minutes 152