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HomeMy WebLinkAbout2021 - 67891 LHC Lansing Housing Commission - Financial Report with supplemental Information June 30, 2021 Lansing Housing Commission Financial Report with Supplemental Information June 30, 2021 Lansing Housing Commission Contents Independent Auditor's Report 1-2 Management's Discussion and Analysis 3-7 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 8-9 Statement of Activities 10 Statement of Cash Flows 11-12 Fund Financial Statements: Fiduciary Fund: Statement of Fiduciary Net Position - Other Postemployment Benefits Trust 13 Statement of Changes in Fiduciary Net Position - Other Postemployment Benefits Trust 14 Discretely Presented Component Units: Statement of Net Position 15 Statement of Activities 16 Notes to Financial Statements 17-40 Required Supplemental Information 41 Schedule of Changes in the Commission's Net Pension Liability and Related Ratios 42 Schedule of Pension Contributions 43 Schedule of Changes in the Commission's Net OPEB Liability and Related Ratios 44 Schedule of OPEB Contributions 45 Schedule of OPEB Investment Returns 46 Notes to Required Supplemental Information 47 Other Supplemental Information 48 Financial Data Schedules 49-53 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, the discretely presented component units, and the aggregate remaining fund information of Lansing Housing Commission (the "Commission") as of and for the year ended June 30, 2021 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 opinions on these financial statements based on our audit. We did not audit the financial statements of Oliver Gardens Limited Dividend Housing Association LP, which represents 17 percent and 97 percent, respectively, of the assets and revenue of the aggregate discretely presented component units. Those financial statements were audited by other auditors, whose report has been furnished to us and, our opinion, insofar as it relates to the amounts included for Oliver Gardens Limited Dividend Housing Association LP, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, the discretely presented component units, and the aggregate remaining fund information of Lansing Housing Commission as of June 30, 2021 and the respective changes in its financial position and, where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1 To the Board of Commissioners Lansing Housing Commission 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 opinions on the financial statements that collectively comprise Lansing Housing Commission's basic financial statements. The financial data schedules 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 14, 2022 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. 44t4& �, P L L C January 14, 2022 2 Lansing Housing Commission Lansing, Michigan Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2021 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, 2021. The operations of the Commission are comprised of a Low- Income Public Housing Program, a Housing Choice Voucher program, a Capital Fund 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 does not analyze the financial position or current year activity of the discretely presented component units, as disclosed in Note 1 to the financial statements. Please read this summary along with the accompanying audited financial statements of the Commission for the fiscal year ended June 30, 2021. Financial Highlights 1. Total assets and deferred outflows of resources exceed total liabilities and deferred inflows of resources by $ 30,199,618 2. Unrestricted net position equals 19,272,545 3. Total net position increased by 12,199,621 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. 3 Financial Analysis Statement of Net Position Percent 2020 2021 Change Change Assets Current assets $ 6,272,329 $ 6,954,603 $ 682,274 11% Capital assets 13,778,940 8,295,702 (5,483,238) -40% Noncurrent assets 1,756,969 16,182,674 14,425,705 821% Total assets 21,808,238 31,432,979 9,624,741 44% Deferred Outflows of Resources 407,663 1,660,807 1,253,144 307% Total assets and deferred outflows of resources 22,215,901 33,093,786 10,877,885 49% Liabilities Current liabilities 970,472 510,819 (459,653) -47% Long-term liabilities 2,904,506 1,786,515 (1,117,991) -38% Total liabilities 3,874,978 2,297,334 (1,577,644) -41% Deferred Inflows of Resources 340,926 596,834 255,908 75% Net Position Net investment in capital assets 12,282,689 8,295,702 (3,986,987) -32% Restricted 346,406 2,631,371 2,284,965 660% Unrestricted 5,370,902 19,272,545 13,901,643 259% Total net position $ 17,999,997 $ 30,199,618 $ 12,199,621 68% As illustrated in the statement of net position, the overall net position of the Commission increased by $12,199,621. During the year ended June 30, 2021, the Commission sold substantially all of the units comprising two of its Low-Income Public Housing Asset Management Projects (AMPs) in connection with the conversion of these AMPs to new limited partnerships under HUD's Rental Assistance Demonstration (RAD) program. This led to an overall decrease in net capital assets. The sales were financed in part by seller notes receivable issued by the Commission totaling $12,245,775 and noncurrent restricted cash proceeds totaling $2,304,225. These attributed to the increase in noncurrent assets during the year ended June 30, 2021. The overall decrease in liabilities is primarily attributable to the pay-off of the Commissions outstanding debt totaling $1,496,251. 4 Financial Analysis (Continued) Statement of Activities Percent 2020 2021 Change Change Revenue Tenant rental revenue $ 1,486,057 $ 1,007,171 $ (478,886) -32% Federal grants 18,973,768 20,967,349 1,993,581 11% Other revenue 1,419,023 9,613,845 8,194,822 577% Total revenue 21,878,848 31,588,365 9,709,517 44% Expenses Administrative expenses 2,818,997 1,841,361 (977,636) -35% Tenant services 29,645 22,568 (7,077) -24% Utilities 967,501 776,096 (191,405) -20% Maintenance and operations 2,382,592 2,511,711 129,119 5% Insurance and general expenses 425,542 768,313 342,771 81% Housing assistance payments 12,130,939 12,533,402 402,463 3% Depreciation and amortization 1,102,145 869,391 (232,754) -21% Interest expense 63,884 65,902 2,018 3% Total expenses 19,921,245 19,388,744 (532,501) -3% Change in Net Position $ 1,957,603 $ 12,199,621 $ 10,242,018 523% Revenue In reviewing the statement of activities, you will find that 67 percent of the Commission's revenue is derived from grants from the Department of Housing and Urban Development, 3 percent of the Commission's revenue is from dwelling rent, and 30 percent is from other income. Other revenue is primarily attributable to a $7,605,477 gain on the sale of capital assets in connection with RAD conversions. Expenses In reviewing the statement of activities, you will find that 65 percent of the Commission's expenses are for housing assistance payments, 9.5 percent for administrative, 4 percent are for utilities, 13 percent are for maintenance, 4.5 percent are for depreciation and amortization, and 4 percent are for tenant services, protective services, general expenses, and interest expense. Change in Net Position There was an increase in overall revenue during fiscal year 2021 driven primarily by an increase in other revenue, as described above. 5 Financial Analysis (Continued) Capital Assets As of year-end, the Commission had $8,295,702 invested in a variety of capital assets as reflected in the following schedule, which represents a net decrease (additions, deductions, and depreciation) of 40 percent from the end of 2020. The decrease is primarily attributable to the capital assets sold in connection with the RAID conversions as previously described. Percent 2020 2021 Change Change Land $ 1,554,771 $ 1,279,900 $ (274,871) -18% Buildings 52,626,312 32,414,114 (20,212,198) -38% Furniture and equipment 1,323,281 768,671 (554,610) -42% Construction in progress 957,455 819,780 (137,675) -14% Accumulated depreciation (42,682,879) (26,986,763) 15,696,116 -37% Net capital assets $ 13,778,940 $ 8,295,702 $ (5,483,238) -40% The following reconciliation summarizes the change in capital assets: Beginning balance -July 1, 2020 $ 13,778,940 Additions: Construction in progress 2,262,853 Building and improvements 37,650 Furniture and equipment 31,555 Disposals net of depreciation (6,945,905) Depreciation expense (869,391) Ending balance -June 30, 2021 $ 8,295,702 Debt Outstanding As of the end of the fiscal year, the Commission had $0 in debt outstanding compared to $1,496,251 in the previous year. During the year ended June 30, 2021 the Commission paid off all outstanding debt. See Note 6 to the financial statements for further information. Long-term Debt 2020 2021 Note payable - Davenport $ 67,354 $ - Note payable - PNC 1,428,897 - Total long-term debt $ 1,496,251 $ - 6 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 (HUD) • 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 and other postemployment benefit liabilities • The conversion of Low-Income Public Housing projects under HUD's Rental Assistance Demonstration program 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. 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 Doug Fleming, Executive Director, Lansing Housing Commission, 419 Cherry, Lansing, MI 48933, or call (517) 372-7996. 7 Lansing Housing Commission Statement of Net Position June 30, 2021 Discretely Presented Component Primary Units- Government December 31, (LHC) 2020 Assets Current assets: Cash and cash equivalents (Note 3) $ 5,192,376 $ 126,350 Cash and cash equivalents- Restricted (Note 3) 684,839 1,869,772 Receivables: Tenant receivables 87,550 7,008 Other receivables 20,731 6,906 Allowance for doubtful accounts (5,445) - Due from other governmental units- HUD 3,500 - Due from other governmental units- State and local 295,738 - Prepaid expenses and other assets 44,937 3,626 Investments (Note 3) 541,604 - Tenant security deposits - Restricted (Note 3) 88,773 5,348 Total current assets 6,954,603 2,019,010 Noncurrent assets: Cash and cash equivalents- Restricted (Note 3) 2,304,225 - Due from component units 950,472 - Capital assets: Assets not subject to depreciation (Note 5) 2,099,680 2,954,539 Assets subject to depreciation - Net (Note 5) 6,196,022 9,428,185 Notes receivable (Note 4) 12,545,908 - Other assets 382,069 32,291 Total noncurrent assets 24,478,376 12,415,015 Total assets 31,432,979 14,434,025 Deferred Outflows of Resources Pension (Note 7) 1,597,374 - OPEB (Note 8) 63,433 - Total deferred outflows of resources 1,660,807 - See notes to financial statements. 8 Lansing Housing Commission Statement of Net Position (Continued) June 30, 2021 Discretely Presented Component Primary Units- Government December 31, (LHC) 2020 Liabilities Current liabilities: Accounts payable - Operating $ 184,387 $ 10,408 Security deposit liability 124,904 5,148 Accrued liabilities and other: Accrued salaries and wages 62,624 7,820 Accrued interest payable - 196,036 Accrued PILOT 66,444 19,389 Compensated absences 16,460 - Unearned revenue 56,000 388 Current portion of long-term debt(Note 6) - 36,404 Total current liabilities 510,819 275,593 Noncurrent liabilities: Due to primary government - 546,872 Compensated absences 93,268 - Net pension liability(Note 7) 1,285,458 Net OPEB liability(Note 8) 50,096 - Notes payable- Net of current portion (Note 6) - 13,504,343 Other noncurrent liabilities 357,693 82,788 Total noncurrent liabilities 1,786,515 14,134,003 Total liabilities 2,297,334 14,409,596 Deferred Inflows of Resources Pension (Note 7) 351,664 - OPEB (Note 8) 245,170 - Total deferred inflows of resources 596,834 Net Position Net investment in capital assets 8,295,702 (1,158,023) Restricted 2,631,371 - Unrestricted 19,272,545 1,182,452 Total net position $ 30,199,618 $ 24,429 See notes to financial statements. 9 Lansing Housing Commission Statement of Activities Year Ended June 30, 2021 Discretely Presented Component Primary Units- Government December 31, (LHC) 2020 Operating Revenue Tenant revenue- Net $ 1,007,171 $ 283,739 HUD operating revenue 18,771,084 - Other grant revenue 961,648 - Other operating revenue 720,600 16,831 Total operating revenue 21,460,503 300,570 Operating Expenses Administrative 1,841,361 26,078 Tenant services 22,568 - Utilities 776,096 94,397 Maintenance 2,511,711 34,871 Insurance 322,503 14,001 Other general expenses 445,810 65,053 Housing assistance payments 12,533,402 - Depreciation and amortization 869,391 104,121 Total operating expenses 19,322,842 338,521 Operating Income (Loss) 2,137,661 (37,951) Nonoperating Revenue (Expense) Investment income 326,120 8,901 Gain on sale of fixed assets 7,605,477 - Interest expense (Note 6) (65,902) (92,618) Total nonoperating revenue (expense) 7,865,695 (83,717) Income (Loss) - Before capital contributions 10,003,356 (121,668) Capital Contributions Capital grants- HUD 2,196,265 - Partner contributions - 1,226,647 Total capital contributions 2,196,265 1,226,647 Change in Net Position 12,199,621 1,104,979 Net Position (Deficit) - Beginning of year 17,999,997 (1,080,550) Net Position - End of year $ 30,199,618 $ 24,429 See notes to financial statements. 10 Lansing Housing Commission Statement of Cash Flows Year Ended June 30, 2021 Primary Government (LHC) Cash Flows from Operating Activities Cash received from HUD operating subsidies and grants $ 18,949,342 Cash received from tenants 1,066,180 Other receipts 1,758,840 Cash payments for housing assistance (12,533,402) Cash payments for administrative expenses (1,841,361) Cash payments for other operating expenses (4,786,400) Net cash and cash equivalents provided by operating activities 2,613,199 Cash Flows from Capital and Related Financing Activities Receipt of capital grants 2,196,265 Proceeds from sale of capital assets 2,304,225 Purchase of capital assets (2,330,676) Principal and interest paid on capital debt (1,562,153) Net cash and cash equivalents used in capital and related financing activities 607,661 Cash Flows from Investing Activities Interest received on investments 11,046 Purchases of investment securities (7,332) Net cash and cash equivalents provided by investing activities 3,714 Net Increase in Cash and Cash Equivalents 3,224,574 Cash and Cash Equivalents- Beginning of year 5,045,639 Cash and Cash Equivalents- End of year $ 8,270,213 Classification of Cash and Cash Equivalents Cash and cash equivalents $ 5,192,376 Restricted cash and cash equivalents (current) 684,839 Restricted cash and cash equivalents (noncurrent) 2,304,225 Tenant security deposits 88,773 Total cash and cash equivalents $ 8,270,213 See notes to financial statements. 11 Lansing Housing Commission Statement of Cash Flows (Continued) Year Ended June 30, 2021 Primary Government (LHC) Reconciliation of Operating Income to Net Cash from Operating Activities Operating income $ 2,137,661 Adjustments to reconcile operating income to net cash from operating activities: Depreciation and amortization 869,391 Bad debts 29,082 Deferred outflows and inflows (997,236) Changes in assets and liabilities: Receivables 536,323 Prepaid and other assets 119,371 Accounts payable 170,673 Accrued and other liabilities (107,845) Security and other trust deposits (48,907) Unearned revenue (95,314) Net cash and cash equivalents provided by operating activities $ 2,613,199 Significant Noncash Transactions- Issuance of seller notes receivable in exchange for capital assets sold $ 12,245,775 See notes to financial statements. 12 Lansing Housing Commission Statement of Fiduciary Net Position Other Postemployment Benefits Trust June 30, 2021 Assets - Interest in pooled investments (Note 3) $ 455,332 Liabilities - Net Position - Restricted for other postemployment benefits $ 455,332 See notes to financial statements. 13 Lansing Housing Commission Statement of Changes in Fiduciary Net Position Other Postemployment Benefits Trust Year Ended June 30, 2021 Additions Investment income $ 63,752 Employer contributions 82,435 Total additions 146,187 Deductions - Benefit payments 82,435 Net Increase in Net Position Restricted for Other Postemployment Benefits 63,752 Net Position Restricted for Other Postemployment Benefits - Beginning of year 391,580 Net Position Restricted for Other Postemployment Benefits- End of year $ 455,332 See notes to financial statements. 14 Lansing Housing Commission Discretely Presented Component Units Statement of Net Position December 31, 2020 Mount Vernon Oliver Gardens Park Limited Limited Dividend Dividend Housing Housing Association LP Association LP Total Assets Cash and cash equivalents (Note 3) $ - $ 126,350 $ 126,350 Cash and cash equivalents- Restricted (Note 3) 384,537 1,485,235 1,869,772 Receivables: Tenant receivables 7,008 - 7,008 Other receivables - 6,906 6,906 Prepaid expenses and other assets 3,626 - 3,626 Tenant security deposits - Restricted (Note 3) 5,248 100 5,348 Capital assets: Assets not subject to depreciation (Note 5) 697,672 2,256,867 2,954,539 Assets subject to depreciation - Net (Note 5) 1,398,185 8,030,000 9,428,185 Other assets 1,526 30,765 32,291 Total assets 2,497,802 11,936,223 14,434,025 Liabilities Accounts payable - Operating 9,499 909 10,408 Due to primary government 546,872 - 546,872 Security deposit liability 5,148 - 5,148 Accrued liabilities and other 223,245 - 223,245 Unearned revenue 388 - 388 Noncurrent liabilities: Due within one year(Note 6) 36,404 - 36,404 Due in more than one year(Note 6) 2,477,617 11,109,514 13,587,131 Total liabilities 3,299,173 11,110,423 14,409,596 Net Position (Deficit) Net investment in capital assets (335,376) (822,647) (1,158,023) Restricted - - - Unrestricted (465,995) 1,648,447 1,182,452 Total net position (deficit) $ (801,371) $ 825,800 $ 24,429 See notes to financial statements. 15 Lansing Housing Commission Discretely Presented Component Units Statement of Activities Year Ended December 31, 2020 Mount Vernon Oliver Gardens Park Limited Limited Dividend Dividend Housing Housing Association LP Association LP Total Operating Revenue Tenant revenue- Net $ 267,265 $ 16,474 $ 283,739 Other operating revenue 10,158 6,673 16,831 Total operating revenue 277,423 23,147 300,570 Operating Expenses Administrative 22,418 3,660 26,078 Utilities 83,076 11,321 94,397 Maintenance 31,797 3,074 34,871 Insurance 14,001 - 14,001 Other general expenses 65,053 - 65,053 Depreciation and amortization 103,949 172 104,121 Total operating expenses 320,294 18,227 338,521 Operating (Loss) Income (42,871) 4,920 (37,951) Nonoperating Revenue (Expense) Investment income 8,901 - 8,901 Interest expense (Note 6) (92,618) - (92,618) Total nonoperating expense (83,717) - (83,717) (Loss) Income- Before capital contributions (126,588) 4,920 (121,668) Capital Contributions- Partner contributions 405,767 820,880 1,226,647 Change in Net Position 279,179 825,800 1,104,979 Net Position (Deficit) - Beginning of year (1,080,550) - (1,080,550) Net Position (Deficit) - End of year $ (801,371) $ 825,800 $ 24,429 See notes to financial statements. 16 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 1 - Nature of Business Organization and Program Descriptions 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, deferred outflows, liabilities, deferred inflows, 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.C. 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 506 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 primarily consists 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 either to 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 1,622 tenant-based vouchers monthly for the year ended June 30, 2021. 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. 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. 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. 17 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 1 - Nature of Business (Continued) 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's 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 No. 14, as amended, defines 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. 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. The Commission has financial accountability for the nonprofit and controls its board of directors and management. As of June 30, 2021, LHCNPDC had assets of$535,767, liabilities of $0, and net position of $535,767. The total revenue and expenses were $10,000 and $0, respectively, for the year ended June 30, 2021. Discretely Presented Component Unit The following component units meet the criteria for discrete component unit presentation and are presented separately from the primary government in the basic financial statements to clearly distinguish the component unit balances and transactions from the primary government. These entities follow all applicable Financial Accounting Standards Board (FASB) standards, and financial statements are prepared on the accrual basis of accounting in accordance with GAAP. Since they do 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. All of the discrete component units have a calendar year end of December 31, which differs from the Commission's year end of June 30, 2021. For reporting purposes, the information reported in the basic financial statements is presented as of and for the 12-month period ended December 31, 2020 for these discrete component units. Due to fiscal year-end differences between the Commission and the discrete component units, certain related receivables of the Commission do not have offsetting equal liabilities reflected in the discrete component units. Each of the discrete component units is legally separate from the Commission and meets the fiscal dependency and financial burden criteria but do not meet any of the blending criteria. The Commission has a 0.01 percent general partner ownership interest in each of the respective discrete component units and, thus, does not have a majority ownership interest. • Oliver Gardens Limited Dividend Housing Association Limited Partnership (Oliver Gardens) was organized in 2006 as a limited partnership exclusively to acquire, rehabilitate, maintain, and operate a 30-unit rental housing project for persons of low income. Occupancy of the units began in 2007. The project is located in Lansing, Michigan. The major activities of Oliver Gardens, including rental rates, are governed by the partnership agreement and Michigan State Housing Development Authority (MSHDA). The property is developed and operated under the low-income housing tax credit program, as provided for in Section 42 of the Internal Revenue Code. A complete financial report for Oliver Gardens can be obtained at its administrative offices at 419 Cherry St., Lansing, MI 48933. 18 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 1 - Nature of Business (Continued) • Mount Vernon Park Limited Dividend Housing Association Limited Partnership (Mount Vernon Park) was formed under the laws of the State of Michigan to acquire, rehabilitate, own, and operate Mount Vernon Park Apartments under the U.S. Department of Housing and Urban Development's rental assistance demonstration (RAD) program and consists of 140 rental units rented to low-income individuals in Lansing, Michigan. The major activities of Mount Vernon Park, including rental rates, are governed by the partnership agreement and Michigan State Housing Development Authority. The property is developed and operated under the low-income housing tax credit program, as provided for in Section 42 of the Internal Revenue Code. • South Washington Park Limited Dividend Housing Association Limited Partnership (South Washington Park) was formed under the laws of the State of Michigan to acquire, rehabilitate, own, and operate South Washington Park Apartments under the U.S. Department of Housing and Urban Development's rental assistance demonstration program and consists of 187 rental units rented to low-income individuals in Lansing, Michigan. The major activities of South Washington Park, including rental rates, are governed by the partnership agreement and Michigan State Housing Development Authority. The property is developed and operated under the low-income housing tax credit program, as provided for in Section 42 of the Internal Revenue Code. On March 19, 2021, South Washington Park purchased South Washington Park Apartments from the Commission in exchange for a seller note with the Commission in the amount of $5,100,000 and $900,000 in cash. Operations of South Washington Park began on March 20, 2021. The reporting period of South Washington Park is December 31. Given the timing of the reporting period, financial results for South Washington Park are not included in the accompanying combining statements as of June 30, 2021; however, the closing activity affecting the Commission that has taken place as of June 30, 2021 has been reflected in the financial statements of the Commission. Note 2 - Significant Accounting Policies Basis of Accounting 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. 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 primarily consists of rental charges to tenants, operating grants from HUD, and other operating revenue that offsets operating expenses. Operating expenses include the cost of administration, 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 primarily assessed to the users of the services. For financial reporting purposes, the Commission considers its grants associated with operations to be 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. 19 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 2 - Significant Accounting Policies (Continued) Fiduciary funds of the Commission include amounts held in a fiduciary capacity for others. These amounts are not used to operate the Commission's programs. Activities that are reported as fiduciary consist of the Other Post Employment Benefit Trust Fund, which accounts for the activities and accumulates resources for health care insurance benefits provided to retirees. 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. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and all highly liquid investments with an original maturity of three months or less when purchased. 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, replacement reserves, and RAD sale proceeds. Restrictions for use in operations and approval are governed by HUD, lender requirements, or other outside parties. In accordance with GASB Statement No. 62, cash that is restricted as to withdrawal or use in the acquisition or construction of noncurrent assets or that is segregated for the liquidation of long-term debts has been presented as noncurrent. Investments Short-term investments consisted of certificates of deposit at June 30, 2021. Investments are reported at fair value or estimated value. 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 $5,445 as potentially uncollectible as of June 30, 2021. Tenant bad debt for the year ended June 30, 2021 was $29,082. Prepaid Expenses Prepaid items consist of certain payments to vendors that reflect costs applicable to future fiscal years. Due from Component Units The amounts due from component units includes amounts due from the Commission's discretely presented component units. Of the amount due, $359,837 is for accrued interest receivable on notes receivable that are payable from the availability of cash flow generated at the operating partnership level. Also included in this amount is $541,618 due from Oliver Gardens resulting from the Commission providing accounting, management, oversight, and maintenance services. 20 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 2 - Significant Accounting Policies (Continued) 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 to or above the capitalization threshold of $5,000 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: Years Buildings 40 Building improvements 7-40 Furniture and fixtures, equipment, 3-10 and machinery 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 generally is measured by identifying the historical cost of the service utility of the capital asset that cannot be used due to the impairment event of 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 are written off entirely. During 2021, no impairments were recorded. Notes Receivable The notes receivable are reported at their original issue amount less principal repaid. Interest is recognized according to the terms of the specific note. An allowance for loan loss is determined based on a specific assessment of the note that is delinquent or determined to be doubtful to be collected. A note is considered delinquent if the repayment terms are not met. All amounts deemed to be uncollectible are charged against the allowance for loan losses in the period that determination is made. As of June 30, 2021, no amounts have been deemed to be uncollectible. Other Noncurrent Assets Other assets of the Commission include development costs totaling $382,069 associated with conversion of the Commission's low-rent public housing projects under HUD's Rental Assistance Demonstration program. The costs will be reimbursed by the newly formed companies upon final closing of the conversions. Other assets of the component units include $53,854 of costs related to obtaining tax credits, net of accumulated amortization of$21,563. These costs have been capitalized and are being amortized over 15 years using the straight-line method. Amortization expense for the discrete component units' year ended December 31, 2020 was $1,701. 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 $109,728 at June 30, 2021, of which $16,460 is current and $93,268 is noncurrent. 21 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 2 - Significant Accounting Policies (Continued) Classification of Net Assets 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 a 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 its 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. 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 and Self-Sufficiency) Grant from HUD in fiscal year 2021 to cover the costs of the service coordinator. Capital Grants The Commission records grants received for capital outlay as contributions of capital gains. 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. Pension The Commission offers a defined benefit pension plan to its employees. The Commission records a net pension asset or liability for the difference between the total pension liability calculated by the actuary and the pension plan's fiduciary net position. For the purpose of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the pension plan and additions to/deductions from the pension plan's fiduciary net position have been determined on the same basis as they are reported by the pension plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 22 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 2 - Significant Accounting Policies (Continued) Other Postemployment Benefit Costs The Commission provides retiree health care benefits to eligible employees and their spouses. The Commission records a net other postemployment benefit cost (OPEB) asset or liability for the difference between the total OPEB liability calculated by the actuary and the OPEB plan's fiduciary net position. For the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the OPEB plan and additions to/deductions from the OPEB plan's fiduciary net position have been determined on the same basis as they are reported by the OPEB plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 reporting period. Actual results could differ from those estimates. Upcoming Accounting Pronouncements In June 2017, the GASB issued 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 were previously 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 year ending June 30, 2022. In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, which simplifies accounting for interest cost incurred before the end of construction and requires those costs to be expensed in the period incurred. As a result, interest cost incurred before the end of a construction period will not be capitalized and included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. This statement also reiterates that, in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The requirements of the standard will be applied prospectively and result in increased interest expense during periods of construction. The provisions of this statement are effective for the Commission's financial statements for the June 30, 2022 fiscal year. 23 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 2 - Significant Accounting Policies (Continued) Subsequent Events Events that occur after the date of the statement of net position but before the financial statements were available to be issued must be evaluated for recognition or disclosure. The effects of the subsequent events that provide evidence about conditions that existed at the date of the statement of net position are recognized in the accompanying financial statements. Subsequent events, which provide evidence about conditions that existed after the date of the statement of net position, require disclosure in the accompanying notes. Management evaluated the activity of the Commission through January 14, 2022, which is the date the financial statements were available to be issued, and concluded that the following subsequent event has occurred that would require disclosure in the notes to the financial statements: • On November 18, 2021, the Commission sold real property associated with its public housing program to convert 100 public housing units to project-based voucher units under HUD's rental assistance demonstration program. The purchase price was $5,500,00, and the purchase was financed in part with a seller note due back to the Commission in the amount of$5,037,425. Hildebrandt Park GP LLC, an affiliate of the Commission, will be the managing member of the new entity, Hildebrandt Park Limited Dividend Housing Association Limited Partnership (Hildebrandt Park). As part of this conversion, Hildebrandt Park has committed to entering into debt agreements in the amount of $7,724,813. These proceeds will be utilized to complete the rehabilitation of the facility. Full rehabilitation is estimated to be completed during 2023. Note 3 - Deposits and Investments Deposits and investments are reported in the financial statements for the primary government as follows: Primary Government (LHC) Cash and cash equivalents-Unrestricted $ 5,192,376 Cash and cash equivalents-Restricted 684,839 Tenant security deposits- Restricted 88,773 Investments-Certificates of deposit 541,604 Cash and cash equivalents-Restricted (noncurrent) 2,304,225 Total deposits and investments $ 8,811,817 Deposits and investments are reported in the financial statements for the discrete component units as follows: Oliver Gardens Waverly Place Total Cash and cash equivalents-Unrestricted $ - $ 126,350 $ 126,350 Cash and cash equivalents-Restricted 384,537 1,485,235 1,869,772 Tenant security deposits- Restricted 5,248 100 5,348 Total $ 389,785 $ 1,611,685 $ 2,001,470 24 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 3 - Deposits and Investments (Continued) 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 that matures no more than 270 days after the date of purchase, obligations of the State of Michigan or its political subdivisions that 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 investments are in accordance with statutory authority. The Commission's cash and investments are subject to several types of risk, which are examined in more detail below: Custodial Credit Risk of Bank Deposits Custodial credit risk is the risk that, in the event of a bank failure, the Commission's deposits may not be returned to it. The Commission does not have a deposit policy for custodial credit risk. At year end, the Commission had bank deposits of $0 (certificates of deposit and checking and savings accounts) that were uninsured and uncollateralized. 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, $291,604 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. Interest Rate Risk Interest rate risk is the risk that the value of investments will decrease as a result of a rise in interest rates. The Commission's investment policy does not restrict investment maturities other than commercial paper, which can only be purchased with a 270-day maturity. The investments included in the other postemployment benefits trust within the fiduciary fund consist of common collective trust funds of $455,332. The underlying asset allocation of this fund consists of 24.7 percent fixed-income bonds, which are subject to interest rate risk. Fair Value Measurements The Commission categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted market prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs. Investments that are measured at fair value using net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Commission's assessment of the significance of particular inputs to these fair value measurements requires judgement and considers factors specific to each asset or liability. 25 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 3 - Deposits and Investments (Continued) Investments in Entities that Calculate Net Asset Value per Share The Commission holds shares or interests in investment companies where the fair value of the investments is measured on a recurring basis using net asset value per share (or its equivalent) of the investment companies as a practical expedient. At June 30, 2021, the fair value, unfunded commitments, and redemption rules of those investments are as follows: Redemption Unfunded Frequency, if Redemption Carrying Value Commitments Eligible Notice Period MERS Total Market Fund $ 455,332 $ - N/A N/A The MERS Total Market Fund seeks to provide current income and capital appreciation while minimizing the volatility of the capital markets. MERS manages the asset allocation and monitors the underlying investment managers of the MERS Total Market Fund. Note 4 - Notes Receivable At June 30, 2021, the Commission's notes receivable consisted of the following: Balance Balance July 1, 2020 Additions Reductions June 30, 2021 Oliver Gardens- Note receivable $ 300,133 $ - $ - $ 300,133 Mount Vernon Park- Seller Note Receivable - 7,145,775 - 7,145,775 South Washington Park- Seller Note Receivable - 5,100,000 - 5,100,000 Total $ 300,133 $ 12,245,775 $ - $ 12,545,908 Oliver Gardens The loan bears interest at 1 percent, compounded annually. The total amount of accrued interest at June 30, 2021 is $47,990. No principal or interest is due until the loan matures on January 1, 2048. The note is secured by land and substantially all the real property owned by Oliver Gardens. Mount Vernon Park The loan bears interest at 4.5 percent, compounded annually. The total amount of accrued interest at June 30, 2021 is $168,268. No principal or interest is due until the loan matures on January 1, 2070. The note is secured by land and substantially all the real property owned by Mount Vernon Park. South Washington Park The loan bears interest at 9.5 percent, compounded annually. The total amount of accrued interest at June 30, 2021 is $143,359. No principal or interest is due until the loan matures on March 31, 2061. The note is secured by land and substantially all the real property owned by South Washington Park. 26 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 5 - Capital Assets Capital asset activity of the Commission's governmental activities was as follows: Primary Government Balance Balance July 1, 2020 Additions Reductions June 30, 2021 Capital assets not being depreciated: Land $ 1,554,771 $ - $ (274,871) $ 1,279,900 Construction in progress 957,455 2,262,853 (2,400,528) 819,780 Total nondepreciable assets 2,512,226 2,262,853 (2,675,399) 2,099,680 Capital assets being depreciated: Buildings and improvements 52,626,312 37,650 (20,249,848) 32,414,114 Furniture and equipment 1,323,281 31,555 (586,165) 768,671 Total depreciable capital assets 53,949,593 69,205 (20,836,013) 33,182,785 Accumulated depreciation 42,682,879 869,391 (16,565,507) 26,986,763 Net capital assets being depreciated 11,266,714 (800,186) (4,270,506) 6,196,022 Net capital assets $ 13,778,940 $ 1,462,667 $ (6,945,905) $ 8,295,702 Depreciation expense for the year ended June 30, 2021 was $869,391 and is included in depreciation and amortization on the statement of activities. During the year ended June 30, 2021, the Commission disposed of the capital assets associated with Mount Vernon Park and South Washington Park in connection with their RAD conversions (as discussed in Note 1), resulting in a net gain on disposals of $7,605,477. Component Units Balance Balance December 31, January 1, 2020 Additions Reductions 2020 Capital assets not being depreciated -Land: Land $ 685,162 $ 520,000 $ - $ 1,205,162 Construction in progress 12,510 1,736,867 - 1,749,377 Total nondepreciable assets 697,672 2,256,867 - 2,954,539 Capital assets being depreciated: Buildings and improvements 3,318,485 8,030,000 - 11,348,485 Furniture and equipment 175,949 - - 175,949 Subtotal 3,494,434 8,030,000 - 11,524,434 Accumulated depreciation 1,993,829 102,420 - 2,096,249 Net capital assets being depreciated 1,500,605 7,927,580 - 9,428,185 Net capital assets $ 2,198,277 $ 10,184,447 $ - $ 12,382,724 27 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 5 - 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 is 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, at which time construction in progress for that grant is placed in service and transferred to the buildings or improvements categories. Note 6 - Long-term Debt Primary Government Lansing Housing Commission's debt is composed of a promissory note payable to Davenport University and a lease with PNC for the energy performance contract. These are both considered direct borrowings. 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. The note was paid in full during the fiscal year ended June 30, 2021. 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. All leases held with PNC were paid in full during the fiscal year ended June 30, 2021. 28 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 6 - Long-term Debt (Continued) Component Units The discrete component units have the following loans outstanding as of December 31, 2020 that are secured by land and substantially all real property owned by the component units. These are all considered direct borrowings: Oliver Gardens - Mortgage dated October 17, 2006 held by Michigan State Housing Development Authority 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 through maturity on February 1, 2043. Financing fees of $45,415 were incurred in connection with obtaining the loan. 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, 2020, total accumulated amortization related to these costs was $17,515.Amortization expense was $1,298 for the year ended December 31, 2020 and has been included as a component of interest expense on the statement of activities $ 1,411,100 Oliver Gardens- 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 0.5 percent, compounded annually. Principal and interest are due on the loan when it matures on December 31, 2041 170,000 Oliver Gardens - 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 0.5 percent, compounded annually, on $150,000 of the loan. Principal and interest are due on the loan when it matures on May 31, 2046 550,000 Oliver Gardens - Lansing Housing Commission note dated December 31, 2007 in the amount of$300,133. The loan is held by LHC and bears an interest rate of 4.5 percent. Principal and interest are due on the loan when it matures on January 1, 2048 300,133 Mount Vernon Park - Lansing Housing Commission note dated December 22, 2020 in the amount of $7,145,775. The loan is held by LHC and bears an interest rate of 4.5 percent. Principal and interest are due on the loan when it matures 50 years after the date of completion of the project, which is anticipated to occur during the Mount Vernon Park's year ending December 31, 2022. As the maturity date is contingent upon construction completion, future minimal payments have not been reflected in the maturity schedule below 7,145,775 Mount Vernon Park - Construction loan dated December 22, 2020 held by Michigan State Housing Development Authority in the amount of$15,098,727. Due to the nature of loan being related to the construction and development of Mount Vernon Park, the full amount of the loan has not been drawn upon as of Mount Vernon Park's year ended December 31, 2020. Total funds drawn as of December 31, 2020 totaled$4,238,113. The mortgage bears interest at a rate of 4.25 percent and is payable monthly beginning on February 1, 2021. The construction loan has a maturity of 18 months after initial closing, at which point it may be converted to permanent financing at reduced principal balance of $10,345,643. The permanent financing would require monthly principal and interest payments and would mature 40 years after the conversion date. Financing fees of $324,374 were incurred in connection with obtaining the loan. These costs will be amortized over the term of the related debt and are reported net of debt on the statement of net position. As the maturity date is contingent upon the conversion to permanent financing, future minimal payments have not been reflected in the maturity schedule below 3,913,739 29 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 6 - Long-term Debt (Continued) Mount Vernon Park - HOME loan dated December 22, 2020 in the amount of $1,119,976. The loan is held by the City of Lansing, Michigan under the HOME Investments Partnership Program and bears interest at a rate of 1.0 percent, compounded annually. Due to the nature of loan being related to the construction and development of Mount Vernon Park, the full amount of the loan has not been drawn upon as of Mount Vernon Park's year ended December 31, 2020. Total funds drawn as of December 31, 2020 totaled $50,000. Principal and interest are payable from available cash flow and are to be paid in full no later than the earliest to occur of(i)the sale of the development, (ii)the refinancing of the MSHDA loan, or(iii) 50 years from the date of the note, December 22, 2070. As the maturity date is contingent upon the conditions described above, future minimal payments have not been reflected in the maturity schedule below $ 50,000 Total 13,540,747 Less current portion 36,404 Long-term portion $ 13,504,343 Component Units Future minimum principal and interest payments on direct borrowings to maturity for the years ending December 31 are as follows: Years Ending Amount Interest 2021 $ 36,404 $ 71,121 2022 38,267 69,259 2023 40,225 67,300 2024 42,283 65,242 2025 44,446 63,086 2026-2030 258,801 278,859 2031-2035 332,135 205,525 2036-2040 426,248 111,412 2041-2045 362,291 342,527 2046-2050 850,133 - Total $ 2,431,233 $ 1,274,331 Changes in long-term debt for the year ended June 30, 2021 (or December 31, 2020 for the discretely presented component units) are presented below: Primary Government Balance- Unamortized Beginning of Financing Balance- Due in One Year Additions Reductions Costs End of Year Year Davenport $ 67,354 $ - $ (67,354) $ - $ - $ - PNC 1,428,897 - (1,428,897) - - - Total $ 1,496,251 $ - $ (1,496,251) $ - $ - $ - 30 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 6 - Long-term Debt (Continued) Component Units Balance- Unamortized Beginning of Financing Balance- End Due in One Year Additions Reductions Costs of Year Year Oliver Gardens: MSHDA $ 1,473,633 $ - $ (34,633) $ (27,900) $ 1,411,100 $ 36,404 City of Lansing, Michigan 720,000 - - - 720,000 - LHC 300,133 - - - 300,133 - Mount Vernon Park: MSHDA - 4,238,113 - (324,374) 3,913,739 - City of Lansing, Michigan - 50,000 - - 50,000 - LHC - 7,145,775 - - 7,145,775 - Total $ 2,493,766 $ 11,433,888 $ (34,633) $ (352,274) $ 13,540,747 $ 36,404 Interest expense for the year ended June 30, 2021 was $65,902 for the primary government, and interest expense for the year ended December 31, 2020 was $91,320 for the discrete component units, excluding $1,298 of amortization expense of financing fees, which has been reported as a component of interest expense on the statement of activities. Note 7 - Agent Defined Benefit Pension Plan Description Plan Description Lansing Housing 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.mersofmich igan.com or in writing to MERS at 1134 Municipal Way, Lansing, MI 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. Effective May 1, 2021, the plan was closed to all new hires. Retirement benefits for employees in the open general division are calculated as 2.25 percent of the employee's final 3-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. The vesting period is 8 years. Employees are eligible for nonduty disability benefits after 8 years of service and for duty-related disability benefits upon hire. Disability retirement benefits are determined in the same manner as retirement benefits but are payable immediately without an actuarial reduction. Death benefits for a surviving spouse equal 85 percent of the deceased member's accrued retirement allowance, computed in the same manner as a service retirement allowance, based on service and final average compensation at the time of death. An employee who leaves service may withdraw his or her contributions plus any accumulated interest. 31 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 7 - Agent Defined Benefit Pension Plan Description (Continued) Retirement benefits for employees hired after May 1, 2012 are calculated as 1.70 percent of the employee's final 3-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. The vesting period is 8 years. Employees are eligible for nonduty disability benefits after 8 years of service and for duty-related disability benefits upon hire. Disability retirement benefits are determined in the same manner as retirement benefits but are payable immediately without an actuarial reduction. Death benefits for a surviving spouse equal 85 percent of the deceased member's accrued retirement allowance, computed in the same manner as a service retirement allowance, based on service and final average compensation at the time of death. An employee who leaves service may withdraw his or her contributions plus any accumulated interest. Retirement benefits for exempt employees hired before May 1, 2012 are calculated as 2.25 percent of the employee's final 3-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. The vesting period is 8 years. Employees are eligible for nonduty disability benefits after 8 years of service and for duty-related disability benefits upon hire. Disability retirement benefits are determined in the same manner as retirement benefits but are payable immediately without an actuarial reduction. Death benefits for a surviving spouse equal 85 percent of the deceased member's accrued retirement allowance, computed in the same manner as a service retirement allowance, based on service and final average compensation at the time of death. An employee who leaves service may withdraw his or her contributions plus any accumulated interest. 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, generally are established and amended by authority of the board of commissioners, generally after negotiations of these terms with the affected unions. Benefit terms may be subject to binding arbitration in certain circumstances. Employees Covered by Benefit Terms At the December 31, 2020 measurement date, the following employees were covered by the benefit terms: Inactive plan members or beneficiaries currently receiving benefits 44 Inactive plan members entitled to but not yet receiving benefits 12 Active plan members 23 Total employees covered by MERS 79 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 plan year ended December 31, 2020, the average employee contribution rate was 5.0 percent of annual pay for all divisions, and the Commission's average contribution rate was 6.13 percent under the new hires division of annual payroll. 32 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 7 - Agent Defined Benefit Pension Plan Description (Continued) Net Pension Liability The Commission has chosen to use the December 31 measurement date as its measurement date for the net pension liability. The June 30, 2021 fiscal year end reported net pension liability was determined using a measure of the total pension liability and the pension net position as of the December 31, 2020 measurement date. The December 31, 2020 measurement date 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 31,2019 $ 9,462,695 $ 8,146,961 $ 1,315,734 Service cost 88,143 - 88,143 Changes in benefits 692,942 - 692,942 Differences between expected and actual experience 143,224 - 143,224 Changes in assumptions 291,056 - 291,056 Contributions-Employer - 122,635 (122,635) Contributions-Employee - 64,814 (64,814) Net investment income - 1,074,111 (1,074,111) Benefit payments, including refunds (778,229) (778,229) - Administrative expenses - (15,919) 15,919 Net changes 437,136 467,412 (30,276) Balance at December 31,2020 $ 9,899,831 $ 8,614,373 $ 1,285,458 The plan's fiduciary net position represents 87.0 percent of the total pension liability. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2021, the Commission recognized pension expense of$351,917. At June 30, 2021, 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 $ 71,612 $ (22,536) Changes in assumptions 250,677 Net difference between projected and actual earnings on pension plan investments - (329,128) Employer contributions to the plan subsequent to the measurement date 1,275,085 - Total $ 1,597,374 $ (351,664) 33 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 7 - Agent Defined Benefit Pension Plan Description (Continued) Amounts reported as deferred outflows of resources and deferred inflows 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 of$1,275,085, which will impact the net pension liability in fiscal year 2022, rather than pension expense. Years Ending June 30 Amount 2022 $ 230,725 2023 17,012 2024 (181,512) 2025 (95,600) Actuarial Assumptions The total pension liability in the December 31, 2020 actuarial valuation was determined using an inflation assumption of 2.5 percent, assumed salary increases of 3 percent (in the long term, plus a merit and longevity increase ranging from 0 to 6.7 percent), and an investment rate of return (net of pension plan investment expenses)of 7.6 percent. The valuation incorporates fully generational mortality. The base mortality tables used are constructed as described below and are weighted based on sex-distinct rates: Preretirement mortality: • 100 percent of Pub-2010 Juvenile Mortality Tables for Ages 0-17 • 100 percent of PubG-2010 Employee Mortality Tables for Ages 18-80 • 100 percent of PubG-2010 Healthy Retiree Tables for Ages 81-120 Nondisabled retired plan members and beneficiaries: • 106 percent of Pub-2010 Juvenile Mortality Tables for Ages 0-17 • 106 percent of PubG-2010 Employee Mortality Tables for Ages 18-49 • 106 percent of PubG-2010 Healthy Retiree Tables for Ages 50-120 Disabled retired plan members: • 100 percent of Pub-2010 Juvenile Mortality Tables for Ages 0-17 • 100 percent of PubNS-2010 Disabled Retiree Tables for Ages 18-120 Future mortality improvements are assumed each year using scale MP-2019 applied fully generationally from the Pub-2010 base year of 2010. The actuarial assumptions used in the December 31, 2020 valuation were based on the results of an actuarial experience study for the period from January 1, 2013 through December 31, 2018. Discount Rate The discount rate used to measure the total pension liability was 7.6 percent. The projection of cash flows used to determine the discount rate assumed 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. 34 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 7 - Agent Defined Benefit Pension Plan Description (Continued) Investment Rate of Return 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 of 7.6 percent 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, 2020, the measurement date, for each major asset class, are summarized in the following tables: Long-term Target Allocation Expected Real Asset Class (%) Rate of Return Global equity 60.00 % 5.25 % Global fixed income 20.00 1.25 Private investment 20.00 7.25 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 7.6 percent, as well as what the Commission's net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower(6.6 percent)or 1 percentage point higher(8.6 percent)than the current rate: 1 Percentage Current Discount 1 Percentage Point Decrease Rate Point Increase (6.60%) (7.60%) (8.60%) Net pension liability of the Commission $ 2,352,358 $ 1,285,458 $ 439,695 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 pensions, and pension expense, information about the plan's fiduciary net position and additions to/deductions from fiduciary net position have 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. Assumption Changes A 5-year experience study analyzing historical experience from 2013 through 2018 was completed in February 2020. The experience study resulted in updated demographic assumptions, including adjustments to the following actuarial assumptions: mortality, retirement, disability, and termination rates that were first used in the December 31, 2020 actuarial valuation. 35 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 8 - Other Postemployment Benefit Plan Plan Description The Commission provides retiree health care 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. The financial statements of the OPEB plan are included in these financial statements as an other employee benefit trust fund (a fiduciary fund). Benefits Provided The plan provides comprehensive medical and life insurance for retirees. For those retirees over the age of 65 as of January 1, 2019, both the retiree and spouse may be covered in retirement. Health, dental, and vision benefits will be administered through a third-party insurer, with each retiree given $100 per month ($200 per month if the spouse is eligible for coverage) to purchase an individual Medicare Supplement, Medicare Part D Prescription Drug, and Medicare Advantage plan, along with dental and vision plans. For those retirees under the age of 65 as of January 1, 2019, each retiree will be given $750 per month ($1,200 per month if the spouse is eligible for coverage) to purchase a plan of their choosing along with dental and vision. For active employees hired prior to January 1, 2019, the Commission will contribute $50 per month per employee, while a payroll deduction will be required of each employee of $10 per month. Both amounts will be deposited into the MERS Health Care Savings Program. Employees will be vested into the heath retirement account after eight years of service. Prior to vesting, employees leaving employment will immediately be allowed to keep and use their personal contributions plus investment gains on their health account. The commission portion will be returned for use in satisfying other OPEB liabilities. After vesting, the entire health account is available for the employee's use for medical expenses upon retirement or termination of employment. Employees hired after January 1, 2019 will not be provided OPEB benefits. Employees Covered by Benefit Terms The following members were covered by the benefit terms: Date of member count July 1, 2020 Inactive plan members or beneficiaries currently receiving benefits 15 Active plan members 18 Total plan members 33 Contributions The authority to establish and amend the contribution requirements of the Commission and plan members is held by the board of commissioners. The board of commissioners establishes contribution rates based on an actuarially determined rate per a funding valuation. The actuarially determined contribution for the year ended June 30, 2021 was $11,151. Retiree health care costs are paid by the Commission on a pay- as-you-go basis. For the fiscal year ended June 30, 2021, the Commission made payments for postemployment health benefit premiums of$82,435. Net OPEB Liability The Commission has chosen to use the June 30 measurement date as its measurement date for the net OPEB liability. The June 30, 2021 fiscal year end reported net OPEB liability was determined using an actuarial valuation performed as of July 1, 2019, which used update procedures to roll forward the estimated liability to the June 30, 2021 measurement date. 36 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 8 - Other Postemployment Benefit Plan (Continued) Changes in the net OPEB liability during the measurement year were as follows: Increase (Decrease) Total OPEB Plan Net Net OPEB Changes in Net OPEB Liability Liability Position Liability Balance at July 1, 2020 $ 542,214 $ 391,580 $ 150,634 Changes for the year: Service cost 8,907 - 8,907 Interest 28,075 - 28,075 Changes in assumptions 8,667 - 8,667 Contributions-Employer - 82,435 (82,435) Net investment income - 63,752 (63,752) Benefit payments, including refunds (82,435) (82,435) - Net changes (36,786) 63,752 (100,538) Balance at June 30,2021 $ 505,428 $ 455,332 $ 50,096 The plan's fiduciary net position represents 90.1 percent of the total OPEB liability. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2021, the Commission recognized OPEB expense of$(41,276). At June 30, 2021, the Commission reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Difference between expected and actual experience $ 56,502 $ (94,247) Changes in assumptions 6,931 (121,735) Net difference between projected and earnings on OPEB plan investments - (29,188) Total $ 63,433 $ (245,170) Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Years Ending June 30 Amount 2022 $ (56,721) 2023 (56,721) 2024 (61,339) 2025 (6,956) Total $ (181,737) 37 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 8 - Other Postemployment Benefit Plan (Continued) Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of July 1, 2019. The valuation used the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Inflation 2.5 percent as of June 30, 2021 and for future periods Cost of living 3.50 percent per year Salary increases 3.00 percent annually as of June 30, 2021 and for future periods Mortality General: RP-2014 Mortality Table for Blue Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females, set forward one year for females(postretirement mortality)/set forward one year for both males and females (disabled mortality) The actuarial assumptions used to calculate the actuarial accrued liability and the service cost primarily reflect the latest experience studies of a large State Municipal Retirement System issued in 2014 and their most recent analysis of retiree mortality during 2015 and 2016. Discount Rate The discount rate used to measure the total OPEB liability was 5.25 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that commission contributions will be made at rates equal to the difference between actuarially determined contribution rates and the employee rate. Based on those assumptions, the OPEB 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 OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. Investment Rate of Return The investment rate of return was assumed to be 5.44 percent, net of OPEB plan investment expense, including inflation. The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB 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 adding expected inflation. Best estimates of arithmetic real rates of return as of the June 30, 2021 measurement date for each major asset class included in the OPEB plan's target asset allocation are summarized in the following table: Long-term Expected Real Asset Class Rate of Return Global equity 5.25 % Global fixed income 1.25 Private investment 7.25 38 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 8 - Other Postemployment Benefit Plan (Continued) Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the Commission, calculated using the discount rate of 5.25 percent, depending on the plan option. The following also reflects what the Commission's net OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (4.25 percent) or 1 percentage point higher(6.25 percent)than the current rate: 1 Percentage Current Discount 1 Percentage Point Decrease Rate Point Increase (4.25%) (5.25%) (6.25%) Net OPEB liability of the plan $ 89,621 $ 50,096 $ 16,763 Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rate The following presents the net OPEB liability of the Commission, calculated using the health care cost trend rate of 3.5 percent, as well as what the Commission's net OPEB liability would be if it were calculated using a health care cost trend rate that is 1 percentage point lower or 1 percentage point higher than the current rate: Current Health 1 Percentage Care Cost Trend 1 Percentage Point Decrease Rate Point Increase (2.50%) (3.50%) (4.50%) Net OPEB liability of the plan $ 50,096 $ 50,096 $ 50,096 Assumption Changes The sole change in assumptions from June 30, 2020 to June 30, 2021 was the change in the discount rate from 5.50 percent to 5.25 percent. Investment Policy The OPEB plan's policy in regard to the allocation of invested assets is established and may be amended by the board of commissioners. It is the policy of the board of commissioners to pursue an investment strategy that manages risk through the prudent diversification of the portfolio across a broad selection of distinct asset classes. The OPEB plan's investment policy discourages the use of cash equivalents, except for liquidity purposes, and aims to refrain from dramatically shifting asset class allocations over short time spans. The following was the board of commissioners' adopted asset allocation policy as of June 30, 2021: Plan Asset Class Target Allocation Global equity 60.00 % Global fixed income 20.00 Private investment 20.00 Total 100.00 % Rate of Return For the year ended June 30, 2021, the annual money-weighted rate of return on OPEB plan investments, net of OPEB plan investment expense, was 5.44 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. 39 Lansing Housing Commission Notes to Financial Statements June 30, 2021 Note 9 - 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, 2021. The collective bargaining three-year agreement between the Commission's employees and Chapter of Local 1390.11 and Michigan Council #25, AFSCME, AFL-CIO, covering approximately 31 percent of the Commission's labor force, will be in place from January 1, 2019 through December 31, 2021. Note 10 - 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 risk of loss, including 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. Note 11 - 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, 2021, approximately 93 percent of the operating revenue reflected in the primary government basic financial statements is from HUD. 40 Required Supplemental Information 41 Lansing Housing Commission Required Supplemental Information Schedule of Changes in the Commission's Net Pension Liability and Related Ratios Last Seven Plan Years Years Ended December 31 2020 2019 2018 2017 2016 2015 2014 Total Pension Liability Service cost $ 88,143 $ 74,380 $ 72,132 $ 91,117 $ 126,678 $ 114,272 $ 114,461 Interest 692,942 708,880 700,146 687,782 714,076 698,614 684,653 Differences between expected and actual experience 143,224 (67,609) 77,954 88,563 (140,946) (123,435) - Changes in assumptions 291,056 315,446 - - (349,397) 405,966 Benefit payments,including refunds (778,229) (784,425) (701,709) (661,395) (651,805) (635,102) (624,495) Other - - (21,160) (4,268) (521) - - Net Change in Total Pension Liability 437,136 246,672 127,363 201,799 (301,915) 460,315 174,619 Total Pension Liability-Beginning of year 9,462,695 9,216,023 9,088,660 8,886,861 9,188,776 8,728,461 8,553,842 Total Pension Liability-End of year $ 9,899,831 $ 9,462,695 $ 9,216,023 $ 9,088,660 $ 8,886,861 $ 9,188,776 $ 8,728,461 Plan Fiduciary Net Position Contributions-Employer $ 122,635 $ 87,890 $ 145,613 $ 685,378 $ 693,689 $ 158,735 $ 215,191 Contributions-Member 64,814 58,282 62,196 70,951 67,424 55,586 37,167 Net investment income(loss) 1,074,111 1,025,515 (323,275) 1,035,066 743,039 (104,348) 446,261 Administrative expenses (15,919) (17,645) (16,423) (16,381) (14,686) (15,480) (16,314) Benefit payments,including refunds (778,229) (755,797) (701,709) (661,395) (651,805) (635,102) (624,495) Other - (28,628) (22,040) (4,445) (521) - Net Change in Plan Fiduciary Net Position 467,412 369,617 (855,638) 1,109,174 837,140 (540,609) 57,810 Plan Fiduciary Net Position-Beginning of year 8,146,961 7,777,344 8,632,982 7,523,808 6,686,668 7,227,277 7,169,467 Plan Fiduciary Net Position-End of year $ 8,614,373 $ 8,146,961 $ 7,777,344 $ 8,632,982 $ 7,523,808 $ 6,686,668 $ 7,227,277 Commission's Net Pension Liability-Ending $ 1,2859458 $ 1,3159734 $ 194389679 $ 4559678 $ 1,3639053 $ 295029108 $ 195019184 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 87.02 % 86.10 % 84.39 % 94.99 % 84.66 % 72.77 % 82.80 % Covered Payroll $ 1,280,845 $ 1,104,246 $ 1,072,020 $ 1,304,971 $ 1,333,333 $ 1,235,367 $ 1,164,556 Commission's Net Pension Liability as a Percentage of Covered Payroll 100.36 % 119.15 % 134.20 % 34.92 % 102.23 % 202.54 % 128.91 % See notes to required supplemental information. 42 Lansing Housing Commission Required Supplemental Information Schedule of Pension Contributions Last Six Fiscal Years Years Ended June 30 2021 2020 2019 2018 2017 2016 Actuarially determined contribution $ 222,240 $ 80,707 $ 97,665 $ 133,299 $ 122,057 $ 103,079 Contributions in relation to the actuarially determined contribution 1,357,471 80,707 145,613 685,378 693,689 158,735 Contribution Excess $ 1,135,231 $ - $ 47,948 $ 552,079 $ 571,632 $ 55,656 Covered Payroll $ 1,280,845 $ 1,104,246 $ 1,072,020 $ 1,304,971 $ 1,333,333 $ 1,235,367 Contributions as a Percentage of Covered Employee Payroll 105.98 % 7.31 % 13.58 % 52.52 % 52.03 % 12.85 % See notes to required supplemental information. 43 Lansing Housing Commission Required Supplemental Information Schedule of Changes in the Commission's Net OPEB Liability and Related Ratios Last Five Fiscal Years 2020 2019 2018 2017 2016 Total OPEB Liability Service cost $ 8,907 $ 9,427 $ 11,298 $ 53,470 $ 50,924 Interest 28,075 23,121 49,023 59,951 58,429 Changes in benefit terms - - (882,057) - - Differences between expected and actual experience - (157,076) 141,256 - - Changes in assumptions 8,667 (124,117) (118,162) - - Benefit payments, including refunds (82,435) (80,400) (201,577) (65,682) (64,552) Net Change in Total OPEB Liability (36,786) (329,045) (1,000,219) 47,739 44,801 Total OPEB Liability-Beginning of year 542,214 871,259 1,871,478 1,823,739 1,778,938 Total OPEB Liability- End of year $ 505,428 $ 542,214 $ 871,259 $ 1,871,478 $ 1,823,739 Plan Fiduciary Net Position Contributions-Employer $ 82,435 $ 470,742 $ - $ - $ - Net investment income 63,752 1,238 - - - Benefit payments, including refunds (82,435) (80,400) - - - Net Change in Plan Fiduciary Net Position 63,752 391,580 - - - Plan Fiduciary Net Position -Beginning of year 391,580 - - - - Plan Fiduciary Net Position - End of year $ 455,332 $ 391,580 $ - $ - $ - Net OPEB Liability- Ending $ 50,096 $ 150,634 $ 871,259 $ 1,871,478 $ 1,823,739 Plan Fiduciary Net Position as a Percentage of Total OPEB Liability 90.09 % 72.22 % - % - % - % Covered Payroll $ 918,208 $ 891,464 $ 2,452,554 $ 2,381,121 $ 2,311,768 Net OPEB Liability as a Percentage of Covered Payroll 5.46 % 16.90 % 35.52 % 78.60 % 78.89 % See notes to required supplemental information. 44 Lansing Housing Commission Required Supplemental Information Schedule of OPEB Contributions Last Five Fiscal Years Years Ended June 30 2020 2019 2018 2017 2016 Actuarially determined contribution $ 11,151 $ 19,251 $ 53,173 $ 148,959 $ 143,977 Contributions in relation to the actuarially determined contribution 82,435 470,742 201,577 65,682 64,552 Contribution (Excess) Deficiency $ (71,284) $ (451,491) $ (148,404) $ 83,277 $ (79,425) Covered Payroll $ 918,208 $ 891,464 $ 2,452,554 $ 2,381,121 $ 2,311,768 Contributions as a Percentage of Covered Payroll 8.98 % 52.81 % 8.22 % 2.76 % 2.79 % Notes to Schedule of Contributions Actuarial valuation information relative to the determination of contributions: Valuation date July 1, 2019 Methods and assumptions used to determine contribution rates: Actuarial cost method Individual entry age normal cost method Asset valuation method Market value of assets as of the measurement date Inflation 2.50 percent per annum Cost of living adjustment 3.50 percent per annum Salary increase 3.00 percent per annum Investment rate of return 5.19 percent- Net of OPEB plan investment expense, including inflation Retirement age 60 Mortality General: RP-2014 Mortality Table for Blue Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females, set forward one year for females (post-retirement mortality)/set forward one year for both males and females (disabled mortality) Other information None See notes to required supplemental information. 45 Lansing Housing Commission Required Supplemental Information Schedule of OPEB Investment Returns Last Two Fiscal Year Years Ended June 30 2021 2020 Annual money-weighted rate of return - Net of investment expense 5.19 % 3.40 % The annual money-weighted rate of return, net of investment expense is not applicable to years prior to 2020. See notes to required supplemental information. 46 Lansing Housing Commission Notes to Required Supplemental Information June 30, 2021 Pension Information Actuarial valuation information relative to the determination of contributions: Valuation date Actuarially determined contribution rates are calculated as of June 30, 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 20 years Asset valuation method 5-year smoothed Inflation 2.5 percent Salary increase 3.75 percent plus merit and longevity Investment rate of return 7.75 percent- Net of pension plan investment expenses, including inflation Retirement age 60 Mortality 50 percent male to 50 percent female blend of the RP-2014 mortality tables Other information None Benefit Changes There were no changes of benefit terms in 2020. Changes in Assumptions A 5-year experience study analyzing historical experience from 2013 through 2018 was completed in February 2020. The experience study resulted in updated demographic assumptions, including adjustments to the actuarial assumptions of mortality, retirement, disability, and termination rates that were first used in the December 31, 2020 actuarial valuation. Effective in the 2019 valuation, the MERS retirement board adopted a reduction in the investment rate of return assumption from 7.75 percent to 7.35 percent and a reduction in the rate of wage inflation from 3.75 percent to 3.00 percent. Changes to these assumptions are effective for contributions beginning in 2021 and may be phased in. Changes in Size or Composition of the Covered Population There were no significant changes in size or composition of the covered population. OPEB Information Benefit Changes There were no changes of benefit terms in 2021. Changes in Assumptions The single change in assumptions from June 30, 2020 to June 30, 2021 was a change in the discount rate from 5.50 percent to 5.25 percent. The changes in assumptions from June 30, 2019 to June 30, 2020 include a change in the discount rate from 2.75 percent to 5.50 percent, the inflation adjustment being updated to 2.5 percent, and the mortality tables used being updated from the RP-2000 Employees Mortality Table projected generationally with scale BB and base year 2009 to the RP-2014 Mortality Table projected generationally with scale MP-2016 for males and females. 47 Other Supplemental Information 48 Lansing Housing Commission Financial Data Schedules Year Ended June 30, 2021 14.PHC Public 14.896 PIH 14.CCC 6.1 Component 14.871 14.EHV Central Office 14.HCC HCV Housing 1 Business Family Self- Unit- Housing Emergency Project Total CARES Act Activities 2 State/Local Sufficiency Cost Center Discretely CARES Act Choice Housing 5 Fiduciary COCC Subtotal ELIM Total Funding Program CARES Act presented Funding Vouchers Voucher Funding 111 Cash-Unrestricted 1,738,662 666,787 164,556 126,450 1,126,824 68,800 1,699,926 5,592,005 5,592.005 112 Cash-Restricted-Modemization and Development 113 Cash-Other Restricted 2,304,225 1,869,873 411,661 4,5859759 4,585.759 114 Cash-Tenant Securit Deposits 88,773 5,14E 93,921 93,921 115 Cash-Restricted for Pa ment of Current Liabilities 100 Total Cash 1,827,435 2,971,012 164,556 2,001,471 1,538,485 68,800 1,699,926 10,271,685 10,271,685 121 Accounts Receivable-PHA Projects 122 Accounts Receivable-HUD Other Projects 3,500 3,500 39500 124 Accounts Receivable-Other Government 12,252 12,252 12,252 125 Accounts Receivable-Miscellaneous 295,738 61906 389,542 692,186 692,186 126 Accounts Receivable-Tenants 87,551 7,008 94,559 94,559 126A Allowance for Doubtful Accounts-Tenants (5,445) 5,445 5,445 126.2 Allowance for Doubtful Accounts-Other 127 Notes,Loans,&Mortgages Receivable-Current 786 786 786 128 Freud Recove 128.1 Allowance for Doubtful Accounts-Freud 129 Accrued Interest Receivable 220 359,617 359,837 359,837 120 Total Receivables,Net of Allowances for Doubtful Accounts 98,864 359,617 295,738 13,914 389,542 1,157,675 1,157,675 131 Investments-Unrestricted 541,604 541,604 541,604 132 Investments-Restricted 455,332 455,332 455,332 135 Investments-Restricted for Payment of Current Liability 142 Prepaid Expenses and Other Assets 38,016 3,626 2,964 3,957 48,563 48,563 143 Inventories 143.1 Allowance for Obsolete Inventories 144 Inter Program Due From 879,695 879,699 (879,695) 145 Assets Held for Sale 150 Total Current Assets 2.505,919 3,330,629 460,294 2,019,011 1,541,449 68,800 455,332 2,973,120 13,354,554 (879,695) 12,474,859 161 Land 1,089,900 1,205,162 190,000 214857062 2,485,062 162 Buildings 31,618,638 11,348,485 775,621 43,742,744 43,7427744 163 Furniture,Equipment&Machinery-Dwellings 405,068 4057068 405,068 164 Furniture,Equipment&Machinery-Administration 1757949 48,177 335,281 5597407 559,407 165 Leasehold Improvements 166 Accumulated Depreciation (25,902,843) (2,0967249) (28,063) (1,055,857) (29,083,012) (29,0837012) 167 Construction in Progress 778,041 17749,377 41,739 2,5697157 2,569,157 168 Infmstmcture 160 Total Capital Assets,Net of Accumulated Depreciation 7,988,804 12,382,724 207114 286,784 20,678,42E 20,6787426 171 Notes,Loans and Mortgages Receivable-Non-Current 12,545,908 460,855 13,006,763 13,0067763 172 Notes,Loans,&Mortgages Receivable-Non Current-Past Due 173 Grants Receivable-Non Current 174 Other Assets 130,000 32,291 162,291 162,291 176 Investments in Joint Ventures 180 Total Non-Current Assets 7,988,804 12,675,908 12,415,015 20,114 747,639 33,847,480 33,847,480 200 Deferred Outflow of Resources 1,454,099 126,859 79,851 100,809 1,660,809 290 Total Assets and Deferred Outflow of Resources 11,948,822 16,006,537 .0,2. 14,434,026 1,688,422 68,800 455,332 3,800,610 48,862,843 (879,695) 47,983,148 49 Lansing Housing Commission Financial Data Schedules Year Ended June 30, 2021 14.PHC Public 14.896 PH 14.CCC Central Office 14.HCC HCV 6.1 Component 14.871 14.EHV Housing 1Business Family Self- Unit- Housing Emergency Project Total CARES Act AcliNlies 2 State/Local Sufficiency Cost Center Discretely CARES Acl Funding Program CARES Choice Housing Funding 5 Fiduciary COCC Subtotal ELIM Total Act pre Funding sented Vouchers Voucher 311 Bank Overdraft 312 Accounts Payable<=90 Das 8,135 2 8,137 8,137 313 Accounts Pa able>90 Days Past Due 321 Accrued Wa a/Pa roll Taxes Payable 33,440 21,078 8,104 62,622 62,622 322 Accrued Compensated Absences-Current Portion 7,756 6,904 19800 16,460 16,460 324 Accrued Contin enc Liability 325 Accrued Interest Pa able 196,036 196,036 196,036 331 Accounts Pa able-HUD PHA Programs 332 Account Payable-PHA Pro'ecls 333 Accounts Payable-Other Govemmenl 66,444 19,389 85,833 85,833 341 Tenant Security De osits 881773 5,148 93,921 93,921 342 Uneamed Revenue 33,476 388 56,000 2,655 92,519 92,519 343 Current Portion of Lon-tens Debt-Ca ilal Pro'"b"Mort a Revenue 344 Current Portion of Long-term Debt-O eratin Bonowin s 345 Other Current Liabilities 273,178 273,178 273,178 346 Accrued Liabilities-Other 133,310 215,884 8,678 42,400 400,272 400,272 347 Inter P rem-Due To 879,695 879,695 879,695) .8 Loan Liabilit -Cunenl 7,145,775 7,145,775 7,1451775 310 Total Current Liabilities 363,199 1,152,873 7,590,755 36,660 56,000 54,961 9,254,448 879,695) 8,374.753 351 Long-tenn Debt,Net of Current-Capital Projects/Mortgage Revenue 6,394,973 6,394,973 6,394,973 352 Long-tenn Debt,Net of Current-Operating Borrowings 353 Noncurrent Liabilities-Other 423,869 84,515 508,384 508,384 354 Accrued Compensated Absences-Non Current 43,947 39p1201 10,201 93,268 1 93,268 355 Loan Liability-Non Current 356 FASB 5 Liabilities 357 Accrued Pension and OPEB Liabilities 921,633 249,468 164,453 1,335,554 1,335,554 350 Total Non-Current Liabilities 965,580 6,818,842 373,103 174,654 8,332,179 8,332,179 300 Total Liabilities 1,328,779 1,152,873 14,409,597 409,763 56,000 229,615 17,586,627 (879,695) 16,706,932 400 Deferred Inflow of Resources 365,027 163,078 68,729 596,834 596,834 508.4 Net Investment in Capital Assets 7,988,804 (1,158,023) 20,114 286,784 7,137,679 7,137,679 511.4 Restricted Net Position 2,304,225 327,146 455,332 3,086,703 3,086,703 512.4 Unrestricted Net Position 2,266,212 12,549,439 460,294 1,182,452 768,321 12,800 3,215,482 20,455,000 20,455,000 513 Total Equity-Net Assets/Position 10,2557016 14,853,664 460,294 24,429 1,115,581 12,800 4 55,332 3,502,266 30,679,382 30,679,382 600 Total Liabilities,Deferred Inflows of Resources and Equity-Net 11,948,822 16,006,537 460,294 14,434,026 1,688,422 68,800 455,332 3,800,610 48,862,843 (879,695) 47,983,148 50 Lansing Housing Commission Financial Data Schedules Year Ended June 30, 2021 14.PHC Public 14.896 PH 14.CCC 6.1 Component 14.671 14.EHV Central Office 14.HCC HCV Housing 1 Business Family Self- Unit- Housing Emergency Project Total CARES Act Activities Sufficiency State/Local Sufficiency Cost Center Discretely CARES Act Choice Housing 5 Fiduciary COCC Subtotal ELIM Total Funding Program CARES Act Presented Funding Funding Vouchers Voucher 70300 Net Tenant Rental Revenue 945,732 - - - - - 110,543 - - - 1,056,275 1,056,275 70400 Tenant Revenue-Other 61,439 6,673 68,112 68,112 70500 Total Tenant Revenue 1,007,171 117,216 - 1,124,387 1,124,387 70600 HUD PHA Operating Grants 5,697,940 308,152 7 45,435 7 183,303 391,337 12,315,422 12,800 18,954,389 18,954,389 70610 Capital Grants 2,196,265 2,196,265 2,196,265 70710 Management Fee 1,078,666 1,078.666 (1,078,666) - 70720 Asset Management Fee 85,950 85,950 (85,950) - 70730 Book Keeping Fee 72,335 72,335 (72,335) 70740 Front Line Service Fee - - - 70750 Other Fees 423,873 - 423,873 423,873 70700 Total Fee Revenue 1,236.951 1,236,951 (1,236,951) 70800 Other Government Grants - - - 961,648 - - - - - - 961,648 961,648 71100 Investment Income-Unrestricted 9,493 315,074 - 8,901 - 1,553 - 335,021 335,021 71200 Mortgage Interest Income - - - - - 71300 Proceeds from Disposition of Assets Held for Sale - - - - - - - - - - - - 71310 Cost of Sale of Assets - - - 71400 Fraud Recovery - - - - 32,068 - 32,068 32,068 71500 Other Revenue 63,314 - 10,000 - - - - - 5,288 82,435 186,057 347,094 347,094 71600 Gain or Loss on Sale of Capital Assets 7,605,477 - - - - - - -I I - 7,605,477 7,605,477 72000 Investment Income-Restricted - - - - - - - - - 63,752 - 63,752 63,752 70000 Total Revenue 16,579,660 308,152 748,947 961,648 45,435 - 309,420 391,337 12,354,331 12,800 146,187 1,423,008 33,280,925 (1,236,951) 32,043,974 91100 Administrative Salaries 228,894 94,158 - 37,558 33,849 - 8,638 284,257 61,695 208,940 957,989 957,989 91200 Auditing Fees 21,000 - - - - - 10,025 - 26,250 5,250 62,525 62,525 91300 Management Fee 790,268 80,361 - - - 31,473 - 208,037 1,110,139 (1,078,666) 31,473 91310 Book-keeping Fee 60,957 11,378 - - - 72,335 (72,335) 91400 Advertising and Marketing - - - - - - - - - - - - 91500 Employee Benefit contributions-Administrative 232,123 19,515 - 16,096 11,586 - 3,1451 70,571 16,1671 1 50,990 420,193 420,193 91600 Office Expenses 356,264 5,954 30,468 113,629 - 16,2041 23,595 207,6161 159,864 913,594 913,594 91700 Legal Expense 45,628 - - - - - - - - 5,689 51,317 51,317 91800 Travel - - - - - - - - - 99 99 99 91810 Allocated Overhead - - - - - 91900 Other - - - - - - - - - - - - 91000 Total Operating-Administrative 1,735,134 211,366 30,468 167,283 45,435 - 69,485 378,423 519,765 - - 430,832 3,588,191 (1,151,001) 2,437,190 92000 Asset Management Fee 85,950 - - - - 85,950 (85,950) 92100 Tenant Services-Salaries - - - - - - - - - - - - 92200 Relocation Costs - - - - - - - - 92300 Employee Benefit Contributions-Tenant SeMces - - - - - - - - - 92400 Tenant Services-Other 22,568 - - - - - - - - - 22,568 22,568 92500 Total Tenant Services 22,568 - - - - - - - - - - - 22,568 - 22,568 51 Lansing Housing Commission Financial Data Schedules Year Ended June 30, 2021 14.PHC Public 14.896 PIH 14.CCC 6.1 Comp onent 14.871 14.EHV Central Office 14.HCC HCV Housing 1 Business Family Self- Unit- Housing Emergency Project Total CARES Act Activities 2 State/Local Sufficiency Coat Center Discretely CARES Act Choice Housing 5 Fiduciary COCC Subtotal ELIM Total Funding Program CARES Act Funding Presented Funding Vouchers Voucher 93100 Water 167,166 - - - 32,229 - 836 200,231 200,231 93200 Electricity 178,245 - - - - - 39,056 - - 14,016 231,317 231,317 93300 Gas 149,130 - - - - - 20,374 - - 2,649 172,153 172,153 93400 Fuel - - - - - - - 93500 Labor - - - - - - - - - - - - 93600 Sewer 227,611 - - - - - - - 658 228,269 228,269 93700 Employee Benefit Contributions-Utilities - - 93800 Other Utilities Expense - - - 93000 Total Utilities 722,152 - - - - 91,659 - - - - 18,159 831,970 - 831,970 94100 Ordinary Maintenance and Operations-Labor 225,943 63,221 - - 7,156 26,233 322,553 322,553 94200 Ordinary Maintenance and Operations-Materials and Other 162,586 - - - - - 6,829 - - 111 169,526 169,526 94300 Ordinary Maintenance and Operations Contracts 756,207 - - - -94 21,003 16,668 31,582 395,974 1,221,434 1,221,434 500 Employee Benefit Contributions-Ordinary Maintenance 221,203 33,565 - - - 10,358 265,126 265,126 94000 Total Maintenance 1,365,939 96,786 - - - - 34,988 16,668 31,582 - - 432,676 1,978,639 - 1,978,639 95100 Protective SeMces-Labor - - - - 662 - - 662 662 95200 Protective Services-Other Contract Costs 11,180 - - - - - - - 269 878 12,327 12,327 95300 Protective SerNces-Other - - - - - - - - - - - 95500 Employee Benefit Contributions-Protective Services - - - - 95000 Total Protective Sarmces 11,180 - - 6621 26911 878 12,9891 12,989 96110 Property Insurance 189,966 - 13,287 1,480 2,947 207,680 207,680 96120 Liability Insurance 78,591 - - - - - - - 16,653 113 95,357 95,357 96130 Workmen's Compensation - - - - - - 62 - - - 62 62 96140 All Other Insurance 28,353 - - - - 652 - - 4,400 33,405 33,405 96100 Total insurance Premiums 296,910 - - - - - 14,001 - 18,133 - - 7,460 336,504 - 336,504 96200 Other General Expenses - 405,767 - - - - - - 82,435 - 488,202 488,202 96210 Compensated Absences 26,933 - - - 25,951 4,793 57,677 57,677 96300 Payments in Lieu of Taxes 18,722 - - - -1 20,8161 - - 39,538 39,538 96400 Bad debt-Tenant Rents 29,082 - 2,739 31,821 31,821 96500 Bad debt-Mortgages - - - 96600 Bad debt-Other - - - - - - - - - - - - 96800 Severance Expense 96000 Total Other General Expenses 74,737 405,767 - 23,555 25,951 - 82,435 4,793 617,238 - 617,238 96710 Interest of Mortgage(or Bonds)Payable - - - - - - 91,319 - - - 91,319 91,319 96720 Interest on Notes Payable(Short and Long Tenn) 65,042 - - - 860 65,9021 65,902 96730 Amortization of Bond Issue Costs - - - - -1 2,9991 1 - 2,999 2,999 96700 Total Interest Expense and Amortization Cost 65,042 - - - - 94,318 - - - - 860 160,220 - 160,220 96900 Total Operating Expenses 4,379,612 308,152 436,235 167,283 45,435 328,668 395,091 595,700 - 82,435 895,658 7,634,269 (1,236,951) 6,397,318 97000 Excess of Operating Revenue over Operating Expenses 12,200,048 - 312,712 794,365 - (19,248) (3,754) 11,758,631 12,800 63,752 527,350 25,646,656 - 25,646,656 97100 Extraordinary Maintenance - - -I - - - - - - - - - 97200 Casualty Losses-Non-capitalized - - - - - - - - - 97300 Housing Assistance Payments 492,033 - - 730,838 - 11,310,531 - 12,533,402 12,533,402 97350 HAP Portability-In - - - - - - - - - - - - 97400 Depreciation Expense 863,188 - - - - - 102,420 - 467 5,735 971,810 971,810 97500 Freud Losses - - - - - - - - - 97600 Capital Outlays-Governmental Funds 97700 Debt Principal Payment-Governmental Funds 97800 Dwelling Units Rent Expense - - - - - - - - - .000 Total Expenses 5,734,8331 308,1521 436,2391 898,121 45,4351 1 431,0881 395,091 11,906,698 - 82,435 901,393 21,139,481 (1,236,951)1 19,902,530 52 Lansing Housing Commission Financial Data Schedules Year Ended June 30, 2021 14.PHC Public 14,896 PIH 14.CCC 6A Component 14.871 14.EHV Central Office 14.HCC HCV Housing 1 Business Family Sell- Unit- Housing Emergency Project Total CARES Acl Activities 2 State/Local Sufficiency Cost Center Discretely CARES Act Choice Housing 5 Fiduciary COCC Subtotal ELIM Total Funding Progmm CARES Act presented Funding Vouchers Voucher Funding 10010 Operating Transfer In 607,238 - - - 607,238 (607,238) - 10020 Operating transfer Out (607,238) - - - - (607,238) 607,238 - 10030 Operating Transfers from/to Primary Govemment - - - - - - - - - - - - 10040 Operating Transfers from/to Component Unit - - - - - - - - - - - 10050 Proceeds from Notes,Loans and Bonds 10060 Proceeds from Property Sales 10070 Extraordinary Items,Net Gain/Loss - - - - - - - - - - - - 10080 Special Items(Net Gain/Loss) - - - - - - - - - - 10091 Inter Project Excess Cash Transfer In - - - 10092 Inter Project Excess Cash Transfer Out - - - 10093 Transfers between Program and Project-In - - - - - 10094 Transfers between Project and Program-Out - - - - - - 10100 Total Other financing Sources(Uses) - - - - - - - - - - - - - 10000 Excess(Deficiency)of Total Revenue Over(Under)Total Expenses 10,844,827 312,712 63,527 (121,668) (3,754) 447,633 12,800 63,752 521,615 12,141,444 12,141,444 11020 Required Annual Debt Principal Payments 1,409,195 - - - - - 28,367 - - - - 47,976 1,485,538 1,485,538 11030 Beginning Equity 13,960,189 - (9,048) 396,767 - (1,080,551) - 671,702 - 391,580 2,980,651 17,311,290 17,311,290 040 Prior Period Adjustments,Equity Transfers and Correction of Errors (14,550,000) 14,550,000 1,226,648 3,754 (3,754) - 1,226,648 1,226,648 11050 Changes in Compensated Absence Balance 11060 Changes in Contingent Liability Balance 11070 Changes in Unrecognized Pension Transition Liability 11080 Changes in Special Tenn/Severance Benefits Liability 11090 Changes in Allowance for Doubtful Accounts-Dwelling Rents 11100 Changes in Allowance for Doubtful Accounts-Other 170 Administrative Fee Equity 788,435 788,435 788,435 11180 Housing Assistance Payments Equity 327,146 327,146 327,146 11190 Unit Months Available 8,595 - - - - - 360 - 21,936 - - 30,891 30,891 11210 Number of Unit Months Leased 8,128 - - - - 360 - 19,594 - - 28,082 28,082 11270 Excess Cash 1,717,591 1,717,591 1,717,591 11610 Land Purchases - 11620 Building Purchases 2,196,265 - 2,196,265 2,196,265 11630 Furniture&Equipment-Dwelling Purchases - - - 11640 Furniture&Equipment-Administrative Purchases - 11650 Leasehold Improvements Purchases - - - 11660 Infrastructure Purchases - - - - 13510 CFFP Debt S-1ce Payments - 13901 Replacement Housing Factor Funds - - - 53