HomeMy WebLinkAboutLEPFA Lansing Entertainment and Public facilities Authority 2022 Audit LANSING ENTERTAINMENT AND PUBLIC
FACILITIES AUTHORITY
REPORT ON FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Maner
Costerisan
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT.........................................................................................................................................1-3
MANAGEMENT'S DISCUSSION AND ANALYSIS....................................................................................................................4-7
BASICFINANCIAL STATEMENTS...................................................................................................................................................8
Statementof Net Position..............................................................................................................................................................9
Statement of Revenues,Expenses,and Changes in Net Position................................................................................10
Statementof Cash Flows..............................................................................................................................................................11
Notesto Financial Statements................................................................................................................................................12-20
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS.....................................................................................................................21-22
2425 E.Grand River Ave.,
(00*M a n e r Suite 1,Lansing,MI 48912
2 517.323.7500
CosterisanED 517.323.6346
INDEPENDENT AUDITOR'S REPORT
The Honorable Mayor,Members of the City Council,and
Members of the Board of Commissioners of the
Lansing Entertainment and Public Facilities Authority
Lansing,Michigan
Opinions
We have audited the accompanying financial statements of the business-type activities and each major fund of
the Lansing Entertainment and Public Facilities Authority (the Authority), a discretely presented component
unit of the City of Lansing, Michigan, as of and for the year ended June 30, 2022, and the related notes to the
financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the business-type activities and each major fund of the Lansing Entertainment and Public
Facilities Authority as of June 30,2022,and the respective changes in financial position and cash flows thereof for
the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
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 Govern men tAuditing Standards,issued by
the Comptroller General of the United States. Our responsibilities under those standards are further described
in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required
to be independent of the Authority and to meet our other ethical responsibilities,in accordance with the relevant
ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Authority and do not purport to, and do not
present fairly the financial position of the City of Lansing, Michigan,as of June 30, 2022, and the changes in its
financial position for the years then ended, in conformity with accounting principles generally accepted in the
United States of America.Our opinion is not modified with respect to this matter.
Change in Accounting Principle
As discussed in Note 13 to the financial statements, in 2022 the Authority adopted new accounting guidance,
GASB Statement No.87,Leases. Our opinions are not modified with respect to this matter.
1
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the Authority's ability to continue as a
going concern for twelve months beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a
guarantee that an audit conducted in accordance with generally accepted auditing standards and Government
Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are
considered material if there is a substantial likelihood that,individually or in the aggregate,they would influence
the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing
Standards,we:
➢ Exercise professional judgment and maintain professional skepticism throughout the audit.
➢ Identify and assess the risks of material misstatement of the financial statements,whether due to fraud
or error,and design and perform audit procedures responsive to those risks. Such procedures include
examining,on a test basis,evidence regarding the amounts and disclosures in the financial statements.
➢ Obtain an understanding of internal control relevant to the audit 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 Authority's internal control. Accordingly,no such opinion is expressed.
➢ Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management,as well as evaluate the overall presentation of the financial
statements.
➢ Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the Authority's ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related matters
that we identified during the audit.
2
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and other required supplementary information,as identified in the table of contents,be
presented to supplement the basic financial statements. Such information is the responsibility of management
and,although not a part of the basic financial statements,is required by the Governmental Accounting Standards
Board who 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 supplementary 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 Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards,we have also issued our report dated December 19, 2022,
on our consideration of the Authority'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 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 Authority's internal control over financial reporting and compliance.
December 19, 2022
3
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the Lansing Entertainment and Public Facilities Authority(the"Authority")we offer readers
of the Authority's financial statements this narrative overview and analysis of the financial activities of the
Authority for the fiscal year ended June 30,2022.
Financial Highlights
Total net position $ 1,710,613
Change in total net position 1,163,183
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the Authority's basic financial statements.
The basic financial statements are comprised of:
➢ The statement of net position presents information on all of the Authority's assets and liabilities,with the
difference between the two reported as net position. Over time, increases or decreases in net position
may serve as a useful indicator of whether the financial position of the Authority is improving or
deteriorating.
➢ The statement of revenues, expenses, and changes in net position presents information showing how the
Authority's net position changed during the most recent fiscal year. All changes in net position are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cashflows. Thus,revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods.
➢ The statement of cash flows presents the change in the Authority's cash and cash equivalents for the most
recent fiscal year.
➢ The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided in the basic financial statements.
Financial Analysis
As noted earlier,net position may serve over time as a useful indicator of a government's financial position. In
the case of the Authority,assets exceeded liabilities by$1,710,613 at the close of the most recent fiscal year.
By far the largest portion of the Authority's net position (93.8%) is its unrestricted net position which may be
used to meet the Authority's ongoing obligations to system users and creditors.
Another portion of net position (4.7%) is restricted by contractual agreement to maintain in an event
development cash reserve for Jackson Field to provide a source of monies from which to finance events at the
Jackson Field.
The remaining portion of the net position (1.5%) is its investment in capital assets (e.g., machinery and
equipment, and right to use assets);less any related debt used to acquire those assets that is still outstanding.
The Authority uses these capital assets to provide services;consequently,these assets are not available for future
spending.
At the end of the current fiscal year, the Authority is able to report positive balances in all categories of net
position. The same situation held true for the prior fiscal year.
4
Center Park Productions reported a net position of $259,811. The primary purpose of the Center Park
Productions fund is to record the activity of the Common Ground Musical Festival,an event that occurs each year
in July. Historically,the event has generated a loss.
Net Position
2022 2021
Assets
Current and other assets $ 3,302,209 $ 3,496,242
Capital assets,net 86,948 18,570
Total assets 3,389,157 3,514,812
Current liabilities 1,657,979 2,248,406
Non-Current Liabilities 20,565 718,976
Total Liabilities 1,678,544 2,967,382
Net Position
Net investment in capital assets 25,864 18,570
Restricted 80,000 80,000
Unrestricted 1,604,749 448,860
Total net position $ 1,710,613 $ 547,430
Change in Net Position
2022 2021
Operating revenues $ 5,428,872 $ 1,940,191
Operating expenses 6,485,452 3,070,425
Operating loss (1,056,580) (1,130,234)
Nonoperating revenues 2,219,763 1,393,355
Income (loss) before transfers 1,163,183 263,121
Transfers in (out) - -
Change in net position 1,163,183 263,121
Net position,beginning of year 547,430 284,309
Net position,end of year $ 1,710,613 $ 547,430
5
The Authority's net position increased by$361,539 for fiscal year 2022, compared to an increase of$263,121
for fiscal year 2021. Key elements of the 2022 increase include:
➢ Revenues of the Authority increased overall;however,the Lansing Center and Groesbeck Golf Course saw
increases in revenues due to the increase ability to host activities due to the removal of restriction from
the pandemic. Jackson Field returned to normal operating conditions but saw significant increases in
operating expenses due to restrictions in funding to maintain the facility during the pandemic. Deferred
maintenance at all facilities caused additional increases in maintenance expenses. The return to events at
all properties created increases in staffing and expense for hiring and training staff increased as well. Grant
funds help sustain operations while revenues increased. Continued concerns over the inflation and
challenges associated with expenses(healthcare costs,labor costs,food costs,utilities,etc.)rising and still
being able to maintain competitively in the industry while trying hard to provide a good product. Concerns
over the overall conditions of the Lansing Center,Jackson Field,and Groesbeck Golf Course still exist and
funding is desperately needed to stay up to industry standards and competitive for business.
Capital Assets
The Authority's investment in capital assets as of June 30, 2022 amounted to $86,948 (net of accumulated
depreciation). Total net capital assets increased by $32,930. The decrease is due to there being a $6,500
purchase for the Groesbeck Golf Course,$8,619 for the Lansing Center,and$54,371 disposal for the City Market
of in the current year.
Restated Net
Balance Additions/ Balance
June 30,2021 Deletions June 30,2022
Capital assets being depreciated/amortized
Machinery and equipment $ 1,418,204 $ (39,252) $ 1,378,952
Right to use-machinery and equipment 101,308 - 101,308
Total assets being depreciated/amortized 1,519,512 (39,252) 1,480,260
Less accumulated depreciation/amortization
Machinery and equipment (1,399,634) 47,761 (1,351,873)
Right to use-machinery and equipment - (41,439) (41,439)
Total accumulated depreciation/amortization (1,399,634) 6,322 (1,393,312)
Capital assets,net $ 119,878 $ (32,930) $ 86,948
Additional information on the Authority's capital assets can be found in Note 5 of this report.
Long-term Obligations
Restated Net
Balance Additions/ Balance
July 1,2021 Deletions June 30, 2022
Governmental Activities
Direct borrowings and direct placements $ 101,308 $ (40,224) $ 61,084
Additional information on the Authority's long-term obligation can be found in Note 7 of this report.
6
Economic Factors Affecting Next Year's Operations
The Authority is still concerned about several economic factors for all LEPFA managed properties heading into
FY 2022-23. Post-pandemic attendance at events has been erratic due to concerns over continued safety.
Additionally, consumer spending is concerning due to uncertainty of the economy and inflation. Continued
increases to expenses at the Authority include costs of good,labor,utilities,and employee benefits. Supply chain
issues and staffing shortages continue to be a concern heading into this fiscal year.
The Authority does believe that events will continue to be held and plans to focus on strategic plans that involve
growth and investment in the facilities,events,and staff. There is a strong schedule of activity at all properties,
and we are focused on overcoming the challenges with staffing and increased costs. Supply chain issues continue
to be monitored and are expected to impact pricing and availability of food and beverage product offerings to
our clients. There is a focus on evolving foodservice operations to help offset some of these challenges while still
delivering great service to our customers.
Requests for Information
This financial report is designed to provide a general overview of the Authority's finances for all those with an
interest in the Authority's finances. Questions concerning any of the information provided in this report or
requests for additional financial information should be addressed to the Lansing Entertainment and Public
Facilities Authority,333 E.Michigan Avenue,Lansing,Michigan 48933.
7
BASIC FINANCIAL STATEMENTS
s
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
STATEMENT OF NET POSITION
JUNE 30,2022
Lansing Jackson Groesbeck Center Park
Center Field Golf Course Productions Total
ASSETS
Current Assets
Cash and cash equivalents $ 641,360 $ 181,484 $ 944,232 $ 21,536 $ 1,788,612
Cash and cash equivalents-restricted - 80,000 - - 80,000
Receivables,net 749,756 141,730 1,661 227,118 1,120,265
Due from other funds 171,766 6,747 - - 178,513
Prepaid items 32,736 7,645 10,154 12,063 62,598
Inventory 60,572 - 11,649 - 72,221
Total Current Assets 1,656,190 417,606 967,696 260,717 3,302,209
Noncurrent Assets
Capital assets,net 8,188 - 78,760 - 86,948
TOTAL ASSETS 1,664,378 417,606 1,046,456 260,717 3,389,157
LIABILITIES
Current Liabilities
Accounts payable 202,016 345,610 27,245 906 575,777
Accrued liabilities 397,262 719 5,761 - 403,742
Due to other funds 6,747 38,231 133,535 178,513
Current portion of long-term obligations - - 40,519 40,519
Unearned revenue 387,779 71,649 459,428
Total Current Liabilities 993,804 384,560 278,709 906 1,657,979
Noncurrent Liabilities
Long-term obligations,net of current portion - - 20,565 - 20,565
TOTAL LIABILITIES 993,804 384,560 299,274 906 1,678,544
NET POSITION
Net investment in capital assets 8,188 - 17,676 - 25,864
Restricted for Jackson Field events - 80,000 - - 80,000
Unrestricted 662,386 (46,954) 729,506 259,811 1,604,749
TOTAL NET POSITION $ 670,574 $ 33,046 $ 747,182 $ 259,811 $ 1,710,613
See accompanying notes to financial statements.
9
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION
YEAR ENDED JUNE 30,2022
Lansing Jackson Groesbeck Center Park
Center Field Golf Course Productions Total
OPERATING REVENUES
Intergovernment-state $ 300,000 $ $ $ $ 300,000
Building rental 747,078 747,078
Security 43,036 43,036
Food services 1,737,763 122,155 1,859,918
Equipment rental 717,515 204,557 922,072
Box office 10,851 - 10,851
Labor/service 249,966 249,966
Trade show utilities 83,317 - 83,317
Greens fees - 514,225 514,225
Sponsorships - - 4,150 4,150
PPP loan forgiveness 507,700 - - 507,700
Other 178,522 (12,386) 20,193 230 186,559
TOTAL OPERATING REVENUES 4,575,748 (12,386) 861,130 4,380 5,428,872
OPERATING EXPENSES
Personnel services 1,718,316 158,528 491,351 2,938 2,371,133
Food and beverage 1,061,382 - 60,723 - 1,122,105
Communications 22,758 7,107 12,209 42,074
Rents 21,380 - 17,552 - 38,932
Professional services 375,573 1,200 19,529 3,800 400,102
Utilities 920,459 207,940 22,817 - 1,151,216
Marketing 85,123 787 14,565 100,475
Repairs and maintenance 119,273 112,363 43,517 275,153
Supplies and materials 76,152 3,158 66,634 145,944
Insurance 87,947 24,478 14,013 - 126,438
Events 535,929 - - 30,005 565,934
Security 6,392 - - 6,392
Depreciation/amortization 431 47,618 48,049
Bad debt expense 12,002 - - 12,002
Other 55,924 23,579 - 79,503
TOTAL OPERATING EXPENSES 5,099,041 539,140 810,528 36,743 6,485,452
OPERATING INCOME(LOSS) (523,293) (551,526) 50,602 (32,363) (1,056,580)
NONOPERATING REVENUES
Annual operating subsidy-City of Lansing 975,000 479,500 85,100 1,539,600
Pass-through of hotel/motel tax collections from
Greater Lansing Convention and Visitors Bureau 680,163 - - 680,163
TOTAL NONOPERATING REVENUES 1,655,163 479,500 85,100 2,219,763
INCOME(LOSS)BEFORE TRANSFERS 1,131,870 (72,026) 135,702 (32,363) 1,163,183
Transfers in(out) (770,331) - 770,331 -
CHANGE IN NET POSITION 361,539 (72,026) 135,702 737,968 1,163,183
Net Position(deficit),beginning of year 309,035 105,072 611,480 (478,157) 547,430
Net Position,end of year $ 670,574 $ 33,046 $ 747,182 $ 259,811 $ 1,710,613
See accompanying notes to financial statements.
10
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30,2022
Lansing Jackson Groesbeck Center Park
Center Field Golf Course Productions Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers $ 2,818,579 $ 208,399 $ 868,225 $ 4,380 $ 3,899,583
Cash receipts from other governmental agencies 300,000 - - - 300,000
Cash payments for goods and services (3,538,799) (397,771) (259,964) (41,967) (4,238,501)
Cash payments to employees (1,578,418) (158,528) (493,865) (2,938) (2,233,749)
Cash receipts(payments)for interfund services 633,817 2,970 78,689 (718,976) (3,500)
NET CASH PROVIDED(USED)BY
OPERATING ACTIVITIES (1,364,821) (344,930) 193,085 (759,501) (2,276,167)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash transfers from the City of Lansing 975,000 479,500 85,100 - 1,539,600
Transfer from/(to)other funds (770,331) 770,331 -
Cash transfers from the Convention and Visitors Bureau 680,163 - - - 680,163
NET CASH PROVIDED BY NONCAPITAL
FINANCING ACTIVITIES 884,832 479,500 85,100 770,331 2,219,763
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Payments related to lease payable - - (40,224) - (40,224)
Payments for acquisition of capital assets (8,619) (6,500) (15,119)
NET CASH(USED)BY CAPITAL
AND RELATED FINANCING ACTIVITIES (8,619) - (46,724) - (55,343)
NET INCREASE(DECREASE)IN CASH
AND CASH EQUIVALENTS (488,608) 134,570 231,461 10,830 (111,747)
Cash and cash equivalents,beginning of year 1,129,968 126,914 712,771 10,706 1,980,359
Cash and cash equivalents,end of year $ 641,360 $ 261,484 $ 944,232 $ 21,536 $ 1,868,612
Reconciliation of operating income(loss)to net cash
provided(used)by operating activities
Operating income(loss) $ (523,293) $ (551,526) $ 50,602 $ (32,363) $ (1,056,580)
Adjustments to reconcile operating income(loss)to
net cash provided(used)by operating activities
Depreciation/amortization 431 - 47,618 48,049
(Increase)/decreasein:
Accounts receivable (582,232) 60,285 (1,255) (523,202)
Due from other funds (88,270) (6,747) 136 (94,881)
Prepaid items 721 (1,353) (1,343) (1,975)
Inventory (9,369) - (3,763) (13,132)
Increase/(decrease)in:
Accounts payable (149,857) 144,694 16,701 (8,162) 3,376
Accrued liabilities 139,898 - (2,514) 137,384
Due to other funds 6,611 9,717 78,553 94,881
Advance to/from other funds 715,476 - - (718,976) (3,500)
Unearned revenue (874,937) - 8,350 - (866,587)
NET CASH PROVIDED(USED)BY
OPERATING ACTIVITIES $ (1,364,821) $ (344,930] $ 193,085 $ (759,501) $ (2,276,167)
See accompanying notes to financial statements.
11
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -DESCRIPTION OF AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
The Lansing Entertainment and Public Facilities Authority(the"Authority") was established under the charter
of the City of Lansing in February 1996,replacing the former Greater Lansing Convention/Exhibition Authority.
The Authority was established to oversee the management and operations of the Lansing Center,Jackson Field,
and Groesbeck Golf Course under an agreement with the City of Lansing.
The Authority is chartered as a building authority under the provisions of Act 31,Public Acts of Michigan, 1948.
In the event of dissolution or termination of the Authority, all assets and rights of the Authority shall revert to
the City of Lansing. The Authority's Board of Commissioners consists of nine members appointed by the Mayor
of the City of Lansing and approved by the City Council,and three ex-officio members.
Center Park Productions,a not-for-profit entity,was organized to perform activities in support and furtherance
of the purposes of its sole member, Lansing Entertainment and Public Facilities Authority, and is therefore
reported as a blended component unit of the Authority. The Entity's Board of Directors consists of six members
appointed by the Board of Directors of the Authority. Center Park Productions is presented in the accompanying
financial statements on its fiscal year end of December 31.
The Authority is a discretely presented component unit of the City of Lansing.
Measurement Focus.Basis of Accounting.and Basis of Presentation
The proprietary fund financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability
is incurred,regardless of the timing of related cash flows.
The financial statements present the Authority's individual major funds. The major individual enterprise funds
are reported as separate columns in the financial statements. The Authority reports the Lansing Center,Jackson
Field,Groesbeck Golf Course,and Center Park Productions enterprise funds as major funds. Each fund accounts
for the activities of its respective facility/event.
Enterprise funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
and expenses generally result from providing services and producing and delivering goods in connection with
an enterprise fund's principal ongoing operations. The principal operating revenues of the enterprise funds are
charges to customers for facility rentals, sales, and services. Operating expenses for enterprise funds include
the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as nonoperating revenues and expenses. Also with this
measurement focus, all assets, deferred outflows of resources, liabilities, and deferred inflows of resources
associated with the operation of this fund are included on the Statement of Net Position. Fund equity(i.e.,net
position) is segregated into net investment in capital assets,restricted,and unrestricted components.
12
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 1-DESCRIPTION OF AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Assets,Liabilities.and Equity
Deposits and Investments
The Authority's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term
investments with original maturities of three months or less from the date of acquisition. State statutes
authorize governments to deposit in the accounts of federally insured banks,credit unions,and savings and loan
associations,and to invest in obligations of the U.S.Treasury,certain commercial paper,repurchase agreements,
bankers'acceptances,and mutual funds composed of otherwise legal investments.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of
the fiscal year are referred to as either"due to/from other funds" (i.e.,the current portion of interfund loans).
Other receivables,generated in the normal course of providing services to customers,are shown net of doubtful
accounts where applicable. Payables are related to amounts due and payable at year-end for liabilities incurred
and paid for subsequent to year-end.
Inventory and Prepaid Items
Inventory is valued at cost using the first-in/first-out(FIFO) method. Certain payments to vendors reflect costs
applicable to future accounting periods and are recorded as prepaid items.
Capital Assets
Capital assets are limited to equipment and right to use assets. Equipment is stated at cost and depreciated using
the straight-line method over the estimated useful lives of the assets ranging from three to ten years. Right to
use assets of the Authority are amortized using the straight-line method over the shorter of the lease period or
the estimated useful lives, which is three years. Capital assets are defined by the Authority as assets with an
initial,individual cost of more than$500 and an estimated useful life of three years. Facilities managed by the
Authority are owned by the City of Lansing and,as such,the carrying values of these properties are reflected in
the City's financial statements. The costs of normal maintenance and repairs that do not add to the value of the
asset or materially extend asset lives are not capitalized.
Unearned Revenue
Unearned revenue consists of amounts received prior to the delivery of goods/service or expenditure for
allowable costs. Unearned revenue also consists of funds received from state government for a grant where
funds were received but expenditures were not allocated in order to recognize the full amount of grant funds
received.
13
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 1-DESCRIPTION OF AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Assets,Liabilities.and Equity(continued)
Cash and Cash Equivalent Reserves
Under the terms of the Authority's operating agreement with the City of Lansing, the Authority is required to
restrict$50,000 annually for capital improvements and/or replacements. Any such monies unexpended shall
be carried forward to future years. For the year ended June 30,2022,all such restricted monies were expended
on capital improvements,leaving a zero balance in restricted assets for capital improvements at year end.
Under an amendment to the operating agreement with the City of Lansing, the Authority is also required to
maintain an event development cash reserve fund for Jackson Field to provide a source of monies from which to
finance events at the Jackson Field. The fund was established by an initial contribution from the City and may
be increased up to certain limits by the amount of any profits earned from such events. Restricted assets for
event development amounted to $80,000 at June 30, 2022. An equal amount of net position is reported as
restricted on the statement of net position.
The Authority's Board of Commissioners has also established a cash reserve account to ensure reasonable liquidity
for Lansing Center operations. The balance of this cash reserve as of June 30, 2022 was $350,324 and has been
formally set aside by the Board of Commissioners as designated for the above purpose. Generally,the reserve is
intended to provide up to 60 days of operating cash (which would be approximately $860,000 under normal
operating conditions if fully funded). The account is adjusted annually for the prior year operating results.
Leases
Lessee: The Authority is a lessee for noncancelable leases of equipment. The Authority recognizes a lease
liability and an intangible right-to-use lease asset in the statement of net position. The Authority recognizes
lease liabilities with an initial, individual value that it considers significant to the statement of net position, or
with annual lease payments that are considered significant to the fund in which they are accounted for.
At the commencement of a lease, the Authority initially measures the lease liability at the present value of
payments expected to be made during the lease term. Subsequently,the lease liability is reduced by the principal
portion of lease payments made. The leased asset is initially measured as the initial amount of the lease liability,
adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs.
Subsequently,the leased asset is amortized on a straight-line basis over its useful life.
Key estimates and judgements related to leases include how the Authority determines (1) the discount rate it
uses to discount the expected lease payments to present value, (2) lease term,and(3)lease payments.
➢ The Authority uses the interest rate charged by the lessor as the discount rate. When the interest rate
charged by the lessor is not provided,the Authority generally uses its estimated incremental borrowing
rate as the discount rate for leases.
➢ The lease term includes the noncancelable period of the lease. Lease payments included in the
measurement of the lease liability are composed of fixed payments and purchase option price that the
Authority is reasonably certain to exercise.
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LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Assets,Liabilities,Deferred Outflows/Inflows of Resources,and Net Position/Fund Balance (continued)
Leases(continued)
The Authority monitors changes in circumstances that would require a remeasurement of its leases and will
remeasure the leased asset and liability if certain changes occur that are expected to significantly affect the
amount of the lease liability.
Leased assets are reported with other capital assets and lease liabilities are reported with long-term obligations
on the statement of net position.
NOTE 2 -DEPOSITS AND INVESTMENTS
In accordance with Michigan Compiled Laws,the Authority is authorized to invest in the following investment
vehicles:
a. Bonds,securities,and other obligations of the United States or an agency or instrumentality of the United
States.
b. Certificates of deposit,savings accounts,deposit accounts,or depository receipts of a State or nationally
chartered bank or a State or Federally chartered savings and loan association, savings bank, or credit
union whose deposits are insured by an agency of the United States government and which maintains a
principal office or branch office located in this State under laws of this State or the United States, but
only if the bank,savings and loan association,savings bank or credit union is eligible to be a depository
of surplus funds belonging to the State under Section 6 of 1855 PA 105,MCL 21.146.
c. Commercial paper rated at the time of purchase within the three highest classifications established by
not less than two standard rating services and which matures more than 270 days after the date of
purchase.
d. The United States government or Federal agency obligations repurchase agreements.
e. Bankers acceptances of United States Banks.
f. Mutual funds composed of investment vehicles, which are legal for direct investment by local units of
government in Michigan.
15
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 2 -DEPOSITS AND INVESTMENTS (continued)
A reconciliation of cash and cash equivalents as shown on the statement of net position follows:
Statement of net position
Cash and cash equivalents $ 1,788,612
Cash and cash equivalents-restricted 80,000
Total $ 1,868,612
Deposits and investments
Bank deposits-checking and savings accounts 1,834,754
Cash on hand 33,858
Total $ 1,868,612
Interest Rate Risk
State law limits the allowable investments and the maturities of some of the allowable investments as identified
in the summary of significant accounting policies. The Authority's investment policy does not have specific limits
in excess of state law on investment maturities as a means of managing its exposure to fair value losses arising
from increasing interest rates.
Credit Risk
State law limits investments to specific government securities, certificates of deposits and bank accounts with
qualified financial institutions, commercial paper with specific maximum maturities and ratings when
purchased,bankers acceptances of specific financial institutions, qualified mutual funds and qualified external
investment pools as identified in the list of authorized investments in the summary of significant accounting
policies. The Authority's investment policy does not have specific limits in excess of state law on investment
credit risk.
Custodial Credit Risk-Deposits
Custodial credit risk is the risk that in the event of a bank failure,the Authority's deposits may not be returned.
State law does not require,and the Authority does not have a policy for deposit custodial credit risk. As of year
end, $1,666,822 of the Authority's bank balance of$1,916,822 was exposed to custodial credit risk because it
was uninsured and uncollateralized.
The Authority's investment policy does not specifically address this risk, although the Authority believes that
due to the dollar amounts of cash deposits and the limits of FDIC insurance,it is impractical to insure all bank
deposits. As a result,the Authority evaluates each financial institution with which it deposits Authority funds
and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level
are used as depositories.
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LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 3 -TRANSACTIONS WITH THE CITY OF LANSING
For the year ended June 30, 2022,the City of Lansing provided annual operating subsidies to the Authority in
the amount of$1,539,600 for the Lansing Center,Jackson Field,and Groesbeck Golf Course Funds.
NOTE 4-RECEIVABLES
Receivables are composed entirely of amounts due from customers (net of an allowance for doubtful accounts
in the amount of$25,280) and the City of Lansing. Accounts receivable as of June 30,2022,were as follows:
Accounts receivable,net $ 896,570
Accounts receivable-City of Lansing 223,695
Total receivables $ 1,120,265
NOTE 5 -CAPITAL ASSETS
Capital assets activity for the year ended June 30,2022,was as follows:
As restated
Balance Balance
July 1,2021 Additions Deletions June 30,2022
Capital assets being depreciated/amortized
Machinery and equipment $ 1,418,204 $ 15,119 $ (54,371) $ 1,378,952
Right to use-machinery and equipment 101,308 - 101,308
Total assets being depreciated/amortized 1,519,512 15,119 (54,371) 1,480,260
Less accumulated depreciation/amortization
Machinery and equipment (1,399,634) (6,610) 54,371 (1,351,873)
Right to use-machinery and equipment (41,439) - (41,439)
Total accumulated depreciation/amortization (1,399,634) (48,049) 54,371 (1,393,312)
Capital assets,net $ 119,878 $ (32,930) $ - $ 86,948
NOTE 6-PAYABLES
Accounts payable is composed entirely of amounts due to vendors. Accrued liabilities include wages payable,
payroll taxes payable,insurance payable and benefits payable.
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LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 7-LONG-TERM OBLIGATIONS
The following is a summary of long-term obligations for the Authority for the year ended June 30,2022:
As restated Amounts
Balance Balance Due Within
July 1,2021 Additions Deletions June 30,2022 One Year
Business-type Activities
Direct borrowings and
direct placements $ 101,308 $ - $ (40,224) $ 61,084 $ 40,519
Long-term obligations at June 30,2022 are comprised of the following issues:
Direct Borrowing and Direct Placement
$96,614 Golf Car lease dated April 2021, due in annual installments of$37,045
through October 2023,with imputed interest of 2.00%, payable bi-monthly six
times per year. $ 58,254
$4,694 Golf Car lease dated April 2021, due in annual installments of $1,800
through October 2023,with imputed interest of 2.00%, payable bi-monthly six
times per year. 2,830
$ 61,084
The Authority's outstanding notes from direct borrowings and direct placements related to governmental activities
of $61,084 contains provisions that in an event of default, either by (1) unable to make principal or interest
payments(2)false or misrepresentation is made to the lender(3)become insolvent or make an assignment for the
benefit of its creditors (4) if the lender at any time in good faith believes that the prospect of payment of any
indebtedness is impaired. Upon the occurrence of any default event,the outstanding amounts,including accrued
interest become immediately due and payable.
The annual requirements to amortize long-term obligations outstanding,including interest of$1,073 as of June 30,
2022,are as follows:
Direct Borrowings
Year Ending and Direct Placements
June 30, Principal Interest
2023 $ 40,519 $ 919
2024 20,565 154
$ 61,084 $ 1,073
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LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 8-INTERFUNDS
Short-term interfund receivables and payables are considered due to and due from other funds. These amounts
due from and to other funds at year-end are as follows:
Due From Due To
Other Funds Other Funds
Lansing Center Fund $ 171,766 $ 6,747
Jackson Field Fund 6,747 38,231
Groesbeck Golf Course Fund - 133,535
$ 178,513 $ 178,513
The outstanding balances between funds results mainly from the time lag between the dates that(1) interfund
goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the
accounting system,and(3)payments between funds are made.
The Authority had transfers throughout the year from the Lansing Center to Central Parks Productions to write-
off previous interfund receivable/payables in the amount of$770,331
NOTE 9-DEFINED CONTRIBUTION PENSION PLAN
The Authority has a defined contribution pension plan covering substantially all full-time employees who have
completed 120 days of employment. The Authority contributes 12% of participating employees' annual
compensation to the plan. Effective January 1, 2003, employees are required to contribute 7.5% of covered
wages as defined in the plan; prior to that date, no employee contributions to this plan were required. Such
current employee contributions are in lieu of federal social security participation. Plan provisions and
contribution requirements are established and may be amended by the Authority's Board of Commissioners.
Employee contributions for the year ended June 30,2022 were$182,403. Employer contributions for the year
ended June 30,2022 were$102,661. At June 30,2022,there were 31 employees participating in the plan.
NOTE 10 - CONDITIONAL CONTRIBUTION
The COVID-19 outbreak in the United States caused business and government disruptions through mandated
and voluntary closings. On April 17, 2020,the Authority applied for and received a conditional contribution in
the amount of $507,700 under the CARES Act through the Paycheck Protection Program. The Authority
determined it was eligible to receive the conditional contribution. The Authority recognized the conditional
contribution as revenue as the necessary requirements were met and the loan was forgiven in the current year.
NOTE 11-RISK MANAGEMENT
The Authority is exposed to various risks of loss including losses related to issues of cyber security, liability,
liquor liability,flood,inland marine,directors and officers liability,property,employee bonding,auto,crime,and
worker' compensation which is covered through the Authority s insurance policies. The Authority carries
commercial insurance to cover these risks. Settled claims relating to the commercial insurance have not
exceeded the amount of insurance coverage during the past three years.
19
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 12-UPCOMING ACCOUNTING PRONOUNCEMENT
In May 2020,the GASB issued Statement No.96,Subscription-based Information Technology Arrangements. This
Statement provides guidance on the accounting and financial reporting for subscription-based information
technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a
SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset - an intangible asset - and a
corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription
payments,including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To
the extent relevant,the standards for SBITAs are based on the standards established in Statement No.87,Leases,
as amended. The Authority is currently evaluating the impact this standard will have on the financial statements
when adopted during the 2022-2023 fiscal year.
NOTE 13 -CHANGE IN ACCOUNTING PRINCIPLE
For the year ended June 30, 2022, the Authority implemented the following new pronouncement: GASB
Statement No.87,Leases.
Summary:
Governmental Accounting Standards Board(GASB)Statement No.87,Leases,was issued by the GASB in June 2017.
The objective of this Statement is to increase the usefulness of governments' financial statements by requiring
recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and
recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It
establishes a single model for lease accounting based on the foundational principle that leases are financings of the
right to use the underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an
intangible right-to-use lease asset,and a lessor is required to recognize a lease receivable and a deferred inflow of
resources,thereby enhancing the relevance and consistency of information about governments'leasing activities.
The restatement of the beginning of year had no impact on net position. The change capital assets and long-term
obligations is as follows:
Long-term
Capital Asset Obligations
Balances as of July 1,2021,as previously stated $ 18,570 $ -
Adoption of GASB Statement 87 101,308 101,308
Balances as of July 1,2022,as restated $ 119,878 $ 101,308
20
2425 E.Grand River Ave.,
(00*M a n e r Suite 1,Lansing,MI 48912
2 517.323.7500
CosterisanED 517.323.6346
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
The Honorable Mayor,Members of the City Council,and
Members of the Board of Commissioners of the
Lansing Entertainment and Public Facilities Authority
Lansing,Michigan
We have audited,in accordance with the 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,the financial statements of the business-type activities and each major
fund of Lansing Entertainment and Public Facilities Authority(the Authority),as of and for the year ended June
30,2022,and the related notes to the financial statements,which collectively comprise Lansing Entertainment
and Public Facilities Authority's basic financial statements and have issued our report thereon dated December
19,2022.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements,we considered the Authority's internal control
over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements,but not for the purpose of
expressing an opinion on the effectiveness of the Authority's internal control. Accordingly,we do not express
an opinion on the effectiveness of the Authority's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency,or a combination of deficiencies,in internal
control, such that there is a reasonable possibility that a material misstatement of the Authority's financial
statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a
deficiency,or a combination of deficiencies,in internal control that is less severe than a material weakness,yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not
identified. We identified a certain deficiency in internal control, described below as item 2022-001, that we
consider to be a material weakness:
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2022-001 MATERIAL JOURNAL ENTRIES PROPOSED BY AUDITORS
Condition: Material journal entries to properly adjust the due from other governmental units,accounts payable,
and unearned revenue were proposed by the auditors. These entries were prepared by the auditors and
provided to management, who agreed to them and were subsequently recorded in the Authority's general
ledger.
Criteria: Management is responsible for establishing,maintaining,and monitoring internal controls,and for the
fair presentation in the financial statements of financial position, results of operations, and cash flows (where
applicable),including the recording of all appropriate journal entries so that the trial balances,from which the
audited financial statements are prepared, reflect amounts that are in conformity with U.S.generally accepted
accounting principles.
Cause: These misstatements were not identified as part of the Authority's internal control procedures.
Effect: Without the recording of these journal entries the financial statements would have been materially
misstated.
Recommendation: We recommend that the Authority take steps to assure that material journal entries are no
necessary at the time future audit analysis is performed.
Corrective Action Response: The Authority strives to perform necessary material journal entry adjustments
prior to fiscal year end. The Authority will work to establish a policy to assure all material journal entries are
recorded prior to the commencement of audit procedures in future years.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether Authority's financial statements are free from material
misstatement,we performed tests of its compliance with certain provisions of laws,regulations,contracts,and
grant agreements,noncompliance with which could have a direct and material effect on the financial statements.
However, providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncompliance
or other matters that are required to be reported under GovernmentAuditing Standards.
Authority's Response to Findings
GovernmentAuditing Standards requires the auditor to perform limited procedures on the Authority's response
to the findings identified in our audit and described above. Authority's response was not subjected to the other
auditing procedures applied in the audit of the financial statements and,accordingly,we express no opinion on
the response.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing,and not to provide an opinion on the effectiveness of the entity's internal control or
on compliance. This report is an integral part of an audit performed in accordance with GovernmentAuditing
Standards in considering the entity's internal control and compliance. Accordingly,this communication is not
suitable for any other purpose.
December 19,2022
22