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HomeMy WebLinkAbout01-20-09 TSHA Agenda Packet TEXAS STUDENTLHOUSING AGENDA BOARD OF DIRECTORS OF THE TEXAS STUDENT HOUSING AUTHORITY (AN INSTRUMENTALITY OF THE TOWN OF WESTLAKE) January 20,2009 5:30 P.M. TEXAS STUDENT HOUSING OFFICE 3 VILLAGE CIRCLE, SUITE 207 WESTLAKE, TEXAS 1. CALL TO ORDER. 2. DISCUSS AND CONSIDER APPROVAL OF TEXAS STUDENT HOUSING AUTHORITY_ AUDIT FOR FY 2007-2008 PRESENTED BY PATILLO BROWN&HILL, L.L.P. 3. DISCUSS AND CONSIDER APPROVAL OF BALLPARK PROPERTY ANNUAL AUDIT FOR FY 2007-2008 PRESENTED BY PATILLO BROWN&HILL,L.L.P. 4. DISCUSS AND CONSIDER APPROVAL OF TOWNLAKE ANNUAL AUDIT FOR FY 2007-2008 PRESENTED BY PATILLO BROWN&HILL.,L.L.P. 5. DISCUSS AND CONSIDER APPROVAL OF CAMBRIDGE ANNUAL AUDIT FOR FY 2007-2008 PRESENTED BY PATILLO BROWN&HILL,L.L.P. 6. DISCUSS AND CONSIDER APPROVAL OF AMENDED BYLAWS. 7. EXECUTIVE DIRECTORS' REPORT. S. CONSIDER APPROVAL OF A SCHOLARSHIP CONSULTANT AGREEMENT FOR THE 2009-2010 SCHOLARSHIP CYCLE. 9. CONSIDERATION OF RENEWAL SCHOLARSHIPS FOR 2009-2010. 10. REVIEW AND APPROVE MINUTES OF SEPTEMBER 16,2008. 11. REVIEW AND APPROVE MINUTES OF OCTOBER 14,2008. 12. ADJOURN. TEXAS STUDENT HOUSING AUTHORITY FINANCIAL REPORT AUGUST 31, 2008 TEXAS STUDENT HOUSING AUTHORITY TABLE OF CONTENTS AUGUST 31,2008 Page Number FINANCIAL SECTION Independent Auditors' Report............................................................................................. 1 Management's Discussion and Analysis ............................................................................ Financial Statements: Statementof Net Assets................................................................................................... 4 i Statement of Revenues, Expenses and Changes in Net Assets........................................ 5 Statementof Cash Flows ................................................................................................. 6 Notes to Financial Statements.......................................................................................... 7 — 10 SUPPLEMENTAL INFORMATION Budgetary Comparison Schedule........................................................................................ 11 FINANCIAL STATEMENTS W, PATTILLO, BROWN & HILL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT To the Board of Directors Texas Student Housing Authority Westlake, Texas We have audited the accompanying financial statements of Texas Student Housing Authority (the "Authority") (a component unit of the Town of Westlake), as of and for the year ended August 31, 2008, which collectively comprise the Authority's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Authority's management. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Texas Student Housing Authority as of August 31, 2008, and the respective changes in its financial position, and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The management's discussion and analysis on pages 2 through 3 is not a required part of the basic financial statements but is supplemental information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Authority's basic financial statements. The accompanying supplemental information on page 11 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. P00a/ d %�4,L.L. R January 14, 2009 1 401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(254)772-4901 ■FAX:(254)772-4920■www.pbhcpa.com AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583 TEMPLE,TX(254)791-3460■WHITNEY,TX(254)694-4600■ALBUQUERQUE,NM(505)266-5904 MANAGEMENT'S DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS As staff of the Texas Student Housing Authority (the "Authority"), we offer the readers of the Authority's financial statements this narrative overview and analysis of the financial activities of the Authority for the fiscal year ended August 31, 2008. We encourage readers to consider the information presented herein in conjunction with the Authority's financial statements. The Authority is a component unit of the Town of Westlake and is considered a governmental entity; accordingly, the Authority has adopted Governmental Accounting Standards Board Statement 34, Basic Financial Statements—and Management's Discussion and Analysis for State and Local Governments has been implemented. The reader should note that this financial report addresses only the financial condition of the Authority itself. Properties managed by the Authority are reported individually by property under separate cover. FINANCIAL HIGHLIGHTS • The assets of the Authority exceeded its liabilities at the close of the fiscal year by $337,876, a decrease of $210,904 over the prior fiscal year. All of the assets and liabilities of the Authority are classified as current. • At the end of the current fiscal year, the total cash balances were $393,264, a decrease of$229,206 over the prior fiscal year. The main factor was the increase in oversight fees paid to the Town of Westlake. The Authority paid $200,000 more than FY 2007. • All revenues are generated from management of the properties and scholarship activity of the authority and totaled $1,029,550. Total expenses incurred were $1,292,170. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Authority's basic financial statements. The Authority's report consists of three parts, Management's Discussion and Analysis, the basic financial statements, and notes to financial statements. The basic financial statements include a statement of net assets, statement of revenues, expenses and changes in net assets, a statement of cash flows and supplemental schedules. The statement of net assets presents information on the Authority's assets and liabilities with the difference between the two reported as net assets. The statement of revenues, expenses and changes in net assets accounts for all of the Authority's revenues and expenses regardless of when cash is paid or received. The statement of cash flows reflects cash inflows and outflows by operating, noncapital financing and capital related financing activities during the year. 2 NOTES TO THE FINANCIAL STATEMENTS The notes provide additional information that is essential to a full understanding of the data provided in the financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET It is anticipated that fiscal year 2008/2009 will end with less income to the Authority as we have increased scholarships at our overflow facility in College Station. CONTACTING THE AUTHORITY'S FINANCIAL MANAGEMENT This financial report is designed to provide the reader with a general overview of the Authority's finances and to demonstrate the Authority's accountability for the money it receives. If you have any questions about this report, or need additional information, please contact Pete Ehrenberg at(817) 490-5723. 3 TEXAS STUDENT HOUSING AUTHORITY STATEMENT OF NET ASSETS j AUGUST 31, 2008 ASSETS Current assets: Cash $ 393,264 Accounts receivable 32,947 Prepaid expenses 5,236 Total current assets 431,447 Total assets 431,447 LIABILITIES Deferred revenue 93,571 Total liabilities 93,571 NET ASSETS Unrestricted 337,876 Total net assets $ 337,876 The accompanying notes are an integral part of these financial statements. 4 TEXAS STUDENT HOUSING AUTHORITY I STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED AUGUST 31, 2008 OPERATING REVENUES Basic property administration $ 240,491 Scholarship value 492,600 Scholarship administration 296,459 Total operating revenues 1,029,550 OPERATING EXPENSES Scholarship 492,600 Scholarship expense 239,756 Labor 214,054 Professional fees 5,000 Oversight fee 300,000 Office and other 40,760 Total operating expenses 1,292,170 OPERATING LOSS ( 262,620) NONOPER NTING REVENUES (EXPENSES) Interest income 18,408 Other income 33,308 Total nonoperating revenues (expenses) 51,716 CHANGE IN NET ASSETS ( 210,904) NET ASSETS, BEGINNING 548,780 NET ASSETS, ENDING $ 337,876 The accompanying notes are an integral part of these financial statements. 5 it TEXAS STUDENT HOUSING AUTHORITY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED AUGUST 31, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from scholarships and scholarship properties Cash paid to contract services i Cash paid to others Net cash used for operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Miscellaneous other income Net cash provided by investing activities NET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS,BEGINNING CASH AND CASH EQUIVALENTS,ENDING RECONCILIATION OF OPERATING GAIN TO NET CASH USED FOR OPERATING ACTIVITIES Operating loss Adjustments to reconcile operating income to net cash provided(used)by operating activities: Accounts receivable Deferred revenue Net cash used for operating activities The accompanying notes are an integral part of these tmancial statements. 10 $ 1,011,248 ( 214,054) ( 1,078,116) ( 280,922) 18,408 33,308 51,716 ( 229,206) 622,470 $ 393,264 $( 262,620) 1,345 ( 19,647) $( 280,922) TEXAS STUDENT HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS AUGUST 31,2008 I. GENERAL STATEMENT Texas Student Housing Authority (the "Authority"), a higher education authority, was established on January 23, 1995, as a duly constituted authority of the Town of Westlake (the "Town"), Texas, pursuant to Section 53.11 of Chapter 53 of the Texas Education Code, as amended. The Authority's purpose among other things is to acquire, finance, and operate student housing facilities and to provide scholarships to students from high schools and community colleges in Texas. The Authority operates several student housing projects in Texas. The accompanying financial statements do not present the projects, but the scholarship administration of the Authority. II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the Authority's significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: A. ReportinL,Entity For financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GASB Statement No. 14 as amended by GASB Statement No. 39. The criteria used is as follows: Financial Accountability — The primary government is deemed to be financially accountable if it appoints a voting majority of the organization's governing body and 1) is able to impose its will on that organization; or 2) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. Additionally, the primary government may be financially accountable if an organization is fiscally dependent on the primary government regardless of whether the organization has a separately elected governing board appointed by a higher level of government or a jointly appointed board. (continued) 7 II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Measurement Focus and Basis of Accounting Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. The Authority uses the economic resources measurement focus and the accrual basis of accounting. The economic resources measurement focus means all assets and liabilities (whether current or noncurrent) are included on the statement of net assets and the operating statement present increases (revenues) and decreases (expenses) in net total assets under the accrual basis of accounting, revenues are recognized when earned, and expenses are recognized at the time the liability is incurred. In applying the requirements of GASB Statement No. 20, the Authority has chosen to apply all applicable GASB pronouncements as well as Financial Accounting Standards board pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. C. Assets, Liabilities and Net Assets or Equity Income Taxes The Authority is an instrumentality of the Town and, therefore, its income is not subject to federal income taxation pursuant to Section 115 of the Internal Revenue Code. Cash and Cash Equivalents The Authority considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. At August 31, 2008, the Authority had no such investments included in cash and cash equivalents. Accounts Receivable Accounts receivable are stated at amounts management expects to collect from outstanding balances. At year-end, management assesses the accounts receivable balance and establishes a valuation allowance based on historical experience and an evaluation of the outstanding balances. As of August 31, 2008, management has determined that all accounts doubtful of collection have been charged to operations and an allowance is not required. Capital Assets Texas Student Housing Authority utilizes space within the Town of Westlake offices and does not have capital assets at this time. III. DETAILED NOTES ON ALL FUNDS A. Cash and Investments The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies relating to a governmental entity's cash and investments. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an instrument. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. Texas Student Housing Authority is not significantly exposed to interest rate risk as all investments earn a variable rate. Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The Public Funds Investment Act has a minimum rating that is required for investments. Texas Student Housing Authority holds all of its cash and investments with commercial banks. Concentration of Credit Risk Texas Student Housing Authority holds no investments at August 31, 2008, and is not exposed to concentration of credit risk. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Public Funds Investment Act does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The Public Funds Investment Act requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least the bank balances less FDIC insurance at all times. As of August 31, 2008, the Authority's cash balances totaled $393,264 (bank balance of $396,105). Of the bank balance, $100,000 was covered by federal depository insurance while the remaining amount was collateralized by a Bank Deposit Guarantee Bond from the Authority's depository in the amount of$296,105. (continued) 9 III. DETAILED NOTES ON ALL FUNDS (Continued) B. Net Assets Net assets represent the residual assets after liabilities are deducted. These assets are reported in the following categories: Unrestricted Net Assets consists of the portion of net assets after invested in capital assets, net of related debt and restricted for net assets has been satisfied. At August 31, 2008, the Authority has no restricted net assets or capital assets. All net assets are unrestricted. C. Concentrations The Authority services scholarships for Texas students attending Texas higher education facilities and is dependent upon the geographic areas and the higher education facilities in Texas. D. Related Party Transactions The Town of Westlake charges an oversight fee to the Authority. The fee of $300,000 is included in expenses at August 31, 2008. The Authority also received revenues of$240,491 related to its oversight of the various properties. 10 SUPPLEMENTAL INFORMATION TEXAS STUDENT HOUSING AUTHORITY BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED AUGUST 31,2008 11 Budget Actual Variance REVENUES Basic property administration $ 259,316 $ 240,491 $( 18,825) Scholarship value 492,600 492,600 - Scholarship administration 315,428 296,459 ( 18,969) Interest income 50,000 18,408 ( 31,592) Other income 25,000 33,308 8,308 Total revenues 1,142,344 1,081,266 ( 61,078) EXPENDITURES Scholarships 492,600 492,600 - Scholarship expense 252,120 239,756 12,364 Contract labor 230,000 214,054 15,946 Professional fees 7,400 5,000 2,400 Contingency fund 100,000 300,000 ( 200,000) Office and other 45,320 40,760 4,560 Total expenditures 1,127,440 1,292,170 ( 164,730) CHANGE IN NET ASSETS OVER EXPENSES 14,904 ( 210,904) ( 225,808) NET ASSETS, BEGINNING 548,780 548,780 - NET ASSETS, ENDING $ 563,684 $ 337,876 $( 225,808) 11 TEXAS STUDENT HOUSING AUTHORITY BALLPARK AUSTIN PROJECT FINANCIAL REPORT AUGUST 31, 2008 TEXAS STUDENT HOUSING AUTHORITY BALLPARK AUSTIN PROJECT TABLE OF CONTENTS AUGUST 31,2008 Page Number FINANCIAL SECTION Independent Auditors' Report............................................................................................. 1 —2 Management's Discussion and Analysis ............................................................................ 3 -6 Financial Statements: Statement of Net Assets................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................ 8 Statementof Cash Flows ................................................................................................. 9 Notes to Financial Statements.......................................................................................... 10 18 SUPPLEMENTAL SCHEDULES Schedule I— Schedule of Revenues and Expenses............................................................. 19 Schedule II—Certificate of the Fixed Charges Coverage Ratio......................................... 20 IV4 PATTILLO, BROWN & HILL, L_L.P_ CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT To the Board of Directors Texas Student Housing Authority— Ballpark Austin Project Westlake, Texas We have audited the accompanying financial statements of Texas Student Housing Authority — Ballpark Austin Project (the "Project"), as of and for the year ended August 31, 2008, as listed in the table of contents. Texas Student Housing Authority—Ballpark Austin Project is a component unit of the Town of Westlake. These financial statements are the responsibility of the Project management. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note I, the financial statements present only the Project and do not purport to, and do not, present fairly the financial position of Texas Student Housing Authority as of August 31, 2008, and the changes in its financial position and cash flows, where applicable, for the period then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Texas Student Housing Authority — Ballpark Austin Project at August 31, 2008, and the respective changes in its financial position, and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that Texas Student Housing Corporation—Ballpark Austin Project will continue as a going concern. As discussed in Note I to the financial statements, the Project is in default on its bonds and the Trustee or Service Agent may choose to continue as a going concern. Management's plans in regard to these matters are discussed in Note I. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 1 401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(254)7724901 ■FAX:(254)772-4920■www.pbhcpa.com AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583 TEMPLE,TX(254)791-3460■WHITNEY,TX(254)694-4600■ALBUQUERQUE,NM(505)266-5904 The management's discussion and analysis on pages 3 through 6 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Texas Student Housing Authority — Ballpark Austin Project's basic financial statements. The accompanying supplemental information on pages 20 and 21 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Pte, � �ld, c L a January 14, 2009 2 MANAGEMENT'S DISCUSSION AND ANALYSIS As staff of the Texas Student Housing Authority (the "Authority") — Ballpark Austin Project (the "Project"), we offer the readers of the Project's financial statements this narrative overview and analysis of the financial activities of the Project for the fiscal year ended August 31, 2008. We encourage readers to consider the information presented herein in conjunction with the Project's financial statements which follow this section. As the Authority is a component unit of the Town of Westlake and is thus considered a governmental entity, Governmental Accounting Standards Board Statement 34, Basic Financial Statements—and Management's Discussion and Analysis for State and Local Governments has been implemented. The reader should note that this financial report addresses only the financial condition of the Project itself for 2008. FINANCIAL HIGHLIGHTS • The liabilities of the Project exceeded its assets at the close of the fiscal year by $11,731,496. Of this liability, a total of$338,450 is carried as a liability to JPI, the former management company, and management is of the opinion that pending a settlement with JPI, this liability may be forgiven. • Operating revenue of $3,540,628 is $140,215 more than budget, and operating expense is $36,878 less than budget, not including depreciation and amortization. • At the end of the current fiscal year, the total cash balances were $700,599 in unrestricted cash and $1,886,562 in restricted cash. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Project's basic financial statements. The Project's report consists of three parts, Management's Discussion and Analysis, the basic financial statements, and notes to financial statements. The basic financial statements include a statement of net assets, statement of revenues, expenses and changes in net assets, a statement of cash flows and supplemental schedules. The Project is being treated as a going concern. The Project is in default on its bonds and is not financially able to make scheduled principal and interest payments on its outstanding debt. They are considered an event of default by the Trustee, which gives the bondholders the right to accelerate and demand payment of the bonds in full. Management and the property manager are in the process of developing plans to increase occupancy and rental rates at the property to improve its financial performance. 3 The statement of net assets presents information on all of the Project's assets and liabilities with the difference between the two reported as net assets. TABLE 1 TEXAS STUDENT HOUSING AUTHORITY- BALLPARK AUSTIN PROJECT NET ASSETS Current and other assets Capital assets Total assets Long-term liabilities Other liabilities Total liabilities Net assets: Invested in capital assets, Business- 2008 $ 5,357,557 24,949,032 30,306,589 36,173,009 5,865,076 42,03 8,085 Activities $ 5,351,810 25,917,825 31,269,635 36,637,924 4,568,587 41,206,511 net of related debt ( 10,358,977) ( 9,855,099) Restricted ( 1,877,960) ( 719,602) Unrestricted 505,441 637,825 Total net assets $( 11,731,496) $( 9,936,876) The statement of revenues, expenses and changes in net assets accounts for all of the Project's revenues and expenses regardless of when cash is paid or received. TABLE 2 TEXAS STUDENT HOUSING AUTHORITY- BALLPARK AUSTIN PROJECT CHANGES IN NET ASSETS Business-type Activities Total operating revenue $ 3,540,628 Total operating expenses 2,779,670 Total operating income 760,958 Interest income 111,411 Interest expense ( 2,666,989) Total nonoperating loss ( 2,555,578) CHANGE IN NET ASSETS ( 1,794,620) NET ASSETS,BEGINNING ( 9,936,876) NET ASSETS,ENDING $( 11,731,496) The statement of cash flows recaps how cash changed from year to year. 4 $ 3,359,388 2,964,501 394,887 134,855 ( 2,246,094) ( 2,111,239) ( 1,716,352) ( 8,220,524) $( 9,936,876) FINANCIAL ANALYSIS OF THE PROJECT'S FUNDS Notes to financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the financial statements. Restricted cash. Restricted cash represents monies held in escrow by the trustee and are restricted for the payment of expenses as outlined in the Installment Sale Agreement. As of August 31, 2008, these balances were as follows: Bond Fund, Series 2001A Senior Interest $ 117,358 Bond Fund, Series 200113 Sub B 12,977 Bond Fund, Series 2001C Sub C 16 Debt Service Reserve 2001A Senior 1,579,129 Debt Service Reserve 2001B Sub B 861 Repair and Replacement Fund 1,311 Minimum Scholarship Fund 1,939 Trustee Fee Fund 3 Tax and Insurance Fund 13,006 Senior Bonds Principal 157,029 Sub B Bond Principal 2,933 Total $ 1,886,562 Nonrestricted cash. Nonrestricted cash is available for general use of the Project. Bonds payable. As of August 31, 2008, the following amounts on the Series A, B and C Bonds were owed: Series A $ 31,345,000 Series B 2,365,000 Series C 3,000,000 Less discounts ( 1,401,991) Total $ 35,308,009 For the fiscal year ending August 31, 2008, the total principal and interest payment is calculated at $2,962,341. A total of$560,000 in principal was paid during 2008. Fixed charge cover ratio. The bond indenture provides for a fixed charge coverage ratio of 1.25 when payments on the A and B Bond Series are considered and 1.15 when payments on the C Bond Series are added. At this time, the Project has only realized a ratio of .87 and .77, respectively, and is thus technically in default of the indenture. 5 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET Leases at the Project are primarily 12-month leases, however, due to competitive and market conditions, a relatively minor number of 10-month leases exist. These leases do bring a monthly premium over the 12-month leases. Occupancy for the fiscal year ending August 31, 2009, indicates a substantial increase to 100%; however, rental rates, again due to competitive pressures, will not see an increase. Net operating revenue for next year is projected at $1,623,819. This negative gap between cash available for debt service and cash required for debt service will result in the necessity to invade the Series A debt service reserve funds. CONTACTING THE PROJECT'S FINANCIAL MANAGEMENT This financial report is designed to provide the reader with a general overview of the Project's finances and to demonstrate the Project's accountability for the money it receives. If you have any questions about this report, or need additional information, please contact Pete Ehrenberg at(817) 490-5723. G TEXAS STUDENT HOUSING AUTHORITY BALLPARK AUSTIN PROJECT STATEMENT OF NET ASSETS AUGUST 31,2008 ASSETS Current assets: Cash Restricted cash Accounts receivable Prepaid expenses Total current assets Capital assets: Land Other capital assets,net of accumulated depreciation Total capital assets Intangible assets: Deferred financing costs, net of amortization Total intangible assets Total assets LIABILITIES Current liabilities: Accounts payable Management and development fees payable Accrued liabilities Deferred revenue and prepaid rent Accrued interest Bonds payable Total current liabilities Long-term liabilities: Bonds payable Deferred purchase price Total long-term liabilities Total liabilities NET ASSETS Invested in capital assets,net of related debt Restricted for debt service Unrestricted Total net assets $ 700,599 1,886,562 B,390 8,225 2,610,776 4,788,265 20,160,767 24,949,032 2,746,781 2,746,781 30,306,589 112,699 496,483 352,241 544,131 3,764,522 595,000 5,865,076 34,713,009 1,460,000 36,173,009 42,03 8,085 ( 10,358,977) ( 1,877,960) 505,441 $( 11,731,496) The accompanying notes are an integral part of these financial statements. 7 TEXAS STUDENT HOUSING AUTHORITY BALLPARK AUSTIN PROJECT STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED AUGUST 31,2008 OPERATING REVENUES Rental income Other income Total operating revenues OPERATING EXPENSES Personnel Contract services Utilities Repairs and maintenance Turnover Advertising and promotion Administration Management fees Replacements Depreciation Amortization Total operating expenses OPERATING INCOME NONOPERATING REVENUES (EXPENSES) Interest income Interest expense Total nonoperating revenues (expenses) CHANGE IN NET ASSETS NET ASSETS, BEGINNING NET ASSETS, ENDING $ 3,516,568 24,060 3,540,628 309,229 58,928 565,936 57,025 181,216 94,025 169,308 194,656 174 968,794 180,379 2,779,670 760,958 111,411 ( 2,666,989) ( 2,555,578) ( 1,794,620) ( 9,936,876) $( 11,731,496) The accompanying notes are an integral part of these financial statements. 8 TEXAS STUDENT HOUSING AUTHORITY BALLPARK AUSTIN PROJECT STATEMENT OF CASH FLOWS FOR THE YEAR ENDED AUGUST 31,2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from tenants Miscellaneous other income Cash paid to employees Cash paid to suppliers Net cash provided by operating activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Payments on bonds payable Interest paid Net cash provided by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments Net cash provided by investing activities NET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS,BEGINNING CASH AND CASH EQUIVALENTS,ENDING RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization Changes in operating assets and liabilities: Accounts receivable Trade accounts payable Deferred revenue Other current liabilities Net cash provided by operating activities The accompanying notes are an integral part of these financial statements. 9 $ 3,839,918 24,060 ( 289,336) ( 1,271,994) 2,302,648 525,000) 1,742,146) 2,267,146) 111,411 111,411 146,913 2,440,248 $ 2,587,161 $ 760,958 1,149,172 20,872 49,275 302,478 19,893 $ 2,302,648 TEXAS STUDENT HOUSING AUTHORITY— BALLPARK AUSTIN PROJECT NOTES TO FINANCIAL STATEMENTS AUGUST 31,2008 L GENERAL STATEMENT Texas Student Housing Authority (the "Authority"), a higher education authority, was established on January 23, 1995, as a duly constituted authority of the Town of Westlake, Texas, pursuant to Section 53.11 of Chapter 53 of the Texas Education Code, as amended. The Authority's purpose among other things is to acquire, finance, and operate student housing facilities. The Authority operates several student housing facilities in Texas and one of the housing projects is the Ballpark Austin Project (the "Project"). The Project was purchased from Jefferson Commons — Austin, L.P., a Delaware limited partnership on December 27, 2001. The Project obtained its financing through the issuance of Texas Student Housing Authority — Student Housing Revenue Bonds (Austin, Texas Project), Series 2001A, Series 2001B and Subordinate Series 2001C. The bonds were issued through a trust indenture by and between the Authority and the Bank of New York, the, trustee. The Series 2001A, 2001B and Subordinate Series 2001C Bonds were issued in the face amounts of $34,175,000, $2,470,000 and $3,000,000, respectively. The accompanying financial statements present the operations of the Project, whose revenue streams are pledged for the bonds described herein. The 2007 financial statements were prepared assuming the Project will continue as a going concern. The Project's bonds payable are considered to be in default due to the discontinuance of principal and interest payments. These are considered an event of default by the Trustee, which gives the bondholders the right to accelerate and demand payment of the bonds in full. Management and the property manager are in the process of developing and implementing plans to increase occupancy and rental rates at the property to improve its financial performance. II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the Project's significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: A. Reporting Entity For financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GASB Statement No. 14 as amended by GASB Statement No. 39. The criteria used is as follows: (continued) 10 II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity (Continued) Financial Accountability — The primary government is deemed to be financially accountable if it appoints a voting majority of the organization's governing body and 1) is able to impose its will on that organization; or 2) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. Additionally, the primary government may be financially accountable if an organization is fiscally dependent on the primary government regardless of whether the organization has a separately elected governing board appointed by a higher level of government or a jointly appointed board. B. Measurement Focus and Basis of Accounting The Project uses the economic resources measurement focus. This means that all assets, liabilities, equity, revenues, and expenses are accounted for using the accrual basis of accounting. Revenue is recognized when earned and expenses are recognized when they are incurred. In applying the requirements of GASB Statement No. 20, the Project has chosen to apply all applicable GASB pronouncements as well as Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. C. Assets, Liabilities and Net Assets or Equity Income Taxes The Project is an instrumentality of the Town and, therefore, its income is not subject to federal income taxation pursuant to Section 115 of the Internal Revenue Code. Cash and Cash Equivalents The Project considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. At August 31, 2008, the Project had no such investments included in cash and cash equivalents. In addition, the Project has restricted cash of $1,886,562 that is held by the trustee for the bonds payable under provisions of the trust indenture. During the year ended August 31, 2008, the investment income received from cash was $111,411. See Note III for risk disclosures and breakdown of restricted cash accounts. (continued) 11 I1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Assets, Liabilities and Net Assets or Equity (Continued) Accounts Receivable Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management writes off uncollectible amounts through a reduction to revenue and a credit to accounts receivable based on its assessment of the outstanding receivables. At year- end, management assesses the accounts receivable balance and establishes a valuation allowance based on historical experience and an evaluation of the outstanding balances. As of August 31, 2008, management has determined that all accounts doubtful of collection have been charged to operations and an allowance is not required. Deferred Financing Costs Costs associated with the issuance of bonds are deferred and amortized over the term of the bonds. Advertising Costs All adverting costs are expensed as they are incurred. Advertising costs for the year ended August 31, 2008, were approximately $94,000. Capital Assets Property and equipment have been recorded at the date of acquisition at cost. Routine maintenance and repair costs to ready the units for the next period are expensed as incurred. F,xpenditures directly related to the improvement of property are capitalized at cost. The Project capitalizes the cost of roof replacements and expenditures for other major property improvements. The trust indenture (dated December 1, 2001) provides for a repair and replacement fund requirement. The covenant states that no less frequently than every five years following the date of issuance of the bonds, the Project will cause a professional engineer or firm of such engineers to conduct a physical assessment of the Project and to submit a written report concerning the physical condition of the Project and the engineer's recommendations for capital improvements needed at the Project. Depreciation is computed using the straight-line method over the estimated useful lives as follows: Estimated Asset Class Useful Lives Building Furniture,fixtures and equipment 12 30 3 -20 III. DETAILED NOTES ON ALL FUNDS A. Cash and Investments At August 31, 2008, the carrying amount of Texas Student Housing Authority — Ballpark Austin Project deposits (cash with interest bearing accounts and restricted cash held in interest bearing accounts)was in total $2,587,161 of which $1,886,562 represented restricted cash. The following is the breakdown of the restricted cash. Restricted Cash Restricted cash represents amounts placed on deposit in accounts and held by the trustee, which are restricted for the payment of expenses as required by the trust indenture. At August 31, 2008, restricted cash consists of the following funds and accounts: Fund/Account Description Bond Fund, Series 2001A Senior Interest $ 117,358 Bond Fund,Series 2001 B Sub B 12,977 Bond Fund, Series 2001C Sub C 16 Debt Service Reserve 2001A Senior 1,579,129 Debt Service Reserve 2001B Sub B 861 Repair and Replacement Fund 1,311 Minimum Scholarship Fund 1,939 Trustee Fee Fund 3 Tax and Insurance Fund 13,006 Senior Bonds Principal 157,029 Sub B Bond Principal 2,933 Total $ 1,886,562 The following is a brief description of the funds and accounts making up the restricted cash balance at year-end, as defined by the trust indenture: Revenue Fund— The Revenue Fund was established for monthly deposits from the depository account that holds general revenues of the Project. All monies are deposited in the Revenue Fund and then properly distributed to the other funds, as required by the trust indenture. Amounts in the fund at year-end represent amounts that have not been distributed to the other funds due to timing of the interfund transfers. (continued) 13 III. DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) Restricted Cash (Continued) Bond Fund— The trustee makes monthly deposits in the Bond Fund pursuant to the trust indenture. Amounts in the Bond Fund shall be used solely to fund the payment of principal and interest on the bonds, for the redemption of the bonds at or prior to maturity, and to purchase bonds on the open market. In the event of default, amounts in this fund may pay the fees and expenses of the trustee prior to making any payments to the bondholders. This fund has three accounts, the Series 2001A, 2001B and the Series 2001C accounts. Repair and Replacement Fund— Amounts in the Repair and Replacement Fund may be a) used to pay the maintenance and repair costs related to the Ballpark Austin property, which the Project is obligated to pay pursuant to the trust indenture; and b) transferred to the Bond Fund to pay principal of, or interest on, the bonds to the extent there are insufficient monies in the Bond Fund. Surplus Fund— The trustee shall deposit any remaining amount in the Revenue Fund into the Surplus Fund. Amounts on deposit in the Surplus Fund will be released to the Project if certain release tests are satisfied. If the release tests are not satisfied, the trustee will retain the monies on deposit in the Surplus Fund. Trustee Fee Fund—Amounts are deposited in the Trustee Fee Fund on a monthly basis and are intended to pay the fees to the trustee at year-end. Series A Principal Fund — Amounts in the Series A Principal Fund represent sinking fund payments set aside for repayment of the principal balance on the Series A Bonds. Series B Principal Fund — Amounts in the Series B Principal Fund represent sinking fund payments set aside for repayment of the principal balance on the Series B Bonds. Operating Reserve Fund — Amounts in the Operating Reserve Fund may be transferred to the property manager to fund operations if the transfer from the Revenue Fund is not sufficient to pay operating expenses. Amounts may also be transferred to the Bond Fund to pay principal and interest on the bonds, to the extent there are insufficient monies in the Bond Fund on any interest payment date. Debt Service Reserve 2001 Account—The amounts on deposit in this account are to be used for the purpose of paying principal and interest on the Series 2001A bonds as they become due in the event there should be insufficient funds in the Bond Fund. (continued) 14 III. DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) Restricted Cash (Continued) Debt Service Reserve 2001B Account — The amounts on deposit in this account are to be used for the purpose of paying principal and interest on the Series 2001B Bonds as they become due in the event there should be insufficient funds in the Bond Fund. Project Fund— Amounts in the Project Fund are held and disbursed for costs of the Project. Residual Fund — Amounts in the Residual Fund related to three accounts — the Subordinate Bond Amortization Account — Series C, the Issuer Education Account and the Supplemental Management Fee Account. Based on release, tests funds are then transferred to each respective account. In addition, insurance funds are held to pay costs of maintaining insurance on the Project. The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies relating to a governmental entity's cash and investments. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an instrument. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. Texas Student Housing Authority — Ballpark Austin Project is not significantly exposed to interest rate risk as all investments earn a variable rate. Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The Public Funds Investment Act has a minimum rating that is required for investments. Texas Student Housing Authority — Ballpark Austin Project holds all of its cash and investments with the bond trustee and commercial banks. Concentration of Credit Risk The investment policy of Texas Student Housing Authority — Ballpark Austin Project is subject to the indenture agreement of the bonds. As of August 31, 2008, the Project held all of its restricted cash balances with the trustee, which represents 73% of the total cash and investments held at August 31, 2008. (continued) 15 III. DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) Custodial Credit Risk Custodial credit risk for s o deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Public Funds Investment Act does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The Public Funds Investment Act requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least the bank balances less FDIC insurance at all times. As of August 31, 2008, $254,147 of the Project's $367,084 bank balance was collateralized with a Bank Deposit Guarantee Bond from the Project's depository. The remaining balance, $1 12,937, was covered by FDIC insurance. B. Capital Assets Capital asset activity for the Project for the year ended August 31, 2008, was as follows: Beginning Ending Balance Additions Retirements Balance Capital assets,not being depreciated: Land $ 4,788,265 $ - $ - $ 4,788,265 i Total capital assets, not being depreciated 4,788,265 - 4,788,265 Capital assets,being depreciated: Building 21,345,305 - - 21,345,305 Improvements,furniture and fixtures 6,993,063 - - 6,993,063 Total capital assets, being depreciated 28,338,368 - - 28,338,368 Less accumulated depreciation for: Building ( 4,031,890) ( 711,511) - ( 4,743,401) Improvements,furniture and fixtures ( 3,176,918) ( 257,282) - ( 3,434,200) Total accumulated depreciation ( 7,208,808) ( 968,793) - ( 8,177,601) Total capital assets, j being depreciated,net 21,129,560 ( 968,793) - 20,160,767 Capital assets,net $ 25,917,825 $L__268,793 $ - $ 24,949,032 j (continued) 16 III. DETAILED NOTES ON ALL FUNDS (Continued) C. Bonds Payable The bonds are tax-exempt governmental obligations under the Internal Revenue Code. The bonds payable represent amounts due to the bondholders, via the trustee, and payable under the terms of the trust indenture dated December 1, 2001. The bonds are payable solely from the revenues generated by the Project and are secured by the revenues pledged and assigned under the terms of the trust indenture. The Town of Westlake does not have any liability for the payment of the bonds, as the bonds are non-recourse to both the Town of Westlake and Texas Student Housing Authority. Interest rates on the bonds range from 4.00% to 11.00% and are payable semi-annually on July 1 and January 1 of each year thereafter. At August 31, 2006, the Project had not made interest payments on the Subordinate 2001C Bond Series since July 2003, and the Subordinate 2001C Bond is in default. In addition, the Project's fixed charges coverage ratio was not in compliance with the covenants of the indenture. These events do not constitute an event of default that accelerates the bonds. As a result, the maturities are presented under the original repayment terms. The following is a summary of long-term debt transactions of the Project for the 12-month period ended August 31, 2008: The debt is to be amortized through 2033 with varying payment amounts ranging from $330,000 to $4,505,000 for interest and principal. The annual requirements to amortize all debts outstanding as of August 31, 2008, are as follows: Year Ending August 31, 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 Totals Principal $ 690,000 650,000 680,000 715,000 755,000 4,440,000 5,785,000 7,575,000 15,420,000 Governmental Activities Interest $ 36,710,000 (continued) 17 $ 2,340,339 2,311,359 2,280,294 2,247,194 2,208,144 10,375,044 9,021,281 7,236,000 4,865,075 $ 42,884,730 Total $ 3,030,339 2,961,359 2,960,294 2,962,194 2,963,144 14,815,044 14,806,281 14,811,000 20,285,075 $ 79,594,730 Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Revenue Bonds: 2001A Bonds $ 31,905,000 $ - $( 560,000) $ 31,345,000 $ 585,000 2001B Bonds 2,330,000 35,000 - 2,365,000 105,000 2001C Bonds 3,000,000 - - 3,000,000 - Less discounts ( 1,462,076) - 60,085 ( 1,401,991) - Total $ 35,772,924 $ 35,000 $( 499,915) $ 35,308,009 $ 690,000 The debt is to be amortized through 2033 with varying payment amounts ranging from $330,000 to $4,505,000 for interest and principal. The annual requirements to amortize all debts outstanding as of August 31, 2008, are as follows: Year Ending August 31, 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 Totals Principal $ 690,000 650,000 680,000 715,000 755,000 4,440,000 5,785,000 7,575,000 15,420,000 Governmental Activities Interest $ 36,710,000 (continued) 17 $ 2,340,339 2,311,359 2,280,294 2,247,194 2,208,144 10,375,044 9,021,281 7,236,000 4,865,075 $ 42,884,730 Total $ 3,030,339 2,961,359 2,960,294 2,962,194 2,963,144 14,815,044 14,806,281 14,811,000 20,285,075 $ 79,594,730 III. DETAILED NOTES ON ALL FUNDS (Continued) D. Net Assets Net assets represent the residual assets after liabilities are deducted. These assets are reported in the following categories: Invested in Capital Assets, Net of Related Debt consists of capital assets, net of accumulated depreciation and reduced by outstanding balances for bonds, notes, and other debt that are attributed to the acquisition, construction, or improvement of those assets. Restricted for Debt Service results when constraints placed on net asset use are either externally imposed by creditors, grantors and the like, or imposed by law through constitutional provisions or enabling legislation. E. Management Fees Beginning June 1, 2004, the Project retained Asset Campus Management for property management and recorded property management fees of approximately $155,694 for the year ended August 31, 2008, with approximately $27,510 due at August 31, 2008, and included in accounts payable. As of August 31, 2008, the Project has recorded approximately $338,450 in unpaid property and asset management fees to the prior property management company. The management agreement with the previous management company states that if the management fees are not paid, the amounts past due will accrue interest at the lesser of 12% or the highest lawful rate of interest. The Project's financials include accrued interest of approximately$40,614 for the unpaid management fees for the year ended August 31, 2008. F. Concentrations The Project consists of one property in Austin, Texas, and is dependent upon the Austin area and the higher education facilities in the Austin area for revenues. G. Commitments and Contingencies The Project has a deferred purchase commitment for $1,460,000 as part of the original purchase of the Project. The deferred purchase price accrues interest at a rate of 11% per annum. The first deferred purchase price installment shall be payable on September 1 of the first year after the Series C Bonds have been paid in full (scheduled final payment on Series C Bonds is in 2033), and the remaining installments shall be paid on each anniversary thereafter until the deferred purchase price and all interest thereon has been paid in full. As of August 31, 2008, there have been no payments made on the deferred purchase price. The Project has yet to have an arbitrage calculation performed for its outstanding debt. After that analysis, the Project may incur a liability for interest earned in accordance with Internal Revenue Service regulations. 18 SUPPLEMENTAL SCHEDULES TEXAS STUDENT HOUSING AUTHORITY BALLPARK AUSTIN PROJECT SCHEDULE I-SCHEDULE OF REVENUES AND EXPENSES BUDGET AND ACTUAL FOR THE YEAR ENDED AUGUST 31, 2008 REVENUES AND OTHER SUPPORT Rental income Other income Interest income Total revenues and other OPERATING EXPENSES Personnel Contract services Utilities Repairs and maintenance Turnover Advertising and promotion Administration Total operating expenses REVENUES AVAILABLE FOR FIXED CHARGES OTHER EXPENSES Management fees Replacements Depreciation and amortization Interest Total other expenses EXCESS OF EXPENSES OVER REVENUES 19 Budget Actual Variance $ 3,299,973 $ 3,516,568 $ 216,595 100,440 24,060 ( 76,380) - 111,411 111,411 3,400,413 3,652,039 251,626 315,001 309,229 5,772 65,459 58,928 6,531 573,232 565,936 7,296 62,545 57,025 5,520 188,100 181,216 6,884 98,900 94,025 4,875 59,935 169,308 ( 109,373) 1,363,172 1,435,667 ( 72,495) 2,037,241 2,216,372 179,131 271,245 194,656 76,589 - 174 ( 174) 1,149,173 1,149,173 - 2,666,989 2,666,989 - 4,087,407 4,010,992 76,415 $( 2,050,166) $( 1,794,620) $ 255,546 TEXAS STUDENT HOUSING AUTHORITY— BALLPARK AUSTIN PROJECT SCHEDULE II-CERTIFICATE OF THE FIXED CHARGES COVERAGE RATIO AUGUST 31,2008 We are providing this letter, as required by the Trust Indenture by and between Texas Student Housing Authority — Ballpark Austin Project (the "Project") and the Bank of New York (the "Trustee"), dated December 1, 2001, relating to Texas Student Housing Authority — Ballpark Austin Project Student Housing Revenue Bonds the "Indenture," to certify the Fixed Charges Coverage Ratio as of August 31, 2007. The Fixed Charges Coverage Ratio is defined in the Indenture as the ratio of revenue available for fixed charges to fixed charges. Further, fixed charges are defined in the Indenture as the sum of all cash outflows related to the Project that the Issuer cannot avoid without violating long-term contractual or legal obligations (those obligations which extend for a period greater than one year), including, but not limited to, (i) interest on indebtedness other than short-term indebtedness, and (ii) scheduled payments of principal on indebtedness other than short-term indebtedness, provided that maximum annual debt service shall be used for purposes of computing (i) and (ii) above. The audited financial statements indicate revenue available for fixed charges for the 12-month period ended August 31, 2008, to be $2,216,372. Based on the above revenues and fixed charges utilizing Bond A and Bond B, we calculate that the fixed charges coverage ratio as of August 31, 2008, to be .87 which is based on 12 months of operations. Based on the above revenues and fixed charges utilizing Bond A, Bond B and Bond C, we calculate that the fixed charges coverage ratio as of August 31, 2008, to be .77 which is based on 12 months of operations. Based on the above budgeted revenues and fixed charges utilizing Bond A and Bond B, we calculate that the fixed charges coverage ratio as of August 31, 2008, to be .80 which is based on 12 months of operations. 20 TEXAS STUDENT HOUSING AUTHORITY TOWN LAKE AUSTIN PROJECT FINANCIAL REPORT AUGUST 31, 2008 TEXAS STUDENT HOUSING AUTHORITY TOWN LAKE AUSTIN PROJECT TABLE OF CONTENTS AUGUST 31,2008 Page Number FINANCIAL SECTION Independent Auditors' Report............................................................................................. 1 —2 Management's Discussion and Analysis ............................................................................ 3 — 6 lFinancial Statements: Statementof Net Assets................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................ 8 Statement of Cash Flows .............................:................................................................... 9 Notes to Financial Statements.......................................................................................... 10 — 18 SUPPLEMENTAL SCHEDULES Schedule I— Schedule of Revenues and Expenses............................................................. 19 IV4 PATTILLO, BROWN & HILL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT To the Board of Directors Texas Student Housing Authority— Town Lake Austin Project Westlake, Texas We have audited the accompanying financial statements of Texas Student Housing Authority — Town Lake Austin Project (the "Project"), as of and for the year ended August 31, 2008, which collectively comprise the Project's basic financial statements as listed in the table of contents. Texas Student Housing Authority— Town Lake Austin Project is a component unit of the Town of Westlake. These financial statements are the responsibility of the Project management. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note I, the financial statements present only the Project and do not purport to, and do not, present fairly the financial position of Texas Student Housing Authority as of August 31, 2008, and the changes in its financial position and cash flows, where applicable, for the period then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Texas Student Housing Authority—Town Lake Austin Project as of August 31, 2008, and the respective changes in its financial position, and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1 401 WEST HIGHWAY 6■P.O.BOX 20725 ■WACO,TX 76702-0725■(254)772-4901 ■FAX:(254)772-4920■www.pbhcpa.com AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583 TEMPLE,TX(254)791-3460■WHITNEY,TX(254)694-4600■ALBUQUERQUE,NM(505)266-5904 The management's discussion and analysis on pages 3 through 6 is not a required part of the basic financial statements but is supplemental information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Texas Student Housing Authority — Town Lake Austin Project's basic financial statements. The accompanying supplemental information on page 19 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. f 8"', am I , + 4 Z. Z . January 14, 2009 2 MANAGEMENT'S DISCUSSION AND ANALYSIS As staff of the Texas Student Housing Authority (the "Authority") — Town Lake Austin Project (the "Project"), we offer the readers of the Project's financial statements this narrative overview and analysis of the financial activities of the Project for the fiscal year ended August 31, 2008. We encourage readers to consider the information presented herein in conjunction with the Project's financial statements which follow this section. As the Authority is a component unit of the Town of Westlake and is thus considered a governmental entity, Governmental Accounting Standards Board Statement 34, Basic Financial Statements—and Management's Discussion and Analysis for State and Local Governments has been implemented. The reader should note that this financial report addresses only the financial condition of the Project itself for 2008. FINANCIAL HIGHLIGHTS • The liabilities of the Project exceeded its assets at the close of the fiscal year by $3,361,664, an increase of$950,100 over the prior year. • Operating revenue of$2,831,579 is $13,795 less than budget; and operating expenses were $29,217 more than budget. • At the end of the current fiscal year, the total cash balances were $587,382 in unrestricted cash and$1,041,774 in restricted cash. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Project's basic financial statements. The Project's report consists of three parts, Management's Discussion and Analysis, the basic financial statements, and notes to financial statements. The basic financial statements include a statement of net assets, statement of revenues, expenses and changes in net assets, a statement of cash flows and a supplemental schedule. 3 The statement of net assets presents information on all of the Project's assets and liabilities with the difference between the two reported as net assets. TABLE 1 j TEXAS STUDENT HOUSING AUTHORITY- TOWN LAKE AUSTIN PROJECT NET ASSETS Business-type Activities 2008 2007 i Current and other assets $ 2,502,102 $ 2,667,636 Capital assets 16,748,671 17,405,068 Total assets 19,250,773 20,072,704 Current liabilities 1,211,342 860,408 Noncurrent liabilities 21,401,095 21,623,860 Total liabilities 22,612,437 22,484,268 Net assets: Invested in capital assets, net of related debt ( 4,857,382) ( 4,423,750) Restricted 552,995 1,214,006 Unrestricted 942,723 798,180 Total net assets i $( 3,361,664) $( 2,411,564) The statement of revenues, expenses and changes in net assets accounts for all of the Project's revenues and expenses regardless of when cash is paid or received. j TABLE 2 TEXAS STUDENT HOUSING AUTHORITY- TOWN LAKE AUSTIN PROJECT CHANGES IN NET ASSETS Business-type Activities 2008 2007 Total operating revenue $ 2,831,579 $ 2,790,825 i Total operating expenses 2,137,550 1,967,332 Total operating income 694,029 823,493 Interest income 33,592 63,230 Interest expense ( 1,677,721) ( 1,782,361) Total nonoperating loss ( 1,644,129) ( 1,719,131) CHANGE IN NET ASSETS ( 950,100) ( 895,638) l NET ASSETS,BEGINNING ( 2,411,564) ( 1,515,926) NET ASSETS,ENDING $( 3,361,664) $( 2,411,564) The statement of cash flows recaps how cash changed from year to year. 4 FINANCIAL ANALYSIS OF THE PROJECT'S FUNDS Notes to financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the financial statements. Restricted cash. Restricted cash represents monies held in escrow by the trustee and are restricted for the payment of expenses as outlined in the Installment Sale Agreement. As of August 31, 2008, these balances were as follows: Bond Proceeds Principal Fund, Series 2002 A-1 $ 303 Bond Proceeds Interest Fund,Series 2002 A-1 3,318 Bond Proceeds Interest Fund, Series 2002 A-2 5,235 Reserve Fund 167 Debt Service Reserve Fund 675,315 Repair and Replacement Fund 329,624 Deferred Debt Service 16,397 Tax and Insurance Fund 2,115 Fee and Expense Fund 9,309 Initial Purchase Fund ( 9) Total $ 1,041,774 Nonrestricted cash. Nonrestricted cash is available for general use of the Project. Bonds payable. As of August 31, 2008, the following amounts on the Series 2002 A-1 and 2002 A-2 were payable: Series 2002 A-1 Series 2002 A-2 Total $ 16,516,812 5,089,241 $ 21,606,053 For the fiscal year ending August 31, 2008, the total principal and interest payment is calculated at $1,891,637. A total of$222,765 in principal was paid during 2008. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET Leases at the Project are primarily 12-month leases, however, due to competitive and market conditions, a relatively minor number of 10-month leases exist. These leases do bring a monthly premium over the 12-month leases. Occupancy for the fiscal year ending August 31, 2009, forecasts at 100%. However, rental rates, again due to competitive pressures will not see a large increase. Net operating revenue for next year is projected at $1,480,151. 5 CONTACTING THE PROJECT'S FINANCIAL MANAGEMENT This financial report is designed to provide the reader with a general overview of the Project's finances and to demonstrate the Project's accountability for the money it receives. If you have any questions about this report, or need additional information, please contact Pete Ehrenberg at (817) 490-5723. 6 1 TEXAS STUDENT HOUSING AUTHORITY TOWN LAKE AUSTIN PROJECT STATEMENT OF NET ASSETS AUGUST 31,2008 ASSETS Current assets: Cash Restricted cash Accounts receivable Prepaid expenses Total current assets Capital assets: Land Other capital assets,net of accumulated depreciation Total capital assets Intangible assets: Debt issue costs,net of amortization Total intangible assets I Total assets LIABILITIES Current liabilities: Accounts payable Accrued liabilities Bonds payable-current maturities Management and development fees payable Deferred revenue and prepaid rent Accrued interest Total current liabilities Noncurrent liabilities: Bonds payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets,net of related debt Restricted for debt service i Unrestricted Total net assets $ 587,382 1,041,774 21,869 15,000 1,666,025 2,182,816 14,565,855 16,748,671 836,077 836,077 19,250,773 65,059 107,105 204,958 79,200 471,199 283,821 1,211,342 21,401,095 21,401,095 22,612,437 ( 4,857,382) 552,995 942,723 $( 3,361,664) The accompanying notes are an integral part of these financial statements. 7 TEXAS STUDENT HOUSING AUTHORITY TOWN LAKE AUSTIN PROJECT STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED AUGUST 31,2008 OPERATING REVENUES Rental Other Total operating revenues OPERATING EXPENSES Personnel Contract services Utilities Repairs and maintenance Turnover Advertising and promotion Administration Management fees Replacements Depreciation and amortization Total operating expenses OPERATING INCOME NONOPERATING REVENUES (EXPENSES) Interest income Interest expense Total nonoperating revenues (expenses) CHANGE IN NET ASSETS NET ASSETS,BEGINNING NET ASSETS,ENDING $ 2,721,224 110,355 2,831,579 264,901 52,893 500,461 22,780 65,128 65,924 136,953 153,671 53,261 821,578 2,137,550 694,029 33,592 ( 1,677,721) ( 1,644,129) ( 950,100) ( 2,411,564) $( 3,361,664) The accompanying notes are an integral part of these financial statements. 8 TEXAS STUDENT HOUSING AUTHORITY TOWN LAKE AUSTIN PROJECT STATEMENT OF CASH FLOWS FOR THE YEAR ENDED AUGUST 31, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from tenants $ 3,111,872 Cash paid to employees ( 253,797) Cash paid to suppliers ( 1,010,279) Net cash provided by operating activities 1,847,796 i CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Payments on bonds payable ( 222,765) Interest paid ( 1,668,871) Net cash used in capital and related financing activities ( 1,891,636) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 33,592 Net cash provided by investing activities 33,592 NET CHANGE IN CASH AND CASH EQUIVALENTS ( 10,248) CASH AND CASH EQUIVALENTS,BEGINNING I 1,639,404 CASH AND CASH EQUIVALENTS,ENDING $ 1,629,156 Cash $ 587,382 Restricted cash 1,041,774 Total cash and cash equivalents $ 1,629,156 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 694,029 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 821,578 Changes in operating assets and liabilities: Accounts receivable 10,284) Prepaids 389 Trade accounts payable 40,403 Deferred revenue 290,577 Other current liabilities 11,104 Net cash provided by operating activities $ 1,847,796 The accompanying notes are an integral part of these financial statements. 9 TEXAS STUDENT HOUSING AUTHORITY— TOWN LAKE AUSTIN PROJECT NOTES TO FINANCIAL STATEMENTS AUGUST 31,2008 I. GENERAL STATEMENT Texas Student Housing Authority (the "Authority"), a higher education authority, was established on January 23, 1995, as a duly constituted authority of the Town of Westlake, Texas, pursuant to Section 53.11 of Chapter 53 of the Texas Education Code, as amended. The Authority's purpose among other things is to acquire, finance, and operate student housing facilities. The Authority operates several student housing facilities in Texas and one of the housing projects is the Town Lake Austin Project (the "Project"). The Project was purchased from Jefferson Commons — Austin, L.P., a Delaware limited partnership on December 17, 2002. The Project obtained its financing through the issuance of Texas Student Housing Authority — Student Housing Revenue Bonds (Jefferson Commons at Town Lake Project), Series 2002 A-1 and A-2 (the "Bonds"). The Bonds were issued through a Trust Indenture (the "Trust Indenture") by and between the Authority and The Bank of New York (the "Trustee"). The Series 2002 A-1 and Series 2002 A-2 Bonds were issued in the face amounts of$19,480,000 and $5,670,000, respectively. The accompanying financial statements present the operations of the one Project, whose revenue streams are pledged for the Bonds described herein. The Project was operated and managed under the terms of the (a) Property Management and Leasing Agreement by and between the Authority and JPI Campus Quarters Management, L.P. ("JPI") and (b) the Asset Management Agreement by and between the Authority and JPI Apartment Management, L.P., up until February 2005. The Project is now managed and operated by Asset Campus Housing under the terms of a Property Management and Leasing Agreement dated March 1, 2005. The Property Management Agreements are collectively referred to as the "Agreements." II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the Project's significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: A. Reporting Entity For financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GASB Statement No. 14 as amended by GASB Statement No. 39. The criteria used is as follows: (continued) 10 II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity(Continued) Financial Accountability — The primary government is deemed to be financially accountable if it appoints a voting majority of the organization's governing body and 1) is able to impose its will on that organization; or 2) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. Additionally, the primary government may be financially accountable if an organization is fiscally dependent on the primary government regardless of whether the organization has a separately elected governing board appointed by a higher level of government or a jointly appointed board. B. Measurement Focus and Basis of Accounting The Project uses the economic resources measurement focus. This means that all assets, liabilities, equity, revenues, and expenses are accounted for using the accrual basis of accounting. Revenue is recognized when earned and expenses are recognized when they are incurred. In applying the requirements of GASB Statement No. 20, the Project has chosen to apply all applicable GASB pronouncements as well as Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. C. Assets, Liabilities and Net Assets or Equity Income Taxes The Project is an instrumentality of the Town and, therefore, its income is not subject to federal income taxation pursuant to Section 115 of the Internal Revenue Code. Cash and Cash Equivalents The Project considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. At August 31, 2008, the Project had no such investments included in cash and cash equivalents. In addition, the Project has restricted cash of$1,041,774 that is held by the Trustee for the Bonds payable under provisions of the Trust Indenture. During the year ended August 31, 2008, the investment income received from cash was $33,592. See Note III for risk disclosures and breakdown of restricted cash accounts. (continued) 11 II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Assets, Liabilities and Net Assets or Equity (Continued) Accounts Receivable Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management writes off uncollectible amounts through a reduction to revenue and a credit to accounts receivable based on its assessment of the outstanding receivables. At year- end, management assesses the accounts receivable balance and establishes a valuation allowance based on historical experience and an evaluation of the outstanding balances. As of August 31, 2008, management has determined that all accounts doubtful of collection have been charged to operations and an allowance is not required. Deferred Financing Costs Costs associated with the issuance of bonds are deferred and amortized over the term of the Bonds. Advertising Costs All adverting costs are expensed as they are incurred. Advertising costs for the year ended August 31, 2008, were $65,924. Capital Assets Property and equipment have been recorded at the date of acquisition at cost. Routine maintenance and repair costs to ready the units for the next period are expensed as incurred. Expenditures directly related to the improvement of property are capitalized at cost. The Project capitalizes the cost of roof replacements and expenditures for other major property improvements. The indenture provides for a replacement fund requirement. Depreciation is computed using the straight-line method over the estimated useful lives as follows: Asset Class Building Furniture,fixtures and equipment 12 Estimated Useful Lives 30 3 -20 III. DETAILED NOTES ON ALL FUNDS A. Cash and Investments At August 31, 2008, the carrying amount of Texas Student Housing Authority — Town Lake Austin Project deposits (cash with interest bearing accounts and restricted cash held in interest bearing accounts) was in total $1,629,156 of which $1,041,774 represented restricted cash. Restricted Cash Restricted cash represents amounts placed on deposit in accounts and held by the Trustee, which are restricted for the payment of expenses as required by the Trust Indenture. At August 31, 2008, restricted cash consists of the following funds and accounts: Fund/Account Description Bond Proceeds Principal Fund,Series 2002 A-1 Bond Proceeds Interest Fund, Series 2002 A-1 Bond Proceeds Interest Fund, Series 2002 A-2 Reserve Fund Debt Service Reserve Fund Repair and Replacement Fund Deferred Debt Service Tax and Insurance Fund Fee and Expense Fund Initial Purchase Fund Total $ 303 3,318 5,235 167 675,315 329,624 16,397 2,115 9,309 ( 9) $ 1,041,774 The following is a brief description of the funds and accounts making up the restricted cash balance at year-end, as defined by the Trust Indenture: Revenue Fund— The Revenue Fund was established for monthly deposits from the depository account that holds general revenues of the Project. All monies are deposited in the Revenue Fund and then properly distributed to the other funds, as required by the Trust Indenture. Amounts in the fund at year-end represent amounts that have not been distributed to the other funds due to timing of the interfund transfers. Bond Proceeds Fund — The Trustee makes monthly deposits in the Bond Proceeds Fund pursuant to the Trust Indenture. Amounts in the Bond Proceeds Fund shall be used solely to fund the payment of principal and interest on the Bonds, for the redemption of the Bonds at or prior to maturity, and to purchase Bonds on the open market. (continued) 13 III. DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) Restricted Cash (Continued) Debt Service Reserve Fund— The amounts on deposit in this account are to be used for the purpose of paying principal and interest on the Bonds in the event the principal and interest is not paid by issuer in accordance with the terms of the indenture and written notice of the Servicing Agent. Proiect Fund— Amounts in the Project Fund are held and disbursed for costs of the Project. Repair and Replacement Fund— Amounts in the Repair and Replacement Fund may be used to make mandatory repairs of the Project pursuant to the Trust Indenture. Trustee Fee Fund—Amounts are deposited in the Trustee Fee Fund on a monthly basis and are intended to pay the fees to the Trustee at year-end. Temporary Funds and Accounts—The Trustee may establish and maintain for so long as is necessary one or more Temporary Funds and accounts under this indenture. The Deferred Debt Service Reserve Fund, Tax and Insurance Fund, and Initial Purchase Funds are Temporary Funds at August 31, 2008. Residual Fund—The Trustee shall deposit any remaining amount in the Revenue Fund into the Surplus Fund. Amounts on deposit in the Surplus Fund will be released to the Project if certain release tests are satisfied. If the release tests are not satisfied, the Trustee will retain the monies on deposit in the Residual Fund. The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies relating to a governmental entity's cash and investments. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an instrument. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. Texas Student Housing Authority — Town Lake Austin Project is not significantly exposed to interest rate risk as all investments earn a variable rate. (continued) 14 III. DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The Public Funds Investment Act has a minimum rating that is required for investments. Texas Student Housing Authority—Town Lake Austin Project holds all of its cash and investments with the Bond Trustee and commercial banks. Concentration of Credit Risk The investment policy of Texas Student Housing Authority — Town Lake Austin Project is subject to the indenture agreement of the Bonds. As of August 31, 2008, the Project held all of its restricted cash balances with the Trustee, which represents 64% of the total cash and investments held at August 31, 2008. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Public Funds Investment Act does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The Public Funds Investment Act requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least the bank balances less FDIC insurance at all times. As of August 31, 2008, the Project has unrestricted cash of $587,382 (bank balance $277,068). Of the bank balance, $272,841 was covered by federal depository insurance while the remaining $4,227 was uncollateralized. The Project has a Bank Deposit Guarantee Bond from the Project's depository in the amount of$3,000,000. (continued) 15 III. DETAILED NOTES ON ALL FUNDS (Continued) i i B. Capital Assets Capital asset activity for the Project for the year ended August 31, 2008, was as follows: Beginning Ending Balance Additions Retirements Balance Capital assets,not being depreciated Land $ 2,182,816 $ - $ - $ 2,182,816 Total capital assets, not being depreciated 2,182,816 - - 2,182,816 Capital assets,being depreciated: Building and improvements 13,270,150 - - 13,270,150 Capitalized purchase costs 887,095 - - 887,095 Land improvements 2,806,596 - - 2,806,596 Unit appliances 295,134 - - 295,134 Furniture and fixtures 915,951 - - 915,951 Total capital assets, being depreciated 18,174,926 - - 18,174,926 Less accumulated depreciation for: Building and improvements 1,768,268 627,913 - 2,396,181 Capitalized purchase costs 118,280 28,484 - 146,764 Land improvements 374,212 - - 374,212 Unit appliances 168,648 - - 168,648 Furniture and fixtures 523,266 - - 523,266 Total accumulated depreciation 2,952,674 656,397 - 3,609,071 Total capital assets, being depreciated,net 15,222,252 656,397) - 14,565,855 Capital assets,net $ 17,405,068 $L6 6,397 $ - $ 16,748,671 C. Bonds Payable The Bonds are tax-exempt governmental obligations under the Internal Revenue Code. The Bonds payable represent amounts due to the bondholders, via the Trustee, and payable under the terms of the Trust Indenture dated December 1, 2001. The Bonds are payable solely from the revenues generated by the Project and are secured by the revenues pledged and assigned under the terms of the Trust Indenture. The Town of Westlake does not have any liability for the payment of the Bonds, as the Bonds are non-recourse to both the Town of Westlake and Texas Student Housing Authority. Interest rates on the Bonds range from 7.76% to 8.69% and are payable semi-annually on July 1 and January 1 of each year thereafter. (continued) 16 III. DETAILED NOTES ON ALL FUNDS (Continued) C. Bonds Payable (Continued) The following is a summary of long-term debt transactions of the Project for the 12-month period ended August 31, 2008: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Revenue Bonds: 2002 A-1 Bonds $ 16,739,577 $ 2002 A-2 Bonds 5,089,241 - $( 222,765) $ 16,516,812 $ 222,872 - 5,089,241 - Total $ 21,828,818 $ - $ 222,765 $ 21,606,053 $ 222,872 The debt is to be amortized on the A-1 Bonds through 2033 with monthly payments of $124,726 and the A-2 Bonds through 2038 with monthly payments of $167,675 starting November 1, 2033. The A-2 Bonds have no regular principal payments until the year 2033. The Bonds also had a clause for an initial purchase release draw. The requirements for that draw were not met and during 2006, the funds held in the initial Purchase Fund were applied to principal on the Bonds. The annual requirements to amortize all debts outstanding as of August 31, 2008, are as follows: Year Ending August 31, 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 Totals D. Net Assets Principal $ 222,872 240,795 260,159 281,080 303,683 1,926,465 2,836,079 4,175,185 11,359,735 $ 21,606,053 Governmental Activities Interest $ 1,668,765 1,650,842 1,631,478 1,610,557 1,587,954 7,531,720 6,622,106 5,283,000 3,312,414 Total $ 1,891,637 1,891,637 1,891,637 1,891,637 1,891,637 9,458,185 9,458,185 9,458,185 14,672,149 $ 30,898,836 $ 52,504,889 Net assets represent the residual assets after liabilities are deducted. These assets are reported in the following categories: Invested in Capital Assets, Net of Related Debt consists of capital assets, net of accumulated depreciation and reduced by outstanding balances for bonds, notes, and other debt that are attributed to the acquisition, construction, or improvement of those assets. (continued) 17 III. DETAILED NOTES ON ALL FUNDS (Continued) D. Net Assets (Continued) Restricted for Debt Service results when constraints placed on net asset use are either externally imposed by creditors, grantors and the like, or imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Assets consists of the portion of net assets after invested in capital assets, net of related debt and restricted for debt service has been satisfied. E. Management Fees The Project paid JPI property and asset management fees for the Project through February 283 2005. Effective March 1, 2005, the Project entered into a management agreement with ACH and began paying management fees to ACH at that date. During 2008, the Project recorded management fees of$153,671 to ACH. At August 31, 2008, the Project owed JPI $79,200 for property management fees. F. Concentrations The Project consists of one property in Austin, Texas, and is dependent upon the Austin area and the higher education facilities in the Austin area for revenues. G. Commitments and Continizencies The Project has yet to have an arbitrage calculation performed for its outstanding debt. After that analysis, the Project may incur a liability for interest earned in accordance with Internal Revenue Service regulations. 18 SUPPLEMENTAL SCHEDULE TEXAS STUDENT HOUSING AUTHORITY TOWN LAKE AUSTIN PROJECT SCHEDULE I-SCHEDULE OF REVENUES AND EXPENSES BUDGET AND ACTUAL FOR THE YEAR ENDED AUGUST 31,2008 19 Budget Actual Variance REVENUES AND OTHER SUPPORT Rental $ 2,758,234 $ 2,721,224 $( 37,010) Other 87,140 110,355 23,215 Interest - 33,592 33,592 Total revenues and other support 2,845,374 2,865,171 19,797 OPERATING EXPENSES Personnel 293,104 264,901 28,203 Contract services 78,120 52,893 25,227 Utilities 415,580 500,461 ( 84,881) Repairs and maintenance 19,750 22,780 ( 3,030) Turnover 82,775 65,128 17,647 Advertising and promotion 75,800 65,924 9,876 Administration 114,694 136,953 ( 22,259) Total operating expenses 1,079,823 1,109,040 ( 29,217) REVENUES AVAILABLE FOR FIXED CHARGES 1,765,551 1,756,131 ( 9,420) OTHER EXPENSES Management fees 147,195 153,671 ( 6,476) Replacements 55,500 53,261 2,239 Depreciation and amortization 821,578 821,578 - Interest 1,677,721 1,677,721 - Total other expenses 2,701,994 2,706,231 4,237 EXCESS OF EXPENSES OVER(UNDER) REVENUES $( 936,443) $( 950,100) $( 13,657) 19 TEXAS STUDENT HOUSING AUTHORITY COLLEGE STATION PROJECT FINANCIAL REPORT AUGUST 31, 2008 TEXAS STUDENT HOUSING AUTHORITY COLLEGE STATION PROJECT TABLE OF CONTENTS AUGUST 31,2008 Page FINANCIAL SECTION Independent Auditors' Report.............................................................................................. 1 —2 Management's Discussion and Analysis ............................................................................ 3 - Financial Statements: Statementof Net Assets................................................................................................... 6 Statement of Revenues, Expenses and Changes in Net Assets........................................ 7 Statement of Cash Flows ................................................................................................. 8 Notes to Financial Statements.......................................................................................... 9 — 16 SUPPLEMENTAL SCHEDULES i Schedule I—Schedule of Revenues and Expenses............................................................. 17 Schedule II—Fixed Charges Coverage Ratio..................................................................... 18 W, PATTILLO, BROWN & HILL, L.L_P. CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS INDEPENDENT AUDITORS' REPORT To the Board of Directors Texas Student Housing Authority— College Station Project Westlake, Texas We have audited the accompanying financial statements of Texas Student Housing Authority — College Station Project (the "Project"), as of and for the year ended August 31, 2008, which collectively comprise the Project's basic financial statements as listed in the table of contents. Texas Student Housing Authority — College Station Project is a component unit of the Town of Westlake. These financial statements are the responsibility of the Project's management. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note I, the financial statements present only the Project and do not purport to, and do not, present fairly the financial position of Texas Student Housing Authority as of August 31, 2008, and the changes in its financial position and cash flows, where applicable, for the period then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Texas Student Housing Authority— College Station Project as of August 31, 2008, and the respective changes in financial position and where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that Texas Student Housing Corporation— College Station Project will continue as a going concern. As discussed in Note II, H to the financial statements, the Project is in default on its certificates and certificate holders may choose to continue as a going concern. Management's plans in regard to these matters are discussed in Note Il, H. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 1 401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(254)772-4901 ■FAX:(254)772-4920■www.pbhcpa.com AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583 TEMPLE,TX(254)791-3460■WHITNEY,TX(254)694-4600■ALBUQUERQUE,NM(505)266-5904 The management's discussion and analysis on pages 3 through 5 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the business-type activities of Texas Student Housing Authority— College Station Project's basic financial statements. The accompanying supplementary information on pages 17 and 18 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. January 14, 2009 2 MANAGEMENT'S DISCUSSION AND ANALYSIS As staff of the Texas Student Housing Corporation (the "Corporation") — College Station Project (the "Project"), we offer the readers of the Project's financial statements this narrative overview and analysis of the financial activities of the Project for the fiscal year ended August 31, 2008. We encourage readers to consider the information presented herein in conjunction with the Project's financial statements which follow this section. As the Corporation is a component unit of the Town of Westlake and is thus considered a governmental entity, Governmental Accounting Standards Board Statement 34, Basic Financial Statements—and Management's Discussion and Analysis for State and Local Governments has been implemented. The reader should note that this financial report addresses only the financial condition of the Project itself for 2008. FINANCIAL HIGHLIGHTS • The liabilities of the Project exceeded its assets at the close of the fiscal year by $4,730,505 due primarily to a decrease in net assets of$1,366,700. • Major components of the expense overage were $130,611 in administrative and marketing, and $58,979 in repairs and maintenance expenses. • At the end of the current fiscal year, the total cash balances were $3,992,27') in unrestricted cash and$928,518 in restricted cash. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Project's basic financial statements. The Project's report consists of three parts, Management's Discussion and Analysis, the basic financial statements, and notes to financial statements. The basic financial statements include a statement of net assets, statement of revenues, expenses and changes in net assets, a statement of cash flows and supplemental schedules. The Project is being treated as a going concern. The Project is in default on its certificates and is not financially able to make scheduled principal and interest payments on its outstanding debt. They are considered an event of default by the Trustee, which gives the certificate holders the right to accelerate and demand payment of the certificates in full. Management and the property manager are in the process of developing plans to increase occupancy and rental rates at the property to improve its financial performance. The statement of net assets presents information on all of the Project's assets and liabilities with the difference between the two reported as net assets. 3 The statement of revenues, expenses and changes in net assets accounts for all of the Authority's revenues and expenses regardless of when cash is paid or received. The statement of cash flows recaps how cash increased year over year. FINANCIAL ANALYSIS OF THE PROJECT'S FUNDS Notes to financial statements. The notes provide additional inforination that is essential to a frill understanding of the data provided in the financial statements. Restricted cash. Restricted cash represents monies held in escrow by the trustee and are restricted for the payment of expenses as outlined in the Installment Sale Agreement. As of August 31, 2008, these balances were as follows: Replacement Fund $ 202,655 Series A Reserve Fund 3,186 Series B Reserve Fund 156,827 Series A Interest Account 232,045 Series A Principal Account 103,678 Series B Interest Account 62,000 Series B Principal Fund 93,333 Transaction Costs Payment Fund 32,457 Series D Interest Account 40,187 Current Receipts Fund 2,150 Total $ 928,518 Nonrestricted cash. Nonrestricted cash is available for general use of the Project. Installment note payable. The Project's developer refinanced the original Installment Sale Agreement effective December 1, 2004, by issuing debt certificates in the following classes: Series A $ 17,220,000 Series B 4,650,000 Series C 4,820,000 Series D 5,380,000 Total $ 32,070,000 The note is payable at the rate of$231,545 monthly. Fixed Charge Coverage Ratio The Installment Sale Agreement provides for a fixed charges coverage ratio of 1.1. At this time, the Project has only realized a ratio of 1.06 and is thus technically in default of the Agreement. Upon default, the lender may accelerate maturity of the unpaid portion of the principal, however, it is not anticipated that this event will incur since foreclosure by the certificate holders would result in the loss of the Project's tax-exempt status. 11 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET Leases at the Project have a duration that encompasses the school year, primarily the months of September through May. The June to August revenue is dependent on the ability to attract various camps/meetings. As the Project is tax-exempt through the Texas Higher Education Act, only those functions sponsored by the University are eligible for acceptance. The occupancy for this school year is 100%, thus the focus for this year will be on increasing this "summer" revenue. Although the fixed charges coverage ratio was only 1.06, all of the A and B certificate holders received all proceeds due them. The 2008/2009 budget clearly indicates that operating income will be sufficient to again service the A and B certificates. CONTACTING THE PROJECT'S FINANCIAL MANAGEMENT This financial report is designed to provide the reader with a general overview of the Project's finances and to demonstrate the Project's accountability for the money it receives. If you have any questions about this report, or need additional information, please contact Pete Ehrenberg at (817) 490-5723. TEXAS STUDENT HOUSING AUTHORITY COLLEGE STATION PROJECT STATEMENT OF NET ASSETS AUGUST 31,2008 ASSETS Current assets: Cash Restricted cash Accounts receivable,net of$64,045 allowance Prepaid expenses Total current assets Capital assets: Land Other capital assets,net of accumulated depreciation Total capital assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued expenses Deferred revenue and prepaid rent Accrued interest Installment loan payable Total current liabilities NET ASSETS Invested in capital assets,net of related debt Unrestricted Total net assets $ 3,992,273 928,518 791,135 18,227 5;730,153 2,899,597 24,947,732 27,847,329 27,847,329 33,577,482 245,863 428,938 2,562,422 3,000,764 32,070,000 38,307,987 ( 4,222,671) ( 507,834) $( 4,730,505) The accompanying notes are an integral part of these financial statements. 6 TEXAS STUDENT HOUSING AUTHORITY COLLEGE STATION PROJECT STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED AUGUST 31,2008 OPERATING REVENUES Rental Other Total operating revenues OPERATING EXPENSES Management fees Administration and marketing Cafeteria Utilities Repairs and maintenance Insurance Depreciation and amortization Total operating expenses OPERATING INCOME NONOPERATING REVENUES (EXPENSES) Interest revenue Interest expense Total nonoperating revenues (expenses) CHANGE IN NET ASSETS NET ASSETS,BEGINNING NET ASSETS, ENDING $ 5,945,851 54,748 6;000;599 274,058 904,016 861,747 689,788 468,335 67,757 1,356,620 4,622,321 1,378,278 72,935 ( 2,817;913) ( 2,744,978) ( 1,366,700) ( 3,363,805) $( 4,730,505) The accompanying notes are an integral part of these financial statements. rA TEXAS STUDENT HOUSING AUTHORITY COLLEGE STATION PROJECT STATEMENT OF CASH FLOWS FOR THE YEAR ENDED AUGUST 31,2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from tenants $ 5,472,919 Other operating revenues 54,748 Cash paid to employees ( 779,101) Cash paid to suppliers ( 2,780,702) Net cash provided by operating activities 1,967,864 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal repayments on bonds ( 275,000) Interest paid ( 1,598,475) Net cash provided by capital and related financing activities ( 1,873,475) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 72.935 Net cash provided by investing activities 72,935 NET CHANGE IN CASH AND CASH EQUIVALENTS 167,324 i CASH AND CASH EQUIVALENTS,BEGINNING 4,753,467 CASH AND CASH EQUIVALENTS,Q NTS,ENDING $ 4,920,791 Cash $ 3,992,273 Restricted cash 928,518 Total cash and cash equivalents $ 4,920,791 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 1,378,278 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,356,620 Changes in operating assets and liabilities: Accounts receivable ( 356,279) Accounts payable ( 62,738) Accrued liabilities 124,915 Deferred revenue and prepaid rent ( 472,932) Net cash provided by operating activities $ 1,967,864 The accompanying notes are an integral part of these financial statements. TEXAS STUDENT HOUSING AUTHORITY— COLLEGE STATION PROJECT NOTES TO FINANCIAL STATEMENTS AUGUST 31,2008 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Operations Texas Student Housing Authority — College Station Project (the "Project"), a duly constituted authority of the Town of Westlake, Texas (the "Town") pursuant to Section 53.35(b) of the Texas Education Code, as amended (the "Act"). The Authority was established to acquire educational facilities and housing facilities to be used by the students, faculty and staff of institutions of higher education within the State of Texas. The Project's purpose is to own and operate a student housing facility known as Cambridge at College Station (the "College Station Project") in College Station, Texas. The College Station Project was purchased from Cambridge Student Housing Development, L.P. (the "Developer") effective September 1, 2004. The Project obtained its financing through a seller-financed installment sale agreement. The accompanying financial statements present the operations of the Project, whose revenues are pledged for the installment note described herein. The College Station Project is operated and managed under the terms of the First Amended and Restated Property Project Management and Leasing Agreement by and between the Authority and Asset Campus Housing, Inc. for the period audited. The Project's significant accounting policies are as follows: A. Reporting Entity For financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GASB Statement No. 14 as amended by GASB Statement No. 39. (continued) I I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity (Continued) The criteria set forth require governmental reporting entities to determine their primary government for the purposes of annual reporting. The primary government is deemed to be financially accountable if it appoints a voting majority of the organization's governing body and (1) it is able to impose its will on that organization or (2) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. Additionally, the primary government may be financially accountable if an organization is fiscally dependent regardless of whether the organization has a separately elected governing board appointed by a higher level of government or a jointly appointed board. B. Measurement Focus and Basis of Accounting The Project uses the "net income and capital maintenance" measurement focus. This means that all assets, liabilities, equity, revenues, and expenses are accounted for using the accrual basis of accounting. Such standards are generally in accordance with the reporting standards of income producing real estate projects owned in the private sector. Revenue is recognized when earned and expenses are recognized when they are incurred. In applying the requirements of GASB Statement No. 20, the Project has chosen to apply all applicable GASB pronouncements as well as Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. C. Capitalization, Depreciation and Impairment Policies Property and Depreciation Property and equipment are recorded at cost. Such costs include carpet and appliance replacements. Expenditures for routine maintenance and repairs are expensed as incurred. Property and equipment are depreciated using the straight-line method over the following useful lives: Buildings 30 years Improvements 15 years Equipment,furniture and fixtures 5 -20 years (continued) 10 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Net Assets or Equity Cash and Cash Equivalents For the purpose of the statement of cash flows, the Project considers unrestricted cash and highly liquid investments with maturities of three months or less at the date of purchase to be cash and cash equivalents. Concentration of Credit Risk As of and during the year ended August 31, 2008, the Project had cash deposits with financial institutions in excess of the $250,000 amount insured by the Federal Deposit Insurance Corporation. Any amounts over the FDIC limit are insured with pledged securities by the Project's depository. Taxes The Project is an instrumentality of the Town of Westlake, therefore, its income is not subject to federal income taxation pursuant to Section 115 of the Internal Revenue Code. Additionally, the Project is exempt from local property taxes. Accounts Receivable Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management writes off uncollectible amounts through a reduction to revenue and a credit to accounts receivable based on its assessment of the outstanding receivables. At year- end, management assesses the accounts receivable balance and establishes a valuation allowance based on historical experience and an evaluation of the outstanding balances. Advertising Costs All advertising costs are expensed as they are incurred. Advertising costs for the year ended August 31, 2008, were approximately$90,390. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11 II. DETAILED NOTES ON ALL FUNDS A. Restricted Cash Restricted cash represents amounts held in escrow, which are restricted for the payment of expenses as required by the installment sale agreement. As of August 31, 2008, restricted cash consists of the following: Replacement Fund $ 202,655 Series A Reserve Fund 3,186 Series B Reserve Fund 156,827 Series A Interest Account 232,045 Series A Principal Account 103,678 Series B Interest Account 62,000 Series B Principal Fund 93,333 Transaction Costs Payment Fund 32,457 Series D Interest Account 40,187 Current Receipts Fund 2,150 Total $ 928,518 The following is a brief description of the funds and accounts comprising the restricted cash balance at year-end, as defined by the installment sale agreement and the trust agreement: Replacement Fund— Amounts in the Replacement Fund may be used to pay the maintenance and repair costs related to the College Station Property, which the Project is obligated to pay pursuant to the installment sale agreement. Series A Reserve Fund—The amounts on deposit in this account were required to be contributed by the Developer and are to be used for the purpose of paying principal and interest on the Series A certificates as they become due in the event there should be insufficient funds in the Debt Service Fund. Series B Reserve Fund—The amounts on deposit in this account were required to be contributed by the Developer and are to be used for the purpose of paying principal and interest on the Series B certificates as they become due in the event there should be insufficient funds in the Debt Service Fund. Series A Principal Fund — Amounts in the Series A Principal Fund represent payments set aside for the repayment of the principal balance on the Series A certificates. Transaction Costs Payment Fund— Amounts in the Transaction Costs Payment Fund are to be used to pay for debt issuance costs. (continued) 12 II. DETAILED NOTES ON ALL FUNDS (Continued) A. Restricted Cash (Continued) Debt Service Fund — Amounts in the Debt Service Fund are to be used to accumulate funds that are used to pay debt service costs. Series D Interest Fund — Amounts in the Series D Interest Fund are used to accumulate funds to pay interest on the Series D certificates. Current Receipts Fund—Amounts in the Current Receipts Fund are to be used to accumulate funds from the collections of rent payments and other income from the College Station Project. B. Installment Note Payable The Project's installment note payable is summarized as follows: Interest Lender/Security/Due Date Rate Balance Cambridge Student Housing Financing Company, L.P.; substantially all assets and assignment of rents; due November 1,2039 8.00% $ 32,070,000 The Project's installment note is payable monthly with principal and interest payments of $231,545 until November 1, 2039. The following is a summary of long-term debt transactions of the Project for the year ended August 31, 2008: Amounts j Beginning Ending Due Within Balance Increases Decreases Balance One Year Installment note $ 32,345,000 $ - $ 2757000 $ 32,070,000 $ 32,070,000 i The Project's original Developer refinanced the installment note through a secondary offering with Cambridge Student Housing Financing Company, L.P. The debt certificates were sold to private investors in the following classes: Class(Series) Offering Total A $ 17,500,000 B 4,900,000 C 4,820,000 D 5,380,000 Total $ 32,600,000 (continued) 13 II. DETAILED NOTES ON ALL FUNDS (Continued) B. Installment Note Payable (Continued) Each class has certain rights and privileges, as contained in the private placement memorandum. As a part of the offering, the Project entered into a trust agreement with J. P. Morgan Trust Company, N.A. (the "Trustee") for the purpose of determining that each class is paid in accordance with the private placement memorandum. At August 31, 2008, the Project was not in compliance with the fixed charge coverage ratio. Should the project default, the lender may accelerate the maturity of the unpaid portion of the principal payable under the installment sale agreement. However, the Authority does not anticipate this event will occur, since foreclosure by private interests would result in the loss of tax-exempt status for the Project. C. Capital Assets Capital asset activity for the Project for the year ended August 31, 2008, was as follows: Beginning Prior Period Ending Balance Increase Decrease Adjustment Balance Capital assets,not being depreciated: Land $ 2,899,597 $ $ - $ - $ 2,899,597 Total capital assets, not being depreciated 2,899,597 - - 2,899,597 1 Capital assets,being depreciated: Building 27,727,646 - 27,727,646 Furniture and fixtures 2,594,804 - - 2,594,804 Total capital assets, being depreciated 30,322,450 - 30,322,450 iLess accumulated depreciation for: Building ( 2,738,798) ( 871,729) - ( 3,610,527) Furniture and fixtures ( 1,279,299) ( 484,892) - - ( 1,764,191) Total accumulated depreciation ( 4,018,097) ( 1,356,621) - - ( 5,374,718) i Total capital assets, being depreciated,net 26,304,353 ( 1,356,621) - - 24,947,732 Capital assets,net $ 29,203,950 $L 1,356,621 $ - $ $ 27,847,329 (continued) 14 II. DETAILED NOTES ON ALL FUNDS (Continued) D. Geography and Concentration Resident leases generally have a duration that encompasses the school year. This enables the Project to pass on inflationary increases in operating expenses on a timely basis; however, this exposes the Project to rental rate decreases during economic downturns. Additionally, competition from nearby university housing properties in College Station, Texas influences the housing rates charged to students. Despite these risks, the Project believes there will be a continued strong demand for its dwelling units. E. Net Assets Net assets represent the residual assets after liabilities are deducted. Net assets are reported in the following categories. Invested in Capital Assets, Net of Related Debt—consists of capital assets, net of accumulated depreciation and reduced by outstanding balances for certificates, notes, and other debt that are attributed to the acquisition, construction, or improvement of those assets. Restricted for Debt Service—consists of net assets for which conditions are either externally imposed by creditors, grantors and the like, or imposed by law through constitutional provisions or enabling legislation. At August 31, 2008, the total funds available for debt service were less than the accrued interest due at August 31, 2008. As a result,net assets restricted for debt service is shown at zero. Unrestricted—available for general use of the Project without restriction. F. Management Fees/Related Party Transactions The Project pays Asset Campus Housing asset management fees for the management of the College Station Property. The Project recorded property management fees of approximately $280,800 for the period ended August 31, 2008. Administration and marketing expenses include approximately $96,346 for administrative fees earned by Texas Student Housing Authority. There were no administrative fees included in accounts payable at August 31, 2008. G. Commitments and Contingencies During fiscal year 2006, the Brazos County Tax — Assessor's office filed suit against the Project in order to eliminate the Project's tax-exempt status. This would force the Project to begin paying property taxes on the property owed by the Project. The County is also seeking back property taxes previously not paid as the Project was under tax-exempt status. The status of this suit is unknown at this time and a liability has not been booked. Should the county prevail, the Project would owe the county a material amount of property taxes, from both current and prior periods. (continued) 15 II. DETAILED NOTES ON ALL FUNDS (Continued) G. Commitments and ContiniZencies (Continued) The Project has not yet to have an arbitrage calculation performed for its outstanding debt. After that analysis, the Project may incur a liability for interest earned in accordance with Internal Revenue Service regulations. H. GoinLr Concern The 2007 financial statements were prepared assuming the Project will continue as a going concern. The Project's bonds payable are considered to be in default due to partial non- payment of principal and interest payments. These are considered an event of default by the Trustee, which gives the bondholders the right to accelerate and demand payment of the bonds in full. This condition raises substantial doubt about the Project's ability to continue as a going concern. Management and the property manager are in the process of developing and implementing plans to increase occupancy and rental rates at the property to improve its financial performance. 16 SUPPLEMENTAL SCHEDULES TEXAS STUDENT HOUSING AUTHORITY COLLEGE STATION PROJECT SCHEDULE I-SCHEDULE OF REVENUES AND EXPENSES BUDGET AND ACTUAL FOR THE YEAR ENDED AUGUST 31,2008 Budget Actual Variance REVENUES AND OTHER SUPPORT Rental $ 4,610,924 $ 5,945,851 $ 1,334,927 Other 510,623 54,748 ( 455,875) Interest 69,522 72,935 3,413 Total revenues and other support 5,191,069 6,073,534 882,465 OPERATING EXPENSES Administrative and marketing 773,405 904,016 ( 130,611) Cafeteria 822,561 861,747 ( 39,186) Utilities 675,133 689,788 ( 14,655) Repairs and maintenance 409,356 468,335 ( 58,979) Insurance 208,200 67,757 140.443 Total operating expenses 2,888,655 2,991,643 ( 102,988) REVENUE AVAILABLE FOR FIXED CHARGES 2,302,414 3,081,891 779,477 OTHER EXPENSES Management fees 280,800 274,058 6,742 Depreciation and amortization 1,356,620 1,356,620 - Interest 2,817,913 2,817,913 - Total other expenses 4,455,333 4,448,591 6.742 EXCESS OF EXPENSES OVER REVENUES $( 2,152,919) $( 1,366,700) $ 786,219 17 TEXAS STUDENT HOUSING AUTHORITY COLLEGE STATION PROJECT SCHEDULE II-FIXED CHARGES COVERAGE RATIO FOR THE YEAR ENDED AUGUST 31,2008 CALCULATION OF FIXED CHARGES COVERAGE RATIO Total gross revenues Total expenses Add: Interest Depreciation and amortization Property management fees in excess of base property management fee Adjusted expenses Adjusted net operating income available to pay fixed charges Fixed charges/maximum principal and interest for fiscal year-end Fixed charges coverage ratio Required ratio Pass or fail 18 $( 7,440,234) 2,817,913 1,356,620 124,915 $ 6,073,534 ( 3,140,786) $ 2,932,748 $ 2,778,540 1.06 1.10 Fail (c) Under the direction ofthe Board of Directors.the Treasurer shall disburse all money and sign all checks and other instruments drawn on or payable out of the funds of the Authority and shall make transfers and other dispositions of the funds and securities ofthe Authority as may be ordered by the Board of Directors. (d) The Treasurer shall also discharge such additional duties as may be assigned from time to time by the Board of Directors. (e) Upon the request of the President and or the Board of Directors.the Treasurer shall render an accounting of all transactions of the Treasurer and of the financial condition of the Authority. (f) The Treasurer shall give bond on Iy if required to do so by the Board of Directors. SECTION 3.8. Assistant Treasurer. (a) In the event of the absence or disability of the Treasurer.the Assistant Treasurer shall discharge the powers and duties of the Treasurer. (b) The Assistant Treasurer shall perform such additional duties as may be assigned from time to time by the Board of Directors. SECTION 3.9.Executive Director. (a) The Executive Director shall be appointed by the° id t, on tefms..ppro by the Board of Directors and consented to by the R a ...,f Aldgfmen ToN-%,-n Council. In connection with the employment of the Executive Director.the Authority shall enter into an employment contract with the Executive Director.which contract shall be approved by the Board of Directors and consented to by the:R d of A Idg en Town Council. (b) The Executive Director shall (i) report and be accountable to the Board of Directors, and to the Town Council carryout instructions given by the Pr-esiden t Board of Directors and (iii) be subject to removal(for cause or without cause)at anytime by the Board of Directors and or the Town Council (c) If the Executive Director is removed,the Authority shall hire,as a successor 'Ixecutive Director.the person appointed by the Presidpl#on.40H:Hs' approved by the Board of Directors and consented to by the (d) Without any action by the Board of Directors.the Executive Director shall serve ex qffcio as both:assistant Secretary and Assistant Treasurer. SECTION 3.10.Compensation of Officers. Officers who are not Directors may receive compensation for their services as officers on terms approved by the Board of Directors. 'ESHA.BYLAWS Page TAM.v 1.4:20.-2004 AMENDEDED AND RESTATED BYLAWS of TEXAS STUDENT HOUSING AUTHORITY ARTICLE I POWERS AND OPERATIONS IN GENERAL SECTION 1.1. Powers of Authority. The Texas Student Housing Authority (the "Authority") shall have all of the powers and authority granted to"Higher Education Authorities"created under Section 53.11,Texas Education Code,as amended (the "Act"). The Authority shall be managed by the Board of Directors (the "Board of Directors") in accordance with the Act. SECTION 1.2. Supervision by Beafd of ldefinen.the Town Council. As the instrumentality of the Town of Westlake(the"Town"),the Authority and its policies are subject to supervision by the Town's Bawd of ^'a eF ?E}(the�"Board 0f la°^—.... )Town Council(the Council) SECTION 1.3. Student Assistance Program. (a) The Authority shall establish a program (the "Student Assistance Program") to provide assistance to students attending institution(s)of higher education whose principal campus is located in the State of Texas. (b) Students qualifying for assistance shall be referred to as"Recipients,"who in order to qualify must: of Texas, and (i) be a graduate of a high school located in the State of Texas, (ii) attend an institution of higher education whose principal campus is located in the State (iii) meet the requirements promulgated from time to time by the Board of Directors. (c) Recipients may be provided use of student housing facilities owned by the Authority at a cost less than the cost paid by other students residing in the same student housing facility(the assistance provided to each Recipient shall be referred to as a"Scholarship"). (d) The Student Assistance Program shall be funded exclusively from those funds(if any)of the Authority that are (1) not subject to a lien and/or pledge securing the Authority's bonds or other obligations, (ii) not required for the timely payment of the Authority's operation and maintenance expenses, and TSHA.BYLAWS—Page 1 TAM.v1.4/20/2004 (iii) authorized by the Board of Directors. (e) Authority funds not used to provide funds for the Student Assistance Program may be used for any lawful purpose. SECTION 1.4. Regulations. The Authority,by action of the Board of Directors,may promulgate regulations(the"Regulations") governing the Authority's operations and implementation ofthe Student Assistance Program. The Regulations shall not conflict with, and shall be subject to,these Bylaws. ARTICLE II THE BOARD OF DIRECTORS SECTION 2.1. Number,Appointment, Tenn,Disqualifications and Removal of Directors. (a) The Board of Directors shall consist of seven Directors. (b) Successor Directors(including Directors filling vacancies)shall be appointed by the 1X? r>r of 'Vid 11. Jbvv= ::£: r <°il. ................................................................. (c) The term of each Director shall be two years. (d) As a Director's term expires,the Director shall continue to serve until a successor is appointed and assumes office;provided that, if a Director is removed or resigns,the Director's office shall be deemed vacant upon the removal or resignation. (e) Any Director may be removed at any time (with or without cause) by the -13,o -1. 1.4' (f) No officer or employee of the Town may serve as a Director. SECTION 2.2. Resi ation. Any Director may resign at any time. A resignation shall be made by written instrument and shall take effect at the time specified therein or, if no time is specified, at the time of its receipt by the president or the secretary of the Authority. The acceptance of a resignation is not necessary to make it effective unless expressly provided in the instrument of resignation. SECTION 2.3. Committees. (a) With respect to the management of the Authority, the Board of Directors, by resolution adopted by a majority of the Directors present, may designate one or more committees that, to the extent provided in the resolution, shall have the authority of the Board of Directors in the management of the Authority. Each committee shall consist of two or more Directors. Committees that do not have the authority of the Board of Directors in the management of the Authority may be designated by resolution of the Board of Directors and membership on any committee is not limited to Directors. TSHA.BYLAWS—Page 2 TAM.v].4/20/2004 (b) With respect to the administration of the Student Assistance Program, an Education Leadership Advisory Committee (the "Advisory Committee") empowered to advise the Board of Directors concerning student needs, assistance, and other matters relating to Scholarships, may be established by the President. The Advisory Committee shall be composed of five members and shall include two Directors. The President shall be empowered to appoint and remove all members of the Advisory Committee. SECTION 2.4. Compensation of Directors. Directors are not entitled to receive any compensation for their services as officers, except for reimbursement of their actual expenses incurred in the performance of their official duties. ARTICLE III THE OFFICERS AND DUTIES SECTION 3.1. Officers. (a) The officers of the Authority shall be a president(the"President"),a vice president(the"Vice President"), a secretary (the "Secretary"), an assistant secretary (the "Assistant Secretary"), a treasurer(the "Treasurer"), an assistant treasurer (the "Assistant Treasurer"), an executive director (the "Executive Director"),and such other officers as the Board of Directors may from time to time appoint. (b) The President and Vice President shall be Directors,but no other officers are required to be Directors. (c) The same person may hold more than one office,except that the President shall not hold the office of Secretary. SECTION 3.2. Appointment, Term Removal Vacancy of Offices. (a) Each officer shall be appointed by the Board of Directors for a term of two years and,in the absence of resignation or removal, shall continue to serve until his/her successor is appointed and assumes office, except that the Executive Director shall automatically cease being an officer upon the removal or resignation of the Executive Director. (b) Each officer is subject to removal from office(with or without cause)at any time by the vote of a two-thirds majority of the Directors in office. (c) A vacancy in any office shall be filled in the same manner as the original appointment for the unexpired term thereof. SECTION 3.3 President. (a) The President is the chief executive officer of the Authority and,subject to the actions of the Board of Directors, shall have general charge and supervision of the management of the affairs of the Authority. (b) The President shall preside at all meetings of the Board of Directors. TSHA.BYLAWS—Page 3 TAMA.4/20/2004 (c) The President shall cause all orders and resolutions of the Board of Directors to be put into effect. (d) The President shall sign and execute all legal documents and instruments in the name of the Authority when authorized to do so by the Board of Directors; provided that, the Board of Directors may delegate the signing and execution thereof to some other officer or to an agent of the Authority. SECTION 3.4. Vice President. (a) In the event of the absence or disability of the President;the Vice President shall discharge the powers and duties of the President. (b) The Vice President shall perform such additional duties as may be assigned from time to time by the Board of Directors. SECTION 3.5. Secretary. (a) The Secretary shall have charge of the records and correspondence of the Authority under the direction of the President. (b) The Secretary is responsible for the giving of notice of meetings of the Board of Directors. (c) The Secretary shall attend the Board of Directors meetings and shall take and keep minutes of, and record all votes cast at,the meetings. (d) The Secretary shall discharge such other duties as may be assigned from time to time by the President or the Board of Directors. SECTION 3.6. Assistant Secretary. (a) In the event of the absence or disability of the Secretary, the Assistant Secretary shall discharge the powers and duties of the Secretary. (b) The Assistant Secretary shall perform such additional duties as may be assigned from time to time by the Board of Directors. SECTION 3.7. Treasurer. (a) To the extent not otherwise provided in any resolution ofthe Board of Directors relating to the issuance of bonds or other obligations of the Authority or to instruments authorized by the Board of Directors to provide security therefor,the Treasurer shall have the custody of all the funds and securities of the Authority and shall deposit them to the credit of the Authority in such banks or other depositories as the Board of Directors may designate. (b) The Treasurer shall keep proper books of account and other records showing at all times the amount of the fiends and other property belonging to the Authority and of all receipts and disbursements ofthe Authority. TSHA.BYLAWS—Page 4 TAM.v1.4/20/2004 (c) Under the direction of the Board of Directors,the Treasurer shall disburse all money and sign all checks and other instruments drawn on or payable out of the funds of the Authority and shall make transfers and other dispositions of the funds and securities of the Authority as may be ordered by the Board of Directors. (d) The Treasurer shall also discharge such additional duties as may be assigned from time to time by the Board of Directors. (e) Upon the request of the President and/or the Board of Directors,the Treasurer shall render an accounting of all transactions of the Treasurer and of the financial condition of the Authority. (f) The Treasurer shall give bond only if required to do so by the Board of Directors. SECTION 3.8. Assistant Treasurer. (a) In the event of the absence or disability of the Treasurer, the Assistant Treasurer shall discharge the powers and duties of the Treasurer. (b) The Assistant Treasurer shall perform such additional duties as may be assigned from time to time by the Board of Directors. SECTION 3.9. Executive Director. (a) The Executive Director shall be appointed by the President,on terms approved by the Board of Directors and consented to by the Board of Aldermen Town Council.In connection with the employment of the Executive Director, the Authority shall enter into an employment contract with the Executive Director, which contract shall be approved by the Board of Directors and consented to by the Beafd of"'ao... en Town Council. (b) The Executive Director shall (i) report and be accountable to the Board of Directors, the and the President, (ii) carryout instructions given by the President,and (iii) be subject to removal(for cause oi•without cause)at anytime by the President and/or the .. ...-. ................ ........ (c) If the Executive Director is removed, the Authority shall hire, as a successor Executive Director,the person appointed by the President on terms approved by the Board of Directors and consented to by the . ...................... .... .................. (d) Without any action by the Board of Directors,the Executive Director shall serve ex officio as both Assistant Secretary and Assistant Treasurer. SECTION 3.10. Compensation of Officers. Officers who are not Directors may receive compensation for their services as officers on tel-ms approved by the Board of Directors. TSHA.BYLAWS—Page 5 TAM.v1.4/20/2004 ARTICLE IV MEETINGS SECTION 4.1. Meetings of Directors. (a) The Board of Directors shall hold its meetings at the principal office of the Authority; provided that, if the President determines that, with respect to any regular or special meeting, an alternative meeting place is appropriate,the President may designate an alternative place for such meeting. (b) The time and place of each meeting of the Board of Directors shall be provided in each notice of meeting. (c) Regular meetings of the Board of Directors shall be held at the times designated by resolution of the Board of Directors. (d) Special meetings of the Board of Directors shall be held whenever called by the President or the Secretary or by the Board of Directors at the time and place specified by the officer calling the special meeting. (e) Unless otherwise indicated in the notice of a special meeting, any matter that may be acted upon by the Board of Directors at a regular meeting may be acted upon at a special meeting. (f) Except as otherwise provided by law,notice to Directors of a regular meeting is not required. Notice of the time and place of each special meeting shall be given to each Director (either by personal delivery, United States mail, telephone, telecopy, or any other lawful means) not later than two hours in advance of the meeting. Notice of any Board of Directors meeting to persons other than Directors shall be given if and to the extent required by law. (g) Attendance by a Director at a meeting shall constitute a waiver by the Director of any notice of meeting,unless the Director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. A waiver of a notice in writing, signed by any person entitled to notice(whether before or after the time for giving the notice)shal l be deemed to be the equivalent to the giving of notice. SECTION 4.2. Quorum. A majority of the number of Directors fixed by these bylaws as constituting the Board of Directors shall constitute a quorum for the transacting of the business of the Authority. The act of a majority of the Directors present at a meeting at which a quorum is in attendance shall constitute the act of the Board of Directors except as otherwise required by law or by these Bylaws. SECTION 4.3. Order of Business. The Board of Directors shall consider the matters before it in such order as the presiding officer ofthe Board of Directors may determine. TSHA.BYLAWS—Page 6 TAM.v 1.4/20/2004 ARTICLE V ADMINISTRATION SECTION 5.1. Staffing. (a) Upon the recommendation of the President and the approval of the Board of Directors,the Authority may hire full or part-time employees to carry out the functions of the Authority. (b) Staff functions of the Authority may be performed by employees of the Town if and to the extent approved by the Board of Aldermen Town Council and if the Town is reimbursed for all actual costs of the performance of the staff functions. (c) The Executive Director shall be the senior staff member of the Authority,and all employees of the Authority shall report to the Executive Director. SECTION 5.2. Engagement of Consultants. (a) To assist the Authority in acquiring, financing, and managing the Authority's projects and administering the Student Assistance Program and other activities of the Authority,the Authority shall retain a general counsel(the"General Counsel"),a finance counsel(the"Finance Counsel"),a special finance counsel (the"Special Finance Counsel"), a financial adviser(the"Financial Adviser"),and a real estate and finance consultant (the "Real Estate and Finance Consultant"). Collectively, the General Counsel, the Finance Counsel,the Special Finance Counsel,the Financial Adviser,and the Real Estate and Finance Consultant shall be referred to as the"Consultants." (b) Each of the Consultants shall be designated by resolution of the Board of Directors and the BE)afd of Aldeffnen Town Council and shall be responsible directly to the President,the Board of Directors, and the a of lde men Town Council. (e) Each of the Consultants shall be employed pursuant to a written agreement that (i) shall preclude the Consultants from having any conflicts-of-interest with either the Authority or the Town and(ii) shall prescribe the compensation payable to the Consultant. With respect to the relationship between the Authority and the Town,the interest of the Town shall be paramount. (f) The General Counsel shall not be compensated for services rendered. (g) Each Consultant entitled to compensation shall be compensated on the basis of effort and,as a condition to being compensated,shall furnish the Board of Directors with a written statement that describes in reasonable detail the services rendered,the number of hours spent in rendering the services, and the amount charged for the services. SECTION 5.3. Responsibilities of Executive Director. The Executive Director shall be responsible for the following: (a) If the Authority has oversight responsibilities, including, but not limited to, approval of budgets,monitoring the performance of the Authority's property manager(s)(if any),obtaining insurance,and other related matters,for any project that the Authority has financed and/or owns,the Executive Director,with respect to the provisions that are contained in the documents governing the acquisition,financing,operations, TSHA.BYLAWS—Page 7 TAM.vl.4/20/2004 and management of the project (collectively, such documents shall be referred to as the "Project Administration Documents"), shall certify in writing to the Board of Directors at least once each calendar quarter the following: (i) the Authority is in compliance with all material requirements applicable to the Authority that are contained in the Project Administration Documents, (ii) the project is being managed by the Authority's property manager(s)in compliance the Project Administration Documents, (iii) the budget for the project has been timely submitted to the Board of Directors and is in compliance with the Project Administration Documents,and (iv) such other matters as may be requested by the President and/or the Board of Directors. (b) If the Executive Director is unable to certify to the matters referred to in Section 5.3(a)above, the Executive Director shall provide a written statement to the President stating in reasonable detail the reasons that the Executive Director cannot make such certification. (c) No later than 60 days prior to the beginning of each fiscal year,the Executive Director shall prepare and submit to the Board of Directors an annual budget containing all material revenues and expenses relating to all corporate activities of the Authority. (d) With respect to any project budget that is required to be approved by the Board of Directors, the Executive Director shall make written recommendations to the Board of Directors regarding the budget. (e) The Executive Director shall provide to the Board of Directors and the' °°-Fa e f "'a Town Council a monthly transaction report showing all income received and expenses paid during each calendar month. Upon the request of the President or a majority of the Board of Directors, the Executive Director shall provide any financial report,to the extent reasonably possible,to the Board of Directors and the Board of Aldeffnen Town Council. (f) In performing the duties assigned to the Executive Director, the Executive Director shall confer with each of the Consultants to the extent the Executive Director believes that consultation is appropriate to assure that the duties of the Executive Director will be performed properly. SECTION 5.4. Records. (a) The Authority shall keep complete corporate and financial records, including all banking records,and minutes of the proceedings of its Board of Directors and of committees(if any)of the Board of Directors in accordance with applicable law. (b) The records and minutes shall be made available for inspection at all reasonable times by any (i) Director, and (ii) Town representative authorized by the Beafd e f ide ie Town Council. TSHA.BYLAWS—Page 8 TAMM.4/20/2004 (c) The Secretary and Assistant Secretary,under the supervision of the Executive Director,shall be responsible for keeping and maintaining the Authority's records. SECTION 5.5. Authorization to Write Checks. The President,the Treasurer,the Executive Director,the Assistant Treasurer and the Secretary each shall be authorized to write checks on behalf of the Authority from any bank or trust account maintained by the Authority for any purpose authorized by the Board of Directors; provided that, with respect to any check in excess of$5,000,the check must be signed by two officers at least one of which must be a Director. SECTION 5.6. Administrative Fees. The Authority may prescribe fees payable by applicants for financial participation and/or assistance by the Authority and such other fees and charges as the Board of Directors determines appropriate to defray the administrative expenses incurred in the operation of the Authority or to be used for any other lawful purposes. SECTION 5.7. Fiscal Year. The fiscal year of the Authority shall be the annual period determined by resolution of the Board of Directors. SECTION 5.8. Amounts Owning to Town. The Authority shall pay any amounts owed to the Town for permitting its employees to provide staffing for the Authority upon receipt(or as promptly thereafter as practicable)from any of its funds available for such payment. ARTICLE VI MISCELLANEOUS PROVISIONS SECTION 6.1. Time for Taking Effect. These Bylaws shall take effect upon their adoption by the B,,aM of Aldefffien Town Council and the Board of Directors. SECTION 6.2. Seal. The official seal of the Authority shall be as detennined by the Board of Directors. The seal shall not be necessary to the proper execution by the officers of the Authority of any document or instrument unless otherwise specified by the Board of Directors. SECTION 6.3. Amendments. These Bylaws may be amended at any tune, and from time to time, by resolutions adopted by the Board of Directors and the Beard of Aldefmen Town Council. SECTION 6.4. Interpretation. TSHA.BYLAWS—Page 9 TAMM A/20/2004 These Bylaws shall be liberally construed to effect the purposes of the Authority. If any part of these Bylaws is ruled invalid by a court of competent jurisdiction,the remainder of these Bylaws shall remain in effect to the fullest extent possible under the application of such ruling. References in these Bylaws to the singular number shall include the plural and vice versa(unless the context otherwise requires). SECTION 6.5. Special Requirements. entity. The Authority shall comply with the following special requirements: (a) The Authority shall maintain its books and records separate and apart from any other legal (b) The Authority shall not commingle its assets with the assets of any other legal entity. (c) The Authority shall maintain financial records separate from any other legal entity. (d) The Authority shall maintain an"arms-length"relationship with all other legal entities except as otherwise may be required by law. (e) The Authority shall pay the salaries of its own employees. SECTION 6.6. Financial Relationship with Town. (a) As the duly created instrumentality ofthe Town,the Authority shall be required to compensate the Town for overseeing the activities of the Authority and providing facilities and staffto the Authority. Upon receipt of a resolution adopted by the 8...,,d of l def en Town Council assessing an oversight and facilities fee payable by the Authority to the Town,the Authority shall be obligated to pay the fee in the amount and on teens authorized by the B..^,..7 of ldef nen Town Council without any action being required to be taken by the Board of Directors. Notwithstanding any provision in these Bylaws, the President and/or the Executive Director shall be authorized to pay any fees payable by the Authority to the Town by check or otherwise without any action being required to be taken by any other officer or director. (b) As the duly created instrumentality of the Town, upon dissolution of the Authority, the following actions shall be taken: (i) all assets,including real and personal property of all types,owned by the Authority at the time of such dissolution shall be transferred to the Town after all debts, liabilities,and obligations of the Authority have been paid or otherwise satisfied without any action being required to be taken by the Board of Directors, and (ii) the officers and directors of the Authority shall take any action necessary or appropriate to effect the transfer of the Authority's assets to the Town. TSHA.BYLAWS—Page 10 TAM.v 1.4/20/2004 January 15,2009 Mr. Henry C. Smyth 512 Wagonwheel Court Colleyville,Tx 76034 Re: Employment of Scholarship Consultant Dear Mr. Smyth: The Texas Student Housing Authority(TSHA) acting under the Inter-Entity Agreement for the various corporations is pleased to employ Henry C. Smyth as Scholarship Consultant. Mr. Smyth shall be referred to in this agreement as the "Scholarship Consultant" DUTIES OF SCHOLARSHIP CONSULTANT 1. The Scholarship Consultant shall be responsible to the President of TSHA or to the Executive Director of the TSHA. 2. The Scholarship Consultant shall be responsible for the conduct of the TSHA Scholarship Process. 3. The process shall include but not be limited to: (1) Read and analyze new scholarship applications for each TSHA location. (2)In conjunction with staff,determme the priority listing and initial order of scholarship offers. (3) Assist in the process of communicating the Group 1, highest priority offers to applicants. (4)In conjunction with staff,select follow on offers and repeat the process sequentially for Groups 2,3 and 4 on a two week cycle or as directed. (5) In conjunction with staff, determine the Full Scholarship offers and communicate with the potential recipients and families to verify that the scholarships will be accepted if offered. January 15, 2009 Mr. Henry C. Smyth 512 Wagonwheel Court Colleyville,Tx 76034 Re: Employment of Scholarship Consultant Dear Mr. Smyth: The Texas Student Housing Authority (TSHA)acting under the Inter-Entity Agreement for the various corporations is pleased to employ Henry C. Smyth as Scholarship Consultant. Mr. Smyth shall be referred to in this agreement as the "Scholarship Consultant" DUTIES OF SCHOLARSHIP CONSULTANT 1. The Scholarship Consultant shall be responsible to the President of TSHA or to the Executive Director of the TSHA. 2.The Scholarship Consultant shall be responsible for the conduct of the TSHA Scholarship Process. 3. The process shall include but not be limited to: (1) Read and analyze new scholarship applications for each TSHA location. (2)In conjunction with staff,determine the priority listing and initial order of scholarship offers. (3) Assist in the process of communicating the Group 1,highest priority offers to applicants. (4)In conjunction with staff,select follow on offers and repeat the process sequentially for Groups 2,3 and 4 on a two week cycle or as directed. (5) In conjunction with staff, determine the Full Scholarship offers and communicate with the potential recipients and families to verify that the scholarships will be accepted if offered. January 15,2009 Mr. Henry C. Smyth 512 Wagonwheel Court Colleyville,Tx 76034 Re: Employment of Scholarship Consultant Dear Mr. Smyth: The Texas Student Housing Authority(TSHA)acting under the Inter-Entity Agreement for the various corporations is pleased to employ Henry C. Smyth as Scholarship Consultant. Mr. Smyth shall be referred to in this agreement as the "Scholarship Consultant" DUTIES OF SCHOLARSHIP CONSULTANT 1. The Scholarship Consultant shall be responsible to the President of TSHA or to the Executive Director of the TSHA. 2.The Scholarship Consultant shall be responsible for the conduct of the TSHA Scholarship Process. 3. The process shall include but not be limited to: (1) Read and analyze new scholarship applications for each TSHA location. (2)In conjunction with staff,determine the priority listing and initial order of scholarship offers. (3) Assist in the process of communicating the Group 1,highest priority offers to applicants. (4)In conjunction with staff,select follow on offers and repeat the process sequentially for Groups 2,3 and 4 on a two week cycle or as directed. (5) In conjunction with staff, determine the Full Scholarship offers and communicate with the potential recipients and families to verify that the scholarships will be accepted if offered. DENTON RENEWALS 1 Denton 2006-2007 Med School No Not Eligible 3 2 Denton 2008-2009 No No Yes 20 3 Denton 2007-2008 No No No 8 4 Denton 2005-2006 4th year Not Eligible 3.703/4.0/12 No No Response 8 5 Denton 2008-2009 No No No/Main.Issues Total 39 6 Denton 2006-2007 No No 7 Denton 2008-2009 Grad Aug No No 8 Denton 2008-2009 No No/engaged 9 Denton 2006-2007 Grad May No 10 Denton 2005-2006 4th year Not Eligible 11 Denton 2005-2006 4th year Not Eligible 12 Denton 2008-2009 yes 185 Yes Yes 13 Denton 2008-2009 Yes 195 yes Yes 14 Denton Full 2007-2008 Yes 170 Yes Yes 15 Denton 2007-2008 Yes 215 yes yes 16 Denton 2008-2009 Yes 150 yes yes 17 Denton 2008-2009 Yes 220 3.68/3.38/18 Yes 18 Denton 2008-2009 Yes 170 Yes Yes 19 Denton 2008-2009 Yes 210 4.0/4.0/16 Yes 20 Denton 2008-2009 Yes 195 Yes Yes 21 Denton 2008-2009 Yes 185 3.53/3.28/14 Yes 22 Denton 2008-2009 Yes 180 Yes Yes 23 Denton 2008-2009 Yes 200 Yes yes 24 Denton 2008-2009 Yes 210 3.9615/4/16 Yes 25 Denton 2008-2009 Yes 175 No/3.85/12 Yes 26 Denton 2006-2007 Yes 215 Yes Yes 27 Denton 2007-2008 Yes 200 Yes yes 28 Denton 2007-2008 Yes 175 3.466/3.2/15 Yes 29 Denton 2008-2009 Yes 185✓3.558/3.666/15 Yes 30 Denton 2008-2009 Yes/Prov. 80 2.58/3.0/12 Yes 31 Denton 2008-2009 32 Denton 2007-2008 33 Denton 2008-2009 34 Denton 2008-2009 Yes 35 Denton 2008-2009 Yes/Prov. 145 2.866/2.850/15 Yes 36 Denton 2008-2009 Yes 37 Denton 2007-2008 38 Denton Full 2007-2008 Yes 39 Denton 2008-2009 +-,cw C& 1/20/2009 11:45 AM PAGE 3 OF12 `t,Y ti.. SAN MARCOS RENEWALS 1 San Marcos 2008-2009 Grad/Dec.2009 No 200 3.85/4.0/15 Yes Not Eligible 2 San Marcos Full 2005-2006 4th year Not Eligible No Yes 3 San Marcos 2008-2009 Grad May No No No 4 San Marcos 2008-2009 No 30 1.5/1.5/9 Yes No Response 5 San Marcos 2008-2009 Yes 155 Yes Yes Total 6 San Marcos 2008-2009 Yes 215 Yes Yes 7 San Marcos 2008-2009 yes 180 3.3/3.6/14 Yes 8 San Marcos 2008-2009 Yes/Prov. 150 2.62/2.62/16 Yes 9 San Marcos 2008-2009 Yes/Prov. 130 2.85/2.18/17 Yes 10 San Marcos 2008-2009 Yes 11 San Marcos 2008-2009 12 San Marcos 2008-2009 13 San Marcos 2008-2009 Yes 1 5 3 4 13 1/20/2009 11:45 AM PAGE 5 OF12 BALLPARK RENEWALS Property Full? Year Renewal Renew? 1 Ballpark 210 Yes 2007-2008 200 Yes No 2 Ballpark Full 2007-2008 Yes No 3 Ballpark 165 Yes 2008-2009 165 Yes No 4 Ballpark Yes 2005-2006 4th year Not Eligible 5 Ballpark 130 No/3.12/2.67/15 2005-2006 4th year Not Eligible 6 Ballpark Full 2008-2009 Yes No 7 Ballpark 2007-2008 Grad May No 8 Ballpark 2006-2007 Grad May No 9 Ballpark 2008-2009 No 10 Ballpark 2005-2006 4th year Not Eligible 11 Ballpark 2008-2009 Grad May No 12 Ballpark 2005-2006 4th year Not Eligible 13 Ballpark Full 2007-2008 Yes 14 Ballpark 2006-2007 Yes 15 Ballpark Full 2008-2009 Yes 16 Ballpark Full 2008-2009 Yes 17 Ballpark 2006-2007 Yes 18 Ballpark Full 2007-2008 Yes 19 Ballpark Full 2006-2007 Yes 20 Ballpark 2006-2007 Yes 21 Ballpark 2007-2008 Yes 22 Ballpark 2006-2007 Yes 23 Ballpark Full 2008-2009 Yes 24 Ballpark Full 2007-2008 Yes/Incre 25 Ballpark Full 2007-2008 Yes/Incre/Prov. 26 Ballpark 2008-2009 Yes/Prov. 27 Ballpark 2008-2009 Yes/Prov. 28 Ballpark 2006-2007 Yes/Prov. 29 Ballpark 2007-2008 30 Ballpark Full 2008-2009 31 Ballpark 2007-2008 32 Ballpark 2006-2007 33 Ballpark 2008-2009 No 34 Ballpark 2008-2009 35 Ballpark 2006-2007 Yes 36 Ballpark Full 2007-2008 37 Ballpark 2008-2009 Score Met Reqments Req't Renewal No Not Eligible 90 2.2/1.75/16 Yes Yes No No No Response Total No 3.75/4.0/15 185 Yes Yes 200 Yes Yes 175 Yes Yes 210 Yes Yes 200 Yes Yes 155 Yes yes 160 3.41/3.25/16 Yes 200 Yes yes 165 Yes Yes 165 Yes Yes 3.0666/3.0666/18 Yes 115 7592/2.2352/17 Yes 125 No/2.92/2.66/12 Yes 130 No/3.12/2.67/15 Yes 150 3.26/2.44/16 Yes 105 8235/2.5384/13 Yes Yes Yes 30 4285/2.4285/14 Yes Yes 150 3.4078/2.5/12 Yes Yes 4 17 9 7 37 1/20/2009 11:45 AM PAGE 1 OF12 TOWN LAKE RENEWALS 1 Town Lake 2005-2006 4th year Not Eligible Not Eligible 2 Town Lake 2008-2009 No No/moving Yes 3 Town Lake 2007-2008 Grad May No No 4 Town Lake 2008-2009 No 75 2.2/2.2/15 Yes No Response 5 Town Lake 2007-2008 No 115 No/2.84/2.38/16 Yes Total 6 Town Lake 2008-2009 No 105 No/2.75/2.75/12 Yes 7 Town Lake 2008-2009 No 1.875/1.875/16 8 Town Lake 2005-2006 4th year Not Eligible 9 Town Lake 2008-2009 Grad No No 10 Town Lake 2005-2006 4th year Not Eligible 11 Town Lake 2005-2006 4th year Not Eligible 12 Town Lake 2005-2006 4th year Not Eligible 13 Town Lake 2008-2009 Yes 190 yes yes 14 Town Lake Full 2006-2007 Yes 165 2.98/3.0/15 Yes 15 Town Lake 2008-2009 Yes 180 Yes Yes 16 Town Lake 2007-2008 Yes 155 Yes Yes 17 Town Lake 2008-2009 Yes 190 Yes Yes 18 Town Lake Full 2007-2008 Yes 200 Yes Yes 19 Town Lake 2006-2007 Yes 195 3.47/3.65/17 Yes 20 Town Lake 2008-2009 Yes 120 2.844/2.4/15 Yes 21 Town Lake Full 2006-2007 Yes 195 Yes Yes 22 Town Lake 2008-2009 Yes 185 Yes Yes 23 Town Lake 2006-2007 Yes 155 3.17/3.0/14 Yes 24 Town Lake 2006-2007 Yes Yes Yes 25 Town Lake 2008-2009 Yes 1650 2.95/3.25/16 Yes 26 Town Lake 2006-2007 Yes 175 3.26/3.6/15 Yes 27 Town Lake 2007-2008 Yes 225 Yes Yes 41 Town Lake Full 2007-2008 Yes 155 3.2571/3.4/12 Yes 28 Town Lake 2008-2009 Yes 180 Yes yes 29 Town Lake 2008-2009 Yes 195 Yes yes 30 Town Lake 2008-2009 Yes 215 Yes Yes 31 Town Lake 2008-2009 Yes 215 Yes Yes 32 Town Lake 2007-2008 Yes 160 Yes Yes 33 Town Lake Full 2007-2008 Yes 205 Yes Yes 34 Town Lake 2006-2007 Yes/Prov. 130 No/2.94/2.75/15 Yes 35 Town Lake 2006-2007 Yes/Prov. 155 Yes yes 36 Town Lake Full 2008-2009 Yes/Prov. 110 No/2.75/2.75/16 Yes 37 Town Lake 2007-2008 Yes/Prov. 145 No/2.78/2.8/15 yes 38 Town Lake 2008-2009 Yes/Prov. 145 2.8/3.4/15 Yes 39 Town Lake 2008-2009 40 Town Lake 2008-2009 42 Town Lake 2008-2009 43 Town Lake 2008-2009 5 27 7 4 43 1/20/2009 11:45 AM PAGE 6 OF12 CAMBRIDGE RENEWALS 1 Cambridge 2007-2008 No No Not Eligible 2 Cambridge 2007-2008 No No Yes 3 Cambridge 2008-2009 No 60 1.87/1.87/15 Yes No 4 Cambridge Full 2007-2008 Yes 150,/3.146/3.307/13 Yes No Response 5 Cambridge Full 2007-2008 Yes 175 Yes Yes Total 6 Cambridge 2008-2009 Yes 195 Yes Yes 7 Cambridge Full 2006-2007 Yes 215 Yes Yes 8 Cambridge Full 2006-2007 Yes 185 Yes yes 9 Cambridge Full 2006-2007 Yes 165 Yes yes 10 Cambridge Full 2007-2008 Yes 165 3.384/3.0/15 Yes 11 Cambridge 2008-2009 Yes/Prov. 125,/2.923/2.923/14 Yes 12 Cambridge 2008-2009 Yes/Prov. 130 2.86/2.86/15 Yes 13 Cambridge 2008-2009 Yes 165 No/3.5/12 Yes 14 Cambridge Full 2007-2008 15 Cambridge Full 2007-2008 16 Cambridge 2008-2009 17 Cambridge 2007-2008 2.891/2.937/16 0 10 3 4 17 1/20/2009 11:45 AM PAGE 2 OF12 Q 47 m O O N O N CO W Z W rr W 0 rr J 5W O m r N N r N N N O 07 m} Z O 1- CL W y (V O Q' Z o Z O N O O N O V) 0 0 V) 0 N N 0 N N 0 V) N N N 0 0 N N N 0 V) N N N N 0 N 0 0 V) N V) N z N z z O C N O) N N d N N O) d N N O N O N O N d N N N N N O) N N O) O) N N O N N CO } } }}} }}} } T T} } }} } T}}} } } } T} } } } } } } }} } } } n N d } m co to N CD Cl) V) Lo V) V) V) V) V) V) Lo V) V) V) V) V) V) V) V) V) w V) Lo V) V) V) O (D "T N (D (D N f) O M O (D 1- >- >-} } } } } } } } }}}} } } T} }} T W z V M CO �o N V N N CO Crj Cl) Cl) a) M N N N N N N p N LO N N N N V N o N (D M M M Cm0 N M to N N o Z z N o } N n M z 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O O O O O O O o O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N d N N N d O N d d N N N N d N N N N N N N N N N N N N (U N N u> VI N u) V) V) V) U) VI U1 V1 V1 V) V) N V) N N N N V) N V) N N N N VI V) N VI U) N N V) U) V) V7 V) VI N V) Ul VI N N Vl VI U) Ul N N O_ O O O O O O O O O O O O O O O O O_ 0 0 0 0 0 0 O_ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O_ 0 0 0 0 0 0 N N N N N N N N O O N N N N N O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N d N N N N (O d �- N CO V to (D 1- CO m 0�- CV Co V N (D I- M m 0 N CO V N CD 1-- W m O N M V M m r CO m 0 N •- .- �- N N N N N N N N N N M M M M M M M M M M V V' V 'IT 'IT V V V V V N N N N_ LL O V W C7 Q d i I G MINUTES OF THE BOARD OF DIRECTORS OF THE TEXAS STUDENT HOUSING AUTHORITY (AN INSTRUMENTALITY OF THE TOWN OF WESTLAKE) September 16,2008 PRESENT: Chairman Jim Carter and Directors Jac Irvine, George Ledak, and Jill McKean, Melanie Lekkos, and Chuck Schultz. ABSENT: None. OTHERS PRESENT: Finance Manager Pete Ehrenberg, Secretary Kim Sutter, and General Counsel Scott Bradley. 1. CALL TO ORDER. Chairman Carter called the meeting to order at 6:34 p.m. 2. PRESENTATION AND RECOGNITION OF OUTGOING PRESIDENT HENRY C. SMYTH. Chairman Carter presented outgoing President Smyth with a token of the Board's appreciation. Members of the Board expressed their appreciation to Mr. Smyth for his years of service. 3. PRESENTATION AND DISCUSSION BY ASSET CAMPUS REGARDING PROPERTY MANAGEMENT. Staff advised that, due to the recent hurricane, Asset Campus was unable to attend the meeting, and a presentation will be scheduled for a future meeting date. Chairman Carter recessed the meeting at 6:55 p.m. Chairman Carter reconvened the meeting at 7:31 p.m. at the Town Hall offices, 3 Village Circle, Suite 207, Westlake, Texas. 4. HEAR AND ACCEPT FINANCE MANAGER'S REPORT. Finance Manager Ehrenberg presented the report to the Board, and reviewed the property budgets, including the balance sheets, and profit and lost statements through August 31, 2008. TSHA Board of Directors Page 2 of 4 Meeting Minutes September 16,2008 Board discussion ensued regarding the report. MOTION: Director Schultz made a motion to accept the Finance Manager's report. Director McKean seconded the motion. The motion carried by a vote of 6-0. 5. CONSIDER APPROVAL OF THE MINUTES OF THE APRIL 15, 2008, MEETING. Chairman Carter introduced the item and requested a motion. MOTION: Director McKean made a motion to approve the minutes as presented. Director Lekkos seconded the motion. The motion carried by a vote of 6- 0. 6. CONSIDER APPROVAL OF THE MINUTES OF THE JUNE 17,2008, MEETING. Chairman Carter introduced the item and requested a motion. MOTION: Director Ledak made a motion to approve the minutes as presented. Director McKean seconded the motion. The motion carried by a vote of 6-0. 7. EXECUTIVE SESSION. Chairman Carter recessed the regular meeting at 7:55 p.m. to discuss the following items in executive session: A. The Board will conduct a closed session under Texas Government Code section 551.074 to discuss personnel matters, specifically related to the appointment of an interim President. B. The Board will conduct a closed session under Texas Government Code section 551.071 to seek advice of counsel on legal matters involving pending or contemplated litigation, settlement offers, or other legal matters not related directly to litigation or settlement of litigation, specifically related to 1) a consultant contract for the purpose of evaluating scholarship applications; and 2) current and proposed contracts for President, Interim President and Finance Manager. Chairman Carter convened the executive session at 7:56 p.m. The executive session adjourned at 9:39 p.m. Chairman Carter reconvened the meeting at 9:47 p.m. 8. DISCUSS AND CONSIDER REQUEST FOR PAYOUT OF VACATION ACCRUAL TO PAST PRESIDENT. Chairman Carter introduced the item and asked for a motion. No motion was brought to the table for consideration. TSHA Board of Directors Meeting Minutes September 16,2008 Page 3 of 4 9. DISCUSS AND CONSIDER APPROVING THE FY 2008-2009 AUTHORITY BUDGET. Discussion ensued regarding the proposed budget. Staff was directed by the Board to make the following revisions and resubmit a balanced budget to the Board for consideration. - Reduce the contract labor line item to $167,000; - Reduce the Other Expense Reserve line item 8020 to $50,000; - Reduce Other Expenses line item 8010 to $0.00. Director Irvine asked for clarification regarding the amounts associated with the assessment of TSHA and the executive search for a President. Town Manager Brymer addressed the Board regarding the estimates presented for an executive search and assessment of TSHA. MOTION: Based on the discussion, Director Schultz made a motion directing staff to present a revised budget for consideration. Director Lekkos seconded the motion. The motion carried by a vote of 6-0. 10. DISCUSS AND CONSIDER APPOINTING AN INTERIM PRESIDENT. Chairman Carter recommended the Board appoint Mr. Pete Ehrenberg to serve as the TSHA President on an interim basis. Mr. Carter recommended an increase in salary of$1,000 per month for the additional responsibilities. Discussion ensued regarding the recommendation of the Board of Aldermen to utilize an executive search firm to identify a candidate to serve as the TSHA President. MOTION: Director McKean made a motion to appoint Pete Ehrenberg to serve as the TSHA President on an interim basis. Director Schultz seconded the motion. The motion carried by a vote of 6-0. 11. DISCUSS AND CONSIDER APPROVING A CONTRACT FOR A CONSULTANT TO EVALUATE SCHOLARSHIP APPLICATIONS. Chairman Carter introduced the item and recommended the Board considering tabling action on the item until the TSHA Board receives feedback from the Board of Aldermen. MOTION: Director Schultz made a motion to table this item at this time. Director Ledak seconded the motion. The motion carried by a vote of 6-. 12. ADJOURN. MOTION: Director Schultz made a motion to adjourn the meeting. Director Lekkos seconded the motion. The motion carried by a vote of 6-0. Chairman Carter declared the meeting adjourned at 10:12 p.m. TSHA Board of Directors Meeting Minutes September 16,2008 Page 4 of 4 APPROVED BY THE TEXAS STUDENT HOUSING AUTHORITY BOARD OF DIRECTORS JANUARY 20, 2009. Jim Carter, Chairman ATTEST Kim Sutter, Secretary