HomeMy WebLinkAbout2018 - LHC Lansing Housing Commission, Financial Report with Supplemental Information June 30, 2017, Plante Moran Annual Certified Audit- Final Audit Lansing Housing Commission
Financial Report
with Supplemental Information
June 30, 2017
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 14-36
Required Supplemental Information 37
Schedule of Changes in the Commission's Net Pension Liability and Related Ratios 38
Schedule of Commission Contributions 39
Other Supplemental Information 40
Financial Data Schedules 41-44
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, 2017 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
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, 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, 2017 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 February 28,
2018 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.
February 28, 2018
3
Lansing Housing Commission
Lansing, Michigan
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2017
This management's discussion and analysis (MD&A) of Lansing Housing Commission (the "Commission")
provides an overview of the Commission's financial performance during the fiscal year ended June 30,
2017. 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 Resident Opportunity and Supportive Services Program. The Low Income
Public Housing Program is funded with tenant rental revenue, miscellaneous tenant charges, and
Department of Housing and Urban Development (HUD) grants and subsidies. 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, including its blended component unit and the 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, 2017. 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 $ 16,592,680
2. Unrestricted net position equals 2,281,993
3. Total net position increased by 189,747
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 activities - 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
2016 2017 Change Change
Assets
Current and restricted assets $ 6,090,137 $ 5,335,778 $ (754,359) -12%
Capital assets 15,647,363 15,562,494 (84,869) -1%
Noncurrent assets 909,675 924,330 14,655 2%
Total assets 22,647,175 21,822,602 (824,573) -4%
Deferred Outflows of Resources 992,302 1,017,239 24,937 3%
Total assets and deferred
outflows of resources 23,639,477 22,839,841 (799,636) -3%
Liabilities
Current liabilities 880,792 630,636 (250,156) -28%
Long-term liabilities 6,273,462 5,481,415 (792,047) -13%
Total liabilities 7,154,254 6,1 12,051 (1,042,203) -15%
Deferred Inflows of Resources 82,290 135,110 52,820 64%
Net Position
Net investment in capital assets 13,195,546 13,268,885 73,339 1%
Restricted 952,587 1,041,802 89,215 9%
Unrestricted 2,254,800 2,281,993 27,193 1%
Total net position $ 16,402,933 $ 16,592,680 $ 189,747 1%
As illustrated in the statement of net position, the overall net position of the Commission increased by
$189,747, primarily as a result in a decrease in current and long-term liabilities net of decreases in current
and capital assets. Current assets decreased primarily due to a decrease in cash and an overall decrease in
accounts receivable due from HUD. There were no large new capital asset projects in the current year
and as a result net capital assets decreased by normal depreciation. The increase in noncurrent assets was
due to an increase in the COCC investment in Oliver Gardens. Current liabilities decreased primarily due
to the decrease in the activity of accounts payable related to the insignificant purchases of capital assets.
While there was an increase in OPEB liabilities, the decrease in net pension liability led to an overall
decrease in noncurrent liabilities.
5
Financial Analysis
(Continued)
Statement of Activities
Percent
2016 2017 Change Change
Revenue
Tenant rental revenue $ 1,717,181 $ 1,655,669 $ (61,512) -4%
Federal grants 17,108,785 15,562,618 (1,546,167) -9%
Other revenue 1,500,717 1,580,120 79,403 5%
Total revenue 20,326,683 18,798,407 (1,528,276) -8%
Expenses
Administrative expenses 3,169,731 3,064,073 (105,658) -3%
Tenant services 21,976 41,195 19,219 87%
Utilities 769,1 1 1 893,395 124,284 16%
Maintenance and operations 2,108,351 2,392,757 284,406 13%
Insurance and general expenses 430,957 450,813 19,856 5%
Housing assistance payments 9,970,034 10,404,199 434,165 4%
Depreciation and amortization 1,358,328 1,273,346 (84,982) -6%
Interest expense 86,744 88,882 2,138 2%
Total expenses 17,915,232 18,608,660 693,428 4%
Change in Net Position $ 2,41 1,451 $ 189,747 $ (2,221,704) -92%
Revenue
In reviewing the statement of activities, you will find that 83 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 8 percent is from investment income and other income.
Expenses
In reviewing the statement of activities, you will find that 56 percent of the Commission's expenses are
for housing assistance payments, 16 percent for administrative, 5 percent are for utilities, 13 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
Although there was a significant decrease in overall revenue during fiscal year 2017, the Commission
increased the net position due to effective management of expenses. The overall revenue decrease was
primarily a result of decrease in the federal grant revenue received under the Continuum of Care
program and the Public Housing Capital Fund program. Noted increases in tenant services, utilities,
maintenance and operations, and housing assistance payments were the result of high occupancy rates
exceeding 97 percent. 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.
6
Financial Analysis
(Continued)
Capital Assets
As of year end, the Commission had $15,562,494 invested in a variety of capital assets as reflected in the
following schedule, which represents a net decrease (additions, deductions, and depreciation) of I
percent from the end of last year.
Percent
2016 2017 Change Change
Land $ 1,554,771 $ 1,554,771 $ - 0%
Buildings 48,743,568 49,742,492 998,924 2%
Furniture and equipment 1,541,301 1,353,588 (187,713) -12%
Construction in progress 2,245,979 2,331,065 85,086 4%
Accumulated depreciation (38,438,256) (39,419,422) (981,166) 3%
Net capital assets $ 15,647,363 $ 15,562,494 $ (84,869) -1%
The following reconciliation summarizes the change in capital assets:
Beginning balance-July 1, 2016 $ 15,647,363
Additions:
Construction in progress 911,341
Building and improvements 290,099
Furniture and equipment 37,558
Disposals net of depreciation (50,521)
Depreciation expense (1,273,346)
Ending balance-June 30, 2017 $ 15,562,494
Debt Outstanding
As of the end of the fiscal year, the Commission had $2,293,609 in debt outstanding compared to
$2,451,817 in the previous year. The net change in debt for the year was a decrease of $158,208 of
principal payments.
Long-term Debt
2016 2017
Note payable- Davenport $ 522,879 $ 474,903
Note payable- PNC 1,928,938 1,818,706
Total long-term debt $ 2,451,817 $ 2,293,609
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 is also impacted by the
Commission's adoption of Governmental Accounting Standards Board (GASB) Statement No. 68 as of
July 1, 2014, 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 periodic physical
inspections 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. The Commission did
not undergo an inspection or evaluation during the fiscal year ended June 30, 2017.
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 Martell Armstrong, 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, 2017
Discrete
Primary Component
Government Unit- Oliver
(LHC) Gardens
Assets and Deferred Outflows of Resources
Current Assets
Cash and cash equivalents (Note 2) $ 3,278,089 $ 33,994
Cash and cash equivalents - Restricted (Note 2) 1,070,995 300,878
Tenant security deposits - Restricted (Note 2) 127,326 4,406
Receivables:
Tenant receivables 23,555 -
Accrued interest receivable 34,555 -
Other receivables 229,461 2,336
Due from other governmental units - HUD 4,292 -
Allowance for doubtful accounts (2,356) -
Investments (Note 2) 512,144 -
Prepaid expenses and other assets 57,717 3,783
Total current assets 5,335,778 345,397
Noncurrent Assets
Investment in partnership 924,230 -
Other assets 100 7,638
Capital Assets - Nondepreciable (Note 3) 3,885,836 685,162
Capital Assets - Net of depreciation (Notes 3) 11,676,658 1,933,967
Total assets 21,822,602 2,972,164
Deferred Outflows of Resources - Pension (Note 5) 1,017,239 -
Total assets and deferred outflows of resources $ 22,839,841 $ 2,972,164
The Notes to Financial Statements are an
Integral Part of this Statement. 9
Lansing Housing Commission
Statement of Net Position (Continued)
June 30, 2017
Discrete
Primary Component
Government Unit- Oliver
(LHC) Gardens
Liabilities, Deferred Inflows of Resources, and Net Position
Current Liabilities
Accounts payable - Operating $ 162,072 $ 3,685
Security deposits liability 160,051 4,528
Accrued liabilities and other:
Accrued PILOT 64,909 17,915
Accrued interest - 139,595
Accrued salaries and wages 56,391 -
Compensated absences < one year 17,528 -
Other current liabilities - 399,754
Accrued partnership management fees - 90,000
Notes payable - Current portion (Note 4) 169,685 29,818
Total current liabilities 630,636 685,295
Noncurrent Liabilities
Notes payable - Net of current portion (Note 4) 2,123,924 2,524,965
Compensated absences 99,325 -
Net OPEB obligation (Note 6) 1,865,920 Net pension liability(Note 5) 1,363,053 -
Other noncurrent liabilities 29,193 405,767
Total liabilities 6,1 12,051 3,616,027
Deferred Inflows of Resources - Pension (Note 5) 135,110 -
Net Position
Net investment in capital assets 13,268,885 64,346
Restricted 1,041,802 -
Unrestricted 2,281,993 (708,209)
Total net position 16,592,680 (643,863)
Total liabilities, deferred inflows of resources, and net
position $ 22,839,841 $ 2,972,164
The Notes to Financial Statements are an
Integral Part of this Statement. 10
Lansing Housing Commission
Statement of Activities
Year Ended June 30, 2017
Discrete
Primary Component
Government Unit- Oliver
(LHC) Gardens
Operating Revenue
Tenant revenue - Net $ 1,655,669 $ 260,063
HUD operating revenue 14,670,381 -
Other grant revenue 1,362,750 -
Other operating revenue 250,669 -
Total operating revenue 17,939,469 260,063
Operating Expenses
Administrative 3,064,073 23,488
Tenant services 41,195 -
Utilities 893,395 67,907
Maintenance 2,392,757 20,886
Insurance 252,021 14,348
Other general expenses 198,792 49,912
Housing assistance payments 10,404,199 -
Depreciation and amortization 1,273,346 141,787
Total operating expenses 18,519,778 318,328
Operating Loss (580,309) (58,265)
Nonoperating Income (Expenses)
Investment income 5,926 20,968
Interest expense (Note 4) (88,882) (93,331)
Loss on sale of assets (39,225) -
Total nonoperating expenses (122,181) (72,363)
Loss - Before contributions (702,490) (130,628)
Capital Contributions- Capital grants- HUD 892,237 -
Change in Net Position 189,747 (130,628)
Net Position - Beginning of year (as restated) (Note 1) 16,402,933 (513,235)
Net Position - End of year $ 16,592,680 $ (643,863)
The Notes to Financial Statements are an
Integral Part of this Statement. I I
Lansing Housing Commission
Statement of Cash Flows
Year Ended June 30, 2017
Primary
Government
Cash Flows from Operating Activities
Cash received from HUD operating subsidies and grants $ 15,074,461
Cash received from tenants 1,678,290
Other receipts 1,486,066
Cash payments for housing assistance (10,404,199)
Cash payments for administrative expenses (3,064,073)
Cash payments for other operating expenses (4,990,091)
Net cash used in operating activities (219,546)
Cash Flows from Capital and Related Financing Activities
Receipt of capital grants 892,237
Proceeds from sales of capital assets 342,697
Purchase of capital assets (1,238,994)
Principal and interest paid on capital debt (247,090)
Net cash used in capital and related financing activities (251,150)
Cash Flows from Investing Activities
Interest received on investments 3,977
Purchase of investment securities (2,888)
Net cash provided by investing activities 1,089
Net Decrease in Cash and Cash Equivalents (469,607)
Cash and Cash Equivalents - Beginning of year 4,946,017
Cash and Cash Equivalents - End of year $ 4,476,410
Statement of Net Position Classification of Cash and Cash Equivalents
Cash and cash equivalents $ 3,278,089
Restricted cash and cash equivalents 1,070,995
Tenant security deposits 127,326
Total cash and cash equivalents $ 4,476,410
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, 2017
Reconciliation of Operating Loss to Net Cash from Operating Activities
Operating loss $ (580,309)
Adjustments to reconcile operating loss to net cash from operating activities:
Depreciation and amortization 1,273,346
Bad debts 120,832
Deferred outflows and inflows 27,883
Changes in assets and liabilities:
Receivables 305,869
Prepaid and other assets (481,510)
Accounts payable (297,270)
Security and other trust deposits 20,060
Accrued and other liabilities (608,447)
Net cash used in operating activities $ (219,546)
The Notes to Financial Statements are an
Integral Part of this Statement. 13
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note 1 - Organization and Summary of Significant Accounting Policies
Organization 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 1,552 tenant-based vouchers
monthly for the year ended June 30, 2017.
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, 2017
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Continuum of Care Program (Shelter Plus Care and Permanent Supportive
Housing) - This program provides rental assistance to homeless individuals and families
with disabilities. The Commission is a subrecipient of the funding from the City of
Lansing, Michigan.
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, Michigan, but the Commission board independently
oversees the Commission's operation and designates its management. The City of
Lansing, Michigan 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, Michigan.
Accordingly, the Commission is not a component unit of the financial reporting entity of
the City of Lansing, Michigan.
GASB Statement Nos. 14, 39, 61, and 80 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, 2017
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,
2017, LHCNPDC had assets of$830,41 1, liabilities of$879,491, and net deficit position
of ($49,080). The total revenue and change in net position was $93,321 for the year
ended June 30, 2017.
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, 2016. 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, 2017
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Basis of Accountingo 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.
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.
17
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
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 $2,356 as potentially uncollectible as of June 30, 2017.
Tenant bad debt for the year ended June 30, 2017 was $120,832.
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 Limited Partnership. 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 Capital
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
2017, no impairments were recorded.
18
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
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 $22,917 of
costs related to obtaining tax credits, net of accumulated amortization. These costs have
been capitalized and are being amortized over 15 years using the straight-line method.
Amortization expense for the year ended June 30, 2017 was $1,527.
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 $1 16,853 at June 30, 2017, of which $17,528
is current and $99,325 is noncurrent.
Net Position - Net position is composed 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 the purpose 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, 2017
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 and state/local in support of housing units and programs as well as 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.
The Commission also received a ROSS (Resident Opportunities & Self Sufficiency) Grant
from HUD in fiscal year 2017 to cover the costs of the service coordinator.
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.
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.
Reporting Change (Prior Period Adjustment) - The financial statements for the
year ended June 30, 2017 have been restated to correct an error within the discretely
presented component unit. According to the partnership agreement of Oliver Gardens
LDHA Limited Partnership, the limited partner was entitled to a cumulative annual
partnership management fee of $10,000 per annum since inception of the partnership.
The partnership did not previously recognize this expense and accrual.
The effect of the restatement on the financial statements of the Commission was to
adjust the net position beginning balance from $(433,235) as reported for the year
ended June 30, 2016 to $(513,235).
20
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note 1 - Organization and Summary of Significant Accounting Policies
(Continued)
Subsequent Events - The financial statements and related disclosures include
evaluation of events through and including February 28, 2018, which is the date the
financial statements were available to be issued.
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 $ 3,278,089 $ 33,994
Cash and cash equivalents - Restricted 1,070,995 300,878
Tenant security deposits - Restricted 127,326 4,406
Investments 512,144 -
Total deposits and investments $ 4,988,554 $ 339,278
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:
21
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note 2 - Deposits and Investments (Continued)
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.
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,
$262,144 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 I,2016 Reclassifications Additions Reductions June 30,2017
Capital assets not being depreciated:
Land $ 1,554,771 $ - $ - $ $ 1,554,771
Construction in progress 2,245,979 (826,255) 911,341 2,331,065
Total nondepreciable assets 3,800,750 (826,255) 911,341 3,885,836
Capital assets being depreciated:
Building and improvements 48,743,568 808,742 290,099 (99,917) 49,742,492
Furniture and fixtures,equipment,and
machinery 1,541,301 17,513 37,558 (242,784) 1,353,588
Total depreciable capital
assets 50,284,869 826,255 327,657 (342,701) 51,096,080
Accumulated depreciation 38,438,256 - (292,180) 1,273,346 39,419,422
Net capital assets being depreciated 11,846,613 826,255 619,837 (1,616,047) 1 1,676,658
Net capital assets $ 15,647,363 $ - $ 1,531,178 $ (1,616,047) $ 15,562,494
Balance
Balance December 31,
Component Unit January I,2016 Additions Disposals 2016
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 188,459 188,459
Subtotal 3,506,944 3,506,944
Accumulated depreciation 1,432,717 140,260 1,572,977
Net capital assets being depreciated 2,074,227 (140,260) 1,933,967
Net capital assets $ 2,759,389 $ (140,260) $ $ 2,619,129
22
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
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 11, 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, 2017
Note 4 - Long-term Debt (Continued
Component Unit
Oliver Gardens LDHA Limited Partnership (the "Partnership") has the following loans
outstanding as of December 31, 2016 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. Financing fees of $45,415 were
incurred in connection with obtaining loans to rehabilitate the property.
These costs are being amortized over the term of the related debt and
are reported net of debt on the statement of net position. As of
December 31, 2016, total accumulated amortization related to these
costs was $12,324. Amortization expense was $1,527 for the year
ended December 31, 2016 and has been included as a component of
interest expense on statement of activities $ 1,567,741
HOME loan dated June 1, 2006 in the amount of $170,000. The loan is
held by the City of Lansing, Michigan 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,
Michigan 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 2,587,874
Less current portion 29,818
Long-term portion $ 2,558,056
24
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note 4 - Long-term Debt (Continued
Primary Government
Future minimum principal and interest payments on the LHC promissory note with
Davenport University to maturity for the years ending June 30 are as follows:
Principal Interest Total
2018 $ 49,141 $ 10,859 $ 60,000
2019 301,000 4,000 305,000
2020 58,000 2,000 60,000
2021 59,000 1,000 60,000
2022 7,762 609 8,371
Total payments $ 474,903 $ 18,468 $ 493,371
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
2018 $ 120,544 $ 72,000
2019 131,000 67,000
2020 138,000 62,000
2021 144,000 56,000
2022 150,000 50,000
2023-2027 847,000 150,000
2028-2029 288,162 9,000
Total payments $ 1,818,706 $ 466,000
25
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
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
2017 $ 29,818 $ 77,714
2018 31,343 76,189
2019 32,953 74,579
2020 34,638 72,894
2021 36,411 71,121
2022-2026 211,977 325,683
2027-2031 272,042 265,618
2032-2036 349,128 188,532
2037-2041 618,056 89,604
2042-2046 671,375 305,910
2047-2048 300,133 -
Total payments $ 2,587,874 $ 1,547,844
Changes in long-term debt for the year ended June 30, 2017 (or December 31, 2016 for
the discretely presented component unit) are presented below:
Balance-
Beginning of Balance- Due in One
Year Additions Deletions End of Year Year
Primary government:
Davenport $ 522,879 $ - $ (47,976) $ 474,903 $ 49,141
PNC 1,928,938 - (110,232) 1,818,706 120,544
Total $ 2,451,817 $ - $ (158,208) $ 2,293,609 $ 169,685
Component unit:
MSHDA $ 1,596,108 $ - $ (28,367) $ 1,567,741 $ 29,818
City of Lansing,
Michigan 720,000 - - 720,000 -
LHC 300,133 - - 300,133 -
Total $ 2,616,241 $ - $ (28,367) $ 2,587,874 $ 29,818
Interest expense for the year ended June 30, 2017 was $88,882 for the primary
government and interest expense for the year ended December 31, 2016 was $92,033
for the discrete component unit, excluding $1,298 of amortization expense of financing
fees, which has been reported as a component of interest expense on the statement of
activities.
26
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note S - 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 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, employees hired after
May 1, 2012, and exempt employees hired before May 1, 2012.
Retirement benefits for employees in the open general 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 15 years of
service. Early retirement age with reduced benefits is 50 with 25 years of service.
Vesting period is eight years. Employees are eligible for nonduty 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. Early retirement age with reduced benefits is at 50
with 25 years of service or 55 with 15 years of service. Vesting period is eight years.
Employees are eligible for nonduty 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 80 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, 2017
Note S - Agent Defined Benefit Pension Plan Description (Continued)
Retirement benefits for exempt employees hired before May 1, 2012 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 15 years
of service. Early retirement age with reduced benefits is 50 with 25 years of service.
Vesting period is eight years. Employees are eligible for nonduty 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.
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, 2016 measurement
date, the following employees were covered by the benefit terms:
Inactive plan members or beneficiaries currently receiving benefits 35
Inactive plan members entitled to but not yet receiving benefits 14
Active plan members 27
Total employees covered by MERS 76
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, 2017, the average active employee contribution rate was
5.0 percent of annual pay for all divisions and the Commission's average contribution
rate was 15.05 percent in the open general division and 3.24 percent under the new
hires division of annual payroll.
28
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note S - Agent Defined Benefit Pension Plan Description (Continued)
Net Pension Liability
The net pension liability reported at June 30, 2017 was determined using a measure of
the total pension liability and the pension net position as of December 31, 2016. The
December 31, 2016 total pension liability was determined by an actuarial valuation
performed as of that date.
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, 2015 $ 9,188,776 $ 6,686,668 $ 2,502,108
Service cost 126,678 - 126,678
Interest 714,076 - 714,076
Changes in benefits (349,397) - (349,397)
Differences between expected and
actual experience (140,946) - (140,946)
Contributions - Employer - 693,689 (693,689)
Contributions - Employee - 67,424 (67,424)
Net investment income - 743,039 (743,039)
Benefit payments, including refunds (651,805) (651,805) -
Administrative expenses - (14,686) 14,686
Miscellaneous other charges (521) (521) -
Net changes (301,915) 837,140 (1,139,055)
Balance at December 31, 2016 $ 8,886,861 $ 7,523,808 $ 1,363,053
29
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note S - Agent Defined Benefit Pension Plan Description (Continued)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions
For the year ended June 30, 2017, the Commission recognized pension expense of
$951,902. At June 30, 2017, the Commission reported deferred outflows of resources
and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Difference between expected and actual experience $ - $ 135,110
Changes in assumptions 135,322 -
Net difference between projected and actual earnings
on pension plan investments 297,768 -
Employer contributions to the plan subsequent to the
measurement date 584,149 -
Total $ 1,017,239 $ 135,1 10
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 $(584,149), which
will impact the net pension liability in fiscal year 2018, rather than pension expense.
Years Ending
June 30 Amount
2018 $ 168,687
2019 74,510
2020 95,652
2021 (40,869)
Actuarial Assumptions - The total pension liability in the December 31, 2016 actuarial
valuation was determined using the following actuarial assumptions, applied to all
periods included in the measurement:
Inflation 2.50%
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
Although no specific price inflation assumptions are needed for the valuation, the 3.75
percent long-term wage inflation assumption would be consistent with a price inflation
of 2.5 percent.
30
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note S - Agent Defined Benefit Pension Plan Description (Continued)
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, 2016 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.
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, 2016, 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
31
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note S - Agent Defined Benefit Pension Plan Description (Continued)
The preceding target allocation was amended as of January 1, 2017 to reduce the
previous allocation to global equity and global fixed income and to increase the allocation
of real assets and diversifying strategies. The target allocation as of January 1, 2017 will
be 55.5 percent global equity, 18.5 percent global fixed income, 13.5 percent real assets,
and 12.5 percent diversifying strategies.
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 $ 2,288,989 $ 1,363,053 $ 577,944
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
of resources related to pension, and pension expense, information about the plan's
fiduciary net position and additions to/deductions 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.
32
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note 6 - Other Postemployment Benefits (Continued
Funding Progress - For the year ended June 30, 2017, the Commission has estimated
the cost of providing retiree healthcare benefits through the alternative measurement
method permitted by GASB Statement No. 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) $ 616,028
Interest on the prior year's net OPEB obligation 2,746
Less adjustment to the annual required contribution (61,132)
Annual OPEB cost 557,642
Amounts contributed:
Payments of current premiums (64,552)
Advance funding -
Increase in net OPEB obligation 493,090
OPEB obligation - Beginning of year 1,372,830
OPEB obligation - End of year $ 1,865,920
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
6/30/17 $ 616,028 10.5 % $ 1,865,920
6/30/16 421,898 15.3 1,372,830
6/30/15 291,357 28.3 1,058,787
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
6/30/17 $ - $ 2,850,309 $ 2,850,309 - % $ 1,448,372 196.8 %
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
33
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note 6 - Other Postemployment Benefits (Continued
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, 2017, the unfunded actuarial liability (UAAL) of $2,850,309 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.
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 No. 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.
34
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
Note 6 - Other Postemployment Benefits (Continued)
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 and 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, 2017 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, 2017.
The collective bargaining five-year agreement between the Housing Commission
Employees' and Chapter of Local 1390. 1 1 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 risks of loss related to property loss, torts, errors
and omissions, and employee injuries (workers' compensation), as well as medical
benefits provided to employees. The Commission has purchased commercial insurance
for all risks of loss, included workers' 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.
35
Lansing Housing Commission
Notes to Financial Statements
June 30, 2017
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, 2017, approximately 82 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.
In June 2017, the Governmental Accounting Standards Board issued GASB Statement
No. 87, Leases, which improves accounting and financial reporting for leases by
governments. This statement requires recognition of certain lease assets and liabilities
for leases that previously were classified as operating leases and recognized as inflows
of resources or outflows of resources based on the payment provisions of the contract.
It establishes a single model for lease accounting based on the foundational principle that
leases are financings of the right to use an underlying asset. Under this statement, a
lessee is required to recognize a lease liability and an intangible right-to-use lease asset,
and a lessor is required to recognize a lease receivable and a deferred inflow of
resources. 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 2020-2021 fiscal year.
36
Required Supplemental Information
37
Lansing Housing Commission
Required Supplemental Information
Schedule of Changes in the Commission's Net Pension Liability
and Related Ratios
2017 2016 2015
Total Pension Liability
Service cost $ 126,678 $ 1 14,272 $ 114,461
Interest 714,076 698,614 684,653
Changes in assumptions (349,397) 405,966 -
Differences between expected and actual
experience (140,946) (123,435) -
Benefit payments, including refunds (651,805) (635,102) (624,495)
Other (521) - -
Net Change in Total Pension Liability (301,915) 460,315 174,619
Total Pension Liability- Beginning of year 9,188,776 8,728,461 8,553,842
Total Pension Liability- End of year $ 8,886,861 $ 9,188,776 $ 8,728,461
Plan Fiduciary Net Position
Contributions - Employer $ 693,689 $ 158,735 $ 215,191
Contributions - Member 67,424 55,586 37,167
Net investment income 743,039 (104,348) 446,261
Administrative expenses (14,686) (15,480) (16,314)
Benefit payments, including refunds (651,805) (635,102) (624,495)
Other (521) - -
Net Change in Plan Fiduciary Net Position 837,140 (540,609) 57,810
Plan Fiduciary Net Position - Beginning of year 6,686,668 7,227,277 7,169,467
Plan Fiduciary Net Position - End of year $ 7,523,808 $ 6,686,668 $ 7,227,277
Commission's Net Pension Liability - Ending $ 1,363,053 $ 2,502,108 $ 1,501,184
Plan Fiduciary Net Position as a Percentage
of Total Pension Liability 84.66 % 72.77 % 82.80 %
Covered Employee Payroll $ 1,333,333 $ 1,235,367 $ 1,164,556
Commission's Net Pension Liability as a
Percentage of Covered Employee Payroll 102.2 % 202.5 % 128.9 %
38
Lansing Housing Commission
Required Supplemental Information
Schedule of Commission Contributions
Calendar Year
2016 2015 2014
Actuarially determined contribution $ 122,057 $ 103,079 $ 213,163
Contributions in relation to the actuarially determined contribution 693,689 158,735 215,191
Contribution Excess $ (571,632) $ (55,656) $ (2,028)
Covered Employee Payroll $ 1,333,333 $ 1,235,367 $ 1,164,556
Contributions as a Percentage of Covered Employee Payroll 52.0 % 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 24 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
39
Other Supplemental Information
40
Lansing Housing Commission
Financial Data Schedules
Year Ended June 30, 2017
Public Housing 14.CFP Capital 14.871 Housing 14.238 Supportive Central Office Cost 6.1 Component
Project Total Fund Choice Vouchers Housing Program State/Local Business Activities Center Subtotal Eliminations Total Units-Discretely
Presented
Balance Sheet
Assets
111.00 Cash-Unrestricted $ 1,938,322.00 $ - 5 375,42L00 $ - $ 154,558,00 $ - $ 689,244.00 $ 3,157,545.00 $ - $ 3,157,545.00 $ 33,872.00
113.00 Cash-Other restricted - - 1,070,995.00 - - - - 1,070,995.00 - 1,070,995.00 300,878.00
114.00 Cash-Tenant security deposits 127,326.00 - - - - - - 127,326.00 - 127,326.00 4,528.00
I5.00 Cash-Restricted for payment of current liabilities 120,544.00 - - - - - - 120,544.00 - 120,544.00 -
100.00 Total Cash 2,186,192.00 - 1,446,416.00 - 154,558,00 - 689,244.00 4,476,410.00 - 4,476,410.00 339,278.00
122.00 Total accounts receivable-HUD other projects 4,292.00 - - - - - - 4,292.00 - 4,292.00 -
124.00 Accounts receivable-Other government 1,662.00 - - - - - - 1,662.00 - 1.662.00 -
125.00 Total accounts receivable-Miscellaneous - - - - 91,627,00 90,000.00 46,172.00 227,799.00 - 227,799.00 1,799.00
126.00 Accounts receivable-Tenants-Dwelling rents 23,555.00 - - - - - - 23,555.00 - 23,555.00 531.
126.10 Allowance for boubtful accounts-Dwelling rents (2,356.00) - - - - - - (2,356.00) - (2,356.00) -
128.00 Accounts and notes receivable fraud recovery - - - - - - - - - - -
129.00 Accrued interest receivable 124.00 - - - - 34,431.00 - 34,555.00 - 34,555.00 -
120.00 Total Receivables-Net Of Allowances For Doubtful Accounts 27,277.00 - - - 91,627.00 124,431.00 46,172.00 289,507.00 - 289,507.00 2,336.00
131.00 Investments-Unrestricted 512,144.00 - - - - - - 512,144.00 - 512,144.00 -
I42.00 Prepaid expenses and other assets 31,128.00 - 2.74700 - - - 23,842.00 57,717.00 - 57,717.00 3,783.00
144.00 Interprogram-Due from - - - - - - 879,491.00 879,491.00 (879,491.00) - -
150.00 Total Cument Assets 2,756,741.00 - 1,449,163.00 - 246,185.00 124,431.00 1,638,749.00 6,215,269.00 (879,491.00) 5,335,778.00 345,397.00
I61.00 Land 1,364,771.00 - - - - - 190,000.00 1,554,771.00 - 1,554,771.00 685,162.00
162.00 Buildings 49,023,620.00 - - - - - 718,871.00 1 554,77�.00 1 554,771.00 685,162.OD
�62.00 Wild ngs 49,023,620.00 718,871.00 49,742,49.00 - 49,742,491.00 3,318,485.00
163.00 Furniture-Equipmem and machinery-Dwellings 948,105.00 - - - - - - 948,105.00 - 948,105.00 -
164.00 Furniture-Equipment and machine ry-Administration 13,600.00 - 27,596,00 - - - 364,287.00 405,483.00 - 405,483.00 175,949.00
166.00 Accumulated depreciation (38,526,405.00) - (27,596,00) - - - (865,420.00) (39,419,421,00) - (39,419,421.00) (1,572,977.00)
167.00 Construction in progress 21311,965.00 1 19,100.00 2,331,065.00 - 2,331,065.00 12,510.00
160.00 Total Fixed Assets-Net Of Accumulated Depreciation 15.135,656.00 - - - - - 426,838.00 15,562,494.00 - 15,562,494.00 2,619,129.010
171.00 Total notes-Loans-And mortgages receivable-Noncurrent - - - - - 705,880.00 218,350.00 924,230.00 - 924,230.00 -
174.00 Total other assess - - - - - 100.00 - 100.00 - 100.00 7,638,00
180.00 Total Noncurrent Assets 15,135,656.00 - - - - 705,980.00 645,188.00 16,486,824.00 - 16,486,824.00 2,626,767.00
190.00 Total Assets 17,892,397.00 - 1,449,163.00 - 246,185.00 830,411.00 2,283,937.00 22,702,093.00 (879,491.00) 21,822,602.00 2,972,164.00
200.00 Deferred outflow of resources 705,540.00 - 185,626,00 - - - 126,073.00 1,017,239.00 - 1,017,239.00 -
290.00 Total Assets and Deferred Outflow of Resources 16,597,937..0 1,634,789.00 246,185.00 830,41 I.00 2,410,010.00 23,719,332.00 (879,491.00) 22,839,841.00 2,972,164.00
41
Lansing Housing Commission
Financial Data Schedules (Continued)
Year Ended June 30, 2017
Public Housing 14.CFP Capital 14.871 Housing 14.238 Supportive Central Office Cost 6.1 Component
Project Total Fund Choice Vouchers Housing Program State/Local Business Activities Center Subtotal Eliminations Total Units-Discretely
Presented
Liabilities
312.00 Accounts payable<=90 Days $ 70,000.00 $ - $ 8,176.00 $ - $ - $ - $ 4,282.00 $ 82,458.00 $ - $ 82,458.00 $ 1,381.00
321.00 Accrued vrage/payroll taxes payable 30,125.00 - 13,510.00 - - - 12,756.00 56,391.00 - 56.391.00 61,009.00
322.00 Accrued compensated absences-Current portion 9,281.00 - 3,948.00 - - - 4,299.00 17,528.00 - 17,528.00 -
325.00 Accrued interest payable - - - - - - - - - - 139,595.00
331.00 Total accou,m payable-HUD Pha programs - - - - - - - - - - -
333.00 Accounts payable-Other government 64,909.00 - - - - - - 64,909.00 - 64,909.00 17,915.00
341.00 Tenant security deposits 127,326.00 - - - - - - 127,326.00 - 127,326.00 4,528.00
342.00 Total deferred revenue 32,725.00 - - - - - - 32,725.00 - 32,725.00 -
343.00 Total current ponion of LTD-capital projects/mortgage revenue bonds 120,544.00 - - - - - 49,141.00 169,685.00 - 169,685.00 29,818.00
345.00 Other Current Liabilities - - - - - - - - - - 104,927.00
346.00 Accrued liabilities-Other 78,622.00 - 17.00 - - - 975.00 79,614.00 - 79,614.00 148,360.00
347.00 Interprogram-Due to - - - - - 879,491.00 - 879,491.00 (879,491.00) - -
348.00 Loan liability-Current - - - - - - - - 177,762.00
310.00 Total Current Liabilities 533,532.00 - 25,651.00 - - 879,491.00 71,453.00 1,510,127.00 (879,491.00) 630,636.00 685,295.00
351.00 Total LTD-Net of current-Capital projects/mortgage revenue bonds 1,698,162.00 - - - - - 425,762.00 2,123,924.00 - 2,123,924.00 2,524,965.00
353.00 Noncurrent liabilities-Other - - 29,193.00 - - - - 29,193.00 - 29,193.00 405,767.00
354.00 Accrued compensated absences-Noncurrent 52,594.00 - 22,370.00 - - - 24,361.00 99,325.00 - 99,325.00 -
35T00 Accrued pension and OPEB liabilities 2,137,003.00 808,997.00 - - 282,973.00 3,228,973.00 3,228,973.00 -
350.00 Total Noncurrent Liabilities 3,887,759.00 - 860,560.00 - - - 733,096.00 5,481,415.00 - 5,481,415.00 2,930,732.20
300.00 Total Liabilities 4,421,291.00 - 886,211.00 - - 879,491.00 804,549.00 6,991,542.00 (879,491.00) 6,112,051.00 3,616,027.00
400.00 Deferred inflow of resources 93,710.00 - 24,655.00 - - - 16,745.00 135,I I0.00 - 135,110.00 -
Equity
508,10 Invested in capital assets-Net of related debt 13,316,950.00 - - - - - (48,065.00) 13,268,885.00 - 13,268,885.00 64,346.00
511.40 Restricted net assets - - 1,041,802.00 - - - - 1,041,802.00 - 1,041,802.00 -
512.I0 Unrestricted net assets 765,986.00 - (317,879.00) - 246.185.00 (49,080.00) 1,636,781.00 2,281,993.00 - 2,281,993.00 (708.209.00)
513.00 Total Equity/Net Assets 14,082,936.00 - 723,923.00 - 246,185.00 (49,080.00) 1,588,716.00 16,592,680.00 - 16,592,680.00 (643,863.00)
600.00 Total Liabilities and Equity/Net Assets 18,597,937.00 1,634,789.00 246,185.00 830,411.00 2,410,010.00 23,719,332.00 1 (879,491.00) 22,839,841.00 2,972,164.00
42
Lansing Housing Commission
Financial Data Schedules (Continued)
Year Ended June 30, 2017
Public Housing 14.CFP Capital 14.871 Housing 14.238 Supportive Central Offce Cost 6.1 Component
Project Total Fund Choice Vouchers Housing Program State/Local Business Activities Center Subtotal Eliminations Total Units-Discretely
Presented
Income Statement
Revenue
70300 Net tenant rental revenue $ 1,556,075.00 $ - $ - $ - $ - 5 - $ - $ 1,556,075.00 $ - $ 1,556,075.00 $ 85,152.00
70400 Tenant revenue-Other 99,594.001 99,594.00 1 99,594.00 -
70500 Total Tenant Revenue 1,655,669.00 - - - - - - 1,655,669.00 - 1,655,669.00 85,152.00
70600 Total HUD Ph,operating grants 3,712,245.00 603,937.00 10,354,199.00 - - - - 14,670,381.00 - 14,670,381.00 174,911.00
70610 Capital grants - 892,237.00 - - - - - 892,23T00 - 892,237.00 -
70710 Management fee - - - - - - 786,023.00 786,023.00 (786,023.00) - -
70720 Asset management fee - - - - - - 99,960.00 99,960.00 (99,960.00) - -
70730 Bookkeeping fee - - - - - - 72,015.00 72,015.00 (72,015.00) - -
70750 Other fees - - - - - - - - - - -
70700 Total Fee Revenue 3,712,245.00 1,496,174.00 10,354,199.00 - - - 957,998.00 957,998.00 (957,998.00) -
70800 Other government grants - - - - 1,362,750.00 - - 1,362,750.00 - 1,362,750.00 -
71100 Total investment income-Unrestricted 2,446.00 - 160.00 - - 3,321.00 - 5,927.00 - 5,927.00 20,968.00
71400 Total revenue fraud recovery - - 9,900.00 - - - - 9,900.00 - 9,900.00 -
71500 Other revenue 62,183.00 - 12,806.00 - - 90,000.00 75,780.00 240,769.00 - 240,769.00 -
71600 Gain or loss on sale of fixed assets (39,225.00) - - - - - - (39,225.00) - (39,225.00) -
70000 Total Revenue 5,393,318.00 1,496,174.00 10,377,065.00 - 1,362,750.00 93,321.00 1,033,778.00 19,756,406.00 (957,998.00) 18,798,408.00 281,031.00
Expenses
91100 Administrative salaries 318,689.00 - 276,393.00 - 56,377,00 - 325,263.00 976,722.00 - 976,722.00 5,934.00
91200 Auditing fees 15,360.00 - 27,725.00 - - - 5,545.00 48,630.00 - 48,630.00 13.050.00
91300 Management fee 609,395.00 137,265.00 176,628.00 - - - - 923,288.00 (786,023.00) 137,265.00 30,654.00
91310 Bookkeeping fee 72,015.00 - - - - - - 72,015.00 (72,015.00) - -
91400 Advertisting and marketing - - - - - - 509.00 509.00 - 509.00 -
91500 Employee benefit contribution,-Administrative 369,390.00 - 242,506.00 - 12.841.00 - 130,137.00 754,874.00 - 754.874.00 -
91600 Office expenses 186,968.00 - 148,380.00 - - - 33,376.00 368,724.00 - 368,724.00 5,311.00
91700 Legal expense 104,784.00 - - - - - 3,639.00 108,423.00 - 108,423.00 -
91800 Travel 2,272.00 - 920.00 - - - 1,502.00 4,694.00 - 4,694.00 -
91900 Other - - 146,028.00 - 103,845.00 - 49,458.00 299,331.00 - 299,331.00 112.00
91000 Total Administrative 1,678,873.00 137,265.00 1,018,580.00 - 173,063.00 - 549,429.00 3,557,210.00 (858,038.00) 2,699,172.00 55,061.00
92000 As set management fee 99,960.00 - - - - - - 99,960.00 (99,960.00) - -
92400 Tenant services-Other 41,134.00 - - - - - 61.00 41,195.00 - 41,195.00 -
92500 Total Tenant Services 141,094.00 - - - - - 61.00 41,195400 - 41,195.00 -
93100 Water 175,131.00 - 114.00 - - - 892.00 176,137.00 - 176,137.00 11,210.00
93200 Electricity 224,569.00 - 893.00 - - - 8,230.00 233,692.00 - 233,692.00 35,938.00
93300 Gas 202,397400 - 73.00 - - - 1,691400 204,161400 - 204,161.00 10,318.00
93600 Sewer 252,588.00 - 95.00 - - - 542.00 253,225.00 - 253,225.00 10,441.00
93800 Other utilities expense - - - - - - - - - - -
93000 Total Utilities 854,685.00 - 1,175.00 - - - 11,355400 867,215.00 - 867,215.00 1 67,907.00
43
Lansing Housing Commission
Financial Data Schedules (Continued)
Year Ended June 30, 2017
Public Housing 14.CFP Capital 14.871 Housing 14.238 Supportive Central Office Cost 6.1 Component
Project Total Fund Choice Vouchers Housing Program State/Local Business Activities Center Subtotal Eliminations Total Units-Discretely
Presented
94100 Ordinary maintenance and operations-Labor $ 471,587.00 $ - $ - $ - $ - $ - $ - $ 471,587.00 $ - $ 471,587.00 $ 2,902.00
94200 Ordinary maintenance and operations-Materials and other 364,336.00 - - - - - - 364,336.00 - 364.336.00 577.00
94300 Total ordinary maintenance and operations-Contract costs 1,541,373.00 - 33,981.00 - - - 66,154.00 1,641,508.00 - 1,641,508.00 16,773.00
94500 Employee benefit contributions-Ordinary maintenance 233,446.00 - - 233,446.00 233.446.00
94000 Total Maintenance 2,610,742.00 - 33,981.00 - - - 66,154.00 2,710,877.00 - 2,710,877.00 20,252.00
95200 Protective services-Other contract costs 11,175.00 - 261.00 - - - 1,662.00 13,098.00 - 13,098.00 635.00
96110 Property insurance 124,309.00 - - - - - 1,487.00 125,796.00 - 125,796.00 11,482.00
96120 Liability insurance 51,696.00 - 16,279.00 - - - 226.00 68,201.00 - 68,201.00 1,275.00
96130 Workmens compensation 16,834.00 - 5,734.00 - - - 1,059.00 23,627.00 - 23,627.00 -
96140 All other insurance 14,716.00 554.00 - 19,127.00 34,397.00 34,397.00 1,591.00
96100 Total Insurance Premiums 207,555.00 22,567.00 21,899.00 252,021.00 252,021.00 14,348.00
96210 Compensated absences 38,715.00 - 19,310.00 - - - 17,696.00 75,721.00 - 75,721.00 -
96300 Payments in lieu of We, 63,156.00 - - - - - - 63,156.00 - 63,156.00 18,338.00
96400 Bad debt-Tenant rents 69,832.00 - - - - - 51,000.00 120,832.00 - 120,832.00 -
96000 Total Other General Expenses 171,703.00 - 19,310.00 - - - 68,696.00 259,709.00 - 259,709.00 18,338.00
96710 Interest of mortgage(or bonds)payable - - - - - - - - - - 93,331 00
96720 Interest on notes payable(short and long term) 76,858.00 - - - - - 12,024.00 88,882.00 - 88,882.00 -
96730 Amortization of bond issue costs - - - - - - - - - - 1,527.00
96700 Total Interest Expense And Amortization Cost 76,858.00 - - - - - 12,024.00 88,882A0 - 88.882.00 94,858.00
96900 Total Operating Expenses 5,752,685.00 137,265.00 1,095,874.00 - 173,063.00 - 731,280.00 7,890,167.00 (957,998.00) 6,932,169.00 271,399.00
97000 Excess revenue over operating expenses (359,367.00) 1,358,909.00 9,281,191.00 - 1,189,687.00 93,321.00 302,498.00 11,866,239.00 - 11,866,239.00 9.632.00
97300 Total housing assistance payments - - 9,276,898.00 - 1,126,248.00 - - 10,403,146.00 - 10,403,146.00 -
97400 Depreciation expense 1,155,512.00 - 705.00 - - - 117,129.00 1,273,346.00 - 1,273,346.00 140,260.00
98000 Total Other Nonoperating Expenses 1,155,512.00 - 9,277,603.00 - 1,126,248.00 117,129.00 11,676,492.00 11,676,492.00 140,260.00
90000 Total Expenses 6,908,197.00 137,265.00 10,373,477.00 - 1,299,311.00 - 848,409.00 19,566,659.00 (957,998.00) 18,608,661.00 411,659.00
10010 Operating transfers in 466,672.00 - - - - - - 466,672.00 466,672.00 -
10020 Operating tramfers out - (466,672.00) - - (466,672.00) (466,672.00)
10100 Total Other Financing Sources(Uses) 466,672.00 (466,672.00) - - - - - - - - -
10000 Excess(Deficienry)Of Total Revenue Over(Under)Total
Expenses (I,048,207.00) 892,237.00 3,588.00 63,439.00 93,321.00 I85,369.00 189,747.00 189,747.00 (130,628.00)
11020 Required annual debt principal payments 110,231.00 - - - - - 47,976.00 158,207.00 - 158,207.00 28,367.00
11030 Beginning equity 14,238,906.00 - 724,182.00 (143.00) 179,042.00 (142,401.00) 1,403,347.00 16,402,933.00 - 16,402,933.00 (433,235.00)
11040 Prior period adjustment-Equity transfers-And correction of errors - - (3,847,00) 143.00 3,704.00 - - - - - (80,000.00)
11170 Administrative fee equity - - - - - - - - - - -
11180 Housing assistance payments equity - - - - - - - - - - -
11190 Unit months available 9,996.00 - 21,936.00 - 1,050.00 - - 32,982.00 - 32,982.00 30.00
11210 Number of unit months leased 9,602.00 - 16,424.00 - 1,050.00 - - 27,076.00 - 27,076.00 30.00
11620 Bing Purchases - 892,237.00 - - - - - 892,237.00 - 892,237.00 -
13901 Repluildacement housing factor funds
44
RECEIVED JUN 15 2017
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 collectioh 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 M133PO58501-14
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 $ $1,292,413.00
B. Funds Disbursed $ $1,292,413.00
C. Funds Expended(Actual Modernization Cost) $ $1,292,413.00
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:
r A. This grant will be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act.
._I 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 staled 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.1001,1010.1D12;31 U.S.C.3729,3802)
Name&Title of Authorized Signatory(type or print clearly):
Patricia Baines-
Executive Director
Signature of Executive Di�qdtor(or Authorized Designee): Date:
X k -M,�' 7 11-22-16
For HUD Use Only
The Co tc to pro d for a dit x 7A is rk
r e f dit( it to of c g) Date: /
/l
The costs shown above agree with HUD ve os f box 7A or 7B is marked):
Appr �or, Publi oust ) Date:
X
form HUD-53001(10/96)
ref Handbooks 7485.1 &.3
45
Actual Modernization U.S.Department of Housing OMBApprovaBE&F71ME1).$El?/312A1N117
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: I Modernlzation Project Number:
Lansing Housing Commission M133PO58501-15
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 $ 1,324,342.00
B. Funds Disbursed $ 1,324,342.00
C. Funds Expended(Actual Modernization Cost) $ 1,324,342.00
D. Amount to be Recaptured(A—C) $
E. Excess of Funds Disbursed(B-C) $
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 at seq.,as
amended,the grantee has or will perform an audit in compliance with said requirements.
7. Please mark one:
i A. This grant will be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act.
,.1 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 Baines-L..a e, Executive Director
Signature of Executive,Dfrect r"(orAuthorized Designee): Date:
1-12-2017
For HUD Use Only -----
The Cost Certificate is appro>4 for audit if x A isvilarked
roved fo udit(Direc r,Off ubl H sin Date:
. �X
2
i25.;or,
ove a with HUD riff c (if box 7A or 7B is marked):
c of usin Date,
form HUD-53001(10/96)
ref Handbooks 7485.1 &.3
46