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T't�I3I�E �' C I�d'I'�I�i'I'�
' F�ecommendations from Audit I2elated Procedures.............................................1
Items for imtnediate consideration if one or more properties are given back................3
' Consideration for future operatior�s at audit date (The Colony Apartments).................4
' l�nalysis of Net Cash l�vailable for I�ebt Service (The Colony Apartments)................6
C-�ccountsll�ent Receivable—Analysis—'�ow�r..................................................7
' Trial Balance—�olony Apartments...............................................................�
' Minimum Interest {ESCR�W}I'ayments 5chedule...........................................9
�nstaliment Purchase �bligations................................................................10
'T'�x�s Stu ent 0using C�r°p�rat��n
��� �n �t��ns fr°o �u�it �lat� �r���dur�s
' Au�ust 31, 2040
O��r�tivnal— Itel�ted
1) Must improve accountability of each property's operatians thraugh the prop�r use of
a budget. Must improve administrative procedures in relationship to the applicatiQn
; of budget restraims.
2) �apital projects a major improvement, restoration or betterment programs should be
' a) planned and structured with cash flow in mind, b) be project based and project
budgeted c} with periodic reviews for controls on actual costs.
i 3) 5hould implement a defined procedure or required RFP's (Request for Proposal) on
any major maintenance or capital improvement projects on properties. Ind�astry
standard processes on RFP's should be sufficient ta insure that reasonable effort is
made to secure �quitable eost on projects.
4) Reserve far replacement accounts have been substantially depleted and need to be re-
' capitalized to proper levels in order to secure the integrity of the ariginal intent ofthe
reserve and installment agreement.
5} No cash flow source is present to pay the minimum payment on the Lodge Co. note.
Only $1Q0,000 of the $300,000 payment was made in 2000. Forum is no longer
operational as far as a revenue producing entity. I�inimum �xpenses still exist for
security guard cost, insurance, taxes and limited maintenance and utilities.
6) I�Iore rigid cash cantrol and expenditure processes should be dacumented and
implemented to further establish fiscal controls.
7j Excess use of Credit �ard charges far repairs and maintenance andlor capital expense
items indirectly adds additional cost�o vendor charges. We would recommend that
this practice be reviewed for feasibility. No true cash disbursement deferral is gained
' by this practice. It was noted that Credit ��rd (held by SSRS or its owners) were
used far charges to properties other than Texas Student Housing Corporation
properties, which substantially adds to the coznplexity of accounting and audit
processes of the accuracy of these charges.
8) Cost analysis should be performed on all major maintenance contracts.
' i.e.: Fire system, Security system, Elevators, eta (Specific to T�wer)
9} The dorm should. be sold ar reactivated. P oss should suspend interest or the note
' since the proper�y was taken out of service by same.
Page 2-Recommendation
10) l�n allowance for doubtful acc�unts on a histarical basis method should be
eonsidered. There appears to be a significant amount of uncollected rental
receivables on the Tower from 9b/97, 97/98 and 98/99. (�e� attached analysis
schedule of Tower Accounts Receivable
' Adrnir�is�r��iv�
1) Insurance coverage on properties should be submitted for bid bi-annually to secure
' the best possible economics on this major expense item.
2} Insurance coverage liability limits shouid undergo a comprehensive r�-evaluation
based on current tr�nds in the student housing market.
3) Operational policies and procedures of Nlanagement �ompany should be updated and
' filed with Texas �tudent Housing �orporation at the beginning of each fiscal year.
4) Recommend that regular meetings be established between Texas S2udent Housing
' �orporation�3oard and Management Company to review the operations of properties.
'Texas Stu ��� �usin� �or°p�rati�n
�ugust 31, 2000
�t�rns f�a� flr�'m�d���� c�nsisl�r�tf�� if on� �r an�re pr°op�r�fles �re �ivea� b�ck—
- Clear all intercompany b�lances using transfers, and elimination's due to/due from an
intercompanies.
- �ake provisions far honoring existing scholarship liability for future years. Cotony
' has na faod service facilities.
- Consider deferred {unearned) dorm rental obligation ta students at each facility,
especially the Tower. (See attached Accaunt Receivable/Deferred Revenue t�nalysis.)
' - See �Qlony list of considerations concerning billing of 9 af the Quads "through"the
Tower,the use of the Tower's access to a Credit Card account, and overall guest
hause and e�ended stay record keeping.
- Management fee structure would change.
- Insurance costs would change.
- Potential for filing far groperty tax exemption may be increased since risk of loss of
' A&M management support may be decreased due to the amount of the lost value tax
return for the local area.
- P�mounts due from and due to SSRS management would be cleared by paymenY or
demand far payment.
- Amounts of unpaid compensated absences for the entity's employees may be liability.
- Amounts of unspent insurance loss claim proceeds held, as deferred balance sheet
items would need to be considered in any settlement of accounts.
- 1�ny maintenance contract or agreement obligation must be considered. Fire
protection, sprinkler and alarm system, elevator maintenance, security system
maintenance, landscape services, or cansultinglmonitoring HVAC system.
- Any escrow of property taxes or insurance must be considered {Colony may have
some escrow currently at February 2001, but it is small due to the time of year. When
taxes have normally been paid on January 31�`.
- Any lease agreement minimum amounts due. (Copier and postal system equipment�
C arl�s �yn�s, CPA
C��°tr"fzec�Publzc Accountan�s
1903 �entrai Drive, Suite 304
��dford, TX 76Q21.
�17-�45-1300/ fax �17-267-6100
'I'�xz�s S#ucl�nt I3ous�n� C�rpc�ration
Au�ust 31,2000
Th� Coi�ny r�p�a�trnents
�onsideratians for future operations at audit date of Au sgu t 3 l, 2004 fiscal year
1) �olony owns 10 Quads
9 are leased to the Tower far a flat amount of rent
; $21,600 per manth fiscal year ended August 31, 2000
' 9 Quads x 4 units per Quad = 36 units leased x 9 months per year x 600 per month
for fiscal year ended 2001. Tawer pays all expenses and bills students, etc.
, Are they leased for a fair market value rent?
Ftevenue of above recorded on Colony books at above calculation. Tower records it's
amounts are grass revenue on the Quads based on amount rented to students.
2) Tawer awes Colony through a due to Colony (liabiiity) account on Tower Books
(Colony books have a corresponding receivable account)
' 1�t August 3 l, 20Q0 the l�ccounts Receivable cansists of: $174,164.63
3) Colony pays the �olony Lodging Incorporated an amount which should be equal to
, The minimum interest payments. $603,44�.00
Escrow for property taxes 100,808.4Q
Escrow for praperty insurance 15.00O.QO
Subtotal 719.256.00
These were deficient for fiscal 2000 into amount of $152,554.78
{�ee wark papers attached)
Future cash flow must �over these expenses.
4} Will management fees naw currently at $32,520 per month �'or the Colony go up due
to the loss of"ecQnomics of scale" provided by the Tower operations (& Forum for
2400j (but not in 2001 since Forum was not rented for this schaol year 2040-2001), if
the "Lodges �o" properties are not retained by Texas Student Housing CQrporatian?
Tower management fee is 139 992 and Forum was �27,504 for fiscal year ended
August 31, 20Q0.
Pagc 2—to he considered
5} Is the Colony budge� praperly and accurately based on history ar anticipated
Operations strategies in fiseal 2001?
Note budget variances in all repair and maintenance expense accounts were
unfavorable again for a record consecutive year.
b) Colony has par�icipation in the use of sorne SSRS controlled assets (Best Western
credit �ard accaunt) and the Tawer aperatians for extended stay and guesthause
billing which passes fihrough the �'awer's billing system.
' 7) Colany may have some liability on certain maintenance cantracts such as security,
fire, or equipment leas�s.
' 8) Insurance settlement amounts must be reconciled and paid or adjusted before
inter— campany accoiants can be settled.
' 9) �onsider defened dorm income accaunt as a liability to s�udents if this praperty was
to be closed or have operations interrupted or ceased.
T'�x�s Stu �nt �usir�g C�rp�r�#i�n
�olony Apa�°t �nts — Aa�alysis of N�t �as Availabl� for �bt S�rvi��
��s�al ear Ende Au��s� 31, �000
Revenues $1,456,864
Expenses�efore Capitalizing any fixed assets 8�5 476 (1)
Net incame before depreciation and interest expense � 571,388
' IViinimum payments on Rossco (Colony Lodging note) $620,,690
�hortfall fye 8l31/2000 $49,302
Net receivable balance due from Tower at 8/31/2000 per unadjusted generalledger
$124,1 b4 (�)
(1) Expenses include the following cost which may be eontrollable-
I�eal and personal property taxes �11'7,342
Repairs, I�aintenance, Improvements $306.737 (2�
'I'OTAL, $424,079
(2} Includes Improvements, repairs and maintenance in excess af budget of$9�,bb0 fye
813112000.
(A)Net due from Tower per cli�nt general ledger before audit adjustment reflects a
receivable from Tower of$124,164, all of which was out�xandin� at August 3 l, 1999.
Therefore in the current year this was not a net cash out;�t��v for the�olony.
(3) �apitalized assets originally expensed as repairs and ff��intenan,� expense w�s
$237,900 for the year ended August 31, 2000
' T' � fi sa r r ti
���un�s�Rer�t eceivak�l� - Analysi� - T°�wer
st �,
D�ra� C�ratract alarac� �alar�c� �alarace
Re�eiva�le Ac�ourtt� Atagus#31, �99� ��a�ust 31, 1999 Augaast 31, 20�0
Dorm Receivable 0�/00 $1,726,748.00 (A}
Dorm Receivable 99/00 �1,847,427.19 108,941.37
Dorm FZeceivable 9�/99 �1,964,574.81 87,217.00 78,8Q6.�9
Dorm Receivabie 97/98 90,156.91 71,80�.9� 71,808.98
Dorm F�eceivable 96197 46,707.81 46,707.81 46�707.8'9
Dorm Receivabie 95/96 3,371,47 3,371.47 3,371.47
00.121 Guest Ledger 7,394.37 38,710.75 <1558.74�>
Dorm Receivable 98- UT 3,455.61 2,666.07 2,666.07
, 00.127 AIR Direct Bill 3,073.86 18,216.25 8,696.00
�
Totais $2,118,734.84 $2,110,125.52 �2,046,620.70
(A} -'This receivable fiar academic year 2001/2QOQ corresponds to 4ota( deferred revenue on darm
�ees in the amount of $377�0(}5.74
Analysis: Deferred (uneamed) down revenue August 31, 2000 $3,778,OQ5.47
less: Amaunt of Dorm Receivabie above August 31, 2000 $1,726,748.00
Amaunt previausiy collected for unearned Dorm
rental at August 31, 20�0 $2,051,257.47
Combined Cash �alanc� at August 31, zoaa $1,450,571.84
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1Yia1 Balance - 14 T.S.x.C. LJNY F�S.
PY Y - P�ziai A1-i2 - �at# 00.109 - Detail - Incl - % Acct �"'g
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A�cotmt� 2d� 2ype Group Account
Batcht# Ssc Fk� Date ZD SJL# Referealce Ref Date Description �bit GYedit Ba].ance
____..-..._._-.--�.e�..__
O�:ID9 .__Ti?F+2dSFf3t TO NL. IdJDGI2��. A ACRE 50000.00
��"�'s°"'`""''03237 AFAY OCT08;99 IB O1$55 12650 OCTp8,99 WVEK NOTE PAYMEN'P 50�00.00 100000.00
83331 APAY 2d;)V11,99 IB 01965 12650 NC)V11,94 �IFR Ix7i'E PAYMENS 50000.00 150000.00
03370 APAX P73V30,99 1� 0193'I 12650 DEC01,99 TRFINSFER CC1VII2 2NJTE PYMf 50000.00 200Q00.00
03437 APAY I3EC29,99 IS 01976 12650 DEC29,99 TRANSFER TO �VER hCYI'E 50600.00 250000.00
03620 APi.Y MAR03,�0 IB 02101. 12650 MAR03,�0 'IRANS TO Cl�VIIt 2�Yi'E PAYM 48500.00 298500.DO
03704 F+PAY APR04,00 LB 42154 12650 APR04,QO TRANSf'ER - C�VER 2.ZYi'E AK� SOOOO.OQ 348500.00
03766 hPAY APk30,00 IS 02196 12650 }1PR30,00 TTtANSFER 56000.00 404500.00
Q3850 hPhY JUNOZ,00 CF 02255 12650 JUN02,00 TRANSFER TO OJVER I�Td 5600Q.00 • � 460500.00
03991 FiIST JIRd3p,00 CY RECORA JUL17,00 IST UNION IDIS[7RANCE FMIYI 15000.00 V 445500.00
03956 GE2dL.7tJIA5,00 IB PAYMENf JLR,OS,00 PAYA�NT FROM U.T. 60699.78 � � 506194.'IS
04019 HIST JUL31,00 .("'r 15I'UNZON JtTL27,00 PMP QF PROPE�TY TA}�S 50401.56 455793.22
00029 PaPAY JUL31,00 LII 02364 12650 JUL31,04 TRANSFII2-CbVII2 NOT'E 45000.00 500793.22
04072 APAY AI�15,�0 LB 02396 12650 A�15,00 TRANSFII2 100.00 500893.22
---------------- ------------------ --------- ----�r�..
�_. `�(.��� Accotmt Total 516294.78 65401.56 �-� /'S 0893.22 •
t,�.--
Report Tatal 6294.78 401.56 450893.22
Accotmt Types
Tatal Asse 516294.�8 65401.56 4$0893.22
' Total ity .00 .00 .00
F.cuity .00 .00 .00
Total Incare .00 .00 .00
Total Expense .00 .00 .00
Regort Total 516294.78 65401.56 450893.22
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T.S.H.C. - COLONY APARTMENTS
MINIMUM INTEREST (ESCROW} PAYMENTS SCHEDULE
Monthly Amount
Minimun interest Insurance Tax Actually Paid by
R9anth Due Per Dacuments Escrow(a) Escrow(a} Totai Funds Needed T.S.H.C.-Colony Apts Variance
____—-------------------------- ---------------1------- --------------- ----------------------------------------------------------
Sep 99 4�7,414.00 � 1,250.00 8,400.69 57,064.69 5Q,000.00 (7,064.69)
Oct 99 47,414.00 1,250.00 8,400.69 57,064.69 50,000.00 (7,064.69)
Nov99 47,414.00 1,250.00 8,400.69 57,064.69 50,000.00 (7,064.69)
Dec 99 47,414.00 1,250.00 8,400.69 57,064.69 50,000.00 (7,064.69}
Jan 00 51,724.00 1,250.00 8,400.69 61,374.69 _ (61,374.69)
Feb 00 51,724.00 1,250.00 8,400.69 61,374.69 48,50Q.00 (12,874.69}
Mar00 51,724.00 1,250.00 8,400.69 61,374.69 50,000.00 (11,374.69)
Apr 00 51,724.00 1,250.00 8,400.69 61,374.69 56,000.00 (5,374.69)
tvlay 00 51,724.00 1,250.00 8,400.69 , 61,374.69 56,000.00 (5,374.69}
Jun 00 51,724.00 1,250.00 8,400.69 61,374.69 60,694.78 (679.91}
Ju100 51,724.00 1,250.00 8,400.69 61,374.69 45,000.00 (16,374.69)
Aug 00 51,724.00 1,250.00 8,400.69 61,374.69 100.00 (61,274.69)
603,448.00 , 15,000.00 100,808.28 719,256.28 516,294.78 (202,961.50)
(A} 1/12 af amaunts a ually paid by mortgage company ,
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JAN. -�2' 96 (1'UE) 15:37 FRI�CIP�r� F1�. SEC TEL:214, ��0 6946 P, 02
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(�olony �ornplex, F�rurn ��mplex � �'�w�r �oinpl�x)
Inst�Iimerat ��trchas� �bl�ga�ans
I�1lu�imum Payment Schedul�
I.�dBeco . Rossco
" ' ""�y�
TotaI Uttivcrsity The 1��`� Thc
1'ear Payment Tower Faru.m Colotry
K1.3�1`!�3 -
1996 $ �8�;88fl �.�-4; , Z.s � 240,000 $ �#13,793
00�G" ����`n��y3 I997 2 ?04 000 1 964 4�3 270 000 465 517 � � `��p 3-
����W g / 7 9 ) I ) f �.-f_.�----��...-" ""-_
1998�.°C��� 3,004,000 2,182,?59 300,000 l-t 3d�3 1 7,2 4 1 '� ���_�.:
�,�.�,�dC�1999�� 3,300,000 2,401,034 �q / 330,d0��'�P� ;g�, � _-
Zyy�z7,s 2040 3,600,000 2,619,310 �!b1��g 360,4QQ ,�01 0�� 6 , aS" ^�e�-jd, �7 '
�7,g-g6� 2001 4,000,000 2,910,345��y�S2� �p0,000 �3�333 689,655 ��l
, 2002 4,000,000 2,gI0,345 400,fl0� 6g9,655
20a3 4,oao,000 2,9�0,345 aoa,000 689,555
2004 4,OQ0,000 2,910,345 40�,000 689,655
2005 4,�00,400 2,9I0,345 4Q0,400 6�9,655
2ao6 a,000,oao 2,91o,3�s aao,000 6sg,6SS
2Q0? 4,000,000 ?.,910,345 400,000 689,655
2008 a,000,000 z,91o,3as aoa,000 �a9,6s5
2009 4,004,000 �,910,345 400,040 689,655
2010 4,04�,000 2,910,345 400,Q00 689,655
2011 4,40t},000 2,9�0,345 400,000 589,655
2012 4,OOO,fJ00 2,910,345 400,000 6�9,655
2013 4,000,000 Z,910,345 400,400 689,655
, 2014 4,000,000 2,91Q,345 400,004 6�9,655
20�5 4,0�0,000 2,910,345 400,000 689,655
2o1s 4,000,00a 2,910,345 400,000 689,655
' 2017 4,OOO,d00 2,910,345 �400,000 689,655
2018 4,000,000 2,9I0,345 400,000 ' ` 6�9,655 "� .
2019 4,000,000 2,910,�45 400,OOQ 689,655
2Q20 4,000,0�4 2,91�,�45 400,000 689,655
2021 4,00O,OOQ Z,914,345 400,OOQ 689,655
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