HomeMy WebLinkAboutTownLake Audit 08-31-05-rev1TEXAS STUDENT HOUSING
AUTHORITY-
TOWN LAKE AUSTIN PROJECT
FINANCIAL REPORT
AUGUST 31, 2005
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT ................................................................................... 1
MANAGEMENT'S DISCUSSION AND ANALYSIS (unaudited) ................................................ 2
FINANCIAL STATEMENTS
Statement of Net Assets .................................................................................................. 6
Statement of Revenues, Expenses, and Changes in Net Assets ..................................... 7
Statement of Cash Flows ................................................................................................. 8
Notes to Financial Statements ....................................................................................... 10
SUPPLEMENTAL SCHEDULES
Schedule 1-Schedule of Revenues and Expenses ....................................................... 18
I I
WEAVER
1-LP
CERTiFiED PUBLIC
ACCOUNTANTS
AND CONSULTANTS
; '.'-' / ' '
-\/ i_L' r6
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Texas Student Housing Authority -Town Lake Austin Project
We have audited the accompanying financial statements of the business type activities of
Texas Student Housing Authority-Town Lake Austin Project (the "Project"), as of and for
the year ended August 31, 2005, 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 1, 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, 2005, 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 business type activities of the Texas Student Housing
Authority -Town Lake Austin Project at August 31, 2005 and the results of its operations
and cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
Management's discussion and analysis on pages 2 through 5 are 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 opinions on the financial statements
that collectively comprise the business type activities of Texas Student Housing Authority -
Town Lake Austin Project's basic financial statements. The supplementary information on
page 18 is presented for purposes of additional analysis and is not a required part of the
basic financial statements. The information has been subjected to the auditing procedures
applied in the audit of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
WEAVER AND TIDWELL, L.L.P.
·" ....... · • Fort Worth, Texas
"' """"'"''" .,, '·" '" January 17, 2006
MANAGEMENT'S DISCUSSION AND ANALYSIS
(unaudited)
TEXAS STUDENT HOUSING AUTHORITY-TOWN LAKE AUSTIN PROJECT
MANAGEMENT'S DISCUSSION AND ANAYLSIS
YEAR ENDED AUGUST 31, 2005
(unaudited)
Page 2
As Staff of the Texas Student Housing Authority-Town Lake-Austin Project ("Town Lake") we
offer the readers of the Town Lake's Financial Statements this narrative overview and analysis of
the financial activities of Town Lake for the fiscal year ended August 31, 2005. We encourage
readers to consider the information presented herein in conjunction with Town Lake's financial
statements which follow this section. As the Authority is an instrumentality of the Town of
Westlake and is thus considered a governmental entity, Governmental Accounting Standards
Board Statement 34, Basic Financial Statements-and Management Discussion and Analysis-for
State and Local Governments (Statement 34) were implemented. The reader should note that
this financial report addresses only the financial condition of Town Lake itself for 2005. The
prior period covered the activities of the project from inception and will not provide meaningful
comparison to current year activities. Comparative information will be provided when available.
FINANCIAL HIGHLIGHTS
The Liabilities of the Town Lake Austin Project exceeded its Assets at the close of the fiscal year
by $1,398,394 a decrease of $1,286,466 over the prior year, the major component being an
increase of $508,444 in interest payments.
Operating Revenue of$2,646,768 is $120,084 better than budget; however Operating Expense is
$280,026 worse than budget thus effectively negating the revenue overage. Major components
of the expense overage were $66,117 worse than budget in Turnover Expense (painting,
recarpeting, etc. rooms during student turnover expense; and $97,194 worse in General
Administration expenses. Utilities were also worse by $32,985.
At the end ofthe current fiscal year, the total cash balances were $501,809 in unrestricted cash
and $1,353,438 in restricted cash.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to Town Lake's basic
financial statements. Town Lake's report consists of three parts-Management Discussion and
Analysis, the basic financial statements, and notes to the 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.
TEXAS STUDENT HOUSING AUTHORITY-TOWN LAKE AUSTIN PROJECT
MANAGEMENT'S DISCUSSION AND ANAYLSIS
YEAR ENDED AUGUST 31, 2005
(unaudited)
Page 3
The statement of net assets presents information on all of the Authority's assets and liabilities
with the difference between the two reported as net assets.
Total current and other assets
Total capital assets
TOTAL ASSETS
Total current liabilities
Noncurrent liabilities
TOTAL LIABILITIES
NET ASSETS
Invested in capital assets, net of related debt
Restricted for debt service
Unrestricted
TOTAL NET ASSETS
$ 2,947,534
18,881,408
21,828,942
909,931
22,317,405
23,227,336
3,611 ,580)
1,067,540
1,145,646
($ 1 ,398,394)
The statement of revenues, expenses, and changes in net assets account for all of the Authority's
revenues and expenses regardless of when cash is paid or received.
Total operating revenue $ 2,646,768
Total operating expenses 2,120,710
OPERATING INCOME 526,058
Interest income 23,019
Interest expense ( 1,835,543)
TOTAL NON-OPERATING LOSS ( 1,812,524)
CHANGE IN NET ASSETS ( 1,286,466)
NET ASSETS, AUGUST 31, 2004 ( 111 ,928)
NET ASSETS. AUSUST 31, 2005 ($ 1,398,394)
The statement of cash flows recaps how cash changed year over year.
TEXAS STUDENT HOUSING AUTHORITY-TOWN LAKE AUSTIN PROJECT
MANAGEMENT'S DISCUSSION AND ANAYLSIS
YEAR ENDED AUGUST 31, 2005
(unaudited)
NOTES TO THE FINANCIAL STATEMENTS
Page4
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, 2005
these balances were as follows:
Bond Proceeds Principal Fund-Series 2002 A-1
Bond Proceeds Interest Fund-Series 2002 A-1
Bond Proceeds Principal Fund-Series 2002 A-2
Bond Proceeds Interest Fund-Series 2002 A-2
Debt Service Reserve Fund
Repair and Replacement Fund
Project Fund
Deferred Debt Service
Tax and Insurance Fund
Fee and Expense Fund
Initial Purchase Fund
Total
Non-Restricted Cash
Non-restricted cash is available for general use of the project.
Bonds Payable
$ 14,251
111,867
15
35,190
1,037,352
126,713
222
14,895
11
10,242
2 680
$1,353,438
As of August 31,2005, the following amounts on the Series 2002 A-1 and 2002 A-2 were
payable:
Series 2002 A-1
Series 2002 A-2
Total
$17,104,863
5,388,125
$ 22,492,988
For the Fiscal Year ending on August 31, 2006, the total principal and interest payment is
calculated at $1,914,830. A total of $1,101,312 in principal was paid during 2005.
TEXAS STUDENT HOUSING AUTHORITY-TOWN LAKE AUSTIN PROJECT
MANAGEMENT'S DISCUSSION AND ANAYLSIS
YEAR ENDED AUGUST 31, 2005
(unaudited)
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
Page5
Leases at Town Lake 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 31,2006 is
forecast at 92 %. However rental rates, again due to competitive pressures, will not see a large
increase.
Net Operating Revenue for this next year is projected at $1,543,634. Debt Service decreases
from $2,956,719 to $1,914,830 thus substantially decreasing the need for funds from the Debt
Service Reserve.
CONTACTING THE AUTHORITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide the reader with a general overview of the Ballpark's
finances and to demonstrate the Ballpark'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 or Hank Smyth at 817-281-5053.
FINANCIAL STATEMENTS
TEXAS STUDENT HOUSING AUTHORITY •
TOWN LAKE AUSTIN PROJECT
STATEMENT OF NET ASSETS
AUGUST 31, 2005
Current Assets
Cash
Restricted cash
Accounts receivable
Prepaids
Total current assets
Capital Assets
Land
ASSETS
Other capital assets, net of accumulated depreciation
Total capital assets
Intangible Assets
Debt issue costs, net of amortization
Total intangible assets
Total Assets
Current liabilities:
Bonds payable -current maturities
Trade accounts payable
Management fees payable
Accrued interest
Other current liabilities
Deferred revenue
Total current liabilities
Non-current liabilities
Bonds payable
Total liabilities
LIABILITIES
NET ASSETS
Invested in capital assets, net of related debt
Restricted for debt service
Unrestricted
Total net assets
The Notes to Financial Statements are
an integral part of this statement.
$
$
Page6
501,809
1,353,438
9,246
2,737
1,867,230
2,182,816
16,698,592
18,881,408
1,080,304
1,080,304
21,828,942
175,583
68,448
79,200
133,815
96,001
356,884
909,931
22,317,405
23,227,336
3,611,580)
1,067,540
1 '145,646
($ 1,398,394)
TEXAS STUDENT HOUSING AUTHORITY -
TOWN LAKE AUSTIN PROJECT
Page?
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31, 2005
OPERATING REVENUES
Rental income
Other income
Total operating revenue
OPERATING EXPENSES
Personnel expenses
Contract services
Utilities
Travel
Repairs and maintenance
Turnover expenses
Advertising and promotion
Administration expenses
Management fees
Replacements
Depreciation expense
Amortization expense
Total operating expenses
OPERATING INCOME
NON-OPERATING REVENUES (EXPENSES)
Interest income
Interest expense
TOTAL NON-OPERATING LOSS
CHANGE IN NET ASSETS
NET ASSETS, AUGUST 31, 2004
NET ASSETS, AUGUST 31, 2005
The Notes to Financial Statements are
an integral part of this statement.
$ 2,632,802
(
(
(
($
13,966
2,646,768
314,485
37,200
336,755
252
19,853
87,717
93,248
284,293
124,110
45,104
708,600
69,093
2,120,710
526,058
23,019
1,835,543)
1,812,524)
1,286,466)
111,928)
1,398,394)
TEXAS STUDENT HOUSING AUTHORITY •
TOWN LAKE AUSTIN PROJECT
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from tenants
Cash paid to employees
Cash paid to suppliers
Net cash provided by operating activities
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Payments on bonds payable
Interest paid
Net cash used in capital and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of land and building and improvements
Interest on investments
Net cash provided by investing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash
Restricted cash
Total cash and cash equivalents
The Notes to Financial Statements are
an integral part of this statement.
PageS
$ 2,983,258
( 301,168)
( 952,951)
1,729,139
( 1,101,312)
( 1,855,407)
( 2,956,719)
( 9,170)
23,019
13,849
( 1,213,731)
3,068,978
$ 1,855,247
$ 501,809
1,353,438
$ 1,855,247
TEXAS STUDENT HOUSING AUTHORITY -
TOWN LAKE AUSTIN PROJECT
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 2005
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
Prepaids
Trade accounts payable
Management fees payable
Deferred revenue
Tenant security deposits
Development fee payable
Other current liabilities
Net cash provided by operating activities
The Notes to Financial Statements are
an integral part of this statement.
Page9
$ 526,058
777,693
97,753
8,135
9,589
54,200
239,960
( 1 ,225)
( 10,450)
27,426
$ 1,729,139
TEXAS STUDENT HOUSING AUTHORITY-
TOWN LAKE AUSTIN PROJECT
NOTES TO THE FINANCIAL STATEMENTS
NOTE1. GENERALSTATEMENT
Page 10
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. 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".
NOTE 2. 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:
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 are 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)
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 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.
TEXAS STUDENT HOUSING AUTHORITY-
TOWN LAKE AUSTIN PROJECT
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Measurement Focus and Basis of Accounting
Page 11
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.
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, 2005, the Project had no such
investments included in cash and cash equivalents.
In addition, the Project has restricted cash of $1 ,353,438 that is held by the Trustee for the
Bonds payable under provisions of the Indenture. During the year ended August 31, 2005
the investment income received from cash was $23,019. See Note 3 for risk disclosures
and breakdown of restricted cash accounts.
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, 2005, 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 terms of
the bonds.
TEXAS STUDENT HOUSING AUTHORITY-
TOWN LAKE AUSTIN PROJECT
NOTES TO THE FINANCIAL STATEMENTS
Page 12
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Advertising Costs
All advertising costs are expensed as they are incurred. Advertising costs for the year
ending August 31, 2005 was approximately $93,000.
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.
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:
Building
Furniture, fixtures and equipment
NOTE 3. CASH AND INVESTMENTS
30 years
3 to 20 years
At August 31, 2005, 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 $1,855,247 of which $1,353,438 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, 2005, 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 Principal Fund -Series 2002 A-2
Bond Proceeds Interest Fund -Series 2002 A-2
Debt Service Reserve Fund
Repair and Replacement Fund
Project Fund
$ 14,251
111,867
15
35,190
1,037,352
126,713
222
TEXAS STUDENT HOUSING AUTHORITY-
TOWN LAKE AUSTIN PROJECT
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3. CASH AND INVESTMENTS -CONTINUED
Deferred Debt Service
Tax and Insurance Fund
Fee and Expense Fund
Initial Purchase Fund
Total
$
Page 13
14,895
11
10,242
2,680
$1 353 438
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 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.
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.
Project Fund -Amounts in the project fund are held and disbursed for costs of the
project.
Repair and Replacement Fund-Amounts in the 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, 2005.
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.
TEXAS STUDENT HOUSING AUTHORITY-
TOWN LAKE AUSTIN PROJECT
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3. CASH AND INVESTMENTS-CONTINUED
Page 14
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.
Disclosure Relating to 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.
Disclosure Relating to 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-Ballpark Austin Project is
subject to the indenture agreement of the Bonds. As of August 31, 2005, Texas Student
Housing Authority-Town Lake Austin Project held all of its restricted cash balances with the
trustee, which represents 73% of the total cash and investments held at August 31, 2005.
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.
TEXAS STUDENT HOUSING AUTHORITY-
TOWN LAKE AUSTIN PROJECT
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3. CASH AND INVESTMENTS-CONTINUTED
Page 15
As of August 31, 2005, the Project has unrestricted cash of $501,809 (bank balance
$267, 171). Of the bank balances $194,051 was covered by federal depository insurance
while the remaining $73,120 was uncollateralized. The Project has a Bank Deposit
Guarantee Bond from the Project's depository in the amount of $2,000,000. However, an
account at another institution was in excess of the FDIC insured balance.
NOTE4. CAPITAL ASSETS
Capital asset activity for the Project for the year ended August 31, 2005 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 13,260,980 9,170 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 18,165,756 9 170 18.174,926
Totals at historical cost 20,348,572 9 170 20,357,742
Less accumulated depreciation:
Building and improvements 442,163 442,035 844,198
Capitalized purchase costs 29,570 29,570 59,140
Land improvements 93,553 93,553 187,106
Unit appliances 42,162 42,162 84,324
Furniture and fixtures 130 716 130 850 261,566
Total accumulated depreciation 738 164 738 170 1.476,334
Capital assets, net ~Hl,61Q,~Q8 (~ 729 QQQ) ~ ~:18,88:1 4Q8
TEXAS STUDENT HOUSING AUTHORITY-
TOWN LAKE AUSTIN PROJECT
NOTES TO THE FINANCIAL STATEMENTS
NOTE 5. BONDS PAYABLE
Page 16
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 November 1, 2002. 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 frorn
7.76% to 8.69% at present and principal and interest payments are made monthly.
The following is a summary of long-term debt transactions of the Project for the year ended
August 31, 2005:
Balance
Beginning August 31, Due Within
Balance Increases Decreases 2005 One Year
Revenue Bonds
2002 A-1 Bonds $18,206,175 $ ($1,101,312) $17,104,863 $ 175,583
2002 A-2 Bonds 5,388,125 5,388,125
Total :li23 59!13QQ (:li 1 jQj 312) :li22 492 988 :li 175 583
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 2005 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, 2005 are as follows:
Due Fiscal
Year Ending
August 31 Principal Interest Total
2006 $ 175,583 $ 1,739,247 $ 1,914,830
2007 189,703 1 ,725,127 1,914,830
2008 204,958 1,709,872 1,914,830
2009 221,441 1,693,389 1,914,830
2010 239,248 1,675,582 1,914,830
2011-2015 1,517,705 8,056,448 9,574,153
2016-2020 2,234,316 7,339,837 9,574,153
2021-2025 3,289,289 6,284,864 9,574,153
2026-2030 4,842,385 4,727,764 9,570,149
2031-2035 6,165,901 3,586,576 9,752,477
2036-2039 3,412,459 2,959,136 6,371,595
Total Debt Service :11 22 492 988 $41,497 842 :1163 99Q,83Q
NOTE 6. NET ASSETS
TEXAS STUDENT HOUSING AUTHORITY-
TOWN LAKE AUSTIN PROJECT
NOTES TO THE FINANCIAL STATEMENTS
Page 17
Net assets represents 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.
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.
NOTE 7. EMPLOYEE BENEFIT PLAN
Employees of the Project are eligible to participate in the Asset Campus Management 401 (k)
Plan as of August 31, 2005. Employee salary deferrals into the Plan are matched by the
Project up to 1% of employee compensation as defined by the Plan. As of August 31, 2005
there were no contributions to the plan for participants.
NOTE 8. MANAGEMENT FEES
The Project paid JPI property and asset management fees for the Project through February
28, 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 2005, the Project
recorded management fees of $79,200 to JPI and $44,910 to ACH for a total of $124,110. At
August 31, 2005, the Project owed JPI and ACH $79,200 and $13,855, respectively, for
property management fees.
NOTE 9. 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 revenue.
NOTE 10. RELATED PARTY TRANSACTIONS
The Authority receives funds for administrative services and other transfers based on release
tests from the Trustee on behalf of the Project. For the year ended August 31, 2005 the
Trustee paid approximately $6,300 to the Authority.
TEXAS STUDENT HOUSING AUTHORITY -
TOWN LAKE AUSTIN PROJECT
SCHEDULE I -SCHEDULE OF REVENUES AND EXPENSES
FOR THE YEAR ENDED AUGUST 31, 2005
Actual Budget
Revenue and other support:
Rental income $ 2,632,802 $ 2,468,764
Other income 13,966 57,920
Interest income 23,019
Total revenue and other 2,669,787 2,526,684
Operating expenses
Personnel expenses 314,485 297,688
Contract services 37,200 36,765
Utilities 336,755 303,770
Travel 252
Repairs and maintenance 19,853 14,084
Turnover expense 87,717 21,600
Advertising and promotion 93,248 64,829
Administration expenses 284,293 187,099
Management fees 124,110 115,156
Replacements 45,104 22,000
Depreciation and amortization 777,693 777,693
Interest expense 1,835,543 1,558,440
Total expenses 3,956,253 3,399,124
Excess of expenses over revenue ($ 1 ,286,466) ($ 872,440)
Page 18
Variance
$ 164,038
( 43,954)
23,019
143,103
( 16,797)
( 435)
( 32,985)
( 252)
( 5,769)
( 66, 117)
( 28,419)
( 97,194)
( 8,954)
( 23, 104)
277, 103)
557, 129)
($ 414,026)