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HomeMy WebLinkAbout2016 - 67891 LHC Lansing Housing Commission - Financial Report with Supplemental Information June 30, 2016 - 0616 - Final Lansing Housing Commission Financial Report with Supplemental Information June 30, 2016 Lansing Housing Commission Contents Report Letter 1-3 Management's Discussion and Analysis 4-8 Basic Financial Statements Statement of Net Position 9-10 Statement of Activities I I Statement of Cash Flows 12-13 Notes to Financial Statements 14-35 Required Supplemental Information 36 Schedule of Changes in the Commission's Net Pension Liability and Related Ratios 37 Schedule of Commission Contributions 38 Other Supplemental Information 39 Financial Data Schedules 40-44 Actual Modernization Cost Certificate 45-46 Independent Auditor's Report To the Board of Commissioners Lansing Housing Commission Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities and the discretely presented component unit of Lansing Housing Commission (the "Commission") as of and for the year ended June 30, 2016 and the related notes to the financial statements, which collectively comprise Lansing Housing Commission's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of the discretely presented component unit. Those financial statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component unit, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.Accordingly,we express no such opinion.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. I To the Board of Commissioners Lansing Housing Commission Opinion In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the discretely presented component unit of Lansing Housing Commission as of June 30, 2016 and the respective changes in its financial position and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplemental Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and other required supplemental information, as identified on the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, which considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplemental information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise Lansing Housing Commission's basic financial statements. The financial data schedules and closed grants are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The financial data schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion,the financial data schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The closed grants have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly,we do not express an opinion or provide any assurance on them. 2 To the Board of Commissioners Lansing Housing Commission Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 9, 2017 on our consideration of Lansing Housing Commission's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Lansing Housing Commission's internal control over financial reporting and compliance. 4Gam, !� �, PGL C January 9, 2017 3 Lansing Housing Commission Lansing, Michigan Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2016 This management's discussion and analysis (MD&A) of Lansing Housing Commission provides an overview of the Commission's financial performance during the fiscal year ended June 30, 2016. The operations of the Lansing Housing Commission are comprised of a Low Income Public Housing Program, a Housing Choice Voucher program, a Capital Fund Program, a Section 8 New Construction Program, and a Shelter plus Care Program. The Public Housing Program is funded with rental revenue, miscellaneous tenant charges, and Department of Housing and Urban Development (HUD) grants. The remaining programs are funded entirely by federal grants. The Commission also maintains a central office cost center, various business activities, and component units. This MD&A covers only the Commission's primary government activities, which includes the blended component unit, Lansing Housing Commission Non Profit Development Corporation (LHCNPDC), and do not analyze the financial position or current year activity of the discretely presented component unit - Oliver Gardens LDHA Limited Partnership (Oliver Gardens). Please read this summary along with the accompanying audited financial statements of the Commission for the fiscal year ended June 30, 2016. The audited financial statements of Oliver Gardens have been presented in the financial statements of the Commission. Financial Highlights 1. Total assets exceed total liabilities by $ 16,402,933 2. Unrestricted net position equals 2,254,800 3. Total net position increased by 2,41 1,451 Required Financial Statements The financial statements of the Commission have been prepared on the accrual basis of accounting following the business-type activities reporting requirements of the Governmental Accounting Standards Board (GASB) as a single enterprise fund. These statements are as follows: Statement of net position - includes all of the Commission's assets and liabilities and provides information about the amounts and investments in assets and the obligations to commission creditors. It also provides a basis of assessing the liquidity and financial flexibility of the Commission. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial health of the Commission is improving or deteriorating. Statement of revenue, expenses, and changes in net position - provides information as to the increase or decrease of current year revenue over expenses. Statement of cash flows - provides information about the Commission's cash receipts and disbursements during the reporting period. The statement discloses net cash provided by or used in operating activities and noncapital financing activities from capital and related financing activities and from investing activities. 4 Financial Analysis Statement of Net Position Percent Restated 2014 2015 2016 Change Change Assets Current and restricted assets $ 3,459,833 $ 3,339,211 $ 6,090,137 $ 2,750,926 82% Capital assets 15,511,120 14,844,567 15,647,363 802,796 5% Noncurrent assets 1,464,346 1,478,780 909,675 (569,105) -38% Total assets 20,435,299 19,662,558 22,647,175 2,984,617 15% Deferred Outflows of Resources 118,212 208,788 992,302 783,514 375% Total assets and deferred outflows of resources 20,553,511 19,871,346 23,639,477 3,768,131 19% Liabilities Current liabilities 628,673 719,583 880,792 161,209 22% Long-term liabilities 4,966,888 5,160,281 6,273,462 1,1 13,181 22% Total liabilities 5,595,561 5,879,864 7,154,254 1,274,390 22% Deferred Inflows of Resources - - 82,290 82,290 n/a Net Position Net investment in capital assets 13,135,256 12,245,548 13,195,546 949,998 8% Restricted 633,791 545,721 952,587 406,866 75% Unrestricted 1,188,903 1,200,213 2,254,800 1,054,587 88% Total net position $ 14,957,950 $ 13,991,482 $ 16,402,933 $ 2,41 1,451 17% As illustrated in the statement of net position, the overall net position of the Commission increased by $2,41 1,451. Current assets increased primarily due to an increase in cash received from the sale of certain assets that were held for sale and an increase in accounts receivable due from HUD. Additions to construction work in progress accounts for the increase in capital assets. The decrease in noncurrent assets was due to the sale of certain assets that were held for sale. Current liabilities increased primarily due to the increases in the accounts payable related to the purchase of capital assets. Noncurrent liabilities increased due to an increase in OPEB liabilities and the addition of the net pension liability in accordance with GASB 68. 5 Financial Analysis (Continued) Statement of Revenue and Expenses Percent 2014 2015 2016 Change Change Revenue Tenant rental revenue $ 1,522,720 $ 1,651,196 $ 1,717,181 $ 65,985 4% Federal grants 16,488,971 15,003,554 17,108,785 2,105,231 14% Other revenue 575,926 1,090,1 10 1,500,717 410,607 38% Total revenue 18,587,617 17,744,860 20,326,683 2,581,823 15% Expenses Administrative expenses 2,520,740 3,028,025 3,169,731 141,706 5% Tenant services 97,939 69,978 21,976 (48,002) -69% Utilities 1,093,095 899,135 769,1 1 1 (130,024) -14% Maintenance and operations 2,488,488 2,178,672 2,108,351 (70,321) -3% Insurance and general expenses 367,237 481,043 430,957 (50,086) -10% Housing assistance payments 10,682,277 10,559,434 9,970,034 (589,400) -6% Depreciation and amortization 1,275,203 1,348,290 1,358,328 10,038 1% Interest expense 21,680 146,751 86,744 (60,007) -41% Total expenses 18,546,659 18,71 1,328 17,915,232 (796,096) -4% Change in Net Position $ 40,958 $ (966,468) $ 2,41 1,451 $ 3,377,919 -350% Revenue In reviewing the statement of revenue and expenses, you will find that 84 percent of the Commission's revenue is derived from grants from the Department of Housing and Urban Development, 9 percent of the Commission's revenue is from dwelling rent, and 7 percent is from investment income and other income. Expenses In reviewing the statement of revenue and expenses, you will find that 56 percent of the Commission's expenses are for housing assistance payments, 18 percent for administrative,4 percent are for utilities, 12 percent are for maintenance, 7 percent are for depreciation and amortization, and 3 percent are for tenant services, protective services,general expenses, and interest expense. Change in Net Position The Commission operated in fiscal year 2016 at a profit due to an increase in revenue coupled with a slight decrease in overall expenses. The overall revenue increase was primarily a result of the increases in available HUD funding over prior year and the gain on the sale of certain capital assets. Housing assistance payments decreased due to a repayment (to HUD) of a prior year advance that occurred in 2015. The decrease in utility expenses is the result of the Energy Performance Contract implemented during 2015. Other expenses fluctuated at relatively expected amounts due to changes in salaries, benefits, and other housing operating expenditures with the net effect on expenditures consistent overall to the prior year. Depreciation expense increases are a function of additional capital projects being placed in service at the capital grant close-out. Interest expense decreased due to the reduction in existing debt entered into in prior years. 6 Financial Analysis (Continued) Capital Assets As of year end, the Commission had $15,647,363 invested in a variety of capital assets as reflected in the following schedule, which represents a net increase (additions, deductions and depreciation) of 5 percent from the end of last year. Percent 2014 2015 2016 Change Change Land $ 1,648,584 $ 1,648,584 $ 1,554,771 $ (93,813) -6% Buildings 46,315,845 48,777,078 48,743,568 (33,510) 0% Furniture and equipment 909,221 1,255,227 1,541,301 286,074 23% Construction in progress 2,513,451 387,948 2,245,979 1,858,031 479% Accumulated depreciation (35,875,891) (37,224,270) (38,438,256) (1,213,986) 3% Net capital assets $ 15,51 1,210 $ 14,844,567 $ 15,647,363 $ 802,796 5% The following reconciliation summarizes the change in capital assets: Beginning balance-July 1, 2015 $ 14,844,567 Additions: Construction in progress 2,245,979 Furniture and equipment 17,445 Disposals net of depreciation (102,300) Depreciation expense (1,358,328) Ending balance-June 30, 2016 $ 15,647,363 Debt Outstanding As of the end of the fiscal year, the Commission had $2,451,817 in debt outstanding compared to $2,599,019 in the previous year. The net change in debt for the year was a decrease of $147,202 of principal payments. Long-term Debt 2014 2015 2016 Note payable- Davenport $ 611,681 $ 574,719 $ 522,879 Note payable- PNC 2,051,375 2,024,300 1,928,938 Total long-term debt $ 2,663,056 $ 2,599,019 $ 2,451,817 7 Financial Analysis (Continued) Economic Factors and Events Affecting Operations Factors that may affect the financial position of the Commission in the subsequent fiscal year are as follows: • Federal funding appropriations as budgeted by Congress for funding to the Department of Housing and Urban Development • Local labor supply and demand, which can affect salary and wage rates and the need to contract more work because of employee hiring challenges • Union contract negotiations • Local inflationary, recessionary and employment trends, which can affect resident incomes and therefore the amount of rental income • Inflationary pressure on utility rates, supplies, and other costs • Pay down of underfunded pension liability In the current year and for future years, the financial position of the Commission will also be impacted by the Commission's adoption of Governmental Accounting Standards Board (GASB) Statement No. 68 as of July 1, 2014.The beginning of the year net position was restated to comply with GASB 68, the objective of which is to improve accounting and financial reporting by state and local employers about financial support for pensions that is provided by other entities. The Commission participates in an agent multiple-employer defined benefit pension plan administered by the Municipal Employees Retirement System of Michigan (MERS) that covers all employees of the Commission. The Commission's net pension liability for this plan is determined annually using a measure of the total pension liability and the pension net position at the end of each calendar year. REAC The Real Estate Assessment Center's (REAC) mission is to provide and promote accurate information in assessing the condition of HUD's housing portfolio. The Commission receives a physical inspection and an annual financial evaluation provided by REAC. This performance data provides an annual assessment of how each Public Housing Commission compares to its peers. Conclusion The Commission's management is committed to staying abreast of regulations and appropriations as well as maintaining an ongoing analysis of all budgets and expenses to ensure that the Commission continues to operate at the highest standards established by the Real Estate Assessment Center and the Department of Housing and Urban Development. Contact This financial report is designed to provide a general overview of the Commission's finances for all those with an interest. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Ms. Patricia Baines-Lake, Executive Director, Lansing Housing Commission, 419 Cherry, Lansing, MI 48933, or call (517)372-7996. 8 Lansing Housing Commission Statement of Net Position June 30, 2016 Discrete Primary Component Government Unit- Oliver (LHC) Gardens Assets and Deferred Outflows of Resources Current Assets Cash and cash equivalents (Note 2) $ 3,844,361 $ 30,294 Cash and cash equivalents- Restricted (Note 2) 984,529 275,431 Tenant security deposits - Restricted (Note 2) 117,127 4,406 Receivables: Tenant receivables 47,022 - Accrued interest receivable 32,606 - Other receivables 100,446 1,799 Due from other governmental units 408,372 - Allowance for doubtful accounts (3,202) - Investments (Note 2) 509,256 - Prepaid expenses and other assets 49,620 5,161 Total current assets 6,090,137 317,091 Noncurrent Assets Investment in partnership 909,575 - Other assets 100 43,554 Capital Assets - Nondepreciable (Note 3) 3,800,750 685,162 Capital Assets- Net of depreciation (Notes 3) 11,846,613 2,074,227 Total assets 22,647,175 3,120,034 Deferred Outflows of Resources - Pension (Note 5) 992,302 - Total assets and deferred outflows of resources $ 23,639,477 $ 3,120,034 The Notes to Financial Statements are an Integral Part of this Statement. 9 Lansing Housing Commission Statement of Net Position (Continued) June 30, 2016 Discrete Primary Component Government Unit- Oliver (LHC) Gardens Liabilities, Deferred Inflows of Resources, and Net Position Current Liabilities Accounts payable- Operating $ 357,937 $ 3,685 Security deposits liability 139,991 4,499 Accrued liabilities and other: Accrued PILOT 161,903 25,067 Accrued interest - 44,843 Accrued salaries and wages 49,876 - Compensated absences < I year 12,878 - Other current liabilities - 58,875 Notes payable- Current portion (Note 4) 158,207 28,367 Total current liabilities 880,792 165,336 Noncurrent Liabilities Notes payable - Net of current portion (Note 4) 2,293,610 2,587,874 Compensated absences 72,972 - Net OPEB obligation (Note 6) 1,372,830 Net pension liability(Note 5) 2,502,108 - Other noncurrent liabilities 31,942 800,059 Total liabilities 7,154,254 3,553,269 Deferred Inflows of Resources - Pension (Note 5) 82,290 - Net Position Net investment in capital assets 13,195,546 143,168 Restricted 952,587 - Unrestricted 2,254,800 (576,403) Total net position 16,402,933 (433,235) Total liabilities, deferred inflows of resources, and net position $ 23,639,477 $ 3,120,034 The Notes to Financial Statements are an Integral Part of this Statement. 10 Lansing Housing Commission Statement of Activities Year Ended June 30, 2016 Discrete Primary Component Government Unit- Oliver (LHC) Gardens Operating Revenue Tenant revenue- Net $ 1,717,181 $ 82,504 HUD operating revenue 14,862,802 172,653 Other grant revenue 747,910 - Other operating revenue 288,857 - Total operating revenue 17,616,750 255,157 Operating Expenses Administrative 3,169,731 42,218 Tenant services 21,976 - Utilities 769,1 1 1 72,715 Maintenance 2,108,351 20,156 Insurance 235,525 12,587 Other general expenses 195,432 24,550 Housing assistance payments 9,970,034 - Depreciation and amortization 1,358,328 141,627 Total operating expenses 17,828,488 313,853 Operating Loss (21 1,738) (58,696) Nonoperating Income (Expenses) Investment income 7,429 18,717 Interest expense (Note 4) (86,744) (93,461) Gain on sale of assets 456,521 - Total nonoperating expenses 377,206 (74,744) Gain (Loss) - Before contributions 165,468 (133,440) Capital Contributions - Capital grants - HUD 2,245,983 - Change in Net Position 2,41 1,451 (133,440) Net Position - Beginning of year 13,991,482 (299,795) Net Position - End of year $ 16,402,933 $ (433,235) The Notes to Financial Statements are an Integral Part of this Statement. 11 Lansing Housing Commission Statement of Cash Flows Year Ended June 30, 2016 Primary Government Cash Flows from Operating Activities Cash received from HUD operating subsidies and grants $ 14,638,886 Cash received from tenants 1,690,965 Other receipts 1,021,712 Cash payments for housing assistance (9,970,034) Cash payments for administrative expenses (3,169,730) Cash payments for other operating expenses (1,721,731) Net cash provided by operating activities 2,490,068 Cash Flows from Capital and Related Financing Activities Receipt of capital grants 2,245,983 Proceeds from sales of capital assets 246,646 Purchase of capital assets (2,263,429) Principal and interest paid on capital debt (233,946) Net cash used in capital and related financing activities (4,746) Cash Flows from Investing Activities Interest received on investments 3,581 Purchase of investment securities (3,544) Net cash provided by investing activities 37 Net Increase in Cash and Cash Equivalents 2,485,359 Cash and Cash Equivalents - Beginning of year 2,460,658 Cash and Cash Equivalents - End of year $ 4,946,017 Balance Sheet Classification of Cash and Cash Equivalents Cash and investments $ 3,844,361 Restricted cash 984,529 Tenant security deposits 117,127 Total cash and cash equivalents $ 4,946,017 The Notes to Financial Statements are an Integral Part of this Statement. 12 Lansing Housing Commission Statement of Cash Flows (Continued) Year Ended June 30, 2016 Reconciliation of Operating Loss to Net Cash from Operating Activities Operating loss $ (21 1,738) Adjustments to reconcile operating loss to net cash from operating activities: Depreciation and amortization 1,358,328 Bad debts 64,417 Deferred outflows and inflows (701,225) Changes in assets and liabilities: Receivables (314,549) Prepaid and other assets 907,638 Accounts payable 45,605 Security and other trust deposits 35,273 Accrued and other liabilities 1,306,319 Net cash provided by operating activities $ 2,490,068 The Notes to Financial Statements are an Integral Part of this Statement. 13 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 1 - Organization and Summary of Significant Accounting Policies Or,ganization and Program Descriptions The Lansing Housing Commission (LHC or the "Commission") is a Michigan public body corporation operating as a public housing authority under the Michigan Housing Facilities Act, MCL 125.65 to provide decent, safe, and adequate housing for low- income program participants. The Commission owns and provides subsidy and operation support for housing units located throughout the Lansing area. LHC's assets, liabilities, net position, and changes in net position are included in its primary government fund and include all AMPS, COCC, business activities, and programs of the Commission. The Commission receives and administers funds from the U.S. Department of Housing and Urban Development (HUD) and has signed an annual contributions contract (ACC) under the provisions of the ACC and all applicable provisions of the United States Housing Act of 1937 (42 U.S.0 1437 Section 1.1). The ACC allows the Commission to obtain financial support from HUD and provide low- income housing throughout Lansing. The Commission administers the following significant programs: Low-rent Public Housing - The Commission owns, operates, and maintains 833 units of public housing in four properties throughout the city of Lansing. The Low Rent Housing Assistance Program is designed to provide subsidized housing to low-income individuals who pay monthly rent in accordance with prescribed rent formulas based on family income limits. Revenue consists primarily of this rental income, other tenant fees collected, and an operating subsidy from HUD. Housing Choice Voucher Program (HCVP) - Section 8 of the Housing and Community Development Act of 1974 provides Housing Assistance Payments on behalf of lower-income families to participating housing owners. Under the program, the landlord-tenant relationship is between a housing owner and a family, rather than the Commission and a family as in the Public Housing program. HUD contracts with the Commission to enter into contracts with owners to either make assistance payments or to pay the difference between the approved contract rent and the actual rent paid by the lower-income families. Housing assistance payments made to landlords and some participants are funded through annual contributions contracts, as well as the administrative cost of managing the program up to a per-unit limit established in the contracts. The Commission administered an average of 1,539 tenant-based vouchers monthly for the year ended June 30, 2016. Capital Fund Program (CFP) - Funds from the Capital Fund Program provided by HUD are used to maintain and improve the Public Housing portfolio. Substantially all additions to land, structures, and equipment for these properties are accomplished by using capital grant funds. 14 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 1 - Organization and Summary of Significant Accounting Policies (Continued) Shelter Plus Care - This program provides rental assistance to homeless persons with disabilities and their families. Recovery Agreement and Action Plan On September 25, 2014, the Commission was designated as a troubled agency by HUD based on a failing Public Housing Assessment System audited financial score. When a public housing agency is determined to be substandard, it is asked to provide an assessment of its deficiencies from its own self diagnosis and identify solutions to recover its performance for long-term sustainability. The Commission has completed its Public Housing Agency Recovery and Sustainability Assessment and on January 6, 2016, entered into a Recovery Agreement and Action Plan with HUD. The Commission began submitting monthly progress reports to the local HUD Field Office commencing on March 1, 2016 and every month thereafter. The monthly reports will continue until the Recovery Agreement is terminated. These financial statements have not been modified for this status. Reporting Entity The nucleus of the financial reporting entity, as defined by Governmental Accounting Standards Board (GASB) Statement No. 14, as amended, is the primary government. A fundamental characteristic of a primary government is that it is a fiscally independent entity. In evaluation of how to define the financial reporting entity, management has considered all potential component units. A component unit is a legally separate entity for which the primary government is financially accountable. The criteria of financial accountability is the appointment of a voting majority plus the ability of the primary government to impose its will upon the potential component unit. These criteria were considered in determining the reporting entity. The five-member board of commissioners of LHC is appointed to five-year terms by the mayor of the City of Lansing, but the Commission board independently oversees the Commission's operation and designates its management. The City of Lansing is not financially accountable for the Commission as it cannot impose its will on the Commission, and there is no potential for the Commission to provide financial benefits to, or impose financial burdens on, the City of Lansing. Accordingly, the Commission is not a component unit of the financial reporting entity of the City of Lansing. GASB Statements 14, 39, and 61 define a primary government and those organizations that should be reported as component units. The following organizations have been determined under this guidance to be component units of the Commission. 15 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 1 - Organization and Summary of Significant Accounting Policies (Continued) Blended Component Units - One component unit, despite being legally separate, is so integrated with the primary government that it is in substance part of the primary government. The Commission has included as a blended component unit in business activities the operations of Lansing Housing Commission Non Profit Development Corporation (LHCNPDC), a nonprofit organization. LHCNPDC has a 99 percent ownership interest in Oliver Gardens, LLC. The Commission has financial accountability for the nonprofit and controls its board of directors and management. As of June 30, 2016, LHCNPDC had assets of$737,090, liabilities of$879,491, and net deficit position of ($142,401). The total revenue and change in net position was $3,288 for the year ended June 30, 2016. Discretely Presented Component Unit - The component unit column in the financial statements includes the financial data of the Commission's legally separate component unit, Oliver Gardens LDHA Limited Partnership, which meets the criteria for discrete component presentation. The separate column presentation clearly distinguishes the component unit balances and transactions from that of the primary government. The balances are presented as of December 31, 2015. A complete financial report can be obtained at their administrative offices at 419 Cherry St., Lansing, MI 48933. The Commission has a I percent managing member ownership interest in Oliver Gardens, LLC, which has a 0.01 percent general partner ownership interest in Oliver Gardens LDHA Limited Partnership (Oliver Gardens). Oliver Gardens is a residential apartment complex in Lansing, Michigan consisting of 30 low-income housing units. The Commission does have financial accountability for Oliver Gardens, but it does not have majority ownership of the entity. Oliver Gardens follows all applicable Financial Accounting Standards Board (FASB) standards. Since it does not follow governmental accounting for presentation purposes, certain transactions may be reflected differently in these financial statements than in the separately issued discrete component unit financial statements in order for them to conform to the presentation of the primary government. 16 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 1 - Organization and Summary of Significant Accounting Policies (Continued) Basis of Accounting and Presentation The basic financial statements of the Commission have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (GAAP), as prescribed by the Governmental Accounting Standards Board (GASB). The Commission follows the business-type activities reporting requirements of GASB Statement No. 34, which provides a comprehensive one-line look at the Commission's financial activities. The Commission reports all of its operations as a single business activity in a single enterprise fund. The enterprise fund is a proprietary fund, which distinguishes operating revenue and expenses from nonoperating items. The operating revenue of the Commission consists primarily of rental charges to tenants, operating grants from HUD, and other operating revenue that offsets operating expenses. Operating expenses include the cost of administrative, tenant services, utilities, maintenance, protective services, general operations, depreciation, and housing assistance payments. As a proprietary fund, revenue is recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The Commission's financial activities operate in a manner similar to private business enterprises and are financed through fees and charges assessed primarily to the users of the services. For financial reporting purposes, the Commission considers its grants associated with operations as operating revenue because these funds more closely represent revenue generated from operating activities rather than nonoperating activities. Grants associated with capital acquisition and improvements are considered capital contributions and are presented after nonoperating activity as capital contributions on the accompanying statement of activities. Budgets - The Commission is required by its HUD annual contributions contracts to adopt annual budgets for the Low Rent Public Housing Program and the Housing Choice Vouchers Program. Annual budgets are not required for the Capital Fund Program, as those budgets are approved for the length of any given project. Annual, project, and grant length budgets require grantor approval. Appropriations are authorized at the function level. Management may transfer budget authorization between functions. All appropriations that are not used lapse at year end. Budgeted amounts are as originally adopted or as amended by the board. 17 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 1 - Organization and Summary of Significant Accounting Policies (Continued) Assets, Liabilities, and Net Position Cash and Cash Equivalents - Cash and cash equivalents consist of cash on hand and all highly liquid investments purchased with an original maturity of three months or less. Current Receivables and Recognition of Bad Debts - Current receivables consist of revenue that is earned at year end but not yet received. Tenant accounts generally are collectible as long as the tenant is occupying the unit; however, the Commission has established an allowance of $3,202 as potentially uncollectible as of June 30, 2016. Tenant bad debt for the year ended June 30, 2016 was $64,417. Prepaid Expenses - Prepaid items consist of certain payments to vendors that reflect costs applicable to future fiscal years. Investment in Partnership - The amount of this investment includes amounts invested in and due from the Commission's discretely presented component unit, Oliver Gardens LDHA LP. Of the amount due, $405,767 is for developer fees earned that are payable from limited partner contributions or upon the availability of cash flow generated at the operating partnership level. Capital Assets - Purchased assets and self-constructed assets and certain improvements are recorded as assets at cost in accordance with the Commission's capitalization policy. Costs equal or above the capitalization threshold of $2,500 that materially add to the productive capacity and extend the life of an asset longer than one year are capitalized, while maintenance and repair costs are expensed as incurred. Property and equipment are depreciated using the straight-line method over the following useful lives: Property and Equipment Years Buildings 40 Building improvements 7-40 Furniture and fixtures, equipment, and machinery 3-10 GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capitol Assets and for Insurance Recoveries, establishes accounting and financial reporting standards for the impairment of capital assets. If an indicator of impairment is identified and the decline in service utility was unexpected and significant, an impairment loss is calculated in consideration of whether the capital asset will continue to be used by the Commission. An impairment loss is generally measured by identifying the historical cost of the service utility of the capital asset that cannot be used due to the impairment event or circumstance. Impaired capital assets that will no longer be used by the Commission are reported at the lower of carrying value or fair value, or written off entirely. During 2016, no impairments were recorded. 18 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 1 - Organization and Summary of Significant Accounting Policies (Continued) Restricted Cash - Restricted cash represents amounts held in escrow accounts in the name of the entity for insurance and PILOT expenses, FSS escrows, Section 8 funds, tenant deposits, and replacement reserves. Restrictions for use in operations and approval are governed by HUD, lender requirements, or other outside parties. Other Noncurrent Assets - Other assets of the component unit include $45,415 of costs related to obtaining debt financing and $22,917 of costs related to obtaining tax credits, net of accumulated amortization. These costs have been capitalized and are being amortized over 35 years and 15 years, respectively, using the straight-line method. Amortization expense for the year ended June 30, 2016 was $2,825. Compensated Absences - The Commission allows employees to accumulate earned but unused sick and vacation pay benefits. The Commission accrues a liability for benefits attributable to services already rendered by the Commission's employees. Employees are entitled to a specific amount of leave per month capped at 480 hours total. Upon separation from employment, employees with 20 years of service hired before December 31, 2009 are entitled to receive pay for 50 percent of their accrued unused sick time, and employees with 25 years of service hired on or after January 1, 2010 are entitled to receive pay for 25 percent of their accrued unused sick time. The liability for accrued and unused leave was $85,850 at June 30, 2016, of which $12,878 is current and $72,972 is noncurrent. Net Position - Net position is comprised of three categories: (1) net investment in capital assets, (2) restricted, and (3) unrestricted. The Commission's positive value of unrestricted net position in the primary government may be used to meet ongoing obligations. When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the Commission's policy is to first apply restricted resources. Each component of net assets is reported separately on the statement of net position. i. Net investment in capital assets - This category consists of capital assets (including restricted capital assets), net of accumulated depreciation and reduced by any outstanding balances of mortgages, notes, or other borrowings that are attributable to the acquisition, construction, and improvements of those assets. ii. Restricted - This category equals the restricted cash of the Commission and consists of net position restricted in their use by (1) external groups such as grantors, creditors, or laws and regulations of other governments or (2) law through constitutional provisions or enabling legislation. iii. Unrestricted - This category includes all of the remaining net position that does not meet the definition of the other two categories. 19 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 1 - Organization and Summary of Significant Accounting Policies (Continued) Revenue Recognition - The Commission receives funds from certain federal and other agencies under various grant programs. Receivables are recorded based upon amounts expended for the various programs for which funds have not been received, to the extent grant limits have not been exceeded. The Commission leases properties to tenants under various rental arrangements. Payments from tenants are recognized as revenue in the period during which the associated use of premises occurred. Operating Revenue and Expenses - The Commission's operating revenue includes HUD funding and other amounts received from tenants for rent and other charges for services provided. Operating expenses are costs incurred during the operation of its primary housing activities. Such revenue and expenses are reported when earned or incurred, respectively. Capital Grants - The Commission records grants received for capital outlay as contributions of capital grants. Nonoperating Revenue and Expenses - Nonoperating revenue and expenses are derived from transactions other than those associated with the Commission's primary housing operations and are reported as incurred, including investment activity. During the year ended June 30, 2016, the Oliver Tower Property was sold for $1,050,000, resulting in a gain on the sale of the asset of$456,521. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ. Subsequent Events - The financial statements and related disclosures include evaluation of events through and including January 9, 2017, which is the date the financial statements were available to be issued. 20 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 2 - Deposits and Investments Deposits and investments are reported in the financial statements as follows: Primary Government Component (LHC) Unit Cash and cash equivalents - Unrestricted $ 3,844,361 $ 30,294 Cash and cash equivalents - Restricted 984,529 275,431 Tenant security deposits - Restricted 117,127 4,406 Investments 509,256 - Total designated $ 5,455,273 $ 310,131 Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes local governmental units to make deposits and invest in the accounts of federally insured banks, credit unions, and savings and loan associations that have offices in Michigan. The law also allows investments outside the state of Michigan when fully insured. The local unit is allowed to invest in bonds, securities, and other direct obligations of the United States or any agency or instrumentality of the United States; repurchase agreements; bankers' acceptances of United States banks; commercial paper rated within the two highest classifications, which matures not more than 270 days after the date of purchase; obligations of the State of Michigan or its political subdivisions, which are rated as investment grade; and mutual funds composed of investment vehicles that are legal for direct investment by local units of government in Michigan. The Commission has designated two banks for the deposit of its funds. The investment policy adopted by the board in accordance with Public Act 196 of 1997 has authorized investment in bonds and securities of the United States government and bank accounts and CDs, but not the remainder of state statutory authority as listed above. The Commission's deposits and investment policies are in accordance with statutory authority. The Commission's cash and investments are subject to several types of risk, which are examined in more detail below: Custodial Credit Risk of Bank Deposits - Custodial credit risk is the risk that in the event of a bank, failure, the Commission's deposits may not be returned to it. The Commission does not have a deposit policy for custodial credit risk. At year end, the Commission had $0 of bank deposits (certificates of deposit and checking and savings accounts) that were uninsured and uncol lateral ized. 21 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 2 - Deposits and Investments (Continued) Custodial Credit Risk of Investments - Custodial credit risk is the risk that, in the event of the failure of the counterparty, the Commission will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Commission does not have a policy for custodial credit risk. At year end, $259,256 of investment securities was uninsured and unregistered, with securities held by the counterparty or by its trust department or agent but not in the Commission's name. Note 3 - Capital Assets A summary of property and equipment by class is as follows: Balance Balance Primary Government July 1,2015 Reclassifications Additions Reductions June 30,2016 Capital assets not being depreciated: Land $ 1,648,584 $ - $ - $ (93,813) $ 1,554,771 Construction in progress 387,948 (387,948) 2,245,979 2,245,979 Total nondepreciable assets 2,036,532 (387,948) 2,245,979 (93,813) 3,800,750 Capital assets being depreciated: Building and improvements 48,777,078 105,203 - (138,713) 48,743,568 Furniture and fixtures,equipment,and machinery 1,255,228 282,745 17,445 (14,117) 1,541,301 Total depreciable capital assets 50,032,306 387,948 17,445 (152,830) 50,284,869 Accumulated depreciation 37,224,271 - 1,358,328 (144,343) 38,438,256 Net capital assets being depreciated 12,808,035 387,948 (1,340,883) (8,487) 11,846,613 Net capital assets $ 14,844,567 $ - $ 905,096 $ (102,300) $ 15,647,363 Balance Balance December 31, Component Unit January 1,2015 Additions Disposals 2015 Capital assets not being depreciated-Land $ 685,162 $ $ $ 685,162 Capital assets being depreciated: Buildings and improvements 3,318,485 3,318,485 Furniture and equipment 175,949 12,510 188,459 Subtotal 3,494,434 12,510 3,506,944 Accumulated depreciation 1,293,915 138,802 1,432,717 Net capital assets being depreciated 2,200,519 (126,292) 2,074,227 Net capital assets $ 2,885,681 $ (126,292) $ $ 2,759,389 22 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 3 - Capital Assets (Continued) Construction in Progress Capital improvements made for LHC's low-rent housing units are financed by grant funds provided by HUD under capital grants. Capital grants are awarded annually based on a five-year comprehensive modernization plan submitted by the Commission. Related construction in progress are costs incurred for the modernization of low-rent units. When modernization projects are completed, HUD issues a modernization cost certificate for each grant, closing out the grant for that year, and at which time construction in progress for that grant is placed in service and transferred to the buildings or improvements categories. Note 4 - Long-term Debt Primary Government LHC's debt is comprised of a promissory note payable to Davenport University and a lease with PNC for the Energy Performance Contract. Davenport University The Commission purchased an office building and land from Davenport University (the "Lender") in 2012 for $950,000 with a$700,000 promissory note payable to the Lender. The note bears an annual interest rate of 2.4 percent, which is subject to adjustment concurrently with changes in the Lender's cost of funds. Equal monthly payments of $5,000 are due beginning on July 28, 2012. The outstanding principal and interest balance will be due when the note matures on June 28, 2022. PNC Energy Conservation Measures (ECMs), as defined in the Commission's Energy Performance Contract (EPC) dated December 1 1, 2013, are financed by PNC as stipulated in the Master Equipment Lease-Purchase Agreement in the principal amount of $2,051,375. This obligation was issued pursuant to the provisions of Act 18, Public Acts of Michigan 1933 (Ex. Sess), as amended, and Chapter 260 of the Code of Ordinances of the City of Lansing. HUD's Public Housing EPC program is an innovative financing technique that uses cost savings from reduced energy consumption to repay the cost of installing ECMs. The project is financed with a tax-exempt lease for a term of 15 years at a fixed interest rate of 3.91 percent. PNC as the lender has a security interest in the ECMs. 23 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 4 - Long-term Debt (Continued) Component Unit Oliver Gardens LDHA Limited Partnership (the "Partnership") has the following loans outstanding as of December 31, 2015 that are secured by land and substantially all real property owned by the Partnership: Mortgage dated October 17, 2006 held by Michigan State Housing Development Authority (MSHDA) in the amount of $1,775,482. The mortgage bears interest at a rate of 5.5 percent. However, an amount equal to 0.5 percent of interest is deferred until the mortgage principal balance is paid in full. Monthly payments of principal and interest are required in the amount of$8,961 $ 1,596,108 HOME loan dated June 1, 2006 in the amount of$170,000. The loan is held by the City of Lansing under the HOME Investments Partnership Program and bears interest at a rate of I percent per annum. Principal and interest are due on the loan when it matures on December 31, 2041 170,000 Community Development Block Grant (CDBG) loan dated May 31, 2006 in the amount of$550,000. The loan is held by the City of Lansing under the CDBG Program and bears interest at a rate of I percent per annum. Principal and interest are due on the loan when it matures on May 31, 2046 550,000 Lansing Housing Commission (LHC) note dated December 31, 2007 in the amount of$300,133. The loan is held by LHC and bears an interest rate of I percent per annum. Principal and interest are due on the loan when it matures on January 1, 2048 300,133 Total 2,616,241 Less current portion 28,367 Long-term portion $ 2,587,874 24 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 4 - Long-term Debt (Continued) Primary Government Future minimum principal and interest payments on the LHC promissory note with Davenport to maturity for the years ending June 30 are as follows: Principal Interest Total 2017 $ 47,976 $ 12,000 $ 59,976 2018 49,000 11,000 60,000 2019 301,000 4,000 305,000 2020 58,000 2,000 60,000 2021 59,000 1,000 60,000 2022 7,903 468 8,371 Total payments $ 522,879 $ 30,468 $ 553,347 Future minimum principal and interest payments on LHC's lease with PNC to maturity for the years ending June 30 are as follows: Principal Interest 2017 $ 110,231 $ 77,000 2018 121,000 72,000 2019 131,000 67,000 2020 138,000 62,000 2021 144,000 56,000 2022-2026 813,000 184,000 2027-2029 471,707 25,000 Total payments $ 1,928,938 $ 543,000 25 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 4 - Long-term Debt (Continued) Component Unit Future minimum principal and interest payments on long-term debt to maturity for the years ending December 31 for the discretely presented component unit are as follows: Principal Interest 2016 $ 28,367 $ 79,166 2017 29,818 77,714 2018 31,343 76,189 2019 32,953 74,579 2020 34,638 72,894 2021-2025 201,659 336,001 2026-2030 258,801 278,859 2031-2035 332,135 205,525 2036-2040 426,248 1 1 1,412 2041-2045 390,146 314,672 2046-2048 850,133 - Total payments $ 2,616,241 $ 1,627,01 1 Changes in long-term debt for the year ended June 30, 2016 (or December 31 , 2015 for the discretely presented component unit) are presented below: Balance- Beginning of Balance- Year Additions Deletions End of Year Due in I Year Primary government: Davenport $ 574,719 $ - $ (51,840) $ 522,879 $ 47,976 PNC 2,024,300 - (95,362) 1,928,938 1 10,231 Total $ 2,599,019 $ - $ (147,202) $ 2,451,817 $ 158,207 Component unit: MSHDA $ 1,623,094 $ - $ (26,986) $ 1,596,108 $ 28,367 City of Lansing 720,000 - - 720,000 - LHC 300,133 - - 300,133 - Total $ 2,643,227 $ - $ (26,986) $ 2,616,241 $ 28,367 Interest expense for the year ended June 30, 2016 was $86,744 for the primary government and interest expense for the year ended December 31, 2015 was $93,461 for the discrete component unit. 26 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 5 - Agent Defined Benefit Pension Plan Description Plan Description - The Commission participates in an agent multiple-employer defined benefit pension plan administered by the Municipal Employees Retirement System of Michigan (MERS), that covers all employees of the Commission. MERS was established as a statewide public employee pension plan by the Michigan Legislature under PA 135 of 1945 and is administered by a nine-member retirement board. MERS issues a publicly available financial report which includes the financial statements and required supplemental information of this defined benefit plan. This report can be obtained at www.mersofmichigan.com or in writing to MERS of Michigan at 1 134 Municipal Way, Lansing, Michigan 48917. Benefits Provided - The Plan provides certain retirement, disability, and death benefits to plan members and beneficiaries. PA 427 of 1984, as amended, established and amends the benefit provisions of the participants in MERS. The MERS plan covers employees in the general open division hired before May 1, 2012, and employees hired after May 1, 2012. Retirement benefits for employees in the open division are calculated as 2.25 percent of the employee's final three-year average salary times the employee's years of service. Normal retirement age is 60 with early retirement at 55 with 25 years of service. Early retirement age with reduced benefits is 55 with 15 years of service or 50 with 25 years of service. Vesting period is eight years. Employees are eligible for non-duty disability benefits after eight years of service and for duty-related disability benefits upon hire. Disability retirement benefits are determined in the same manner as retirement benefits but are payable immediately without an actuarial reduction. Death benefits equal 80 times the employee's final full-year salary. An employee who leaves service may withdraw his or her contributions plus any accumulated interest. Retirement benefits for employees hired after May 1, 2012 are calculated as 1.70 percent of the employee's final three-year average salary times the employee's years of service. Normal retirement age is 60 with early retirement at 55 with 25 years of service. Early retirement age with reduced benefits is 55 with 15 years of service or 50 with 25 years of service. Vesting period is eight years. Employees are eligible for non- duty disability benefits after eight years of service and for duty-related disability benefits upon hire. Disability retirement benefits are determined in the same manner as retirement benefits but are payable immediately without an actuarial reduction. Death benefits for a surviving spouse equal 85 percent of the deceased member's accrued retirement allowance, computed in the same manner as a service retirement allowance, based on service and final average compensation at the time of death. An employee who leaves service may withdraw his or her contributions plus any accumulated interest. 27 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 5 - Agent Defined Benefit Pension Plan Description (Continued) Benefit terms provide for annual cost-of-living adjustments to each employee's retirement allowance subsequent to the employee's retirement date. The annual adjustments are 3 percent, noncompounding. Benefit terms, within the parameters established by MERS, are generally established and amended by authority of the board of commissioners, generally after negotiations of these terms with the affected unions. Police and fire employees benefit terms may be subject to binding arbitration in certain circumstances. Employees Covered by Benefit Terms - At the December 31, 2015 measurement date, the following employees were covered by the benefit terms: Inactive plan members or beneficiaries currently receiving benefits 32 Inactive plan members entitled to but not yet receiving benefits 16 Active plan members 26 Total employees covered by MERS 74 Contributions - Article 9, Section 24 of the State of Michigan Constitution requires that financial benefits arising on account of employee service rendered in each year be funded during that year. Accordingly, MERS retains an independent actuary to determine the annual contribution. The employer is required to contribute amounts at least equal to the actuarially determined rate, as established by the MERS retirement board. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by plan members during the year, with an additional amount to finance any unfunded accrued liability. The employer may establish contribution rates to be paid by its covered employees. For the year ended June 30, 2016, the average active employee contribution rate was 5.0 percent of annual pay and the Commission's average contribution rate was 15.05 percent of annual payroll. Net Pension Liability The net pension liability reported at June 30, 2016 was determined using a measure of the total pension liability and the pension net position as of December 31, 2015. The December 31, 2015 total pension liability was determined by an actuarial valuation performed as of that date. 28 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 5 - Agent Defined Benefit Pension Plan Description (Continued) Changes in the net pension liability during the measurement year were as follows: Increase (Decrease) Total Pension Plan Net Net Pension Changes in Net Pension Liability Liability Position Liability Balance at December 31, 2014 $ 8,728,461 $ 7,227,277 $ 1,501,184 Service cost 1 14,272 - 1 14,272 Interest 698,614 - 698,614 Differences between expected and actual experience (123,435) - (123,435) Changes in assumptions 405,966 - 405,966 Contributions - Employer - 158,735 (158,735) Contributions - Employee - 55,586 (55,586) Net investment income - (104,348) 104,348 Benefit payments, including refunds (635,102) (635,102) - Administrative expenses - (15,480) 15,480 Net changes 460,315 (540,609) 1,000,924 Balance at December 31, 2015 $ 9,188,776 $ 6,686,668 $ 2,502,108 Assumption Changes - The change in the total pension liability as a result of changes in assumptions was due to the mortality table being adjusted to reflect longer lifetimes and the assumed annual rate of return, net of expenses, being lowered. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2016, the Commission recognized pension expense of $451,061. At June 30, 2016, the Commission reported deferred outflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Difference between expected and actual experience $ - $ 82,290 Changes in assumptions 270,644 - Net difference between projected and actual earnings on pension plan investments 623,600 - Employer contributions to the plan subsequent to the measurement date 98,058 - Total $ 992,302 $ 82,290 29 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 5 - Agent Defined Benefit Pension Plan Description (Continued) Amounts reported as deferred outflows of resources related to pensions will be recognized in pension expense as follows. These amounts are exclusive of the employer contributions to the plan made subsequent to the measurement date ($98,059), which will impact the net pension liability in fiscal year 2017, rather than pension expense. Years Ending June 30 Amount 2017 $ 256,537 2018 256,537 2019 162,360 2020 136,520 Actuarial Assumptions - The total pension liability in the December 31, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.5% Salary increases 3.75% In the long term, plus a merit and longevity increase ranging from 0 to I I percent Investment rate of return 8.00 % Net of pension plan investment expense Mortality rates were a blend of the RP-2014 Healthy Annuitant Mortality Tables, with rates multiplied by 105 percent; RP-2014 Employee Mortality Tables; and RP-2014 Juvenile Mortality Tables, all with a 50 percent male and 50 percent female blend. For disabled retirees, the RP-2014 Disabled Retiree Mortality Table with a 50 percent male and 50 percent female blend is used to reflect the higher expected mortality rates of disabled members. The actuarial assumptions used in the December 31, 2015 valuation were based on the results of the most recent actuarial experience study covering the period from January 1, 2009 through December 31, 2013. Discount Rate - The discount rate used to measure the total pension liability was 8.00 percent. The projection of cash flows used to determine the discount rate assumes that employee contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the employee rate. 30 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 5 - Agent Defined Benefit Pension Plan Description (Continued) Projected Cash Flows Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The long-term expected rate of return on pension plan investments was determined using a model in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense, and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return as of December 31, 2015, the measurement date, for each major asset class are summarized in the following table: Long-term Target Expected Real Asset Class Allocation (%) Rate of Return Global equity 58 % 5.00 % Global fixed income 20 2.18 Real assets 12 4.23 Diversifying strategies 10 6.56 Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The following presents the net pension liability of the Commission, calculated using the discount rate of 8.00 percent, as well as what the Commission's net pension liability would be if it were calculated using a discount rate that is I percentage point lower (7.00 percent) or I percentage point higher (9.00 percent) than the current rate: I Percent Current I Percent Decrease Discount Rate Increase (7.00%) (8.00%) (9.00%) Net pension liability of the Commission $ 3,497,190 $ 2,502,108 $ 1,659,805 31 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 5 - Agent Defined Benefit Pension Plan Description (Continued) Pension Plan Fiduciary Net Position - Detailed information about the plan's fiduciary net position is available in the separately issued financial report. For the purpose of measuring the net pension liability, deferred outflows of resources, and deferred inflows or resources related to pension and pension expense, information about the plan's fiduciary net position and addition to/deduction from fiduciary net position has been determined on the same basis as they are reported by the plan. The plan uses the economic resources measurement focus and the full accrual basis of accounting. Investments are stated at fair value. Contribution revenue is recorded as contributions are due pursuant to legal requirements. Benefit payments and refunds of employee contributions are recognized as expense when due and payable in accordance with the benefit terms. Note 6 - Other Postemployment Benefits Plan Description - The Commission provides retiree healthcare benefits to eligible employees and their spouses. This is a single-employer defined benefit plan administered by the Commission and is provided under a separate collective bargaining agreement on health care. The plan does not issue a publicly available financial report. Funding Progress - For the year ended June 30, 2016, the Commission has estimated the cost of providing retiree healthcare benefits through the alternative measurement method permitted by GASB Statement 45 for employers in plans with fewer than 100 plan members. The valuation computes an annual required contribution which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. This valuation's computed contribution and actual funding are summarized as follows: Annual required contribution (recommended) $ 421,898 Interest on the prior year's net OPEB obligation 2,118 Less adjustment to the annual required contribution (45,228) Annual OPEB cost 378,788 Amounts contributed: Payments of current premiums (64,745) Advance funding - Increase in net OPEB obligation 314,043 OPEB obligation - Beginning of year 1,058,787 OPEB obligation - End of year $ 1,372,830 32 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 6 - Other Postemployment Benefits (Continued) The annual required contribution, the percentage contributed to the plan, and the net OPEB obligation for the current and two preceding years as well as funding progress are as follows: Annual Required Percentage Net OPEB Fiscal Year Ended Contribution* Contributed Obligation 6/30/16 $ 421,898 15.3 % $ 1,372,830 6/30/15 291,357 28.3 1,058,787 6/30/14 330,416 24.7 879,953 Actuarial Actuarial UAAL as a Value of Accrued Unfunded Funded Ratio Covered Percentage Actuarial Assets Liability AAL(UAAL) (Percent) Payroll of Covered Valuation Date (a) (AAL) (b) (b-a) (a/b) (c) Payroll 6/30/16 $ - $ 3,687,831 $ 3,687,831 - % $ 1,278,377 288.5 % 6/30/15 - 3,575,100 3,575,100 - 1,190,293 300.4 6/30/14 - 3,677,1 18 3,677,1 18 - 1,140,604 322.4 Actuarial Methods and Assumptions -Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented above, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. As of June 30, 2016, the unfunded actuarial liability (UAAL) of $3,628,877 was equal to the actuarial accrued liability (AAL). The following simplifying assumptions were made: Retirement age for active employees - Based on the historical average retirement age for the covered group, active plan members were assumed to retire at age 55, or at the first subsequent year in which the member would qualify for benefits. 33 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 6 - Other Postemployment Benefits (Continued) Marital status - Marital status of members at the calculation date was assumed to continue throughout retirement. As of March 31, 1997, the policy changed to an employee-only benefit without spouse coverage at retirement. Mortality - Life expectancies were based on mortality tables from the National Center for Health Statistics; the 2002 version (Tables 2 and 3 from the National Vital Statistics Reports) for males and for females was used. Turnover - Nongroup-specific age-based turnover data from GASB Statement 45 was used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Healthcare cost trend rate - The expected rate of increase in healthcare insurance premiums was based on projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 5.0 percent was used initially, increased to an ultimate rate of 5.9 percent after six years. Health insurance premiums - 2015 health insurance premiums for retirees were used as the basis for calculation of the present value of total benefits to be paid. Inflation rate - A wage inflation rate of 1.5 percent was used based on Commission budgets averaging from 0 to 2.5 percent. Payroll growth rate - The expected long-term payroll growth rate was assumed to equal the rate of inflation. The Commission expects little return over investment and has used a rate of .20 percent and a simplified version of the entry age actuarial cost method. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2016 was 30 years. Note 7 - Commitments and Contingencies The Commission receives financial assistance from federal and state agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the Commission. However, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the Commission at June 30, 2016. 34 Lansing Housing Commission Notes to Financial Statements June 30, 2016 Note 7 - Commitments and Contingencies (Continued) The collective bargaining five-year agreement between the Housing Commission Employees' and Chapter of Local 1390.11 and Michigan Council #25, AFSCME, AFL- CIO covering approximately 60 percent of the Commission's labor force will be in place from July 1, 2014 through December 31, 2018. Note 8 - Risk Management The Commission is exposed to various risl<s of loss related to property loss, torts, errors and omissions, and employee injuries (worl<ers' compensation), as well as medical benefits provided to employees. The Commission has purchased commercial insurance for all risl<s of loss, included worl<ers' compensation, employee health, and accident insurance. Settled claims relating to the commercial insurance have not exceeded the amount of insurance coverage in any of the past three fiscal years. Note 9 - Concentrations The Commission operates in a heavily regulated environment. The operations of the Commission are subject to the administrative directives, rules, and regulations of federal, state, and local regulatory agencies, including, but not limited to HUD. Such administrative directives, rules, and regulations are subject to change by an Act of Congress or an administrative change mandated by HUD. Such changes may occur with little notice or inadequate funding to pay for the related costs and the additional administrative burden to comply with the changes. For the year ended June 30, 2016, approximately 84 percent of the operating revenue reflected in the primary government basic financial statements is from HUD. Note 10 - Upcoming Accounting Pronouncements In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which addresses reporting by governments that provide postemployment benefits other than pensions (OPEB) to their employees and for governments that finance OPEB for employees of other governments. This OPEB standard will require the Commission to recognize on the face of the financial statements its net OPEB liability related to its retiree healthcare benefits offered to retirees. The statement also enhances accountability and transparency through revised note disclosures and required supplemental information (RSI). The Commission is currently evaluating the impact this standard will have on the financial statements when adopted. The provisions of this statement are effective for the Commission's financial statements for the year ending June 30, 2018. 35 Required Supplemental Information 36 Lansing Housing Commission Required Supplemental Information Schedule of Changes in the Commission's Net Pension Liability and Related Ratios 2016 2015 Total Pension Liability Service cost $ 1 14,272 $ 114,461 Interest 698,614 684,653 Changes in benefit terms - - Differences between expected and actual experience (123,435) - Changes in assumptions 405,966 - Benefit payments, including refunds (635,102) (624,495) Net Change in Total Pension Liability 460,315 174,619 Total Pension Liability- Beginning of year 8,728,461 8,553,842 Total Pension Liability- End of year $ 9,188,776 $ 8,728,461 Plan Fiduciary Net Position Contributions - Employer $ 158,735 $ 215,191 Contributions - Member 55,586 37,167 Net investment income (104,348) 446,261 Administrative expenses (15,480) (16,314) Benefit payments, including refunds (635,102) (624,495) Other - - Net Change in Plan Fiduciary Net Position (540,609) 57,810 Plan Fiduciary Net Position - Beginning of year 7,227,277 7,169,467 Plan Fiduciary Net Position - End of year $ 6,686,668 $ 7,227,277 Commission's Net Pension Liability - Ending $ 2,502,108 $ 1,501,184 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 72.77 % 82.80 % Covered Employee Payroll $ 1,235,367 $ 1,164,556 Commission's Net Pension Liability as a Percentage of Covered Employee Payroll 202.5 % 128.9 % 37 Lansing Housing Commission Required Supplemental Information Schedule of Commission Contributions Calendar Year 2015 2014 Actuarially determined contribution $ 103,079 $ 213,163 Contributions in relation to the actuarially determined contribution 158,735 215,191 Contribution Deficiency $ (55,656) $ (2,028) Covered Employee Payroll $ 1,235,367 $ 1,164,556 Contributions as a Percentage of Covered Employee Payroll 12.8 % 18.5 % Notes to Schedule of Commission Contributions Actuarial valuation information relative to the determination of contributions: Valuation date Actuarially determined contribution rates are calculated as of December 31, two years prior to the end of the fiscal year in which the contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal cost method Amortization method Level percentage of payroll, open Remaining amortization period 25 years Asset valuation method I 0-year smoothed Inflation 3.0 to 4.0 percent Salary increases 4.5 percent, with merit and longevity increases ranging from 0 to 13 percent Investment rate of return 8.0 percent Retirement age 60 Mortality 50 percent male to 50 percent female blend of the 1994 Group Annuity Mortality Table Other information None 38 Other Supplemental Information 39 Lansing Housing Commission Financial Data Schedules Year Ended June 30, 2016 14.238 6.1 Component Public Housing 14.CFP Capital 14.871 Housing Supportive Business Central Office Units- Project Total Funtl Choice Vouchers Housing State/Local Activities Cost Center Subtotal eliminations Total Discretely Program Presented Balance Sheet Assets 111 Cash-Unrestricted $ 2,612,181 $ - $ 487,127 $ 4,239 5 63,583 $ - $ 567,001 $ 3,734,131 $ - $ 3,734,131 $ 30,291 113 Cash-Other restricted - - 984,529 - - - - 984,529 - 984,529 275,431 114 Cash-Tenant security deposits 117,127 - - - - - - 117:127 - 117,127 4,409 115 Cash-Restricted for payment of current liabilities 110,231 - - - - - - 110,231 - 110,231 - 100 Total Cash 2,839,539 - 1,471,656 4,239 63,583 - 567,001 4,946,018 - 4,946,018 310,131 122 Total accounts receivable-HUD other projects 268,550 - - 24,364 - - - 292,914 - 292,914 - 124 Accounts receivable-Other government - - - - 115,459 - - 115,459 - 115,459 - 125 Total accounts receivable-Miscellaneous - - - - - - 99,776 99,776 - 99,776 1,799 126 Accounts receivable-Tenants-Dwelling rents 47,021 - - - - - - 47,021 - 47,021 - 126.1 Allowance for boubtful accounts-Dwelling rents (3,202) - - - - - - (3,202) - (3,202) - 128 Accounts and notes receivable fraud recovery 670 - - - - - - 670 - 670 - 129 Accrued Interest receivable 1,496 - - - - 31,110 - 32,606 - 32,606 - 120 Total Receivables-Net Of Allowances For Doubtful Accounts 314,535 - - 24,364 115,459 31,110 99,776 585,244 - 585,244 1,799 131 Investments-Unrestricted 509,256 - - - - - - 509,256 - 509,256 - 142 Prepaid expenses and other assets 28,540 - 2,548 - - - 18,531 49,619 - 49,619 5,161 144 Interprogram-Due from - - - - - - 902,755 902,755 (902,755) - - 150 Total Current Assets 3,691,870 - 1,474,204 28,603 179,042 31,110 1,588,063 6,992,892 (902,755) 6,090,137 317,091 161 Land 1,364,771 - - - - - 190000 1,554,771 - 1,554,771 685,162 162 Buildings 48,022,801 - - - - - 720:764 48,743,565 - 48,743,565 3,318,485 163 Furniture-Equipment and machinery-Dwellings 1,125,675 - - - - - - 1,125,675 - 1,125,675 - 164 Furniture-Equipment and machinery-Administration - - 27,596 - - - 388,030 415,626 - 415,626 175,949 166 Accumulated depreciation (37,637,437) - (26,891) - - - (773,928) (38,438,256) - (38,438,256) (1,432,717) 167 Construction in progress 2,245,982 - - - - - - 2,245,982 - 2,245,982 12,510 160 Total Fixed Assets-Net Of Accumulated Depreciation 15,121,792 - 705 - - - 524,866 15,647,363 - 15,647,363 2,759,389 171 Total notes-Loans-And mortgages receivable-Noncurrent - - - - - 705,880 203,695 909,575 - 909,575 - 174 Total other assets - - - - - 100 - 100 - 100 43,554 180 Total Noncurrent Assets 15,121,792 - 705 - - 705,980 728,561 16,557,038 - 16,557,038 2,802,943 190 Total Assets 18,813,662 - 1,474,909 28,603 179,042 737,090 2,311,624 23,549,930 (902,755) 22,647,175 3,120,034 200 Deferred outflow of resources 688,244 - 181,076 - - - 122,982 992,302 - 992,302 - 290 Total Assets and Deferred outflow of Resources $ 19,501,906 $ $ 1,655,985 $ 28,603 $ 179,042 $ 737,090 $ 2,439,606 $ 24,542,232 $ (902,755) $ 23,639,477 § 3,120,034 40 Lansing Housing Commission Financial Data Schedules (Continued) Year Ended June 30, 2016 14.238 6.1 Component Public Housing 19.CFP Capital 14.871 Housing Supportive Business Central Office Units- Project Total Fund Choice Vouchers Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely Program Presented Liabilities 312 Accounts payable<=90 Days $ 10,137 $ - $ 30 $ - $ - $ - $ 765 $ 10,932 $ - $ 10,932 $ 3,685 321 Accrued wage/payroll taxes payable 28,832 - 10,223 - - - 10,821 49,876 - 49,876 - 322 Accrued compensated absences-Current portion 6,088 - 1,591 - - - 5,199 12,878 - 12,878 - 331 Total accounts payable-HUD Pha programs 9,194 - - - - - - 9,194 - 9,194 - 333 Accounts payable-Other government 161,903 - - - - - - 161,903 - 161,903 25,067 341 Tenant security deposits 117,127 - - - - - - 117,127 - 117,127 4,499 342 Total deferred revenue 22,864 - - - - - - 22,864 - 22,864 - 343 Total current portion of LTD-capital projects/mortgage revenue bonds 110,231 - - - - - 47,976 158,207 - 158,207 28,367 346 Accrued liabilities-Other 327,130 - 4,640 - - - 6,041 337,811 - 337,811 58,875 347 Interprogram-Due to - - - 23,264 - 879,491 - 902,755 (902,755) - - 310 Total Current Liabilities 793,506 - 16,484 23,264 - 879,491 70,802 1,783,547 (902,755) 880,792 120,493 351 Total LTD-net of current-capital projects/mortgage revenue bonds 1,818,707 - - - - - 474,903 2,293,610 - 2,293,610 2,587,874 353 Noncurrent liabilities-Other - - 31,942 - - - - 31,942 - 31,942 844,902 354 Accrued compensated absences-Non-current 34,497 - 9,015 - - - 29,460 72,972 - 72,972 - 357 Accrued pension and OPEB liabilities 2,559,215 - 859,346 5,482 - - 450,895 3,874,938 - 3,874,938 - 350 Total Noncurrent Liabilities 4,412,419 - 900,303 5,482 - - 955,258 6,273,462 - 6,273,462 3,432,776 300 Total Liabilities 5,205,925 - 916,787 28,746 - 679,491 1,026,060 8,057,009 (902,755) 7,154,254 3,553,269 400 Deferred Inflow of resources 57,075 - 15,016 - - - 10,199 82,290 - 82,290 - Equity 508.1 Invested in capital assets-Net of related debt 13,192,854 - 705 - - - 1,987 13,195,546 - 13,195,546 143,168 511.1 Restricted net assets - - 952 - - - - 952587 - 952587 - 512.1 Unrestricted net assets 1,046,052 - (229:,587 110) (143) 179,042 (142,401) 1,401,360 2,254:800 - 2,254:800 (576,403) 513 Total Equity/Net Assets 14,238,906 - 724,182 (143) 179,042 1 (142,401) 1,403,347 16,402,933 - 16,402,933 (433,235; 600 Total Liabilities And Equity/Net Assets $ 19,501,906 $ - $ 1,655,985 $ 28,603 1$ 179,042 1$ 737,090 $ 2,439,606 $ 24,342,232 1 $ (902,755)1 $ 23,639,477 $ 3,120,034 41 Lansing Housing Commission Financial Data Schedules (Continued) Year Ended June 30, 2016 14.238 6.1 Component Public Housing 14.CFP Capital 14.871 Housing Supportive Business Central Office Units- Project Total Fund Choice Vouchers Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely Program Presented Income Statement Revenue 70300 Net tenant rental revenue $ 1,591,996 $ - $ - $ - $ - $ - $ - $ 1,591,996 $ - $ 1,591,996 $ 82,504 70400 Tenant revenue-Other 125,184 - - - - - - 125,184 - 125,184 25 70500 Total Tenant Revenue 1,717,180 - - - - - - 1,717,180 - 1,717,180 82,529 70600 Total HUD Pha operating grants 3,441,431 769,298 10,340,542 311,531 - - - 14862,802 - 14,862,802 172,653 70610 Capital grants - 2,245,983 - - - - - 2:245,983 - 2,245,983 - 70710 Management fee - - - - - - 1,029,107 1,029,107 (1,029,107) - - 70720 Asset management fee - - - - - - 73,560 73,560 (73,560) - - 70730 Bookkeeping fee - - - - - - 71,723 71,723 (71,723) - - 70750 Other fees - - - - - - - - - - - 70700 Total Fee Revenue - - - - - - 1,174,390 1,174,390 (1,174,390) - - 70800 Other government grants - - - - 747,910 - - 747,910 - 747,910 - 71100 Total investment income-Unrestricted 4,141 - 50 - - 3,288 - 7,479 - 7,479 18,692 71400 Total revenue fraud recovery 1,005 - 3,238 - - - - 4,243 - 4,243 - 71500 Other revenue 116,472 - 50,099 - - - 117,236 283,807 - 283807 - 71600 Gain or loss on sale of fixed assets 367,908 - - - - - 88,613 456,521 - 456:521 - 70000 Total Revenue $ 5,648,137 $ 3,015,281 $ 10,393,929 $ 311,531 $ 747,910 1 $ 3,288 $ 1,380,239 $ 21,500,315 1 $ (1,174,390) $ 20,325,925 $ 273,874 42 Lansing Housing Commission Financial Data Schedules (Continued) Year Ended June 30, 2016 14.238 6.1 Component Public Housing 14.CFP Capital 14.871 Housing Supportive Business Central Office Units- Project Total Fund Choice Vouchers Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely Program Presented Expenses 91100 Administrative salaries $ 259,229 $ - $ 206,874 $ 9,090 $ 24,601 $ - $ 202,222 $ 702,016 $ - $ 702,016 $ 8,508 91200 Auditing fees 74,020 - 91,900 - - - 18,380 184,300 - 184,300 6,300 91300 Management fee 470,212 371,390 187,505 - - - - 1,029,107 (1,029,107) - 20,464 91310 Bookkeeping fee 71,723 - - - - - - 71,723 (71,723) - - 91400 Advertisting and marketing 371 - - - - - 220 591 - 591 - 91500 Employee benefit contributions-Administrative 509,492 - 224,120 2,763 10,993 - 132,765 880,133 - 880,133 - 91600 Office expenses 205,821 - 168,096 - - - 48,037 421,954 - 421,954 1,860 91700 Legalexpense 86,974 - - - - - 1,529 88,503 - 88,503 - 91800 Travel 5,917 - 3,117 - - - 11,576 20,610 - 20,610 - 91900 Other - - 26,386 - 124,045 - 3,987 154,418 - 154,418 8,815 91000 Total Administrative 1,683,759 371,390 907,998 11,853 159,639 - 418,716 3,553,355 (1,100,830) 2,452,525 45,947 92000 Asset management fee 73,560 - - - - - - 73,560 (73,560) - - 92400 Tenant services-Other 21,412 - - - - - 564 21,976 - 21,976 1,400 92500 Total Tenant Services 21,412 - - - - - 564 21,976 - 21,976 1,400 93100 Water 143,523 - 20 - - - 1,173 144,716 - 144,716 18,030 93200 Electricity 199,258 - 910 - - - 9,257 209,425 - 209,425 34,894 93300 Gas 204,634 - 46 - - - 1,592 206,272 - 206,272 14,929 93800 Other utilities expense 196,492 - 16 - - - 999 197,507 - 197,507 4,863 93000 Total Utilities 743,907 - 992 - - - 13,021 757,920 - 757,920 72,716 94100 Ordinary maintenance and operations-Labor 488,640 - - - - - 1,015 489,655 - 489,655 16,736 94200 Ordinary maintenance and operations-Materials and other 491,856 - - - - - 2,121 493,977 - 493,977 6,126 94300 Total ordinary maintenance and operations-Contract costs 1,446,590 - 37,424 - - - 85,102 1,569,116 - 1,569,116 10,733 94500 Employee benefit contributions-Ordinary maintenance 235,431 - - - - - 653 236,084 - 236,084 - 94000 Total Maintenance 2,662,517 - 37,424 - - - 88,891 2,788,832 - 2,788,832 33,595 95200 Protective services-Other contract costs 15,070 - 362 - - - 237 15,669 - 15,669 1,897 96110 Property insurance 122,458 - 313 - - - 3,746 126,517 - 126,517 10,975 96120 Liability insurance 52,401 - 15,464 - - - 1,344 69,209 - 69,209 1,612 96130 Workmens compensation 12,833 - 3,006 - - - 564 16,403 - 16,403 - 96140 All other insurance 21,663 - - - - - 1,733 23,396 - 23,396 96100 Total Insurance Premiums $ 209,355 $ - $ 18,783 $ - $ - $ - $ 7,387 $ 235,525 $ - $ 235,525 $ 12,587 43 Lansing Housing Commission Financial Data Schedules (Continued) Year Ended June 30, 2016 14.238 6.1 Component Public Housing 14.CFP Capital 14.871 Housing Supportive Business Central Office Units- Project Total Fund Choice Vouchers Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely Program Presented 96210 Compensated absences $ 35,929 $ - $ 14,686 $ - $ - 5 - $ 11,424 $ 62,039 $ - $ 62,039 $ - 96300 Payments in lieu of taxes 101,141 - - - - - 144 101,285 - 101,285 4,086 96400 Bad debt-Tenant rents 64,417 - - - - - - 64,417 - 64,417 - 96000 Total Other General Expenses 201,487 - 14,686 - - - 11,568 227,741 - 227,741 4,086 96720 Interest on notes payable(hort and long-term) 73,584 - - - - - 13,160 86,744 - 86,744 93,459 96730 Amortization of bond issue costs - - - - - - - - - - 2,825 96700 Total Interest Expense And Amortization Cost 73,584 - - - - - 13,160 86,744 - 86,744 96,284 96900 Total Operating Expenses 5,684,651 371,390 980,245 11,853 159,639 - 553,544 7,761,322 (1,174,390) 6,586,932 268,512 97000 Excess revenue over operating expenses (36,514) 2,643,891 9,413,684 299,678 588,271 3,288 826,695 13,738,993 - 13,738,993 5,362 97300 Total housing assistance payments - - 9,041,243 299,821 628,150 - - 9,969,214 - 9,969,214 - 97400 Depreciation expense 1,248,163 - 821 - - - 109,344 1,358,328 - 1,358,328 138,802 98000 Total Other Nonoperating Expenses 1,248,163 - 9,042,064 299,821 628,150 - 109,344 11,327,542 - 11,327,542 138,802 90000 Total Expenses 6,932,814 371,390 10,022,309 311,674 787,789 - 662,888 19,088,864 (1,174,390) 17,914,474 407,314 10010 Operating transfers in 397,908 - - - - - - 397,908 - 397,908 - 10020 Operating transfers out - (397,908) - - - - - (397,908) - (397,908) - 10100 Total Other Financing Sources(Uses) 397'90" (397,908) - - - - - - - - - 10000 Excess(Deficiency)Of Total Revenue Over(Under)Total Expenses $ (886,769) $ 2,245,983 1$ 371,620 1 $ (143) $ (39,879)1 $ 3,288 1$ 717,351 $ 2,411,451 $ $ 2,411,451 $ (133,440) 44 Actual Modernization U.S.Department of Housing OMB Approval No.2577-0157(exp.01/31/2017) Cost Certificate and Urban Development Office of Public and Indian Housing Capital Fund Program(CFP) Public reporting burden for this collection of information is estimated to average 2 hours per response,including the time for reviewing instructions,searching existing data sources,gathering and maintaining the data needed,and completing and reviewing the collection of information.Send comments regarding this burden estimate or any other aspect of this collection of information,including suggestions for reducing this burden,to the Reports Management Officer, Paperwork Reduction Project(2577-0044 and 0157),Office of Information Technology,U.S.Department of Housing and Urban Development,Washington, D.C.20410-3600.This agency may not conduct or sponsor,and a person is not required to respond to,a collection of information unless that collection displays a valid OMB control number. Do not send this form to the above address. This collection of information requires that each Housing Authority(HA)submit information to enable HUD to initiate the fiscal closeout process.The information will be used by HUD to determine whether the modernization grant is ready to be audited and closed out.The information is essential for audit verification and fiscal close out.Responses to the collection are required by regulation.The information requested does not lend itself to confidentiality. PHA Name: Modernization Project Number: Lansing Housing Commission M133PO58501-12 The PHA hereby certifies to the Department of Housing and Urban Development as follows: 1. That the total amount of Modernization Cost herein called the"Actual Modernization Cost" of the Modernization Grant,is as shown below: A. Funds Approved $ 1,225,248.00 B. Funds Disbursed $ 1,225,248.00 C. Funds Expended(Actual Modernization Cost) $ 1,225,248.00 D. Amount to be Recaptured(A—C) $ 0 E. Excess of Funds Disbursed(B-C) $ 0 2. That all modernization work in connection with the Modernization Grant has been completed; 3.That the entire Actual Modernization Cost or liabilities therefor incurred by the PHA have been fully paid; 4. That there are no undischarged mechanics', laborers', contractors', or material-men's liens against such modernization work on file in any public office where the same should be filed in order to be valid against such modernization work; 5. That the time in which such liens could be filed has expired;and 6.That for any years in which the grantee is subject to the audit requirements of the Single Audit Act, 31 U.S.C.§7501 et seq.,as amended,the grantee has or will perform an audit in compliance with said requirements. 7. Please mark one: f A. This grant will be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act. J B.This grant will not be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act. I hereby certify that all the information stated herein,as well as any information provided in the accompaniment herewith,is true and accurate. Warning:HUD will prosecute false claims and statements.Conviction may result in criminal and/or civil penalties.(18 U.S.C.1001,1010,1012;31 U.S.C.3729,3802) Name&Title of Authorized Signatory(type or print clearly): Patricia BainQ§-Lake Signature of Executiv Director(or A t torized Designee): Date: X 7 5/6/2016 For HUD Use Only The Cost Certificate is approved for audit(if box 7A is marked): Approved for Audit(Director,Office of Public Housing) Date: X The costs shown above agree with HUD verified costs(if box 7A or 7B is marked): Approved: (Director,Office of Public Housing) Date: X form HUD-53001 (10/96) ref Handbooks 7485.1 &.3 45 Actual Modernization U.S.Department of Housing OMB Approval No.2577-0157(exp.01/31/2017) and Urban Development Cost Certificate Office of Public and Indian Housing Capital Fund Program(CFP) Public reporting burden forthis collection of information is estimated to average 2 hours per response,including the time for reviewing instructions,searching existing data sources,gathering and maintaining the data needed,and completing and reviewing the collection of information.Send comments regarding this burden estimate or any other aspect of this collection of information,including suggestions for reducing this burden,to the Reports Management Officer, Paperwork Reduction Project(2577-0044 and 0157),Office of Information Technology,U.S.Department of Housing and Urban Development,Washington, D.C-20410-3600,This agency may not conductor sponsor,and a person is not required to respond to,a collection of information unless that collection displays a valid OMB control number. Do not send this form to the above address. This collection of information requires that each Housing Authority(HA)submit information to enable HUD to initiate the fiscal closeout process.The information will be used by HUD to determine whether the modernization grant is ready to be audited and closed out.The information is essential for audit verification and fiscal close out.Responses to the collection are required by regulation.The information requested does not lend itself to confidentiality, PHA Name: Modernization Project Number: Lansing Housing Commission M133PO58501-13 The PHA hereby certifies to the Department of Housing and Urban Development as follows: 1. That the total amount of Modernization Cost herein called the"Actual Modernization Cost" of the Modernization Grant,is as shown below: A. Funds Approved $ 1'191,186.00 B. Funds Disbursed $ 1,191,186.00 C. Funds Expended(Actual Modernization Cost) $ 1 1191 186.00 D. Amount to be Recaptured(A—C) $ 0 F. Excess of Funds Disbursed (B-C) $ 0 2.That all modernization work in connection with the Modernization Grant has been completed; 3.That the entire Actual Modernization Cost or liabilities therefor incurred by the PHA have been fully paid; 4. That there are no undischarged mechanics', laborers', contractors', or material-men's liens against such modernization work on file in any public office where the same should be filed in order to be valid against such modernization work; 5. That the time in which such liens could be filed has expired;and 6. That for any years in which the grantee is subject to the audit requirements of the Single Audit Act,31 U.S.C. §7501 et seq.,as amended,the grantee has or will perform an audit in compliance with said requirements. 7. Please mark one: F A. This grant will be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act. J B.This grant will not be included in the PHA's next fiscal year audit per the requirements of the Single Audit Act. I hereby certify that all the information stated herein,as well as any information provided in the accompaniment herewith,is true and accurate. Warning:HUD will prosecute false claims and statements.Conviction may result in criminal andlor civil penalties-(18 U.S.C.1001,1010,1012;31 U.S.C.3729,3802) Name&Title of Authorized Signatory(type or print clearly): Patricia Baines-Lake Signature ive rector(or A prized Designee): Date: X 5/6/2016 For HUD Use Only The Cost Certificate is approved for audit(if box 7A is markedf: Approved for Audit(Director,Office of Public Housing) Date: X The costs shown above agree with HUD verified costs(if box 7A or 7B is marked): Approved: (Director,Office of Public Housing) Date: X form HUD-53001 (10196) ref Handbooks 7485.1 &.3 46