HomeMy WebLinkAboutTownLake Audit 08-31-13TEXAS STUDENT HOUSING AUTHORITY
TOWN LAKE AUSTIN PROJECT
FINANCIAL REPORT
AUGUST 31, 2013
TEXAS STUDENT HOUSING AUTHORITY
TOWN LAKE AUSTIN PROJECT
TABLE OF CONTENTS
AUGUST 31, 2013
Page
Number
FINANCIAL SECTION
Independent Auditors’ Report ............................................................................................. 1 – 3
Management’s Discussion and Analysis ............................................................................ 4 – 6
Financial Statements:
Statement of Net Position ................................................................................................ 7
Statement of Revenues, Expenses and Changes in Net Position ..................................... 8
Statement of Cash Flows ................................................................................................. 9
Notes to Financial Statements .......................................................................................... 10 – 17
SUPPLEMENTAL SCHEDULES
Schedule I – Schedule of Revenues and Expenses ............................................................. 18
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FINANCIAL SECTION
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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, 2013, and the related
notes to the financial statements, 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.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
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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
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An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the Project as of August 31, 2013 and the respective changes in
financial position and, where applicable, cash flows thereof 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 I to the financial statements, the Project is in default
on its bonds. This gives the bondholders the right to accelerate and demand payment on the bonds in
full. These conditions raise substantial doubt about its ability to continue as a going concern.
Management’s plans regarding these matters also are described in Note I. 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 through 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 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 of the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
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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 accompanying supplemental
information is presented for purposes of additional analysis and is not a required part of the basic
financial statements.
The supplemental information 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
information are fairly stated, in all material respects, in relation to the basic financial statements as a
whole.
January 14, 2014
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MANAGEMENT’S DISCUSSION
AND ANALYSIS
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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, 2013. 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.
FINANCIAL HIGHLIGHTS
The liabilities of the Project exceeded its assets at the close of the fiscal year by
$8,814,788, a decrease of $1,127,725 over the prior year.
Operating revenue of $3,061,901 is $137,999 more than budget; and operating
expenses were $86,757 more than budget.
At the end of the current fiscal year, the total cash balances were $377,017 in
unrestricted cash and $185,033 in restricted cash.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Project’s basic financial
statements. The Project’s report consists of three parts, Management’s Discussion and Analysis, the
basic financial statements, and notes to financial statements. The basic financial statements include a
statement of net position, statement of revenues, expenses and changes in net position, a statement of
cash flows and a supplemental schedule.
The Project is being treated as a going concern. The Project is in default on its bonds and is not
financially able to make scheduled principal and interest payments on its outstanding debt. They are
considered an event of default by the Trustee, which gives the bondholders the right to accelerate and
demand payment of the bonds in full. Management and the property manager are in the process of
developing plans to increase occupancy and rental rates at the property to improve its financial
performance.
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The statement of net position presents information on all of the Project’s assets and liabilities with the
difference between the two reported as net position.
20132012
Current and other assets1,176,896$ 1,088,410$
Capital assets 13,538,493 14,171,565
Total assets 14,715,389 15,259,975
Current liabilities3,552,532 2,643,238
Noncurrent liabilities 19,977,645 20,303,800
Total liabilities 23,530,177 22,947,038
Net position:
Net investment in
capital assets6,767,257)( 6,435,918)(
Unrestricted 2,047,531)( 1,251,145)(
Total net position 8,814,788)$( 7,687,063)$(
Business-type Activities
TABLE 1
TEXAS STUDENT HOUSING AUTHORITY -
TOWN LAKE AUSTIN PROJECT
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.
20132012
Total operating revenue3,061,901$ 2,811,775$
Total operating expenses2,189,675 2,247,050
Total operating income872,226 564,725
Interest income31 -
Interest expense1,999,982)( 1,968,384)(
Total nonoperating loss1,999,951)( 1,968,384)(
CHANGE IN NET POSITION 1,127,725)( 1,403,659)(
NET POSITION, BEGINNING 7,687,063)( 6,283,404)(
NET POSITION, ENDING 8,814,788)$( 7,687,063)$(
Business-type Activities
TABLE 2
TEXAS STUDENT HOUSING AUTHORITY -
TOWN LAKE AUSTIN PROJECT
CHANGES IN NET POSITION
The statement of cash flows recaps how cash changed from year to year.
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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 Trust Indenture. As of August 31, 2013, these balances were
as follows:
Bond Proceeds Interest Fund, Series 2002 A-25,240$
Revenue Fund26,361
Debt Service Reserve Fund71,875
Repair and Replacement Fund67,963
Fee and Expense Fund13,603
Initial Purchase Fund 9)(
Total 185,033$
Nonrestricted cash. Nonrestricted cash is available for general use of the Project.
Bonds payable. As of August 31, 2013, the following amounts on the Series 2002 A-1 and 2002 A-2
were payable:
Series 2002 A-115,216,509$
Series 2002 A-2 5,089,241
Total 20,305,750$
For the fiscal year ending August 31, 2013, the total principal and interest payment is calculated at
$1,891,637. A total of $301,733 in principal was paid during 2013.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
Leases at the Project are primarily 12-month leases, however, due to competitive and market conditions,
a relatively minor number of 10-month leases exist. These leases do bring a monthly premium over the
12-month leases. Occupancy for the fiscal year ending August 31, 2013, forecasts at 100%. However,
rental rates, again due to competitive pressures will not see a large increase.
CONTACTING THE PROJECT’S FINANCIAL MANAGEMENT
This financial report is designed to provide the reader with a general overview of the Project’s finances
and to demonstrate the Project’s accountability for the money it receives. If you have any questions
about this report, or need additional information, please contact Pete Ehrenberg at (817) 490-5723.
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FINANCIAL STATEMENTS
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ASSETS
Current assets:
Cash 377,017$
Restricted cash 185,033
Accounts receivable 13,273
Total current assets 575,323
Capital assets:
Land 2,182,816
Other capital assets, net of accumulated depreciation 11,355,677
Total capital assets 13,538,493
Intangible assets:
Debt issue costs, net of amortization 601,573
Total intangible assets 601,573
Total assets 14,715,389
LIABILITIES
Current liabilities:
Accounts payable 280,085
Accrued liabilities 6,714
Bonds payable - current maturities328,105
Unearned revenue and prepaid rent181,013
Accrued interest 2,756,615
Total current liabilities 3,552,532
Noncurrent liabilities:
Bonds payable 19,977,645
Total noncurrent liabilities 19,977,645
Total liabilities 23,530,177
NET POSITION
Net investment in capital assets6,767,257)(
Unrestricted 2,047,531)(
Total net position 8,814,788)$(
The accompanying notes are an integral part of these financial statements.
TEXAS STUDENT HOUSING AUTHORITY
TOWN LAKE AUSTIN PROJECT
STATEMENT OF NET POSITION
AUGUST 31, 2013
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OPERATING REVENUES
Rental 2,972,670$
Other 89,231
Total operating revenues 3,061,901
OPERATING EXPENSES
Personnel 288,996
Contract services 59,777
Utilities 550,169
Travel 2,358
Repairs and maintenance 56,077
Turnover 243,421
Advertising and promotion 44,490
Administration 139,487
Management fees 124,927
Depreciation and amortization 679,973
Total operating expenses 2,189,675
OPERATING INCOME 872,226
NONOPERATING REVENUES (EXPENSES)
Interest income 31
Interest expense 1,999,982)(
Total nonoperating revenues (expenses)1,999,951)(
CHANGE IN NET POSITION 1,127,725)(
NET POSITION, BEGINNING 7,687,063)(
NET POSITION, ENDING 8,814,788)$(
The accompanying notes are an integral part of these financial statements.
TEXAS STUDENT HOUSING AUTHORITY
TOWN LAKE AUSTIN PROJECT
STATEMENT OF REVENUES, EXPENSES
FOR THE YEAR ENDED AUGUST 31, 2013
AND CHANGES IN NET POSITION
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CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from tenants 3,157,620$
Cash paid to employees 290,957)(
Cash paid to suppliers 1,191,695)(
Net cash provided by operating activities 1,674,968
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments on bonds payable 301,733)(
Interest paid 1,194,979)(
Net cash used in capital and related financing activities 1,496,712)(
NET CHANGE IN CASH AND CASH EQUIVALENTS 178,287
CASH AND CASH EQUIVALENTS, BEGINNING 383,763
CASH AND CASH EQUIVALENTS, ENDING 562,050$
Cash 377,017$
Restricted cash 185,033
Total cash and cash equivalents 562,050$
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 872,226$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation and amortization679,973
Changes in operating assets and liabilities:
Accounts receivable 42,900
Trade accounts payable 29,011
Deferred revenue 52,819
Other current liabilities 1,961)(
Net cash provided by operating activities 1,674,968$
The accompanying notes are an integral part of these financial statements.
TEXAS STUDENT HOUSING AUTHORITY
TOWN LAKE AUSTIN PROJECT
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 2013
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10
TEXAS STUDENT HOUSING AUTHORITY –
TOWN LAKE AUSTIN PROJECT
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2013
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.”
The 2013 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. 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
Nos. 39 and 61. The criteria used is as follows:
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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.
Private-sector standards of accounting and financial reporting issued prior to December 1,
1989, generally are followed in both the government-wide and proprietary fund financial
statements to the extent that those standards do not conflict with or contradict guidance of the
Governmental Accounting Standards Board. Governments also have the option of following
subsequent private-sector guidance for their business-type activities and Enterprise Funds,
subject to this same limitation. The government has elected not to follow subsequent private-
sector guidance.
C. Assets, Liabilities and Net Position 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, 2013, the Project had no such
investments included in cash and cash equivalents.
In addition, the Project has restricted cash of $185,033 that is held by the Trustee for the
Bonds payable under provisions of the Trust Indenture. During the year ended August 31,
2013, the interest income received from cash was $31. See Note III for risk disclosures and
breakdown of restricted cash accounts.
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Accounts Receivable
Accounts receivable are stated at amounts management expects to collect from outstanding
balances. Management writes off uncollectible amounts through a charge to expense. 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, 2013, 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, 2013, were $44,490.
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:
Estimated
Asset ClassUseful Lives
Building30
Furniture, fixtures and equipment3 - 20
III. DETAILED NOTES ON ALL FUNDS
A. Cash and Investments
At August 31, 2013, 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 $562,050 of which $185,033 represented restricted
cash.
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Restricted Cash
Restricted cash represents amounts placed on deposit in accounts and held by the Trustee,
which are restricted for the payment of expenses as required by the Trust Indenture. At
August 31, 2013, restricted cash consists of the following funds and accounts:
Fund/Account Description
Bond Proceeds Interest Fund, Series 2002 A-25,240$
Debt Service Reserve 71,875
Repair and Replacement Fund67,963
Revenue Fund26,361
Fee and Expense Fund13,603
Initial Purchase Fund 9)(
Total 185,033$
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.
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 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, 2013.
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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.
Deferred Debt Service Fund – The amounts on deposit in this account are to be
used to pay the next interest payment on the Series A-2 Bonds.
Tax and Insurance Fund – The amounts on deposit in this account represent
1/12th of the ad valorem property taxes, if any, and 1/12th of the annual premiums
for insurance due, determined in accordance with the annual budget.
Initial Purchase Fund – The amounts on deposit in this account represent monies
that were withheld from the seller at closing and were to be paid once certain
operating criteria were met. These conditions have not been met yet.
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. Texas Student Housing
Authority – Town Lake 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 – 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, 2013, the Project held all
of its restricted cash balances with the Trustee, which represents 32.9% of the total cash and
investments held at August 31, 2013.
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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, 2013, the Project has unrestricted cash of $377,017 (bank balance $363,518).
Of the bank balance, $250,000 was covered by federal depository insurance, while $113,518
was collateralized.
B. Capital Assets
Capital asset activity for the Project for the year ended August 31, 2013, was as follows:
BeginningRetirements/Ending
BalanceAdditionsReclassificationsBalance
Capital assets, not being depreciated:
Land 2,182,816$ -$ -$ 2,182,816$
Total capital assets,
not being depreciated 2,182,816 - - 2,182,816
Capital assets, being depreciated:
Building and improvements13,270,150 - - 13,270,150
Capitalized purchase costs887,095 - - 887,095
Land improvements2,806,596 - - 2,806,596
Unit appliances295,134 - - 295,134
Furniture and fixtures 915,951 - - 915,951
Total capital assets,
being depreciated 18,174,926 - - 18,174,926
Less accumulated depreciation for:
Capitalized purchase costs256,356)( 28,484)( - 284,840)(
Building and equipment 5,929,821)( 604,588)( - 6,534,409)(
Total accumulated depreciation 6,186,177)( 633,072)( - 6,819,249)(
Total capital assets,
being depreciated, net 11,988,749 633,072)( - 11,355,677
Capital assets, net 14,171,565$ 633,072)$( -$ 13,538,493$
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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 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 from
7.76% to 8.69% and are payable monthly each year thereafter.
The following is a summary of long-term debt transactions of the Project for the 12-month
period ended August 31, 2013:
Amounts
BeginningEndingDue Within Interest
BalanceIncreasesDecreasesBalanceOne Year Paid
Revenue Bonds:
2002 A-1 Bonds15,518,242$ -$ 301,733$ 15,216,509$ 328,105$ 1,194,979$
2002 A-2 Bonds 5,089,241 - - 5,089,241 - -
Total 20,607,483$ -$ 301,733$ 20,305,750$ 328,105$ 1,194,979$
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 $167,675 starting
November 1, 2033. The A-2 Bonds have no regular principal payments until the year 2033.
The Bonds also had a clause for an initial purchase release draw. The requirements for that
draw were not met and during 2006, the funds held in the initial Purchase Fund were applied
to principal on the Bonds. The annual requirements to amortize all debts outstanding as of
August 31, 2013, are as follows:
Year Ending
August 31,PrincipalInterestTotal
2014328,105$ 1,563,532$ 1,891,637$
2015354,491 1,537,146 1,891,637
2016382,998 1,508,639 1,891,637
2017413,797 1,477,840 1,891,637
2018447,074 1,444,563 1,891,637
2019-20232,836,079 6,622,106 9,458,185
2024-20284,175,185 4,102,458 8,277,643
2029-2033 11,368,021 3,312,414 14,680,435
Totals 20,305,750$ 21,568,698$ 41,874,448$
Governmental Activities
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D. Net Position
Net position represent the residual assets after liabilities are deducted. These assets are
reported in the following categories:
Net investment in capital assets 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 Net Position 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 Position consists of the portion of net position after net
investment in capital assets 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
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 2013, the Project
recorded management fees of $124,927 to ACH.
F. Concentrations
The Project consists of one property in Austin, Texas, and is dependent upon the Austin area
and the higher education facilities in the Austin area for revenues.
G. Commitments and Contingencies
The Project has yet to have an arbitrage calculation performed for its outstanding debt. After
that analysis, the Project may incur a liability for interest earned in accordance with Internal
Revenue Service regulations.
SUPPLEMENTAL SCHEDULE
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BudgetActualVariance
REVENUES AND OTHER SUPPORT
Rental 2,817,411$ 2,972,670$ 155,259$
Other 106,491 89,231 17,260)(
Total revenues and other support 2,923,902 3,061,901 137,999
OPERATING EXPENSES
Personnel295,903 288,996 6,907
Contract services81,240 59,777 21,463
Utilities485,573 550,169 64,596)(
Repairs and maintenance60,120 56,077 4,043
Turnover197,695 243,421 45,726)(
Advertising and promotion74,900 44,490 30,410
Travel- 2,358 2,358)(
Management fees116,956 124,927 7,971)(
Administration 110,558 139,487 28,929)(
Total operating expenses 1,422,945 1,509,702 86,757)(
REVENUES AVAILABLE FOR FIXED CHARGES 1,500,957 1,552,199 51,242)(
NONOPERATING REVENUES (EXPENSES)
Depreciation and amortization- 679,973)( 679,973
Interest- 31 31)(
Interest expense - 1,999,982)( 1,999,982
Total other expenses - 2,679,924)( 2,679,924)(
EXCESS OF EXPENSES OVER (UNDER) REVENUES 1,500,957$ 1,127,725)$( 2,628,682)$(
FOR THE YEAR ENDED AUGUST 31, 2013
TEXAS STUDENT HOUSING AUTHORITY
TOWN LAKE AUSTIN PROJECT
SCHEDULE I - SCHEDULE OF REVENUES AND EXPENSES
BUDGET AND ACTUAL
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