HomeMy WebLinkAboutMINUTES - 12142004 - HA4 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
TO: BOARD OF COMMISSIONERS
FROM: Robert McEwan, Executive Director
DATE: December 14, 2003
SUBJECT: ACCEPTANCE OF AUDIT REPORT FOR FISCAL YEAR ENDED MARCH 31, 2004
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
1. RECOMMENDED ACTION:
ACCEPT financial audit report for the period April 1, 2003 through March 31, 2004, performed by
Patel and Associates, Oakland, California, as recommended by the Advisory Housing Commission.
11. FINANCIAL IMPACT:
Funding has been provided for the audit contract in the Housing Authority's Fiscal Year 2004/2005
Consolidated Operating Budget.
Ill. REASONS FOR RECOMMENDATION/BACKGROUND
Patel and Associates has completed their audit of the financial records of the Housing Authority of
the County of Contra Costa and all financial records of the Housing Authority are in order. Although there
were no material weaknesses identified, there were three non-financial reportable conditions made.
Further, a Management Letter was issued by Patel &Associates listing five area that presented
opportunities for strengthening internal controls and operating efficiencies. I have attached a copy of the
Housing Authority's Action Plan for these items.
IV. CONSEQUENCES 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 Patel and Associates, it would become necessary to expend
additional funds to either redo the financial audit report or contract with another certified public
accountancy firm.
CONTINUED ON ATTACHMENT: voo" YES SIGNATURE •
RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD
COMMITTEE
APPROVE OTHER
SIGNATURE(S):
A
ACTION OF BOARD ON 'Iev _0",I)elROVED AS RECOMMENDED 04:1 Tr_11n
APP x-L.L,.L%-
VOTE OF COMMISSIONERS
I HEREBY CERTIFY THAT THIS IS A
UNANIMOUS (ABSENT TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
COMMISSIONERS ON THE DATE SHOWN.
ATTESTED <V ra
JOHN SWEETEN,CLERK OF
THE BOARD OF COMMISSIONERS
AND COUNTY ADMINISTRATOR
BY4 ,DEPUTY
H:\JudyHayes\MSOFFICE\WINWORD\BOARD\BO-AUDIT FYE 3-31-04.doc :: 4
HOUSING AUTHORITY
Of THE
COUNTY Of CONTRA COSTA
affordaklekousing solutions
Housing Authority of the County of Contra Costa
Action Plan
Audit Findings & Management Comments
Audit by Patel & Associates
FYE March 31, 2004
AUDIT FINDINGS
'14.871-HOUSING CHOICE VOUCHERS
Fin 04-01: It was noted that re-examinations of income and composition
were not being performed at least 12 months in 4 of the tenant files out of 40 that
were reviewed.
Action taken: As outlined in the finding, this was an isolated occurrence. The 4
tenant files have been corrected. The Authority has alerted the proper
supervisory staff to continue to review and maintain the strong controls in place
to prevent future occurrences.
14.850-PUBLIC AND INDIAN HOUSING PROGRAM
Findin
-q--04-028- It was noted that the Authority had not documented the option of
tenantpaying a flat rent or an income based rent at every re-examination.
Action taken: It is and was the Authorities practice to offer the flat rent or income
bases for establishing rents, however it was not known that this process had to
be documented. The Authority has now created a certification documentation
that the family signs as a part of every re-examination that documents this option.
This practice has already been established and put into place. For all prior re-
examinations staff has been directed to go back and document the offer of rent
options.
Findinq--04-03: It was noted that utility allowance schedules were outdated for 9
out of 40 tenant files reviewed.
Action taken: As outlined in the audit report, this matter was addressed but
outside of the audit period in question.
Audit FYE 4/31/04 Action Items
Page 1 of 2
H:\JudyHayeS\MSOFFICE\WINWORD\BOARD\BO-Audit FYE 3-31-04 Action Plan Report.doc
3133 ESTUDILLO STREET 0 P.O.BOX 2759 0 MARTINEZ,CALIFORNIA 94553*PHONE(925)372-7400 0 FAX(925)372-0236
www.contracostahousing.org
MANAGEMENT LETTER ISSUES
Improve record keeping in the area of Captial Assets: It was noted that
the Authority could improve the record keeping of Capital Assets by monitoring
and maintaining a quarterly reconciliation and review of Capital Assets.
Action taken: The Authority has implemented a quarterly internal auditing
procedure that satisfies this recommendation and the two other comments
outlined below.
Uninsured Cash Balances: It was noted that the Authority deposited cash
into demand deposit accounts in excess of the normal insured amounts of
$100,000. It was recommended that the Authority maintain demand deposit
accounts equal to or less than the insured maximums.
Action taken: The Authority is reviewing and updating the depository
agreements with the financial institutions that provided for the proper
collateralization of funds over $100,000.
Reconciliation Accounts Payable detail to General Ledger: It was noted that
the Accounts Payable was not reconciled to the General Ledger on a regular
basis.
Action Taken: The Authority has implemented a quarterly internal auditing
procedure that satisfies this recommendation.
Reconciliation of Interfund receivable and payables: It was noted that the
Interfund receivable and payables were not regularly reconciled.
Action Taken: The Authority has implemented a quarterly internal auditing
procedure that satisfies this recommendation.
Audit FYE 4/31/04 Action Items
Page 2of2
H:1JudyHayes\MSOFFICEIWINWORDIBOARDIBO-Audit FYE 3-31-04 Action Plan Report.doc
Patel &
(
Associates hone:el (510)452-5051
Telephone:
266 17�h TeStreet, Suite 200 Fax: (510)452-3432
Certified Public Accountant Oakland,California 94612-4124e-mail: ramesh@patelcpa.com
Board of Commissioners
Housing Authority of the County of Contra Costa
Martinez, California
In planning and performing our audit of the financial statements of Housing Authority of the
County of Contra Costa (the Authority) for the year ended March 31, 2004, we considered the
Authority's internal control in order to determine our auditing procedures for the purpose of
expressing an opinion on the financial statements and not to provide assurance on internal
control
However, during our audit we became aware of several matters that are opportunities for
strengthening internal controls and operating efficiency. This report summarizes our comments
and suggestions regarding those matters. This letter does not affect our report dated September 2,
2004, on the financial statements of the Housing Authority of the County of Contra Costa.
We will review the status of these comments during our next audit engagement. We have already
discussed many of these comments and suggestions with various personnel of the Authority, and
we will be pleased to discuss them in further detail at your convenience, to perform any
additional study of these matters or to assist you in implementing the recommendations.
Improve record keeping of Capital Assets
During our testing of capital assets we noted the following:
• The schedule of building and building improvement beginning balance items did not
agree to the general ledger.
• Soft costs supporting documentations were not readily available. During the year ended
March 31, 2004, the authority had charged some soft cost to (Hard Costs) for
Construction in Progress.
• The Authority disposed of certain equipment. We were unable to verify the disposals to
any written Housing Authority accounting policy.
We recommend that capital assets listing be monitored and maintained on a quarterly basis. Soft
costs and hard costs manual record should also be maintained throughout the year. Procedures
on disposal of assets should be monitored and be included in the accounting process.
We also recommend that reconciliation of capital assets be performed at least quarterly when any
discrepancies can be more easily and quickly researched and resolved. This will ensure that
capital assets are properly stated and that depreciation is being calculated from a reliable listing.
1
Uninsured Cash Balances
The Authority deposited significant amount of cash into demand deposit accounts at Bank of
America and West America Bank. Since demand deposit accounts in most financial institution
are insured for a maximum of $100,000, we recommend that the Authority maintain demand
deposits in amounts equal to or less than the insured maximums.
Avoid Overdrawn Cash Balances and Better Manage Cash Flow
We believe that the Authority should avoid overdraft cash balances and work to improve the cash
management system. We believe that cash management could be improved by taking the
following steps:
• Prepare regular cash flow position reports and budgeted cash flow statements for
management review to anticipate both cash needs and cash availability and to provide
information for planning the timing of discretionary expenditures and the need for
temporary borrowing.
• Regularly prepare and review accurate reconciliation of cash accounts.
Reconcile Accounts Payable Detail to the General Ledger
Through our review of the accounts payable system, we noted that the accounts payable detail is
not reconciled to the general ledger balance on a regular basis. We recommend that this
reconciliation be performed each month end to ensure that the general ledger balance, and thus
monthly and yearly financial statements,reflect the proper accounts payable amount.
Reconcile Interfund receivable and payable
During our review of interfund receivable and payable, we noted that those interfund accounts
were not reconciled on a regular basis. We recommend that reconciliation be made periodically.
This report is intended solely for the information and use of the Board of Commissioners,
management, federal awarding agencies and pass-through entities and is not intended to be and
should not be used by anyone other than these specified parties.
P",.,/". , i,-,4
Oakland,California
September 2, 2004
2
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31,2004
Patel &
Associates
Certified Public Accountant
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
,MARCH 31,2004
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1-2
MANAGEMENT DISCUSSION AND ANALYSIS 3-12
FINANCIAL STATEMENTS
Statement of Net Assets 13
Statement of Activities 14
Statement of Cash Flows 15
Statement of Net Assets—Proprietary Funds 16
Statement of Revenues,Expenses and Changes in fund Net Assets—
Proprietary funds 17
Statement of Cash Flows—Proprietary funds 18
Notes to Financial Statements 19-35
SUPPLEMENTARY INFORMATION:
Combining Statement of Net Assets—Non-Major Enterprise Funds 36
Combining Statement of Revenues,Expenses and Changes in Net Assets -
Non-Major Enterprise Funds 37
Combining Statement of Cash Flows—Non-Maj or Enterprise Funds 38
Financial Data Schedule 39-41
Schedule of Expenditures of Federal Awards 42
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON
INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS 43-44
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH
REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON
INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB
CIRCULAR.A-13 3 45-46
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 47-50
STATUS OF PRIOR YEAR.FINDINGS AND RECOMMENDATIONS 51
Patel &
Associates Telephone: (510)452-5051
266 1711 Street,Suite 200 Fax: (510)452-3432
Certified Public Accountant Oakland,California 946 1 2-4 1 24 e-mail: ramesh@patelcpa.com
INDEPENDENT AUDITOR'S REPORT
Board of Commissioners
Housing Authority of the County of Contra Costa
Martinez, California
We have audited the accompanying financial statements of the business-type activities, the
aggregate discretely presented component units, each major fund and the aggregate remaining
fund information of Housing Authority of the County of Contra Costa (the Authority) as of and
for the year ended March 31, 2004, which collectively comprise the Authority's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
the Authority's management. Our responsibility is to express opinions on these financial
statements based on our audit. We did not audit the financial statements of CDR Senior Housing
Associates (A California Limited Partnership), which is part of a major find which represents
19% and .4% respectively, of the assets, and revenues of the business-type activities, and the
financial statements of De Anza Gardens, L.P. (a California Limited Partnership) one of the
discretely presented component units. Those financial statements were audited by other auditors,
whose report thereon has been furnished to us, and our opinion, insofar as it relates to the
amounts included for CDR Senior Housing Associates and De Anza Gardens, L.P. is based on
the report of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit and the report of other auditors provides a reasonable
basis for our opinions.
In our opinion, based on our audit and the report of the other auditors, the financial statements
referred to above present fairly, in all material respects, the respective financial position of the
business-type activities, the aggregate discretely presented component units, each major fund,
and the aggregate remaining fund information of the Authority, as of March 31, 2004, and the
respective changes in financial position and cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated
September 2, 2004 on our consideration of the Authority's internal control over financial
re-porting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grants. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and' should be read in conjunction with this report in
considering the results of our audit.
The management's discussion and analysis on pages 3 through 12 are not a required part of the
basic financial statements but are supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement
and presentation of the supplementary information. However, we did not audit the information
and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Authority's basic financial statements. The combining nonmajor fund
financial statements and the Financial Data Schedule, are presented for the purposes of additional
analysis and are not a required part of the basic financial statements- The accompanying
schedule of expenditures of federal awards is presented for purposes of additional analysis as
required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations and is also not a required part of the basic financial
statements of the Authority. The combining nom-naJor fund financial statements, the Financial
Data Schedule and the schedule of expenditures of federal awards have been subjected to the
auditing procedures applied by us and the other auditors in the audit of the basic financial
statements and, in our opinion,based on our audit and the report of the auditors, are fairly stated
in all material respects in relation to the basic financial statements taken as a whole.
Oakland!, California
September 2,2004
2
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
MANAGEMENT DISCUSSION AND ANALYSIS
MARCH 31
The Housing Authority of the County of Contra Costa (the Authority) management discussion
and analysis is designed to (a) assist the reader in focusing on significant financial issues, (b)
provide an overview of the Authority's financial activity, (c) identify changes in the Authority's
financial position(its ability to address the next and subsequent year challenges), and(d) identify
individual fund issues or concerns.
The Management Discussion and Analysis (MD&A) is designed to focus on the current year's
activities, resulting changes and currently known facts. Please read MD&A in conjunction with
the Authority's financial statements (beginning on page 13).
FINANCIAL HIGHLIGHTS
• The Authority's net assets decreased by $3.2 million (or 12.6%) during 2004. The
Authority engages only in business-type activities, therefore the decrease is attributable
to the Authority's business-type net assets. Net Assets were $22.12 million and $25.30
million for 2004 and 2003 respectively.
• The business-type activities revenue increased by $14.46 million (or 17.64%) during
2004. They were$96.44 million for 2004 and$81.98 million for 2003.
• The total expenses of all Authority programs increased by $16.41 million (or 19.72%)
during 2004. Total expenses were $99.62 million and $83.21 million for 2004 and 2003
respectively.
3
USING THIS ANNUAL REPORT
MDMA
Management Discussion
and Analysis—
Basic Financial Statements
Authority-wide Financial Statements (new)—pgs 13 — 15
—Fund Financial Statement(refocused)—pgs 16— 18
Notes to Financial Statements(expanded/restructured)—pgs 19—35
Authority-Wide Financial Statements
The Authority-wide financial statements are designed to be corporate-like in that all business
type activities are consolidated into columns that add to a total for the entire Authority.
These Statements include a Statement of Net Assets which is similar to a Balance Sheet. The
Statement of Net Assets reports all financial and capital resources for the Authority. The
statement is presented in the format where assets, minus liabilities, equals"Net Assets", formerly
known as equity. Assets and liabilities are presented in order of liquidity.
The focus of the Statement of Net Assets (the "Unrestricted Net Assets") is designed to represent
the net available liquid (non-capital) assets,net of liabilities,, for the entire Authority. Net Assets
(formerly equity) are reported in three broad categories:
Net Assets, Invested in Capital Assets, Net of Related Debt: This component of Net
Assets consists of all Capital Assets, reduced by the outstanding balances of any bonds,
mortgages, notes or other borrowings that are attributable to the acquisition,
construction,or improvement of those assets.
Restricted Net Assets: This component of Net Assets consists of restricted assets, when
constraints are placed on the asset by creditors (such as debt covenants), grantors,
contributors, laws,regulations, etc.
Unrestricted Net Assets: Consists of Net Assets that do not meet the definition of"Net
Assets Invested in Capital Assets,Net of Related Debt", or"Restricted Net Assets".
4
The Authority-wide financial statements also include a Statement of Revenues, Expenses and
Changes in Fund Net Assets (similar to an Income Statement). This Statement includes:
Operating Revenues; such as rental income, grant revenue, fees and miscellaneous income.
Operating Expenses, such as administrative, utilities, and maintenance, and depreciation; and,
Non-Operating Revenue and Expenses, such as investment income and interest expense.
The focus of the Statement of Revenues, Expenses and Changes in Fund Net Assets is the
"Change in Net Assets",which is similar to Net Income or Loss.
Finally, Statement of Cash Flows is included, which discloses net cash provided by, or used for
operating activities, non-capital financing activities, and from capital and related financing
activities.
Fund Financial Statements
The Fund Financial Statements presentation is similar to the traditional government financial
statements. The focus is now on Major Funds, rather than fund types. The Authority's major
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.
The Authority's Funds
Business Type Funds
Conventional Public Housing—Under the Conventional Public Housing Program, (also titled as
`Low Rent-Aided Housing') the Authority rents units that it owns to very low & low-income
households. The Conventional 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.
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.
CDBG Rental Rehabilitation Program (RRP - Under the RRP, the Authority executes annual
funding contracts with Contra Costa County and the Cities of Antioch and Walnut Creek to fund
operation 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 8Noucher 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.
5
Casa del Rio., Associates
Casa del Rio, Senior Housing Associates (CDR)was formed as a limited partnership on April 12,
1.994 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.
The general partner of the 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.
Other Non-Mai or Funds—In addition to the mai or funds above, the Authority also maintains the
following non-major funds. Non-major funds are defined as funds that have assets, liabilities,
revenues, or expenses of less than 10% of the Authority's total assets, liabilities, revenues or
expenses:
Shelter Plus Care program — is designed to provide rental assistance and supportive
services to homeless and disabled individuals and their families. It is cooperatively
administered by the County Health Services Department and the Housing Authority of
Contra Costa County, and has capacity to serve 200 households. Participants receive
rental assistance through the Section 8 Housing Choice Voucher program funded by U.S
Department of Housing and Urban Development.
Economic Development and Supportive Services Program— a grant program funded by
the Department of Housing and Urban Development that encourages economic self-
sufficiency among the Authority's public housing resident population.
ROSS—The Resident Opportunities and Self Sufficiency Program is a grant program for
the benefit of public housing residents. It is designed to provide residents empowerment
activities and assistance in becoming economically self sufficient; provide resource to
enhance independent living for the elderly and persons with disabilities, and improve
overall quality of life. Funding for the program primarily comes from the Department of
Housing and Urban Development
Section 8, Pension—The Coggins Square family Apartments (1 50 Units) in the City of
Pleasant Hill, California, was developed under Section 8 Community Investment
Demonstration (Pension Fund) Program of the U.S. Department of Housing and Urban
Development. HUD is responsible for the contract administration; however, HUD has
contracted with the Housing Authority to carry out the contract administrative functions
for five of the units under this program. The administrative functions relate to the five
project based Section 8 certificates at Coggins Square.
Drug Elimination Program—a grant program funded by the Department of Housing and
Urban Development that is intended to reduce the use of illegal drugs within the
Authority's properties
Moderate Rehabilitation — is a Department of Housing and Urban Development funded
rehabilitation program that provides project based rental assistance based on the Housing
Choice Voucher methodology in determining subsidized rent and program compliance.
Management Fund& County Programs—represents non-HUD resources developed from
a variety of activities,including County cost reimbursement projects.
6
AUTHORITY-WIDE STATEMENT
Statement of Net Assets
The following table reflects the condensed Statement of Net Assets compared to prior year. The
Authority is engaged only in Business-Type Activities.
TABLE 1
STATEMENT OF NET ASSETS
2003 2003 2003 2004
(in millions (in millions (in millions (in millions
of dollars) of dollars of dollars) of doll
Blended
Component Primary Primary
Authorily Unit Government Government
Current and Other Assets $ 11.18 $ 1.28 $ 12.46 $ 10.64
Capital Assets 16-15 5.16 21-31 20.01
Total Assets 27.33 6.44 33.77 30.65
Other Liabilities 4.46 0.08 4.54 2.68
Long-Term Liabilities 3.93 3.93 5.86
Total Liabilities 4.46 4.01 8.47 8.54
Net Assets:
Invested in Capital Assets,
Net of Related Debt 16.15 2.20 18.35 16-84
Restricted
Unrestricted 6.72 .23 6.95 5.27
Total Net Assets $ 22-87 $ 2.43 $ 25-30 $ 22.11
Major Factors Affecting the Statement of Net Assets
Current assets & Other Assets decreased by $1.82 million, while other liabilities decreased by
$1.86 million. The decrease in other liabilities and current and other assets is primarily due to an
increase in unearned portion of the Housing Choice Voucher Program and CDBG & Rental
Rehabilitation program revenues.
Capital assets also changed, decreasing from$21.50 million to $20.01 million. Of which, $1.49
million decrease was attributed primarily to writing off of construction soft costs, that are not
considered as part of the capital costs, and current year depreciation & amortization of $3.01
million. Additional purchases of capital assets, including construction costs, in the year
amounted to $1.52 million, net, after deletion. For more detail see "Capital Assets and Debt
Administration".
7
Table 2 presents details on the change in Unrestricted Net Assets
TABLE 2
CHANGE OF UNRESTRICTED NET ASSETS
Millions
of Dollars
Unrestricted Net Assets 04/01/03 $ 6.95
Results of Operations (3.18)
Adjustments:
Depreciation(1) 3.02_
Adjusted Results from Operations 7.57
Capital Expenditures: (1.52)
Unrestricted Net Assets 03/31/04 5.27
(1)Depreciation is treated as an expense and reduces the results of operations but does not have
an impact on Unrestricted Net Assets
While the result of operations is a significant measure of the Authority's activities, the analysis
of the changes in Unrestricted Net Assets provides a clearer change in financial well-being.
8
TABLE 3
STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET ASSETS
The following schedule compares the revenues and expenses for the current and previous fiscal
year. The Authority is engaged only in Business-Type Activities.
2003 2003 2003 2004
(in millions (in millions (in millions (in millions
of dollars) of doll of dollars) of doll
Blended
Component Primary Primary
Authority Unit -Government Government
Revenues
Tenant Revenue-Rents and Other $ 3.46 $ 0.39 $ 3.85 $ 3.67
Operating Subsidies and Grants 73.42 73.42 90.51
Capital Grants 3.90 3.90 1.90
Investment Income 0.38 0.38 0.01
Other Revenues 0.38 0.05 0.43 0.35
Total Revenue 81.54 0.44 81-98 96.44
Expenses
Administrative 9.30 0.13 9.43 10.22
Tenant Services 0.46 0.46 0.48
Utilities 1.21 0.03 1.24 1.34
Maintenance 3.79 0.09 3.88 3.41
General 0.62 0.20 0.82 1.09
Housing Assistance Payments 64.07 64.07 80-06
Depreciation 3.14 0.17 3.31 3.02
Total Expenses 82-59 0.62 83.21 99.62
Net Decrease $ (1.05) $ (0-18) $ (1-23) $ (3.18)
MAJOR FACTORS AFFECTING THE STATEMENT OF REVENUE,EXPENSES AND
CHANGES IN NET ASSETS
Tenant revenue has slightly decreased due to decrease in the tenant portion of the rent generated
mainly due to decrease in average household income during the year.
Operating Subsidies, Grants and Capital Grants increased substantially. This increase was
primarily due to:
• A higher level of activity in the areas of capital grants. The Authority is under-
taking an aggressive modernization program.
• Increased HUD reimbursements for the increased HAP payments mainly due to
hard rental market in the local Bay-Area and more vouchers were placed in
service and hence, increased the HAP expenditure for the year.
9
Other revenues have decreased mainly due to substantially fewer activities during the year
compared to prior year.
Most expenses are in line with those incurred in the previous year, however, administrative
expenses have increased due to increased workers compensation and health benefits
contributions and a substantial increase in contributions for retirement benefits plan. Also,
Housing assistance payments have increased significantly due to increase in rental costs and an
increase in the number of voucher holders during the year.
CAPITAL ASSETS AND DEBT ADMMSTRATION
Capital Assets
As of year-end, the Authority had $20.01 million invested in a variety of capital assets as
reflected in the following schedule, which represents a net decrease (addition, deductions and
depreciation) of$1.49 million or 7%from the end of last year.
TABLE 4
CAPITAL ASSETS AT YEAR-END
(NET OF DEPRECIATION)
Business-Type
Activities
2004 2003
Land $ 1,495,202 $ 1,500,259
Buildings 76,273,191 80,403,706
Equipment 1,594,537 1,407,667
Accumulated Depreciation (61,630,974) (623,9495958)
Construction In Progress 2,279,601 131141,344
Total 20,011,557 $ 21,5031018
For more detailed information, see Note 7.
10
The following reconciliation summarizes the change in Capital Assets, which is presented in
detail on page 32 of the notes.
TABLE 5
CHANGE IN CAPITAL ASSETS
Business Type
Activities
Beginning Balance-4/01/03 $ 219503,018
Additions 1,523,460
Retirements,Net of Depreciation (660)
Depreciation and Amortization (310145261)
Ending Balance-3/31/04 20,011,557
This year's major additions are:
Business-Type Activities
Construction in progress and building and improvements 1,292,192
Furniture and Equipment Purchases 231,268_
$ 1,523,460
Notes Pavable Outstanding
As of year-end, the Authority had$7,921,793 of notes payable outstanding, see Note 6 to the
financial statements.
ECONOMIC FACTORS
Significant economic factors affecting the Authority are as follows:
• Federal funding of the Department of Housing and Urban Development
• Local labor supply and demand, which can affect salary and wage rates
• Local inflation,recession and employment trends, which can affect resident incomes and
therefore the amount of rental income
• Local rental market & economy that has direct effect on the ability to find viable
privately owned rental properties that are available to our Housing Choice Voucher
participants.
• Inflationary pressure on utility rates, supplies and other costs
FINANCIAL CONTACT
The individual to be contacted regarding this report is John Hunter, Director of Finance of the
Housing Authority of the County of Contra Costa, at (925) 957-8014. Specific requests may be
submitted to John Hunter, Director of Finance, Housing Authority of the County of Contra
Costa,P.O. Box 2759, 3133 Estudillo Street,Martinez, CA 94553.
12
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATEMENT OF NET ASSETS
MARCH 31,21304
Primary
Government- Component Units Totals
Business-type De Anza De Memorandum
Activities L.P. Anza Only
ASSETS
Current Assets:
Cash (Note 2) $ 386,113 $ 56,772 $ 200 443,085
Accounts receivable-HUD 2,7919117 2,791,117
Accounts receivable-tenants 446,204 446,204
Accounts receivable-other 471,726 102,945 574,671
Accrued interest receivable 106,098 34,093 140,191
Other current assets 125,035 8,932 133,967
Prepaid expenses,deposits and other assets 206,036 206,036
Investments(Note 2) 31,503,585 3,503,585
Notes receivable-current portion(Note 4) 297,250 297,250
Total current assets 8,333,164 168,649 34,293 8,536,106
Non current assets:
Capital contribution receivable 24,9433,325 24,943,325
Notes receivable(Note 4) 2,307,686 1,000,000 3,307,686
Total other non-current 23,307,686 24,9433,325 1,000,000 28,2513,011
Capital assets(Note 7) 81,642,531 89086,812 899729,343
Less accumulated depreciation (6126303,974) (61,630,974)
Capital assets,net 20,011,557 8,086,812 289,098,369
Total assets 303,652,407 333,198,786 110343,293 64,885,486
LIABILITIES
Current liabilities:
Accounts payable 963,1812 2,283 28,603 994,698
Accrued compensated absences-current(Note 1) 354,093 354,093
Accrued salaries and wages 800 800
Accrued benefits 36,317 36,317
Accrued liabilities 387,411 116,710 504,121
Deferred revenue 614,310 614,310
Tenants security deposits 319,739 319,739
Total current liabilities 2,676,482 118,993 28,603 2,824,078
Non-current liabilities:
Accrued compensated absences-non-current(Note 1) 62,812 62,812
Notes payables-non current(Note 6) 3,346,269 4,575,524 7,921,793
Accrued interest-non current 830,593 830,593
Loan Payable(Note 6) 11604,936 1,6049936
Other liabilities-related parties 15,000 83,932 23,932
Total non-current liabilities 5,859,610 4,575,524 8,932 10,444,066
Total liabilities 8,536,092 4,694,517 37,535 13,268,144
Net assets:
Investment in capital assets,net of related debt 16,850,288 8,086,812 24,9371,100
Unrestricted 5,266,027 20,417,457 996,758 26,680,242
Total net assets $ 22,116,315 $ 281,504,269 $ 996,758 $ 51,617,342
The accompanying notes are an integral part of this financial statement
13
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31,2004
Primary
Government Component Units Totals
Business-type Memorandum
Activities De Anza Dc Only
L.P. Anza
Cash flows from operating activities:
Cash Collected from:
Dwelling rental $ 2,595,669 $ 21595,669
Other government grants 50)051 50,051
Other miscellaneous 128,165 200 128,365
Cash paid for:
Housing assistance payments (80,309,100) (80,309,100)
Employee expenses (9,546,544) (9,546,544)
Administrative expenses (2,529,725) 4,727 (2,524,998)
Utilities expenses (1,335,351) (1,335,351)
Maintenance expenses (1,282,758) (1,282,758)
General expenses (2,145,349) (2,145,349)
Net cash provided(used)by operating activities (94,374,942) 4,727 200 (94,370,015)
Cash flows from noncapital financing activities:
Grant revenue received-HUD 90,351,399 90,351,399
Grant revenue received-other 2,058,599 2,058,599
Net cash provided by noncapital financing activities 92,409,998 92,409,998
Cash flows from capital and related financing activities:
Acquisition of capital assets (380,915) (380,915)
Proceeds from sale of capital assets 630 630
Construction of capital assets (1,138,257) (8,086,812) (9,225,069)
Disposal of assets 5,057 5,057
Net cash used by capital and related financing activities (1,513,485) (8,086,812) (9,600,297)
Cash flows from financing activities:
Proceeds from notes payable (9,824) 4,575,524 4,565,700
Contributions from partners 1,017,580 3,563,333 4,580,913
Collection of notes receivable
Cash received from Loans (91713) (9,713)
Net cash provided by financing activities 998,043 8,138,857 9,136,900
Cash flows from investing activities:
Sale of investments 1859126 1,8591126
Purchase of investments (75,465) (75,465)
Net cash provided by investing activities 1,783,661 1,783,661
Net increase(decrease)in cash and cash equivalents (696,725) 56,772 200 (639,753)
Cash and cash equivalents at beginning of year 1,082,838 1,082,838
Cash and cash equivalents at end of year $ 386,113 $ 56,772 200 $ 443,085
Reconciliation of operating income to net cash provided/(used)
by operating activities:
Operating loss $ (95,606,363) $ (2,598) $ (3,242) $ (95,612,203)
Adjustments to reconcile operating income to
net cash provided/(used)by operating activities:
Depreciation expense 31014,261 3,0149261
(Increase)/Decrease in accounts receivable-HUD (1,503,228) (1,503,228)
(Increase)/Decrease in accounts receivable-other 57,182 (8,932) 48,250
(Increase)/Decrease in accounts receivable-tenants (306,183) (306,183)
(Increase)/Decrease in accrued interest receivable (52,230) (34,093) (86,323)
(Increase)/Decrease in other current assets (57,100) (102,736) (159,836)
Increase/(Decrease)in prepaid expense and deposits (1,822) (1,822)
Increase/(Decrease)in deferred revenue (369,434) (369,434)
Increase/(Decrease in accounts payable 942,902 2,283 28,603 973,788
Increase/(Decrease)in accounts payable-other government (34,302) (34,302)
Increase/(Decrease in accrued benefits (46,514) (46,514)
Increase/(Decrease)in accrued compensated absences 30,402 30,402
Increase/(Decrease)in other liabilities (497,973) 8,932 (489,041)
Increase/(Decrease)in accrued liabilities 39,171 116,710 155,881
Increase/(Decrease)in tenant security deposit 16,289 16,289
Net cash provided(used)by operating activities $ (94,324,942) $ 4,727 $ 200 $ (94,370,015)
The accompanying notes are an integral part of these financial statement.
15
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATEMENT OF NET ASSETS-PROPRIETARY FUNDS
MARCH 31,2004
Major Enterprise Funds
Low Rent Housing Casa Other
Public Choice Del Enterprise
Housing CDBG Voucher Rio Funds Total
ASSETS
Current Assets:
Cash (Note 2) $ 9,182 64,373 1,024 $ 162,073 $ 149,461 $ 386,113
Accounts receivable-HUD 2,666,198 124,919 2$791,117
Accounts receivable-tenants 167,781 4,252 274,171 446,204
Accounts receivable-other 300 224,645 246,781 471,726
Accrued interest receivable 9,147 90,082 6,869 106,098
Other current assets 151 501 31,814 67,935 24,634 125$035
Prepaid expenses,deposits and other assets 122,439 66,118 13,574 3,905 206,036
Investments(Note 2) 727,388 829,928 607,641 1,338,628 3,503,585
Due from other funds(Note 3) 2,254,455 208,307 2,462,762
Notes receivable-current portion(Note 4) 173,680 50,000 73,570 297,250
Total current assets 3,290,543 238,854 3,735,164 1,080,120 -21451,245 10,795,926
Non current assets:
Capital contribution receivable
Notes receivable(Note 4) 820,100 950,000 537,586 2,307,686
Total other non-current 820,100 950,000 _537,586 2,307,686
Capital assets(Note 7) 70,954,663 888,656 6,843,602 2,955,610 81,642,531
Less accumulated depreciation (59,116,694) (385,994) (1,651,577) (476,709) (61,630,974)
Capital assets,net 11,837,969 502,662 5,192,025 2,478,901 20,011,557
Total assets 15,128,512 1,058,954 5,187,826 6,272,145 5,467,732 33,115,169
LIABILITIES
Current liabilities:
Accounts payable 1,777 821,763 8,692 131,580 963,812
Accrued compensated absences-current(Note 1) 134,358 187,875 31,860 354,1093
Accrued salaries and wages 800 800
Accrued benefits 25,120 9,878 1,319 36,317
Accrued liabilities 76,803 310,608 387,411
Deferred revenue 77,244 64,373 472,693 614,310
Tenants security deposits 293,323 26,1374 42 319,739
Due to other funds(Note 3) 386 2,014,345 448,031 2,462,762
Total current liabilities 608,625 64,759 3,344,469 35,866 1,085,525 5,139,244
Non-current liabilities:
Accrued compensated absences-non-current(Note 1) 28,447 23,406 10,959 62,812
Notes payables-non current(Note 6) 3,161,269 185,000 3,346,269
Accrued interest-non current 830,593 830,593
Loan Payable(Note 6) 993,780 611,156 1,604,936
Other liabilities-related parties 15,000 15,000
Total non-current liabilities 28,447 993,780 23,406 4,006,862 807,115 5,859,610
Total liabilities 637,072 1,058,539 3,367,875 4,042,728 1,892,640 10,998,854
Net assets:
Investment in capital assets,net of related debt 11,837,969 502,662 2,030,756 2,478,901 16,850,288
Unrestricted 2,653,471 415 1,317,289 198,661 1,096,191 5,266,027
Total net assets $ 14,491,440 415 $ 1,819,951 $ 2,229,417 $ 3,575,092 $ 22,116,315
The accompanying notes are an integral part of this financial statement
16
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATEMENT OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS-PROPRIETARY FUNDS
FOR THE YEAR ENDED MARCH 31,2004
Low Rent Housing Casa Other
Public Choice Del Enterprise
Hous CDBG Voucher Rio Funds Total
Operating revenues
Rental revenue-tenant $ 3,272,030 $ $ $ 395,185 $ 3,667,215
Other revenue 148,132 24,669 74,457 27,459 87,674 362,391
Total operating revenues 3,420,162 24,669742457 422,644 87,674 4,029,60
Operating expenses
Administration 1,785,998 122,154 7,367,606 125,401 814,845 10)216,004
Tenant services 115,545 2,100 271 363,008 480,924
Utilities 11236,162 44,644 54,088 495 1,335,389
Ordinary maintenance and operations 3,013,448 63,541 97,507 155,798 3,330,294
General expenses 401,098 515,860 178,019 27,555 1,122,532
Housing assistance payments 76,204,483 3,855,998 80,060,481
Depreciation expense 2,616,210 150,786 182,298 64,967 3,014,261
Extraordinary maintenance 74,978 974 132 76,084
Total operating expenses 9,243,439 1241254;A
84,348,165 637,313 5,282,798 99,635,969
Operating income(loss) (5,823,277) (99,585) (84,273,708) (214,669) (5,195,124) (95,606,363)
Non-operating revenues(expenses)
HUD PHA grants 31628,171 82,2499851 4,174,217 90,052.239
Other government grants 2,357,789 211357,789
Interest income-restricted 10,698 10,698
Gain on sale of fixed assets 630 630
Net non-operating revenues(expenses) 3,628,801 82,249,851 10,698 6,532,006 92,4212356
Income/(loss)before equity transfers (2,194,476) (99,585) (2,023,857) (203,971) 1,336,882 (3,185,007)
Equity transfers in(out)(Note 11) 100,000 165,000 (265,000)
Beginning net assets(Note 14) 16,685,916 3,678808 2,433,388 2,503,210 25,301,322
Ending net assets $ 14,491,440 $ 415 $ 1,8+19,951 $ 2,229,417 $ 35-5757092 $ 22,1161315
The accompanying notes are an integral part of this financial statement
17
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATEMENT OF CASH FLOWS-PROPRIETARY FUNDS
FOR THE YEAR ENDED MARCH 31,2004
Major Enterprise Funds
Low Rent Housing Casa Other
Public Choice Del Enterprise
Housing CDBG Vouchers Rio Funds Total
Cash flows from operating activities:
Cash Collected from:
Dwelling rental $ 2,200,484 $ $ $ 395,185 $ $ 2,595,669
Other government grants 50,051 50,051
Other miscellaneous 62,178 714 27,459 37,814 128,165
Cash paid for:
Housing assistance payments (76,204,483) (4,104,617) (80,309,100)
Employee expenses (3,697,978) (75,756) (5,051,467) (19,948) (701,395) (9,546,544)
Administrative expenses (409,678) (6,976) (1,167,277) (74,266) (871,528) (2,529,725)
Utilities expenses (1,236,162) (44,644) (54,088) (457) (1,335,351)
Maintenance expenses (909,806) (64,515) (82,507) (225,930) (1,282,758)
General expenses (401,291) 515,569). (138,019) (90,4721_ (2,145,349)
Net cash(used)/provided by operating activities (4,342,202) (82,732) (84,047,241) 53,816 (5,956,583) (94,374,942)
Cash flows from noncapital financing activities:
Grant revenue received-HUD 3,628,141 82,249,851 4,473,407 90,351,399
Grant revenue received-Other 2,058,599 2,058,599
Interfund transfers out (265,000) (265,000)
luterfimd transfers in 100,000 165,000 265,000
Net cash provided by noncapital financing activities 3,628,141 100,000 82,414,851 6,267,006 92,409,998
Cash flows from capital and related financing activities:
Acquisition of capital assets (175,977) (14,052) (190,886) (380,915)
Proceeds from sale of capital assets 630 630
Construction of capital assets (1,138,257) (1,138,257)
Disposal of assets 5,057 5,057
Net cash provided/(used)by capital and related financing activities 630 (175,977), (14,052) (1,324,086) (1,513,485)
Cash flows from financing activities:
Issuance of notes payable (9,824) (9,824)
Collection of notes receivable 1,0009000 17,580 1,017,580
Payment of loans (9,713) (9,713)
Net cash provided(used)by financing activities (9,824) 1,000,000 (9,713) 17,580 998,043
Cash flows from investing activities:
Sale of investments 372,733 809,291 677,102 1,859,126
Purchase of investements (49,165) (26,300) (75,465)
Net cash provided(used)by investing activities 372,733 809,291 (49,165) 650,802 1,783,661
Net increase(decrease)in cash and cash equivalents (340,698) 7,444 924 (19,114) (345,281) (696,725)
Cash and cash equivalents at beginning of year 349,880 56,929 100 181,187 494,742 1,082,838
Cash and cash equivalents at end of year $ 9,182 $ _64,373 $ 1,024 $ 162,073 $ 149,461 $ 386,113
Reconciliation of operating income to net cash provided/(used)
by operating activities:
Operating income(loss) $ (5,823,277) $ (99,585) $ (84,273,708) $ (214,669) $ (5,195,124) $ (95$606,363)
Adjustments to reconcile operating income to
net cash provided/(used)by operating activities:
Depreciation expense 2,616,210 150,786 182,298 64,967 31014,261
(Increase)/Decrease in accounts receivable-HUD (1,535,291) 32,063 (1,503,228)
(Increase)/Decrease in accounts receivable-other 16,185 (300) 141,584 43,649 (143,936) 57,182
(Increase)/Decrease in accounts receivable-tenants (28,108) (3,904) (274,171) (306,183)
(Increase)/Decrease in accrued interest receivable (1,985) (52,438) 2,193 (52,230)
(Increase)/Decrease in other current assets (151) (501) (31,814) (24,634) (57,100)
(Iiicrease)/Decrease in interfaud receivable (950,683) (95,835) (1,046,518)
(increase)/Decrease in prepaid expense and deposits 50,196 (46,372) (3,310) (2,336) (1,822)
Increase/(Decrease)in deferred revenue 77,244 100,973 1,258 (548,909) (369,434)
Increase/(Decrease in accounts payable 1,196 808,769 1,357 131,580 942,902
Increase/(Decrease)in inter-fimd payable (79,060) 989,818 135,760 1,046,518
Increase/(Decrease)in accounts payable-other government (34,302) (34,302)
Increase/(Decrease)in accrued compensated absences (50,202) (4,091) 71,426 13,269 30,402
Increase/(Decrease)in accrued benefits 25,120 (168) (73,585) 800 1,319 (46,514)
Increase/(Decrease)in other liabilities (69,719) (507,024) 78,800 (30) (497,973)
Increase/(Decrease)in accrued liabilities (218,636) 310,608 (52,801) 39,171
Increase/(Decrease)in tenant security deposit 14,408 1,839 42 16,289
Net cash provided(used)by operating activities $ (4,342,202)$ (82,732) $ (84,04Z,241) $ 53,816 $ (5,216,583) $ (94,374,942)
The accompanying notes are an integral part of these financial statement.
18
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31
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 generally accepted
accounting principles (GAAP) as applied to Government units. The Governmental
Accounting Standards Board (GASB) is the accepted standard setting body for
establishing governmental accounting and financial reporting principles.
A. Ortzanization
The Housing Authority of the County of Contra Costa (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 California's 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.
A seven member Board of Commissioner governs the Authority.
Commissioners are appointed by the County of Contra Costa Board of
Supervisors. The accompanying financial statements present the Authority
and its component units, entities for which the Authority is considered to be
financially accountable. Blended components units, although legally separate
entities, are, in substance, part of the authority's operations. Discretely
presented component unit is reported in the separate column in the net assets
financial statements to emphasize that it is legally separate from the
government.
The Authority is a legally separate Agency maintaining separate accounting
records and staff from those of the County. For purposes of these financial
statements the Authority is not considered to be a component unit of the
County. However, these financial statements are included in those of the
County as a non-discrete component unit. The Authority's financial
statements include all funds, and organizations over which Authority officials
exercise oversight responsibility.
The accompanying financial statements are those of the Low Rent Housing
g
Program (Contract SF-477) and the Section 8 Housing Program (Contract SF-
473), which includes Moderate Rehabilitation Shelter Plus Care and Voucher
programs, and the Local Programs. A summary of the programs administered
by the Authority is provided below to assist the reader in interpreting such
financial statements.
19
Blended Component Units. Casa Del Rio (CDR.) Senior Housing Associates
L.P and HACCC Casa Del Rio Inc. The general partner of the 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.
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
deficiency, unpaid taxes, interest and penalties, cost to contest, operating
deficiency and expenses of enforcement as identified in the Agreement and for
a sponsor's 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.Reporting funds—CDR.
Discretely presented component units. DeAnza Gardens, L.P and DeAnza
Gardens Inc. The Authority is Co-General Partner of the limited partnership of
De Anza Gardens, Associates. 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, and the operation, and leasing of an
affordable housing development located in Contra Costa County. Financing
the construction of the project was obtained through notes by the Authority,
Bank of America.
B. Major Funds
Based on criteria established by Governmental Accounting Standards Board's
Statement No. 34)the Authority has reported the following major funds:
Conventional Low Rent Public Housine Fund - The Authority has
contracted with the HUD (Contract No. SF - 477) to provide housing for
families of low-income in public housing facilities owned and maintained,
pursuant to the United States Housing Act of 1937 and the Department of
Housing and Urban Development Act.
Under this program, the public housing agency develops and owns properties
which are rented to qualified low-income families. The Authority has financed
these housing developments through the issuance of notes, under which HUD
has guaranteed the debts and made specific annual debt and service
contributions to the Authority. This debt has since been assumed by HUD and
accordingly is no longer carried as debt on the Authority's books.
Housinz -Choice Voucher Funds - The Authority has contracted with the
HUD (Contract No. SF-473) to provide rent subsidy payments to low and
moderate income families pursuant to the United States Housing Act of 1937
and the Department Of Housing and Urban Development Act.
20
HUD makes annual contributions to the program for housing assistance
payments on behalf of the families. Included in this annual contribution is an
allowance for administrative costs. Under this program, tenants lease directly
with private owners after being certified as eligible under program guidelines.
Tenants make payments directly to owners for the tenant rent obligation (TRO)
and the Authority makes monthly subsidy payments (HAP) to the owners.
Programs included in this annual contribution are the Section 8 Housing
Choice Voucher,Moderate Rehabilitation and Shelter Plus Care.
Community Development Block Grants-
Casa Del Rio:
CDR Senior Housing Associates LY 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.
Non M;4or Funds
1. Capital Grants
2. Management Fund
3. Ross
4. County Programs
5. Moderate Rehabilitation
6. Shelter Plus Care
7. Rental Rehabilitation
8. Section 8 Pension
9. Drug Elimination
C: Fund Accounting
The basic accounting and reporting entity is a"fund". A fund is defined as an
independent fiscal and accounting entity with a self-balancing set of accounts,
recording resources, related liabilities, obligations, reserves and equities
segregated for the purpose of carrying out specific activities or attaining
certain objectives in accordance with special regulations, restrictions or
limitations.
The Authority applies all applicable GASB pronouncements in accounting and
reporting for its proprietary operations as well as the following
pronouncements issued on or before November 30, 1989, unless these
pronouncements conflict with or contradict GASB pronouncements: Financial
Accounting Standards Board (FASB) Statements and Interpretations.
Accounting Principles Board (APB) Opinions, and Accounting Research
Bulletins(ARBs)of the Committee on Accounting Procedure.
21
The accounting records of the Authority are organized on the basis of funds
classified for reporting purposes as follows:
Enterprise Funds
All of the funds of the Authority are considered Enterprise Funds. Enterprise
funds are used to account for operations (a)that are financed primarily through
user charges, or (b) where the governing body has decided that determination
of net income is appropriate.
D. Measurement Focus and Basis of Accounting
The proprietary fund types are accounted for on an "income determination" or
"cost of services" measurement focus. Accordingly, all assets and liabilities
are included on the balance sheet, and the reported fund equity provides an
indication of the historical net worth of the fund. Operating statements for
proprietary fund types report 'increases (revenues) and decreases (expenses) in
total historical net worth.
Proprietary funds use the accrual basis of accounting, i.e., revenues are
recognized in the period earned and expenses are recognized in the period
incurred.
Proprietary funds distinguish operating revenues and expenses from
nonoperating items. Operating revenues and expenses result from providing
goods and services related to the fund's ongoing operations. The principal
operating revenue of the Authority's enterprise funds is dwelling rental
income. Operating expenses include the cost of services provided,
administrative expenses and depreciation on fixed assets. All revenues and
expenses not meeting this definition are reported as nono-perating revenues and
expenses.
E. Capital Assets
Capital Assets, which include property, plant and equipment, are reported in
the applicable business-type activities columns in the government-wide
financial statements. 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 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.
The costs or normal maintenance and repairs that do not add to the value of the
asset or materially extend assets lives are not capitalized.
22
Property, plant, and equipment of the Authority, is depreciated using the
straight-line basis over the useful lives of the assets generally as follows:
Years,
Computer Hardware and Software 3
Furniture and Equipment 5
Vehicles 5
Building Improvements 10
Buildings 27.5
F. Accounts Receivable
Receivables are principally amounts due from HUD and tenants. Allowance
for doubtful accounts has been provided based on the likelihood of the
recoverability.
G. Estimates
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the reported
revenues and expenses. Actual results could differ from those estimates.
H. Compensated Absences
It is the Authority's policy to pen-nit 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 government. All
vacation pay is accrued when incurred in the government-wide, proprietary,
fund financial statements. A liability for these amounts is reported in
governmental funds only if they have matured, as a result of employee
resignations and retirements. Total liability for the Authority is $416,905
based on year-end hourly rates.
L Net Assets
Net Assets consist of investment in capital assets,net of related debt,restricted
net assets and unrestricted net assets. Restricted net assets include the
accumulation of contributions in the form of cash or other assets which
generally do not have to be returned to the contributor. These funds are
restricted by HUD as to use and must be approved before expending. The
Authority does not have any restricted net assets for the period ended March
315 2004. Unrestricted assets are designated for use for program expenditures
in future periods.
J. Cash and Investments
Cash includes amounts in demand deposits and saving accounts. Investments
are reported in the accompanying statement of net assets at fair value.
23
Changes in fair value that occur during a fiscal year are recognized as
investment income reported for that fiscal year. Investment 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 funds. Each fund's share in
this pool is displayed in the accompanying financial statements as cash and
investments. Investment income earned by the pooled investments is allocated
to the various funds based on each fund's average cash and investment
balance.
K. 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.
L. Budgets and Budgetary Accountint!
The Board of Commissioners adopts an operating budget no later than April 1.
This budget is 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.
M. Total Memorandum Only)
Columns in the accompanying combined financial statements captioned "Total
(Memorandum Only)" do not present consolidated financial information. They
are presented for purposes of additional analysis and are not necessary for a
fair presentation of the financial statements. These data are not comparable to
a consolidation and do not present financial position or results of operations in
conformity with generally accepted accounting principles.
NOTE 2: CASH AND LWESTMENT
The Authority is empowered by the HUD Notice 99-48 and its own investment
policy to invest HUD funds in the following:
a 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;
24
• Insured SUPER NOW accounts, provided that deposits in excess of the insured
amount must be 100%collateralized by federal securities;
• Negotiable Certificates of Deposit issued by federally or state chartered banks or
associations,, limited to no more than 30% of surplus funds;
• Repurchase/Reverse Repurchase Agreements of any securities authorized by this
section; securities purchased under purchase agreements shall be no less than
102% of market value;
• 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 EIUD/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;
25
• Prime Commercial Paper with a term not to exceed 180 days and the highest
ranking issued by Moody's Investors Service or Standard & Poor's 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 Moody's or Standard & Poor's limited to not more than 30% of
surplus funds;
• Shares of beneficial interest issued by diversified management companies
investing in the securities and obligations authorized by this Section (Money
Market Mutual Funds), limited to not more than 15%of surplus funds;
• Funds held under the terms of a Trust Indenture or other contract or agreement
may be invested according to the provisions of those indentures or agreements;
• Collateralized bank deposits with a perfected security interest in accordance with
the Uniform Commercial Code(UCC) or applicable federal security regulations;
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.
Under the California Government Code, a financial institution is required to secure
deposits made by state or local governmental units by pledging securities held in the
form of an undivided collateral pool. 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.
Deposits of Authority's and other state or local governments are classified in three
categories to give an indication of the level of custodial risk assumed by the entity.
Category I includes deposits that are insured or collateralized with securities held by
the Authority or its agent in the Authority's name. Category 2 includes deposits
26
collateralized with securities held by the pledging financial institution's trust
department or agent in the Authority name. Category 2 also includes deposits
collateralized by an interest in an undivided collateral pool held by an authorized
Agent or Depository and subject to certain regulatory requirements under State law.
Category 3 includes deposits collateralized with securities held by the pledging
financial institution, or by its trust department or agent but not in the Authority's
name. Category 3 also includes any uncollateralized deposits. Deposits are
categorized as follows:
Category
Bank Carrying
Form of Deposit 1 2 3 — Balance Amount
Demand deposits $ 200)000 $ $ 800)135 $ 1A0,135 $ 386)113
Total deposits $ 200)000 i $ $ 800,135 $ 1300031135 - $ 3863113
Investments in authorities and other state or local governments are classified in three
categories to give an indication of the level of custodial risk assumed by the entity at
year-end. Category 1 includes investments that are insured or registered or for which
the securities are held by the Authority or the Authority's custodial agent (which
must be a different institution other than the party through which the Authority
purchased the securities) in the Authority's name. Investments held "in the
Authority's name"include securities held in a separate custodial or fiduciary account
and identified as owned by the Authority in the custodian's internal accounting
records. Category 2 includes uninsured and unregistered investments for which the
securities are held by the dealer's agent (or by the trust department of the dealer if
the dealer was a financial institution and another department of the institution
purchased the securities for the Authority) in the Authority's name. Category 3
includes uninsured and unregistered investments for which the securities are held by
the dealer's agent (or by the trust department of the dealer if the dealer was a
financial institution and another department of the institution purchased the
securities for the Authority), but not in the Authority's name. Category 3 also
includes all securities held by the broker-dealer agent of the Authority(the party that
purchased the securities for the Authority)regardless of whether or not the securities
are being held in the Authority's name.
The carrying amount of all investments reflected in the above table is at fair value.
The Authority is a voluntary participant in the Local Agency Investment Fund
(LAIF) that is regulated by California Government Code Section 16429 under the
oversight of the Treasurer of the State of California. The fair value of the
Authority's investment in this pool is reported in the accompanying financial
statements at amounts based upon the Authority's pro-rata share of the fair value
provided by LAW for the entire LAW portfolio (in relation to the amortized cost of
that portfolio). The balance available for withdrawal is based on the accounting
records maintained by LAIF, which are recorded on an amortized cost basis.
Included in LAIF's investment portfolio are collateralized mortgage obligations,,
mortgage-backed securities, other asset-backed securities, loans to certain state
funds, and floating rate securities issued by federal agencies., government-sponsored
enterprises,and corporations.
27
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NOTE 3: INTERFUND RECEIVABLES/PAYABLES
Interfund
General purpose is to establish a revolving cash where an individual fund
expenditures are paid in the interfund accounts and the reimbursement is processed
within the year.
The composition of Due to/from other funds as of March 31, 2004, is as follows:
Receivable Fund Payable Fund Amount
Low Rent Public Housing Housing Choice Voucher $ 2,014,345
Low Rent Public Housing Capital Grants 43,523
Low Rent Public Housing County Programs 1393446
County Programs Shelter Plus Care 223,066
Management Shelter Plus Care 106,740
Low Rent Aided Housing ROSS 57,141
Management ROSS 5p9
Management CDBG 386
Management Rental Rehabilitation 257
Moderate Rehabilitation County Programs 62,471
Section 8 County Programs 11)298
$ 2,462,762
All Due to/from balances represent short term transactions between ftmds.
NOTE 4: NOTES RECEIVABLE
The following is a schedule of notes receivable as of March 31, 2004 that includes
the relevant property,maturity date, interest rate,principal advanced and balance.
A. CDBG Loans
Notes
Receivable
Maturity Interest Principal Balances at
Pro ex Date Rate Advanced 3/31/04
1301 York Street,Richmond,CA 11/15/00 3.00% $ 16,701 $ 23,417
982 Marlesta Road,Pinole 3/31/07 3.00% 22,250 30,011
1168 Temple Drive,Pacheco,CA 5/13/02 0.00% 23,700 23,700
831 Contra Costa Blvd., Pleasanton Hill, 3/26/08 3.00% 25,000 323,837
CA
1341 Madeline,San Pablo,CA 10/08/03 3.00% 13,777 18,059
1602 Alhambra,Martinez 10/22/03 3.00% 39,000 51,080
24 Bella Monte,Bay Point,CA 11/16/02 3.00% 2,600 3,473
5276 Ironwood Lane,Oakley,CA 3/17/09 0.00% 4,733 4)733
120 Williams Way,Pittsburg 5/17/04 3.00% 10,791 14,021
123-125 Anderson Way,Martinez 7/11/04 3.00% 6,718 8,687
1411 York Street,Richmond,CA 7/19/04 3.00% 15,250 19,604
80-82 Mountain View,Bay Point 8/17/09 3.00% 94)000 115,830
2723 Sixteenth Street,San Pablo,,CA 8/24/04 3.00% 9,418 123,122
417 Market Street,Richmond,CA 9/12/04 3.00% 27)500 35)167
800-804 Bella Vista,Martinez 5/18/05 3.00% 13,532 17ffl9
810-814 Bella Vista)Martinez 5/18/05 3.00% 13,532 17,079
330 Hanlon Way,Bay Point 6/30/05 3.00% 18,000 22,212
29
Nates
Receivable
Maturity Interes Principal Balances at
PrDate t Rate Advanced 3/31/04
84-86 Mountain View,Bay Point 11/15/05 3.00% $ 22,800 $ 27,998
105 Sanford Avenue,Richmond,CA 9/11/06 3.00% 193500 23,682
200922 d Street,San Pablo,CA 4109/09 3.00% 1,910 29171
1002-1006 Alhambra,Martinez,CA 3/24/10 3.00% K0500 115723
5249/5251 Sobrante Avenue, and 2,4,6,8 8/27/10 3.00% 931000 1005731
Sobrante Court,El Sobrante,CA
1243 Richmond Street,El Cerrito,CA 8/21/10 3.00% 71500 8,186
1830 5th Street,Richmond,CA 10/27/11 3.00% 325500 355544
1999 19th Street,San Pablo,CA 10/27/10 3.00% 25,000 275449
6208 Cypress,El Cerrito,CA 11/28/1.0 3.00% 25,000 27,308
1304 Berry Lane,Brentwood 10/08/11 3.00% 91250 91)831
53 Willard,Richmond,CA 12/19/11 3.00% 281000 29,818
1837 5"Street,Richmond 12/21/11 3.00% 32,789 34,077
548 Virgil Street 11/28/11 3.00% 75000 713 86
5245/5247 Sobrante Avenue & 1,315,7 11/02/11 3.00% 94,000 985600
Sobrante Court
29 Santa Monica,Pleasant Hill 5/05/12 3.00% 145350 15,091
1415 Dover,San Pablo,CA 6/12/23 3.00% 18,000 185365
44 Crivello,Bay Point,Ca 94565 6/23/23 3.00% 61371 65456
150923 d Street,San Pablo,CA 9/09/23 3.00% 95900 1011026
940 Big Horn Terrace,Brentwood,CA 11/07/23 3.00% 7,000 73069
1140 Yuba Avenue,San Pablo,CA 94806 10/02/23 3.00% 2,610 23k635
1334 Fillmore,San Pablo,CA 94806 8/27/23 3.00% 10,000 105086
Chester Drive,Pittsburg,CA 6/22/03 0.00% 305000 305000
129 Christine Drive,San Pablo,CA Monthly 12,142 437
$ 8750624 $ 9
B. Rental Rehabilitation Loans
Notes
Receivable
Maturity Interest Principal Balances at
Pr Date Rate Advanced 3/31/04
982 Marlesta Road,Pinole 3/31/07 3.00% $ 193750 $ 26,643
1579 N.Mitchell Canyon Road,Clayton 6/24/07 0.00% 253000 253,000
1541 Truman Street,Richmond 12/09/07 3.00% 205000 233,793
185214 th Street,San Pablo 2/10/08 3.00% 365000 42,112
978 Mitchell Way,El Sobrante 6/08/08 0.00% 211707 215707
835 Windward Drive,Rodeo 6/20/08 0.00% 59950 57950
106 Alder Court,Hercules 5/20/08 0.00% 5,625 5,625
1837 Powell Street,San Pablo 12/05/08 3.00% 51330 65161
57 Mountain View Avenue,Bay Point 3/12/09 3.00% 959412 108,291
115 Manor Drive,Bay Point 1/26/11 3.00% 15,000 16,336
1830 Sixth Street,Richmond 3/05/11 3.00% 19,000 205447
1318 California,San Pablo,CA 94806 3/05/11 3.00% 63,964 691244
10 Alamo Avenue,Richmond 2/27/11 3.00% 257000 27,212
1817 Truman Street,Richmond 5/10/11 3.00% 153000 163280
4150 San Pablo Dam Road,El Sobrante 5/22/11 3.00% 341200 373,061
1875 15th Street,San Pablo,CA 10/15/12 3.00% 125700 13,072
293212 1h Street,San Pablo,CA 1/03/23 3.00% 205475 211,076
7202 nd Street,Rodeo,CA 1/27/23 3.00% 33050 39147
244 Center,Pacheco,CA 9/09/23 3.00% 475579 471,992
1301 York Street,Richmond 1/15/00 3.00% 16,701 231483
125 Marin Avenue,Bay Point,CA 94565 1/24/01 3.00% 205400 281,338
24 Bella Monte Avenue,Bay Point 94565 11/19/02 3.00% 6,000 8,035
30
Notes
Receivable
Maturity Interest Principal Balances at
Property Date Rate Advanced 3/31/04
1248 Dainty Avenue,Brentwood 9/09/03 3.00% $ 10,500 $ 133,715
1743 Erneric,San Pablo,CA Monthly 17,323436
561j666 i611,156i611,156A
C. Component Unit Loan
Property
125 Pueblo Avenue,Bay Point,CA $1,000,000 $1%000,000
Total $204321,29-0 216043,936
Less: Current portion 297,250
$2;307,686
NOTE 5: PAYMENT IN LIEU OF TAXES
In connection with the Conventional Housing Program, the Authority is obligated to
make annual payments in lieu of property taxes based on the lesser of assessable
value of owned housing times the current tax rate or 10% of the dwelling rents net
of utilities expense. At March 31, 2004, accrued liabilities include $70,255 for
payment in lieu of taxes.
NOTE 6: LOAN AND NOTES PAYABLE
Loan Payable:
The detail for Loan Payable is disclosed in Note 4 in the amount of$993,780 as
CDBG Loans Receivable and Rental Rehabilitation Loans in the amount of
$611,156. The receivable and payable are offset accounts. When the receivable is
collected the loan payable is reduced. Cash is debited and Uncommitted Loan
Funds is credited and available for future loans.
Notes Payable:
1. On June 301, 1994 the Authority signed a Demand Promissory Note promising to
pay to the order of HACCC Casa Del Rio, Inc. a California Non-Profit Public
Benefit Corporation on demand or in the event no demand has there-to-fore
been made, on December 31, 2059 (the maturity date), the amount of$185,000,
and all accrued but unpaid interest there on. The outstanding principal amount
hereof shall bear interest until the maturity date at the lesser of 7.52% and the
maximum rate permitted by law. As of the date of this report there is no
interest accrued as it has been forgiven by HACCC Casa Del Rio,Inc.
2. California Housing Finance Agency, note dated November 14, 1994 in the
original amount of $600,000. Bears simple interest of 7.8% per annum,
principal and interest payable in monthly installments of $4,319. Current
principle amount of$534,651.
3. Rental Housing Construction Program note dated January 15, 1993 in the
original amount of$2,626,618. Bears simple interest of 3%per annum,payable
to the extent of net cash flow, as described in the regulatory agreement. Due in
full June 5, 2054. Current principle amount is $2,626,618.
31
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NOTE 8: RETIREMENT PLAN
The Authority participates in a defined benefit retirement plan that is administered by
the Contra Costa County Employees'Retirement Association. All full-time employees
of the Authority participate in this plan. The plan provides death, disability and service
retirement benefits. Benefits are based on the employee's highest level of annual
salary, years of service and age at the time of retirement. The Authority's retirement
plan had 113 participants at March 31, 2004. The Authority contributes 24.73% of
eligible employees' annual compensation. In addition, the Authority also paid
approximately 50% of the employees' basic annual contributions pursuant to
agreements during salary negotiations. Employer contributions are vested (1) after 10
years of service and employee attain age 50 or(2) 30 years of service regardless of age
or(3)at mandatory age regardless of the amount of service.
Employees contribute to the retirement system through biweekly payroll deductions.
The rate of contribution for employees is determined by age at the time of entrance into
the system. Employee contributions and interest thereon may be withdrawn only at
termination of employment or at retirement. Total payroll subject to contributions was
$5,472,600 for the year ended March 31, 2004. Employer contributions were
$1,106,173 and employee contributions were $318,185, representing 20.21% and
5.21% of payroll subject to contribution, respectively, for the fiscal year ended March
31,2004.
The ten-year trend analysis and other disclosures required by accounting principles
generally accepted in the United States of America are described in the general-
purpose financial statements of the County of Contra Costa, California as of June 30,
2004. The plan report may be obtained from Contra Costa County Employee's
Retirement Association.
NOTE 9: CONTINGENT LIABILITIES AND RELATED PARTIES
The Authority has received funds from various Federal, 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 amounts, 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.
De Anza Gardens,Inc./De Anza Gardens,Associates
The Authority is Co-General Partner of the limited partnership of De Anza Gardens,
Associates. As of March 31, 2003 the Authority has advanced a short-term loan of$2
million accruing interest at a simple rate of 6%. In June 2004 $1 million of the short-
term loan was granted to De Anza Gardens,Inc. and the other$1 million was converted
to long-term debt accruing interest at a simple rate of 3%. De Anza Gardens, Inc. then
advanced the $1 million granted to them by the Authority to De Anza Gardens
Associates,The Limited Partnership.
33
Casa Del Rio, Associates,
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 deficiency, unpaid
taxes, interest and penalties, cost to contest, operating deficiency and expenses of
enforcement as identified in the Agreement.
Pursuant to the Operating Deficit Guaranty Agreement dated July 1, 1994 by the
Authority to and for the benefit of MHIFED I Limited Partnership, the Authority can
possibly be liable for operating deficit and expenses of enforcement as identified in the
Agreement.
Pursuant to the Indemnity Agreement, dated July 1, 1994, by the Authority to and for
the benefit of CDR Senior Housing Associates and MHIFED I Limited Partnership,the
Authority can possibly be liable for any costs, expenses, and liabilities arising out of
claims made by FPI (FPI Real Estate Group, FPI Mortgage Co. and FPI Management,
Inc.)under the Development Agreement.
Pursuant to the Demand Note dated June 30, 1994,from the Authority to HACCC Casa
Del Rio, Inc., the Authority can possibly be liable to HACCC Casa Del Rio, Inc. for
$185,000. Although the note is due upon demand the maturity date is December 31,
2059, the note will be called prior to maturity only in the event that there are operating
deficits and there is not sufficient cash available to cover expenses.
Pursuant to the Assignment and Assumption Agreement, the Authority can possibly be
liable for any and all claims relating to the Assignment agreement arising prior to the
date of the Assignment Agreement.
Pursuant to the Department of Housing and Community Development Rental Housing
Construction Program First Amendment to 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 possible be liable for a sponsor's 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.
NOTE 10: RISK MANAGEMENT
The Authority is exposed to all common perils associated with the ownership and
rental of real estate properties. A risk management program has been established to
minimize loss occurrence and to transfer risk through various levels of insurance.
Property, casualty, employee dishonesty and public official's liability forms are used to
cover the respective perils. Insurance for these perils is carried by California Housing
Authority Risk Management Agency(CHARMA), a Joint Powers Agreement(JPA).
Excess insurance from $250,000 to $10,000,000 is carried through, the Housing
Authorities Risk Retention Group (HAR.RG), a Housing Authority Insurance Pool.
34
NOTE 11: EQUITY TRANSFERS
Equity transfers in the amount of$265,000 were completed. $100,000 was transferred
from the Rental Rehabilitation Program accounts to the Community Development
Block Grant program accounts. $165,000 was transferred fro the Section 8 Moderate
Rehabilitation Program accounts to the Section 8 Housing Vouchers program accounts.
NOTE 12: SUBSEQUENT EVENTS I
On July 1, 2004, the Authority entered into an unsecured notes agreement with West
America Bank for $1,000,000. The maturity date of this note is March 31, 2005. The
Authority will pay this loan in one payment of all outstanding principal plus all accrued
unpaid interest of equal to the index,resulting in an initial rate of 4.25%.
NOTE 13: OPERATING LEASE
The Authority leases an office building under operating lease expiring on July 31,2007
with an option to renew for additional five years.
Minimum future rental payments under noncancelable operating lease having
remaining terms in excess of one year as of March 31, 2004, for each of the next four
years and in the aggregate are:
Year ended March 31, Amount
2005 $ 179,400
2006 186,580
2007 194,040
2008 65,520
Total minimum future rental payments $ �6255540
The rental expense for the year under the operating lease amounted to $174,720.
NOTE 14: RESTATEMENT OF BEGINNING NET ASSETS
The accompanying financial statements reflect adjustments which resulted in a
restatement of the beginning net assets.
Net assets at beginning of the year of the primary government
(reporting entity)as previously reported $ 225867,934
Blended component unit net assets at the end of its calendar year
ended during the last fiscal year of the primary government 2,4331388
Net assets at beginning of the year of the reporting entity as
restated $ 25,301,322
35
SUPPLEMENTARY INFORMATION
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED MARCH 31,2004
FEDERAL
CFDA FEDERAL
FEDERAL GRANTOR/PASS-THROUGH.GRANTOR/PROGRAM TITLE NUMBER EXPENDITURES
U.S.Department of Housing and Urban Development
Direct Awards
Moderate Rehabilitation 14.856 $ 154,689
Housing Choice Voucher 14.871 82)251)232
Public and Indian Housing Drug Elimination Program 14.854 249)121
ROSS 14-870 295
Shelter Plus Care 14.238 2,130,995
Low Rent Public Housing 14.850 3,6282141
Capital Fund Programs 14-872 158553,446
Rental Rehabilitation N/A 78,252
Total U.S.Department of Housing and Urban Development 90,3348)171
Total Expenditures of Federal Awards $ 903,3485171
N/A: CFDA Number is not available
Note: The accompanying schedule of expenditures of federal awards includes the federal grant activity of the
Authority and is presented on the accrual basis of accounting. The information in this schedule is
presented in accordance with the requirements of OMB Circular A-133,Audits of States,Local Governments,
and Non-Profit Organizations. Therefore,some amounts presented in this schedule may differ from amounts
presented in,or used in the preparation of,the general-purpose financial statements.
42
Patel &
Associates Telephone: (5 10)452-5051
266 171"Street,Suite 1.00 Fax: (510)452-3432
Certified Public Accountant Oakland,California 946 1 2-4 1 24 e-mail: ramesh@patelcpa.corn
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON
INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GO VERNMENT A UDITING STANDARDS`
Board of Commissioners
Housing Authority of the County of Contra Costa
Martinez, California
We have audited the general-purpose financial statements of the Housing Authority of the
County of Contra Costa (the Authority) as of and for the year ended March 31, 2004, and have
issued our report thereon dated September 2, 2004. 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.
Compliance
As part of obtaining reasonable assurance about whether the Authority's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts, and grants, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Re-porting
In planning and performing our audit, we considered the Authority's internal control over
financial reporting in order to determine our auditing procedures for the purpose of expressing
our opinion on the financial statements and not to provide assurance on the internal control over
financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control over financial reporting that might be
material weaknesses. A material weakness is a condition in which the design or operation of one
or more of the internal control components does not reduce to a relatively low level the risk that
misstatements in amounts that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees in the normal course
of performing their assigned functions. However, we noted other matters involving the internal
control over financial reporting which we have reported to management of the Authority in a
separate letter dated September 2,2004.
43
This report is intended for the information of management, federal awarding agencies and pass-
through entities and is not intended to be and should not be used by anyone other than these
specified parties.
r, 4� , "4,"/-
Oakland,California
September 2, 2004
44
Patel &
Associates 1h Telephone: (5 10)452-5051
266 17 Street,Suite .1-00 Fax: (5 10)452-3432
Certified Public Accountant Oakland,California 946 1 2-4 1 24 e-nail: ramesh@patelcpa.com
INDEPENDENT AUDITOR9S REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Board of Commissioners
Housing Authority of the County of Contra Costa
Martinez, California
Compliance
We have audited the compliance of the Housing Authority of the County of Contra Costa (the
Authority) with the types of compliance requirements described in the U.S. Office of
Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to
each of its major federal programs for the year ended March 31, 2004. The Authority's major
federal programs are identified in the summary of auditor's results section of the accompanying
schedule of findings and questioned costs. Compliance with the requirements of laws,
regulations, contracts, and grants applicable to each of its major federal programs is the
responsibility of the Authority's management. Our responsibility is to express an opinion on the
Authority's compliance based on our audit.
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
OMB Circular A-133, Audits of States, Local Governments, and Non-Profits Organizations.
Those standards and OMB A-133 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 Authority's compliance with those
requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit
does not provide a legal determination of the Authority's compliance with those requirements.
In our opinion,the Authority complied, in all material respects, with the requirements referred to
above that are applicable to each of its major federal programs for the year ended March 31,
2004.
Internal Control Over Compliance
The management of the Authority is responsible for establishing and maintaining effective
internal control over compliance with the requirements of laws,regulations, contracts, and grants
applicable to federal programs. In planning and performing our audit we considered the
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Authority's internal control over compliance with requirements that could have a direct and
material effect on a major federal program in order to determine our auditing procedures for the
purpose of expressing our opinion on compliance and to test and report on the internal control
over compliance in accordance with OMB Circular A-13 3.
We noted certain matters involving the internal control over compliance and its operation that we
consider to be reportable conditions. Reportable conditions involve matters coming to our
attention relating to significant deficiencies in the design or operation of the internal control over
compliance that, in our judgment, could adversely affect the Authority's ability to administer a
major federal program in accordance with the applicable requirements of laws, regulations,
contracts, and grants. Reportable conditions are described in the accompanying schedule of
findings and questioned costs as items 04-1 to 04-3.
A material weakness is a condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that noncompliance
with the applicable requirements of laws,regulations, contracts and grants that would be material
in relation to a major federal program being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned functions. Our
consideration of the internal control over compliance would not necessarily disclose all matters
in the internal control that might be reportable conditions and accordingly, would not necessarily
disclose all reportable conditions that are also considered to be material weaknesses. However,
we believe that none of the reportable conditions described above is a material weakness.
This report is intended solely for the information of the management and federal awarding
agencies and is not intended to be and should not be used by anyone other than these specified
parties.
Oakland, California
September 2,2004
46
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED MARCH 31,2004
SECTION 1 - SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
• Material weaknesses identified? No
• Reportable conditions identified that are not considered to be
material weaknesses? None reported
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
• Material weaknesses identified? No
• Reportable conditions identified that are not considered to be
material weaknesses? Yes
Type of auditor's report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in
accordance with section 5 10(a) of Circular A-133? Yes
Identification of major programs:
CFDA Number Name of Federal Program
14.871 Housing Choice Voucher Program
14.850 Low Rent Public Housing
Dollar threshold used to distinguish between type A and type B
programs: $29710,445
Auditee qualified as low-risk auditee? Yes
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED MARCH 31
SECTION H-FINANCIAL STATEMENT FINDINGS
No matters were reported.
SECTION III-FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
14.871 HOUSING CHOICE VOUC R PROGRAM
Eligibility:
Finding 04-1
Criteria:
The program requires that the Authority re-examine family income and composition at lease once
every 12 months and adjust the tenant rent and housing assistance payment as necessary using
the documentation from third party verification to determine income eligibility and calculate the
tenant's rent payment using the documentation from third party verification.
Condition:
During our test of the Housing Choice Vouchers Program, we noted that re-examinations of
income and composition were not being performed at least 12 months in 4 of the tenant files out
of 40 that were reviewed.
Questioned Costs:
We are not able to determine the questioned costs.
Effect:
Lack of re-examination of family income and composition may lead to incorrect calculations of
tenant rent and housing assistance payments. The Authority uses the total housing assistance
expense in requesting funding from HUD to administer this program.
Cause:
There were personnel problems with the case worker assigned to work on the 4 tenant files
mentioned. The case worker has separated from the Authority and the Authority has hired a
temporary case worker to correct the prior worker's caseload.
48
Recommendation:
We recommend that the Authority continue working with thetemporary case worker to ensure all
of the tenant files that were the responsibility of the prior case worker are correctly completed.
Management's Response:
The Authority is working with the temporary caseworkers to ensure all of the tenant files are
correctly completed and current.
14.850 PUBLIC AND INDIAN HOUSING PROGRAM
aikibff Lq:
Findinz 04-2
Criteria:
The program requires that the Authority offer tenants the option of paying a flat rent or an
income based rent at every re-examination.
Condition:
During our test of the Public and Indian Housing Program, we noted the Authority had not
documented the choice of rent to the tenant for 14 tenant files out of the 40 that were reviewed.
The Authority was made aware of this requirement during the RIM review to take corrective
action to ensure that all tenant files maintained a copy of the choice of rent.
Questioned Costs:
We are not able to determine the questioned costs.
Effect:
The choice of flat or income based rent is required to ensure the tenant is offered the best rental
rate for the unit. In some instances, using the income based rent, which is 30% of the tenant's
adjusted annual income,may be lower than the flat rental rate.
Cause:
The Authority was not aware of this requirement until the REV review by HUD.
Recommendation:
We recommend that the Authority continue to follow their corrective action plan and document
in each tenant file the offer of the choice of rent.
Management's Response:
As outlined by the auditor, the Authority has implemented a corrective action plan to document
each tenant file the offer of the choice of rent.
49
SPECIAL TESTS AND PROVISIONS:
Elieibility:
Findinz 04-3
Criteria:
The Authority must maintain an up-to-date utility allowance schedule. The Authority must
review utility rate data for each utility category each year and must adjust its utility allowance
schedule if there has been a rate change of 10 percent or more for a utility category or fuel type
since the last time the utility allowance schedule was revised.
Condition.-
During our test of the Public and Indian Housing Program, we noted that utility allowance
schedules were outdated for 9 tenant files out of the 40 that were reviewed.
Questioned Costs:
We are not able to determine the questioned costs.
Effect:
Although the Authority had completed a review of utility rates, an updated utility schedule was
not being used until after the fiscal year under audit.
Cause:
The Authority did not use an updated utility schedule since there was not a 10% increase in the
utilities.
Recommendation:
We recommend that the Authority continue to use and file the updated utility allowance
schedules in all of the tenant files at every re-examination.
Management's Response:
As outlined by the auditor, the Authority is now filing updated utility allowance schedules in all
of the tenant files at every re-examination.
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATUS OF PRIOR YEAR FINDINGS
AND RECOMMENDATIONS
FOR THE YEAR ENDED MARCH 31,2004
No Endings were reported in the prior year.
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