HomeMy WebLinkAboutLHC Lansing Housing Commission 0619 Financial Statement Final Lansing Housing Commission
Financial Report
with Supplemental Information
June 30, 2019
Lansing Housing Commission
Contents
Independent Auditor's Report 1-2
Management's Discussion and Analysis 3-7
Basic Financial Statements
Fund Financial Statements:
Statement of Net Position 8-9
Statement of Activities 10
Statement of Cash Flows 11
Notes to Financial Statements 12-29
Required Supplemental Information 30
Schedule of Changes in the Commission's Net Pension Liability and Related Ratios 31
Schedule of Commission Contributions 32
Schedule of Changes in the Commission's OPEB Liability and Related Ratios 33
Schedule of OPEB Contributions 34
Notes to Schedule of Commission Contributions 35
Other Supplemental Information 36
Financial Data Schedules 37-41
Actual Modernization Cost Certificate 42
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, 2019 and the related notes to the financial statements, which collectively comprise Lansing Housing
Commission's basic financial statements, as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the business-type activities and the discretely presented component unit of Lansing Housing
Commission as of June 30, 2019 and the respective changes in its financial position and, where applicable, its
cash flows for the year then ended in accordance with accounting principles generally accepted in the United
States of America.
1
To the Board of Commissioners
Lansing Housing Commission
Required Supplemental Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and other required supplemental information, as identified on the table of contents, be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, which considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplemental
information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or
provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming 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 subject 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 11, 2019 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.
Alt& �, PLLC
November 11, 2019
2
Lansing Housing Commission
Lansing, Michigan
Management's Discussion and Analysis
For the Fiscal Year Ended June 30, 2019
This management's discussion and analysis (MD&A) of Lansing Housing Commission (the
"Commission") provides an overview of the Commission's financial performance during the
fiscal year ended June 30, 2019. The operations of the Lansing Housing Commission are
comprised of a Low Income Public Housing Program, a Housing Choice Voucher program, a
Capital Fund Program, a Section 8 New Construction Program, and a Resident Opportunity and
Supportive Services Program. The Low Income Public Housing Program is funded with tenant
rental revenue, miscellaneous tenant charges, and Department of Housing and Urban
Development (HUD) grants and subsidies. The remaining programs are funded entirely by
federal grants. The Commission also maintains a central office cost center, various business
activities, and component units. This MD&A covers only the Commission's primary government
activities, including its blended component unit and the Lansing Housing Commission Non Profit
Development Corporation (LHCNPDC), and do not analyze the financial position or current year
activity of the discretely presented component unit - Oliver Gardens Limited Dividend Housing
Association 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, 2019. 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 $ 16,042,394
2. Unrestricted net position equals 4,139,799
3. Total net position increased by 312,280
Required Financial Statements
The financial statements of the Commission have been prepared on the accrual basis of
accounting following the business-type activities reporting requirements of the Governmental
Accounting Standards Board (GASB) as a single enterprise fund. These statements are as
follows:
• Statement of net position - Includes all of the Commission's assets and liabilities and
provides information about the amounts and investments in assets and the obligations to
commission creditors. It also provides a basis of assessing the liquidity and financial
flexibility of the Commission. Over time, increases or decreases in net position may serve as
a useful indicator of whether the financial health of the Commission is improving or
deteriorating.
• Statement of activities - Provides information as to the increase or decrease of current year
revenue over expenses.
• Statement of cash flows - Provides information about the Commission's cash receipts and
disbursements during the reporting period. The statement discloses net cash provided by or
used in operating activities and noncapital financing activities from capital and related
financing activities and from investing activities.
3
Financial Analysis
Statement of Net Position
Percent
2018 2019 Change Change
Assets
Current and restricted assets $ 5,259,522 $ 5,222,385 $ (37,137) -1%
Capital assets 14,492,096 13,546,781 (945,315) -7%
Noncurrent assets 1,092,791 1,127,886 35,095 3%
Total assets 20,844,409 19,897,052 (947,357) -5%
Deferred Outflows of Resources 100,343 809,448 709,105 707%
Total assets and deferred
outflows of resources 20,944,752 20,706,500 (238,252) -1%
Liabilities
Current liabilities 893,195 742,502 (150,693) -17%
Long-term liabilities 4,153,621 3,921,604 (232,017) -6%
Total liabilities 5,046,816 4,664,106 (382,710) -8%
Deferred Inflows of Resources 167,822 - (167,822) -100%
Net Position
Net investment in capital assets 12,398,172 11,855,031 (543,141) 4%
Restricted 283,714 47,564 (236,150) -83%
Unrestricted 3,048,228 4,139,799 1,091,571 36%
Total net position $ 15,730,114 $ 16,042,394 $ 312,280 2%
As required by Governmental Accountings Standards Board (GASB), the Commission adopted
GASB Statement No. 75 in 2018. This standard required the inclusion of a liability for the
Commission's estimated unfunded other postemployment benefit (OPEB) costs. Some of the
changes in this net OPEB liability were recognized immediately as part of the OPEB expense
measurement, and part will be deferred and recognized over future years.
As illustrated in the statement of net position, the overall net position of the Commission
increased by $312,280, primarily as a result in a decrease in long-term liabilities net of
decreases in capital assets. There were capital asset projects ongoing during the current year
related to the normal maintenance and repairs and the reconstruction of units damaged by a fire
during the prior year. Overall, net capital assets decreased due to normal depreciation expense
exceeding capital asset additions. The decrease in OPEB liabilities and a principal payment of
approximately $301,000 on the promissory note payable with Davenport University led to an
overall decrease in liabilities.
4
Financial Analysis
(Continued)
Statement of Activities
Percent
2018 2019 Change Change
Revenue
Tenant rental revenue $ 1,621,451 $ 1,714,401 $ 92,950 6%
Federal grants 14,666,576 16,462,935 1,796,359 12%
Other revenue 1,396,575 1,408,403 11,828 1%
Total revenue 17,684,602 19,585,739 1,901,137 11%
Expenses
Administrative expenses 2,600,196 1,553,050 (1,047,146) -40%
Tenant services 83,708 83,838 130 0%
Utilities 948,288 964,198 15,910 2%
Maintenance and operations 2,494,575 3,213,723 719,148 29%
Insurance and general expenses 388,174 458,011 69,837 18%
Housing assistance payments 10,785,430 11,695,726 910,296 8%
Depreciation and amortization 1,205,171 1,232,698 27,527 2%
Interest expense 83,017 71,249 (11,768) -14%
Loss on sale of assets 790 966 176 22%
Total expenses 18,589,349 19,273,459 684,110 4%
Change in Net Position $ (904,747) $ 312,280 $ 1,217,027 135%
Revenue
In reviewing the statement of activities, 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 activities, you will find that 61 percent of the Commission's
expenses are for housing assistance payments, 8 percent for administrative, 5 percent are for
utilities, 17 percent are for maintenance, 6 percent are for depreciation and amortization, and 3
percent are for tenant services, protective services, general expenses, and interest expense.
Change in Net Position
There was a significant increase in overall revenue during fiscal year 2019. The Federal Grants
increase was due to two factors. First, there was a increase in the funding for the Public
Housing Capital Fund program. Second, the Commission approved a change in benefits under
the other postemployment benefit plan. This change in benefit terms and change in
assumptions decreased the net OPEB liability by approximately $952,000.
5
Financial Analysis
(Continued)
Capital Assets
As of year end, the Commission had $13,546,781 invested in a variety of capital assets as
reflected in the following schedule, which represents a net decrease (additions, deductions, and
depreciation) of 7 percent from the end of last year.
Percent
2018 2019 Change Change
Land $ 1,554,771 $ 1,554,771 $ - 0%
Buildings 51,223,127 51,933,079 709,952 1%
Furniture and equipment 1,313,200 1,304,132 (9,068) -1%
Construction in progress 914,088 397,756 (516,332) -56%
Accumulated depreciation (40,513,090) (41,642,957) (1,129,867) 3%
Net capital assets $ 14,492,096 $ 13,546,781 $ (945,315) -7%
The following reconciliation summarizes the change in capital assets:
Beginning balance- July 1, 2018 $ 14,492,096
Additions:
Construction in progress 288,349
Disposals net of depreciation (966)
Depreciation expense (1,232,698)
Ending balance-June 30, 2019 $ 13,546,781
Debt Outstanding
As of the end of the fiscal year, the Commission had $1,691,750 in debt outstanding compared
to $2,123,924 in the previous year. The net change in debt for the year was a decrease of
$432,174 of principal payments.
Long-term Debt
2018 2019
Note payable - Davenport $ 425,762 $ 124,986
Note payable - PNC 1,698,162 1,566,764
Total long-term debt $ 2,123,924 $ 1,691,750
6
Financial Analysis
(Continued)
Economic Factors and Events Affecting Operations
Factors that may affect the financial position of the Commission in the subsequent fiscal year
are as follows:
• Federal funding appropriations as budgeted by Congress for funding to the Department of
Housing and Urban Development
• Local labor supply and demand, which can affect salary and wage rates and the need to
contract more work because of employee hiring challenges
• Union contract negotiations
• Local inflationary, recessionary, and employment trends, which can affect resident incomes
and, therefore, the amount of rental income
• Inflationary pressure on utility rates, supplies, and other costs
• Pay down of underfunded pension and other postemployment benefit liabilities
In the current year and for future years, the financial position of the Commission is also
impacted by the Commission's adoption of Governmental Accounting Standards Board (GASB)
Statement No. 68 as of July 1, 2014, the objective of which is to improve accounting and
financial reporting by state and local employers about financial support for pensions that is
provided by other entities. The Commission participates in an agent multiple-employer defined
benefit pension plan administered by the Municipal Employees' Retirement System of Michigan
(MERS) that covers substantially all employees of the Commission. The Commission's net
pension liability for this plan is determined annually using a measure of the total pension liability
and the pension net position at the end of each calendar year.
REAC
The Real Estate Assessment Center's (REAC) mission is to provide and promote accurate
information in assessing the condition of HUD's housing portfolio. The Commission receives
periodic physical inspections and an annual financial evaluation provided by REAC. This
performance data provides an annual assessment of how each Public Housing Commission
compares to its peers.
Conclusion
The Commission's management is committed to staying abreast of regulations and
appropriations as well as maintaining an ongoing analysis of all budgets and expenses to
ensure that the Commission continues to operate at the highest standards established by the
Real Estate Assessment Center and the Department of Housing and Urban Development.
Contact
This financial report is designed to provide a general overview of the Commission's finances for
all those with an interest. Questions concerning any of the information provided in this report or
requests for additional financial information should be addressed to Doug Fleming, Executive
Director, Lansing Housing Commission, 419 Cherry, Lansing, MI 48933, or call (517) 372-7996.
7
Lansing Housing Commission
Statement of Net Position
June 30, 2019
Discrete
Component
Unit- Oliver
Primary Gardens
Government December 31,
(LHC) 2018
Assets
Current assets:
Cash and cash equivalents (Note 3) $ 4,037,366 $ 40,754
Cash and cash equivalents- Restricted (Note 3) 106,180 341,402
Receivables:
Tenant receivables 47,259 -
Other receivables 299,329 5,039
Due from other governmental units- HUD 30,925 -
Allowance for doubtful accounts (4,726) -
Prepaid expenses and other assets 49,196 4,920
Tenant security deposits - Restricted (Note 3) 133,852 5,071
Investments (Note 3) 523,004 -
Total current assets 5,222,385 397,186
Noncurrent assets:
Investment in partnership 1,017,786 -
Capital assets:
Assets not subject to depreciation (Note 4) 1,952,527 685,162
Assets subject to depreciation - Net (Note 4) 11,594,254 1,653,375
Other receivables 110,000 -
Other assets 100 4,583
Total noncurrent assets 14,674,667 2,343,120
Total assets 19,897,052 2,740,306
Deferred Outflows of Resources - Pension (Note 6) 809,448 -
See notes to financial statements. 8
Lansing Housing Commission
Statement of Net Position (Continued)
June 30, 2019
Discrete
Component
Unit- Oliver
Primary Gardens
Government December 31,
(LHC) 2018
Liabilities
Current liabilities:
Accounts payable - Operating $ 210,262 $ 11,683
Security deposits liability 155,909 5,071
Accrued liabilities and other:
Accrued salaries and wages 52,313 -
Accrued interest payable - 165,053
Accrued PILOT 118,496 19,255
Compensated absences < one year 10,023 -
Other current liabilities - 458,032
Current portion of long-term debt(Note 5) 195,499 32,947
Total current liabilities 742,502 692,041
Noncurrent liabilities:
Compensated absences 56,800 -
Accrued partnership management fees - 110,000
Net pension liability(Note 6) 1,438,679 -
Net OPEB obligation (Note 7) 871,259 -
Notes payable- Net of current portion (Note 5) 1,496,251 2,463,271
Other noncurrent liabilities 58,615 405,767
Total noncurrent liabilities 3,921,604 2,979,038
Net Position
Net investment in capital assets 11,855,031 (157,681)
Restricted 47,564 -
Unrestricted 4,139,799 (773,092)
Total net position $ 16,042,394 $ (930,773)
See notes to financial statements. 9
Lansing Housing Commission
Statement of Activities
Year Ended June 30, 2019
Discrete
Component
Unit- Oliver
Gardens
Primary Year Ended
Government December 31,
(LHC) 2018
Operating Revenue
Tenant revenue- Net $ 1,714,401 $ 278,698
HUD operating revenue 16,199,046 -
Other grant revenue 1,079,056 -
Other operating revenue 321,056 255
Total operating revenue 19,313,559 278,953
Operating Expenses
Administrative 1,553,050 24,173
Tenant services 83,838 -
Utilities 964,198 72,213
Maintenance 3,213,723 50,583
Insurance 333,407 15,494
Other general expenses 124,604 47,587
Housing assistance payments 11,695,726 -
Depreciation and amortization 1,232,698 141,860
Total operating expenses 19,201,244 351,910
Operating Income (Loss) 112,315 (72,957)
Nonoperating Revenue (Expense)
Investment income 8,291 10,991
Interest expense (Note 5) (71,249) (88,858)
Loss on sale of assets (966) (1,298)
Total nonoperating expense (63,924) (79,165)
Income (Loss) - Before capital contributions 48,391 (152,122)
Capital Contributions- Capital grants- HUD 263,889 -
Change in Net Position 312,280 (152,122)
Net Position - Beginning of year 15,730,114 (778,651)
Net Position - End of year $ 16,042,394 $ (930,773)
See notes to financial statements. 10
Lansing Housing Commission
Statement of Cash Flows
Year Ended June 30, 2019
Primary
Government
(LHC)
Cash Flows from Operating Activities
Cash received from HUD operating subsidies and grants $ 16,172,025
Cash received from tenants 1,699,770
Other receipts 1,366,705
Cash payments for housing assistance (11,695,726)
Cash payments for administrative expenses (1,553,050)
Cash payments for other operating expenses (5,580,004)
Net cash and cash equivalents provided by operating activities 409,720
Cash Flows from Capital and Related Financing Activities
Receipt of capital grants 263,889
Purchase of capital assets (288,349)
Principal and interest paid on capital debt (503,423)
Net cash and cash equivalents used in capital and related financing activities (527,883)
Cash Flows from Investing Activities
Interest received on investments 8,291
Purchases of investment securities (7,080)
Net cash and cash equivalents provided by investing activities 1,211
Net Decrease in Cash and Cash Equivalents (116,952)
Cash and Cash Equivalents- Beginning of year 4,394,350
Cash and Cash Equivalents- End of year $ 4,277,398
Classification of Cash and Cash Equivalents
Cash and cash equivalents $ 4,037,366
Restricted cash and cash equivalents 106,180
Tenant security deposits 133,852
Total cash and cash equivalents $ 4,277,398
Reconciliation of Operating Income to Net Cash from Operating Activities
Operating income $ 112,315
Adjustments to reconcile operating income to net cash from operating activities:
Depreciation and amortization 1,232,698
Bad debts 65,536
Deferred outflows and inflows (876,927)
Changes in assets and liabilities:
Receivables (117,188)
Prepaid and other assets (56,178)
Accounts payable 100,408
Accrued and other liabilities (45,379)
Security and other trust deposits (5,565)
Net cash and cash equivalents provided by operating activities $ 409,720
See notes to financial statements. 11
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 1 - Nature of Business
Organization and Program Descriptions
Lansing Housing Commission (LHC or the "Commission") is a Michigan public body corporation operating
as a public housing authority under the Michigan Housing Facilities Act, MCL 125.65, to provide decent,
safe, and adequate housing for low-income program participants. The Commission owns and provides
subsidy and operation support for housing units located throughout the Lansing area. LHC's assets,
deferred outflows, liabilities, deferred inflows, net position, and changes in net position are included in its
primary government fund and include all AMPs, COCC, business activities, and programs of the
Commission. The Commission receives and administers funds from the U.S. Department of Housing and
Urban Development (HUD) and has signed an annual contributions contract (the "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 either to make assistance payments or to pay the difference between the approved contract rent
and the actual rent paid by the lower-income families. Housing assistance payments made to landlords
and some participants are funded through annual contributions contracts, as well as the administrative
cost of managing the program up to a per unit limit established in the contracts. The Commission
administered an average of 1,675 tenant-based vouchers monthly for the year ended June 30, 2019.
Capital Fund Program (CFP)
Funds from the Capital Fund Program provided by HUD are used to maintain and improve the public
housing portfolio. Substantially all additions to land, structures, and equipment for these properties are
accomplished by using capital grant funds.
Continuum of Care Program (Shelter Plus Care and Permanent Supportive Housing)
This program provides rental assistance to homeless individuals and families with disabilities. The
Commission is a subrecipient of the funding from the City of Lansing, Michigan.
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 until the recovery agreement was terminated. During February 2019, the Commission received
a letter from HUD notifying them that they have accomplished all corrective actions to remedy
recommendations issued by HUD Departmental Enforcement Center.
12
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 1 - Nature of Business (Continued)
Reporting Entity
The nucleus of the financial reporting entity, as defined by Governmental Accounting Standards Board
(GASB) Statement No. 14, as amended, is the primary government. A fundamental characteristic of a
primary government is that it is a fiscally independent entity. In evaluation of how to define the financial
reporting entity, management has considered all potential component units. A component unit is a legally
separate entity for which the primary government is financially accountable. The criteria of financial
accountability is the appointment of a voting majority plus the ability of the primary government to impose
its will upon the potential component unit. These criteria were considered in determining the reporting
entity.
The five-member board of commissioners of LHC is appointed to five-year terms by the mayor of the City
of Lansing, Michigan, but the Commission's board independently oversees the Commission's operation
and designates its management. The City of Lansing, Michigan is not financially accountable for the
Commission, as it cannot impose its will on the Commission, and there is no potential for the Commission
to provide financial benefits to, or impose financial burdens on, the City of Lansing, Michigan. Accordingly,
the Commission is not a component unit of the financial reporting entity of the City of Lansing, Michigan.
GASB Statement Nos. 14, 39, 61, and 80 define a primary government and those organizations that
should be reported as component units. The following organizations have been determined under this
guidance to be component units of the Commission.
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, and the Commission has a 1 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, 2019, LHCNPDC had assets of $857,110, liabilities of $879,491, and net deficit position of
$(22,381). The total revenue and change in net position were $13,378 for the year ended June 30, 2019.
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 Limited Dividend Housing Association Limited
Partnership (Oliver Gardens), 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 and for the year ended December 31, 2018. A
complete financial report can be obtained at its administrative offices at 419 Cherry St., Lansing, MI
48933.
As described above, the Commission has a 1 percent managing member ownership interest in Oliver
Gardens, LLC, which has a 0.01 percent general partner ownership interest in 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.
13
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 2 - Significant Accounting Policies
Basis of Accounting
The basic financial statements of the Commission have been prepared on the accrual basis of accounting
in conformity with accounting principles generally accepted in the United States of America (GAAP), as
prescribed by the Governmental Accounting Standards Board (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.
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.
Investments
Short-term investments consisted of certificates of deposit at June 30, 2019. Investments are reported at
fair value or estimated value.
Current Receivables and Recognition of Bad Debts
Current receivables consist of revenue that is earned at year end, but not yet received. Tenant accounts
generally are collectible as long as the tenant is occupying the unit; however, the Commission has
established an allowance of $4,726 as potentially uncollectible as of June 30, 2019. Tenant bad debt for
the year ended June 30, 2019 was $65,536.
Prepaid Expenses
Prepaid items consist of certain payments to vendors that reflect costs applicable to future fiscal years.
14
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 2 - Significant Accounting Policies (Continued)
Investment in Partnership
The amount of this investment includes amounts invested in and due from the Commission's discretely
presented component unit, Oliver Gardens. 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. Also included in this amount is $270,776 due from Oliver Gardens resulting
from the Commission providing accounting, management, oversight, and maintenance services.
Additionally, $300,113 is a note receivable dated December 31, 2007. The loan bears interest at 1
percent, compounded annually. The total amount of accrued interest at June 30, 2019 is $41,130. No
principal or interest are due until the loan matures on January 1, 2048. The note is secured by land and
substantially all the real property owned by Oliver Gardens LDHA LP. The note receivable is reported at its
original issue amount less principal repaid. Interest is recognized according to the terms of the specific
note. An allowance for loan loss is determined based on a specific assessment of the note that is
delinquent or determined to be doubtful to be collected. A note is considered delinquent if the repayment
terms are not met. All amounts deemed to be uncollectible are charged against the allowance for loan
losses in the period that determination is made. As of June 30, 2019, no amounts have been deemed to
be uncollectible.
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:
Years
Buildings 40
Building improvements 7-40
Furniture and fixtures, equipment, and machinery 3-10
GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for
Insurance Recoveries, establishes accounting and financial reporting standards for the impairment of
capital assets. If an indicator of impairment is identified and the decline in service utility was unexpected
and significant, an impairment loss is calculated in consideration of whether the capital asset will continue
to be used by the Commission. An impairment loss is generally measured by identifying the historical cost
of the service utility of the capital asset that cannot be used due to the impairment event of circumstance.
Impaired capital assets that will no longer be used by the Commission are reported at the lower of carrying
value or fair value, or written off entirely. During 2019, no impairments were recorded.
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
According to the partnership agreement of Oliver Gardens, the general partner of Oliver Gardens, Oliver
Gardens, LLC, is entitled to a cumulative annual partnership management fee of$10,000 per annum. As
described above, Oliver Gardens, LLC is 99 percent owned by LHCNPDC and 1 percent owned by the
Commission. As such, the total accrued partnership management fee of $110,000 at June 30, 2019 is
reported as an other receivable on the statement of net position.
15
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 2 - Significant Accounting Policies (Continued)
Other assets of the component unit include $22,917 of costs related to obtaining tax credits, net of
accumulated amortization of$18,334. These costs have been capitalized and are being amortized over 15
years using the straight-line method. Amortization expense for the year ended June 30, 2019 was$1,528.
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 $66,823 at June 30, 2019, of which
$10,023 is current and $56,800 is noncurrent.
Classification of Net Assets
Net position is composed of three categories: (1) net investment in capital assets, (2) restricted, and (3)
unrestricted. The Commission's positive value of unrestricted net position in the primary government may
be used to meet ongoing obligations. When an expense is incurred for a purpose for which both restricted
and unrestricted net assets are available, the Commission's policy is to first apply restricted resources.
Each component of net assets is reported separately on the statement of net position.
i. Net investment in capital assets - This category consists of capital assets (including restricted capital
assets), net of accumulated depreciation and reduced by any outstanding balances of mortgages, notes,
or other borrowings that are attributable to the acquisition, construction, and improvements of those
assets.
ii. Restricted - This category equals the restricted cash of the Commission and consists of net position
restricted in its use by (1) external groups, such as grantors, creditors, or laws and regulations of other
governments, or(2) law through constitutional provisions or enabling legislation.
iii. Unrestricted - This category includes all of the remaining net position that does not meet the definition
of the other two categories.
Revenue Recognition
The Commission receives funds from certain federal and other agencies under various grant programs.
Receivables are recorded based upon amounts expended for the various programs for which funds have
not been received to the extent grant limits have not been exceeded.
The Commission leases properties to tenants under various rental arrangements. Payments from tenants
are recognized as revenue in the period during which the associated use of premises occurred.
Operating Revenue and Expenses
The Commission's operating revenue includes HUD and state/local in support of housing units and
programs, as well as other amounts received from tenants for rent and other charges for services
provided. Operating expenses are costs incurred during the operation of its primary housing activities.
Such revenue and expenses are reported when earned or incurred, respectively.
The Commission also received a ROSS (Resident Opportunities & Self Sufficiency) Grant from HUD in
fiscal year 2019 to cover the costs of the service coordinator.
Capital Grants
The Commission records grants received for capital outlay as contributions of capital gains.
16
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 2 - Significant Accounting Policies (Continued)
Nonoperating Revenue and Expenses
Nonoperating revenue and expenses are derived from transactions other than those associated with the
Commission's primary housing operations and are reported as incurred, including investment activity.
Pension
The Commission offers a defined benefit pension plan to its employees. The Commission records a net
pension asset or liability for the difference between the total pension liability calculated by the actuary and
the pension plan's fiduciary net position. For the purpose of measuring the net pension liability, deferred
outflows of resources and deferred inflows of resources related to pensions, and pension expense,
information about the fiduciary net position of the pension plan and additions to/deductions from the
pension plan's fiduciary net position have been determined on the same basis as they are reported by the
pension plan. For this purpose, benefit payments (including refunds of employee contributions) are
recognized when due and payable in accordance with the benefit terms. Investments are reported at fair
value.
Other Postemployment Benefit Costs
The Commission provides retiree healthcare benefits to eligible employees and their spouses. The
Commission records a net other postemployment benefit cost (OPEB) asset or liability for the difference
between the total OPEB liability calculated by the actuary and the OPEB plan's fiduciary net position. For
the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of
resources related to OPEB, and OPEB expense, information about the fiduciary net position of the OPEB
plan and additions to/deductions from the OPEB plan's fiduciary net position have been determined on the
same basis as they are reported by the OPEB plan. For this purpose, benefit payments (including refunds
of employee contributions) are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual results could differ from
those estimates.
Upcoming Accounting Pronouncements
In January 2017, the GASB issued Statement No. 84, Fiduciary Activities. This statement establishes
criteria for identifying fiduciary activities of all state and local governments. An activity meeting the criteria
should be reported in a fiduciary fund in the basic financial statements. 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, 2020.
In June 2017, the GASB issued Statement No. 87, Leases, which improves accounting and financial
reporting for leases by governments. This statement requires recognition of certain lease assets and
liabilities for leases that were previously classified as operating leases and recognized as inflows of
resources or outflows of resources based on the payment provisions of the contract. It establishes a single
model for lease accounting based on the foundational principle that leases are financings of the right to
use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an
intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred
inflow of resources. The Commission is currently evaluating the impact this standard will have on the
financial statements when adopted. The provisions of this statement are effective for the Commission's
financial statements for the year ending June 30, 2021.
17
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 2 - Significant Accounting Policies (Continued)
In August 2018, the GASB issued Statement No. 90, Majority Equity Interests. This statement improves
the consistency and comparability of reporting a government's majority equity interest in a legally separate
organization and improves the relevance of financial statement information for certain component units.
The Commission is currently evaluating the impact this standard will have on the financial statements
when adopted for the year ending June 30, 2020.
In May 2019, the GASB issued Statement No. 91, Conduit Debt Obligations, which clarifies the existing
definition of conduit debt, provides a single method of reporting conduit debt obligations by issuers, and
eliminates diversity in practice associated with commitments extended by issuers, arrangements
associated with conduit debt obligations, and related note disclosures. As a result, issuers should not
recognize a liability for items meeting the definition of conduit debt; however, a liability should be recorded
for additional or voluntary commitments to support debt service if certain recognition criteria are met. The
standard also addresses the treatment of arrangements where capital assets are constructed or acquired
with the proceeds of a conduit debt obligation and used by a third-party obligor. The requirements of the
standard will be applied retrospectively and are effective for the Commission's financial statements for the
June 30, 2022 fiscal year.
Subsequent Events
The financial statements and related disclosures include evaluation of events up through and including
November 11, 2019, which is the date the financial statements were available to be issued.
Note 3 - Deposits and Investments
Deposits and investments are reported in the financial statements as follows:
Primary
Government Component Unit
(LHC) (Oliver Gardens)
Cash and cash equivalents-Unrestricted $ 4,037,366 $ 40,754
Cash and cash equivalents-Restricted 106,180 341,402
Tenant security deposits- Restricted 133,852 5,071
Investments-Certificates of deposit 523,004 -
Total deposits and investments $ 4,800,402 $ 387,227
Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes local
governmental units to make deposits and invest in the accounts of federally insured banks, credit unions,
and savings and loan associations that have offices in Michigan. The law also allows investments outside
the state of Michigan when fully insured. The local unit is allowed to invest in bonds, securities, and other
direct obligations of the United States or any agency or instrumentality of the United States, repurchase
agreements, bankers' acceptances of United States banks, commercial paper rated within the two highest
classifications that matures not more than 270 days after the date of purchase, obligations of the State of
Michigan or its political subdivisions that are rated as investment grade, and mutual funds composed of
investment vehicles that are legal for direct investment by local units of government in Michigan.
The Commission has designated two banks for the deposit of its funds. The investment policy adopted by
the board in accordance with Public Act 196 of 1997 has authorized investment in bonds and securities of
the United States government and bank accounts and CDs, but not the remainder of state statutory
authority, as listed above. The Commission's deposits and investments are in accordance with statutory
authority.
18
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 3 - Deposits and Investments (Continued)
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 uncollateralized.
Custodial Credit Risk of Investments
Custodial credit risk is the risk that, in the event of the failure of the counterparty, the Commission will not
be able to recover the value of its investments or collateral securities that are in the possession of an
outside party. The Commission does not have a policy for custodial credit risk. At year end, $273,004 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 4 - Capital Assets
Capital asset activity of the Commission's governmental activities was as follows:
Primary Government
Balance Balance
July 1, 2018 Reclassifications Additions Reductions June 30, 2019
Capital assets not being
depreciated:
Land $ 1,554,771 $ - $ - $ - $ 1,554,771
Construction in progress 914,088 (804,681) 288,349 - 397,756
Total nondepreciable
assets 2,468,859 (804,681) 288,349 - 1,952,527
Capital assets being depreciated:
Buildings and improvements 51,223,127 804,681 - (94,729) 51,933,079
Machinery and equipment 1,313,200 - - (9,068) 1,304,132
Total depreciable capital
assets 52,536,327 804,681 - (103,797) 53,237,211
Accumulated depreciation 40,513,090 - 1,232,698 (102,831) 41,642,957
Net capital assets being
depreciated 12,023,237 804,681 (1,232,698) (966) 11,594,254
Net capital assets $ 14,492,096 $ - $ (944,349) $ (966) $ 13,546,781
19
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 4 - Capital Assets (Continued)
Component Unit
Balance Balance
July 1, 2018 Additions Disposals June 30, 2019
Capital assets not being
depreciated -Land $ 685,162 $ - $ - $ 685,162
Capital assets being depreciated:
Buildings and improvements 3,318,485 - - 3,318,485
Furniture and equipment 188,459 - - 188,459
Subtotal 3,506,944 - - 3,506,944
Accumulated depreciation-
Buildings and improvements 1,713,237 140,332 - 1,853,569
Net capital assets being
depreciated 1,793,707 (140,332) - 1,653,375
Net capital assets $ 2,478,869 $ (140,332) $ - $ 2,338,537
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, at which time, construction
in progress for that grant is placed in service and transferred to the buildings or improvements categories.
Note 5 - Long-term Debt
Primary Government
Lansing Housing Commission's debt is composed of a promissory note payable to Davenport University
and a lease with PNC for the Energy Performance Contract. These are both considered direct borrowings.
Davenport University
The Commission purchased an office building and land from Davenport University (the "Lender") in 2012
for $950,000 with a $700,000 promissory note payable to the Lender. The note bears an annual interest
rate of 2.4 percent, which is subject to adjustment concurrently with changes in the Lender's cost of funds.
Equal monthly payments of $5,000 are due beginning on July 28, 2012. The outstanding principal and
interest balance will be due when the note matures on June 28, 2022.
PNC
Energy Conservation Measures (ECMs), as defined in the Commission's Energy Performance Contract
(EPC) dated December 11, 2013, are financed by PNC, as stipulated in the Master Equipment Lease-
Purchase Agreement in the principal amount of $2,051,375. This obligation was issued pursuant to the
provisions of Act 18, Public Acts of Michigan 1933 (Ex. Sess), as amended, and Chapter 260 of the Code
of Ordinances of the City of Lansing. HUD's Public Housing EPC program is an innovative financing
technique that uses cost savings from reduced energy consumption to repay the cost of installing ECMs.
The project is financed with a tax-exempt lease for a term of 15 years at a fixed interest rate of 3.91
percent. PNC as the lender has a security interest in the ECMs.
20
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 5 - Long-term Debt (Continued)
Component Unit
Oliver Gardens has the following loans outstanding as of December 31, 2018 that are secured by land and
substantially all real property owned by Oliver Gardens. These are all considered direct borrowings:
Mortgage dated October 17, 2006 held by Michigan State Housing Development Authority
(MSHDA) in the amount of $1,775,482. The mortgage bears interest at a rate of 5.5
percent. However, an amount equal to 0.5 percent of interest is deferred until the
mortgage principal balance is paid in full. Monthly payments of principal and interest are
required in the amount of$8,961. Financing fees of$45,415 were incurred in connection
with obtaining loans to rehabilitate the property.These costs are being amortized over the
term of the related debt and are reported net of debt on the statement of net position. As
of December 31, 2018, total accumulated amortization related to these costs was
$14,920. Amortization expense was $1,528 for the year ended December 31, 2018 and
has been included as a component of interest expense on statement of activities $ 1,476,085
HOME loan dated June 1, 2006 in the amount of$170,000.The loan is held by the City of
Lansing, Michigan under the HOME Investments Partnership Program and bears interest
at a rate of 0.5 percent, compounded annually. Principal and interest are due on the loan
when it matures on December 31, 2041 170,000
Community Development Block Grant (CDBG) loan dated May 31, 2006 in the amount of
$550,000. The loan is held by the City of Lansing, Michigan under the CDBG Program
and bears interest at a rate of 0.5 percent, compounded annually, on $150,000 of the
loan. Principal and interest are due on the loan when it matures on May 31, 2046 550,000
Lansing Housing Commission note dated December 31, 2007 in the amount of$300,133.
The loan is held by LHC and bears an interest rate of 0.5 percent. Principal and interest
are due on the loan when it matures on January 1, 2048 300,133
Total 2,496,218
Less current portion 32,947
Long-term portion $ 2,463,271
Primary Government
Future minimum principal and interest payments on the LHC promissory note (direct borrowing) with
Davenport University to maturity for the years ending June 30 are as follows:
Years Ending Principal Interest Total
2020 $ 58,000 $ 2,000 $ 60,000
2021 59,000 1,000 60,000
2022 7,986 361 8,347
Total $ 124,986 $ 3,361 $ 128,347
21
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 5 - Long-term Debt (Continued)
Future minimum principal and interest payments on LHC's lease (direct borrowing) with PNC to maturity
for the years ending June 30 are as follows:
Years Ending Amount Interest
2020 $ 137,499 $ 62,000
2021 144,000 56,000
2022 150,000 50,000
2023 156,000 44,000
2024 162,000 37,000
2025-2028 720,000 78,000
2029 97,265 1,000
Total $ 1,566,764 $ 328,000
Component Unit
Future minimum principal and interest payments on direct borrowings to maturity for the years ending
December 31 are as follows:
Years Ending Amount Interest
2019 $ 32,947 $ 74,585
2020 34,638 72,894
2021 36,411 71,121
2022 38,273 69,259
2023 40,232 67,300
2024-2028 234,222 303,438
2029-2033 300,591 237,069
2034-2038 385,765 151,895
2039-2043 543,006 376,876
2044-2048 850,133 -
Total $ 2,496,218 $ 1,424,437
Changes in long-term debt for the year ended June 30, 2019 (or December 31, 2018 for the discretely
presented component unit) are presented below:
Balance-
Beginning of Balance-
Year Additions Deletions End of Year Due in One Year
Primary government-
Direct borrowings:
Davenport $ 425,762 $ - $ (300,776) $ 124,986 $ 57,632
PNC 1,698,162 - (131,398) 1,566,764 137,867
Total $ 2,123,924 $ - $ (432,174) $ 1,691,750 $ 195,499
Component unit-
Direct borrowings:
MSHDA $ 1,537,924 $ - $ (31,344) $ 1,506,580 $ 32,947
City of Lansing, Michigan 720,000 - - 720,000 -
LHC 300,133 - - 300,133 -
Total $ 2,558,057 $ - $ (31,344) $ 2,526,713 $ 32,947
22
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 5 - Long-term Debt (Continued)
Interest expense for the year ended June 30, 2019 was $71,249 for the primary government, and interest
expense for the year ended December 31, 2018 was $88,858 for the discrete component unit, excluding
$1,298 of amortization expense of financing fees, which has been reported as a component of interest
expense on the statement of activities.
Note 6 - Agent Defined Benefit Pension Plan Description
Plan Description
Lansing Housing Commission participates in an agent multiple-employer defined benefit pension plan
administered by the Municipal Employees' Retirement System of Michigan (MERS) that covers all
employees of the Commission. MERS was established as a statewide public employee pension plan by
the Michigan Legislature under PA 135 of 1945 and is administered by a nine-member retirement board.
MERS issues a publicly available financial report, which includes the financial statements and required
supplemental information of this defined benefit plan. This report can be obtained at www.mersofmich
igan.com or in writing to MERS at 1134 Municipal Way, Lansing, MI 48917.
Benefits Provided
The Plan provides certain retirement, disability, and death benefits to plan members and beneficiaries. PA
427 of 1984, as amended, established and amends the benefit provisions of the participants in MERS.
The MERS plan covers employees in the general open division; employees hired after May 1, 2012; and
exempt employees hired before May 1, 2012.
Retirement benefits for employees in the open general division are calculated as 2.25 percent of the
employee's final three-year average salary times the employee's years of service. Normal retirement age
is 60 with early retirement at 55 with 15 years of service. Early retirement age with reduced benefits is 50
with 25 years of service. The vesting period is eight years. Employees are eligible for nonduty disability
benefits after eight years of service and for duty-related disability benefits upon hire. Disability retirement
benefits are determined in the same manner as retirement benefits, but are payable immediately without
an actuarial reduction. Death benefits equal 80 times the employee's final full-year salary. An employee
who leaves service may withdraw his or her contributions plus any accumulated interest.
Retirement benefits for employees hired after May 1, 2012 are calculated as 1.70 percent of the
employee's final three-year average salary times the employee's years of service. Normal retirement age
is 60. Early retirement age with reduced benefits is at 50 with 25 years of service or 55 with 15 years of
service. The vesting period is eight years. Employees are eligible for nonduty disability benefits after eight
years of service and for duty-related disability benefits upon hire. Disability retirement benefits are
determined in the same manner as retirement benefits, but are payable immediately without an actuarial
reduction. Death benefits for a surviving spouse equal 80 percent of the deceased member's accrued
retirement allowance, computed in the same manner as a service retirement allowance, based on service
and final average compensation at the time of death. An employee who leaves service may withdraw his
or her contributions plus any accumulated interest.
Retirement benefits for exempt employees hired before May 1, 2012 are calculated as 2.25 percent of the
employee's final three-year average salary times the employee's years of service. Normal retirement age
is 60 with early retirement at 55 with 15 years of service. Early retirement age with reduced benefits is 50
with 25 years of service. The vesting period is eight years. Employees are eligible for nonduty disability
benefits after eight years of service and for duty-related disability benefits upon hire. Disability retirement
benefits are determined in the same manner as retirement benefits, but are payable immediately without
an actuarial reduction. Death benefits equal 80 times the employee's final full-year salary. An employee
who leaves service may withdraw his or her contributions plus any accumulated interest.
Benefit terms provide for annual cost of living adjustments to each employee's retirement allowance
subsequent to the employee's retirement date. The annual adjustments are 3 percent, noncompounding.
23
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 6 - Agent Defined Benefit Pension Plan Description (Continued)
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. Benefit terms may be subject to binding arbitration in certain circumstances.
Employees Covered by Benefit Terms
At the December 31, 2018 measurement date, the following employees were covered by the benefit
terms:
Inactive plan members or beneficiaries currently receiving benefits 41
Inactive plan members entitled to but not yet receiving benefits 13
Active plan members 24
Total employees covered by MERS 78
Contributions
State law requires public employers to make pension contributions in accordance with an actuarial
valuation. The Commission hires an independent actuary for this purpose and annually contributes the
amount determined to finance the costs of benefits earned by employees 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, 2019, the average employee contribution rate was 5.0 percent of annual pay
for all divisions, and the Commission's average contribution rate was 22.42 percent in the open general
division and 0.65 percent under the new hires division of annual payroll.
Net Pension Liability
The Commission has chosen to use the December 31 measurement date as its measurement date for the
net pension liability. The June 30, 2019 fiscal year end reported net pension liability was determined using
a measure of the total pension liability and the pension net position as of the December 31, 2018
measurement date. The December 31, 2018 measurement date total pension liability was determined by
an actuarial valuation performed as of that date.
Changes in the net pension liability during the measurement year were as follows:
Increase (Decrease)
Total Pension Plan Net Net Pension
Changes in Net Pension Liability Liability Position Liability
Balance at December 31,2017 $ 9,088,660 $ 8,632,982 $ 455,678
Service cost 72,132 - 72,132
Interest 700,146 - 700,146
Differences between expected and actual experience 77,954 - 77,954
Contributions-Employer - 145,613 (145,613)
Contributions-Employee - 62,196 (62,196)
Net investment loss - (323,275) 323,275
Benefit payments, including refunds (701,709) (701,709) -
Administrative expenses - (16,423) 16,423
Miscellaneous other charges (21,160) (22,040) 880
Net changes 127,363 (855,638) 983,001
Balance at December 31,2018 $ 9,216,023 $ 7,777,344 $ 1,438,679
The plan's fiduciary net position represents 84.4 percent of the total pension liability.
24
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 6 - Agent Defined Benefit Pension Plan Description (Continued)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions
For the year ended June 30, 2019, the Commission recognized pension expense of$10,364. At June 30,
2019, the Commission reported deferred outflows of resources and deferred inflows of resources related
to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Difference between expected and actual experience $ 81,490 $Net difference between projected and actual earnings on pension plan
investments 590,761 -
Employer contributions to the plan subsequent to the measurement
date 137,197 -
Total $ 809,448 $ -
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions
will be recognized in pension expense as follows. These amounts are exclusive of the employer
contributions to the plan made subsequent to the measurement date $(137,197), which will impact the net
pension liability in fiscal year 2020, rather than pension expense.
Years Ending
June 30 Amount
2020 $ 263,642
2021 97,601
2022 112,484
2023 198,524
Actuarial Assumptions
The total pension liability in the December 31, 2018 actuarial valuation was determined using an inflation
assumption of 2.5 percent; assumed salary increases of 3.75 percent (in the long term, plus a merit and
longevity increase ranging from 0 to 11 percent); and an investment rate of return (net of pension plan
investment expenses)of 8.0 percent.
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, 2018 valuation were based on the results of an
actuarial experience study for the period from January 1, 2009 through December 31, 2013.
Discount Rate
The discount rate used to measure the total pension liability was 8.0 percent. The projection of cash flows
used to determine the discount rate assumed that employee contributions will be made at the current
contribution rate and that employer contributions will be made at rates equal to the difference between
actuarially determined contribution rates and the employee rate.
25
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 6 - Agent Defined Benefit Pension Plan Description (Continued)
Investment Rate of Return
Based on those assumptions, the pension plan's fiduciary net position was projected to be available to
make all projected future benefit payments of current active and inactive employees. Therefore, the long-
term expected rate of return on pension plan investments was applied to all periods of projected benefit
payments to determine the total pension liability.
The long-term expected rate of return on pension plan investments of 8.0 percent was determined using a
model in which best-estimate ranges of expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) are developed for each major asset class. These ranges
are combined to produce the long-term expected rate of return by weighting the expected future real rates
of return by the target asset allocation percentage and by adding expected inflation. The target allocation
and best estimates of arithmetic real rates of return as of December 31, 2018, the measurement date, for
each major asset class, are summarized in the following tables:
Long-term
Target Allocation Expected Real
Asset Class (%) Rate of Return
Global equity 55.50 % 6.15 %
Global fixed income 18.50 1.26
Real estate 13.50 7.22
Diversifying strategies 12.50 5.00
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
8.0 percent, as well as what the Commission's net pension liability would be if it were calculated using a
discount rate that is 1 percentage point lower (7.00 percent) or 1 percentage point higher (9.00 percent)
than the current rate:
1 Percent Current Discount 1 Percent
Decrease Rate Increase
(7.00%) (8.00%) (9.00%)
Net pension liability of the Commission $ 2,346,681 $ 1,438,679 $ 666,536
Pension Plan Fiduciary Net Position
Detailed information about the plan's fiduciary net position is available in the separately issued financial
report. For the purpose of measuring the net pension liability, deferred outflows of resources and deferred
inflows of resources related to pensions, and pension expense, information about the plan's fiduciary net
position and additions to/deductions from fiduciary net position have been determined on the same basis
as they are reported by the plan. The plan uses the economic resources measurement focus and the full
accrual basis of accounting. Investments are stated at fair value. Contribution revenue is recorded as
contributions are due, pursuant to legal requirements. Benefit payments and refunds of employee
contributions are recognized as expense when due and payable in accordance with the benefit terms.
Note 7 - Other Postemployment Benefit Plan
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.
26
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 7 - Other Postemployment Benefit Plan (Continued)
Benefits Provided
During the year ended June 30, 2019, the board of commissioners approved a policy to change the
benefits provided under the other postemployment benefit (OPEB) plan. The plan provides comprehensive
medical and life insurance for retirees. For those retirees over the age of 65 as of January 1, 2019, both
the retiree and spouse may be covered in retirement. Health, dental, and vision benefits will be
administered through a third-party insurer, with each retiree given $100 per month ($200 per month if
spouse is eligible for coverage) to purchase an individual Medicare Supplement, Medicare Part D
Prescription Drug, and Medicare Advantage plans, along with dental and vision plans. For those retirees
under the age of 65 as of January 1, 2019, each retiree will be given $750 per month ($1,200 per month if
spouse is eligible for coverage) to purchase a plan of their choosing along with dental and vision. For
active employees hired prior to January 1, 2019, the Commission will contribute $50 per month per
employee, while a payroll deduction will be required of each employee of $10 per month. Both amounts
will be deposited into the MERS Health Care Savings Program. Employees will be vested into the heath
retirement account after eight years of service. Prior to vesting, employees leaving employment will
immediately be allowed to keep and use their personal contributions plus investment gains on their health
account. The Commission portion will be returned for use in satisfying other OPEB liabilities. After vesting,
the entire health account is available for the employee's use for medical expenses upon retirement or
termination of employment. Employees hired after January 1, 2019 will not be provided OPEB benefits.
Employees Covered by Benefit Terms
The following members were covered by the benefit terms:
Date of member count July 1, 2017
Inactive plan members or beneficiaries currently receiving benefits 17
Active plan members 20
Total employees covered by the plan 37
Contributions
Retiree healthcare costs are paid by the Commission on a "pay-as-you-go" basis. The Commission has no
obligation to make contributions in advance of when the insurance premiums are due for payment. For the
fiscal year ended June 30, 2019, the Commission made payments for postemployment health benefit
premiums plus implicit costs for the retiree medical program of$201,577.
Net OPEB Liability
The Commission's net OPEB liability was measured as of June 30, 2019 and was determined by an
actuarial valuation as of July 1, 2017, which used updated procedures to roll forward the estimated liability
to June 30, 2019.
27
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 7 - Other Postemployment Benefit Plan (Continued)
Changes in the net OPEB liability during the measurement year were as follows:
Increase (Decrease)
Total OPEB Plan Net Net OPEB
Liability Position Liability
Balance at July 1, 2018 $ 1,871,478 $ - $ 1,871,478
Service cost 11,298 - 11,298
Interest 49,023 - 49,023
Change in benefit terms (882,057) - (882,057)
Change in assumptions (118,162) - (118,162)
Differences between actual and expected experience 141,256 - 141,256
Contributions - 201,577 (201,577)
Benefit payments (201,577) (201,577) -
Balance at June 30,2019 $ 871,259 $ - $ 871,259
For the year ended June 30, 2019, the Commission recognized OPEB recovery of$952,480.
Actuarial Assumptions
The total OPEB liability was determined by an actuarial valuation as of July 1, 2017. The valuation used
the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise
specified:
Inflation 2.75 percent as of June 30, 2019 and for future periods
Cost of living 3.50 percent annually as of June 30, 2019 and for future periods
Salary increases 3.00 percent annually as of June 30, 2019 and for future periods
Mortality Represented by the RP-2000 Employees Mortality Table
projected generationally with scale BB and a base
year 2009 for males and females
The actuarial assumptions in the July 1, 2017 valuation were based on the results of an actuarial
experience study for the period from July 1, 2015 through July 1, 2017. The changes in assumptions from
June 30, 2018 to June 30, 2019 included a change in the discount rate from 3.25 percent to 2.75, and the
expected cost of living adjustment was updated to 3.5 percent.
Discount Rate
The discount rate used to measure the total OPEB liability at June 30, 2019 was 2.75 percent. The
discount rate was based on the S&P Municipal Bond 20-year high-grade index- SAPIHG.
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the Commission, calculated using the discount rate of 2.75
percent, depending on the plan option. The following also reflects what the Commission's net OPEB
liability would be if it were calculated using a discount rate that is 1 percentage point lower (1.75 percent)
or 1 percentage point higher(3.75 percent)than the current rate:
1 Percent Current Discount 1 Percent
Decrease Rate Increase
(1.75%) (2.75%) (3.75%)
Net OPEB liability of the Commission $ 959,429 $ 871,259 $ 801,902
28
Lansing Housing Commission
Notes to Financial Statements
June 30, 2019
Note 7 - Other Postemployment Benefit Plan (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Cost of Living Cost Trend
The following presents the net OPEB liability of the Commission, calculated using the cost of living trend
rate of 3.50 percent, as well as what the net OPEB liability would be if it were calculated using a
healthcare cost trend rate that is 1 percentage point lower (2.50 percent) or 1 percentage point higher
(4.50 percent)than the current rate:
1 Percent Current Discount 1 Percent
Decrease Rate Increase
(2.50%) (3.50%) (4.50%)
Net OPEB liability of the Commission $ 798,761 $ 871,259 $ 957,909
Note 8 - 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, 2019.
The collective bargaining three-year agreement between the Housing Commission employees and
Chapter of Local 1390.11 and Michigan Council #25, AFSCME, AFL-CIO, covering approximately 31
percent of the Commission's labor force, will be in place from January 1, 2019 through December 31,
2021.
Note 9 - Risk Management
The Commission is exposed to various risks of loss related to property loss, torts, errors and omissions,
and employee injuries (workers' compensation), as well as medical benefits provided to employees. The
Commission has purchased commercial insurance for all risk of loss, including workers' compensation,
employee health, and accident insurance. Settled claims relating to the commercial insurance have not
exceeded the amount of insurance coverage in any of the past three fiscal years.
Note 10 - 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, 2019, approximately 80 percent of the operating revenue reflected in the
primary government basic financial statements is from HUD.
29
Required Supplemental Information
30
Lansing Housing Commission
Required Supplemental Information
Schedule of Changes in the Commission's Net Pension Liability and Related
Ratios
Last Five Fiscal Years
2019 2018 2017 2016 2015
Total Pension Liability
Service cost $ 72,132 $ 91,117 $ 126,678 $ 114,272 $ 114,461
Interest 700,146 687,782 714,076 698,614 684,653
Differences between expected and
actual experience 77,954 88,563 (140,946) (123,435) -
Changes in assumptions - - (349,397) 405,966 -
Benefit payments, including refunds (701,709) (661,395) (651,805) (635,102) (624,495)
Other (21,160) (4,2682 (521) - -
Net Change in Total Pension Liability 127,363 201,799 (301,915) 460,315 174,619
Total Pension Liability- Beginning of
year 9,088,660 8,886,861 9,188,776 8,728,461 8,553,842
Total Pension Liability- End of year $ 9,216,023 $ 9,088,660 $ 8,886,861 $ 9,188,776 $ 8,728,461
Plan Fiduciary Net Position
Contributions - Employer $ 145,613 $ 685,378 $ 693,689 $ 158,735 $ 215,191
Contributions- Member 62,196 70,951 67,424 55,586 37,167
Net investment(loss) income (323,275) 1,035,066 743,039 (104,348) 446,261
Administrative expenses (16,423) (16,381) (14,686) (15,480) (16,314)
Benefit payments, including refunds (701,709) (661,395) (651,805) (635,102) (624,495)
Other (22,040) (4,445) (521) - -
Net Change in Plan Fiduciary Net
Position (855,638) 1,109,174 837,140 (540,609) 57,810
Plan Fiduciary Net Position -
Beginning of year 8,632,982 7,523,808 6,686,668 7,227,277 7,169,467
Plan Fiduciary Net Position - End of
year $ 7,777,344 $ 8,632,982 $ 7,523,808 $ 6,686,668 $ 7,227,277
Commission's Net Pension Liability-
Ending $ 1,438,679 $ 455,678 $ 1,363,053 $ 2,502,108 $ 1,501,184
Plan Fiduciary Net Position as a
Percentage of Total Pension
Liability 84.39 % 94.99 % 84.66 % 72.77 % 82.80 %
Covered Payroll $ 1,072,020 $ 1,304,971 $ 1,333,333 $ 1,235,367 $ 1,164,556
Commission's Net Pension Liability
as a Percentage of Covered Payroll 134.20 % 34.92 % 102.23 % 202.54 % 128.91 %
See notes to schedule of commission
contributions. 31
Lansing Housing Commission
Required Supplemental Information
Schedule of Commission Contributions
Last Four Fiscal Years
Years Ended December 31
2018 2017 2016 2015
Actuarially determined contribution $ 97,665 $ 133,299 $ 122,057 $ 103,079
Contributions in relation to the actuarially determined contribution 145,613 685,378 693,689 158,735
Contribution Excess $ 47,948 $ 552,079 $ 571,632 $ 55,656
Covered Payroll $ 1,072,020 $ 1,304,971 $ 1,333,333 $ 1,235,367
Contributions as a Percentage of Covered Employee Payroll 13.58 % 52.52 % 52.03 % 12.85 %
See notes to schedule of commission contributions. 32
Lansing Housing Commission
Required Supplemental Information
Schedule of Changes in the Commission's OPEB Liability and Related Ratios
Last Three Fiscal Years
2019 2018 2017
Total OPEB Liability
Service cost $ 11,298 $ 53,470 $ 50,924
Interest 49,023 59,951 58,429
Changes in benefit terms (882,057) - -
Differences between expected and actual experience 141,256 - -
Changes in assumptions (118,162) - -
Benefit payments, including refunds (201,577) (65,682) (64,552)
Net Change in Total OPEB Liability (1,000,219) 47,739 44,801
Total OPEB Liability- Beginning of year 1,871,478 1,823,739 1,778,938
Total OPEB Liability- End of year $ 871,259 $ 1,871,478 $ 1,823,739
Covered Payroll $ 2,452,554 $ 2,381,121 $ 2,311,768
Total OPEB Liability as a Percentage of Covered
Payroll 35.52 % 78.60 % 78.89 %
See notes to schedule of commission
contributions. 33
Lansing Housing Commission
Required Supplemental Information
Schedule of OPEB Contributions
Last Three Plan Years
Years Ended June 30
2018 2017 2016
Actuarially determined contribution $ 53,173 $ 148,959 $ 143,977
Contributions in relation to the actuarially determined contribution 201,577 65,682 64,552
Contribution (Excess) Deficiency $ (148,404) $ 83,277 $ 79,425
Covered Payroll $ 2,452,554 $ 2,381,121 $ 2,311,768
Contributions as a Percentage of Covered Payroll 8.22 % 2.76 % 2.79 %
Notes to Schedule of Contributions
Actuarial valuation information relative to the determination of contributions:
Valuation date Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the
fiscal year in which the contributions are reported.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Individual entry age normal cost method
Asset valuation method Market value of assets as of the measurement date
Inflation 2.75 percent per annum
Cost of living adjustment 3.50 percent per annum
Salary increase 3.00 percent per annum
Investment rate of return 6.50 percent, net of OPEB plan investment expense, including inflation
Retirement age 60
Mortality RP-2000 Employee Mortality Table projected generationally with scale BB and a base year 2009 for
males and females
Other information None
See notes to schedule of commission contributions. 34
Lansing Housing Commission
Notes to Schedule of Commission Contributions
June 30, 2019
Pension Information
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 20 years
Asset valuation method 10-year smoothed
Inflation 2.50 to 3.75 percent
Salary increase 3.75 percent average, including inflation
Investment rate of return 8.0 percent
Retirement age 60
Mortality 50 percent male to 50 percent female blend of the 2004 Group Annuity
Mortality Table
Other information None
Benefit Changes
There were no changes of benefit terms in 2018.
Changes in Assumptions
There were no changes of benefit assumptions in 2018.
Changes in Size or Composition of the Covered Population
There were no significant changes in size or composition of the covered population.
OPEB Information
Benefit Changes
The plan has been changed to provide a monthly contribution into the MERS Care Savings Program for Active
employees hired prior to January 1, 2019 and a monthly stipend to employees retired prior to January 1, 2019.
Changes in Assumptions
From June 30, 2018 to June 30, 2019, the assumption for the discount rate was changed from 3.25 percent to
2.75 percent, and the expected cost of living adjustment was updated to 3.50 percent.
35
Other Supplemental Information
36
Lansing Housing Commission
Financial Data Schedules
Year Ended June 30, 2019
14.871 Housing 14.896 6.1 Component
Public Housing 14.CFP Capital Supportive Business Central Office Units-
Project Total Fund Choice Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely
Vouchers
Program Presented
Balance Sheet
Assets
111.00 Cash-Unrestricted $ 1,938,042 $ - $ 632,604 $ - $ 129,463 $ - $ 1,199,392 $ 3,899501 $ - $ 3,899501 $ 40,754
113.00 Cash-Other restricted - - 106,180 - - - - 106:180 - 106:180 341,403
114.00 Cash-Tenant security deposits 133,852 - - - - - - 133,852 - 133,852 5,071
115.00 Cash-Restricted for payment ofcurrent liabilities 137,867 - - - - - - 137,867 - 137,867 -
100.00 Total Cash 2,209,761 - 738,784 - 129,463 - 1,199,392 4,277,400 - 4,277,400 387,228
122.00 Total accounts receivable-HUD other projects 30,925 - - - - - - 30,925 - 30,925 -
124.00 Accounts receivable-Other government 4,949 - - - - - - 4,949 - 4,949 -
125.00 Total accounts receivable-Miscellaneous - - - - 255,571 - 33,394 288,965 - 288,965 1,799
126.00 Accounts receivable-Tenants-Dwelling rents 47,259 - - - - - - 47,259 - 47,259 3,240
126.10 Allowance for boubtful accounts-Dwelling rents (4,726) - - - - - - (4,726) - (4,726) -
127.00 Notes-Loans-B.Mortgages Receivable-Current - - - - - - - - - - -
128.00 Accounts and notes receivable fraud recovery 4,951 - - - - - - 4,951 - 4,951 -
129.00 Accrued interest receivable 464 - - - 464 - 464
120.00 Total Receivables-Net Of Allowances For Doubtful Accounts 83,822 - - - 255,571 - 33,394 372,787 - 372,787 5,039
131.00 Investments-Unrestricted 523,004 - - - - - - 523,004 - 523,004 -
142.00 Prepaid a)penses and other assets 43,945 - 2,545 - - - 2,706 49,196 - 49,196 4,919
143.00 Inventories - - - - - - - - - - -
144.00 Interprogram-Due from - - - - - - 879,491 879,491 (879,491) - -
150.00 Total Current Assets 2,860,532 - 741,329 - 385,034 - 2,114,983 6,101,878 (879,491) 5,222,387 397,186
161.00 Land 1,364,771 - - - - - 190,000 1,554,771 - 1,554,771 685,162
162.00 Buildings 51,195,108 - - - - - 737,971 61,933,079 - 51,933,079 3,318,485
163.00 Furniture-Equipment and machinery-Dwellings 895,673 - - - - - - 895,673 - 895,673 -
164.00 Furniture-Equipment and machinery-Administration 16,576 - 27,596 - - - 364,287 408,459 - 408,459 175,949
165.00 Leasehold Improvements - - - - - - - - - - -
166.00 Accumulated depreciation (40,531,779) - (27,596) - - - (1,083,579) (41,642,954) - (41,642,954) (1,853,569)
167.00 Construction in progress 397,755 - - - - - - 397,755 - 397,755 12,510
160.00 Total Fixed Assets-Net Of Accumulated Depreciation 13,338,104 - - - - - 208,679 13,546,783 - 13,546,783 2,338,537
171.00 Total notes-Loans-And mortgages receivable-Noncurrent - - - - - 747,010 270,776 1,017,786 - 1,017,786 -
174.00 Total other assets - - - - - 110,100 - 110,100 - 110,100 4,583
176.00 Total Investment In Joint Ventures - - - -
180.00 Total Noncurrent Assets 13,338,104 - - - - 857,110 479,455 14,674,669 - 14,674,669 2,343,120
190.00 Total Assets 16,198,636 - 741,329 - 385,034 857,110 2,594,438 20,776,547 (879,491) 19,817,056 2,740,306
200.00 Deferred outflow of resources 561,419 - 147,708 - - - 100,321 809,448 - 809,448 -
290.00 Total Assets and Deferred Outflow of Resources 16,760,055 889,037 385,034 857,110 2,694,759 21,585,995 (879,491) 20,706,504 2,740,306
37
Lansing Housing Commission
Financial Data Schedules
Year Ended June 30, 2019
14.871 Housing 14'896 6.1 Component
Publie Housing 14.CFP Capital Supportive Business Central Office Units-
ProjectTotal Fund Choice Housing State/Local Activities Cost Center Subtotal Eliminations Total Discretely
Vouchers Program Presented
Liabilities
312.00 Accounts payable-90 Days $ 30,925 $ - $ - $ - $ - $ - $ - $ 30,925 $ - $ 30,925 $ 1,962
321.00 Accrued wage/payroll taxes payable 31,171 - 14,985 - - - 6,157 52,313 - 52,313 78,174
322.00 Accrued compensated absences-Current portion 6,110 - 2,662 - - - 1,251 10,023 - 10,023 -
325.00 Accrued interest payable - - - - - - - - - - 165,055
331.00 Total accounts payable-HUD Pha programs - - - - - - - - - - -
333.00 Accounts payable-Other government 118,496 - - - - - - 118,496 - 118,496 19,255
341.00 Tenant security deposits 133,852 - - - - - - 133,852 - 133,852 5,071
342.00 Total deferred revenue 18,352 - - - - - 3,705 22,057 - 22,057 593
343.00 Total current portion of LTD-capital projects/mortgage revenue bonds 137,867 - - - - - 57,632 195,499 - 195,499 32,947
345.00 Other Current Liabilities - - - - - - - - - - 133,187
346.00 Accrued liabilities-Other 164,152 - 8,435 - - - 6,749 179,336 - 179,336 78,035
347.00 Interprogram-Due to - - - - - 879,491 - 879,491 (879,491) - -
348.00 Loan liability-Current - - - - - - - 1 - 177,762
310.00 Total Current Liabilities 640,925 - 26,082 - - 879,491 75,494 1,621,992 (879,491) 742,501 692,041
351.00 Total LTD-Net ofcurrent-Capital projects/mortgage revenue bonds 1,428,897 - - - - - 67,354 1,496,251 - 1,496,251 2,463,271
353.00 Noncurrent liabilities-Other - - 58,615 - - - - 58,615 - 58,615 515,767
354.00 Accrued compensated absences-Noncurrent 34,626 - 15,086 - - - 7,088 56,800 - 56,800 -
357.00 Accrued pension and OPEB liabilities 1,520,660 - 521,618 - - - 267,660 2,309,938 - 2,309,938 -
350.00 Total Noncurrent Liabilities 2,984,183 - 595,319 - - - 342,102 3,921,604 - 3,921,604 2,979,038
300.00 Total Liabilities 3,625,108 - 621,401 - - 879,491 417,596 5,543,596 (879,491) 4,664,105 3,671,079
400.00 Deferred inflow of resources - - - - - - - - - - -
Equity
508.40 Invested in capital assets-Net of related debt 11,771,340 - - - - - 83,693 11,855,033 - 11,855,033 (157,681)
511.40 Restricted net assets - - 47,565 - - - - 47,565 - 47,565 -
512.40 Unrestricted net assets 1,363,607 - 220,071 - 385,034 (22,381) 2,193,470 4,139,801 - 4,139,801 (773,092)
513.00 Total Equity/Net Assets 13,134,947 - 267,636 - 385,034 (22,381) 2,277,163 16,042,399 - 16,042,399 (930,773;
600.00 1 Total Liabilities and Equity/Net Assets 16,760,055 889,037 385,034 857,110 2,694,759 1 21,585,995 (879,491)1 20,706,504 1 2,740,306
38
Lansing Housing Commission
Financial Data Schedules
Year Ended June 30, 2019
14.871 Housing 14.896 6.1 Component
Public Housing 14.CFu Capital Choice Supportive State/Local Business Central Office Subtotal Diminations Total Units-
Project Total Fund Vouchers Housing Activities Cost Center Discretely
Program Presented
Income Statement
Revenue
70300 Net tenant rental revenue $ 1,575,020 $ - $ - $ - $ - $ - $ - $ 1,575,020 $ - $ 1,575,020 $ 87,253
70400 Tenant revenue-Other 139,380 - - - - - - 139,380 - 139,380 -
70500 Total Tenant Revenue 1,714,400 - - - - - - 1,714,400 - 1,714,400 87,253
70600 Total HUD Pha operating grants 3,728,854 858,100 11,601,323 10,769 - - - 16,199,046 - 16,199,046 191,445
70610 Capital grants - 263,889 - - - - - 263,889 - 263,889 -
70710 Managementfee - - - - - - 910,210 910,210 (910,210) - -
70720 Asset managementfee - - - - - - 99,960 99,960 (99,960) - -
70730 Bookkeeping fee - - - - - - 72,164 72,164 (72,164) - -
70750 Other fees - I - - - I - - - - I - - -
70700 Total Fee Revenue 3,728,854 1,121,989 11,601,323 10,769 - - 1,082,334 17,545,269 (1,082,334) 16,462,935 -
70800 Other government grants - - - - 1,079,056 - - 1,079,056 - 1,079,056 -
71100 Total investment income-Unrestricted 8,137 - 154 - - - - 8,291 - 8,291 10,991
71200 Mortgage Interest Income - - - - - - - - - - -
71400 Total revenue fraud recovery - - 16,350 - - - - 16,350 - 16,350 -
71500 Other revenue 808,440 - 302,023 - - 13,378 181,085 1,304,926 - 1,304,926 50
71600 Gain or loss on sale offixed assets (965) - - - - - - (965) - (965) -
70000 Total Revenue 6,258,866 1,121,989 11,919,850 10,769 1,079,056 13,378 1,263,419 21,667,327 (1,082,334) 20,584,993 289,739
39
Lansing Housing Commission
Financial Data Schedules
Year Ended June 30, 2019
14.871 Housing 14.896 6.1 Component
Ch oice State/Local Subtotal Eliminations Total
Public Housing 14.CFP Capital Supportive Business Central Office Units-
Project Total Fund Vouchers Housing Activities Cost Center Discretely
Program Presented
Expenses
91100 Administrative salaries 312,427 - 276,487 7,431 35,628 - 215,828 847,801 - 847,801 6,413
91200 Auditing fees 20,000 - 25,000 - - - 5,000 50,000 - 50,000 9,475
91300 Managementfee 492,217 214,880 203,113 - - - - 910,210 (910,210) - 31,051
91310 Bookkeeping fee 72,164 - - - - - - 72,164 (72,164) - -
91400 Advertisting and marketing - - - - - - 20 20 - 20 -
91500 Employee benefit contributions-Administrative 207,704 - 148,728 3,338 14,297 - 75,382 449,449 - 449,449 -
91600 Office a)penses 140,135 - 210,007 - 114,250 - 182,585 646,977 - 646,977 5,018
91700 Legal etyense 109,134 - - - - - 9,449 118,583 - 118,583 -
91800 Travel 1,041 - - - - - 10,889 11,930 - 11,930 -
91900 Other - - - - - - - - - - -
91000 Total Administrative 1,354,822 214,880 863,335 10,769 164,175 - 499,153 3,107,134 (982,374) 2,124,760 51,957
92000 Asset management fee 99,960 - - - - - - 99,960 (99,960) - -
92400 Tenant services-Other 79,154 - - - - - 4,684 83,838 - 83,838 -
92500 Total Tenant Services 179,114 - - - - - 4,684 83,838 - 83,838 -
93100 Water 189,849 - - - - - 840 190,689 - 190,689 12,435
93200 Electricity 227,503 - - - - - 9,974 237,477 - 237,477 36,367
93300 Gas 226,398 - - - - - 2,119 228,517 - 228,517 12,709
93400 Fuel - - - - - - - - - - -
93600 Sewer 275,052 - - - - - 685 275,737 - 275,737 10,702
93800 Other utilities expense - - - - - - - - - - -
93000 Total Utilities 918,802 - - - - - 13,618 932,420 - 932,420 72,213
94100 Ordinary maintenance and operations-Labor $ 369,592 $ - $ - $ - $ - $ - $ - $ 369,592 $ - $ 369,592 $ 2,113
94200 Ordinary maintenance and operations-Materials and other 445,421 - - - - - 300 445,721 - 445,721 734
94300 Total ordinary maintenance and operations-Contract costs 2,333,414 - 27,274 - - - 154,809 2,515,497 - 2,515,497 46,142
94500 Employee benefit contributions-Ordinary maintenance 278,911 - - - - - - 278,911 - 278,911 -
94000 Total Maintenance 3,427,338 - 27,274 - - - 155,109 3,609,721 - 3,609,721 48,989
95200 Protective services-Other contractcosts 13,784 - 259 - - - 388 14,431 - 14,431 -
96110 Properly insurance 182,110 - - - - - 1,840 183,950 - 183,950 13,059
96120 Liability insurance 72,056 - 15,860 - - - 226 88,142 - 88,142 1,525
96130 Workmens compensation 4,210 - 8,099 - - - 589 12,898 - 12,898 -
96140 All otherinsurance i18,892 - - - - - 29,525 48,417 - 48,417 910
96100 Total Insurance Premiums 277,268 23,959 - - 32,180 333,407 333,407 15,494
40
Lansing Housing Commission
Financial Data Schedules
Year Ended June 30, 2019
14.871 Housing 14.89E 6.1 Component
Public Housing 14.CFP Capital Choice Supportive State/Local Business Central Office Subtotal Eliminations Total Units-
ProjectTotal Fund Vouchers Housing Activities Cost Center Discretely
Program Presented
96200 Other General Expenses - - - - - - - - - - -
96210 Compensated absences 24,162 - 21.772 - - - 3,922 49,856 - 49,856 -
96300 Payments in lieu of taxes 59,068 - - - - - - 59,068 - 59,068 19,255
96400 Bad debt-Tenant rents 65,536 - - - - - - 65,536 - 65,536 1,936
96000 Total Other General Expenses 148,766 - 21,772 - - - 3,922 174,460 - 174,460 21,191
96710 Interest of mortgage(or bonds)payable - - - - - - - - - - 90,156
96720 Intereston notes payable(short and long term) 67,026 - - - - - 4,223 71,249 - 71,249 -
96730 Amortization of bond issue costs - - - - - - - - - - 1,528
96700 Total Interest Expense And Amortization Cost 67,026 - - - - - 4,223 71,249 - 71,249 91,684
96900 Total Operating Expenses 6,386,920 214,880 936,599 10,769 164,175 - 713,277 8,426,620 (1,082,334) 7,344,286 301,528
97000 Excess revenue over operating expenses (128,054) 907,109 10,983,251 - 914,881 13,378 550,142 13,240,707 - 13,240,707 (11.789)
97100 Extraordinary Maintenance - - - - - - - - - - -
97300 Total housing assistance payments - - 10,834,579 - 861,146 - - 11,695,725 - 11,695,725 -
97350 HAP Portability-In - - - - - - - - - - -
97400 Depreciation expense 1,126,065 - - - - - 106,633 1,232,698 - 1,232,698 140,332
97500 Fraud Losses - - - - - - - - - -
97800 Dwelling units rent expense - - - - - - - - - -
98000 Total Other Nonoperating Expenses 1,126,065 - 10,834,579 - 861,146 - 106,633 12,928,423 - 12,928,423 140,332
90000 Total Expenses 7,512,985 214,880 11,771,178 10,769 1,025,321 - 819,910 21,355,043 (1,082,334) 20,272,709 441,860
10010 Operating transfers in 643,219 - - - - - - 643,219 - 643,219 -
10020 Operating transfers out - (643,219) - - - - - (643,219) - (643,219) -
10100 Total Other Financing Sources(Uses) 643,219 (643,219) - - - - - - - - -
10000 Excess(Deficiency)Of Total Revenue Over(Under)Total
Expenses (610,900) 263,890 148,672 53,735 13,378 443,509 312,284 312,284 (152,121)
11020 Required annual debt principal payments 131,399 - - - - - 47,976 179,375 - 179,375 28,367
11030 Beginning equity 13,481,957 - 118,964 - 331,299 (35,759) 1,833,654 15,730,115 - 15,730,115 (778,652)
11040 Prior period adjustments-Equitytransfers-And correction oferrors - - - - - - - - - - -
11170 Administrative fee equity - - - - - - - - - - -
11180 Housing assistance payments equity - - - - - - - - - - -
11190 Unit months available 9,996 - 21,936 - - - - 31,932 - 31,932 360
11210 Number of unit months leased 9,586 - 20,105 - - - - 29,691 - 29,691 360
11270 Excess Cash - - - - - - - - - - -
11610 Land Purchases - - - - - - - - - - -
11620 Building purchases - 263,889 - - - - - 263,889 - 263,889 -
11630 Furniture and Equipment-Administrative Purchases - - - - - - - - - - -
11640 Furniture and Equipment-Dwelling Purchases - - - - - - - - - - -
11650 Leashold Improvements Purchases - - - - - - - - - - -
13901 1 Replacement housing factorfunds - - - - - - - - - - -
41
Actual Modernization U.S.Department of Housing OMB Approval No.2577-0157(exp.01131/2017)
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 M128P058501-16
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 $ 1,372,645.00
B. Funds Disbursed $ 1,372,645.00
C. Funds Expended (Actual Modernization Cost) $ 1,372,645.00
D. Amount to be Recaptured (A—C) $
E. Excess of Funds Disbursed (B-C) $
2. That all modernization work in connection with the Modernization Grant has been completed;
3.That the entire Actual Modernization Cost or liabilities therefor incurred by the PHA have been fully paid;
4. That there are no undischarged mechanics', laborers', contractors', or material-men's liens against such modernization
work on file in any public office where the same should be filed in order to be valid against such modernization work;
5. That the time in which such liens could be filed has expired; and
6. That for any years in which the grantee is subject to the audit requirements of the Single Audit Act, 31 U.S.C. §7501 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.(1B U.S.C.1001,1010.1012;31 U.S.C.3729,3802)
Name&Title of Authorized Signatory(type or print clearly):
Douglas E. Fleming: Executive Director
ture xecutive Direc r(or Authorized Designee): Date:
s Only
The Co ertificate is approved for au rt(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 (10196)
42 ref Handbooks 7485.1 &.3