Item 11 - Poway Housing Successor Annual Report Fiscal Year 2021-22DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
AGENDA REPORT CityofPoway
June 6, 2023
Honorable Chairman and Members of the Housing Authority
Robert Manis, Director of Development Services~
Marie Sanders, Senior Management Analyst J fJJ
(858) 668-4637 or msanders@poway.org '1(t'
Poway Housing Successor Annual Report Fiscal Year 2021-22
CITY COUNCIL
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 2021-22 (Attachment A), and the Poway Housing
Authority Basic Financial Statements and Independent Auditors Report for the year ending June 30,
2022 (Attachment B), are included with this agenda report for review by the Poway Housing Authority
Board. The Poway City Council also sits as the Poway Housing Authority Board.
Recommended Action:
It is recommended 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 (LMIHAF) 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.
The Poway Housing Successor Annual Report for Fiscal Year 2021-22 indicates a balance in the LMIHAF
of $5,152,809. LMIHAF monies can be spent to acquire, rehabilitate, acquire long term affordability
covenants for, or preserve lower income housing (affordable to households earning 80 percent of
median income or less). Additionally, funds may be used for program administration and monitoring
as well as for homelessness prevention and rapid rehousing services. The source of funding for the
LMIHAF is derived from the previous balance of Redevelopment financing, program income from
operations, repayments of loans, and land sales.
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POWAY HOUSING AUTHORITY
{A Component Unit of the
City of Poway)
Financial Statements
YearEndedJune30,2022
ATTACHMENT B
June 6, 2023, Item #11
POWAY HOUSING AUTHORITY
Table of Contents
Year Ended June 30, 2022
Independent Auditor's Report .... . . ...... .... ....... ........ ... ................... ........... ........ ... . . . ... . .. ............ ...... ... 1
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position ....................................................................................................... 4
Statement of Activities ............................................................................................................ 5
Fund Financial Statements
Balance Sheet .......................................................................................................................... 6
Reconciliation of the Balance Sheet of the Governmental Fund to the
Statement of Net Position ............................................................................................ 7
Statement of Revenues, Expenditures and Changes in Fund Balance .................................... 8
Reconciliation ofthe Statement of Revenues, Expenditures and Changes
in Fund Balance of the Governmental Fund to the Statement of Activities ................ 9
Notes to the Basic Financial Statements......................................................................................... 10
Required Supplementary Information {Unaudited)
Budgetary Comparison Schedule ............................................................................................ 18
Note to Required Supplementary Information ....................................................................... 19
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 ................................................................ 21
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Davis Farr LLP
18201 Von Karrncm Avenue I Suite 1100 I Irvine, CA 92612
Main: 949.474.2020 I Fax: 949.263.5520
INDEPENDENT AUDITOR'S REPORT
Poway Housing Authority
City of Poway
Poway, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the governmental activities and the major fund
of the Poway Housing Authority (the Authority), a component unit of the City of Poway,
California, as of and for the year June 30, 2022, and the related notes to the financial
statements, which collectively comprise the Authority's basic financial statements as listed in
the table of contents.
In our opinion, the accompanying financial statements 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, 2022, and the respective changes in financial position the year then
ended in accordance with accounting principles generally accepted in the United States of
America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America (GAAS) and the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the United States.
Our responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the Authority and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audit. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Emphasis of a Matter
As described more fully in Note 1, the basic financial statements present only the Authority
and are not intended to present fairly the financial position and results of operations of the
City of Poway, California in conformity with accounting principles generally accepted in the
United States of America. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
The Authority's management is responsible for the preparation and fair presentation of the
financial statements in accordance with accounting principles generally accepted in the
United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the
Authority's ability to continue as a going concern for one year after the date that the financial
statements are issued.
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Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is a high level of assurance
but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS will always detect a material misstatement when it exists. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional om1ss1ons,
misrepresentations, or the override of internal control. Misstatements are considered
material if there is a substantial likelihood that, individually or in the aggregate, they would
influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the
audit.
• Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, and design and perform audit procedures responsive to
those risks. Such procedures include examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit 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 Authority's internal control.
Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by , management, as well as evaluate the
overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the Authority's ability to continue as a
going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit, significant audit findings, and
certain internal control-related matters that we identified during the audit.
Required Supplementary 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 is the responsibility of management and, 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.
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Management has omitted management's discussion and analysis that accounting principles
generally accepted in the United States of America require 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 the financial reporting for placing the basic financial
statements in an appropriate operational, economic or historical context. Our opinion the
basic financial statements is not affected by this missing information.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
January 17, 2023 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, and grant agreements and other matters. The purpose of that report is solely 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 effectiveness of 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.
Irvine, California
January 17, 2023
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15 of 36 4 June 6, 2023, Item #11
BASIC FINANCIAL STATEMENTS
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ASSETS
Poway Housing Authority
Statement of Net Position
June 30, 2022
Cash and investments (Note 2)
Accounts receivable
Due from other governments
Capital assets, nondepreciable (Note 3)
Total assets
LIABILITIES
Accounts payable
Unearned revenue
Total liabilities
NET POSITION
Investment in capital assets
Restricted for:
Housing
Total net position
$
$
See accompanying notes to the basic financial statements
6
5,201,162
10,290
427,743
13,917,824
19,557,019
4,057
14,736
18,793
13,917,824
5,620,402
19,538,226
June 6, 2023, Item #11
Functions/Programs
Governmental activities:
General government $
Development services
Community services
Total governmental activities $
Poway Housing Authority
Statement of Activities
Year Ended June 30, 2022
Program Revenues
Expenses
9,925
73,974
83,899
Operating
Charges Contributions
for and
Services Grants
19,969
1,634,152
19,969 1,634,152
General Revenues
Investment income
Other
Capital
Contributions
and
Grants
Total general revenues and transfers
Change in net position
Net position, beginning
Net position, ending
See accompanying notes to the basic financial statements
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Net (Expense)
Revenue
and
Changes in
Net Position
10,044
(73,974)
1,634,152
1,570,222
35,380
53,338
88,718
1,658,940
17,879,286
$ 19,538,226
June 6, 2023, Item #11
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ASSETS
Cash and investments
Accounts receivable
Poway Housing Authority
Balance Sheet
Governmental Fund
June 30, 2022
Due from other governments
Total assets
LIABILITIES AND FUND BALANCE
Liabilities:
Accounts payable
Unearned revenue
Total liabilities
FUND BALANCE
Restricted
Total fund balances
Total liabilities and fund balance
$
$
$
$
See accompanying notes to the basic financial statements
8
5,201,162
10,290
427,743
5,639,195
4,057
14,736
18,793
5,620,402
5,620,402
5,639,195
June 6, 2023, Item #11
Poway Housing Authority
Reconciliation of the Balance Sheet of the
Governmental Fund to the Statement of Net Position
June 30, 2022
Total Governmental Fund Balance
Amounts reported for governmental activities in the Statement of Net
Position were different because:
Capital assets used in governmental activities were not current financial
resources and, therefore, were not reported in the funds.
Net position of governmental activities
See accompanying notes to the basic financial statements
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$ 5,620,402
13,917,824
$ 19,538,226
June 6, 2023, Item #11
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Poway Housing Authority
Statement of Revenues, Expenditures and Changes in Fund Balance
Governmental Fund
Vear Ended June 30, 2022
REVENUES
Lease revenue $
Investment income
Loan repayment
Reimbursement agreement fees
Total revenues
EXPENDITURES
Current:
General government
Development services
Total expenditures
Net change in fund balance
Fund balance, beginning of year
Fund balance, end of year $
See accompanying notes to the basic financial statements
10
19,969
35,380
1,634,152
53,338
1,742,839
9,925
73,974
83,899
1,658,940
3,961,462
5,620,402
June 6, 2023, Item #11
Poway Housing Authority
Reconciliation of the Statement of Revenues,
Expenditures and Changes in Fund Balance of the Governmental Fund
to the Statement of Activities
Year Ended June 30, 2022
Net change in fund balance -total governmental fund
Change in net position of governmental activities
See accompanying notes to the basic financial statements
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$ 1,658,940
$ 1,658,940
June 6, 2023, Item #11
POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022
Note 1-Reporting Entity and Summary of Significant Accounting Policies
The accounting policies of the Poway Housing Authority (Authority) conform to accounting principles
generally accepted in the United States of America as applicable to governments. The Governmental
Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting
and financial reporting principles. The following is a summary of the Authority's significant accounting
policies:
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 Xl 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.
8. Basis of Accounting/Measurement Focus
The accounts ofthe 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.
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POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022
Note 1-Reporting Entity and Summary of Significant Accounting Policies (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.
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POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022
Note 1-Reporting Entity and Summary of Significant Accounting Policies (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 Authority.
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.
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.
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POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022
Note 1-Reporting Entity and Summary of Significant Accounting Policies (Continued)
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
Building improvements
Furniture 9nd equipment
Infrastructure
10-50 years
10-100 years
5-20 years
20-50 years
E. Deferred Outflows/In/lows 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 net assets 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
net assets 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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POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June_30, 2022
Note 1-Reporting Entity and 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.
Note 2 -Cash and Investments
Equity in Cash and Investment Pool of the City of Poway
The Authority does not have a separate bank account; however, the Authority's cash and investments
are maintained in an investment pool managed by the City. The Authority is a voluntary participant in
that pool. This pool is governed by and under the regulatory oversight of the Investment Policy
adopted by the City Council of the City. The Authority has not adopted an investment policy separate
from that of the City.
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POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2022°
Note 2 -Cash and Investments (Continued)
The fair value of the Authority's investment in this pool is reported in the accompanying financial
statements at amounts based upon the Authority's pro-rata share of the fair value calculated by the City
for the entire City portfolio. The balance available for withdrawal is based on the accounting records
maintained by the City, which are recorded on an original cost basis. At June 30, 2022, the Authority
had a cash balance of $5,201,162.
Note 3 -Capital Assets
The summary of changes in capital assets for the year ended June 30, 2022 is as follows:
Capital assets, not being
depreciated:
Land
Total capital assets, not being
depreciated
Governmental activities -capital
assets
Note 4 -Related Party Transactions
Balance
June 30, 2021
$ 13,917,824
13,917,824
$ 13,917,824
Additions Deletions
Balance
June 30, 2022
13,917,824
13,917,824
13,917,824
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 Xl 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
There are two types of housing rehabilitation loan. Forgivable rehabilitation loans are forgiven at a rate of
10% per year given all loan covenants are met. Non-forgivable loans are due upon the sale, transfer or
foreclosure of the property. Due to the contingent nature of the repayment schedule of these loans,
there is an allowance recorded at 100% of the outstanding balance. The balance of the non-forgivable
rehabilitation loans at June 30, 2022 is $7,870.
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POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
YearEndedJune3~2022
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, there is an allowance recorded at 100% of
the outstanding balance. The balance of these Affordable Housing loans at June 30, 2022 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 to 57-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, there is an allowance recorded at 100% of the outstanding
balance. The balance of the development loans, including accrued interest, at June 30, 2022 is
$40,710,578.
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REQUIRED SUPPLEMENTARY INFORMATION
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REVENUES
Lease revenue
Investment income
Loan repayment
Reimbursement agreement fees
Total revenues
EXPENDITURES
Current:
General government
Development services
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Net change in fund balance
Fund balance, beginning of year
Fund balance, end of year
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$
$
POWAY HOUSING AUTHORITY
Budgetary Comparison Schedule
Year Ended June 30, 2022
Budget Amounts
Original Final
32,002 32,002
68,486 68,486
40,000 40,000
140,488 140,488
99,900 108,235
49,300 591,944
149,200 700,179
(8,712) (559,691)
(8,712) (559,691)
See note to required supplementary information
21
Actual Variance with
Amounts Final Budget
19,969 (12,033)
35,380 (33,106)
1,634,152 1,634,152
53,338 13,338
1,742,839 1,602,351
9,925 98,310
73,974 517,970
83,899 616,280
1,658,940 2,218,631
1,658,940 2,218,631
3,961,462
$ 5,620,402
June 6, 2023, Item #11
POWAY HOUSING AUTHORITY
Note to Required Supplementary Information
Year Ended June 30, 2022
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 Commissioners 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 Commissioners.
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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Davis Farr LLP
18201 Von l<arman Avenue I Suite 1100 I Irvine, CA 92612
Moin: 949.474.2020 I Fax: 949.263.5520
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
Poway Housing Authority
City of Poway
Poway, California
INDEPENDENT AUDITOR'S REPORT
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, 2022, 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 17, 2023.
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) as a basis for designing
the audit procedures that are appropriate in the circumstances for the purpose of expressing
our opinion 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 control does not
allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, misstatements on a timely basis. A material
weakness is a deficiency, or a combination of deficiencies, in internal control, such that
there is a reasonable possibility that a material misstatement of the entity's financial
statements will not be prevented or detected and corrected on a timely basis. A significant
deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged
with governance.
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.
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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 financial statements. 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 Authority'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 entity's internal control and compliance. Accordingly, this communication is
not suitable for any other purpose.
Irvine, California
January 17, 2023
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