HomeMy WebLinkAboutTownLake Audit 08-31-15TEXAS STUDENT HOUSING AUTHORITY – JEFFERSON
COMMONS AT TOWN LAKE PROJECT
A Component Unit of the Town of Westlake
FINANCIAL REPORT
AUGUST 31, 2015
C O N T E N T S
Page
INDEPENDENT AUDITOR’S REPORT ..................................................................................... 1
MANAGEMENT’S DISCUSSION AND ANALYSIS (unaudited) ................................................ 4
BASIC FINANCIAL STATEMENTS
Statement of Net Position .................................................................................................. 8
Statement of Revenues, Expenses, and Changes in Net Position .................................... 9
Statement of Cash Flows ................................................................................................ 10
Notes to Financial Statements ......................................................................................... 11
SUPPLEMENTAL INFORMATION
Schedule I – Schedule of Revenues and Expenses – Budget and Actual ...................... 19
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
Texas Student Housing Authority – Jefferson Commons at Town Lake Project
Report on the Financial Statements
We have audited the accompanying statement of net position of Texas Student Housing
Authority – Jefferson Commons at Town Lake Project (the Project), a component unit of Town
of Westlake, as of August 31, 2015, and the related statements of revenues, expenses, and
changes in net position, and cash flows for the year then ended, and the related notes to the
financial statements, which collectively comprise the Project’s basic financial statements as
listed in the table of contents.
Management’s Responsibility for the Financial Statements
The Project’s management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles generally accepted in the United
States of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Project’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Texas Student Housing Authority – Jefferson Commons at Town Lake Project
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the Project as of August 31, 2015, and the changes in its financial
position and its cash flows for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Emphasis of Matter Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Project will
continue as a going concern. As discussed in Note 9 to the financial statements, the Project is in
default on its bonds due to failure to meet certain bond covenants. This gives the bondholders
the right to accelerate and demand payment on the bonds in full. This condition raises
substantial doubt about the Project’s ability to continue as a going concern. Management’s
plans regarding these matters also are described in Note 9. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty. Our opinion is
not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 4 – 7 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is
required by the Governmental Accounting Standards Board who considers it to be an essential
part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in
the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the Project’s basic financial statements. The Schedule of Revenues and
Expenses – Budget and Actual is presented for purposes of additional analysis and is not a
required part of the basic financial statements.
Texas Student Housing Authority – Jefferson Commons at Town Lake Project
Page 3
The Schedule of Revenues and Expenses – Budget and Actual is the responsibility of
management and was derived from and relates directly to the underlying accounting and other
records used to prepare the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the basic financial statements and certain
additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the
basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the
Schedule of Revenues and Expenses – Budget and Actual is fairly stated, in all material
respects, in relation to the basic financial statements as a whole.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
December 18, 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
(unaudited)
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED AUGUST 31, 2015
(unaudited)
4
As staff of the Texas Student Housing Authority – Jefferson Commons at Town Lake 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, 2015.
We encourage readers to consider the information presented herein in conjunction with the
Project’s financial statements which follow this section. As the Project 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.
FINANCIAL HIGHLIGHTS
The liabilities of the Project exceeded its assets at the close of the fiscal year by
$11,379,873, a decrease of $929,868 from the prior year.
Operating revenue of $3,208,107 is $103,719 more than budget; and operating
expenses of $1,761,820 is $103,725 more than budget.
At the end of the current fiscal year, the total cash balances were $256,209 in
unrestricted cash and $232,333 in restricted cash.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Project’s basic
financial statements. The Project’s report consists of three parts: Management’s Discussion and
Analysis, the basic financial statements (including notes to financial statements), and
supplemental information. The basic financial statements include a statement of net position,
statement of revenues, expenses and changes in net position, and a statement of cash flows. A
supplemental schedule follows the notes to the financial statements.
The Project is being treated as a going concern. The Project is in default on its bonds and is not
financially able to make scheduled principal and interest payments on its outstanding debt. This
is considered an event of default by the Trustee, which gives the bondholders the right to
accelerate and demand payment of the bonds in full. Management and the property manager
are in the process of developing plans to reduce concessions and rental compensation, coupled
with small rate increases at the property to improve its financial performance.
The statement of net position presents information on the Project’s assets and liabilities with the
difference between the two reported as net position. The statement of revenues, expenses, and
changes in net position accounts for all of the Project’s revenues and expenses regardless of
when cash is paid or received.
The statement of cash flows reflects cash inflows and outflows by operating, noncapital
financing, capital financing, and investing activities during the year.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED AUGUST 31, 2015
(unaudited)
5
Table 1 provides a summary of the statement of net position for the current and prior fiscal
years:
TABLE 1 – NET POSITION
2015 2014
Current and other assets 506,236$ 546,550$
Capital assets 12,409,741 12,974,117
Total assets 12,915,977 13,520,667
Current liabilities 24,295,850 23,970,672
Net position:
Net investment in capital assets (7,217,779) (7,005,616)
Unrestricted (4,162,094) (3,444,389)
Total net position (11,379,873)$ (10,450,005)$
Business-Type Activities
Table 2 provides a summary of the statement of revenues, expenses, and changes in net
position for the current and prior fiscal years:
TABLE 2 – CHANGES IN NET POSITION
2015 2014
Total operating revenues 3,208,107$ 3,102,367$
Total operating expenses (2,326,196) (2,102,684)
Total operating income 881,911 999,683
Interest income 100 3
Interest expense (1,811,879) (2,033,330)
Total nonoperating expenses (1,811,779) (2,033,327)
CHANGE IN NET POSITION (929,868) (1,033,644)
NET POSITION, BEGINNING (10,450,005) (8,814,788)
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE - (601,573)
NET POSITION, ENDING (11,379,873)$ (10,450,005)$
Business-Type Activities
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED AUGUST 31, 2015
(unaudited)
6
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.
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, 2015
these balances were as follows:
Revenue Fund 168,464$
Repair and Replacement Fund 41,775
Fee and Expense Fund 22,094
Total 232,333$
Non-Restricted Cash
Non-restricted cash is available for general use of the Project.
Bonds Payable
As of August 31, 2015, the following amounts on the Series 2002 A-1 and 2002 A-2 were
payable:
Series 2002 A-1 14,538,279$
Series 2002 A-2 5,089,241
Total 19,627,520$
Total principal and interest payments for the fiscal year ending August 31, 2015 were
$1,583,218; $352,213 of which represented principal.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
Leases at Town Lake are 12-month leases and occupancy for the fiscal year ending August 31,
2016 is forecast at 98%. Gross income expected to be slightly higher due to no longer giving
CA's (community assistants) rental compensation and offering less renewal concessions.
However, we anticipate more difficult market conditions due to competition renovations. As a
result, rental rates will not see a large increase due to the competitive pressures in the market.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED AUGUST 31, 2015
(unaudited)
7
CONTACTING THE AUTHORITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide the reader with a general overview of the Project’s
finances and to demonstrate the Project’s accountability for the money it receives. If you have
any questions about this report, or need additional information, please contact Tracy Schornack
at (817) 430-5874.
BASIC FINANCIAL STATEMENTS
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
STATEMENT OF NET POSITION
AUGUST 31, 2015
The Notes to Financial Statements are
an integral part of this statement.
8
Current assets
Cash 256,209$
Restricted cash 232,333
Accounts receivable 17,694
Total current assets 506,236
Capital assets
Land 2,182,816
Other capital assets, net of accumulated depreciation 10,226,925
Total capital assets 12,409,741
Total assets 12,915,977
Current liabilities
Accounts payable 333,378
Accrued liabilities 7,074
Unearned revenue and prepaid rent 145,275
Accrued interest 4,182,603
Bonds payable 19,627,520
Total current liabilities 24,295,850
Net investment in capital assets (7,217,779)
Unrestricted (4,162,094)
Total net position (11,379,873)$
NET POSITION
ASSETS
LIABILITIES
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
FOR THE YEAR ENDED AUGUST 31, 2015
The Notes to Financial Statements are
an integral part of this statement.
9
OPERATING REVENUES
Rental income 3,118,068$
Other income 90,039
Total operating revenues 3,208,107
OPERATING EXPENSES
Personnel expenses 345,209
Contract services 51,335
Utilities 663,159
Travel 1,218
Repairs and maintenance 76,245
Turnover expenses 315,903
Advertising and promotion 45,368
Administration expenses 140,301
Management fees 123,082
Depreciation expense 564,376
Total operating expenses 2,326,196
OPERATING INCOME 881,911
NON-OPERATING REVENUES (EXPENSES)
Interest income 100
Interest expense (1,811,879)
TOTAL NON-OPERATING EXPENSES (1,811,779)
CHANGE IN NET POSITION (929,868)
NET POSITION, BEGINNING (10,450,005)
NET POSITION, ENDING (11,379,873)$
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 2015
The Notes to Financial Statements are
an integral part of this statement.
10
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from tenants 3,206,364$
Cash paid to suppliers (1,658,214)
Net cash provided by operating activities 1,548,150
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Payments on bonds payable (352,213)
Interest paid (1,231,005)
Net cash used in capital and related financing activities (1,583,218)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 100
Net change in cash and cash equivalents (34,968)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 523,510
CASH AND CASH EQUIVALENTS AT END OF YEAR 488,542$
Cash 256,209$
Restricted cash 232,333
Total cash and cash equivalents 488,542$
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 881,911$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation expense 564,376
Changes in operating assets and liabilities:
Accounts receivable 5,346
Accounts payable 103,246
Accrued liabilities 360
Unearned revenue and prepaid rent (7,089)
Net cash provided by operating activities 1,548,150$
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
NOTES TO FINANCIAL STATEMENTS
11
NOTE 1. 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. 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 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 is managed and operated by Asset Campus Housing (ACH) under the terms of
a Property Management and Leasing Agreement dated March 1, 2005.
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 the Governmental Accounting Standards Board
(GASB) Statement No. 14 as amended by GASB statements No. 39 and 61. 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.
Accordingly, the Project reports no component units.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
NOTES TO FINANCIAL STATEMENTS
12
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
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 Project 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 in the statement of net
position and the operating statement presents increases (revenues) and decreases
(expenses) in net position. Under the accrual basis of accounting, revenues are
recognized when earned and expenses are recognized when they are incurred.
GASB is the accepted standards setting body for establishing generally accepted
accounting principles (GAAP) for governments. Management uses estimates and
assumptions in preparing financial statements in accordance with GAAP. Those
estimates and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that are used.
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 maturities of three months or less
when purchased to be cash equivalents. As of August 31, 2015, the Project had no
such investments included in cash and cash equivalents.
In addition, the Project has restricted cash that is held by the Trustee for the Bonds
payable under provisions of the Indenture. During the year ended August 31, 2015, the
investment income received from cash was $100. 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. 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, 2015, management has
determined that all accounts doubtful of collection have been charged to operations and
an allowance is not required.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
NOTES TO FINANCIAL STATEMENTS
13
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Advertising Costs
All advertising costs are expensed as they are incurred. Advertising costs for the year
ended August 31, 2015 were $45,368.
Capital Assets
Property and equipment have been recorded at the date of acquisition at cost. Routine
maintenance and repair costs to ready the units for the next period are expensed as
incurred.
Expenses directly related to the improvement of property are capitalized at cost. The
Project capitalizes the cost of roof replacements and expenses for other major property
improvements.
The Indenture provides for a replacement fund requirement. Depreciation is computed
using the straight-line method over the estimated useful lives as follows:
Estimated
Asset Class Useful Lives
Building and improvements 30
Capitalized purchase price 30
Land improvements 30
Unit appliances 5
Furniture and fixtures 10
Subsequent Events
The Project has evaluated all events or transactions that occurred after August 31,
2015, and up through December 18, 2015, the date the financial statements were
issued.
NOTE 3. CASH AND INVESTMENTS
Restricted Cash
Restricted cash represents amounts placed on deposit in accounts and held by the
Trustee, which are restricted for the payment of expenses as required by the Trust
Indenture.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
NOTES TO FINANCIAL STATEMENTS
14
NOTE 3. CASH AND INVESTMENTS – CONTINUED
Restricted Cash – Continued
As of August 31, 2015, restricted cash consisted of the following funds and accounts:
Revenue Fund 168,464$
Repair and Replacement Fund 41,775
Fee and Expense Fund 22,094
Total 232,333$
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.
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.
Fee and Expense Fund – The amounts on deposit in this account represent money set
aside for future payments to the Program Administrator.
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. The 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. The Project holds all of its cash
and investments with the Trustee and commercial banks.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
NOTES TO FINANCIAL STATEMENTS
15
NOTE 3. CASH AND INVESTMENTS – CONTINUED
Concentration of Credit Risk
The investment policy of the Project is subject to the Indenture of the Bonds. As of
August 31, 2015, the Project held all of its restricted cash balances with the Trustee,
which represents 47.6% of the total cash and investments held as of August 31, 2015.
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, 2015, the Project has total cash of $488,542 (bank balance $463,476).
Of the bank balance, $250,000 was covered by federal depository insurance, while the
remaining balance was collateralized by a Bank Deposit Guarantee Bond in the amount
of $2 million.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
NOTES TO FINANCIAL STATEMENTS
16
NOTE 4. CAPITAL ASSETS
Capital asset activity for the Project for the year ended August 31, 2015, was as follows:
Beginning Retirements/ Ending
Balance Additions Reclassifications Balance
Capital assets, not being depreciated:
Land 2,182,816$ -$ -$ 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 price 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 (4,976,306) (442,339) - (5,418,645)
Capitalization purchase cost (313,325) (28,485) - (341,810)
Land improvements (882,909) (93,552) - (976,461)
Unit appliances (295,134) - - (295,134)
Furniture and fixtures (915,951) - - (915,951)
Total accumulated depreciation (7,383,625) (564,376) - (7,948,001)
Total capital assets,
being depreciated, net 10,791,301 (564,376) - 10,226,925
Capital assets, net 12,974,117$ (564,376)$ -$ 12,409,741$
NOTE 5. 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 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 Indenture. The Town does not have any liability for the
payment of the Bonds, as the Bonds are non-recourse to both the Town and the Authority.
Interest rates on the Bonds range from 7.76% to 8.69% and are payable monthly each year
thereafter.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
NOTES TO FINANCIAL STATEMENTS
17
NOTE 5. BONDS PAYABLE – CONTINUED
The following is a summary of long-term debt transactions of the Project for the year ended
August 31, 2015:
Amounts
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Revenue Bonds:
2002 A-1 Bonds 14,890,492$ -$ (352,213)$ 14,538,279$ 382,998$
2002 A-2 Bonds 5,089,241 - - 5,089,241 -
Total 19,979,733$ -$ (352,213)$ 19,627,520$ 382,998$
The debt is to be amortized on the A-1 Bonds through 2033 and the A-2 Bonds through
2038. 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, 2015, are as follows:
Principal Interest Total
-$ 3,931,163$ 3,931,163$
382,998 1,508,639 1,891,637
413,797 1,477,840 1,891,637
447,074 1,444,563 1,891,637
483,026 1,408,611 1,891,637
521,870 1,369,767 1,891,637
3,310,558 6,147,627 9,458,185
4,873,699 4,584,486 9,458,185
6,737,498 1,707,029 8,444,527
2,457,000 - 2,457,000
Totals 19,627,520$ 23,579,725$ 43,207,245$
2016
2021-2025
2026-2030
2036-2038
2020
2017
2018
2019
Year Ending
August 31,
2031-2035
Past Due
As of August 31, 2015, the Project was not in compliance with certain covenants of the
Indenture and, therefore, the bonds payable are considered to be in default. GAAP requires
that if the events of default occur, the liability should be disclosed as current on the financial
statements.
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
NOTES TO FINANCIAL STATEMENTS
18
NOTE 6. NET POSITION
Net position represents the residual assets after liabilities are deducted. Net position is
reported in the following categories:
Net Investment in Capital Assets – The component of net position that reports the
difference between capital assets less both the accumulated depreciation and the
outstanding balance of debt, excluding unspent proceeds, that is directly attributable to
the acquisition, construction, or improvement of those capital assets.
Unrestricted Net Position – The difference between assets and liabilities that is not
reported in net position - net investment in capital assets and restricted net position.
NOTE 7. RELATED PARTY TRANSACTIONS
The Project paid management fees of $123,082 during 2015 to the Authority.
NOTE 8. CONCENTRATIONS
The Project consists of one property in Austin, Texas, and is dependent upon the Austin
area and the higher education facilities in the Austin area for revenues.
NOTE 9. GOING CONCERN
The 2015 financial statements were prepared assuming the Project will continue as a going
concern. The Project’s bonds payable are considered to be in default due to not making full
principal and interest payments and, therefore, are reported as current liabilities. This is
considered an event of default by the Trustee, which gives the bondholders the right to
accelerate and demand payment of the bonds in full. This condition raises substantial doubt
about the Project’s ability to continue as a going concern. Management and the property
manager are in the process of developing plans to reduce concessions and rental
compensation, coupled with small rate increases at the property to improve its financial
performance.
SUPPLEMENTAL INFORMATION
TEXAS STUDENT HOUSING AUTHORITY –
JEFFERSON COMMONS AT TOWN LAKE PROJECT
SCHEDULE I – SCHEDULE OF REVENUES AND EXPENSES - BUDGET AND ACTUAL
FOR THE YEAR ENDED AUGUST 31, 2015
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Original and Final
Budget Actual Variance
REVENUES AND OTHER SUPPORT
Rental income 3,013,988$ 3,118,068$ 104,080$
Other income 90,400 90,039 (361)
Total revenues and other support 3,104,388 3,208,107 103,719
OPERATING EXPENSES
Personnel expenses 299,639 345,209 (45,570)
Contract services 82,600 51,335 31,265
Utilities 673,697 663,159 10,538
Travel - 1,218 (1,218)
Repairs and maintenance 173,962 76,245 97,717
Turnover expenses 121,020 315,903 (194,883)
Advertising and promotion 79,278 45,368 33,910
Administration expenses 103,723 140,301 (36,578)
Management fees 124,176 123,082 1,094
Total operating expenses 1,658,095 1,761,820 (103,725)
REVENUES AVAILABLE FOR FIXED CHARGES 1,446,293 1,446,287 (6)
NONOPERATING REVENUES (EXPENSES)
Depreciation and amortization - (564,376) (564,376)
Interest - 100 100
Interest expense - (1,811,879) (1,811,879)
Total non-operating expenses - (2,376,155) (2,376,155)
Excess (Deficiency) of revenues
over (under) expenses 1,446,293$ (929,868)$ (2,376,161)$