HomeMy WebLinkAbout2017 - LHC Lansing Housing Commision, Financial Report with Supplemental Information June 30, 2016, Plante Moran Annual Certified Audit- Final Audit Lansing Housing Commission
Financial Report
with Supplemental Information
June 30, 2016
Lansing Housing Commission
Contents
Report Letter 1-3
Management's Discussion and Analysis 4-8
Basic Financial Statements
Statement of Net Position 9-10
Statement of Activities I I
Statement of Cash Flows 12-13
Notes to Financial Statements 14-35
Required Supplemental Information 36
Schedule of Changes in the Commission's Net Pension Liability and Related Ratios 37
Schedule of Commission Contributions 38
Other Supplemental Information 39
Financial Data Schedules 40-44
Actual Modernization Cost Certificate 45-46
Independent Auditor's Report
To the Board of Commissioners
Lansing Housing Commission
Report on the Financial Statements
We have audited the accompanying financial statements of the business-type activities and the discretely
presented component unit of Lansing Housing Commission (the "Commission") as of and for the year
ended June 30, 2016 and the related notes to the financial statements, which collectively comprise
Lansing Housing Commission's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We did not
audit the financial statements of the discretely presented component unit. Those financial statements
were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for the discretely presented component unit, is based solely on the
report of the other auditors. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal control.Accordingly,we express no such opinion.An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
I
To the Board of Commissioners
Lansing Housing Commission
Opinion
In our opinion, based on our audit and the report of other auditors, the financial statements referred to
above present fairly, in all material respects, the respective financial position of the business-type
activities and the discretely presented component unit of Lansing Housing Commission as of June 30,
2016 and the respective changes in its financial position and its cash flows for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplemental Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and other required supplemental information, as identified on the table of
contents, be presented to supplement the basic financial statements. Such information, although not a
part of the basic financial statements, is required by the Governmental Accounting Standards Board,
which considers it to be an essential part of financial reporting for placing the basic financial statements in
an appropriate operational, economic, or historical context. We have applied certain limited procedures
to the required supplemental information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing
the information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because
the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise Lansing Housing Commission's basic financial statements. The financial data
schedules and closed grants are presented for the purpose of additional analysis and are not a required
part of the basic financial statements.
The financial data schedules are the responsibility of management and were derived from and relate
directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or
to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion,the financial data schedules
are fairly stated in all material respects in relation to the basic financial statements as a whole.
The closed grants have not been subjected to the auditing procedures applied in the audit of the basic
financial statements, and accordingly,we do not express an opinion or provide any assurance on them.
2
To the Board of Commissioners
Lansing Housing Commission
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 9, 2017
on our consideration of Lansing Housing Commission's internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering Lansing Housing
Commission's internal control over financial reporting and compliance.
4Gam, !� �, PGL C
January 9, 2017
3
Lansing Housing Commission
Lansing, Michigan
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2016
This management's discussion and analysis (MD&A) of Lansing Housing Commission provides an
overview of the Commission's financial performance during the fiscal year ended June 30, 2016. The
operations of the Lansing Housing Commission are comprised of a Low Income Public Housing Program,
a Housing Choice Voucher program, a Capital Fund Program, a Section 8 New Construction Program,
and a Shelter plus Care Program. The Public Housing Program is funded with rental revenue,
miscellaneous tenant charges, and Department of Housing and Urban Development (HUD) grants. The
remaining programs are funded entirely by federal grants. The Commission also maintains a central office
cost center, various business activities, and component units. This MD&A covers only the Commission's
primary government activities, which includes the blended component unit, Lansing Housing Commission
Non Profit Development Corporation (LHCNPDC), and do not analyze the financial position or current
year activity of the discretely presented component unit - Oliver Gardens LDHA Limited Partnership
(Oliver Gardens). Please read this summary along with the accompanying audited financial statements of
the Commission for the fiscal year ended June 30, 2016. The audited financial statements of Oliver
Gardens have been presented in the financial statements of the Commission.
Financial Highlights
1. Total assets exceed total liabilities by $ 16,402,933
2. Unrestricted net position equals 2,254,800
3. Total net position increased by 2,41 1,451
Required Financial Statements
The financial statements of the Commission have been prepared on the accrual basis of accounting
following the business-type activities reporting requirements of the Governmental Accounting Standards
Board (GASB) as a single enterprise fund. These statements are as follows:
Statement of net position - includes all of the Commission's assets and liabilities and provides
information about the amounts and investments in assets and the obligations to commission
creditors. It also provides a basis of assessing the liquidity and financial flexibility of the Commission.
Over time, increases or decreases in net position may serve as a useful indicator of whether the
financial health of the Commission is improving or deteriorating.
Statement of revenue, expenses, and changes in net position - provides information as to the increase
or decrease of current year revenue over expenses.
Statement of cash flows - provides information about the Commission's cash receipts and
disbursements during the reporting period. The statement discloses net cash provided by or used in
operating activities and noncapital financing activities from capital and related financing activities and
from investing activities.
4
Financial Analysis
Statement of Net Position
Percent
Restated 2014 2015 2016 Change Change
Assets
Current and restricted assets $ 3,459,833 $ 3,339,211 $ 6,090,137 $ 2,750,926 82%
Capital assets 15,511,120 14,844,567 15,647,363 802,796 5%
Noncurrent assets 1,464,346 1,478,780 909,675 (569,105) -38%
Total assets 20,435,299 19,662,558 22,647,175 2,984,617 15%
Deferred Outflows of Resources 118,212 208,788 992,302 783,514 375%
Total assets and deferred
outflows of resources 20,553,511 19,871,346 23,639,477 3,768,131 19%
Liabilities
Current liabilities 628,673 719,583 880,792 161,209 22%
Long-term liabilities 4,966,888 5,160,281 6,273,462 1,1 13,181 22%
Total liabilities 5,595,561 5,879,864 7,154,254 1,274,390 22%
Deferred Inflows of Resources - - 82,290 82,290 n/a
Net Position
Net investment in capital assets 13,135,256 12,245,548 13,195,546 949,998 8%
Restricted 633,791 545,721 952,587 406,866 75%
Unrestricted 1,188,903 1,200,213 2,254,800 1,054,587 88%
Total net position $ 14,957,950 $ 13,991,482 $ 16,402,933 $ 2,41 1,451 17%
As illustrated in the statement of net position, the overall net position of the Commission increased by
$2,41 1,451. Current assets increased primarily due to an increase in cash received from the sale of
certain assets that were held for sale and an increase in accounts receivable due from HUD. Additions to
construction work in progress accounts for the increase in capital assets. The decrease in noncurrent
assets was due to the sale of certain assets that were held for sale. Current liabilities increased primarily
due to the increases in the accounts payable related to the purchase of capital assets. Noncurrent
liabilities increased due to an increase in OPEB liabilities and the addition of the net pension liability in
accordance with GASB 68.
5
Financial Analysis
(Continued)
Statement of Revenue and Expenses
Percent
2014 2015 2016 Change Change
Revenue
Tenant rental revenue $ 1,522,720 $ 1,651,196 $ 1,717,181 $ 65,985 4%
Federal grants 16,488,971 15,003,554 17,108,785 2,105,231 14%
Other revenue 575,926 1,090,1 10 1,500,717 410,607 38%
Total revenue 18,587,617 17,744,860 20,326,683 2,581,823 15%
Expenses
Administrative expenses 2,520,740 3,028,025 3,169,731 141,706 5%
Tenant services 97,939 69,978 21,976 (48,002) -69%
Utilities 1,093,095 899,135 769,1 1 1 (130,024) -14%
Maintenance and operations 2,488,488 2,178,672 2,108,351 (70,321) -3%
Insurance and general expenses 367,237 481,043 430,957 (50,086) -10%
Housing assistance payments 10,682,277 10,559,434 9,970,034 (589,400) -6%
Depreciation and amortization 1,275,203 1,348,290 1,358,328 10,038 1%
Interest expense 21,680 146,751 86,744 (60,007) -41%
Total expenses 18,546,659 18,71 1,328 17,915,232 (796,096) -4%
Change in Net Position $ 40,958 $ (966,468) $ 2,41 1,451 $ 3,377,919 -350%
Revenue
In reviewing the statement of revenue and expenses, you will find that 84 percent of the Commission's
revenue is derived from grants from the Department of Housing and Urban Development, 9 percent of
the Commission's revenue is from dwelling rent, and 7 percent is from investment income and other
income.
Expenses
In reviewing the statement of revenue and expenses, you will find that 56 percent of the Commission's
expenses are for housing assistance payments, 18 percent for administrative,4 percent are for utilities, 12
percent are for maintenance, 7 percent are for depreciation and amortization, and 3 percent are for
tenant services, protective services,general expenses, and interest expense.
Change in Net Position
The Commission operated in fiscal year 2016 at a profit due to an increase in revenue coupled with a
slight decrease in overall expenses. The overall revenue increase was primarily a result of the increases in
available HUD funding over prior year and the gain on the sale of certain capital assets. Housing
assistance payments decreased due to a repayment (to HUD) of a prior year advance that occurred in
2015. The decrease in utility expenses is the result of the Energy Performance Contract implemented
during 2015. Other expenses fluctuated at relatively expected amounts due to changes in salaries,
benefits, and other housing operating expenditures with the net effect on expenditures consistent overall
to the prior year. Depreciation expense increases are a function of additional capital projects being placed
in service at the capital grant close-out. Interest expense decreased due to the reduction in existing debt
entered into in prior years.
6
Financial Analysis
(Continued)
Capital Assets
As of year end, the Commission had $15,647,363 invested in a variety of capital assets as reflected in the
following schedule, which represents a net increase (additions, deductions and depreciation) of 5 percent
from the end of last year.
Percent
2014 2015 2016 Change Change
Land $ 1,648,584 $ 1,648,584 $ 1,554,771 $ (93,813) -6%
Buildings 46,315,845 48,777,078 48,743,568 (33,510) 0%
Furniture and equipment 909,221 1,255,227 1,541,301 286,074 23%
Construction in progress 2,513,451 387,948 2,245,979 1,858,031 479%
Accumulated depreciation (35,875,891) (37,224,270) (38,438,256) (1,213,986) 3%
Net capital assets $ 15,51 1,210 $ 14,844,567 $ 15,647,363 $ 802,796 5%
The following reconciliation summarizes the change in capital assets:
Beginning balance-July 1, 2015 $ 14,844,567
Additions:
Construction in progress 2,245,979
Furniture and equipment 17,445
Disposals net of depreciation (102,300)
Depreciation expense (1,358,328)
Ending balance-June 30, 2016 $ 15,647,363
Debt Outstanding
As of the end of the fiscal year, the Commission had $2,451,817 in debt outstanding compared to
$2,599,019 in the previous year. The net change in debt for the year was a decrease of $147,202 of
principal payments.
Long-term Debt
2014 2015 2016
Note payable- Davenport $ 611,681 $ 574,719 $ 522,879
Note payable- PNC 2,051,375 2,024,300 1,928,938
Total long-term debt $ 2,663,056 $ 2,599,019 $ 2,451,817
7
Financial Analysis
(Continued)
Economic Factors and Events Affecting Operations
Factors that may affect the financial position of the Commission in the subsequent fiscal year are as
follows:
• Federal funding appropriations as budgeted by Congress for funding to the Department of Housing
and Urban Development
• Local labor supply and demand, which can affect salary and wage rates and the need to contract
more work because of employee hiring challenges
• Union contract negotiations
• Local inflationary, recessionary and employment trends, which can affect resident incomes and
therefore the amount of rental income
• Inflationary pressure on utility rates, supplies, and other costs
• Pay down of underfunded pension liability
In the current year and for future years, the financial position of the Commission will also be impacted by
the Commission's adoption of Governmental Accounting Standards Board (GASB) Statement No. 68 as
of July 1, 2014.The beginning of the year net position was restated to comply with GASB 68,
the objective of which is to improve accounting and financial reporting by state and local employers about
financial support for pensions that is provided by other entities. The Commission participates in an agent
multiple-employer defined benefit pension plan administered by the Municipal Employees Retirement
System of Michigan (MERS) that covers all employees of the Commission. The Commission's net pension
liability for this plan is determined annually using a measure of the total pension liability and the pension
net position at the end of each calendar year.
REAC
The Real Estate Assessment Center's (REAC) mission is to provide and promote accurate information in
assessing the condition of HUD's housing portfolio. The Commission receives a physical inspection and
an annual financial evaluation provided by REAC. This performance data provides an annual assessment of
how each Public Housing Commission compares to its peers.
Conclusion
The Commission's management is committed to staying abreast of regulations and appropriations as well
as maintaining an ongoing analysis of all budgets and expenses to ensure that the Commission continues
to operate at the highest standards established by the Real Estate Assessment Center and the
Department of Housing and Urban Development.
Contact
This financial report is designed to provide a general overview of the Commission's finances for all those
with an interest. Questions concerning any of the information provided in this report or requests for
additional financial information should be addressed to Ms. Patricia Baines-Lake, Executive Director,
Lansing Housing Commission, 419 Cherry, Lansing, MI 48933, or call (517)372-7996.
8
Lansing Housing Commission
Statement of Net Position
June 30, 2016
Discrete
Primary Component
Government Unit- Oliver
(LHC) Gardens
Assets and Deferred Outflows of Resources
Current Assets
Cash and cash equivalents (Note 2) $ 3,844,361 $ 30,294
Cash and cash equivalents- Restricted (Note 2) 984,529 275,431
Tenant security deposits - Restricted (Note 2) 117,127 4,406
Receivables:
Tenant receivables 47,022 -
Accrued interest receivable 32,606 -
Other receivables 100,446 1,799
Due from other governmental units 408,372 -
Allowance for doubtful accounts (3,202) -
Investments (Note 2) 509,256 -
Prepaid expenses and other assets 49,620 5,161
Total current assets 6,090,137 317,091
Noncurrent Assets
Investment in partnership 909,575 -
Other assets 100 43,554
Capital Assets - Nondepreciable (Note 3) 3,800,750 685,162
Capital Assets- Net of depreciation (Notes 3) 11,846,613 2,074,227
Total assets 22,647,175 3,120,034
Deferred Outflows of Resources - Pension (Note 5) 992,302 -
Total assets and deferred outflows of resources $ 23,639,477 $ 3,120,034
The Notes to Financial Statements are an
Integral Part of this Statement. 9
Lansing Housing Commission
Statement of Net Position (Continued)
June 30, 2016
Discrete
Primary Component
Government Unit- Oliver
(LHC) Gardens
Liabilities, Deferred Inflows of Resources, and Net Position
Current Liabilities
Accounts payable- Operating $ 357,937 $ 3,685
Security deposits liability 139,991 4,499
Accrued liabilities and other:
Accrued PILOT 161,903 25,067
Accrued interest - 44,843
Accrued salaries and wages 49,876 -
Compensated absences < I year 12,878 -
Other current liabilities - 58,875
Notes payable- Current portion (Note 4) 158,207 28,367
Total current liabilities 880,792 165,336
Noncurrent Liabilities
Notes payable - Net of current portion (Note 4) 2,293,610 2,587,874
Compensated absences 72,972 -
Net OPEB obligation (Note 6) 1,372,830 Net pension liability(Note 5) 2,502,108 -
Other noncurrent liabilities 31,942 800,059
Total liabilities 7,154,254 3,553,269
Deferred Inflows of Resources - Pension (Note 5) 82,290 -
Net Position
Net investment in capital assets 13,195,546 143,168
Restricted 952,587 -
Unrestricted 2,254,800 (576,403)
Total net position 16,402,933 (433,235)
Total liabilities, deferred inflows of resources, and net
position $ 23,639,477 $ 3,120,034
The Notes to Financial Statements are an
Integral Part of this Statement. 10
Lansing Housing Commission
Statement of Activities
Year Ended June 30, 2016
Discrete
Primary Component
Government Unit- Oliver
(LHC) Gardens
Operating Revenue
Tenant revenue- Net $ 1,717,181 $ 82,504
HUD operating revenue 14,862,802 172,653
Other grant revenue 747,910 -
Other operating revenue 288,857 -
Total operating revenue 17,616,750 255,157
Operating Expenses
Administrative 3,169,731 42,218
Tenant services 21,976 -
Utilities 769,1 1 1 72,715
Maintenance 2,108,351 20,156
Insurance 235,525 12,587
Other general expenses 195,432 24,550
Housing assistance payments 9,970,034 -
Depreciation and amortization 1,358,328 141,627
Total operating expenses 17,828,488 313,853
Operating Loss (21 1,738) (58,696)
Nonoperating Income (Expenses)
Investment income 7,429 18,717
Interest expense (Note 4) (86,744) (93,461)
Gain on sale of assets 456,521 -
Total nonoperating expenses 377,206 (74,744)
Gain (Loss) - Before contributions 165,468 (133,440)
Capital Contributions - Capital grants - HUD 2,245,983 -
Change in Net Position 2,41 1,451 (133,440)
Net Position - Beginning of year 13,991,482 (299,795)
Net Position - End of year $ 16,402,933 $ (433,235)
The Notes to Financial Statements are an
Integral Part of this Statement. 11
Lansing Housing Commission
Statement of Cash Flows
Year Ended June 30, 2016
Primary
Government
Cash Flows from Operating Activities
Cash received from HUD operating subsidies and grants $ 14,638,886
Cash received from tenants 1,690,965
Other receipts 1,021,712
Cash payments for housing assistance (9,970,034)
Cash payments for administrative expenses (3,169,730)
Cash payments for other operating expenses (1,721,731)
Net cash provided by operating activities 2,490,068
Cash Flows from Capital and Related Financing Activities
Receipt of capital grants 2,245,983
Proceeds from sales of capital assets 246,646
Purchase of capital assets (2,263,429)
Principal and interest paid on capital debt (233,946)
Net cash used in capital and related financing activities (4,746)
Cash Flows from Investing Activities
Interest received on investments 3,581
Purchase of investment securities (3,544)
Net cash provided by investing activities 37
Net Increase in Cash and Cash Equivalents 2,485,359
Cash and Cash Equivalents - Beginning of year 2,460,658
Cash and Cash Equivalents - End of year $ 4,946,017
Balance Sheet Classification of Cash and Cash Equivalents
Cash and investments $ 3,844,361
Restricted cash 984,529
Tenant security deposits 117,127
Total cash and cash equivalents $ 4,946,017
The Notes to Financial Statements are an
Integral Part of this Statement. 12
Lansing Housing Commission
Statement of Cash Flows (Continued)
Year Ended June 30, 2016
Reconciliation of Operating Loss to Net Cash from Operating Activities
Operating loss $ (21 1,738)
Adjustments to reconcile operating loss to net cash from operating activities:
Depreciation and amortization 1,358,328
Bad debts 64,417
Deferred outflows and inflows (701,225)
Changes in assets and liabilities:
Receivables (314,549)
Prepaid and other assets 907,638
Accounts payable 45,605
Security and other trust deposits 35,273
Accrued and other liabilities 1,306,319
Net cash provided by operating activities $ 2,490,068
The Notes to Financial Statements are an
Integral Part of this Statement. 13
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
Or,ganization and Program Descriptions
The Lansing Housing Commission (LHC or the "Commission") is a Michigan public body
corporation operating as a public housing authority under the Michigan Housing
Facilities Act, MCL 125.65 to provide decent, safe, and adequate housing for low-
income program participants. The Commission owns and provides subsidy and
operation support for housing units located throughout the Lansing area. LHC's assets,
liabilities, net position, and changes in net position are included in its primary
government fund and include all AMPS, COCC, business activities, and programs of the
Commission. The Commission receives and administers funds from the U.S.
Department of Housing and Urban Development (HUD) and has signed an annual
contributions contract (ACC) under the provisions of the ACC and all applicable
provisions of the United States Housing Act of 1937 (42 U.S.0 1437 Section 1.1). The
ACC allows the Commission to obtain financial support from HUD and provide low-
income housing throughout Lansing. The Commission administers the following
significant programs:
Low-rent Public Housing - The Commission owns, operates, and maintains 833 units
of public housing in four properties throughout the city of Lansing. The Low Rent
Housing Assistance Program is designed to provide subsidized housing to low-income
individuals who pay monthly rent in accordance with prescribed rent formulas based on
family income limits. Revenue consists primarily of this rental income, other tenant fees
collected, and an operating subsidy from HUD.
Housing Choice Voucher Program (HCVP) - Section 8 of the Housing and
Community Development Act of 1974 provides Housing Assistance Payments on behalf
of lower-income families to participating housing owners. Under the program, the
landlord-tenant relationship is between a housing owner and a family, rather than the
Commission and a family as in the Public Housing program. HUD contracts with the
Commission to enter into contracts with owners to either make assistance payments or
to pay the difference between the approved contract rent and the actual rent paid by
the lower-income families. Housing assistance payments made to landlords and some
participants are funded through annual contributions contracts, as well as the
administrative cost of managing the program up to a per-unit limit established in the
contracts. The Commission administered an average of 1,539 tenant-based vouchers
monthly for the year ended June 30, 2016.
Capital Fund Program (CFP) - Funds from the Capital Fund Program provided by
HUD are used to maintain and improve the Public Housing portfolio. Substantially all
additions to land, structures, and equipment for these properties are accomplished by
using capital grant funds.
14
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Shelter Plus Care - This program provides rental assistance to homeless persons with
disabilities and their families.
Recovery Agreement and Action Plan
On September 25, 2014, the Commission was designated as a troubled agency by HUD
based on a failing Public Housing Assessment System audited financial score. When a
public housing agency is determined to be substandard, it is asked to provide an
assessment of its deficiencies from its own self diagnosis and identify solutions to
recover its performance for long-term sustainability. The Commission has completed its
Public Housing Agency Recovery and Sustainability Assessment and on January 6, 2016,
entered into a Recovery Agreement and Action Plan with HUD. The Commission began
submitting monthly progress reports to the local HUD Field Office commencing on
March 1, 2016 and every month thereafter. The monthly reports will continue until the
Recovery Agreement is terminated. These financial statements have not been modified
for this status.
Reporting Entity
The nucleus of the financial reporting entity, as defined by Governmental Accounting
Standards Board (GASB) Statement No. 14, as amended, is the primary government. A
fundamental characteristic of a primary government is that it is a fiscally independent
entity. In evaluation of how to define the financial reporting entity, management has
considered all potential component units. A component unit is a legally separate entity
for which the primary government is financially accountable. The criteria of financial
accountability is the appointment of a voting majority plus the ability of the primary
government to impose its will upon the potential component unit. These criteria were
considered in determining the reporting entity.
The five-member board of commissioners of LHC is appointed to five-year terms by the
mayor of the City of Lansing, but the Commission board independently oversees the
Commission's operation and designates its management. The City of Lansing is not
financially accountable for the Commission as it cannot impose its will on the
Commission, and there is no potential for the Commission to provide financial benefits
to, or impose financial burdens on, the City of Lansing. Accordingly, the Commission is
not a component unit of the financial reporting entity of the City of Lansing.
GASB Statements 14, 39, and 61 define a primary government and those organizations
that should be reported as component units. The following organizations have been
determined under this guidance to be component units of the Commission.
15
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Blended Component Units - One component unit, despite being legally separate, is
so integrated with the primary government that it is in substance part of the primary
government. The Commission has included as a blended component unit in business
activities the operations of Lansing Housing Commission Non Profit Development
Corporation (LHCNPDC), a nonprofit organization. LHCNPDC has a 99 percent
ownership interest in Oliver Gardens, LLC. The Commission has financial accountability
for the nonprofit and controls its board of directors and management. As of June 30,
2016, LHCNPDC had assets of$737,090, liabilities of$879,491, and net deficit position
of ($142,401). The total revenue and change in net position was $3,288 for the year
ended June 30, 2016.
Discretely Presented Component Unit - The component unit column in the financial
statements includes the financial data of the Commission's legally separate component
unit, Oliver Gardens LDHA Limited Partnership, which meets the criteria for discrete
component presentation. The separate column presentation clearly distinguishes the
component unit balances and transactions from that of the primary government. The
balances are presented as of December 31, 2015. A complete financial report can be
obtained at their administrative offices at 419 Cherry St., Lansing, MI 48933.
The Commission has a I percent managing member ownership interest in Oliver
Gardens, LLC, which has a 0.01 percent general partner ownership interest in Oliver
Gardens LDHA Limited Partnership (Oliver Gardens). Oliver Gardens is a residential
apartment complex in Lansing, Michigan consisting of 30 low-income housing units. The
Commission does have financial accountability for Oliver Gardens, but it does not have
majority ownership of the entity.
Oliver Gardens follows all applicable Financial Accounting Standards Board (FASB)
standards. Since it does not follow governmental accounting for presentation purposes,
certain transactions may be reflected differently in these financial statements than in the
separately issued discrete component unit financial statements in order for them to
conform to the presentation of the primary government.
16
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Basis of Accounting and Presentation
The basic financial statements of the Commission have been prepared on the accrual
basis of accounting in conformity with accounting principles generally accepted in the
United States of America (GAAP), as prescribed by the Governmental Accounting
Standards Board (GASB). The Commission follows the business-type activities reporting
requirements of GASB Statement No. 34, which provides a comprehensive one-line
look at the Commission's financial activities. The Commission reports all of its
operations as a single business activity in a single enterprise fund. The enterprise fund is
a proprietary fund, which distinguishes operating revenue and expenses from
nonoperating items. The operating revenue of the Commission consists primarily of
rental charges to tenants, operating grants from HUD, and other operating revenue that
offsets operating expenses. Operating expenses include the cost of administrative,
tenant services, utilities, maintenance, protective services, general operations,
depreciation, and housing assistance payments.
As a proprietary fund, revenue is recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows. The
Commission's financial activities operate in a manner similar to private business
enterprises and are financed through fees and charges assessed primarily to the users of
the services. For financial reporting purposes, the Commission considers its grants
associated with operations as operating revenue because these funds more closely
represent revenue generated from operating activities rather than nonoperating
activities. Grants associated with capital acquisition and improvements are considered
capital contributions and are presented after nonoperating activity as capital
contributions on the accompanying statement of activities.
Budgets - The Commission is required by its HUD annual contributions contracts to
adopt annual budgets for the Low Rent Public Housing Program and the Housing Choice
Vouchers Program. Annual budgets are not required for the Capital Fund Program, as
those budgets are approved for the length of any given project. Annual, project, and
grant length budgets require grantor approval.
Appropriations are authorized at the function level. Management may transfer budget
authorization between functions. All appropriations that are not used lapse at year end.
Budgeted amounts are as originally adopted or as amended by the board.
17
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Assets, Liabilities, and Net Position
Cash and Cash Equivalents - Cash and cash equivalents consist of cash on hand and all
highly liquid investments purchased with an original maturity of three months or less.
Current Receivables and Recognition of Bad Debts - Current receivables consist
of revenue that is earned at year end but not yet received. Tenant accounts generally
are collectible as long as the tenant is occupying the unit; however, the Commission has
established an allowance of $3,202 as potentially uncollectible as of June 30, 2016.
Tenant bad debt for the year ended June 30, 2016 was $64,417.
Prepaid Expenses - Prepaid items consist of certain payments to vendors that reflect
costs applicable to future fiscal years.
Investment in Partnership - The amount of this investment includes amounts invested
in and due from the Commission's discretely presented component unit, Oliver Gardens
LDHA LP. Of the amount due, $405,767 is for developer fees earned that are payable
from limited partner contributions or upon the availability of cash flow generated at the
operating partnership level.
Capital Assets - Purchased assets and self-constructed assets and certain
improvements are recorded as assets at cost in accordance with the Commission's
capitalization policy. Costs equal or above the capitalization threshold of $2,500 that
materially add to the productive capacity and extend the life of an asset longer than one
year are capitalized, while maintenance and repair costs are expensed as incurred.
Property and equipment are depreciated using the straight-line method over the
following useful lives:
Property and Equipment Years
Buildings 40
Building improvements 7-40
Furniture and fixtures, equipment, and machinery 3-10
GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capitol
Assets and for Insurance Recoveries, establishes accounting and financial reporting
standards for the impairment of capital assets. If an indicator of impairment is identified
and the decline in service utility was unexpected and significant, an impairment loss is
calculated in consideration of whether the capital asset will continue to be used by the
Commission. An impairment loss is generally measured by identifying the historical cost
of the service utility of the capital asset that cannot be used due to the impairment event
or circumstance. Impaired capital assets that will no longer be used by the Commission
are reported at the lower of carrying value or fair value, or written off entirely. During
2016, no impairments were recorded.
18
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Restricted Cash - Restricted cash represents amounts held in escrow accounts in the
name of the entity for insurance and PILOT expenses, FSS escrows, Section 8 funds,
tenant deposits, and replacement reserves. Restrictions for use in operations and
approval are governed by HUD, lender requirements, or other outside parties.
Other Noncurrent Assets - Other assets of the component unit include $45,415 of
costs related to obtaining debt financing and $22,917 of costs related to obtaining tax
credits, net of accumulated amortization. These costs have been capitalized and are
being amortized over 35 years and 15 years, respectively, using the straight-line method.
Amortization expense for the year ended June 30, 2016 was $2,825.
Compensated Absences - The Commission allows employees to accumulate earned
but unused sick and vacation pay benefits. The Commission accrues a liability for
benefits attributable to services already rendered by the Commission's employees.
Employees are entitled to a specific amount of leave per month capped at 480 hours
total. Upon separation from employment, employees with 20 years of service hired
before December 31, 2009 are entitled to receive pay for 50 percent of their accrued
unused sick time, and employees with 25 years of service hired on or after January 1,
2010 are entitled to receive pay for 25 percent of their accrued unused sick time. The
liability for accrued and unused leave was $85,850 at June 30, 2016, of which $12,878 is
current and $72,972 is noncurrent.
Net Position - Net position is comprised of three categories: (1) net investment in
capital assets, (2) restricted, and (3) unrestricted. The Commission's positive value of
unrestricted net position in the primary government may be used to meet ongoing
obligations. When an expense is incurred for purposes for which both restricted and
unrestricted net assets are available, the Commission's policy is to first apply restricted
resources. Each component of net assets is reported separately on the statement of net
position.
i. Net investment in capital assets - This category consists of capital assets (including
restricted capital assets), net of accumulated depreciation and reduced by any
outstanding balances of mortgages, notes, or other borrowings that are attributable
to the acquisition, construction, and improvements of those assets.
ii. Restricted - This category equals the restricted cash of the Commission and consists
of net position restricted in their use by (1) external groups such as grantors,
creditors, or laws and regulations of other governments or (2) law through
constitutional provisions or enabling legislation.
iii. Unrestricted - This category includes all of the remaining net position that does not
meet the definition of the other two categories.
19
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Revenue Recognition - The Commission receives funds from certain federal and other
agencies under various grant programs. Receivables are recorded based upon amounts
expended for the various programs for which funds have not been received, to the
extent grant limits have not been exceeded.
The Commission leases properties to tenants under various rental arrangements.
Payments from tenants are recognized as revenue in the period during which the
associated use of premises occurred.
Operating Revenue and Expenses - The Commission's operating revenue includes
HUD funding and other amounts received from tenants for rent and other charges for
services provided. Operating expenses are costs incurred during the operation of its
primary housing activities. Such revenue and expenses are reported when earned or
incurred, respectively.
Capital Grants - The Commission records grants received for capital outlay as
contributions of capital grants.
Nonoperating Revenue and Expenses - Nonoperating revenue and expenses are
derived from transactions other than those associated with the Commission's primary
housing operations and are reported as incurred, including investment activity. During
the year ended June 30, 2016, the Oliver Tower Property was sold for $1,050,000,
resulting in a gain on the sale of the asset of$456,521.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
period. Actual results could differ.
Subsequent Events - The financial statements and related disclosures include
evaluation of events through and including January 9, 2017, which is the date the financial
statements were available to be issued.
20
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 2 - Deposits and Investments
Deposits and investments are reported in the financial statements as follows:
Primary
Government Component
(LHC) Unit
Cash and cash equivalents - Unrestricted $ 3,844,361 $ 30,294
Cash and cash equivalents - Restricted 984,529 275,431
Tenant security deposits - Restricted 117,127 4,406
Investments 509,256 -
Total designated $ 5,455,273 $ 310,131
Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes
local governmental units to make deposits and invest in the accounts of federally insured
banks, credit unions, and savings and loan associations that have offices in Michigan. The
law also allows investments outside the state of Michigan when fully insured. The local
unit is allowed to invest in bonds, securities, and other direct obligations of the United
States or any agency or instrumentality of the United States; repurchase agreements;
bankers' acceptances of United States banks; commercial paper rated within the two
highest classifications, which matures not more than 270 days after the date of purchase;
obligations of the State of Michigan or its political subdivisions, which are rated as
investment grade; and mutual funds composed of investment vehicles that are legal for
direct investment by local units of government in Michigan.
The Commission has designated two banks for the deposit of its funds. The investment
policy adopted by the board in accordance with Public Act 196 of 1997 has authorized
investment in bonds and securities of the United States government and bank accounts
and CDs, but not the remainder of state statutory authority as listed above. The
Commission's deposits and investment policies are in accordance with statutory
authority.
The Commission's cash and investments are subject to several types of risk, which are
examined in more detail below:
Custodial Credit Risk of Bank Deposits - Custodial credit risk is the risk that in the
event of a bank, failure, the Commission's deposits may not be returned to it. The
Commission does not have a deposit policy for custodial credit risk. At year end, the
Commission had $0 of bank deposits (certificates of deposit and checking and savings
accounts) that were uninsured and uncol lateral ized.
21
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 2 - Deposits and Investments (Continued)
Custodial Credit Risk of Investments - Custodial credit risk is the risk that, in the
event of the failure of the counterparty, the Commission will not be able to recover the
value of its investments or collateral securities that are in the possession of an outside
party. The Commission does not have a policy for custodial credit risk. At year end,
$259,256 of investment securities was uninsured and unregistered, with securities held
by the counterparty or by its trust department or agent but not in the Commission's
name.
Note 3 - Capital Assets
A summary of property and equipment by class is as follows:
Balance Balance
Primary Government July 1,2015 Reclassifications Additions Reductions June 30,2016
Capital assets not being depreciated:
Land $ 1,648,584 $ - $ - $ (93,813) $ 1,554,771
Construction in progress 387,948 (387,948) 2,245,979 2,245,979
Total nondepreciable assets 2,036,532 (387,948) 2,245,979 (93,813) 3,800,750
Capital assets being depreciated:
Building and improvements 48,777,078 105,203 - (138,713) 48,743,568
Furniture and fixtures,equipment,and
machinery 1,255,228 282,745 17,445 (14,117) 1,541,301
Total depreciable capital
assets 50,032,306 387,948 17,445 (152,830) 50,284,869
Accumulated depreciation 37,224,271 - 1,358,328 (144,343) 38,438,256
Net capital assets being depreciated 12,808,035 387,948 (1,340,883) (8,487) 11,846,613
Net capital assets $ 14,844,567 $ - $ 905,096 $ (102,300) $ 15,647,363
Balance
Balance December 31,
Component Unit January 1,2015 Additions Disposals 2015
Capital assets not being depreciated-Land $ 685,162 $ $ $ 685,162
Capital assets being depreciated:
Buildings and improvements 3,318,485 3,318,485
Furniture and equipment 175,949 12,510 188,459
Subtotal 3,494,434 12,510 3,506,944
Accumulated depreciation 1,293,915 138,802 1,432,717
Net capital assets being depreciated 2,200,519 (126,292) 2,074,227
Net capital assets $ 2,885,681 $ (126,292) $ $ 2,759,389
22
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 3 - Capital Assets (Continued)
Construction in Progress
Capital improvements made for LHC's low-rent housing units are financed by grant
funds provided by HUD under capital grants. Capital grants are awarded annually based
on a five-year comprehensive modernization plan submitted by the Commission.
Related construction in progress are costs incurred for the modernization of low-rent
units. When modernization projects are completed, HUD issues a modernization cost
certificate for each grant, closing out the grant for that year, and at which time
construction in progress for that grant is placed in service and transferred to the
buildings or improvements categories.
Note 4 - Long-term Debt
Primary Government
LHC's debt is comprised of a promissory note payable to Davenport University and a
lease with PNC for the Energy Performance Contract.
Davenport University
The Commission purchased an office building and land from Davenport University (the
"Lender") in 2012 for $950,000 with a$700,000 promissory note payable to the Lender.
The note bears an annual interest rate of 2.4 percent, which is subject to adjustment
concurrently with changes in the Lender's cost of funds. Equal monthly payments of
$5,000 are due beginning on July 28, 2012. The outstanding principal and interest
balance will be due when the note matures on June 28, 2022.
PNC
Energy Conservation Measures (ECMs), as defined in the Commission's Energy
Performance Contract (EPC) dated December 1 1, 2013, are financed by PNC as
stipulated in the Master Equipment Lease-Purchase Agreement in the principal amount
of $2,051,375. This obligation was issued pursuant to the provisions of Act 18, Public
Acts of Michigan 1933 (Ex. Sess), as amended, and Chapter 260 of the Code of Ordinances
of the City of Lansing. HUD's Public Housing EPC program is an innovative financing
technique that uses cost savings from reduced energy consumption to repay the cost of
installing ECMs. The project is financed with a tax-exempt lease for a term of 15 years at
a fixed interest rate of 3.91 percent. PNC as the lender has a security interest in the
ECMs.
23
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 4 - Long-term Debt (Continued)
Component Unit
Oliver Gardens LDHA Limited Partnership (the "Partnership") has the following loans
outstanding as of December 31, 2015 that are secured by land and substantially all real
property owned by the Partnership:
Mortgage dated October 17, 2006 held by Michigan State Housing
Development Authority (MSHDA) in the amount of $1,775,482. The
mortgage bears interest at a rate of 5.5 percent. However, an amount
equal to 0.5 percent of interest is deferred until the mortgage principal
balance is paid in full. Monthly payments of principal and interest are
required in the amount of$8,961 $ 1,596,108
HOME loan dated June 1, 2006 in the amount of$170,000. The loan is
held by the City of Lansing under the HOME Investments Partnership
Program and bears interest at a rate of I percent per annum. Principal
and interest are due on the loan when it matures on December 31,
2041 170,000
Community Development Block Grant (CDBG) loan dated May 31,
2006 in the amount of$550,000. The loan is held by the City of Lansing
under the CDBG Program and bears interest at a rate of I percent per
annum. Principal and interest are due on the loan when it matures on
May 31, 2046 550,000
Lansing Housing Commission (LHC) note dated December 31, 2007 in
the amount of$300,133. The loan is held by LHC and bears an interest
rate of I percent per annum. Principal and interest are due on the loan
when it matures on January 1, 2048 300,133
Total 2,616,241
Less current portion 28,367
Long-term portion $ 2,587,874
24
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 4 - Long-term Debt (Continued)
Primary Government
Future minimum principal and interest payments on the LHC promissory note with
Davenport to maturity for the years ending June 30 are as follows:
Principal Interest Total
2017 $ 47,976 $ 12,000 $ 59,976
2018 49,000 11,000 60,000
2019 301,000 4,000 305,000
2020 58,000 2,000 60,000
2021 59,000 1,000 60,000
2022 7,903 468 8,371
Total payments $ 522,879 $ 30,468 $ 553,347
Future minimum principal and interest payments on LHC's lease with PNC to maturity
for the years ending June 30 are as follows:
Principal Interest
2017 $ 110,231 $ 77,000
2018 121,000 72,000
2019 131,000 67,000
2020 138,000 62,000
2021 144,000 56,000
2022-2026 813,000 184,000
2027-2029 471,707 25,000
Total payments $ 1,928,938 $ 543,000
25
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 4 - Long-term Debt (Continued)
Component Unit
Future minimum principal and interest payments on long-term debt to maturity for the
years ending December 31 for the discretely presented component unit are as follows:
Principal Interest
2016 $ 28,367 $ 79,166
2017 29,818 77,714
2018 31,343 76,189
2019 32,953 74,579
2020 34,638 72,894
2021-2025 201,659 336,001
2026-2030 258,801 278,859
2031-2035 332,135 205,525
2036-2040 426,248 1 1 1,412
2041-2045 390,146 314,672
2046-2048 850,133 -
Total payments $ 2,616,241 $ 1,627,01 1
Changes in long-term debt for the year ended June 30, 2016 (or December 31 , 2015 for
the discretely presented component unit) are presented below:
Balance-
Beginning of Balance-
Year Additions Deletions End of Year Due in I Year
Primary government:
Davenport $ 574,719 $ - $ (51,840) $ 522,879 $ 47,976
PNC 2,024,300 - (95,362) 1,928,938 1 10,231
Total $ 2,599,019 $ - $ (147,202) $ 2,451,817 $ 158,207
Component unit:
MSHDA $ 1,623,094 $ - $ (26,986) $ 1,596,108 $ 28,367
City of Lansing 720,000 - - 720,000 -
LHC 300,133 - - 300,133 -
Total $ 2,643,227 $ - $ (26,986) $ 2,616,241 $ 28,367
Interest expense for the year ended June 30, 2016 was $86,744 for the primary
government and interest expense for the year ended December 31, 2015 was $93,461
for the discrete component unit.
26
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 5 - Agent Defined Benefit Pension Plan Description
Plan Description - The Commission participates in an agent multiple-employer defined
benefit pension plan administered by the Municipal Employees Retirement System of
Michigan (MERS), that covers all employees of the Commission. MERS was established
as a statewide public employee pension plan by the Michigan Legislature under PA 135
of 1945 and is administered by a nine-member retirement board. MERS issues a publicly
available financial report which includes the financial statements and required
supplemental information of this defined benefit plan. This report can be obtained at
www.mersofmichigan.com or in writing to MERS of Michigan at 1 134 Municipal Way,
Lansing, Michigan 48917.
Benefits Provided - The Plan provides certain retirement, disability, and death benefits
to plan members and beneficiaries. PA 427 of 1984, as amended, established and
amends the benefit provisions of the participants in MERS.
The MERS plan covers employees in the general open division hired before May 1, 2012,
and employees hired after May 1, 2012.
Retirement benefits for employees in the open division are calculated as 2.25 percent of
the employee's final three-year average salary times the employee's years of service.
Normal retirement age is 60 with early retirement at 55 with 25 years of service. Early
retirement age with reduced benefits is 55 with 15 years of service or 50 with 25 years
of service. Vesting period is eight years. Employees are eligible for non-duty disability
benefits after eight years of service and for duty-related disability benefits upon hire.
Disability retirement benefits are determined in the same manner as retirement benefits
but are payable immediately without an actuarial reduction. Death benefits equal 80
times the employee's final full-year salary. An employee who leaves service may
withdraw his or her contributions plus any accumulated interest.
Retirement benefits for employees hired after May 1, 2012 are calculated as 1.70
percent of the employee's final three-year average salary times the employee's years of
service. Normal retirement age is 60 with early retirement at 55 with 25 years of
service. Early retirement age with reduced benefits is 55 with 15 years of service or 50
with 25 years of service. Vesting period is eight years. Employees are eligible for non-
duty disability benefits after eight years of service and for duty-related disability benefits
upon hire. Disability retirement benefits are determined in the same manner as
retirement benefits but are payable immediately without an actuarial reduction. Death
benefits for a surviving spouse equal 85 percent of the deceased member's accrued
retirement allowance, computed in the same manner as a service retirement allowance,
based on service and final average compensation at the time of death. An employee
who leaves service may withdraw his or her contributions plus any accumulated
interest.
27
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 5 - Agent Defined Benefit Pension Plan Description (Continued)
Benefit terms provide for annual cost-of-living adjustments to each employee's
retirement allowance subsequent to the employee's retirement date. The annual
adjustments are 3 percent, noncompounding.
Benefit terms, within the parameters established by MERS, are generally established and
amended by authority of the board of commissioners, generally after negotiations of
these terms with the affected unions. Police and fire employees benefit terms may be
subject to binding arbitration in certain circumstances.
Employees Covered by Benefit Terms - At the December 31, 2015 measurement
date, the following employees were covered by the benefit terms:
Inactive plan members or beneficiaries currently receiving benefits 32
Inactive plan members entitled to but not yet receiving benefits 16
Active plan members 26
Total employees covered by MERS 74
Contributions - Article 9, Section 24 of the State of Michigan Constitution requires that
financial benefits arising on account of employee service rendered in each year be
funded during that year. Accordingly, MERS retains an independent actuary to
determine the annual contribution. The employer is required to contribute amounts at
least equal to the actuarially determined rate, as established by the MERS retirement
board. The actuarially determined rate is the estimated amount necessary to finance the
costs of benefits earned by plan members during the year, with an additional amount to
finance any unfunded accrued liability. The employer may establish contribution rates to
be paid by its covered employees.
For the year ended June 30, 2016, the average active employee contribution rate was
5.0 percent of annual pay and the Commission's average contribution rate was 15.05
percent of annual payroll.
Net Pension Liability
The net pension liability reported at June 30, 2016 was determined using a measure of
the total pension liability and the pension net position as of December 31, 2015. The
December 31, 2015 total pension liability was determined by an actuarial valuation
performed as of that date.
28
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 5 - Agent Defined Benefit Pension Plan Description (Continued)
Changes in the net pension liability during the measurement year were as follows:
Increase (Decrease)
Total Pension Plan Net Net Pension
Changes in Net Pension Liability Liability Position Liability
Balance at December 31, 2014 $ 8,728,461 $ 7,227,277 $ 1,501,184
Service cost 1 14,272 - 1 14,272
Interest 698,614 - 698,614
Differences between expected and
actual experience (123,435) - (123,435)
Changes in assumptions 405,966 - 405,966
Contributions - Employer - 158,735 (158,735)
Contributions - Employee - 55,586 (55,586)
Net investment income - (104,348) 104,348
Benefit payments, including refunds (635,102) (635,102) -
Administrative expenses - (15,480) 15,480
Net changes 460,315 (540,609) 1,000,924
Balance at December 31, 2015 $ 9,188,776 $ 6,686,668 $ 2,502,108
Assumption Changes - The change in the total pension liability as a result of changes in
assumptions was due to the mortality table being adjusted to reflect longer lifetimes and
the assumed annual rate of return, net of expenses, being lowered.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions
For the year ended June 30, 2016, the Commission recognized pension expense of
$451,061. At June 30, 2016, the Commission reported deferred outflows of resources
related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Difference between expected and actual experience $ - $ 82,290
Changes in assumptions 270,644 -
Net difference between projected and actual earnings
on pension plan investments 623,600 -
Employer contributions to the plan subsequent to the
measurement date 98,058 -
Total $ 992,302 $ 82,290
29
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 5 - Agent Defined Benefit Pension Plan Description (Continued)
Amounts reported as deferred outflows of resources related to pensions will be
recognized in pension expense as follows. These amounts are exclusive of the employer
contributions to the plan made subsequent to the measurement date ($98,059), which
will impact the net pension liability in fiscal year 2017, rather than pension expense.
Years Ending
June 30 Amount
2017 $ 256,537
2018 256,537
2019 162,360
2020 136,520
Actuarial Assumptions - The total pension liability in the December 31, 2015 actuarial
valuation was determined using the following actuarial assumptions, applied to all
periods included in the measurement:
Inflation 2.5%
Salary increases 3.75% In the long term, plus a merit and
longevity increase ranging from 0 to I I
percent
Investment rate of return 8.00 % Net of pension plan investment expense
Mortality rates were a blend of the RP-2014 Healthy Annuitant Mortality Tables, with
rates multiplied by 105 percent; RP-2014 Employee Mortality Tables; and RP-2014
Juvenile Mortality Tables, all with a 50 percent male and 50 percent female blend. For
disabled retirees, the RP-2014 Disabled Retiree Mortality Table with a 50 percent male
and 50 percent female blend is used to reflect the higher expected mortality rates of
disabled members.
The actuarial assumptions used in the December 31, 2015 valuation were based on the
results of the most recent actuarial experience study covering the period from January
1, 2009 through December 31, 2013.
Discount Rate - The discount rate used to measure the total pension liability was 8.00
percent. The projection of cash flows used to determine the discount rate assumes that
employee contributions will be made at the current contribution rate and that employer
contributions will be made at rates equal to the difference between actuarially
determined contribution rates and the employee rate.
30
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 5 - Agent Defined Benefit Pension Plan Description (Continued)
Projected Cash Flows
Based on those assumptions, the pension plan's fiduciary net position was projected to
be available to make all projected future benefit payments of current active and inactive
employees. Therefore, the long-term expected rate of return on pension plan
investments was applied to all periods of projected benefit payments to determine the
total pension liability.
The long-term expected rate of return on pension plan investments was determined
using a model in which best-estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense, and inflation) are developed
for each major asset class. These ranges are combined to produce the long-term
expected rate of return by weighting the expected future real rates of return by the
target asset allocation percentage and by adding expected inflation. The target allocation
and best estimates of arithmetic real rates of return as of December 31, 2015, the
measurement date, for each major asset class are summarized in the following table:
Long-term
Target Expected Real
Asset Class Allocation (%) Rate of Return
Global equity 58 % 5.00 %
Global fixed income 20 2.18
Real assets 12 4.23
Diversifying strategies 10 6.56
Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The
following presents the net pension liability of the Commission, calculated using the
discount rate of 8.00 percent, as well as what the Commission's net pension liability
would be if it were calculated using a discount rate that is I percentage point lower
(7.00 percent) or I percentage point higher (9.00 percent) than the current rate:
I Percent Current I Percent
Decrease Discount Rate Increase
(7.00%) (8.00%) (9.00%)
Net pension liability of the
Commission $ 3,497,190 $ 2,502,108 $ 1,659,805
31
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 5 - Agent Defined Benefit Pension Plan Description (Continued)
Pension Plan Fiduciary Net Position - Detailed information about the plan's fiduciary
net position is available in the separately issued financial report. For the purpose of
measuring the net pension liability, deferred outflows of resources, and deferred inflows
or resources related to pension and pension expense, information about the plan's
fiduciary net position and addition to/deduction from fiduciary net position has been
determined on the same basis as they are reported by the plan. The plan uses the
economic resources measurement focus and the full accrual basis of accounting.
Investments are stated at fair value. Contribution revenue is recorded as contributions
are due pursuant to legal requirements. Benefit payments and refunds of employee
contributions are recognized as expense when due and payable in accordance with the
benefit terms.
Note 6 - Other Postemployment Benefits
Plan Description - The Commission provides retiree healthcare benefits to eligible
employees and their spouses. This is a single-employer defined benefit plan
administered by the Commission and is provided under a separate collective bargaining
agreement on health care. The plan does not issue a publicly available financial report.
Funding Progress - For the year ended June 30, 2016, the Commission has estimated
the cost of providing retiree healthcare benefits through the alternative measurement
method permitted by GASB Statement 45 for employers in plans with fewer than 100
plan members. The valuation computes an annual required contribution which
represents a level of funding that, if paid on an ongoing basis, is projected to cover
normal cost each year and amortize any unfunded actuarial liabilities over a period not
to exceed 30 years. This valuation's computed contribution and actual funding are
summarized as follows:
Annual required contribution (recommended) $ 421,898
Interest on the prior year's net OPEB obligation 2,118
Less adjustment to the annual required contribution (45,228)
Annual OPEB cost 378,788
Amounts contributed:
Payments of current premiums (64,745)
Advance funding -
Increase in net OPEB obligation 314,043
OPEB obligation - Beginning of year 1,058,787
OPEB obligation - End of year $ 1,372,830
32
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 6 - Other Postemployment Benefits (Continued)
The annual required contribution, the percentage contributed to the plan, and the net
OPEB obligation for the current and two preceding years as well as funding progress are
as follows:
Annual Required Percentage Net OPEB
Fiscal Year Ended Contribution* Contributed Obligation
6/30/16 $ 421,898 15.3 % $ 1,372,830
6/30/15 291,357 28.3 1,058,787
6/30/14 330,416 24.7 879,953
Actuarial Actuarial UAAL as a
Value of Accrued Unfunded Funded Ratio Covered Percentage
Actuarial Assets Liability AAL(UAAL) (Percent) Payroll of Covered
Valuation Date (a) (AAL) (b) (b-a) (a/b) (c) Payroll
6/30/16 $ - $ 3,687,831 $ 3,687,831 - % $ 1,278,377 288.5 %
6/30/15 - 3,575,100 3,575,100 - 1,190,293 300.4
6/30/14 - 3,677,1 18 3,677,1 18 - 1,140,604 322.4
Actuarial Methods and Assumptions -Actuarial valuations of an ongoing plan involve
estimates of the value of reported amounts and assumptions about the probability of
occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding
the funded status of the plan and the annual required contributions of the employer are
subject to continual revision as actual results are compared with past expectations and
new estimates are made about the future. The schedule of funding progress, presented
above, presents multi-year trend information about whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for
benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce the
effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
As of June 30, 2016, the unfunded actuarial liability (UAAL) of $3,628,877 was equal to
the actuarial accrued liability (AAL).
The following simplifying assumptions were made:
Retirement age for active employees - Based on the historical average retirement age for
the covered group, active plan members were assumed to retire at age 55, or at the
first subsequent year in which the member would qualify for benefits.
33
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 6 - Other Postemployment Benefits (Continued)
Marital status - Marital status of members at the calculation date was assumed to
continue throughout retirement. As of March 31, 1997, the policy changed to an
employee-only benefit without spouse coverage at retirement.
Mortality - Life expectancies were based on mortality tables from the National Center
for Health Statistics; the 2002 version (Tables 2 and 3 from the National Vital Statistics
Reports) for males and for females was used.
Turnover - Nongroup-specific age-based turnover data from GASB Statement 45 was
used as the basis for assigning active members a probability of remaining employed until
the assumed retirement age and for developing an expected future working lifetime
assumption for purposes of allocating to periods the present value of total benefits to be
paid.
Healthcare cost trend rate - The expected rate of increase in healthcare insurance
premiums was based on projections of the Office of the Actuary at the Centers for
Medicare & Medicaid Services. A rate of 5.0 percent was used initially, increased to an
ultimate rate of 5.9 percent after six years.
Health insurance premiums - 2015 health insurance premiums for retirees were used as
the basis for calculation of the present value of total benefits to be paid.
Inflation rate - A wage inflation rate of 1.5 percent was used based on Commission
budgets averaging from 0 to 2.5 percent.
Payroll growth rate - The expected long-term payroll growth rate was assumed to equal
the rate of inflation.
The Commission expects little return over investment and has used a rate of .20
percent and a simplified version of the entry age actuarial cost method. The unfunded
actuarial accrued liability is being amortized as a level percentage of projected payroll on
an open basis. The remaining amortization period at June 30, 2016 was 30 years.
Note 7 - Commitments and Contingencies
The Commission receives financial assistance from federal and state agencies in the form
of grants. The disbursement of funds received under these programs generally requires
compliance with the terms and conditions specified in the grant agreements and is
subject to audit by the grantor agencies. Any disallowed claims resulting from such
audits could become a liability of the Commission. However, in the opinion of
management, any such disallowed claims will not have a material adverse effect on the
overall financial position of the Commission at June 30, 2016.
34
Lansing Housing Commission
Notes to Financial Statements
June 30, 2016
Note 7 - Commitments and Contingencies (Continued)
The collective bargaining five-year agreement between the Housing Commission
Employees' and Chapter of Local 1390.11 and Michigan Council #25, AFSCME, AFL-
CIO covering approximately 60 percent of the Commission's labor force will be in place
from July 1, 2014 through December 31, 2018.
Note 8 - Risk Management
The Commission is exposed to various risl<s of loss related to property loss, torts,
errors and omissions, and employee injuries (worl<ers' compensation), as well as medical
benefits provided to employees. The Commission has purchased commercial insurance
for all risl<s of loss, included worl<ers' compensation, employee health, and accident
insurance. Settled claims relating to the commercial insurance have not exceeded the
amount of insurance coverage in any of the past three fiscal years.
Note 9 - Concentrations
The Commission operates in a heavily regulated environment. The operations of the
Commission are subject to the administrative directives, rules, and regulations of
federal, state, and local regulatory agencies, including, but not limited to HUD. Such
administrative directives, rules, and regulations are subject to change by an Act of
Congress or an administrative change mandated by HUD. Such changes may occur with
little notice or inadequate funding to pay for the related costs and the additional
administrative burden to comply with the changes.
For the year ended June 30, 2016, approximately 84 percent of the operating revenue
reflected in the primary government basic financial statements is from HUD.
Note 10 - Upcoming Accounting Pronouncements
In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions, which addresses reporting by
governments that provide postemployment benefits other than pensions (OPEB) to
their employees and for governments that finance OPEB for employees of other
governments. This OPEB standard will require the Commission to recognize on the face
of the financial statements its net OPEB liability related to its retiree healthcare benefits
offered to retirees. The statement also enhances accountability and transparency
through revised note disclosures and required supplemental information (RSI). The
Commission is currently evaluating the impact this standard will have on the financial
statements when adopted. The provisions of this statement are effective for the
Commission's financial statements for the year ending June 30, 2018.
35
Required Supplemental Information
36
Lansing Housing Commission
Required Supplemental Information
Schedule of Changes in the Commission's Net Pension Liability
and Related Ratios
2016 2015
Total Pension Liability
Service cost $ 1 14,272 $ 114,461
Interest 698,614 684,653
Changes in benefit terms - -
Differences between expected and actual experience (123,435) -
Changes in assumptions 405,966 -
Benefit payments, including refunds (635,102) (624,495)
Net Change in Total Pension Liability 460,315 174,619
Total Pension Liability- Beginning of year 8,728,461 8,553,842
Total Pension Liability- End of year $ 9,188,776 $ 8,728,461
Plan Fiduciary Net Position
Contributions - Employer $ 158,735 $ 215,191
Contributions - Member 55,586 37,167
Net investment income (104,348) 446,261
Administrative expenses (15,480) (16,314)
Benefit payments, including refunds (635,102) (624,495)
Other - -
Net Change in Plan Fiduciary Net Position (540,609) 57,810
Plan Fiduciary Net Position - Beginning of year 7,227,277 7,169,467
Plan Fiduciary Net Position - End of year $ 6,686,668 $ 7,227,277
Commission's Net Pension Liability - Ending $ 2,502,108 $ 1,501,184
Plan Fiduciary Net Position as a Percentage of Total Pension
Liability 72.77 % 82.80 %
Covered Employee Payroll $ 1,235,367 $ 1,164,556
Commission's Net Pension Liability as a Percentage of
Covered Employee Payroll 202.5 % 128.9 %
37
Lansing Housing Commission
Required Supplemental Information
Schedule of Commission Contributions
Calendar Year
2015 2014
Actuarially determined contribution $ 103,079 $ 213,163
Contributions in relation to the actuarially determined contribution 158,735 215,191
Contribution Deficiency $ (55,656) $ (2,028)
Covered Employee Payroll $ 1,235,367 $ 1,164,556
Contributions as a Percentage of Covered Employee Payroll 12.8 % 18.5 %
Notes to Schedule of Commission Contributions
Actuarial valuation information relative to the determination of contributions:
Valuation date Actuarially determined contribution rates are calculated as of December 31, two years prior to the end
of the fiscal year in which the contributions are reported.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age normal cost method
Amortization method Level percentage of payroll, open
Remaining amortization period 25 years
Asset valuation method I 0-year smoothed
Inflation 3.0 to 4.0 percent
Salary increases 4.5 percent, with merit and longevity increases ranging from 0 to 13 percent
Investment rate of return 8.0 percent
Retirement age 60
Mortality 50 percent male to 50 percent female blend of the 1994 Group Annuity Mortality Table
Other information None
38
Other Supplemental Information
39
Lansing Housing Commission
Financial Data Schedules
Year Ended June 30, 2016
14.238 6.1 Component
Public Housing 14.CFP Capital 14.871 Housing Supportive Business Central Office Units-
Project Total Funtl Choice Vouchers Housing State/Local Activities Cost Center Subtotal eliminations Total Discretely
Program Presented
Balance Sheet
Assets
111 Cash-Unrestricted $ 2,612,181 $ - $ 487,127 $ 4,239 5 63,583 $ - $ 567,001 $ 3,734,131 $ - $ 3,734,131 $ 30,291
113 Cash-Other restricted - - 984,529 - - - - 984,529 - 984,529 275,431
114 Cash-Tenant security deposits 117,127 - - - - - - 117:127 - 117,127 4,409
115 Cash-Restricted for payment of current liabilities 110,231 - - - - - - 110,231 - 110,231 -
100 Total Cash 2,839,539 - 1,471,656 4,239 63,583 - 567,001 4,946,018 - 4,946,018 310,131
122 Total accounts receivable-HUD other projects 268,550 - - 24,364 - - - 292,914 - 292,914 -
124 Accounts receivable-Other government - - - - 115,459 - - 115,459 - 115,459 -
125 Total accounts receivable-Miscellaneous - - - - - - 99,776 99,776 - 99,776 1,799
126 Accounts receivable-Tenants-Dwelling rents 47,021 - - - - - - 47,021 - 47,021 -
126.1 Allowance for boubtful accounts-Dwelling rents (3,202) - - - - - - (3,202) - (3,202) -
128 Accounts and notes receivable fraud recovery 670 - - - - - - 670 - 670 -
129 Accrued Interest receivable 1,496 - - - - 31,110 - 32,606 - 32,606 -
120 Total Receivables-Net Of Allowances For Doubtful Accounts 314,535 - - 24,364 115,459 31,110 99,776 585,244 - 585,244 1,799
131 Investments-Unrestricted 509,256 - - - - - - 509,256 - 509,256 -
142 Prepaid expenses and other assets 28,540 - 2,548 - - - 18,531 49,619 - 49,619 5,161
144 Interprogram-Due from - - - - - - 902,755 902,755 (902,755) - -
150 Total Current Assets 3,691,870 - 1,474,204 28,603 179,042 31,110 1,588,063 6,992,892 (902,755) 6,090,137 317,091
161 Land 1,364,771 - - - - - 190000 1,554,771 - 1,554,771 685,162
162 Buildings 48,022,801 - - - - - 720:764 48,743,565 - 48,743,565 3,318,485
163 Furniture-Equipment and machinery-Dwellings 1,125,675 - - - - - - 1,125,675 - 1,125,675 -
164 Furniture-Equipment and machinery-Administration - - 27,596 - - - 388,030 415,626 - 415,626 175,949
166 Accumulated depreciation (37,637,437) - (26,891) - - - (773,928) (38,438,256) - (38,438,256) (1,432,717)
167 Construction in progress 2,245,982 - - - - - - 2,245,982 - 2,245,982 12,510
160 Total Fixed Assets-Net Of Accumulated Depreciation 15,121,792 - 705 - - - 524,866 15,647,363 - 15,647,363 2,759,389
171 Total notes-Loans-And mortgages receivable-Noncurrent - - - - - 705,880 203,695 909,575 - 909,575 -
174 Total other assets - - - - - 100 - 100 - 100 43,554
180 Total Noncurrent Assets 15,121,792 - 705 - - 705,980 728,561 16,557,038 - 16,557,038 2,802,943
190 Total Assets 18,813,662 - 1,474,909 28,603 179,042 737,090 2,311,624 23,549,930 (902,755) 22,647,175 3,120,034
200 Deferred outflow of resources 688,244 - 181,076 - - - 122,982 992,302 - 992,302 -
290 Total Assets and Deferred outflow of Resources $ 19,501,906 $ $ 1,655,985 $ 28,603 $ 179,042 $ 737,090 $ 2,439,606 $ 24,542,232 $ (902,755) $ 23,639,477 § 3,120,034
40
Lansing Housing Commission
Financial Data Schedules (Continued)
Year Ended June 30, 2016
14.238 6.1 Component
Public Housing 19.CFP Capital 14.871 Housing Supportive Business Central Office Units-
Project Total Fund Choice Vouchers Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely
Program Presented
Liabilities
312 Accounts payable<=90 Days $ 10,137 $ - $ 30 $ - $ - $ - $ 765 $ 10,932 $ - $ 10,932 $ 3,685
321 Accrued wage/payroll taxes payable 28,832 - 10,223 - - - 10,821 49,876 - 49,876 -
322 Accrued compensated absences-Current portion 6,088 - 1,591 - - - 5,199 12,878 - 12,878 -
331 Total accounts payable-HUD Pha programs 9,194 - - - - - - 9,194 - 9,194 -
333 Accounts payable-Other government 161,903 - - - - - - 161,903 - 161,903 25,067
341 Tenant security deposits 117,127 - - - - - - 117,127 - 117,127 4,499
342 Total deferred revenue 22,864 - - - - - - 22,864 - 22,864 -
343 Total current portion of LTD-capital projects/mortgage revenue bonds 110,231 - - - - - 47,976 158,207 - 158,207 28,367
346 Accrued liabilities-Other 327,130 - 4,640 - - - 6,041 337,811 - 337,811 58,875
347 Interprogram-Due to - - - 23,264 - 879,491 - 902,755 (902,755) - -
310 Total Current Liabilities 793,506 - 16,484 23,264 - 879,491 70,802 1,783,547 (902,755) 880,792 120,493
351 Total LTD-net of current-capital projects/mortgage revenue bonds 1,818,707 - - - - - 474,903 2,293,610 - 2,293,610 2,587,874
353 Noncurrent liabilities-Other - - 31,942 - - - - 31,942 - 31,942 844,902
354 Accrued compensated absences-Non-current 34,497 - 9,015 - - - 29,460 72,972 - 72,972 -
357 Accrued pension and OPEB liabilities 2,559,215 - 859,346 5,482 - - 450,895 3,874,938 - 3,874,938 -
350 Total Noncurrent Liabilities 4,412,419 - 900,303 5,482 - - 955,258 6,273,462 - 6,273,462 3,432,776
300 Total Liabilities 5,205,925 - 916,787 28,746 - 679,491 1,026,060 8,057,009 (902,755) 7,154,254 3,553,269
400 Deferred Inflow of resources 57,075 - 15,016 - - - 10,199 82,290 - 82,290 -
Equity
508.1 Invested in capital assets-Net of related debt 13,192,854 - 705 - - - 1,987 13,195,546 - 13,195,546 143,168
511.1 Restricted net assets - - 952 - - - - 952587 - 952587 -
512.1 Unrestricted net assets 1,046,052 - (229:,587 110) (143) 179,042 (142,401) 1,401,360 2,254:800 - 2,254:800 (576,403)
513 Total Equity/Net Assets 14,238,906 - 724,182 (143) 179,042 1 (142,401) 1,403,347 16,402,933 - 16,402,933 (433,235;
600 Total Liabilities And Equity/Net Assets $ 19,501,906 $ - $ 1,655,985 $ 28,603 1$ 179,042 1$ 737,090 $ 2,439,606 $ 24,342,232 1 $ (902,755)1 $ 23,639,477 $ 3,120,034
41
Lansing Housing Commission
Financial Data Schedules (Continued)
Year Ended June 30, 2016
14.238 6.1 Component
Public Housing 14.CFP Capital 14.871 Housing Supportive Business Central Office Units-
Project Total Fund Choice Vouchers Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely
Program Presented
Income Statement
Revenue
70300 Net tenant rental revenue $ 1,591,996 $ - $ - $ - $ - $ - $ - $ 1,591,996 $ - $ 1,591,996 $ 82,504
70400 Tenant revenue-Other 125,184 - - - - - - 125,184 - 125,184 25
70500 Total Tenant Revenue 1,717,180 - - - - - - 1,717,180 - 1,717,180 82,529
70600 Total HUD Pha operating grants 3,441,431 769,298 10,340,542 311,531 - - - 14862,802 - 14,862,802 172,653
70610 Capital grants - 2,245,983 - - - - - 2:245,983 - 2,245,983 -
70710 Management fee - - - - - - 1,029,107 1,029,107 (1,029,107) - -
70720 Asset management fee - - - - - - 73,560 73,560 (73,560) - -
70730 Bookkeeping fee - - - - - - 71,723 71,723 (71,723) - -
70750 Other fees - - - - - - - - - - -
70700 Total Fee Revenue - - - - - - 1,174,390 1,174,390 (1,174,390) - -
70800 Other government grants - - - - 747,910 - - 747,910 - 747,910 -
71100 Total investment income-Unrestricted 4,141 - 50 - - 3,288 - 7,479 - 7,479 18,692
71400 Total revenue fraud recovery 1,005 - 3,238 - - - - 4,243 - 4,243 -
71500 Other revenue 116,472 - 50,099 - - - 117,236 283,807 - 283807 -
71600 Gain or loss on sale of fixed assets 367,908 - - - - - 88,613 456,521 - 456:521 -
70000 Total Revenue $ 5,648,137 $ 3,015,281 $ 10,393,929 $ 311,531 $ 747,910 1 $ 3,288 $ 1,380,239 $ 21,500,315 1 $ (1,174,390) $ 20,325,925 $ 273,874
42
Lansing Housing Commission
Financial Data Schedules (Continued)
Year Ended June 30, 2016
14.238 6.1 Component
Public Housing 14.CFP Capital 14.871 Housing Supportive Business Central Office Units-
Project Total Fund Choice Vouchers Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely
Program Presented
Expenses
91100 Administrative salaries $ 259,229 $ - $ 206,874 $ 9,090 $ 24,601 $ - $ 202,222 $ 702,016 $ - $ 702,016 $ 8,508
91200 Auditing fees 74,020 - 91,900 - - - 18,380 184,300 - 184,300 6,300
91300 Management fee 470,212 371,390 187,505 - - - - 1,029,107 (1,029,107) - 20,464
91310 Bookkeeping fee 71,723 - - - - - - 71,723 (71,723) - -
91400 Advertisting and marketing 371 - - - - - 220 591 - 591 -
91500 Employee benefit contributions-Administrative 509,492 - 224,120 2,763 10,993 - 132,765 880,133 - 880,133 -
91600 Office expenses 205,821 - 168,096 - - - 48,037 421,954 - 421,954 1,860
91700 Legalexpense 86,974 - - - - - 1,529 88,503 - 88,503 -
91800 Travel 5,917 - 3,117 - - - 11,576 20,610 - 20,610 -
91900 Other - - 26,386 - 124,045 - 3,987 154,418 - 154,418 8,815
91000 Total Administrative 1,683,759 371,390 907,998 11,853 159,639 - 418,716 3,553,355 (1,100,830) 2,452,525 45,947
92000 Asset management fee 73,560 - - - - - - 73,560 (73,560) - -
92400 Tenant services-Other 21,412 - - - - - 564 21,976 - 21,976 1,400
92500 Total Tenant Services 21,412 - - - - - 564 21,976 - 21,976 1,400
93100 Water 143,523 - 20 - - - 1,173 144,716 - 144,716 18,030
93200 Electricity 199,258 - 910 - - - 9,257 209,425 - 209,425 34,894
93300 Gas 204,634 - 46 - - - 1,592 206,272 - 206,272 14,929
93800 Other utilities expense 196,492 - 16 - - - 999 197,507 - 197,507 4,863
93000 Total Utilities 743,907 - 992 - - - 13,021 757,920 - 757,920 72,716
94100 Ordinary maintenance and operations-Labor 488,640 - - - - - 1,015 489,655 - 489,655 16,736
94200 Ordinary maintenance and operations-Materials and other 491,856 - - - - - 2,121 493,977 - 493,977 6,126
94300 Total ordinary maintenance and operations-Contract costs 1,446,590 - 37,424 - - - 85,102 1,569,116 - 1,569,116 10,733
94500 Employee benefit contributions-Ordinary maintenance 235,431 - - - - - 653 236,084 - 236,084 -
94000 Total Maintenance 2,662,517 - 37,424 - - - 88,891 2,788,832 - 2,788,832 33,595
95200 Protective services-Other contract costs 15,070 - 362 - - - 237 15,669 - 15,669 1,897
96110 Property insurance 122,458 - 313 - - - 3,746 126,517 - 126,517 10,975
96120 Liability insurance 52,401 - 15,464 - - - 1,344 69,209 - 69,209 1,612
96130 Workmens compensation 12,833 - 3,006 - - - 564 16,403 - 16,403 -
96140 All other insurance 21,663 - - - - - 1,733 23,396 - 23,396
96100 Total Insurance Premiums $ 209,355 $ - $ 18,783 $ - $ - $ - $ 7,387 $ 235,525 $ - $ 235,525 $ 12,587
43
Lansing Housing Commission
Financial Data Schedules (Continued)
Year Ended June 30, 2016
14.238 6.1 Component
Public Housing 14.CFP Capital 14.871 Housing Supportive Business Central Office Units-
Project Total Fund Choice Vouchers Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely
Program Presented
96210 Compensated absences $ 35,929 $ - $ 14,686 $ - $ - 5 - $ 11,424 $ 62,039 $ - $ 62,039 $ -
96300 Payments in lieu of taxes 101,141 - - - - - 144 101,285 - 101,285 4,086
96400 Bad debt-Tenant rents 64,417 - - - - - - 64,417 - 64,417 -
96000 Total Other General Expenses 201,487 - 14,686 - - - 11,568 227,741 - 227,741 4,086
96720 Interest on notes payable(hort and long-term) 73,584 - - - - - 13,160 86,744 - 86,744 93,459
96730 Amortization of bond issue costs - - - - - - - - - - 2,825
96700 Total Interest Expense And Amortization Cost 73,584 - - - - - 13,160 86,744 - 86,744 96,284
96900 Total Operating Expenses 5,684,651 371,390 980,245 11,853 159,639 - 553,544 7,761,322 (1,174,390) 6,586,932 268,512
97000 Excess revenue over operating expenses (36,514) 2,643,891 9,413,684 299,678 588,271 3,288 826,695 13,738,993 - 13,738,993 5,362
97300 Total housing assistance payments - - 9,041,243 299,821 628,150 - - 9,969,214 - 9,969,214 -
97400 Depreciation expense 1,248,163 - 821 - - - 109,344 1,358,328 - 1,358,328 138,802
98000 Total Other Nonoperating Expenses 1,248,163 - 9,042,064 299,821 628,150 - 109,344 11,327,542 - 11,327,542 138,802
90000 Total Expenses 6,932,814 371,390 10,022,309 311,674 787,789 - 662,888 19,088,864 (1,174,390) 17,914,474 407,314
10010 Operating transfers in 397,908 - - - - - - 397,908 - 397,908 -
10020 Operating transfers out - (397,908) - - - - - (397,908) - (397,908) -
10100 Total Other Financing Sources(Uses) 397'90" (397,908) - - - - - - - - -
10000 Excess(Deficiency)Of Total Revenue Over(Under)Total
Expenses $ (886,769) $ 2,245,983 1$ 371,620 1 $ (143) $ (39,879)1 $ 3,288 1$ 717,351 $ 2,411,451 $ $ 2,411,451 $ (133,440)
44
Actual Modernization U.S.Department of Housing OMB Approval No.2577-0157(exp.01/31/2017)
Cost Certificate and Urban Development
Office of Public and Indian Housing
Capital Fund Program(CFP)
Public reporting burden for this collection of information is estimated to average 2 hours per response,including the time for reviewing instructions,searching
existing data sources,gathering and maintaining the data needed,and completing and reviewing the collection of information.Send comments regarding this
burden estimate or any other aspect of this collection of information,including suggestions for reducing this burden,to the Reports Management Officer,
Paperwork Reduction Project(2577-0044 and 0157),Office of Information Technology,U.S.Department of Housing and Urban Development,Washington,
D.C.20410-3600.This agency may not conduct or sponsor,and a person is not required to respond to,a collection of information unless that collection displays a
valid OMB control number.
Do not send this form to the above address.
This collection of information requires that each Housing Authority(HA)submit information to enable HUD to initiate the fiscal closeout process.The information
will be used by HUD to determine whether the modernization grant is ready to be audited and closed out.The information is essential for audit verification and
fiscal close out.Responses to the collection are required by regulation.The information requested does not lend itself to confidentiality.
PHA Name: Modernization Project Number:
Lansing Housing Commission M133PO58501-12
The PHA hereby certifies to the Department of Housing and Urban Development as follows:
1. That the total amount of Modernization Cost herein called the"Actual Modernization Cost" of the Modernization Grant,is as shown below:
A. Funds Approved $ 1,225,248.00
B. Funds Disbursed $ 1,225,248.00
C. Funds Expended(Actual Modernization Cost) $ 1,225,248.00
D. Amount to be Recaptured(A—C) $ 0
E. Excess of Funds Disbursed(B-C) $ 0
2. That all modernization work in connection with the Modernization Grant has been completed;
3.That the entire Actual Modernization Cost or liabilities therefor incurred by the PHA have been fully paid;
4. That there are no undischarged mechanics', laborers', contractors', or material-men's liens against such modernization
work on file in any public office where the same should be filed in order to be valid against such modernization work;
5. That the time in which such liens could be filed has expired;and
6.That for any years in which the grantee is subject to the audit requirements of the Single Audit Act, 31 U.S.C.§7501 et seq.,as
amended,the grantee has or will perform an audit in compliance with said requirements.
7. Please mark one:
f A. This grant will be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act.
J B.This grant will not be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act.
I hereby certify that all the information stated herein,as well as any information provided in the accompaniment herewith,is true and accurate.
Warning:HUD will prosecute false claims and statements.Conviction may result in criminal and/or civil penalties.(18 U.S.C.1001,1010,1012;31 U.S.C.3729,3802)
Name&Title of Authorized Signatory(type or print clearly):
Patricia BainQ§-Lake
Signature of Executiv Director(or A t torized Designee): Date:
X 7
5/6/2016
For HUD Use Only
The Cost Certificate is approved for audit(if box 7A is marked):
Approved for Audit(Director,Office of Public Housing) Date:
X
The costs shown above agree with HUD verified costs(if box 7A or 7B is marked):
Approved: (Director,Office of Public Housing) Date:
X
form HUD-53001 (10/96)
ref Handbooks 7485.1 &.3
45
Actual Modernization U.S.Department of Housing OMB Approval No.2577-0157(exp.01/31/2017)
and Urban Development
Cost Certificate Office of Public and Indian Housing
Capital Fund Program(CFP)
Public reporting burden forthis collection of information is estimated to average 2 hours per response,including the time for reviewing instructions,searching
existing data sources,gathering and maintaining the data needed,and completing and reviewing the collection of information.Send comments regarding this
burden estimate or any other aspect of this collection of information,including suggestions for reducing this burden,to the Reports Management Officer,
Paperwork Reduction Project(2577-0044 and 0157),Office of Information Technology,U.S.Department of Housing and Urban Development,Washington,
D.C-20410-3600,This agency may not conductor sponsor,and a person is not required to respond to,a collection of information unless that collection displays a
valid OMB control number.
Do not send this form to the above address.
This collection of information requires that each Housing Authority(HA)submit information to enable HUD to initiate the fiscal closeout process.The information
will be used by HUD to determine whether the modernization grant is ready to be audited and closed out.The information is essential for audit verification and
fiscal close out.Responses to the collection are required by regulation.The information requested does not lend itself to confidentiality,
PHA Name: Modernization Project Number:
Lansing Housing Commission M133PO58501-13
The PHA hereby certifies to the Department of Housing and Urban Development as follows:
1. That the total amount of Modernization Cost herein called the"Actual Modernization Cost" of the Modernization Grant,is as shown below:
A. Funds Approved $ 1'191,186.00
B. Funds Disbursed $ 1,191,186.00
C. Funds Expended(Actual Modernization Cost) $ 1 1191 186.00
D. Amount to be Recaptured(A—C) $ 0
F. Excess of Funds Disbursed (B-C) $ 0
2.That all modernization work in connection with the Modernization Grant has been completed;
3.That the entire Actual Modernization Cost or liabilities therefor incurred by the PHA have been fully paid;
4. That there are no undischarged mechanics', laborers', contractors', or material-men's liens against such modernization
work on file in any public office where the same should be filed in order to be valid against such modernization work;
5. That the time in which such liens could be filed has expired;and
6. That for any years in which the grantee is subject to the audit requirements of the Single Audit Act,31 U.S.C. §7501 et seq.,as
amended,the grantee has or will perform an audit in compliance with said requirements.
7. Please mark one:
F A. This grant will be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act.
J B.This grant will not be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act.
I hereby certify that all the information stated herein,as well as any information provided in the accompaniment herewith,is true and accurate.
Warning:HUD will prosecute false claims and statements.Conviction may result in criminal andlor civil penalties-(18 U.S.C.1001,1010,1012;31 U.S.C.3729,3802)
Name&Title of Authorized Signatory(type or print clearly):
Patricia Baines-Lake
Signature ive rector(or A prized Designee): Date:
X 5/6/2016
For HUD Use Only
The Cost Certificate is approved for audit(if box 7A is markedf:
Approved for Audit(Director,Office of Public Housing) Date:
X
The costs shown above agree with HUD verified costs(if box 7A or 7B is marked):
Approved: (Director,Office of Public Housing) Date:
X
form HUD-53001 (10196)
ref Handbooks 7485.1 &.3
46