HomeMy WebLinkAbout2023 - Lansing Entertainment and Public Facilities Authority LEPFA 2023 Report on financial statements Audit LANSING ENTERTAINMENT AND PUBLIC
FACILITIES AUTHORITY
REPORT ON FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2023
(o,wP
Maner
Costerisan
TABLE OF CONTENTS
Paae
INDEPENDENT AUDITOR'S REPORT.........................................................................................................................................1-3
MANAGEMENT'S DISCUSSION AND ANALYSIS....................................................................................................................4-7
BASIC FINANCIAL STATEMENTS...................................................................................................................................................8
Statementof Net Position..............................................................................................................................................................9
Statement of Revenues, Expenses,and Changes in Net Position................................................................................10
Statementof Cash Flows..............................................................................................................................................................11
Notesto Financial Statements................................................................................................................................................12-20
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS.....................................................................................................................21-23
2425 E.Grand River Ave.,
(0,0.ffManer Suite 1,Lansing,MI 48912
n 517.323.7500
osterisanED 517.323.6346
INDEPENDENT AUDITOR'S REPORT
The Honorable Mayor,Members of the City Council,and
Members of the Board of Commissioners of the
Lansing Entertainment and Public Facilities Authority
Lansing,Michigan
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the business-type activities and each major fund of
the Lansing Entertainment and Public Facilities Authority (the Authority), a discretely presented component
unit of the City of Lansing, Michigan, as of and for the year ended June 30, 2023, and the related notes to the
financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the business-type activities and each major fund of the Lansing Entertainment and Public
Facilities Authority as of June 30,2023,and the respective changes in financial position and cash flows thereof for
the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,issued by
the Comptroller General of the United States. Our responsibilities under those standards are further described
in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required
to be independent of the Authority and to meet our other ethical responsibilities,in accordance with the relevant
ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinions.
Emphasis of Matter
Exclusive Presentation
As discussed in Note 1, the financial statements present only the Authority and do not purport to, and do not
present fairly the financial position of the City of Lansing, Michigan, as of June 30, 2023, and the changes in its
financial position, or where applicable, its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.Our opinions are not modified with respect to this
matter.
1
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America, and for the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement,whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate,that raise substantial doubt about the Authority's ability to continue as a
going concern for twelve months beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a
guarantee that an audit conducted in accordance with generally accepted auditing standards and Government
Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are
considered material if there is a substantial likelihood that,individually or in the aggregate,they would influence
the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing
Standards,we:
➢ Exercise professional judgment and maintain professional skepticism throughout the audit.
➢ Identify and assess the risks of material misstatement of the financial statements,whether due to fraud
or error,and design and perform audit procedures responsive to those risks. Such procedures include
examining,on a test basis,evidence regarding the amounts and disclosures in the financial statements.
➢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Authority's internal control. Accordingly,no such opinion is expressed.
➢ Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management,as well as evaluate the overall presentation of the financial
statements.
➢ Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the Authority's ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related matters
that we identified during the audit.
2
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis be presented to supplement the basic financial statements. Such information is the
responsibility of management and, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America,which consisted of inquiries of management about
the methods of preparing the information and comparing the information for consistency with management's
responses to our inquiries,the basic financial statements,and other knowledge we obtained during our audit of
the basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards,we have also issued our report dated December 8,2023,on
our consideration of the Authority's internal control over financial reporting and on our tests of its compliance
with certain provisions of laws,regulations,contracts,grant agreements,and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering Authority's internal control over financial reporting and compliance.
December 8, 2023
3
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the Lansing Entertainment and Public Facilities Authority(the"Authority")we offer readers
of the Authority's financial statements this narrative overview and analysis of the financial activities of the
Authority for the fiscal year ended June 30,2023.
Financial Highlights
Total net position $ 2,986,599
Change in total net position 1,275,986
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the Authority's basic financial statements.
The basic financial statements are comprised of:
➢ The statement of net position presents information on all of the Authority's assets and liabilities,with the
difference between the two reported as net position. Over time, increases or decreases in net position
may serve as a useful indicator of whether the financial position of the Authority is improving or
deteriorating.
➢ The statement of revenues, expenses, and changes in net position presents information showing how the
Authority's net position changed during the most recent fiscal year. All changes in net position are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cash flows. Thus,revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods.
➢ The statement of cash flows presents the change in the Authority's cash and cash equivalents for the most
recent fiscal year.
➢ The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided in the basic financial statements.
Financial Analysis
As noted earlier,net position may serve over time as a useful indicator of a government's financial position. In
the case of the Authority,assets exceeded liabilities by$2,986,599 at the close of the most recent fiscal year.
By far the largest portion of the Authority's net position (95.9%) is its unrestricted net position which may be
used to meet the Authority's ongoing obligations to system users and creditors.
Another portion of net position (2.7%) is restricted by contractual agreement to maintain in an event
development cash reserve for Jackson Field to provide a source of monies from which to finance events at the
Jackson Field.
The remaining portion of the net position (1.4%) is its investment in capital assets (e.g., machinery and
equipment, and right to use assets);less any related debt used to acquire those assets that is still outstanding.
The Authority uses these capital assets to provide services;consequently,these assets are not available for future
spending.
At the end of the current fiscal year, the Authority is able to report positive balances in all categories of net
position. The same situation held true for the prior fiscal year.
4
The Lansing Center,Jackson Field, Groesbeck Golf Course and Center Park Productions reported a net position
of$1,973,709,$183,433,$681,979 and$147,478,respectively.
Net Position
2023 2022
Assets
Current and other assets $ 5,282,749 $ 3,302,209
Capital assets,net 62,509 86,948
Total assets 5,345,258 3,389,157
Current liabilities 2,358,659 1,657,979
Non-Current Liabilities - 20,565
Total Liabilities 2,358,659 1,678,544
Net Position
Net investment in capital assets 41,944 25,864
Restricted 80,000 80,000
Unrestricted 2,864,655 1,604,749
Total net position $ 2,986,599 $ 1,710,613
Change in Net Position
2023 2022
Operating revenues $ 6,503,225 $ 5,428,872
Operating expenses 8,774,515 6,485,452
Operating loss (2,271,290) (1,056,580)
Nonoperating revenues 3,547,276 2,219,763
Change in net position 1,275,986 1,163,183
Net position,beginning of year 1,710,613 547,430
Net position,end of year $ 2,986,599 $ 1,710,613
5
The Authority's net position increased by$1,710,613 for fiscal year 2023, compared to an increase of$547,430
for fiscal year 2022. Key elements of the 2023 increase include:
➢ Revenues of the Authority increased overall;however,the Lansing Center and Groesbeck Golf Course saw
increases in revenues due to the increase ability to host activities due to the removal of restriction from
the pandemic. Jackson Field returned to normal operating conditions but saw significant increases in
operating expenses due to restrictions in funding to maintain the facility during the pandemic. Deferred
maintenance at all facilities caused additional increases in maintenance expenses. The return to events at
all properties created increases in staffing and expense for hiring and training staff increased as well. Grant
funds help sustain operations while revenues increased. Continued concerns over the inflation and
challenges associated with expenses(healthcare costs,labor costs,food costs,utilities,etc.)rising and still
being able to maintain competitively in the industry while trying hard to provide a good product. Concerns
over the overall conditions of the Lansing Center,Jackson Field,and Groesbeck Golf Course still exist and
funding is desperately needed to stay up to industry standards and competitive for business.
Capital Assets
The Authority's investment in capital assets as of June 30, 2023 amounted to $62,509 (net of accumulated
depreciation). Total net capital assets decreased by$24,439. The decrease is due to depreciation expense in the
current year net with additions related to machinery and equipment.
Net
Balance Additions/ Balance
June 30,2022 Deletions June 30,2023
Capital assets being depreciated/amortized
Machinery and equipment $ 1,378,952 $ 25,550 $ 1,404,502
Right to use-machinery and equipment 101,308 - 101,308
Total assets being depreciated/amortized 1,480,260 25,550 1,505,810
Less accumulated depreciation/amortization
Machinery and equipment (1,351,873) (8,550) (1,360,423)
Right to use-machinery and equipment (41,439) (41,439) (82,878)
Total accumulated depreciation/amortization (1,393,312) (49,989) (1,443,301)
Capital assets,net $ 86,948 $ (24,439) $ 62,509
Additional information on the Authority's capital assets can be found in Note 5 of this report.
Long-term Obligations
Net
Balance Additions/ Balance
July 1, 2022 Deletions June 30, 2023
Governmental Activities
Direct borrowings and direct placements $ 61,084 $ (40,519) $ 20,565
Additional information on the Authority's long-term obligation can be found in Note 7 of this report.
6
Economic Factors Affecting Next Year's Operations
The Authority is still concerned about several economic factors for all LEPFA managed properties heading into
FY 2023-24. Consumer spending is concerning due to uncertainty of the economy and inflation. Continued
increases to expenses at the Authority include costs of good,labor,utilities,and employee benefits. Supply chain
issues and staffing shortages continue to be a concern heading into this fiscal year.
The Authority does believe that events will continue to be held and plans to focus on strategic plans that involve
growth and investment in the facilities,events,and staff. There is a strong schedule of activity at all properties,
and we are focused on overcoming the challenges with staffing and increased costs. Supply chain issues continue
to be monitored and are expected to impact pricing and availability of food and beverage product offerings to
our clients. There is a focus on evolving foodservice operations to help offset some of these challenges while still
delivering great service to our customers.
Requests for Information
This financial report is designed to provide a general overview of the Authority's finances for all those with an
interest in the Authority's finances. Questions concerning any of the information provided in this report or
requests for additional financial information should be addressed to the Lansing Entertainment and Public
Facilities Authority,333 E.Michigan Avenue,Lansing,Michigan 48933.
7
BASIC FINANCIAL STATEMENTS
s
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
STATEMENT OF NET POSITION
JUNE 30, 2023
Lansing Jackson Groesbeck Center Park Total Business-
Center Field Golf Course Productions Type Activities
ASSETS
Current Assets
Cash and cash equivalents $ 1,160,567 $ 158,791 $ 1,154,932 $ 21,164 $ 2,495,454
Cash and cash equivalents-restricted - 80,000 - - 80,000
Receivables,net 1,736,803 217,059 1,701 115,157 2,070,720
Due from other funds 516,337 - - - 516,337
Prepaid items 12,078 3,807 9,008 12,063 36,956
Inventory 73,253 10,029 - 83,282
Total Current Assets 3,499,038 459,657 1,175,670 148,384 5,282,749
Noncurrent Assets
Capital assets,net 7,326 25,008 30,175 - 62,509
TOTAL ASSETS 3,506,364 484,665 1,205,845 148,384 5,345,258
LIABILITIES
Current Liabilities
Accounts payable 594,687 178,836 38,447 906 812,876
Accrued liabilities 463,475 719 4,306 - 468,500
Due to other funds - 121,677 394,660 516,337
Current portion of long-term obligations - - 20,565 20,565
Unearned revenue 474,493 - 65,888 - 540,381
TOTAL LIABILITIES 1,532,655 301,232 523,866 906 2,358,659
NET POSITION
Net investment in capital assets 7,326 25,008 9,610 - 41,944
Restricted for Jackson Field events - 80,000 - - 80,000
Unrestricted 1,966,383 78,425 672,369 147,478 2,864,655
TOTAL NET POSITION $ 1,973,709 $ 183,433 $ 681,979 $ 147,478 $ 2,986,599
See accompanying notes to financial statements.
9
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITION
YEAR ENDED JUNE 30,2023
Lansing Jackson Groesbeck Center Park Total Business-
Center Field Golf Course Productions Type Activities
OPERATING REVENUES
Building rental $ 948,728 $ $ $ $ 948,728
Security 48,556 48,556
Food services 2,626,889 125,217 2,752,106
Equipment rental 1,105,838 225,062 1,330,900
Box office 23,157 - 23,157
Labor/service 342,465 342,465
Trade show utilities 90,005 - 90,005
Greens fees - 559,384 559,384
Sponsorships 220,761 - 220,761
Other 139,987 17,842 29,334 187,163
TOTAL OPERATING REVENUES 5,546,386 17,842 938,997 6,503,225
OPERATING EXPENSES
Personnel services 2,358,751 161,909 631,780 3,152,440
Food and beverage 1,329,848 - 89,075 1,418,923
Communications 18,226 11,752 13,877 43,855
Rents 49,534 - 41,427 90,961
Professional services 917,518 21,698 14,045 953,261
Utilities 995,259 137,113 25,587 1,157,959
Marketing 129,739 - 21,754 151,493
Repairs and maintenance 114,356 69,832 101,125 285,313
Supplies and materials 104,608 19,840 100,154 224,602
Insurance 69,544 28,443 12,791 110,778
Events 824,569 - - 824,569
Security 19,478 - - 19,478
Depreciation/amortization 862 542 48,585 - 49,989
Bad debt expense - - - 111,961 111,961
Other 156,235 22,326 - 372 178,933
TOTAL OPERATING EXPENSES 7,088,527 473,455 1,100,200 112,333 8,774,515
OPERATING(LOSS) (1,542,141) (455,613) (161,203) (112,333) (2,271,290)
NONOPERATING REVENUES
Annual operating subsidy-City of Lansing 1,969,000 606,000 96,000 2,671,000
Pass-through of hotel/motel tax collections from
Greater Lansing Convention and Visitors Bureau 876,276 - - 876,276
TOTAL NONOPERATING REVENUES 2,845,276 606,000 96,000 3,547,276
CHANGE IN NET POSITION 1,303,135 150,387 (65,203) (112,333) 1,275,986
Net Position,beginning of year 670,574 33,046 747,182 259,811 1,710,613
Net Position,end of year $ 1,973,709 $ 183,433 $ 681,979 $ 147,478 $ 2,986,599
See accompanying notes to financial statements.
10
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30,2023
Lansing Jackson Groesbeck Center Park Total Business-
Center Field Golf Course Productions Type Activities
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers $ 4,646,053 $ 103,013 $ 933,196 $ 111,961 $ 5,794,223
Cash payments for goods and services (4,328,266) (634,440) (405,867) (112,333) (5,480,906)
Cash payments to employees (2,292,538) (161,909) (633,235) (3,087,682)
Cash receipts(payments)for interfund services (351,318) 90,193 261,125
NET CASH PROVIDED(USED)BY
OPERATING ACTIVITIES (2,326,069) (603,143) 155,219 (372) (2,774,365)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash transfers from the City of Lansing 1,969,000 606,000 96,000 - 2,671,000
Cash transfers from the Convention and Visitors Bureau 876,276 876,276
NET CASH PROVIDED BY NONCAPITAL
FINANCING ACTIVITIES 2,845,276 606,000 96,000 3,547,276
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Payments related to lease payable - - (40,519) (40,519)
Payments for acquisition of capital assets (25,550) (25,550)
NET CASH(USED)BY CAPITAL
AND RELATED FINANCING ACTIVITIES - (25,550) (40,519) (66,069)
NET INCREASE(DECREASE)IN CASH
AND CASH EQUIVALENTS 519,207 (22,693) 210,700 (372) 706,842
Cash and cash equivalents,beginning of year 641,360 261,484 944,232 21,536 1,868,612
Cash and cash equivalents,end ofyear $ 1,160,567 $ 238,791 $ 1,154,932 $ 21,164 $ 2,575,454
Reconciliation of operating loss to net cash
provided(used)by operating activities
Operating loss $ (1,542,141) $ (455,613) $ (161,203) $ (112,333) (2,271,290)
Adjustments to reconcile operating income(loss)to
net cash provided(used)by operating activities
Depreciation/amortization 862 542 48,585 - 49,989
(Increase)/decreasein:
Accounts receivable (987,047) (75,329) (40) 111,961 (950,455)
Due from other funds (344,571) 6,747 - - (337,824)
Prepaid items 20,658 3,838 1,146 25,642
Inventory (12,681) - 1,620 (11,061)
Increase/(decrease)in:
Accounts payable 392,671 (166,774) 11,202 237,099
Accrued liabilities 66,213 - (1,455) 64,758
Due to other funds (6,747) 83,446 261,125 337,824
Unearned revenue 86,714 (5,761) 80,953
NET CASH PROVIDED(USED)BY
OPERATING ACTIVITIES $ (2,326,069) $ (603,143) $ 155,219 $ (372) $ (2,774,365)
See accompanying notes to financial statements.
11
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 1-DESCRIPTION OF AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
The Lansing Entertainment and Public Facilities Authority (the "Authority") was established under the charter
of the City of Lansing in February 1996,replacing the former Greater Lansing Convention/Exhibition Authority.
The Authority was established to oversee the management and operations of the Lansing Center,Jackson Field,
and Groesbeck Golf Course under an agreement with the City of Lansing.
The Authority is chartered as a building authority under the provisions of Act 31,Public Acts of Michigan, 1948.
In the event of dissolution or termination of the Authority, all assets and rights of the Authority shall revert to
the City of Lansing. The Authority's Board of Commissioners consists of nine members appointed by the Mayor
of the City of Lansing and approved by the City Council,and three ex-officio members.
Center Park Productions,a not-for-profit entity,was organized to perform activities in support and furtherance
of the purposes of its sole member, Lansing Entertainment and Public Facilities Authority, and is therefore
reported as a blended component unit of the Authority. The Entity's Board of Directors consists of six members
appointed by the Board of Directors of the Authority. Center Park Productions is presented in the accompanying
financial statements on its fiscal year end of December 31.
The accompanying financial statements present the financial position and results of operations of the Authority.
They do not purport to,and do not present fairly,the net position of the City of Lansing, Michigan and changes
in its net position or cash flows in conformity with accounting principles generally accepted in the United States
of America. The Authority is a discretely presented component unit of the City of Lansing.
Measurement Focus.Basis of Accounting.and Basis of Presentation
The proprietary fund financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability
is incurred,regardless of the timing of related cash flows.
The financial statements present the Authority's individual major funds. The major individual enterprise funds
are reported as separate columns in the financial statements. The Authority reports the Lansing Center,Jackson
Field,Groesbeck Golf Course,and Center Park Productions enterprise funds as major funds. Each fund accounts
for the activities of its respective facility/event.
Enterprise funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
and expenses generally result from providing services and producing and delivering goods in connection with
an enterprise fund's principal ongoing operations. The principal operating revenues of the enterprise funds are
charges to customers for facility rentals, sales, and services. Operating expenses for enterprise funds include
the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as nonoperating revenues and expenses. Also with this
measurement focus, all assets, deferred outflows of resources, liabilities, and deferred inflows of resources
associated with the operation of this fund are included on the Statement of Net Position. Fund equity (i.e.,net
position)is segregated into net investment in capital assets,restricted,and unrestricted components.
12
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -DESCRIPTION OF AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Assets,Liabilities,and Equity
Deposits and Investments
The Authority's cash and cash equivalents are considered to be cash on hand,demand deposits and short-term
investments with original maturities of three months or less from the date of acquisition. State statutes
authorize governments to deposit in the accounts of federally insured banks,credit unions,and savings and loan
associations,and to invest in obligations of the U.S.Treasury,certain commercial paper,repurchase agreements,
bankers'acceptances,and mutual funds composed of otherwise legal investments.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of
the fiscal year are referred to as either"due to/from other funds" (i.e.,the current portion of interfund loans).
Other receivables,generated in the normal course of providing services to customers,are shown net of doubtful
accounts where applicable. Payables are related to amounts due and payable at year-end for liabilities incurred
and paid for subsequent to year-end.
Inventory and Prepaid Items
Inventory is valued at cost using the first-in/first-out(FIFO) method. Certain payments to vendors reflect costs
applicable to future accounting periods and are recorded as prepaid items.
Capital Assets
Capital assets are limited to equipment and right to use assets. Equipment is stated at cost and depreciated using
the straight-line method over the estimated useful lives of the assets ranging from three to ten years. Right to
use assets of the Authority are amortized using the straight-line method over the shorter of the lease period or
the estimated useful lives, which is three years. Capital assets are defined by the Authority as assets with an
initial,individual cost of more than$500 and an estimated useful life of three years. Facilities managed by the
Authority are owned by the City of Lansing and,as such,the carrying values of these properties are reflected in
the City's financial statements. The costs of normal maintenance and repairs that do not add to the value of the
asset or materially extend asset lives are not capitalized.
Unearned Revenue
Unearned revenue consists of amounts received prior to the delivery of goods/service or expenditure for
allowable costs. Unearned revenue also consists of funds received from state government for a grant where
funds were received but expenditures were not allocated in order to recognize the full amount of grant funds
received.
Cash and Cash Equivalent Reserves
Under the terms of the Authority's operating agreement with the City of Lansing, the Authority is required to
restrict$50,000 annually for capital improvements and/or replacements. Any such monies unexpended shall
be carried forward to future years. For the year ended June 30,2023,all such restricted monies were expended
on capital improvements,leaving a zero balance in restricted assets for capital improvements at year end.
13
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -DESCRIPTION OF AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Assets.Liabilities,and Equity(continued).
Cash and Cash Equivalent Reserves(continued)
Under an amendment to the operating agreement with the City of Lansing, the Authority is also required to
maintain an event development cash reserve fund for Jackson Field to provide a source of monies from which to
finance events at the Jackson Field. The fund was established by an initial contribution from the City and may
be increased up to certain limits by the amount of any profits earned from such events. Restricted assets for
event development amounted to $80,000 at June 30, 2023. An equal amount of net position is reported as
restricted on the statement of net position.
The Authority's Board of Commissioners has also established a cash reserve account to ensure reasonable liquidity
for Lansing Center operations. The balance of this cash reserve as of June 30, 2023 was $605,764 and has been
formally set aside by the Board of Commissioners as designated for the above purpose. Generally,the reserve is
intended to provide up to 60 days of operating cash (which would be approximately $860,000 under normal
operating conditions if fully funded). The account is adjusted annually for the prior year operating results.
Leases
Lessee: The Authority is a lessee for noncancelable leases of equipment. The Authority recognizes a lease
liability and an intangible right-to-use lease asset in the statement of net position. The Authority recognizes
lease liabilities with an initial, individual value that it considers significant to the statement of net position, or
with annual lease payments that are considered significant to the fund in which they are accounted for.
At the commencement of a lease, the Authority initially measures the lease liability at the present value of
payments expected to be made during the lease term. Subsequently,the lease liability is reduced by the principal
portion of lease payments made. The leased asset is initially measured as the initial amount of the lease liability,
adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs.
Subsequently,the leased asset is amortized on a straight-line basis over its useful life.
Key estimates and judgements related to leases include how the Authority determines (1) the discount rate it
uses to discount the expected lease payments to present value, (2)lease term,and (3)lease payments.
➢ The Authority uses the interest rate charged by the lessor as the discount rate. When the interest rate
charged by the lessor is not provided,the Authority generally uses its estimated incremental borrowing
rate as the discount rate for leases.
➢ The lease term includes the noncancelable period of the lease. Lease payments included in the
measurement of the lease liability are composed of fixed payments and purchase option price that the
Authority is reasonably certain to exercise.
The Authority monitors changes in circumstances that would require a remeasurement of its leases and will
remeasure the leased asset and liability if certain changes occur that are expected to significantly affect the
amount of the lease liability.
Leased assets are reported with other capital assets and lease liabilities are reported with long-term obligations
on the statement of net position.
14
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 2 -DEPOSITS AND INVESTMENTS
In accordance with Michigan Compiled Laws, the Authority is authorized to invest in the following investment
vehicles:
a. Bonds,securities,and other obligations of the United States or an agency or instrumentality of the United
States.
b. Certificates of deposit,savings accounts,deposit accounts,or depository receipts of a State or nationally
chartered bank or a State or Federally chartered savings and loan association, savings bank, or credit
union whose deposits are insured by an agency of the United States government and which maintains a
principal office or branch office located in this State under laws of this State or the United States, but
only if the bank,savings and loan association,savings bank or credit union is eligible to be a depository
of surplus funds belonging to the State under Section 6 of 1855 PA 105,MCL 21.146.
c. Commercial paper rated at the time of purchase within the three highest classifications established by
not less than two standard rating services, and which matures more than 270 days after the date of
purchase.
d. The United States government or Federal agency obligations repurchase agreements.
e. Bankers acceptances of United States Banks.
f. Mutual funds composed of investment vehicles, which are legal for direct investment by local units of
government in Michigan.
A reconciliation of cash and cash equivalents as shown on the statement of net position follows:
Statement of net position
Cash and cash equivalents $ 2,495,454
Cash and cash equivalents-restricted 80,000
Total $ 2,575,454
Deposits
Bank deposits-checking and savings accounts $ 2,556,570
Cash on hand 18,884
Total $ 2,575,454
Interest Rate Risk
State law limits the allowable investments and the maturities of some of the allowable investments as identified
in the summary of significant accounting policies. The Authority's investment policy does not have specific limits
in excess of state law on investment maturities as a means of managing its exposure to fair value losses arising
from increasing interest rates.
15
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 2 -DEPOSITS AND INVESTMENTS (continued)
Credit Risk
State law limits investments to specific government securities, certificates of deposits and bank accounts with
qualified financial institutions, commercial paper with specific maximum maturities and ratings when
purchased,bankers acceptances of specific financial institutions, qualified mutual funds and qualified external
investment pools as identified in the list of authorized investments in the summary of significant accounting
policies. The Authority's investment policy does not have specific limits in excess of state law on investment
credit risk.
Custodial Credit Risk-Deposits
Custodial credit risk is the risk that in the event of a bank failure,the Authority's deposits may not be returned.
State law does not require,and the Authority does not have a policy for deposit custodial credit risk. As of year
end, $2,438,004 of the Authority's bank balance of$2,688,004 was exposed to custodial credit risk because it
was uninsured and uncollateralized.
The Authority's investment policy does not specifically address this risk, although the Authority believes that
due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all bank
deposits. As a result, the Authority evaluates each financial institution with which it deposits Authority funds
and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level
are used as depositories.
NOTE 3 -TRANSACTIONS WITH THE CITY OF LANSING
For the year ended June 30, 2023,the City of Lansing provided annual operating subsidies to the Authority in
the amount of$2,671,000 for the Lansing Center,Jackson Field,and Groesbeck Golf Course Funds.
NOTE 4-RECEIVABLES
Receivables are composed entirely of amounts due from customers (net of an allowance for doubtful accounts
in the amount of$25,280) and due from other governmental units. Accounts receivable as of June 30, 2023,
were as follows:
Accounts receivable,net $ 1,839,107
Accounts receivable-Due from other governmental units 231,613
Total receivables $ 2,070,720
16
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 5 -CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2023,was as follows:
Balance Balance
July 1,2022 Additions Deletions June 30,2023
Capital assets being depreciated/amortized
Machinery and equipment $ 1,378,952 $ 25,550 $ $ 1,404,502
Right to use-machinery and equipment 101,308 - 101,308
Total assets being depreciated/amortized 1,480,260 25,550 1,505,810
Less accumulated depreciation/amortization
Machinery and equipment (1,351,873) (8,550) (1,360,423)
Right to use-machinery and equipment (41,439) (41,439) (82,878)
Total accumulated depreciation/amortization (1,393,312) (49,989) (1,443,301)
Capital assets,net $ 86,948 $ (24,439) $ $ 62,509
NOTE 6-PAYABLES
Accounts payable is composed entirely of amounts due to vendors. Accrued liabilities include wages payable,
payroll taxes payable,insurance payable and benefits payable.
NOTE 7-LONG-TERM OBLIGATIONS
The following is a summary of long-term obligations for the Authority for the year ended June 30, 2023:
Amounts
Balance Balance Due Within
July 1,2022 Additions Deletions June 30,2023 One Year
Business-type Activities
Direct borrowings and
direct placements $ 61,084 $ - $ (40,519) $ 20,565 $ 20,565
17
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 7 -LONG-TERM OBLIGATIONS (continued)
Long-term obligations at June 30, 2023 are comprised of the following issues:
Direct Borrowing and Direct Placement
$96,614 Golf Car lease dated April 2021, due in annual installments of$19,612
through October 2023, with imputed interest of 2.00%, payable bi-monthly six
times per year. $ 19,612
$4,694 Golf Car lease dated April 2021, due in annual installments of $953
through October 2023, with imputed interest of 2.00%, payable bi-monthly six
times per year. 953
$ 20,565
The Authority's outstanding notes from direct borrowings and direct placements related to business-type activities
of$20,565 contains provisions that in an event of default, either by (1) unable to make principal or interest
payments(2)false or misrepresentation is made to the lender(3)become insolvent or make an assignment for the
benefit of its creditors (4) if the lender at any time in good faith believes that the prospect of payment of any
indebtedness is impaired. Upon the occurrence of any default event,the outstanding amounts,including accrued
interest become immediately due and payable.
The annual requirements to amortize long-term obligations outstanding,including interest of$154 as of June 30,
2023,are as follows:
Direct Borrowings
Year Ending and Direct Placements
June 30, Principal Interest
2024 $ 20,565 $ 154
NOTE 8-INTERFUNDS
Short-term interfund receivables and payables are considered due to and due from other funds. These amounts
due from and to other funds at year-end are as follows:
Due From Due To
Other Funds Other Funds
Lansing Center Fund $ 516,337 $ -
Jackson Field Fund - 121,677
Groesbeck Golf Course Fund - 394,660
$ 516,337 $ 516,337
The outstanding balances between funds results mainly from the time lag between the dates that(1) interfund
goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the
accounting system,and(3)payments between funds are made.
18
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 9-DEFINED CONTRIBUTION PENSION PLAN
The Authority has a defined contribution pension plan covering substantially all full-time employees who have
completed 120 days of employment. The Authority contributes 12% of participating employees' annual
compensation to the plan. Effective January 1, 2003, employees are required to contribute 7.5% of covered
wages as defined in the plan; prior to that date, no employee contributions to this plan were required. Such
current employee contributions are in lieu of federal social security participation. Plan provisions and
contribution requirements are established and may be amended by the Authority's Board of Commissioners.
Employee contributions for the year ended June 30,2023 were$309,232. Employer contributions for the year
ended June 30,2023 were$216,096. At June 30,2023,there were 42 employees participating in the plan.
NOTE 10 -RISK MANAGEMENT
The Authority is exposed to various risks of loss including losses related to issues of cyber security, liability,
liquor liability,flood,inland marine,directors and officers liability,property,employee bonding,auto,crime,and
worker' compensation which is covered through the Authority's insurance policies. The Authority carries
commercial insurance to cover these risks. Settled claims relating to the commercial insurance have not
exceeded the amount of insurance coverage during the past three years.
NOTE 11-SUBSEQUENT EVENT
In July 2023, the Authority received a $6.5 million grant from the State of Michigan intended to be used for
upgrades to the Authority's facilities with $5 million of the grant to be allocated to facility upgrades at the
Lansing Center and$1.5 million being allocated to facility upgrades at Jackson Field.
NOTE 12 -UPCOMING ACCOUNTING PRONOUNCEMENTS
In June 2022,the GASB issued Statement No. 100,Accounting Changes and Error Corrections-an amendment of
GASB Statement No. 62. This Statement prescribes the accounting and financial reporting for (1) each type of
accounting change and(2) error corrections. This Statement requires that(a) changes in accounting principles
and error corrections be reported retroactively by restating prior periods,(b)changes to or within the financial
reporting entity be reported by adjusting beginning balances of the current period,and(c)changes in accounting
estimates be reported prospectively by recognizing the change in the current period. The Authority is currently
evaluating the impact this standard will have on the financial statements when adopted during the 2023-2024
fiscal year.
In June 2022,the GASB issued Statement No.101,Compensated Absences. This Statement requires that liabilities
for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used
but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has
not been used if(a)the leave is attributable to services already rendered, (b)the leave accumulates,and(c)the
leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means.
This Statement also establishes guidance for measuring a liability for leave that has not been used, generally
using an employee's pay rate as of the date of the financial statements. The Authority is currently evaluating the
impact this standard will have on the financial statements when adopted during the 2024-2025 fiscal year.
19
LANSING ENTERTAINMENT AND PUBLIC FACILITIES AUTHORITY
NOTES TO FINANCIAL STATEMENTS
NOTE 13 -CHANGE IN ACCOUNTING PRINCIPLES
For the year ended June 30, 2023, the Authority implemented the following new pronouncement: GASB
Statement No.96,Subscription-based Information Technology Arrangements.
Summary:
Governmental Accounting Standards Board (GASB) Statement No. 96, Subscription-based Information
Technology Arrangements was issued in May 2020. This Statement provides guidance on the accounting and
financial reporting for subscription-based information technology arrangements (SBITAs) for government end
users (governments). This Statement(1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use
subscription asset - an intangible asset - and a corresponding subscription liability; (3) provides the
capitalization criteria for outlays other than subscription payments,including implementation costs of a SBITA;
and (4)requires note disclosures regarding a SBITA. To the extent relevant,the standards for SBITAs are based
on the standards established in Statement No.87,Leases,as amended.
There was no material impact on the opening balances of the Authority's financial statement after the adoption
of GASB Statement No.96.
20
2425 E.Grand River Ave.,
(0,0.ffManer Suite 1,Lansing,MI 48912
n 517.323.7500
osterisanED 517.323.6346
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
The Honorable Mayor,Members of the City Council,and
Members of the Board of Commissioners of the
Lansing Entertainment and Public Facilities Authority
Lansing,Michigan
We have audited,in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States,the financial statements of the business-type activities and each major
fund of Lansing Entertainment and Public Facilities Authority(the Authority),as of and for the year ended June
30, 2023,and the related notes to the financial statements,which collectively comprise Lansing Entertainment
and Public Facilities Authority's basic financial statements and have issued our report thereon dated December
8,2023.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements,we considered the Authority's internal control
over financial reporting(internal control) as a basis for designing audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements,but not for the purpose of
expressing an opinion on the effectiveness of the Authority's internal control. Accordingly,we do not express
an opinion on the effectiveness of the Authority's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified.
However, as described below we identified certain deficiencies in internal control that we consider to be
material weaknesses and significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency,or a combination of deficiencies,in internal
control such that there is a reasonable possibility that a material misstatement of the Authority's financial
statements will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies
described below as items 2023-001 and 2023-002 to be material weaknesses.
21
2023-001 MATERIAL JOURNAL ENTRIES PROPOSED BY AUDITORS
Condition: Material journal entries to properly adjust a significant number of statement of net position and
statement of revenues,expenses and changes in net position accounts were proposed by the auditors. These
entries were either prepared by the auditors and provided to management,who agreed to them and were
subsequently recorded in the Authority's general ledger or was brought to the attention of management that
an entry was needed.
Criteria: Management is responsible for establishing,maintaining,and monitoring internal controls,and for
the fair presentation in the financial statements of financial position, results of operations, and cash flows
(where applicable),including the recording of all appropriate journal entries so that the trial balances,from
which the audited financial statements are prepared, reflect amounts that are in conformity with U.S.
generally accepted accounting principles.
Cause: These misstatements were not identified as part of the Authority's internal control procedures.
Effect: Without the recording of these journal entries the financial statements would have been materially
misstated.
Recommendation: We recommend that the Authority take steps to assure that material journal entries are
not necessary at the time future audit analysis is performed.
Corrective Action Response: The Authority strives to perform necessary material journal entry adjustments
prior to fiscal year end. The Authority will work to establish a policy to assure all material journal entries
are recorded prior to the commencement of audit procedures in future years.
2023-002 TIMLINESS OF BANK RECONCILIATIONS AND LACK OF REVIEW
Condition: During our analysis of cash, we noted the Authority does not require any documented review
and approval for completed bank reconciliations. In addition to a lack of review, the bank reconciliations
were not completed in a timely manner after month end close.
Criteria: The reconciliation process is an important part of the Authority's internal control and accounting
procedures. The purpose of reconciliations is to ensure that general ledger account balances are supported
by underlying transaction detail or third-party information. They also provide an important internal control,
in that any differences identified between the underlying detail and an account balance through the
reconciliation process may be indicative of an erroneous entry having been posted or inappropriate activity
within the account.
Cause: The Authority does not have a procedure in place requiring documented review and approval for
completed bank reconciliations or required timeliness of completion.
Effect: Without timely reconciliations and written evidence of review procedures being completed,there is
an increased risk of a misstatement of assets due to error or fraud which could go undetected.
Recommendation: We recommend that the Authority implement a process in which the bank reconciliation
are reviewed by at least one individual other than the preparer to ensure that the proper reconciliation
between the bank statements and the general ledger are performed within 30 days of month end.
Corrective Action Response: The Authority has put in place appropriate systems to assure bank
reconciliations are performed in a timely fashion on a monthly basis.
22
Asignificant deficiency is a deficiency,or a combination of deficiencies,in internal control that is less severe than
a material weakness,yet important enough to merit attention by those charged with governance. We consider
the deficiency described below as 2023-003 to be a significant deficiency.
2023-003 CREDIT CARD ACTIVITY REVIEW AND BACKUP
Condition: During our testing of the credit card controls, we noted instances in which the Authority's
internal controls were not followed in practice. Specifically,during our review of credit card purchases,we
noted instances where supporting receipt documents were not retained and credit card statements that
were not reviewed by a reasonable member of management.
Criteria: Management has established control procedures over credit card purchases. These controls limit
credit card usage to management personnel only. Further,these controls require all original receipts to be
retained and submitted and statements reviewed by a reasonable member of management.
Cause: The established control procedures were not followed.
Effect: The Authority is at greater risk of potential fraud if formally adopted internal control procedures are
not followed.
Recommendation: We recommend that the Authority take steps to ensure internal controls related to credit
card use are followed.
Corrective Action Response: The Authority has put in place appropriate systems to assure credit card
statement review is performed in a timely fashion on a monthly basis.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether Authority's financial statements are free from material
misstatement,we performed tests of its compliance with certain provisions of laws,regulations, contracts,and
grant agreements,noncompliance with which could have a direct and material effect on the financial statements.
However, providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncompliance
or other matters that are required to be reported under Government Auditing Standards.
Authority's Response to Findings
Govern men tAuditing Standards requires the auditor to perform limited procedures on the Authority's response
to the findings identified in our audit and described above. The authority's response was not subjected to the
other auditing procedures applied in the audit of the financial statements and, accordingly, we express no
opinion on the response.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or
on compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity's internal control and compliance. Accordingly,this communication is not
suitable for any other purpose.
December 8,2023
23