Item 1.5 - Poway Housing Successor Annual Report FY 2017-18C)
DATE:
TO:
FROM:
INITIATED BY:
SUBJECT:
Summary:
City of Poway
COUNCIL AGENDA REPORT
April 16, 2019
APPROVED
APPROVED AS AMENDED
SEE MINUTES)
DENIED
REMOVED
CONTINUED
RESOLUTION NO.
Honorable Chairman and Members of the Housing Authority
Robert Manis, Director of Development Services PA
Marie Sanders, Senior Management Analyst J
858) 668-4637 or msanders@poway.org wry
Poway Housing Successor Annual Report FY 2017-18
Pursuant to California Health and Safety Code Sections 34176 and 34176.1(f) (Dissolution Law),
the Poway Housing Authority, in its capacity as Housing Successor to the dissolved Poway
Redevelopment Agency, must prepare an annual report detailing its activities during each fiscal
year. The Poway Housing Successor Annual Report for Fiscal Year 2017-18 (Attachment A), and
the Poway Housing Authority Basic Financial Statements and Independent Auditors Report for
the year ended June 30, 2018 (Attachment B), are included with this agenda report for review by
the Poway Housing Authority.
Recommended Action:
It is recommended that the Poway Housing Authority Board receive and file this report.
Discussion:
Part 1.85, Division 24 of the California Health and Safety Code, particularly Sections 34176 and
34176.1(f), require that the Housing Successor provide an annual report of the Successor's
activities during the prior fiscal year. The purpose of the report is to provide the governing body
of the Housing Successor with an annual report on the housing assets and activities of the
Housing Successor. The report is to be provided to the Poway Housing Authority Board, along
with an independent financial audit of the Low- and Moderate -Income Housing Asset Fund within
six months after the end of each fiscal year. Due to Poway's annual timing for completion of the
Housing Authority audit, it is not possible for this report to be completed within the six-month
period. However, there is no penalty for delayed submission of the report.
Environmental Review:
This item is not subject to California Environmental Quality Act (CEQA) review.
Fiscal Impact:
There is no fiscal impact associated with this item.
Public Notification:
None.
1 of 41 April 16, 2019, Item #1.5
Attachments:
A. Poway Housing Successor Annual Report for Fiscal Year 2017-18
B. Poway Housing Authority Basic Financial Statements and Independent Auditor's Report
for Fiscal Year 2017-18
Reviewed/Approved By: Reviewed By: Approved By:
n
Wendy Kaserman Alan Fenstermacher Tina M. White
Assistant City Manager City Attorney City Manager
2of41 April 16, 2019, Item #1.5
POWAY HOUSING SUCCESSOR
ANNUAL REPORT REGARDING THE
LOW- AND MODERATE -INCOME HOUSING ASSET
FUND FOR FISCAL YEAR 2017-2018 PURSUANT TO
CALIFORNIA HEALTH AND SAFETY CODE SECTION
34176.1(f) FOR THE
POWAY HOUSING AUTHORITY
This Housing Successor Annual Report (Report) regarding the Low- and Moderate -Income
Housing Asset Fund (LMIHAF) has been prepared pursuant to California Health and Safety
Code Section 34176.1(f) and is dated as of March 15, 2019. This Report sets forth certain
details of the Poway Housing Authority, in its capacity as Housing Successor to the dissolved
Poway Redevelopment Agency, activities during Fiscal Year 2017-18 (Fiscal Year). The
purpose of this Report is to provide the governing body of the Housing Successor an annual
report on the housing assets and activities of the Housing Successor under Part 1.85, Division
24 of the California Health and Safety Code, in particular sections 34176 and 34176.1
Dissolution Law).
The following Report is based upon information prepared by Housing Successor staff and
information contained within the Poway Housing Authority Basic Financial Statements and
Independent Auditor's Report for Fiscal Year 2017-18 as prepared by Rogers, Anderson,
Malody & Scott, LLP, which Audit is separate from this annual summary Report; further, this
Report conforms with and is organized into sections I. through XI., inclusive, pursuant to the
Dissolution Law:
Amount Deposited into LMIHAF: This section provides the total amount of funds
deposited into the LMIHAF during the Fiscal Year. Any amounts deposited for items
listed on the Recognized Obligation Payment Schedule (ROPS) must be distinguished
from the other amounts deposited.
II. Ending Balance of LMIHAF: This section provides a statement of the balance in the
LMIHAF as of the close of the Fiscal Year. Any amounts deposited for items listed on
the ROPS must be distinguished from the other amounts deposited.
III. Description of Expenditures from LMIHAF: This section provides a categorized
description of the expenditures made from the LMIHAF during the Fiscal Year.
IV. Statutory Value of Assets Owned by Housing Successor: This section provides the
statutory value of real property owned by the Housing Successor, the value of loans
and grants receivables, and the sum of these two amounts.
V. Description of Transfers: This section describes transfers pursuant to Health and
Safety Code Section 34176.1(c)(2), if any, to another housing successor agency made
in previous Fiscal Year(s), including whether the funds are unencumbered and the
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2017 - 2018
3of41 April 16, 2019, Item #1.5ATTACHMENT A
status of projects, if any, for which the transferred LMIHAF will be used. The sole
purpose of the transfers must be for the development of transit priority projects,
permanent supportive housing, housing for agricultural employees or special needs
housing.
VI. Project Descriptions: This section describes any project for which the Housing
Successor receives or holds property tax revenue pursuant to the ROPS and the status
of that project.
VII. Status of Compliance with Section 33334.16: This section provides a status update
on compliance with Section 33334.16 for interests in real property acquired by the
former redevelopment agency prior to February 1, 2012. For interests in real property
acquired on or after February 1, 2012, the Housing Successor must provide a status
update on the project. The Poway Housing Successor has acquired one property since
February 1, 2012.
VIII. Description of Outstanding Obligations under Section 33413: This section
describes the outstanding inclusionary and replacement housing obligations, if any,
under Section 33413 that remained outstanding prior to dissolution of the former
redevelopment agency as of February 1, 2012, along with the Housing Successor's
progress in meeting those prior obligations, if any, of the former redevelopment agency
and how the Housing Successor's plans to meet unmet obligations, if any.
IX. Income Test: This section provides the information required by Section
34176.1(a)(3)(B), or a description of expenditures by income restriction for five-year
period, with the time period beginning January 1, 2014, and whether the statutory
thresholds have been met. However, reporting of the Income Test is not required until
2019.
X. Senior Housing Test: This section provides the percentage of units of deed -restricted
rental housing restricted to seniors and assisted individually or jointly by the Housing
Successor, its former redevelopment Agency, and its host jurisdiction within the
previous 10 years in relation to the aggregate number of units of deed -restricted rental
housing assisted individually or jointly by the Housing Successor, its former
Redevelopment Agency and its host jurisdiction within the same time period. For this
Report the ten-year period reviewed is January 1, 2007 to January 1, 2017.
XI. Excess Surplus Test: This section provides the amount of excess surplus in the
LMIHAF, if any, and the length of time that the Housing Successor has had excess
surplus, and the Housing Successor's plan for eliminating the excess surplus.
This Report is to be provided to the Housing Successor's governing body along with an
independent financial audit of the LMIHAF within six months after the end of each fiscal
year. In addition, the Report and the former redevelopment agency's pre -dissolution
Implementation Plans are available to the public on the City's website
http://poway. org/207/Affordable-Housing.
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2017 - 2018
4of41 April 16, 2019, Item #1.5
AMOUNT DEPOSITED INTO LMIHAF
A total of $159,801 was deposited into the LMIHAF during the Fiscal Year, as detailed on page
8 of the Audit.
II. ENDING BALANCE OF LMIHAF
At the close of the Fiscal Year, the ending balance in the LMIHAF was $2,771,448, none of
which is being held for items listed on the ROPS, as detailed on page 6 of the Audit. This includes
2,128,971 in cash and investments, and $668,531 in housing loans receivable, less $50,499
in liabilities. The $668,531 is due from the Successor Agency and represents the Housing
Authority's 20% of the former Redevelopment Agency's loan balance, and repayment is subject
to approval by the California Department of Finance.
III. DESCRIPTION OF EXPENDITURES FROM LMIHAF
The following is a description of expenditures from the LMIHAF by category:
IV. STATUTORY VALUE OF ASSETS OWNED BY HOUSING SUCCESSOR
87,553
0
0
87,553
Under the Dissolution Law and for purposes of this Report, the "statutory value of real
property' means the value of properties formerly held by the former redevelopment agency
as listed on the housing asset transfer schedule approved by the Department of Finance as
listed in such schedule under Section 34176(a)(2), the value of the properties transferred to
the Housing Successor pursuant to Section 34181(f), and the purchase price of properties
purchased by the Housing Successor. Further, the value of loans and grants receivable are
included in these reported assets held in the LMIHAF.
The following provides the statutory value of assets owned by the Housing Successor:
V. DESCRIPTION OF TRANSFERS
2,128,971
18,582,674
688,531
21,400,176
The Housing Successor did not make any LMIHAF transfers to other Housing Successor(s)
under Section 34176.1(c)(2) during the Fiscal Year.
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2017 - 2018
5 of 41 April 16, 2019, Item #1.5
VI. PROJECT DESCRIPTIONS
The Housing Successor did not receive and did not hold property tax revenue pursuant to the
ROPS.
VII. STATUS OF COMPLIANCE WITH SECTION 33334.16
Section 34176.1 provides that Section 33334.16 does not apply to interests in real property
acquired by the Housing Successor on or after February 1, 2012.
With respect to interests in real property acquired by the former redevelopment agency prior
to February 1, 2012, and transferred to the Successor Agency pursuant to Health and Safety
Code Section 34176, the time periods described in Section 33334.16 shall be deemed to have
commenced on the date that the Department of Finance approved the property as a housing
asset on the Housing Asset Transfer Form; thus, as to real property acquired by the former
redevelopment agency now held by the Housing Successor, the Housing Successor must
initiate activities consistent with the development of the real property for the purpose for which
it was acquired within five years of the date the DOF approved such property as a housing
asset. Poway's Housing Assets Transfer Form was approved by the DOF on August 31, 2012.
The following provides a status update on the real property housing assets that were acquired
by the former redevelopment agency prior to February 1, 2012, and transferred to the Housing
Successor on February 1, 2012, and compliance with the five-year period to commence
development activities.
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2017 - 2018
6 of 41
Vacant land. To be leased in
12674 Monte Vista Rd 2/22/2000 2.06 Acres 2019 for temporary non-
housing use.
13021-13023 Poway Rd 03/26/2002 2.6 Acres
Vacant land. Active Exclusive
Negotiating Rights Agreement.
13031 Poway Rd 3/30/2010 24 Acres
Vacant land. Active Exclusive
Negotiating Rights Agreement.
Twin Peaks Rd 11/03/2004 2.15 Acres Vacant land. Development
options are being evaluated
12341 Oak Knoll Rd 3/23/2011 3.18 Acres Leased Land. DDLA executed
for development in 2019.
Vacant land. Due to access
13424 Scots Way 08/27/2002 0.70 Acres issues, development options
are being evaluated
14048 Sycamore Ave 06/30/2005 0.32 Acres Vacant land. Development
options are being evaluated
Vacant land. Floodway
Wanesta - Floodway 8/27/2004 2.15 Acres properties behind Solara
behind Solara Affordable Housing. Cannot be
developed.
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2017 - 2018
6 of 41 April 16, 2019, Item #1.5
The following provides a status update on real property housing assets that were acquired by
the Housing Successor after February 1, 2012.
12207 & 12237 Old Future affordable housing site.
Pomerado Road
1/9/2018 1.07 Acres Environmental impact study to
be completed in 2019.
VIII. DESCRIPTION OF OUTSTANDING OBLIGATIONS PURSUANT TO SECTION 33413
Replacement Housing: According to the 2010-2014 Implementation Plan for the former
redevelopment agency, no Section 33413(a) replacement housing obligations were
transferred to the Housing Successor. Furthermore, the Housing Successor has not caused
the demolition of any units and no new replacement housing obligations have been created.
Inclusionary/Production Housing. According to the 2010-2014 Implementation Plan for the
former redevelopment agency, no Section 33413(b) inclusionary/production housing
obligations were transferred to the Housing Successor.
The former redevelopment agency's Implementation Plans are posted on the City's website at
http://poway.org/207/Affordable-Housing.
IX. EXTREMELY -LOW INCOME TEST
Section 34176.1(a)(3)(B) requires that the Housing Successor must require at least 30% of the
funds deposited into the LMIHAF to be expended for development of rental housing affordable
to and occupied by households earning 30% or less of the AMI over a five-year period. If the
Housing Successor fails to comply with the Extremely -Low Income requirement in any five-
year report, then the Housing Successor must ensure that at least 50% of the funds remaining
in the LMIHAF be expended in each fiscal year following the latest fiscal year following the
report on households earning 30% or less of the AMI until the Housing Successor
demonstrates compliance with the Extremely -Low Income requirement. This information is not
required to be reported until 2019 for the 2014 — 2019 period.
X. SENIOR HOUSING TEST
The Housing Successor is required to calculate the percentage of units of deed -restricted rental
housing restricted to seniors and assisted by the Housing Successor, the former redevelopment
agency and/or the City within the previous 10 years in relation to the aggregate number of units
of deed -restricted rental housing assisted by the Housing Successor, the former redevelopment
agency, and/or City within the same time period. If this percentage exceeds 50%, then the
Housing Successor cannot expend future funds in the LMIHAF to assist additional senior
housing units until the Housing Successor or City assists and construction has commenced on
a number of restricted rental units that is equal to 50% of the total amount of deed -restricted
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2017 - 2018
7of41 April 16, 2019, Item #1.5
rental units. The following provides the Housing Successor's Senior Housing Test for the 10 -
year period of Fiscal Year 2007 through Fiscal Year 2017:
XI. EXCESS SURPLUS TEST
Excess Surplus is defined in Section 34176.1(d) as an unencumbered amount in the LMIHAF
account that exceeds the greater of one million dollars ($1,000,000) or the aggregate amount
deposited into the LMIHAF account during the Housing Successor's preceding four Fiscal
Years, whichever is greater.
The LMIHAF was not created until February 1, 2012. The current balance of $1,303,336 on
deposit in the LMIHAF exceeds the sum of the annual deposits made in the preceding four
fiscal years ($1,003,531) and as a result, the LMIHAF has an Excess Surplus in the amount of
299, 805.
In accordance with the above provisions, the Poway Housing Authority does in fact have an
Excess Surplus that is required to be utilized within the next three fiscal years. The Housing
Authority will work to spend or commit the funds in the near future on eligible projects within the
community to ensure the LMIHAF does not accumulate an excess surplus.
The following provides the Excess Surplus test for the preceding four Fiscal Years:
1,238,765 $1,402, 359 $1,576,008 $1,687,392 $1,463,129
179,796 $212,473 224,682
16,201) $(38,825) $(113,298)
386,580 $184,553 $1,003,531
820, 000
86,524) $(54,552)
820,000)
524,319)` $(289,794)"
1,402, 359 $1,576,008 $1,687,392 $1,463,129 $1,303,336
Total commitments as of June 30, 2018 is $814,113.
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2017 - 2018
8of41"' April 16, 2019, Item #1.5
Poway Housing Authority
Poway, California
Basic Financial Statements
and Independent Auditor's Report
For the Year Ended June 30, 2018
9 of 41 April 16, 2019, Item #1.5ATTACHMENT B
Poway Housing Authority
Basic Financial Statements
For the Year Ended June 30, 2018
TABLE OF CONTENTS
Paqe
Independent Auditor's Report ........................................................................ 1
Basic Financial Statements
Government -Wide Financial Statements
Statement of Net Position......................................................................... 4
Statement of Activities.............................................................................. 5
Fund Financial Statements
BalanceSheet....................................................................................... 8
Reconciliation of the Balance Sheet to the Statement of Net Position .................. 7
Statement of Revenues, Expenditures and Changes in Fund Balance ................. 8
Reconciliation of the Statement of Revenues, Expenditures and Changes
in Fund Balance to the Statement of Activities ............................................. 9
Notes to the Basic Financial Statements...................................................... 10
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule................................................................... 23
Note to Budgetary Comparison Schedule......................................................... 24
Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards ..................................... 25
10 of 41 April 16, 2019, Item #1.5
735 E. Carnegie Dr. Suite 100
San Bernardino, CA 92408
909 889 0871 T
909 889 5361 F
ramscpa.net
PARTNERS
Brenda L. Odle, CPA. MST
Terry P. Shea, CPA
Kirk A. Franks. CPA
Scott W. Manna, CPA, CGMA
Leena Shanbhag. CPA, MST, CGMA
Bradferd A. Welebir, CPA, MBA, CGMA
Jay H. Zercher, CPA (Partner Emeritus)
Phillip H. Waller, CPA (Partner Emeritus)
MANAGERS/STAFF
Jenny Liu, CPA, MST
Seong-Hyea Lee, CPA, MBA
Charles De Simon), CPA
ROGERS, ANDERSON, MALODY & SCOTT, LLP
CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948
Independent Auditor's Report
To the Chairman and Commissioners
of the Poway Housing Authority
Poway, California
Report on the Financial Statements
We have audited the accompanying financial statements of the
governmental activities and the major fund of the Poway Housing Authority
Authority), a component unit of the City of Poway, California (City), as of
and for the year ended June 30, 2018, and the related notes to the financial
statements, which collectively comprise the Authority's basic financial
statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Gardenya Duran, CPA Management is responsible for the preparation and fair presentation of these
Brianna Schultz, CPA financial statements in accordance with accounting principles generally
Samuel Singery, CPA accepted in the United States of America; this includes the design,
Jing Wu. CPA
Evelyn Morentin-Barcena, CPA
implementation, and maintenance of internal control relevant to the
Jin Gu, CPA. MT preparation and fair presentation of financial statements that are free from
Veronica Hernandez, CPA material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions 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 and the standards
applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. 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
MEMBERS selected depend on the auditor's judgment, including the assessment of the
American Institute of risks of material misstatement of the financial statements, whether due to
Certified Public Accountants
fraud or error. In making those risk assessments, the auditor considers
PCPS The AICPA Alliance internal control relevant to the entity's preparation and fair presentation of
far CPA Firms the financial statements in order to design audit procedures that are
Governmental Audit appropriate in the circumstances, but not for the purpose of expressing an
Quality Center opinion on the effectiveness of the entity's internal control. Accordingly, we
Employee 8ene(t Plon express no such opinion. An audit also includes evaluating the
Audit Quality center appropriateness of accounting policies used and the reasonableness of
Cahforma Society of significant accounting estimates made by management, as well as
Cemfied Pirohc Accountants evaluating the overall presentation of the financial statements.
S!
STABILITY, ACCURACY. TRUST.
11 of 41 April 16, 2019, Item #1.5
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities and the major fund of the
Authority as of June 30, 2018, and the respective changes in financial position for the year then
ended in accordance with accounting principles generally accepted in the United States of
America.
Emphasis of Matter
Specific Authority Presentation
As discussed in Note 1, the basic financial statements present only the Authority and do not
purport to, and do not present fairly, the financial position of the City of Poway, California, as of
June 30, 2018, and the changes in its financial position, or where applicable, its cash flows for
the year then ended in accordance with accounting principles generally accepted in the United
States of America. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Management has omitted the Management's Discussion and Analysis that accounting principles
generally accepted in the United States of America requires to be presented to supplement the
basic financial statements. Such missing 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 financial statements in an appropriate
operational, economic, or historical context. Our opinions on the basic financial statements are
not affected by this missing information.
Accounting principles generally accepted in the United States of America require that the
Budgetary Comparison Schedule 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.
2-
12 of 41 April 16, 2019, Item #1.5
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
January 28, 2019, on our consideration of the Authority's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the Authority's internal control over financial reporting and compliance.
oe e,ss, i•v-ccou, 1'%a.loot' 2-& UP.
San Bernardino, California (/
January 28, 2019
3-
13 of 41 April 16, 2019, Item #1.5
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14 of 41 April 16, 2019, Item #1.5
Basic Financial Statements
15 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Statement of Net Position
June 30, 2018
ASSETS
Cash and investments $ 2,128,971
Accounts receivable 24,445
Due from other governments 668,531
Capital assets 18,582,674
Total assets 21,404,621
LIABILITIES
Accounts payable 10,469
Deposits 4,300
Unearned revenue 35,730
Total liabilities 50,499
NET POSITION
Net investment in capital assets 18,582,674
Restricted for:
Housing 2,771,448
Total net position $ 21,354,122
The accompanying notes are an integral part of these financial statements.
4-
16 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Statement of Activities
For the Year Ended June 30. 2018
Governmental
Activities
Program Grants and Net(Expenses)
Revenues Contributions Revenues and
Charges Operating Grants Capital Grants Changes in
Functions/Programs: Expenses for Services & Contributions & Contributions Net Position
Governmental activities:
General government $ 19,692 $ 59,839 $ - $ - $ 40,147
Development services 34,861 - - (34,861)
Total governmental activities $ 54,553 $ 59,839 $ $ - 5,286
General revenues:
Investment income 40,295
Other 59,667
Transfer in (out) 820, 000
Total general revenues and transfers 919,962
Change in net position 925,248
Net position, beginning 20,428,874
Net position, ending $ 21,354,122
The accompanying notes are an integral part of these financial statements.
5-
17 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Balance Sheet
Governmental Fund
June 30, 2018
ASSETS
Cash and investments $ 2,128,971
Accounts receivable 24,445
Due from other governments 668,531
Total assets $ 2,821,947
LIABILITIES AND FUND BALANCE
Liabilities:
Accounts payable $ 10,469
Deposits 4,300
Unearned revenue 35,730
Total liabilities 50,499
Fund balance:
Restricted 2,771,448
Total fund balance 2,771,448
Total liabilities and fund balance $ 2,821,947
The accompanying notes are an integral part of these financial statements.
6-
18 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Reconciliation of the Balance Sheet to the Statement of Net Position
Governmental Fund
June 30, 2018
Total Governmental Fund Balance $ 2,771,448
Amounts reported in governmental activities in the statement of net
position are different because:
Capital assets used in the governmental activities are not current
financial resources and, therefore, are not reported in the fund. 18,582,674
Net Position of Governmental Activities $ 21,354,122
The accompanying notes are an integral part of these financial statements.
7-
19 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Statement of Revenues, Expenditures and Changes in Fund Balance
Governmental Fund
For the Year Ended June 30, 2018
REVENUES
Charges for services $ 59,839
Investment income 40,295
Other revenues 59,667
Total revenues 159,801
EXPENDITURES
Current:
General government 7,987
Development services 34,861
Capital outlay 831,705
Total expenditures 874,553
OTHER FINANCING SOURCES
Transfers in 820,000
Total other financing sources 820,000
Net change in fund balance
Fund balance, beginning
Fund balance, ending
20 of 41
105,248
2,666,200
2,771,448
The accompanying notes are an integral part of these financial statements.
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April 16, 2019, Item #1.5
Poway Housing Authority
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balance to the Statement of Activities
Governmental Fund
For the Year Ended June 30, 2018
Net change in fund balance - total governmental fund
Amounts reported for governmental activities in the Statement of
Activities are different because:
In governmental funds, the cost of capital assets are reported as
expenditures in the period when the assets are acquired. In the
Statement of Activities, cost of capital assets are allocated over
their estimated useful life.
Capital asset expenditures
Change in net position of governmental activities
21 of 41
105,248
820,000
925,248
The accompanying notes are an integral part of these financial statements.
9-
April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 1 — Summary of Significant Accounting Policies
The basic financial statements of the Poway Housing Authority (Authority), a component unit of
the City of Poway, California (City), have been prepared in conformity with accounting principles
generally accepted in the United States of America (U.S. GAAP) as applied to governmental
agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard
setting body for establishing governmental accounting and financial reporting principles. The
more significant accounting policies of the Authority are described below.
A. Description of Reporting Entity
On March 1, 2011, the City Council of the City of Poway declared a need for a housing authority
in the City of Poway and adopted a resolution forming the Poway Housing Authority. The
creation of the Housing Authority provides the City legal authority to continue monitoring
ongoing rent and income compliance at affordable housing developments.
The former Poway Redevelopment Agency (Agency) and the Authority prepared a Cooperation
Agreement to provide for implementation of certain low and moderate income housing projects
and to make payments by the Agency to the Authority for the costs to the Authority for
performing its obligations. The Agency was dissolved due to the passage of Assembly Bill X1 26
which became effective on October 1, 2011. In accordance with Health and Safety code
34175(b), on February 1, 2012, all housing assets, liabilities and fund balance of the Agency
were transferred to the Authority as the Successor Agency to the Poway Redevelopment
Agency.
The Authority meets the criteria set forth in U.S. GAAP for inclusion as a blended component
unit within the City reporting entity based on the City's oversight responsibility in selection of the
governing board. In addition, all of the Authority's activities are conducted within the geographic
boundaries of the City. Blended component units, although legally separate entities, are, in
substance, part of the City's operations; therefore, data from these units are combined with data
of the primary government in the financial statement presentation of the City. Only the funds of
the Authority are included herein; therefore, these financial statements do not purport to
represent the financial position or results of operations of the City.
B. Basis of Accounting/Measurement Focus
The accounts of the Authority are organized on the basis of funds, each of which is considered
a separate accounting entity. The operations of each fund are accounted for with a separate set
of self -balancing accounts that comprise its assets, deferred outflows of resources, liabilities,
deferred inflows of resources, fund equity, revenues, and expenditures or expenses, as
appropriate. Governmental resources are allocated to and accounted for in individual funds
based upon the purposes for which they are to be spent and the means by which spending
activities are controlled.
10-
22 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
B. Basis of Accounting/MeasurementFocus (Continued)
Government -Wide Financial Statements
The Authority's Government -Wide Financial Statements include a Statement of Net Position and
a Statement of Activities. These statements present summaries of governmental activities for
the Authority.
These basic financial statements are presented on an "economic resources" measurement
focus and the accrual basis of accounting. Accordingly, all of the Authority's assets and
liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are
included in the accompanying Statement of Net Position. The Statement of Activities presents
changes in net position. Under the accrual basis of accounting, revenues are recognized in the
period in which they are earned while expenses are recognized in the period in which the
liability is incurred.
Certain types of transactions are reported as program revenues for the Authority in three
categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for the governmental fund. An accompanying
schedule is presented to reconcile and explain the differences in fund balance as presented in
these statements to the net position presented in the Government -Wide Financial Statements.
All governmental funds are accounted for on a spending or "current financial resources"
measurement focus and the modified accrual basis of accounting. Accordingly, only current
assets and current liabilities are included on the Balance Sheet. The Statement of Revenues,
Expenditures and Changes in Fund Balance presents increases (revenues and other financing
sources) and decreases (expenditures and other financing uses) in net current assets. Under
modified accrual basis of accounting, revenues are recognized in the accounting period in which
they become both measurable and available to finance expenditures of the current period.
Revenues are recorded when received in cash, except that revenues subject to accrual
generally 60 days after year-end) are recognized when due. The primary revenue sources,
which have been treated as susceptible to accrual by the Authority, are property tax, and
intergovernmental revenues. Expenditures are recorded in the accounting period in which the
related fund liability is incurred.
23 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
B. Basis of Accounting/Measurement Focus (Continued)
Unearned revenues arise when the government receives resources before it has a legal claim to
them, as when grant monies are received prior to incurring qualifying expenditures. In
subsequent periods when both revenue recognition criteria are met or when the government
has a legal claim to the resources, the unearned revenue is removed from the balance sheet
and revenue is recognized.
The Reconciliation of the Fund Financial Statements to the Government -Wide Financial
Statements is provided to explain the differences created by the integrated approach of
generally accepted accounting principles.
Fund Accounting
The Authority uses funds to maintain its financial records during the year. A fund is defined as a
fiscal and accounting entity with a self -balancing set of accounts. The Authority only has one
governmental fund.
Governmental Fund
Housing Authority Fund - The Housing Authority Fund is the Authority's operating fund. It
accounts for all financial resources of the general government.
C. Cash and Investments
The Authority's cash and investment balances are included in the City's investment pool. The
City pools cash resources from all City funds in order to facilitate the management of cash and
achieve the goal of obtaining the highest yield with the greatest safety and least risk. The
balance in the pooled cash account is available to meet current operating requirements. Cash in
excess of current requirements is invested in various interest-bearing accounts and other
investments for varying terms. Investments are stated at fair value. Market value is used as fair
value for those securities for which market quotations are readily available.
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24 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
C. Cash and Investments (Continued)
The City participates in an investment pool managed by the State of California titled Local
Agency Investment Fund ("LAIF") which has invested a portion of the pool funds in structured
notes and asset-backed securities. LAIF determines fair value on its investment portfolio based
on market quotations for those securities where market quotations are readily available and
based on amortized cost or best estimate for those securities where market value is not readily
available. LAIF investments are subject to credit risk with the full faith and credit of the State of
California collateralizing these investments. In addition, these investments are subject to market
risk and changes in interest rates.
Cash equivalents are considered amounts in demand deposits and short-term investments with
a maturity date within three months of the date acquired by the Authority and are presented as
Cash and investments" in the accompanying basic financial statements.
D. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads,
streets, sidewalks, medians and storm drains) are reported in the Government -Wide Financial
Statements. Authority policy has set the capitalization threshold for reporting capital assets at
5,000. Capital assets are valued at historical cost or estimated historical cost if actual historical
cost was not available. Donated assets are valued at their estimated acquisition value on the
date donated.
Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as
follows:
Buildings 10-50 years
Building improvements 10-100 years
Furniture and equipment 5-20 years
Infrastructure 20-50 years
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25 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
E. Deferred Outflows/Inflows of Resources
In addition to assets, the balance sheet will sometimes report a separate section for deferred
outflows of resources. This separate financial statement element, deferred outflows of
resources, represents a consumption of fund balance that applies to future periods and so will
not be recognized as an outflow of resources (expenditure) until then. The Authority currently
has no items that qualify for reporting in this category.
In addition to liabilities, the balance sheet will sometimes report a separate section for deferred
inflows of resources. This separate financial element, deferred inflows of resources, represents
an acquisition of fund balance that applies to future periods and so will not be recognized as an
inflow of resources (revenue) until that time. The Authority currently has no items that qualify for
reporting in this category.
F. Net Position
Net position is comprised of the various net earnings from operating income, non-operating
revenues and expenses. Net position is classified in the following categories:
Net Investment in Capital Assets — This component of net position consists of capital
assets, net of accumulated depreciation, reduced by the outstanding balances of debt
that are attributable to the acquisition, construction, or improvement of those assets.
Restricted — This component of net position consists of restricted assets and deferred
outflows of resources reduced by liabilities and deferred inflows of resources related to
those assets.
Unrestricted — This component of net position is the amount of the assets, deferred
outflows of resources, liabilities, and deferred inflows of resources that are not included
in the determination of net investment in capital assets or the restricted component of
net position.
When an expense is incurred for purposes for which both restricted and unrestricted net position
are available, the Authority's policy is to apply restricted net position first.
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26 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 1 — Summary of Significant Accounting Policies (Continued)
G. Fund Balances
In the governmental fund financial statements, fund balances are classified in the following
categories:
Nonspendable — Nonspendable fund balances are items that cannot be spent because they are
not in spendable form, such as prepaid items and inventories, items that are legally or
contractually required to be maintained intact, such as principal of an endowment or revolving
loan funds.
Restricted — Restricted fund balances encompass the portion of net fund resources subject to
externally enforceable legal restrictions. This includes externally imposed restrictions by
creditors, such as through debt covenants, grantors, contributions, laws or regulations of other
governments, as well as restrictions imposed by law through constitutional provisions or
enabling legislation.
Committed — Committed fund balances encompass the portion of net fund resources, the use of
which is constrained by limitations that the government imposes upon itself at its highest level of
decision making, normally the governing body through council resolutions, etc., and that remain
binding unless removed in the same manner. The Board of Commissioners is considered the
highest authority for the Authority.
Assigned — Assigned fund balances encompass the portion of net fund resources reflecting the
government's intended use of resources. Assignment of resources can be done by the highest
level of decision making or by a committee or official designated for that purpose. The Board of
Commissioners has authorized the Executive Director for that purpose.
Unassigned — This category is for any remaining balances that are not classified as
nonspendable, restricted, committed or assigned.
When expenditures are incurred for purposes for which both restricted and unrestricted fund
balances are available, the Authority's policy is to apply restricted fund balances first, then
unrestricted fund balances as they are needed.
When expenditures are incurred for purposes where only unrestricted fund balances are
available, the Authority uses the unrestricted resources in the following order: committed,
assigned, and unassigned.
H. Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
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27 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30. 2018
Note 2 — Cash and Investments
The Authority's cash and investment balances are maintained as part of the City investment
pool, which includes cash balances and authorized investments of all City funds. This pooled
cash is invested by the City Treasurer to enhance earnings. The pooled interest earned is
allocated to the funds based on average month-end cash balances of the various funds.
Cash and investments consisted of the following at June 30, 2018:
Demand deposits $ 17,199
Investments 2,111,772
Total cash and investments $ 2,128,971
A. Cash Deposits
The carrying amounts of the Authority's demand deposits were $17,199 at June 30, 2018. Bank
balances at June 30, 2018, were $45,709 which were fully insured or collateralized with
securities held by the pledging financial institutions in the City's name as discussed below.
The California Government Code requires California banks and savings and loan associations
to secure the Authority's cash deposits by pledging securities as collateral. This Code states
that collateral pledged in this manner shall have the effect of perfecting a security interest in
such collateral superior to those of a general creditor. Thus, collateral for cash deposits is
considered to be held in the Authority's name.
The market value of pledged securities must equal at least 110% of the Authority's cash
deposits. California law also allows institutions to secure Authority deposits by pledging first
trust deed mortgage notes having a value of 150% of the Authority's total cash deposits. The
Authority may waive collateral requirements for cash deposits, which are fully insured by the
Federal Deposit Insurance Corporation. The Authority, however, has not waived the
collateralization requirements.
The City follows the practice of pooling cash and investments of all funds, except for funds
required to be held by fiscal agents under the provisions of bond indentures. Interest income
earned on pooled cash and investments is allocated on an accounting period basis to the
various funds based on the period -end cash and investment balances. Interest income from
cash and investments with fiscal agents is credited directly to the related fund.
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28 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 2 — Cash and Investments (Continued)
B. Investments
The table below identifies the investment types that are authorized for the Authority by the
California Government Code (or the City's investment policy, whichever is more restrictive). The
table also identifies certain provisions of the California Government Code (or the City's
investment policy, whichever is more restrictive) that address interest rate risk, credit risk, and
concentration of credit risk. This table does not address investments of debt proceeds held by
bond trustee that are governed by the provisions of debt agreements of the Authority, rather
than the general provisions of the California Government Code or the City's investment policy.
Investment Type
U.S. Treasury Obligations
U.S. Agency Securities
Bankers' Acceptances
Medium -Term and Corporate Notes
Money Market Mutual Funds
Mortgage Backed Securities
Asset Backed Securities
Commercial Paper
Municipal Bonds
Negotiable Certificates of Deposit
Local AgencylmestmentFund (LAJF)
CountyofSan Diego Imestment Pool
CalTrust Joint Powers Authority
Obligation of any state
C. Risk Disclosures
Interest Rate Risk
5 years
180 days
5 years
N/A
5 years
5 years
270 days
5 years
5 years
N/A
N/A
N/A
5 years
75%
40%
30%
20%
20%
20%
25%
30%
30%
None
None
None
None
Mabmum
Investment in
Onelssuer
None
25%
5%
5%
10%
None
None
3%
5%
5%
None
None
None
None
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair
value of an investment. Generally, the longer the maturity of an investment, the greater the
sensitivity of its fair value to changes in the market interest rates. One of the ways that the
Authority manages its exposure to interest rate risk is by purchasing a combination of shorter
term and longer term investments and by timing cash flows from maturities so that a portion of
the portfolio is maturing or coming close to maturity evenly over time as necessary to provide
the cash flow and liquidity needed for operations.
17-
29 of 41
Mabmum
Mabmum Percentage of
Maturity Portfolio
5 years None
5 years
180 days
5 years
N/A
5 years
5 years
270 days
5 years
5 years
N/A
N/A
N/A
5 years
75%
40%
30%
20%
20%
20%
25%
30%
30%
None
None
None
None
Mabmum
Investment in
Onelssuer
None
25%
5%
5%
10%
None
None
3%
5%
5%
None
None
None
None
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair
value of an investment. Generally, the longer the maturity of an investment, the greater the
sensitivity of its fair value to changes in the market interest rates. One of the ways that the
Authority manages its exposure to interest rate risk is by purchasing a combination of shorter
term and longer term investments and by timing cash flows from maturities so that a portion of
the portfolio is maturing or coming close to maturity evenly over time as necessary to provide
the cash flow and liquidity needed for operations.
17-
29 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 2 — Cash and Investments (Continued)
C. Risk Disclosures (Continued)
Interest Rate Risk (Continued)
Information about the sensitivity of the fair values of the Authority's investments (including
investments held by bond trustee) to market interest rate fluctuations is provided by the
following table that shows the distribution of the Authority's investments by maturity:
Investment Type
U.S. Treasury Bills
U.S. Agencies
Municipalities
CalTrust Investment Pool - Short term
CalTrust Investment Pool - Medium term
Medium -Term and Corporate Notes
Local Agency Investment Fund (LAIF)
Total 2,111,772 $ 1,295,830 $ 257,038 $ 558,904
None of the Authority's investments are highly sensitive to interest rate fluctuations.
Concentration of Credit Risk
The Authority's Policy states that not more than 25% of the portfolio shall be invested in any one
entity or any one instrument to protect the Authority from concentration of credit risk, with the
following exceptions: U.S. Treasury Obligations and investments pools (State of California —
Local Agency Investment Fund). In addition, purchases of commercial paper must not exceed
25% of the value of the portfolio at any time, and single issuer holdings must not exceed 5% per
issuer. The Authority is in compliance with these provisions of the Policy.
The following is a chart of the Authority's investment portfolio:
Trustee/Custodian Imestment Type
Remaining Maturities
Union Bank U.S. Treasuries
12 Months 13 to 24 25 to 60
Amounts or Less Months Months
297,709 157,121 87,715 $ 52,873
711,130 295,729 77,493 337, 908
43,350 21,628 21,722
190,023 190,023
190,220 190,220
307, 915 69,684 70,108 168,123
371,425 371,425
2,111,772 $ 1,295,830 $ 257,038 $ 558,904
None of the Authority's investments are highly sensitive to interest rate fluctuations.
Concentration of Credit Risk
The Authority's Policy states that not more than 25% of the portfolio shall be invested in any one
entity or any one instrument to protect the Authority from concentration of credit risk, with the
following exceptions: U.S. Treasury Obligations and investments pools (State of California —
Local Agency Investment Fund). In addition, purchases of commercial paper must not exceed
25% of the value of the portfolio at any time, and single issuer holdings must not exceed 5% per
issuer. The Authority is in compliance with these provisions of the Policy.
The following is a chart of the Authority's investment portfolio:
Trustee/Custodian Imestment Type Amount
Union Bank U.S. Treasuries 297,709
Union Bank U.S. Agencies 711,130
Union Bank Municipalities 43,350
Union Bank Medium -Term and Corporate Notes 307,915
Wells Fargo CalTrust Investment Pool 380, 243
State Treasurer Office Local Agency Investment Fund (LAIF) 371,425
FM
30 of 41
2,111,772
April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 2 — Cash and Investments (Continued)
C. Risk Disclosures (Continued)
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. The following presentation is the minimum rating
required by (where applicable) the California Government Code, the Authority's investment
policy, or debt agreements, and the actual rating as of year-end for each investment type:
Investment Type Amounts Rating Not Rated
U.S. Tmasury Bills 297, 709 Aaa
U.S.Agancies 711,130 Ass
Municipalities 43,350 Aaa
CalTmst Investment
Pod - Shoal term 190, 023 Aaf 190,023
CelTrust Investment
Pod -Metlium tens 190, 220 WA 190,220
Metlium-Tenn anal
Corporate Notes 307, 915 At
t.ocal AgencyImestmeM FUM
LAIF) 371,425 WA 371,425
AAA+ AA+ AA AA- A+ A A-
297,708 $ - $ - $ - $ - $ - 711,130 - - - - -
21,398 14,239 28,479 58,154 113,923 28,593 43,130
Total $ 2,111,772 $ 751,888 $ 21,3% $1,023, 077 $ 28,479 $ 101,504 $ 113,923 $ 28,593 $ 43,130
D. Investment in Local Agency Investment Funds
The Authority's investments with Local Agency Investment Funds (LAIF) at June 30, 2018,
included a portion of the pooled funds invested in Medium -Term and Short -Term Structured
Notes and Asset -Backed Securities. These investments included the following:
Structured Notes are debt securities (other than asset-backed securities) whose cash
flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon
one or more indices and/or that have embedded forwards or options.
Asset -Backed Securities the bulk of which are mortgage-backed securities, entitle their
purchasers to receive a share of the cash flows from a pool of assets such as principal
and interest repayments from a pool of mortgages (such as Collateralized Mortgage
Obligations) or credit card receivables.
As of June 30, 2018, the Authority had $371,425 invested in LAIF, which had invested 2.67% of
the pooled investment funds in short-term and medium-term Structured Notes and Asset -
Backed Securities.
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31 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 2 — Cash and Investments (Continued)
E. Investment in CaITRUST
The Authority is a voluntary participant in the Investment Trust of California (CaITRUST), a Joint
Powers Authority. CalTRUST is a program established by public agencies in California for the
purpose of pooling and investing local agency funds. CalTRUST invests in fixed income
securities eligible for investment pursuant to California Government Code Sections 53601, et.
seq. and 53635, at. seq. Investments in CalTRUST are highly liquid, as deposits can be
converted to cash within 24 hours without loss of interest. The balance available for withdrawal
is based on the accounting records maintained by CaITRUST, which are recorded on a fair
market value basis. Separate CaITRUST financial statements are available from CalTRUST'S
offices at 400 Capital Mall, Suite 702, Sacramento, CA 95814.
As of June 30, 2018, the Authority had $380,243 invested in CaITRUST.
The Authority's investment in this pool is reported in the accompanying financial statements at
fair market value.
F. Fair Value Measurements
Generally accepted accounting principles establishes a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad
levels: Level 1 inputs consist of quoted prices (unadjusted) for identical assets and liabilities in
active markets that a government can access at the measurement date, Level 2 inputs consist
of inputs that are observable for an asset or liability, either directly or indirectly, and Level 3
inputs have the lowest priority and consist of unobservable inputs for an asset or liability.
The following table presents the balances of the assets measured at fair value on a recurring
basis as of June 30, 2018.
Investments by
Fair Value Level
June 30, 2018
Assets
U.S. Treasury Bills
U.S. Agencies
Municipalities
CarTrust Investment Pool - Short term
Carrrust Investment Pool - Medium term
Madium-Term and Corporate Notes
Local Agency Investment Fund (LAIF)
32 of 41
Fair Value Measurement Using
Not Subject
Level 1 Level 2 Level 3 to GASB 72 Total
297,709 $ - $ - $ - $ 297,709
711, 130 - - - 711,130
43,350 - - - 43,350
190,023 190,023
190,220 190,220
307,915 - - - 307,915
371,425 371,425
1,360,104 $ $ $ 751,668 $2,111,772
20-
April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30, 2018
Note 3 — Capital Assets
The summary of changes in capital assets for the year ended June 30, 2018 is as follows:
Note 4 — Related Party Transactions
In an effort to ensure that the objectives of Poway's Redevelopment Plan and the Poway
Redevelopment Agency's (Agency) 5 -Year Implementation Plan are fulfilled, on March 11,
2011, the Agency transferred all housing -related assets to the Authority through a Cooperation
Agreement between the Agency and the Authority. Under the terms of this agreement, the
Authority agreed to respectively carry out the projects and activities of the Agency in
accordance with the objectives and purposes included in the Redevelopment and
Implementation Plans. Projects included in the Cooperation Agreement between the Agency
and the Authority further the goals of the Redevelopment Plan. It was initially anticipated that
these projects would be funded based on available tax increment to be received through 2037,
but because of the dissolution of the Agency under AB X1 26, tax increment revenue has been
eliminated, and therefore, no funding for these projects from that source is available. Future
project funding will come from the management of the Authority's assets and may include
interest revenue, lease revenue, residual receipt revenue and the sale of assets.
Note 5 — Rehabilitation Loan Program
Housing Rehabilitation Loan Program
Non -forgivable loans are due upon the sale, transfer or foreclosure of the property. Due to the
contingent repayment schedule of these loans, an expenditure is recorded when the loan is
made and no receivable is included in the accompanying basic financial statements. The
balance of the non -forgivable rehabilitation loans at June 30, 2018 is $7,870.
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33 of 41
Balance Balance
June 30, 2017 Additions Deletions June 30, 2018
Capital assets, not being
depreciated:
Land 17,762,674 820,000 $ - 18,582,674
Total capital assets, not being
depreciated 17,762,674 820, 000 - 18,582,674
Governmental activities - capital
assets 17,762,674 820,000 $ - 18,582,674
Note 4 — Related Party Transactions
In an effort to ensure that the objectives of Poway's Redevelopment Plan and the Poway
Redevelopment Agency's (Agency) 5 -Year Implementation Plan are fulfilled, on March 11,
2011, the Agency transferred all housing -related assets to the Authority through a Cooperation
Agreement between the Agency and the Authority. Under the terms of this agreement, the
Authority agreed to respectively carry out the projects and activities of the Agency in
accordance with the objectives and purposes included in the Redevelopment and
Implementation Plans. Projects included in the Cooperation Agreement between the Agency
and the Authority further the goals of the Redevelopment Plan. It was initially anticipated that
these projects would be funded based on available tax increment to be received through 2037,
but because of the dissolution of the Agency under AB X1 26, tax increment revenue has been
eliminated, and therefore, no funding for these projects from that source is available. Future
project funding will come from the management of the Authority's assets and may include
interest revenue, lease revenue, residual receipt revenue and the sale of assets.
Note 5 — Rehabilitation Loan Program
Housing Rehabilitation Loan Program
Non -forgivable loans are due upon the sale, transfer or foreclosure of the property. Due to the
contingent repayment schedule of these loans, an expenditure is recorded when the loan is
made and no receivable is included in the accompanying basic financial statements. The
balance of the non -forgivable rehabilitation loans at June 30, 2018 is $7,870.
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33 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Notes to the Basic Financial Statements
June 30. 2018
Note 5 — Rehabilitation Loan Program (Continued)
Affordable Housing Loans
These loans are made to aid in the purchase of affordable housing in the City of Poway. They
are for a 45 year term with no interest and if there is a sale, transfer, or foreclosure before the
end of the term, the loan must be assumed by an income -qualified buyer and the 45 year term
starts over. Due to the contingent nature of the repayment schedule of these loans, an
expenditure is recorded when the loan is made and no receivable is included in the
accompanying basic financial statements. The balance of these Affordable Housing loans at
June 30, 2018 is $2,690,132.
Development Loans
The City, through the Housing Authority, has development loans primarily for affordable rental
housing projects and for one group home for the developmentally disabled. The affordable
rental housing loans have 55 year terms with three percent simple interest. Loan payments are
made from residual receipts and generally do not cover the annual accrued interest. Therefore,
due to the contingent nature of the repayment schedule of these loans, an expenditure is
recorded when the loan is made and no receivable is included in the accompanying basic
financial statements. The balance of the development loans, including accrued interest, at June
30, 2018 is $34,847,960.
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34 of 41 April 16, 2019, Item #1.5
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35 of 41 April 16, 2019, Item #1.5
Required Supplementary Information
Unaudited)
36 of 41 April 16, 2019, Item #1.5
Poway Housing Authority
Budgetary Comparison Schedule
For the Year Ended June 30, 2018
REVENUES
Charges for services
Investment income
Other revenues
Total revenues
EXPENDITURES
Current:
General government
Development services
Capital outlay
Total expenditures
OTHER FINANCING SOURCES
Transfers in
Total other financing sources
Net change in fund balance
Fund balance, beginning
Fund balance, ending
37 of 41
Original Variance with
Budget Final Budget Actual Final Budget
49,120 49,120 59,839 $ 10,719
22,000 22,000 40,295 18,295
40,000 40,000 59,667 19,667
111,120 111,120 159,801 48,681
10,400 10,400 7,987 2,413
10,000 32,450 34,861 2,411)
554,319 1,645,819 831,705 814,114
574,719 1,688,669 874,553 814,116
820,000 820,000
620,000 820, 000 -
463,599) $ (757,549) 105,248 $ 862,797
2,666,200
2,771,448
See accompanying note to budgetary comparison schedule.
23-
April 16, 2019, Item #1.5
Poway Housing Authority
Note to Budgetary Comparison Schedule
For the Year Ended June 30, 2018
Note 1 — Budgetary Information
The Authority adopts an annual budget prepared on the modified accrual basis for its major
fund. The Executive Director is required to prepare and submit to the Authority's Board of
Directors the annual budget of the Authority and administer it after adoption. Any revisions that
alter the total appropriations of any fund must be approved by the Board of Directors.
Prior year appropriations lapse unless they are encumbered at year-end or re -appropriated
through the formal budget process. For the major fund, total expenditures may not legally
exceed total appropriations.
Budget information is presented for the major fund on a basis consistent with generally
accepted accounting principles. Budgeted revenue and expenditure amounts represent the
original budget modified for adjustments during the year.
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735 E. Carnegie Dr. Suite 100
San Bernardino. CA 92408
909 889 0871 T
909 889 5361 F
ramscpa.net
PARTNERS
Brenda L. Odle, CPA, MST
Terry P. Shea, CPA
Kirl, A. Franks, CPA
Scott W. Marino, CPA. CGMA
Leena Shanbhag, CPA. MST, CGMA
Bradferd A. Welebir, CPA, MBA, CGMA
Jay H. Zercher, CPA (Partner Emeritus)
Phillip H. Waller. CPA (Parmer Emeritus)
MANAGERS/STAFF
Jenny Liu, CPA, MST
Seong-Hyea Lee. CPA, MBA
Charles De Simoni. CPA
Gardenya Duran, CPA
Brianna Schultz, CPA
Samuel Singery, CPA
Jing Wu, CPA
Evelyn Morentin-Barcena, CPA
Jin Gu, CPA, MT
Veronica Hernandez, CPA
ROGERS, ANDERSON, MALODY & SCOTT, LLP
CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance With
Government Auditing Standards
Independent Auditor's Report
To the Chairman and Commissioners
of the Poway Housing Authority
Poway, California
We have audited, in accordance with the auditing standards generally
accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards issued by
the Comptroller General of the United States, the financial statements of
the governmental activities and the major fund of the Housing Authority of
the City of Poway (Authority), a component unit of the City of Poway
City), as of and for the year ended June 30, 2018, and the related notes
to the financial statements, which collectively comprise the Authority's
basic financial statements and have issued our report thereon dated
January 28, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we
considered the Authority's internal control over financial reporting (internal
control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the
effectiveness of the Authority's internal control. Accordingly, we do not
express an opinion on the effectiveness of the Authority's internal control.
A deficiency in internal control exists when the design or operation of a
MEMBERS
American Institute of g employees, control does not allow management or in the normal course
Certified Public Accountants of performing their assigned functions, to prevent, or detect and correct,
PCPS The AICPA Allionce misstatements on a timely basis. A material weakness is a deficiency, or
far CPA Firms a combination of deficiencies, in internal control, such that there is a
Governmental Audit reasonable possibility that a material misstatement of the entity's financial
Qaorty Cente, statements will not be prevented, or detected and corrected on a timely
basis. A significant deficiency is a deficiency, or a combination ofEmployeeinrertPer
deficiencies, in internal control that is less severe than a materialAudi( Quality Center
weakness, yet important enough to merit attention by those charged with
California Society of governance.
Ceruhed Noblic Accountants
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STABILITY. ACCURACY. TRUST.
40 of 41 April 16, 2019, Item #1.5
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority's financial statements
are free from material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our
audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entity's internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the Authority's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
440geAs, e t.cocs, 1'la LoePy A c -&, LLP.
San Bernardino, California
Q
January 28, 2019
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