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Attachments 3 and 4CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES err CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Years Ended December 31, 2013 and 2012 ATTACHMENT 3 CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES TABLE OF CONTENTS Pages INDEPENDENT AUDITOR'S REPORT 1-2 FINANCIAL STATEMENTS: Consolidated Statements of Financial Position 3 -4 Consolidated Statements of Activities 5 Consolidated Statements of Functional Expenses 6-7 Consolidated Statements of Changes in Net Assets 8 Consolidated Statements of Cash Flows 9 -10 Notes to Consolidated Financial Statements 11 -34 SUPPLEMENTARY INFORMATION: Consolidating Schedule of Financial Position 35 -36 Consolidating Schedule of Activities 37 -38 Consolidating Schedule of Financial Position - Developer & Management Affiliates 39 -40 Consolidating Schedule of Activities - Developer & Management Affiliates 41 -42 Consolidating Schedule of Financial Position - Tax Credit Partnerships 43-44 Consolidating Schedule of Activities - Tax Credit Partnerships 45 Consolidating Schedule of Financial Position - HUD Entities 46-47 Consolidating Schedule of Activities - HUD Entities 48 ADDITIONAL SUPPLEMENTARY INFORMATION: Schedule of Expenditures of Federal Awards 49 Notes to Schedule of Expenditures of Federal Awards 50 Schedule of Findings and Questioned Costs 51 -52 Independent Auditor's 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 53 -54 Independent Auditor's Report on Compliance For Each Major Program and on Internal Control over Compliance Required by OMB Circular A -133 55 -57 Thomas Bondi BERGER LEWIS Lawrence S. Kuechler M Roberto M. Maragoni Frank A. Minuti, Jc A c C O O N T g N C Y C O R P O R A T I O N FOUNDERS Alexander W. Berger (1916 -2005) CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS Griffith R. Lewis (1930 -2012) INDEPENDENT AUDITOR'S REPORT To the Board of Directors Charities Housing Development Corporation of Santa Clara County and Affiliates (A California Nonprofit Public Benefit Corporation) San Jose, California Report on the Consolidated Financial Statements Daniel C. Moors Randy G. Peterson Todd W. Robinson David R. Sheets Robert W. Smiley We have audited the accompanying consolidated financial statements of Charities Housing Development Corporation of Santa Clara County (a California nonprofit public benefit corporation) and Affiliates (the "Organization "), which comprise the consolidated statements of financial position as of December 31, 2013 and 2012, and the related consolidated statements of activities, functional expenses, change in net assets and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 55 ALMADEN BLVD. SUITE 600 SAN JOSE, CA 95113 -1605 (408) 494 -1200 (P) (408) 279 -8186 (F) MEMBER OF AGN AN ASSOCIATION OF SEPARATE AND INDEPENDENT ACCOUNTING & CONSULTING FIRMS ��' 1 Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Charities Housing Development Corporation as of December 31, 2013 and 2012, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Supplementary Consolidating Schedules Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating schedules on pages 35 - 48 are presented for purposes of additional analysis and are not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole. Supplementary Information Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 5, 2014 on our consideration of Charities Housing Development Corporation of Santa Clara County and Affiliates' 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 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 Charities Housing Development Corporation of Santa Clara County and Affiliates internal control over financial reporting and compliance. BERGER LEWIS ACCOUNTANCY CORPORATION San Jose, California May 5, 2014 -2- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31, 2013 and 2012 ASSETS 228,930 106,500 Investment in Partnerships 2013 2012 CURRENT ASSETS: 4,450,000 - Cash - CH & Mngt. Affiliates $ 4,354,780 $ 1,035,422 Cash - Partnerships/HUD Entities 1,838,958 2,020,900 Accounts Receivables: 1,506 2,734 Tenant Receivable 57,825 38,798 Management Fee - Affiliates 124,613 105,827 Advances and Other Fees - Affiliates 2,079 114,007 Grants Receivable - 14,000 Partnership Contributions Receivable 233,218 4,819,685 Other Receivables 26,885 66,643 Prepaid Expenses and Deposits 114.239 285.220 Total Current Assets 6.751597 8.500.502 Property, Furnishings and Fixtures, NET 167.976.872 171.891.552 LONGTERM ASSETS: Due from Affiliates 228,930 106,500 Investment in Partnerships 1,141,510 1,451,479 Prepaid Land Lease 4,450,000 - Projects in Development 17,192,106 12,096,270 Notes Receivable - Affiliates 400,000 400,000 Accrued Interest Receivable 1,506 2,734 Intangible Assets, Net 1,032,978 1,437,710 Other Deposits 10.394 7.108 Total Long -Term Assets, Net 24.457,424 15.501,801 CASH - TENANT SECURITY DEPOSITS 762.972 759.908 FUNDED RESERVES: Cash Held for Replacement Reserves 4,555,765 3,688,522 Cash Held for Operating Reserves 2,216,701 1,691,760 Cash Held for CH General Operating Reserves 1,275,933 945,147 Cash Held for Other Reserves 350,751 518,006 Cash Held for Restricted Grants 1,595 1.595 Total Funded Reserves 8.400,745 6.845,030 TOTAL ASSETS $208,350,610 $203.498,793 The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. 3- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Continued) December 31. 2013 and 2012 LIABILITIES AND NET ASSETS The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -4- 2013 2012 CURRENT LIABILITIES: Accounts Payables: Affiliates $ 117,656 $ 145,066 Trade 410,184 339,235 Accrued Expenses 735,553 407,114 Rent Received in Advance 33,653 6,657 Notes and Mortgages Payable 7,395,595 846,297 Accrued Interest 372,691 338,404 Total Current Liabilities 9,065,332 2,082,773 LONG -TERM LIABILITIES, NET OF CURRENT PORTION: Notes and Mortgages Payable 132,201,164 133,114,959 Due to Affiliates - 5,625 Accrued Interest 9,669,732 7,728,715 Total Long -Term Liabilities, Net of Current Portion 141,870,896 140,849.299 TENANT SECURITY DEPOSITS 741513 738,528 Total Liabilities 151,679,741 143,670,600 OBLIGATION UNDER INTEREST RATE SWAP 613,167 839,617 NET ASSETS: Unrestricted Net Assets: Non - Controlling Interest 42,009,614 44,304,984 Controlling Interest 14,046,493 14,681,997 Total Unrestricted Net Assets 56,056,107 58,986,981 Temporarily Restricted Net Assets - Controlling Interest 1,595 1,595 Total Net Assets 56,057,702 58,988,576 TOTAL LIABILITIES AND NET ASSETS $208,350,610 $203,498,793 The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -4- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATED STATEMENTS OF ACTIVITIES Years Ended December 31, 2013 and 2012 UNRESTRICTED REVENUE AND SUPPORT: Rental Operations, Net Management Fees Grants and Contributions Contributions in -Kind Consulting and Services Interest Income Miscellaneous Income Loss on Partnership Interest Loss on Sale of Asset Total Unrestricted Revenue and Support EXPENSES: Program Services: Rental Operations Property Management Total Program Services Support Services: Management and General Fundraising Total Support Services Total Expenses UNRESTRICTED REVENUE AND SUPPORT LESS EXPENSES OTHER COMPREHENSIVE GAIN (LOSS): 2013 2012 $ 9,988,709 195,997 760 825,567 15,510 6,737 (309,968) (22,8911 10,700,421 $ 9,568,131 161,595 18,352 75,558 353,534 32,826 95,926 (214) (4.193) 10301,515 14,771,214 13,595,980 822,478 825,629 15,593,692 14,421,609 227,715 214,045 6,203 5,851 233.918 219.896 15, 827,610 14,641, 505 (5,127,189) (4,339,990) Unrealized Gain (Loss) on Interest Rate Swap 226,450 (6,041) CHANGE IN NET ASSETS * $ (4,900,7391 $ (4,346 0311 * See the consolidated statements of changes in net assets for more information regarding the net asset composition. The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -5- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES Year Ended December 31, 2013 with Comparative Totals for the Year Ended December 31, 2012 The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -6- PROOB 4M CPRVICPq SUPPORTING SERVICES TOTAL Rental Project Property Total Management Fund- Operations Development Maoeeemrnt Proaaam Services and General raining 2013 2012 Wages, Employee Benefits & Payroll Taxes $ 1,170,468 $ 403,039 $ 640,641 $ 2,214,148 $ 158,078 S 4,827 S 2,377,053 S 2,290,598 Repairs and Maintenance 1,322,296 - - 1,322,296 1,322,296 1,100,178 Utilities 993,416 - - 993,416 - 993,416 995,132 Insurance 337,213 6,169 9,821 353,203 9,378 74 362,655 417,314 Office Expenses 135,991 50,401 84,078 270,470 19,768 722 290,960 275,645 Tenant Related Expense 279,718 165 262 280,145 65 2 280,212 535,006 Taxes 249,481 52 83 249,616 6,623 1 256,240 217,732 AudiNAccounfing Expeass 148,860 12,659 20,125 181,644 9,515 151 191,310 194,162 Miuelleneous Expenses 100,459 23,063 36,494 160,016 9,297 193 169,506 89,823 Professional Fces 105,171 11,765 18,704 135,640 4,614 141 140,395 94,558 Replacement - Furnishings 106,236 - - 106,236 - - 106,236 70,044 Bond Adod istrat:on Costs 71,993 71,993 - - 71,993 47,919 Management Fees 26,807 - - 26,807 - 26,807 45,225 Grant ExPeme 3,960 - 3,960 7,350 - 1010 12,238 Depreciation and Amortization 5,099,419 6,453 10,258 5,116,130 2,531 77 5,118,738 4,631,131 Interest Expense 4,023,638 1,266 2,012 4,026,916 496 IS 4,027,427 4,060,173 Financial Expense 596,088 - - 596,088 - - 59,088 - Other Exyeme - - - - 11,203 Capitalized Project Cost (515.0321 (515.032) (515.032) (446-576 Total S 14,771.214 S S 822.478 S 15.593.692 s 227.715 S 6,203 S 15.827.610 S 14.641,505 Peremtage of Total 93.4% % 5.2 % 98.6% 1.4% % 100.0 The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -6- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES Year Ended December 31, 2012 The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -7- PROGRAM SERVICES EUPPORTING SERVICES Rental Project Property Total Management Fund - Ooemtna s Development Management Program Services and General raisin¢ TOTAL Wages, Employee Benefits & Payroa Taxes $ 1,139,614 $ 348,689 S 644,441 $ 2,132,744 S 153,250 S 4,604 S 2,290,598 Repays and Maintenance 1,097,667 761 1,406 1,099,834 334 10 1,100,178 Utilities 995,132 - - 995,132 - - 995,132 Insurance 389,741 6,906 12,764 408,411 8,812 91 417,314 Office Expenses 129,077 44,410 82,078 255,565 19,494 586 275,645 Tenant Related Expense 534,264 225 416 534,905 99 2 535,006 Taxes 212,243 - - 212,243 5,489 - 217,732 AudiUAccopnting Expense 151,912 11,491 21,238 184,641 9,369 152 194,162 Miscellaneous Expenses 47,955 12,593 23,275 83,823 5,834 166 89,823 Professional Fees 62,969 9,571 17,690 90,230 4,201 127 94,558 Replacement - Furnishings 70,044 - - 70,044 - - 70,044 Bond Ad n isnation Costs 47,919 - - 47,919 47,919 Management Fees 45,225 - 45,225 - - 45,225 Grant Expense - 2,358 6,480 8,838 3,400 - 12,238 Depreciation and Amortisation 4,610,809 6,158 11,380 4,628,347 2,703 81 4,631,131 Interest Expense 4,052,206 2,414 4,461 4,059,081 1,060 32 4,060,173 Other Expense 10,203 1,000 - 11 ,203 - 11 ,203 Capitalized Project Cost (446376) (446.5761 (446.576) Total $ 13.595.980 S S 825.629 $ 14.421.609 $ 214045 S 5.851 S 14.641305 Percentage of Total 92.9% - % _56_%2 98.5 % LS % % 100.0% The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -7- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS Years Ended December 31, 2013 and 2012 The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -8- Non - Controlling Total Net Controlline Interest Interest Assets Temporarily Permanently Unrestricted Restricted Restricted Net Assets Net Assets Net Assets Sub -Total Balance at December 31, 2011 $ 12,321,788 $ 1,595 $ $ 12,323,383 $ 32,428,963 $ 44,752,346 2012 Capital Contributions 1,300,870 - 1,300,870 17,291,453 18,592,323 2012 Capital Distributions - - (10,062) (10,062) 2012 Change in Net Assets 1,059.339 1.059339 (5,405.3701 (4.346.031) Balance at December 31, 2012 14,681,997 1,595 14,683,592 44,304,984 58,988,576 2013 Capital Contributions 100 - 100 2,103,034 2,103,134 2013 Capital Distributions - - - (8,269) (8,269) 2013 Change in Net Assets 244,619 - 244,619 (5,145,358) (4,900,739) Allocation of Limited Partner Loss to General Partners * (880,223) - (880,223) 880,223 - Current Year Syndication Costs (125.0001 (125.000) Balance at December 31, 2013 $ 14.046.493 $ 1.595 $ S 14.048.088 $ 42.009,614 S 56.057.702 * Sunset Square L.P: s limited partners' losses exceeded the balance in their equity account. Since the limited partners' losses are limited to thew investment, the limited partners' equity cannot be reduced below zero unless future capital contributions will be made in an amount sufficient to absorb the losses. As a result, the losses in the Limited Partners' capital account were reclassed to the General Partner. Any subsequent income allocable to the limited partners is allocated to the general partner first until the general partner's share of that income offsets the losses not previously recognized by the limited partner. The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -8- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2013 and 2012 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Property, Furnishings and Fixtures 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES: (1,555,715) (906,435) Change in Net Assets $ (4,900,739) $ (4,346,031) Adjustments to Reconcile Decrease in Net Assets to Net 11,269 4,459 Cash Provided by Operating Activities: (3,286) 4,856 Depreciation and Amortization 5,118,738 4,631,131 Loss on Sale of Assets 22,891 4,193 In -Kind Contribution of Land Lease (750,000) - Loss on Partnership Interest 309,968 214 Change in Value of Interest Rate Swap (226,450) 6,041 Accrued Interest - Construction Loans 592,419 678,974 (Increase) Decrease in Assets: Tenant Accounts Receivable (19,027) 32,062 Management Fees - Affiliates (40,557) (30,970) Grants and Contributions Receivable 13,282 454,122 Other Receivables 39,858 203,445 Prepaid Expenses 170,981 (200,403) Accrued Interest Receivable 1,228 1,862 Tenant Security Deposits - Net 1,921 3,872 Increase (Decrease) in Liabilities: Accounts Payable - Affiliates (40,463) 85,332 Accounts Payable - Trade 70,949 265,378 Accrued Expenses 157,242 (87,627) Rent Received in Advance 26,996 (4,518) Accrued Interest 1,382,882 962,200 Developer Fees Payable (41.250) Cash Provided by Operating Activities 1.932.119 2.618.027 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Property, Furnishings and Fixtures (615,967) (4,922,946) Additions to Reserves (1,555,715) (906,435) Syndication Costs (125,000) - Advances to Affiliates 11,269 4,459 Deposits (3,286) 4,856 Capitalized Loan Fees (27,622) (387,270) Capitalized TCAC Fees (74,714) Investments in Developments in Progress (1.709.082) Cash Used by Investing Activities (2.316,3211 (7.991.132) The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Years Ended December 31, 2013 and 2012 The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -10- 2013 2012 CASH FLOWS FROM FINANCING ACTIVITIES: Capital Contributions $ 6,690,219 $ 13,772,638 Capital Distributions (8,269) (10,062) Payments to Notes and Mortgages Payable (17,409,036) (7,047,858) Proceeds from Notes and Mortgages Payable 14,248,704 Cash Provided by Financing Activities 3,521,618 6,714,718 NET INCREASE IN CASH 3,137,416 1,341,613 CASH, Beginning of Year 3056322 1,714,709 CASH, End of Year $ 6,193,738 $ 3,056,322 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid for Interest $ 2,052,126 $ 4,904,922 Cash Paid for Taxes $ 15,200 $ 16,800 Additions to Property, Furnishings and Fixtures Using Short Term Debt $ 536,015 $ 357,387 Additions to Property, Furnishings and Fixtures Using Long -Term Debt $ 3,700,000 5,684,325 Additions to Construction in Progress Using Long -Term Debt $ 5,095,836 $ The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -10- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -NATURE OF ACTIVITIES: Charities Housing Development Corporation of Santa Clara County ( "CH ", the "Organization ") was incorporated in the State of California on December 14, 1993 and is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code. The mission of CH is to develop, preserve, and manage high quality affordable housing for low - income individuals and their families. Through service enhanced property management and structured resident involvement, CH contributes to the highest standards of human dignity and participation in our community. CH has developed and operates 16 properties, totaling over 969 units, throughout Santa Clara County. The properties are home to both individuals and families, a majority of which earn less than 50% of area median income (AMI). Entities Consolidated CH and Management Affiliates: Charities Housing Development Corporation of Santa Clara Coupes - A regional developer of quality, affordable, publicly assisted housing for low and moderate income families. The Organization is the management agent and employer of all personnel working at properties owned by Sierra Vista I /Charities Housing Corporation (SVCHC), San Tomas /Charities Housing Corporation (STCHC), Pensione Bird SRO, Limited Partnership (Pension), Stoney Pine Charities Housing Corporation (Stoney Pine), HomeSafe Santa Clara, L.P. (HSSCLP), HS San Jose, L.P. (HSSJLP), Sunset Square, L.P. (SSLP), San Antonio Place, L.P. (SAPLP), Paseo Senter, L.P. (PSLP), Paseo Senter II, L.P. (PSIILP), Belovida Santa Clara, L.P. (BSCLP), 90 Archer, L.P. (90ALP), Kings Crossing, L.P. (KCLP), San Tomas Gardens, L.P. (STLP), and Sierra Vista I, L.P. (SVLP). CH is also the developer for HSSCLP, Pensione, Stoney Pine, HSSJLP, SSLP, SALP, PSLP, PSIILP, 90ALP, KCLP, PSLP, STLP, SVLP and Parkside Studios, L.P. Management Affiliates - Consist of corporations and limited liability companies ( "LLCs ") that serve as General Partners for tax credit housing partnerships providing affordable housing. The corporations are California nonprofit public benefit corporations exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code and share common board members with CH. -11- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 1 - NATURE OF ACTIVITIES (Continued): The LLCs, of which CH is either the sole or controlling member, are California limited liability companies, operated exclusively to further the tax exempt charitable purposes of the sole member. The following entities are included in the Management Affiliates: Hope Charities Housing (Hope) Caritas Housing (Caritas) Sunset Charities Housing Corporation (Sunset) San Antonio Charities (San Antonio) Charities Kings Crossing, LLC (Kings Crossing) San Tomas Gardens Charities, LLC (San Tomas) 100% Owned Properties: 90 Archer, LLC (Archer) Paseo Senter, LLC ( Paseo) Charities Belovida, LLC ( Belovida) 2112 Monterey Road, LLC (Monterey) Parkside Charities, LLC (Parkside) Siena Vista I Charities, LLC (Sierra Vista) The 100% Owned Properties consist of the following entities: 107 Los Gatos - On December 1, 1998, the Organization received a donation of building and land located in Los Gatos, California (107 Los Gatos). The building contains 7 units for low- income households and was occupied beginning June 1999. 220 Los Gatos - On January 17, 2001, the Organization received a donation of a building and land located in Los Gatos, California (220 Los Gatos). The building contains 6 units for low- income households. Westwood Apartments - On February 18, 1994, the Organization acquired a 42 unit apartment complex, Westwood Apartments (Westwood) in Santa Clara, California. Pursuant to agreements with the City of Santa Clara and the Housing Authority of Santa Clara County, 41 units are restricted to very-low to moderate income households while one rent -free unit is for the resident manager. Consolidated Entities (the "Organization "): The Organization consists of the following consolidated entities: CH and Management Affiliates - as described above. 100% Owned Properties - as described above. -12- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE I - NATURE OF ACTIVITIES (Continued): Tax Credit Limited Partnerships - These are the Limited Partnerships in which CH and /or its affiliates hold General Partner interests. The Limited Partnerships are listed below: Sunset Square, L.P. Pension Bird SRO, L.P. San Antonio Place, L.P. Kings Crossing, L.P. Sierra Vista I, L.P. Parkside Studios, L.P. Paseo Senter, L.P. Paseo Senter II, L.P. 90 Archer, L.P. 2112 Monterey Road, L.P. San Tomas Gardens, L.P. HUD Entities - These are single asset California nonprofit public benefit corporations exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code and share common board members with CH. Sierra Vista I /Charities Housing Corporation San Tomas /Charities Housing Corporation Stoney Pine Chanties Housing Corporation Affiliated Organizations - Not Consolidated Caritas and Belovida are co- general partners of Belovida Santa Clara, L.P., HS San Jose, L.P., and HomeSafe Santa Clara, L.P. Catholic Charities of Santa Clara County (Catholic Charities) has the authority to appoint the Directors of the Organization. The Executive Director and at least one board member of Catholic Charities shall be members of the Organization's Board of Directors and the Executive Director shall be President of CH's Board of Directors. If Catholic Chanties ceases to exist, this authority passes to the Roman Catholic Bishop of San Jose. Catholic Chanties provides contracted services for case management for the Organization. CH and Management Affiliates, with the exception of the LLCs, obtained their nonprofit status under the umbrella of the "United States Catholic Conference of Bishops ". -13- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Consolidation of Financial Statements - Organizations that: 1) have a majority of voting interest; 2) have economic interest; and 3) exercise economic control over a related company, are required to consolidate their financial statements. Hope, Caritas, Sunset, San Antonio, Paseo, Kings Crossing, Archer, Monterey, Belovida, Sierra Vista, San Tomas, Parkside, STCHC, SVCHC and Stoney Pine meet the above criteria and therefore are consolidated into CH's financial statements. All significant intercompany transactions have been eliminated. The consolidated financial statements include the accounts of eleven Limited Partnerships in which CH exercises economic control and has the right to buy the properties after a certain number of years. These entities are included in the consolidation. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. Partnership interests of Investor Limited Partners are shown as non - controlling interests in the consolidated financial statements. Method of Accounting - The Organization uses the accrual method of accounting which recognizes income in the period earned and expenses when incurred, consistent with accounting principles generally accepted in the United States of America. The value of the rent -free employee units at Westwood Apartments, the Limited Partnerships and the HUD Entities are shown both as rental income and as an expense of operations. Basis of Presentation - The Organization follows standards of accounting and financial reporting for voluntary health and welfare organizations as prescribed by the American Institute of Certified Public Accountants, reporting its financial position and operating activities in two classes of net assets: unrestricted net assets and temporarily restricted net assets. Unrestricted net assets include those assets over which the Board of Directors has discretionary control in carrying out the operations of the Organization. Temporarily restricted net assets include those assets which are subject to donor restriction and for which the applicable restriction was not met as of the year end of the current reporting period. Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates. Recognition of Developer Fees - Developer fees are recognized pursuant to terms outlined in the development services agreement. Absent any specific terns outlined in that agreement, they are recognized based on the schedule of payments outlined in the development services agreement. Developer fees of consolidated entities were eliminated in the consolidated financial statements. -14- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recognition of Donor Contributions - Contributions awarded are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. All other donor - restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. The Organization records contributions whose restrictions are met in the same year as unrestricted support. Functional Expenses - Directly identifiable expenses are charged to program and supporting services. Expenses related to more than one function are charged to programs and supporting services on the basis of salary expense. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Organization. Cash and Cash Equivalents - Cash consists of cash on hand and cash in demand deposit accounts. Not included in cash are funds restricted as to their use, regardless of their liquidity, such as security deposits, and operating and replacement reserves. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash. The Organization maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Organization has not experienced any losses in such accounts. Management believes it is not exposed to any significant risk on cash accounts. Allowance for Doubtful Accounts - The Organization uses the specific write -off method to provide for doubtful accounts since past experience and management's estimation indicates an adequate allowance for such accounts is immaterial. Tenant Security Deposits - Tenant security deposits are not available for operating purposes. The Organization maintains on deposit funds equal to the related liability and holds the funds in separate, interest bearing accounts in the name of the Organization. Replacement. Operating and Other Reserves - The Organization is required to maintain replacement, operating, residual receipts, and impound reserves in accordance with partnership and regulatory agreements (see Note 8). Property, Furnishings and Fixtures - Property, furnishings and fixtures are recorded at cost of acquisition or construction, or estimated fair value for donated items. Major improvements or additions over $3,000 that add value to the property are capitalized. Depreciation is computed based on the straight -line method over the estimated useful lives of assets, which ranges from 5 to 40 years. Donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. -15- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investment in Partnerships - The Organization uses the equity method to account for its ongoing investments, even when its percentage of ownership is less than 20 %, when its role as General Partner gives it a measure of control. Under the equity method, the investment is originally recorded at cost and is adjusted annually to recognize the Organization's share of earnings or losses. Investments in the consolidated entities have been eliminated in the consolidated financial statements. Projects in Development - Projects in development are stated at cost, which includes the cost of land, predevelopment, construction and other capitalized expenses including interest, real estate taxes and property insurance. Accounting for Impairment of Lone -Lived Assets - The Organization reviews property furnishings and fixtures for impairment whenever events or changes in circumstances indicate that the carrying value of the property furnishings and fixtures may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the asset to future net cash flows, undiscounted and without interest, expected to be generated by the asset. If assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. As of December 31, 2013, there were no events or changes in circumstances indicating that the carrying amount of the property furnishings and fixtures may not be recoverable. Fair Value - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). Observable inputs are those that market participants would use in pricing the asset based on market data obtained from sources independent of the Organization. Unobservable inputs reflect the Organization's assumption about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances (see Note 13). The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 - Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date. Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads and yield curves. -16- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): Level 3 - Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Organization's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. Income Taxes - CH, Hope, Caritas, Sunset, San Antonio, SVCHC, STCHC, and Stoney Pine are exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and state income taxes under Section 23701(d) of the California Revenue Taxation Code. Accordingly, no provision for income taxes has been made in the accompanying statements. In addition, the Organization qualifies for the charitable contribution deduction under Section 170(b)(1)(A) of the Internal Revenue Code and has been classified as an organization that is not a private foundation under Section 509(a)(1) of the Internal Revenue Code. ProRertv Taxes - The Organization has filed and received an exemption from certain property taxes in accordance with Section 214 of the California Code. Uncertainty in Income Taxes - Accounting principles generally accepted in the United States of America provide accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain. Management has considered its tax positions and believes that all of the positions taken by CH in its federal and state tax returns are more - likely -than-not to be sustained upon examination. CH files information returns in the U.S. federal jurisdiction and state of California. CH's federal returns for the tax years 2010 and beyond remain subject to examination by the Internal Revenue Service. CH's California returns for the tax years 2009 and beyond remain subject to examination by the Franchise Tax Board. Subsequent Events - Management of the Organization has evaluated events and transactions subsequent to December 31, 2013 for potential recognition or disclosure in the consolidated financial statements. The Organization did not have subsequent events that required recognition or disclosure in the consolidated financial statements for the year ended December 31, 2013. Subsequent events have been evaluated through the date the consolidated financial statements became available to be issued, May 5, 2014. -17- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 3 - PROPERTY, FURNISHINGS AND FIXTURES: As of December 31, 2013, the Organization's property, furnishings and fixtures consisted of the following: 107 220 Tax Credit CH Los Gatos Los Gatos Westwood Partnerships HUD Entities Total Land $ - $ 385,755 $ 663,362 $ 754,870 $ 31,946,436 $ 1,592,425 $ 35,342,848 Land Improvements - - 2,205 62,050 6,925,033 - 6,989,288 Building and Building Improvements - 590,411 1,407,342 2,182,174 139,659,410 2,898,530 146,737,867 Building Renovations 120,429 141,812 - 480,423 56,847 530,482 1,329,993 Furnishings and Fixtures 45.877 18.191 3 300 2,129 2,416161 44 531 2.530.189 Total Property, Furnishings and Fixtures 166,306 1,136,169 2,076,209 3,481,646 181,003,887 5,065,968 192,930,185 Accumulated Depreciation (76.226) (269.459) (434.316) (1.549.938) (21549.871) (1.073503) (24.953.313) Property Furnishings and Fixtures, Net $ 90.080 $ 866310 $ 1.641.893 $ 1931308 $159A54.016 $ 3.992.465 $167.976.872 As of December 31, 2012, the Organization's property, furnishings and fixtures consisted of the following: 107 220 Tax credit CH Los Gams Los Gatos Westwood Partnerships HUD Entities Total Land Land Improvements Building and Building Improvements Building Renovations Fumishings and Fixtures Total Property, Furnishings and Fixtures Accumulated Depreciation Property Furnishings and Fixtures, Net $ - $ 385,755 $ 663,362 $ 754,870 $ 29,190,490 $ 5,463,474 $ 36,457,951 - 2,205 62,050 6,925,033 367,882 7,357,170 - 590,411 1,407,342 2,097,892 131,122,230 14,196,005 149,413,880 120,429 141,812 - 473,442 54,493 3,931,594 4,721,770 41.390 18.191 3300 2.129 2.402419 936334 3.403.763 161,819 1,136,169 2,076,209 3,390,383 169,694,665 24,895,289 201,354,534 (68.839) (249.730) (398.655) (1.448.7431 (17.6262301 (9.670.785) (29.462.982) $ 92.980 $ 886.439 $ 1.677.554 $ 1.941.640 $152.068A35 $ 15224.504 $171.891.552 Depreciation Expense for the years ended December 31, 2013 and 2012 totaled $4,686,384 and $4,386,383, respectively. -18- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 4 - INVESTMENT IN PARTNERSHIPS: Investment in partnerships consist of the following as of December 31: HS San Jose, L.P. HomeSafe Santa Clara, L.P. Belovida Santa Clara, L.P. Total Investment in Partnerships NOTE 5 - PROJECTS IN DEVELOPMENT: 2013 2012 $ 883,825 $ 883,915 257,777 567,632 (92) (68) $ 1.141.510 $ 1.451.479 Charities Housing Development Corporation has the following projects in development as of December 31: The Metropolitan (San Jose) San Tomas Gardens (Campbell) San Tomas /Charities Housing Corporation (Campbell) Siena Vista I Apartments (Mountain View) * Siena Vista I /Charities Housing Corporation (Mountain View)* Parkside Studios (San Jose) 2500 Senter Road (San Jose) BAREC Project (Santa Clara) Other Projects in Development Total Projects in Development 2013 2012 $ 11,962,704 $ 11,300,499 2,402,341 - - 106,711 1,849,333 - - 90,419 389,796 35,961 322,482 297,427 265,204 265,094 246 159 $ 17.192.106 $ 12.096.270 ' During the fiscal year ended December 31, 2013 San Tomas/Charities Housing Corporation and Sierra Vista I /Charities Housing Corporation sold their apartment complexes and related assets to San Tomas Gardens, L.P. and Sierra Vista I, L.P., respectively. The purpose of the sale was to generate tax credits for the rehabilitation of the properties. -19- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 6 - INTANGIBLE ASSETS: Intangible assets consist of the following as of December 31: Intangible Assets: Permanent Bond/Loan Fees Tax Credit Fees Total Intangible Assets Less: Accumulated Amortization Total Intangible Assets, Net 2013 2012 $ 1,203,362 $ 1,811,328 314.673 421,943 1,518,035 2,233,271 (485.057) (795.561) $ 1.032.978 $ 1.437.710 STCHC and SVCHC fully amortized $401,693 in loan fees and $107,270 in tax credit fees in connection with the sale of their apartment complexes and related assets /liabilities. Kings Crossing also fully amortized its construction loan fees in the amount of $206,273. Estimated annual amortization expense at December 31, 2014 $ 68,468 2015 68,468 2016 62,533 2017 58,943 2018 58,941 Thereafter 715.625 Total $ 1.031978 Loan fees are recorded on the straight -line method and amortized over the 5 to 55 year life of the loan. Tax credit fees are amortized over the 10 year benefit period of the credits. Amortization expense for the years ended December 31, 2013 and 2012 totaled $432,354 and $244,748, respectively. NOTE 7 - NOTES RECEIVABLE FROM AFFILIATES: HomeSafe Santa Clara, L.P. has a note payable to CH in the amount of $400,000, secured by the HomeSafe Santa Clara property at 0% interest. Principal is due January 2, 2021. All units are to be restricted to households which include a victim of domestic violence, and whose income is at or below 80% of AMI. -20- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 8 - REPLACEMENT, OPERATING, AND OTHER RESERVES: The Limited Partnerships, HUD Entities and 100% owned properties are required to maintain replacement and/or operating deficit reserves in accordance with their respective partnership and regulatory agreements. As of December 31, 2013 and 2012, the total funded replacement reserve and operating reserve balance was $6,772,466 and $5,380,282, respectively. SVCHC was required to make monthly impound payments to the mortgagor for mortgage insurance, property insurance and real estate taxes to be used for those purposes. STCHC was required to make monthly payments to the mortgage insurance impound. As of December 31, 2013 and 2012, the total funded impound account balance was $43,801 and $79,423, respectively. The HUD Entities are required to deposit residual receipts within 60 days after year end in a separate, interest - bearing account. The funds can be used for the operating needs of the property with the prior written approval of HUD. As of December 31, 2013 and 2012, the total funded residual receipts balance was $187,199 and $438,583, respectively. CH has chosen to create a general operating reserve equal to 10% of revenue starting in March 2009. The balance as of December 31, 2013 and 2012 was $1,275,933 and $945,147, respectively. NOTE 9 - NOTES AND MORTGAGES PAYABLE: The Organization had the following notes and mortg Maturity Date CH: City of San Jose note Jan. 2, 2021 Wells Fargo Community Development Corporation note Jun. 10, 2014 Westwood Apartments: ages payable as of December 31: Interest Payment Rate Terms 2013 2012 0.00% (7) $ 400,000 S 400,000 2.00% (8) - 200,000 City of Santa Clara (HOME) note Sep. 1, 2024 3.00% (2) 600,720 600,720 Berkadia note Jan. 1, 2025 5.63% (3) 1,066,709 1,128,715 107 Los Gatos: Santa Clara County CDBG note Jul. 1, 2016 3.00% (3) 4,871 6,767 220 Los Gatos: County of Santa Clara note 1 Jun. 1, 2017 3.00% (3) 8,527 10,863 County of Santa Clara note 2 Mar. 1, 2026 3.00% (4) 147,843 147,843 -21- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 9 - NOTES AND MORTGAGES PAYABLE (Continued): Tax Credit Partnerships: Sunset Square, L.P.: Berkadia note City of San Jose note 1 City of San Jose note 2 City of San Jose note 3 Opportunity Fund note County of Santa Clara (HOME) note Maturity Interest Payment Date Rate Terms 2013 2012 Jun.1,2034 4.71% (3) $ 3,921,394 $ 4,019,113 Jul. 1, 2042 3.00% (2) 2,429,900 2,429,900 Sep.30,2035 3.00% (3) 286,128 295,713 Sep.30,2061 0.00% (2) 3,915,125 3,915,125 Feb.2,2034 2.00% (2) 500,000 500,000 May 3, 2060 6.00% (4) 118,367 118,367 Pensione Bird SRO, L.P.: City of San Jose (Local) note Jun. 1, 2055 3.50% (2) 3,223,004 3,223,004 County of Santa Clara (CDBG) note Sep. 30, 2027 6.00% (4) 61,798 61,798 County of Santa Clara (HOME) note Sep. 30, 2027 6.00% (4) 33,202 33,202 San Antonio Place, L.P.: Wells Fargo Bank Tax - Exempt bond Department of Housing and Community Development (HCD) note City of Mountain View note City of Mountain View (CDBG) note City of Mountain View (HOME) note County of Santa Clara Affordable Housing Funds (AHF) note Opportunity Fund note Paseo Senter, L.P.: Department of Housing and Community Development (HCD) note US Bank Tax- Exempt Bond City of San Jose (Local) note Opportunity Fund note AHP note County of Santa Clara (HPF) note County of Santa Clara (AHF) note Paseo Seater 11, L.P.: US Bank Tax- Exempt Bond Department of Housing and Community Development (HCD) note City of San Jose (Local) note Opportunity Fund note AHP note Dec. 1, 2016 5.32% (3) 255,261 329,452 Jan. 12, 2062 3.00% (6) 4,900,000 4,900,000 Sep.20,2057 0.00% (4) 809,000 809,000 Apr. 24, 2057 0.00% (4) 2,467,451 2,467,451 Apr. 24, 2057 0.00% (4) 2,188,814 2,188,814 Jan.12,2062 3.00% (2) 1,500,000 1,500,000 Jan. 12, 2062 0.00% (4) 500,000 500,000 Jun.12,2064 3.00% (6) 10,500,000 10,500,000 Jun.1,2039 5.50% (3) 4,708,314 4,787,429 Dec. 19, 2065 3.00% (2) 6,932,630 6,932,630 May 12, 2064 0.00% (4) 500,000 500,000 Dec. 1, 2060 0.00% (7) 460,000 460,000 Jun. 12, 2064 3.00% (2) 250,000 250,000 Jun. 12, 2064 3.00% (2) 350,000 350,000 Dec. 1, 2038 5.36% (3) 3,641,580 3,705,924 Dec. 16, 2063 3.00% (6) 9,000,000 9,000,000 Dec. 19, 2063 3.00% (2) 5,939,550 5,939,550 Dec.16,2063 0.00% (4) 500,000 500,000 Apr. 1, 2061 0.00% (7) 396,000 396,000 -22- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 9 - NOTES AND MORTGAGES PAYABLE (Continued): 2112 Monterey Road, L.P.: City of San Jose (Local) note Maturity Interest Payment 6,880,000 6,880,000 County of Santa Clara (CDBG) note Date Rate Terms 2013 2012 County of Santa Clara (AHF) note Dec. 22, 2063 3.00% (2) $ 300,000 $ 300,000 County of Santa Clara (HPF) note Dec. 23, 2063 3.00% (2) 250,000 250,000 Kings Crossing, L.P.: San Tomas Gardens, L.P.: City of San Jose (HOME) note Oct. 2, 2068 0.00% (2) 5,250,700 5,250,700 City of San Jose (Local) note Oct. 2, 2068 0.00% (2) 2,317,298 1,497,765 Citibank note Sep. 1, 2045 5.70% (10) - 16,773,797 CaWA note Oct. 1, 2067 0.00% (2) 1,200,000 1,200,000 AHP note Jun. 1, 2067 0.00% (4) 460,000 460,000 City of San Jose Multifamily' Housing PNC Multifamily Finance, Inc. note Revenue note Various Various (12) 2,809,368 - County of Santa Clara (HOME) note Jun. 30, 2068 3.00% (2) 350,994 Department of Housing and Community Development (HCD) note Oct. 2, 2068 3.00% (6) 9,971,950 2112 Monterey Road, L.P.: City of San Jose (Local) note Dec. 20, 2014 2.00% (9) 6,880,000 6,880,000 County of Santa Clara (CDBG) note Dec. 1, 2024 3.00% (4) 120,371 120,372 City of San Jose (HOME) note Dec. 24, 2039 4.00% (2) 3,043,290 3,043,290 County of Santa Clara (HOME) note Oct. 31, 2066 3.00% (2) 494,264 455,255 90 Archer, L.P.: San Tomas Gardens, L.P.: City of San Jose (HOME) note Jul. 13, 2067 3.5% (2) 1,800,000 1,800,000 City of San Jose (Local) note Jul. 13, 2067 3.5% (2) 3,103,907 3,103,907 County of Santa Clara (HOME) note Oct. 26, 2065 3% (2) 371,157 371,157 CaIHFA note Oct. 1, 2067 0.00% (2) 597,783 600,000 Parkside Studios, L.P.: City of Sunnyvale (Local) note Oct. 1, 2069 Various (5) 3,148,447 County of Santa Clara CDBG Mar. 19, 2069 3.00% (2) 400,000 - County of Santa Clara CDBG Mar. 19, 2069 3.00% (2) 232,493 - County of Santa Clara (HOME) note Dec. 17, 2068 3.00% (2) 200,000 - San Tomas Gardens, L.P.: Citibank note Oct. 1, 2045 Various (1) 13,045,171 - Sierra Vista 1, L.P.: Citibank note Sept. 1, 2070 Various (1) 5,649,445 City of Mountain View note Oct. 1, 2070 3.28% (4) 368,983 HUD Entities: San Tomas/Charities Housing Corporation: PNC Multifamily Finance, Inc. note Oct. 1, 2034 5.27% (3) 9,867,344 -23- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 9 - NOTES AND MORTGAGES PAYABLE (Continued): City of Campbell Redevelopment Agency note City of Campbell note Sierra Vista I/Charities Housing Corporation: PNC Multifamily Finance, Inc. note Federal National Mortgage Association (FNMA) note City of Mountain View note Stoney Pine Charities Housing Corporation: U.S. Department of Housing and Urban Development (HUD) Section 811 note City of Sunnyvale note City of Sunnyvale (HOME) note County of Santa Clare (CDBG) note City of Mountain View (HOME) note City of Santa Clara (HOME) note County of Santa Clara note City of Mountain View (CDBG) note Western Financial Bank (AHP) note City of Sunnyvale (CDBG) note Total Less: Current Portion of Mortgages Payable Long -Tenn Portion Maturity Interest Payment 2,275,900 Date Rate Terms 2013 2012 420,000 420,000 Sep. 1, 2041 3.00% Apr. 1, 2016 3.00% (11) $ - $ 42,432 Apr. 1, 2036 0.00% (2) - 226,229 Aug. 1, 2035 5.670/6 (3) - 3,729,592 May 1, 2014 1.00% (3) - 67,086 Sep.30,2019 6.00% (7) - 100,000 Sep. 1, 2041 6.25% (7) 2,275,900 2,275,900 Sep. 1, 2041 3.00% (4) 420,000 420,000 Sep. 1, 2041 3.00% (4) 780,000 780,000 Sep. 1, 2041 6.00% (4) 300,000 300,000 Dec.30,2040 3.00% (7) 115,050 115,050 Sep.1,2019 3.00% (7) 100,000 100,000 Sep. 1, 2041 3.00% (4) 100,000 100,000 Dec. 30, 2040 3.00% (7) 9,000 9,000 Mar. 30, 2015 0.00% (7) 90,000 90,000 Sep.1,2041 3.00% (4) 525.000 525.000 139,596,759 133,961,256 $132.201.164 $133.114.959 (1) Interest only shall be due during the construction period at a rate of 2.5% plus the current market index . After permanent loan conversion, borrower shall pay monthly payments of principal and interest, at a rate of 5.93% for San Tomas Gardens, L.P. and 6.13% for Sierra Vista 1, L.P. (2) Annual payment of Net Cash Flow /residual receipts, as determined by the promissory note/regulatory agreement are to be applied first to interest and then principal. All remaining accrued interest and principal are due on maturity date. (3) Principal and interest are payable monthly. Any remaining outstanding principal and accrued interest are due on maturity date. (4) Outstanding interest and/or principal is due on maturity date. (5) Interest is 0% during the construction period , and will be 3% commencing upon receipt of the Certificate of Occupancy. Loan maturity date is 55 years from Certificate of Occupancy, which is estimated to occur October 1, 2014. -24- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 9 - NOTES AND MORTGAGES PAYABLE (Continued): (6) Payments in the amount of 0.42% per annum on the unpaid principal balance shall be payable to the Department commencing on the last day of the Initial Operating Year and continuing annually thereafter. Additional payments of Surplus Cash are to be made per the terns of the Regulatory Agreement Commencing on the 30th anniversary of last day of the Initial Operating Year, annual payments shall be made in an amount equal to the lesser of 1) the full amount of interest accruing for the year or 2) an amount determined by the Department to be necessary to cover the costs of monitoring the project in compliance with the requirements of the Program. (7) Principal and interest is due on maturity date, at which time the loan will convert to a grant if none of the default conditions described in the note have occurred. (8) Interest will be paid quarterly in arrears, the loan can be extended for an additional five years upon written request from the borrower. If extended, quarterly payments of $50,000 of principal shall commence September 10, 2014. Otherwise, principal and interest are due at the maturity date. (9) Note due the earlier of 36 months after the recordation of the Deed of Trust, with the option to extend the term of the Note (4) times for a period of six (6) months for each extension, or the date of the recordation of the construction loan from the City. (10) Interest only shall be due during the construction period. After permanent loan conversion, as defined by the loan agreement, the interest shall change to 7.2% for the non - Section 8 portion of the loan, estimated to be $1,516,000 and 6.7% for the Section 8 portion of the loan, estimated to be $1,304,000. After conversion, monthly payments of principal and interest shall be due. (11) Payments of accrued interest and principal are due annually. (12) City of San Jose Multifamily Housing Revenue Note is split into 2 trenches. Tranche A in the amount of $1,738,000 bearing 7.25% interest and amortize over a 30 year period, and Tranche B in the amount of $1,082,000 bearing 6.75% interest to amortize over a 14 and a half year period. Both [ranches bear monthly payments of principal and interest. Scheduled maturities for the above mortgages are as follows: Year Ending December 31. Principal 2014 $ 7,395,595 2015 965,439 2016 745,036 2017 687,408 2018 727,900 Thereafter 129.075.381 $139.596.759 -25- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 10 - ACCRUED INTEREST: Accrued interest consisted of the following as of December 31: Tax Credit Limited Partnerships HUD Entities Westwood . 220 Los Gatos CH Total Accrued Interest Less: Current Portion Accrued Interest, Net of Current Portion NOTE 11 - INTEREST EXPENSE: $ 8,821,267 $ 6,812,235 980,149 979,132 210,682 248,862 30,325 25,890 1.000 10,042,423 8,067,119 (372.691) (338.404) $ 9.669.732 $ 7.728.715 The total interest expense for the years ended December 31, 2013 and 2012 was $4,027,427 and $4,060,173, respectively. Interest costs capitalized in the years ended December 31, 2013 and 2012 was $583,772 and $1,806,949, respectively. NOTE 12 - LINE OF CREDIT: The Organization entered into an unsecured line of credit agreement with Wells Fargo Bank on July 16, 2008, for a maximum of $250,000. The agreement was amended and restated to mature on September 16, 2014. The purpose of the line of credit is to supply working capital for various affordable housing projects in CH's portfolio. The interest rate should not he less than 5.5% per annum based on a 360 -day year and charged on the basis of actual days elapsed. There was no outstanding balance as of December 31, 2013 and 2012. -26- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 13 - OBLIGATION UNDER INTEREST RATE SWAP: Sunset Square, L.P. that is consolidated in the Organization has a derivative instrument with a notional amount of $6,800,000 that is reported in the balance sheet as a liability measured at its fair value. The change in fair value of the hedging instrument is reported in the statement of activities under other comprehensive income /(loss). Sunset Square, L.P. entered into an interest rate swap agreement effective July 1, 2002 to hedge against interest rate exposure associated with its variable rate debt. The swap agreement involves payment by the Partnership to a counter -party at a fixed rate in return for receipts based upon a variable rate indexed to the average rate paid on City of San Jose variable rate demand Multifamily Housing Revenue Bonds, Series 2002E until October 1, 2018. The differential between the fixed rate of 4.712% and variable rate payments under this agreement is recognized as an adjustment to interest expense. The swap was issued at market terms so that it had no fair value at its inception. The carrying amount of the swap has been adjusted to its fair value at the end of the year, which because of changes in the variable rate resulted in reporting a liability for the fair value of the future net payments forecasted under the swap. The liability is classified as noncurrent since management does not intend to settle it during the next twelve months. The obligation under the interest rate swap is valued by a third party using inputs that are observable or that can be corroborated by observable market data and, therefore, are classified as Level 2 of the valuation hierarchy (see Note 2). The fair value of obligations under the interest rate swap as of December 31, 2013 and 2012 was $613,167 and $839,617, respectively. NOTE 14 - TEMPORARILY RESTRICTED NET ASSETS: The Organization's temporarily restricted net assets consisted of a $1,595 49er fund for each of the years ended December 31, 2013 and 2012. NOTE 15 - RELATED PARTY TRANSACTIONS: Bookkeeping and Property Management Fees - The Organization earns property management and bookkeeping fees from related parties as well as other non - related entities. At December 31, 2013 and 2012 the fees from related parties were as follows: -27- Property Bookkeeping Property Management Fees BSCLP $14,004 /yr. $250 /mo. HSSCLP $12,500 /yr. $250 /mo. HSSJLP $12,500 /yr. $250 /mo. -27- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 15 - RELATED PARTY TRANSACTIONS (Continued): Property management and bookkeeping fees earned from related parties for each of the years ended December 31, 2013 and 2012 totaled $167,331 and $133,962, respectively. Partnership Management Fee - HomeSafe Santa Clara, L.P. - Caritas earns management fees for managing HomeSafe Santa Clara, L.P., in an annual amount of $10,000 a year, to be paid in arrears, subject to excess cash. Partnership management fees earned from HomeSafe Santa Clara, L.P. for each of the years ended December 31, 2013 and 2012 amounted to $10,000. Partnership Management Fee - HS San Jose. L.P. - Caritas earns partnership management fees for managing HS San Jose, L.P., in the amount of $10,000 each year. The fee inreases by 4% per year and is to be paid in arrears, subject to excess cash. Partnership management fees earned from HS Jan Jose, L.P. for the years ended December 31, 2013 and 2012 amounted to $14,038 and $13,498, respectively. Partnership Management Fee - Belovida Santa Clara. L.P. - Charities Belovida, LLC earns an annual $1,000 management fees for managing Belovida Santa Clara, L.P. The fee increases by 3% per year and is to be paid in arrears, subject to excess cash. Partnership management fees earned from Belovida Santa Clara, L.P. for the years ended December 31, 2013 and 2012 amounted to $1,126 and $1,093, respectively. Asset Management Fee - As compensation for the services of Investor Limited Partners in monitoring activities of partnership, certain partnerships pay an asset management fee out of surplus cash that ranges from $3,000 to $7,725 per year, as defined in the management/regulatory agreement. Case Management Fees - CH entered into service agreements with Catholic Charities of San Jose (Housing Services), and certain partnerships and properties pay the Housing Services case management fees to provide services to the tenants. Case management fees for years ended December 31, 2013 and 2012 amounted to $191,806 and $169,400, respectively. Investment in Partnerships - See Note 4. Partnership Contributions Receivable - In accordance with the limited partnership agreements, certain Partnerships are to receive contributions from the limited partners. The contributions will be used to pay for construction costs and pay down construction loans. -28- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 15 - RELATED PARTY TRANSACTIONS (Continued): Notes Receivable from Affiliates - See Note 7. These and other transactions resulted in receivables from related parties and payables to related parties as of December 31 as follows: Receivables from Affiliates: Due from Belovida Santa Clara, L.P.: Partnership Management Fee Property Management Fee Other HomeSafe Santa Clara, L.P.: Notes Receivable Operating Deficit Advances Partnership Management Fee Properly Management Fee Other Due from HS San Jose, L.P.: Operating Deficit Loan Partnership Management Fee Management Fee Other Raymond James Tax Credit Fund 36, LLC: Kings Crossing, L.P.'s Capital Contribution Wells Fargo Affordable Housing Community Development Corporation: 90 Archer, L.P.'s Capital Contribution All Properties: Other Total Receivables from Affiliates -29- 2013 2012 6,366 $ 5,241 1,167 1,167 358 509 400,000 400,000 88,930 77,617 50,000 40,000 1,042 1,042 487 428 140,000 140,000 64,996 50,958 1,042 1,041 483 430 232,500 4,591,944 227,741 1.469 7,901 988,840 $ 5,546,019 CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 15 - RELATED PARTY TRANSACTIONS (Continued): Payables to Affiliates: Incentive Management Fees Due to: Centerline Housing Partnership III, L.P. Boston Financial Institutional Tax Credits XXVIII Raymond James Tax Credit Fund 36, LLC Core Builders, LLC Wells Fargo Affordable Housing Community Development Corporation Asset Management Fees Due to: Boston Financial Institutional Tax Credits XXVIII Raymond James Tax Credit Fund 36, LLC RCHP SLP III, L.P. Wells Fargo Affordable Housing Community Development Corporation Case Management Services Due to: Catholic Charities Total Payables to Affiliates NOTE 16 - CONSULTING INCOME: 2013 2012 - $ 17,275 2,791 9,920 1,222 - - 1,690 4,256 648 6,179 6,133 - 5,625 718 - 3,090 3,000 99,400 106,400 $ 117,656 $ 150,691 CH entered into an agreement with Family Supportive Housing, Inc. to provide consulting services for construction of their new shelter building. The contract is for $10,000 a month. The Organization earned $0 and $120,000 for the years ended December 31, 2013 and 2012, respectively. CH entered into an agreement with SummerHill Latimer, LLC ( "SummerHill "), to assist SummerHill in marketing, securing soft financing and prequalifying potential buyers for 24 affordable homes in their development. The total contract is for $240,000. The amount earned and recognized was $0 and $222,000 for the years ended December 31, 2013 and 2012, respectively. -30- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS: The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: (1) The carrying amounts reported in the statement of financial position for the following items approximate fair value because of the short maturity value of these instruments: Cash, Restricted Cash, Current Receivables and Current Liabilities. (2) The carrying amount of interest rate swaps approximates fair value because it is based on quoted market prices. Considerable judgment is required to develop estimates of fair value, and the estimates presented are not necessarily indicative of the amounts that the Organization could realize in a current market. The use of different market assumptions and/or estimation methods could have a material effect on the estimated fair values. The estimates presented are based on pertinent information available to management as of December 31, 2013 and 2012. Current estimates of fair value may differ significantly from the amounts presented. NOTE 18 -RENTAL ASSISTANCE INCOME: The Organization has contracts with the Housing Authority of Santa Clara County (the "PHA ") under Section 8 Housing Assistance Payments Program of the U.S. Department of Housing and Urban Development for Westwood, San Antonio Place, L.P. and Kings Crossing, L.P. Under the terms of the contracts, the PHA will pay the Organization the difference between the rent charged to a tenant and the contract rent allowable by the PHA. Rental assistance income under this agreement for the years ended December 31, 2013 and 2012 totaled $893,622 and $748,512, respectively. In connection with various lender and HUD agreements, there are certain restrictions on occupancy of the Section 8 units which include maximum income limitations and maximum rents chargeable. In addition, Section 8 requires the maintenance of security deposits, replacement reserves, residual receipts and impound accounts which are to be held by the mortgagee and mortgagor in trust. -31- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 19 - COMMITMENTS AND CONTINGENCIES: Affordability Restrictions - See Notes 1 and 9. Operating Deficit Guarantee The Organization is obligated under agreements to advance funds to the following partnerships to pay operating deficits as they arise: Partnership Maximum Amount HomeSafe Santa Clara, L.P. $ 1,560,000 Sunset Square, L.P. 600,000 Kings Crossing, L.P. 475,000 Pensione Bird SRO, L.P. 292,653 Belovida Santa Clara, L.P. 250,000 90 Archer, L.P. 150,000 HS San Jose, L.P. 40.385 Total $ 3.368.038 The Organization has additional operating deficit guaranties with regard to HomeSafe Santa Clara, L.P. and HS San Jose, L.P. These guaranties are subject to various limitations, but do not set a specific fixed dollar limitation amount. Purchase Option and Right of First Refusal Agreement In connection with the development of affordable housing projects, which are owned by Limited Partnerships, the Organization has a right of first refusal, and the Partnerships have granted the Organization options to purchase the projects. The refusal and option periods for the purchase of the projects are as follows: Project Option Period Refusal Pensione Bird SRO, L.P. 01/01/2015- 06/30/2016 07/01/2016 - 12/31/2016 HomeSafe Santa Clara, L.P. 01/01/2017- 12/31/2018 01/01/2017- 06/30/2017 Sunset Square, L.P. 01/01/2018- 12/31/2019 01/01/2018- 12/31/2019 HS San Jose, L.P. 01/01/2019- 12/31/2020 01/01/2019 - 12/31/2020 San Antonio Place, L.P. 01/01/2021- 12/31/2022 01/01/2021- 12/31/2022 Paseo Senter, L.P. 01/01/2019- 12/31/2026 01/01/2023- 12/31/2026 Paseo Senter II, L.P. 01/01/2019- 12/31/2026 01/01/2023 - 12/31/2026 90 Archer, L.P. 01/01/2027- 12/31/2028 01/01/2027- 12/31/2028 Kings Crossing, L.P. 01/01/2023- 12/31/2029 01/01/2023 - 12/31/2029 -32- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 19 - COMMITMENTS AND CONTINGENCIES (Continued): San Tomas Gardens, L.P. and Sierra Vista 1, L.P. also have a right of first refusal and the option to purchase their projects. Their purchase options activate once the projects receive their low- income housing tax credits. Indemnification Agreement In connection with the development of affordable housing projects, which are owned by Limited Partnerships, the Organization has entered into indemnification (guarantee) agreements with the investor limited partners in such partnerships pertaining to low- income housing tax credits and other tax benefits. Contingent liabilities for tax benefits not yet realized by investor limited partners, consisting mainly of housing tax credits, amount to the following at December 31: Total $ 68.800.806 $ 76.665.982 Contingencies arising From Grants and Contracts: Grants and contracts awarded to the Organization are subject to the funding agencies' criteria terms and regulations under which expenditures may be charged and are subject to audit under such terms, regulations and criteria. Occasionally, such audits may determine that certain costs incurred in connection with the grants do not comply with the established criteria that govern them. In such cases, the Organization could be held responsible for repayments to the funding agency for the costs or be subject to a reduction of future funding in the amount of the costs. Management does not anticipate any material questioned costs for the contracts and grants administered during the period. -33- Estimated Guarantee Partnership 2013 2012 Kings Crossing, L.P. $ 14,405,034 $ 15,735,586 Paseo Senter, L.P. 13,753,768 15,193,869 Paseo Senter 11, L.P. 10,689,599 11,900,778 90 Archer L.P. 9,908,236 10,665,529 Belovida Santa Clara, LP 9,020,969 10,174,035 San Antonio Place, L.P. 4,987,585 5,684,984 HS San Jose, L.P. 2,943,674 3,185,834 Sunset Square, L.P. 1,696,615 2,025,174 Pensione Bird SRO, L.P. 799,549 1,378,816 HomeSafe Santa Clara, L.P. 595.777 721.377 Total $ 68.800.806 $ 76.665.982 Contingencies arising From Grants and Contracts: Grants and contracts awarded to the Organization are subject to the funding agencies' criteria terms and regulations under which expenditures may be charged and are subject to audit under such terms, regulations and criteria. Occasionally, such audits may determine that certain costs incurred in connection with the grants do not comply with the established criteria that govern them. In such cases, the Organization could be held responsible for repayments to the funding agency for the costs or be subject to a reduction of future funding in the amount of the costs. Management does not anticipate any material questioned costs for the contracts and grants administered during the period. -33- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 20 - RETIREMENT PLAN: The Organization has a defined contribution retirement plan (the 'Plan") covering eligible employees. The Plan requires employer contributions of 5% of covered payroll. Total contributions made to the Plan, net of forfeitures of non - vested contributions for separated employees, was $44,984 and $45,518 for the years ended December 31, 2013 and 2012, respectively. -34- SUPPLEMENTARY INFORMATION CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF FINANCIAL POSITION December 31, 2013 LONGTERM ASSETS: C NSOLIDATED Cash Held for Replacement Reserves - Develop. & Due from Affiliates CH & - - 228,930 - 228,930 - - hlanagemem lW1..Oxmed Pmoarties - Management Tax Credit HUD - - Consolidated - - Affiliates 107Lat Cams 2201as Cabs Weswood Subbtal Elimination Affiliates P.m.shiva Entities Subtmal Elimination Total CURRENT ASSETS: - - 7,417,779 - 7,417,779 - - 7,417,779 (6,276,269) Cash -CH& 1,5ngt. Affiliates S 4,136,025 5 28,399 $ 29,405 S 160,951 S4,354,780 $ - S 4,354,780 S - S - $ 4,354,780 S - S 4,354,780 Cash - hstnenhipNHUD Entities - - - - - - - 1,499,061 339,897 1,838,958 - 1,838,958 Amoun6Racnivables: - 17,838,312 (646,206) 17,192,106 Developer Fees Receivable - Affiliates 631,803 - Tenant Receivable 50 147 699 8% 896 56,921 8 57,825 57,825 Management Fee - Affiliates 378,973 - - - 378,973 (4,909) 374,064 - 374,064 (249,451) 124,613 Advances and Other Fees- Affiliates 355,101 - - - 355,101 (51,562) 303,539 751 292,158 596,148 (594,369) 2,079 Psrtiaahip Contributions Receivable - - - - - - - 235,693 - 235,693 (2,475) 233,218 Develop. Fee Receivable - ARIiates 316,698 - - - 316,698 - 316,698 - - 316,698 (316,698) - ONerRa ewvables 13,254 - - 13,254 - 13,254 6,791 6,840 26,885 - 26,885 Prepaid Expenses and Deposits 1.926 606 $68 3516 6616 6616 105585 1038 114,239 114.239 Total C..ent Assets 5301.977 29055 30.120 165.166 5426.318 (56471) 5369847 1.904.802 640.941 7915590 (1.162993) 6752.597 Property, Famuhines and plans ., NET 90,080 866.710 1641893 1.931308 4.530.391 - 4.530.391 189063297 3992465 197,586153 (29609281) 167976.872 LONGTERM ASSETS: Cash Held for Replacement Reserves - 23,093 44,565 122,923 19'581 Due from Affiliates 228,930 - - - 228,930 - 228,930 - - 228,930 - 228,930 Notes Receivable - Affiliates - - - - - - - - 21,380,884 21,380,884 (21,380,884) - Investment inPanncahips 7,417,779 - - - 7,417,779 - 7,417,779 - - 7,417,779 (6,276,269) 1,141,510 Prepaid Land Lease - - - - - - 4,450,000 - 4,450,000 - 4,450,000 Projects in Development 587,932 - - - 587,932 - 587,932 17,250,380 - 17,838,312 (646,206) 17,192,106 Developer Fees Receivable - Affiliates 631,803 - - - 631,803 - 631,803 - - 631,803 (631,803) - Not.Receiwble- Affiliates 5,930,725 - - - 5,930,725 - 5,930,725 - - 5,930,725 (5,530,725) 40,000 Aeemed Interest Receivable 33,520 - - 33,520 - 33,520 978 94,860 129,358 (127,852) 1,506 Intangible Assets, Net - - $,074 5,074 - 5,074 994,208 33,696 1,032,978 - 1,032,978 Weer Deposits 3598 3398 3598 6796 10.394 10,394 Tonal Long -Term M", N. 14.834.287 - 5.074 14.839.361 14839 361 22]02362 21.509.440 59.051.163 (34.593.739) 24.457.424 CASH - TENANT SECURpTY DEPOSITS - 6394 4.735 32.305 43.384 - 43.384 708.922 10.666 762.972 - 762.992 FUNDED RESERVES: Cash Held for Replacement Reserves - 23,093 44,565 122,923 19'581 - 19,581 4,299,610 67,574 4,555,765 - 4,555,765 Cash Held for Opeatng Reserves - - - - - - - 2,216,701 - 2,216,701 - 2,216,701 Cash Held for CH O.anl Operating Reserves 1,275,933 - - - 1,275,933 - 1,275,933 1,275,933 - 1,275,933 Cash Held fa Other Reserves - - - - 119,750 231,001 350,751 - 350,751 Cash Held for Repainted Grants 1.595 1.595 1595 1.595 1595 Total Funded Reserves 1277.528 23.093 44.565 122.923 1.468.109 1468109 6.634.061 298.575 8.400.745 SAW.745 TOTAL ASSETS S 21403.872 L__225.202 $ 1.721113 $ 2257.176 $26.307.563 3 (564711 S 26.251.092 $221.013.444 S 26.452.087 $273.716.623 $05.366.0131 $208.350.610 -35. CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF FINANCIAL POSITION (Continued) December 31, 2013 NET ASSETS: Unnameted Nat Ands NonXceiftilinglateseat - CH & 14ANACID4ENT tans 42,009,614 CONSOLIDATED ENTITIES Controlli'lnteret 20.869.903 Developer& 23593.190 6278.658 20,706.40) 50.578.248 (36531:755) CH& Total Uninitiated Nat An" 20,869,903 908,185 1,526,990 288,112 23,593,190 - Management 100%Ownnd Preoerries 56,056,107 Management Tax Credit HUD Consolidated ARliates 1071.os Gatca 220 Los Gams Westwood Subtatd Elimination Affiliates Partnenbim Entities Sublotal Owned, Taal CURRENTI.IABn.TP�S: 1 S95 1.595 1,525 Tend Net Aseem 20.871498 A<c9unn Peyebles: 23594.785 49289272 20] %.400 92589.457 (36.531755) 56057.702 TOTAL LIABn.ITIES AND Affiliate $ 2,475 $ 2,752 S 2,727 8 57,652 $ 65,606 S (57,631) S 7,975 $ 988,813 $ 5,089 S 1,004,977 $ (997,221) S 117,656 Trade 33,252 3,754 686 1,083 38,775 38,775 342,677 28,732 410,184 410,184 Accrued Expense 96,647 - - 96,647 1,160 97,807 596,064 756 694,627 40,926 735,553 Rent Received in Advance 25 4(i 139 210 - 210 30,741 2,702 33,653 33,653 Notes and MMgages Payable - 1,949 2,400 71,381 75,730 - 75,730 7,319,865 - 7,395,595 7,395,595 Devdopa Fees Payable _ _ _ _ - - - 316,698 - 316,698 (316,6"), - AcatuedlntereR 80,339 90,339 80,339 292.352 372.691 372.691 Taal Current Liabilities 132374 SAW 5.859 210594 357.307 (564711 300836 9.887210 40,279 10.228.325 (11629931 9065.332 LONG -TERM LLIBR8T6S, NET OF CURRENT PORTION: Naas and Mortgage Payable 400,000 2,922 153,970 1,5%,048 2,152,940 - 2,152.%0 130,629,114 4,714,950 137,497,004 (5,295,840) 132,201,164 Nae Payable to Affsliae - - - - - - - 21,615,770 21,615,"0 (21,615,770) - DeveloperFeesPayable _ - - - - 631,803 - 631,803 (631,803) Due an Affiliates - Accrvedlnters9 30325 130343 160.668 1W.66S 8.656767 980149 9.797.584 0278521 9669.T32 Told Lmg -Term Liabilities, Net orcurnam Portion 400.000 2922 184,295 1726391 2313.608 2.313.608 161.533454 5.695099 169342.161 (276712651 141.870.9% TENANT SECDRrTY DEPOSITS 5.615 4.169 32079 41.863 41863 691,341 10309 743,513 743.513 Tool Liabilities 532,374 11017 194323 1%9064 2]12]78 (564711 2.656.307 172112005 5]45687 180513.999 (298342581 151.679 ,741 OBLIGATION UNDER INTEREST RATE SWAP 613.167 613.167 613.167 NET ASSETS: Unnameted Nat Ands NonXceiftilinglateseat - - - - - - 42,009,614 42,009,614 42,009,614 Controlli'lnteret 20.869.903 908.185 1526.990 288112 23.593.190 23593.190 6278.658 20,706.40) 50.578.248 (36531:755) 14.4),11 3 Total Uninitiated Nat An" 20,869,903 908,185 1,526,990 288,112 23,593,190 - 23,593,190 48,288,272 20,7%,400 92,587,862 (36,531755) 56,056,107 Temporally Rean ided Net Aeets- Controlling Internal 1,595 - 1,595 1 S95 1.595 1,525 Tend Net Aseem 20.871498 908.185 1.526.990 288,112 23594785 23594.785 49289272 20] %.400 92589.457 (36.531755) 56057.702 TOTAL LIABn.ITIES AND NET ASSETS S 21.403.872 E 925102 E 1,721313 E 2157.176 E 26307.563 8 (56.471) 1 26251092 $221.013.4M E 26452.087 $273716623 5(65366.013) 8208.350610 -36- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF ACTIVITIES Year Ended December 31, 2013 Tool Program Se . 1ID6992 72976 94.140 475.337 1 949.445 (145.393) CH & MANAGEWM AFFMIATES 19,338.484 (3.744.792) CONSOLmATWUUEUS Suppart Smites' Management and Cmnmel 227,715 - - - 227,715 - 227,715 - - Developer& Menegemmt 100%Owned ProcerBn CH& Managemem Tex Credit 31]311 6.203 6203 Consolidated Total Support SeMms Affiliates 107 Los Goo 220 1a Gabs WeaWDW Subtmal F3im utim Affilirtes F4=.hioa Entities Subtoml Elimination TDUI UNRESTRICTED REVENUE 2032970 12.170.193 5.364.239 19572402 (3744.792) 15827610 UNRESTRICTED REVENUE AND SUPPORT: Rental Openfions, Ne S - $ 84,462 S 70,164 $ 513,151 8 667,777 S - S 667,777 S 6,795,052 S 2,525,880 $ 9,988,709 $ - S 9,988,709 Developer Fen 1,141,585 - - 1,141,585 - 1,141,585 - - 1,141,585 (1,141,585) - ManaBmnentFeea 1,208,604 - - - 1 ,208,604 (145,393) 1,063,211 - 1,063,211 (867,214) 195,997 Cants and ComsiWfiom 2,131,641 - 600 2,132,241 - 2,132,241 - - 2,132,241 (2,131,481) 760 Conn, 6onsin -Kind 825,567 - - 825,567 - 825,567 - - 825,567 825,567 Interest Income 5;518 26 K 456 6,046 - 6,046 11,158 96,638 113,842 (98,332) 15,510 Misallaneaus b., - - - 6,750 (13) 6,737 - 6,737 Loss on Pam.. hip lntemt (1,194,3$1) - - - 0,19,351) - - (1,194,351) 884,383 (309,968) Gain. Bale - Affilietc - - - - - - - 25,292,696 25,292,696 (8,292,696) - LosaonSaleofASSet (6573) (6.573) (6573) (16318) (221911 (228911 Twl Um.m tad Revenue and Support 4.111.991 84488 70210 514207 4780.896 (145.3931 463SM3 67%"2 27915201 393,17 (28646.925) 10700.421 EXPENSES: Program Services: Renal Opmations - 72,976 9,140 475,337 642,453 (145,393) 497,OW 12,170,193 5,364,239 18,031,492 (3,20,278) 14,771,214 Project Development 515,032 - - - 515,032 - 515,032 - - 515,032 (515,032) property Management 791.%0 - 791960 791.964 - 791.%0 30518 822.478 Tool Program Se . 1ID6992 72976 94.140 475.337 1 949.445 (145.393) 1 804.052 12.170.193 5364.239 19,338.484 (3.744.792) 15 593 692 Suppart Smites' Management and Cmnmel 227,715 - - - 227,715 - 227,715 - - 227,715 - 227,715 Fundnisin8 6203 . - 6.203 - 6.203 6203 6203 . Total Support SeMms 233 918 233,918 233.918 - - 233 918 233.918 Tna]Eapenses 1540910 72976 94.140 475.337 2,183363 (145393) 2032970 12.170.193 5.364.239 19572402 (3744.792) 15827610 UNRESTRICTED REVENUE ANDSUPPORTLESS EXPENSES 2571.081 11512 (23930) 38870 2397.533 2597533 0373 S51) 22550962 19.774944 (24.902.]33) 15.1271891 37- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLAP COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF ACTIVITIES (Continued) Year Ended December 31, 2013 A C,ONSOMATED ENTITIES Developer& CH& Mao xrnans 1W'h Owned Properties M mgemem Tex Credit HUD Conamidmed Afnlisms 1071 -oa Caws no Los Gems Wertwaod Subtotal Eliminadon Affiliate Pastnenbins Enfitin Submml Elimination Tmal OTHER. COMPREHENSIVE LOSS: U..W1xxd Lass on latmem Raw Swap E S E t t E S $ 226.450 3 $ 226.450 S t 226450 CHANGE IN NET ASSETS NET ASSETS, BeSluaina of Period: Unrean and Tempmerily Reobimed Taml Net Amms, Beginnin8 of Period Capiw C. buBOms Partner Di ebvflew Current Year Syndication Corp NET ASSETS, End of Period: Nves[dmed Tmupomrily Resbicmd Total Na Mae, 2571081 11.512 !239301 38.870 2.597533 2.597.533 (5.147.1011 22550962 20001394 (24902.133) (4.900.7391 18,298,822 896,673 1,550,920 249,242 20,995,657 - 20,995,657 50,715,508 (1,841,562) 69,866,603 (10,879,622) 58,986,981 1 595 1.595 1 595 1.595 1395 18.300.417 896673 1,550,920 249242 20997.252 20.997.252 $0.715.508 (1 U4 69868.198 00.879.6221 58985576 - 2,853,134 - 2,853,134 (750,W0) 2,103,134 - (8,269) - (8,269) - (8,269) - (125,000) - (125,000) (125,000) 20,869,903 908,185 1,526,990 288,112 23,593,190 23,593,190 48,288,272 20,705,400 92,587,862 (36,531,755) 56,056,107 1.595 - 1595 1.595 1.595 1,595 5 20871098 L_,9 08.185 $ 1526.990 S 288]12 S 23.594.785 S S 23.594.785 5 48.288.272 S 20706.400 $ 92589457 t(36531 )551; 56052702 mf:ID CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF FINANCIAL POSITION - DEVELOPER & MANAGEMENT AFFILIATES December 31, 2013 -39- A Chu 0u Kings ChsnOev 2112 Ekm VUUI S- Taou Pvluide Denlopm CH San Perm Smm, WJu Crony, Belovi0a. Ch4nu[c Cuim Monlary Chmiuea. ChenOU, Cbuilin. I Mexgement Developer CNC 9. CHC Itr jac HmMe P"�m .l lC JI9RSIIi� Sudoul Elm�imtiw ARiWItt CTIRReNT ASSETS: Gvb -100'A Owatd Pnfioet S 4,133." S 2,003 f - S - S - F f - f 162 f - S 384 S - E - E - S 4,136,03 S - f 4.136.025 Auounls Rcuive Merugemm F. - ARJuu[ 9;IN 35,230 - 67,612 10,4% 6,366 15,450 114.996 - 10,000 6,667 - - 378,98 - 3A,98 Advancex end dher Fm- MJkuz 336,003 25,123 - - - - 20.600 - - - - - 401,716 ( ",625) 353,101 Dtvebpu Fee Reui,pbk - ARJiokv 316,6911 - - - 316,698 - 316,698 Olhr wblex 13,28 3,24 Ped Elwes and Dx. 1926 _ _ 1.92fi 1926 TNe1 C., Awe¢ 4913.512 51,.6,'3 67.632 0.09 3 3600 113.1 _1,L X66] 5348602 (46.6251 5201.9)) Properq, Fumi[hing and Fixtures,NET 90.080 _ _ %MO - %080 WNGTERM ASSETS: Due firm Affine 117,813 111,117 318,930 M.930 M—.. M Permenhip 5351,619 9)4,)18 ("1.192) 3,2 %391 13o0,M (92) (11) 1,141,602 217,138 18,711 (1,4 %) (1,447) M,93 13,)6),8% (5350.111) ),41),129 Pr91uy MDevebpmrnt 581,932 - - 587, %1 - 50.02 Developer R. RnImbk - ARJkus 631,803 - - - - - - - 631.803 - 631.803 N.,Rum6k- ADOkIU 5,906,%5 - )3.820 - - - - - 143,000 - - - 6,123,125 (1 %,000) 5,930,)35 Aumed Mmwl R —ivabk 33,520 - - - - - - - - - - - - 33,520 - 33,520 q ,D[posiu 3.5% __ 3.598 5598 Tomll ,Term A.ew Net 13633.1% 974,718 0973M 5299.391 I1. 00` X321 111) 6,252 719 217.138 320711 X14") (JAM 24999 M=98 (5543.111) 161134.281 FUNDED RESERVES: Cub Held Su CH Cxmrel Ope ,Rermv 1,175,933 - - - - - - - - - - - 1,275,933 - 1,275,933 Cuh HeldS Remkud Otupb 1593 - 1395 1595 Toul Fmd[d Rtetrutx 1277328 _ _ _ 1.2)) 538 12" 528 TOTALAMM E 18.9N310 S 1037013 S (36).3)2) L.3367." 511".49) S fi )4 3kM 13f 678p S 211138 S 33103 f 5.168 49 749"3 S 26.593.608 S (5389.116) 5 21"3.88 -39- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF FINANCIAL POSITION - DEVELOPER & MANAGEMENT AFFILIATES (Continued) December 31, 2013 WNGTERM LIADEPTIPS, NET Or CURRENT PORTION: Naa end Mal ,a Pryabk 593000 _ 5930,0 119]000) 409.OM T9 Lme-Tnm LiaMOtiu, Ns of C .,Patin 5 % OW _ _ 5 %.000 (193,001 WIN T9ul Lkbd. 72074 4.587 1180 X3.111 IN 1395 10.M 6 3238 wL ]]1 999 1239.625) 332.374 NET ASSETS: Unmelnned Nn ASeu'. C ®tl011wg In a IS IVUI 1.07.DM 71319.9j 3.367.013 1.3n 07 I6937) 35,939 T 2K6 s 331. %5 1m (,M) 749.10 26 +>O D14 (5350111) N1.B69.903 TnW U.,I -ef Na Assn 18,I8],µ1 1,027,073 (371, %9) 3,367,013 1j21I.07 (6,837) 35, %9 1j664112 20qµ5 331,093 2,942 (3,723) 349,1µ 26,230,014 (5,350,111) 20,869,903 T1.1WN1l ReminW Ns &.Is 1 595 _ _ 1595 1.595 ToW Nd Am. I8189436 I. E]Q'(i 31719595 3.36]013 il_36. 7 (6.113]) 35139 13µ.4B3 2W345 331093 2.%2 alv) 749,166 26.221.609 15.350.1111 Ri11 >14% TOTAL AN DWIT6S AND NDTASHETS $19914310 ¢ L0x7 °Ti T(36>3 >]1 S 3367,013 1I392197 S 6V4 36 9 3f 1. 4].BT/ S 217139 r 331.093 S 3.168 f 497 /1 79993 [34.993.(-06 $ 15.589.'Afil S 2144)3 972 40- Eiep C d. Amber 2113 Sims VUUI Sm T9ms Pe ,& De,elosr& CH San Anlmio Paso Seem. CsaaoB. Bnlov)da. Cbantia. Gnus MmkraS' CNnliee, ChvineB. CI—., Me mcw Devebeer LLC 1 C ( Fie 0.u86.LLC Hom CHC LLC SuNOW £Im�matim ARdiaks CURRENT LIABILITIES: Aucuou PryeMes: wlw.B S 1.973 $ - S 4.587 S - 8 II L60 S 13.111 S 100 $ 1,395 S IO A3 $ - 1 2.226 S 2226 S 827 S 49,100 $ (46,625) 1 2,475 TWe 33,252 - - - _ _ 33,332 - 33)52 A —d Ems. M.647 %µl 9668] To Gmm Liob hl 131.874 0.387 11 No 13111 _ IN x`395 K793 = 2 116 2226 �V7 198.999 f4R6231 132374 WNGTERM LIADEPTIPS, NET Or CURRENT PORTION: Naa end Mal ,a Pryabk 593000 _ 5930,0 119]000) 409.OM T9 Lme-Tnm LiaMOtiu, Ns of C .,Patin 5 % OW _ _ 5 %.000 (193,001 WIN T9ul Lkbd. 72074 4.587 1180 X3.111 IN 1395 10.M 6 3238 wL ]]1 999 1239.625) 332.374 NET ASSETS: Unmelnned Nn ASeu'. C ®tl011wg In a IS IVUI 1.07.DM 71319.9j 3.367.013 1.3n 07 I6937) 35,939 T 2K6 s 331. %5 1m (,M) 749.10 26 +>O D14 (5350111) N1.B69.903 TnW U.,I -ef Na Assn 18,I8],µ1 1,027,073 (371, %9) 3,367,013 1j21I.07 (6,837) 35, %9 1j664112 20qµ5 331,093 2,942 (3,723) 349,1µ 26,230,014 (5,350,111) 20,869,903 T1.1WN1l ReminW Ns &.Is 1 595 _ _ 1595 1.595 ToW Nd Am. I8189436 I. E]Q'(i 31719595 3.36]013 il_36. 7 (6.113]) 35139 13µ.4B3 2W345 331093 2.%2 alv) 749,166 26.221.609 15.350.1111 Ri11 >14% TOTAL AN DWIT6S AND NDTASHETS $19914310 ¢ L0x7 °Ti T(36>3 >]1 S 3367,013 1I392197 S 6V4 36 9 3f 1. 4].BT/ S 217139 r 331.093 S 3.168 f 497 /1 79993 [34.993.(-06 $ 15.589.'Afil S 2144)3 972 40- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF ACTIVITIES - DEVELOPER & MANAGEMENT AFFILIATES Year Ended December 31, 2013 EW¢NS¢S: DEVEWPER&MANAQEWWA�U. Propm�.D -1 Dereb,. 5I3,W3 - _ ha ti [ 515.032 Nm Property MweB <mwl M196o �jqQ- _ 58.981 �5 9.50 921.326 HM2665 nub '"190 ToW Pmewn I(m8s Cluritiec Alchtt 3113 $ervic[s fitrta VeYl Sm Twus Ptrkfid[ _� 1.4¢fiM8 (1"2661 <[<lop<r& Suppet Rm CH $m M)wio Swot Paao SmNr, Qouine. Belot4dc C6m4t. Cmius MOm<rcy )Awee .w C6.iuu. C6mities. Clunik[. Mmme<mem General Der <loar Cam, LIL 1,316 06 M2,215 - 0..d LIG Hug f}j4, LLC LI SuMwl E4mivaow A1fli<lu NVRPST 215,W _J gn T_ 21" LOU 2071 1.052 Nn 272 f55 1326 1326 826 233.918 - M3.918 TOW Et .e 15M.78 888 "I 61151 1.02 2.72 25837 86 2.0" 1035 1326 1336 826 1210176 (1"2661 1540910 E NE A UT: DRVRNIIRAND POR SUPPoR F MU 563 5y_3f 3`81 F 1881 H2) F (21.365) F M295 F l9 "5 F win F (M6.]tl41 28" L__= S 4531 F 12 13 S (834) F 25]1 1181 F F 2.571.081 Dcvtlapn R. S 1111 }85 f f - $ - f - E - T - T - f - T - f - S - f - f 1111,585 f - S 1,141M5 )AawgrmeC. 1,191,00 50,389 39,913 35,188 1,126 36,050 31,038 10.000 6,67 - - 1,38],"1 (1'19,266) 1,131,"l Gun C.-1 2,131641 - - - - - - - - - - 3.131611 - 3,131611 dws W CwOibutiom m -Kmd 835,567 - - - - - - - - 835.567 - W.367 InlmmtNwme J5,513 2 - - - - - 2 - 1 - - 1} 18 - 5 }18 " Ines w PeweaBip 4uemt ( "n (12) (880,671) (126) (111) ($) (43) (30,911) (BOp (NI) (80') (805) W (1,191,351) l.w[w Sel<of Ann !63931 _ _ (6.5n) 165Y31 S.b .[ 5,291,241 50,244 (880,6]0 39,86 25,347 1,100 36,07 (285,902) (601) 9,859 5,860 005) (8) 4,391,257 (129,266) 4,111,991 ToW U.. d ¢turn... Sw 3.]91.341 50.2j _ EB! 0671) 39-M 30 1.100 3 082 285 (81111 9.859 5.80 (8051 Q 4.M1.257 11]92661 4.115.991 EW¢NS¢S: Propm�.D -1 Dereb,. 5I3,W3 - _ - 515.032 Nm Property MweB <mwl M196o �jqQ- _ 58.981 �5 9.50 921.326 HM2665 nub '"190 ToW Pmewn $ervic[s 1306992 97,M 589]1 23,785 9500 _� 1.4¢fiM8 (1"2661 1.3W"2 Suppet Rm )Awee .w General 209483 1,828 "1 2,1" 2,052 40n 2,052 "1 2,72 855 1,3M 1,316 06 M2,215 - M7,215 Fwd ft 6303 610 6203 TOW S.p $uvicee 215,W _J gn T_ 21" LOU 2071 1.052 Nn 272 f55 1326 1326 826 233.918 - M3.918 TOW Et .e 15M.78 888 "I 61151 1.02 2.72 25837 86 2.0" 1035 1326 1336 826 1210176 (1"2661 1540910 UNRRSTRSGTED DRVRNIIRAND SUPPORTLESS E% msn F MU 563 5y_3f 3`81 F 1881 H2) F (21.365) F M295 F l9 "5 F win F (M6.]tl41 28" L__= S 4531 F 12 13 S (834) F 25]1 1181 F F 2.571.081 HE CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF ACTIVITIES - DEVELOPER & MANAGEMENT AFFILIATES (Continued) Year Ended December 31, 2013 - EVE!OPM&M AOMEN'f PFlLL4 Cheetiw Kap Chmiuw ArcM1er 2113 Siem Visnl Sa Tamw Pmhside Dry<IOperA CN See MS�o S Pese4Sw0m. CrovmS Belovitl4 Charities. Caelu MoM..." Chuvn. CheeBes. (belies, Me^ee4mwl Devdorcr CM1Uitiw CHC HC LLC UC LIL LLC �}�510 jg Aoed LLC How.CNC I!L 1. GL Subdel Elmmatim A6JiM M"GEENNETASSETS S 3.]63.563 S 055841 I S M�S $ OM) 5 10170 86794 $ !28131 S (4961 $ 4.534 S (3.1311 5 034) S 2571,081 $ S 2371.01 NET ASSETS, Ee3f00i0S 01 Peri06: Umwiwed 14,419278 1,065,657 509,483 3,338 }78 1,305,342 (5.55) 35,769 1.653266 209.218 331,591 (1,592) (1,592) - n,39,933 (4, ,111) 18.29,822 TemlprmAy EesR to 1.595 1.195 2Ms TOW Nel ASUm, ae3 +enm901 Penad 104208]3 1.065657 50M �i°rjn 00,3.$. 158651 2520 239218 3 5 �1- 91 115921 - �] 22.9W 5$ (46001111 15300417 COrrtvl Pee9d C�i,w CamrlBm . 750oao n5o3o ns5aa) NET ASSETS, E0d d Peri4e: V..aw 1,187.N1 1.7,0]3 (371,959) 3,367,013 1,33,637 (6.831) 35,939 1.36,482 20,345 331.95 2,942 (3,M) ]49,166 MXO,,014 (3,350.111) 2,869,903 Temp b Eemimed 1595 L595 1595 T.A N1). , 8 U4 6 x !o2i6n S 071S59) S 3367013 S 1.328.07 S 16.83T S 35939 51366.433 S 3%M5 S 331095 S 2.942 $ 15]231 166 326.221.609 S (5350.111) S 20%/1.498 -42- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF FINANCIAL POSITION - TAX CREDIT PARTNERSHIPS December 31, 2013 -43- Smuel S9 S®AabPiO hRdweand PamS . Pueo SemrH. Kxgs Ci wg, %M ,, 2112MOmm Sep Tomes Siam Vim 1. PmBaide Tax Credit . L.P. Ph Ap SRO, L.P. LP, LP, LP. L.P. RoW. L.P. GNINs LP. LP. SNdiw_LR 11Mau1 Elimoution P. hmo CURRENTA T8: Q .PaWmahi, E IW,6% $ 143.N3 $ 91,= $ 125223 S 135,09 E 127,9" S Min $ 570 E 155,010 S 469.951 S - S 1,4 %,WI S - E I.4Y,W1 A. Rceivabke: Tmum Re ji k, 18,177 7.858 7, %7 6,2A 6,875 - 3,103 - 3.N3 4,219 - 56,921 - 56,921 Advmeeemd0.hm 751 751 Fve- Aflilkue - - - 751 - - - - PalmmM1ip Con6ibutiom 718 232.600 1,9)5 IN I IN IN 235,693 - 335,693 Raeivabk Q ,R—i.Wee - - 321 1.966 - 4,SW - 6,A1 - CM Prepaid Eepeeme and D,w. 7977 8.7" 10113 19891 17.703 20.464 7003 9.$03 3527 105.585 105.585 T.1L . Null 131. 05 162071 Imm 151.892 I ".WO 381W8 137953 670 167.956 475.'"7 100 19W.802 IA14.802 P.,m, B1 Nshliy d R.., NET 12563.M? 168911407 5. %9.in 36.434179 30"0.9W 35892 W2 14081927 25.556426 10852.812 IWW.2W 19R.M29] LONGTERM ASSETS: 4,4%.%0 4,450,000 4.450.000 he "M4 dLUe - - ho5 u 11.962,701 2,811,451 2N3.429 389.7% 17,2517,880 1],850,380 Dewl9pmml _ - Aamd Imneu 90 - 978 Raei,abk b.,We Amu, Nei 978 303,9% 46,558 16,161 181.143 176265 190,278 ]9,]33 - - - - %42% 6796 994208 6.7% pher Depmiu 3786 3.510 Toui Lose -Tern AmO. N. 307.256 44558 24"9 181.143 176.365 1 "278 71733 IL %271" 2814451 2083429 4,W9 ]96 22703.362 ll)U2362 CAS .SN7' SECURITUIPUTY DEIOSITE 84.2A 96367 ]3.2)] 1378'8 132"' 93261 29053 43.139 IR696 708922 ]08.932 NNDEDR ERVES: C hIkld for RePla —m Bvurvp 165,248 531,882 159,0)) 6 %.415 555,886 W,018 40,291 - 986,IW 683.593 - 4,29],610 - 4,2Y],610 C hHeld6 Opemdeg Rexrver "5,117 08240 2)), %9 281,566 229550 496,652 57),60) - - - 2216,T11 - 3,316,)01 Cu Mdfw Olbel 53250 W500 119.750 119]50 Rv . Tml Fu d Rexrns 1 n5A36 IN 6)0 4898 310365 "0.1 43).046 97698 17 22 LNIA50 70 W3 6634061 6.634.061 TOTAL ASEETE S 13.395697 $18.135.513 S 6.5 1111.295 237.8"1773 S 32.121]33 S 37534 W9 E 14,74650 E 11.%5.374 S 29623.412 E 14.18082] S 4939.8" S 321.013.4W E S 81013411 -43- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF FINANCIAL POSITION - TAX CREDIT PARTNERSHIPS (Continued) December 31, 2013 44- T P S Pero Snl«, San A,Lp PSRO PaseP Serra n, RmV CIOainB. "Arches, 2112 M9nlelcy foe Tones Sielro Viga 1, Pansi@ Tea Q<.AT ---LP Pleu_LP. SRO LP. LP. L Y, LP. L . LP, Rntl_LP. Gvdene LP. LP. Srvdim. LP. 9ubmW Efimvnmv Pupvshirc CURRENT P,.bkR1 AcaAJQ Pryabks: T.& S 11.590 f 101.939 E 55,446 S 48,460 S 23,13] E 15,065 S 53,650 I 129,300 I 145,261 f 101,300 S 106,856 f 98LM f i 9 Trade 8,698 6,241 11,085 22,215 16517 11,158 5,151 - 55,261 - 464 Aurced EaOSOas 10,100 1,016 1,698 10,450 4744 100 802 - 316,1" 248,499 800 596,064 - M.249 5%.m 396,061 3 %,M Rem Re¢ivedin A6v4m - S,RS 318 9,992 2,911 (3,143) 43 - 6,199 3,497 - 30,741 - 30.741 Nd MOrlgagee ,. IM,aR 9210 - 86,238 71,111 86,265 ;701 6,4U,OOn - - - ;319865 - ] }19,165 k,, Fen Payable 01.198 ;31.500 - - 316698 - 316,698 Ae.edes AcnuW lvkrcn 56 06 79318 33311 47.284 25341 24.6n II JA3 292.3$2 292352 T9 Rvl Liabiplia 230398 249.897 19,747 2520n U7531 461329 81.]13 7009.300 549,596 639590 106% 9882L0 9887210 LONGTERM LWAXITIES, NET OF CURRENT PORTION: Psgak In D<v<b� eel PWabk NaamO Mmlgagee Payable 11.04,102 12,912316 1318.009 14,011206 19,956,019 3069.865 5.810.118 3,65).9]5 13,045.171 6,018,415 3,980,940 130.6M,114 - 130629,111 Na[nPryaR 134,156 - 14,45 &640 6,922,144 21,615,720 - 21615.220 F ..bleks Des3klles @aP4P6k 63 L803 - 631,803 - 631,803 A¢med lnlaeG 901,3]9 08,m IH0161 207L619 E.054,J3J 46.399 ]91336 1.076.001 35,081 62109 8656]6] 8656.]6] T9 I ,Tm Wbi50a,NnM Q Pm 12.912115 13581 Lab 4958.865 26086.055 x010756 26616.200 61114S4 49M 926 27538192 13003081 3980940 161533454 1615134% TENANTSRLTIRITT DEPOSITS 81210 94.Ifi6 NM6 136116 129.6]3 91200 28006 41544 17.578 691341 691341 To WbihUe< 13. X33' w 13925.849 4893228 26414244 22.368.360 77.369313 621].177 11943.226 21.13004 13660.239 4090.596 172112005 122.112005 OBLIGATION UNBER INTERPSTRATEfWAP 61310 - 613.167 61).16] NRT ASSM Unn46imN NO Nalfunauilmg lwmsl - 3,134,958 1,511956 9,910,100 7,953, "7 &861,729 8919,400 1,491,06) 521"7 42909614 - 42,",614 CaotteWeg W—. W1.1"I 924718 17]]11 1499.]25 ITA 666 1300.007 (10) 220148 (705) 51031 249300 62]861 6278.658 ToW UmnOickA Nn Av fM1.193) 4013676 1689.062 11.409.829 9.753393 1016 1]36 8519.390 220148 1493358 5"388 749.300 48218.2]2 48,288.27E TvW Na Au<a (44) .1") 42101.676 16H N7 11409.829 9153.373 101",M 85193" _220.148 1493.34 520581 749300 48288272 On$2]2 TOTAL LIABILITIES AND NET ASRETS $ 13395697 f 18135525 f 6.568295 $ 37.881.0]3 I 32.121133 S 3254049 r 0.746.563 f 11963.374 f N.623.412 S 14.160.82] f 4.839.89fi f 221013.444 I 5 221013401 44- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF ACTIVITIES - TAX CREDIT PARTNERSHIPS Year Ended December 31, 2013 -45- TAX CPMrr PARTNIMS S.0 9 Anweo PeluiOn[ Pared Sexer, Paco &w 11, amer(]ovine. "0 er, 21121,(oaere7 San Taw[ Seem Vim Pa6rede Tav p[di5 S,a I.P. P1 .L.P. SRO. LP. L.P. LP. L.P. ,�P_ R.W. LP. CRrdem. L. P. LP. Smdlm. LP. &W.I evnmadon Pamntliia UNRESTRICTED REVENUE AND SUPPORT: iU..10,..,.6 Nn S 1,0]6,02] $ 999.189 S 753,853 $ 1,1 ",9W S 1,018,760 S 1090891 S 330,255 S - S 142,754 $ 20.340 S - S 6.95,052 S - S 6,95,052 OU[rtsl lnceme 1,367 5,661 2,514 337 2" In 511 - 109 153 - 11,158 - 11,158 MvalDneom I.— 15 150 934 1.382 1.382 1."2 25 - - - - 6,750 - 6.750 LwmS[1s afAeael !163165 - (16.3161 06.3183 ToDl U.m,tvl Re9en d Sappat 1.078.275 "SWO 757.301 13636& L020."0 1W3 M() 330M2 1/2.863 223493 6."6.642 - 6M..642 EXPENSES: No)mn Serrmuv'. RmYIOpeMiom 1<37566 1450.368 1040.819 2503"1 2154845 2492)64 M.742 (9) 10.663 119861 B00 121M.193 12 17019] UNRESTRC nal SUPPORT AND REVENUE LESS EXPENSES 6592915 (46556) 0.83513 0.342.3263 11.134.4055 11.399]PII _(5j.M) 9 29.10 5.02 !6W) Min 3511 (3,77].351) OTRER COMPRERENSM LOSE: Uar.J Inman Im.. R . Swap 226.450 - 2M.430 "6450 CTIANGEINNETASSETS (132,"1) ( "5565) (21,518) (1,342,326) (1.134,403) (1,399.Mo (422W) 9 29,180 5,632 (BW) (5,147,101) - (5,147.101) NUM S.&6�8Pf P.i (308552) 4,6",535 I"M85 12,752,135 10,81, "e 11,568,162 81946106 220139 (7" (MO) - 50,715408 - 50.715,508 c'..I COnOihmimn - - - - - - - - 1.5",18 558,156 750,10 2,853.134 - 2.853.134 ParN[r Dirvihurioov - ,23."1) - - - (I.mz) (4,236) - - - - (8,269) - (3269) puren[Vear SyMecadm Cwv - RS001 lB0.W01 02505 - !1230001 (125 WW) NEf A53ETSFndafPmW $ ! "1.1931; 4109.676 $ 1.659.067 SIL409.929 $ 9.753.373 5 101 "]36 58519390 5 220.148 S 1.93358 ; 520588 S 74%3W S 45.21.2" S $ 482882" -45- CURRENTASSETS: Cash- HUDFnfi6. Acceuma Receivables: Teoant Receivables Advances and Olher Few-Affiliw. OMer Aecdvebla Prepaid Expetnu end Deposin Toml Cunem Assets Properly, Fure6hie8s oed Fmturn, NET LONGTERM ASSETS: N.,R ivable- Affilim. Accmed InWm Ra mble Im�gible Aetna, Net Ta L.S.T. Assets, Net CASH - TENANT SECURrrY DEPOSITS FUNDED RESERVES: Cash Held for Replacement Renews, Cash Held fa Oher Reserves Trail Funded Aaerves TOTALASSETS CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF FINANCIAL POSITION - HUD ENTITIES December 31, 2013 HUD ENTfr@S Sienay.t I/ Stm Pine Charities San Tomas /Charities Chadfies Housing Hausi=Cotoorarion Hmsine Comomtion Camonficn Sumow Eliminefim MD Enfifi% 8 7,977 S 283,077 S 48,843 S 339,897 $ - S 339,897 B 8 8 133,695 158,463 292,158 292,158 6,840 - 6,840 - 6,840 2038 . 2038 2.0I8 10,023 423612 207306 640.941 640.941 3 992465 3.992.465 3.992465 14,458,640 6,922,244 21,380,884 - 21,380,884 528 35,081 59,251 94,860 - 94,860 33.06 33.696 33.696 3424 14493721 6981495 21509440 21509,40 ID 666 10.666 10.666 67,469 105 - 67,574 - 67,574 187 034 43,%7 231.001 231,01 254.503 M.072 298.575 298.575 S 4 301 881 S 14961.405 S 7.188101 S 26,452 087 S S 264S2087 46- CURRENT LIABILITIES: Accounts Pnyablea. Affilinm T.& Rmt Recnived in Advance T9u1 Currrns Liabilities LONGTERM LIABIIMS, NET OF CURRENT PORTION: Notes and Mongages Pryeble Accrued Interen Tout Lang-Testn Lmbilifi.F Nn of Current Portion TENANT SECURITY DEPOSITS Tml Labilities NETASSETS: Unnnsbiu Nn Aum. Comrnlling mterm Tml Nat Assets TOTAL LIABILITIES AND NET ASSETS CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF FINANCIAL POSITION - HUD ENTITIES (Continued) December 31, 2013 HUD ENTRIES Siem Yw I/ Stoney Pine Cbani. SanTmw/Chann. CW6.11awing Hwsina Comontion Hnuslne COmorafion Casooufion Subtml Eliromefian HUD Enfiti, S 4,122 S 3,131 S 836 S 8,089 S - S 8,089 8,560 5,512 14,660 28,732 - 28,7)2 756 - 756 - 756 24 2.678 2,702 2.702 13,462 11 321 15A96 40.279 40.279 4,714,950 - - 4,714,950 - 4,714,950 980.149 980.149 980.149 5 695 099 5695,099 5 695.099 10.318 (91 10,309 10309 5.718.879 11.312 154% 5745.687 5,745687 (1416.998) 14950093 2173305 20706.400 20]06.400 (1.416.998) 14 950.093 7J73305 20 706.400 20.706.400 S 4.301.881 S 14.961405 S 7.188.801 S 26452.087 S 3 26.452.087 47- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) AND AFFILIATES CONSOLIDATING SCHEDULE OF ACTIVITIES - HIM ENTITIES Year Ended December 31, 2013 48- rn ENfffflE3 slerte Vim 1( StonryPine CBeafiea an S Tomaa/Chaaau Chaaau H dng H.sina Comoua. H mma Comoua. Cor.ra6. Subrnni Elimima, 13HD Fnaau UNSUPP OCTED REVENUE AND SUPPORT: Rental OPentiolu, Net 5 188,038 S 1,709,572 S 6 ,264 S 2,525,880 S - S 2,525,880 Inleren Income 1,334 35,782 59,522 %,638 - 96,638 ALaullaneo9s income - (13) - (13) - (13) Gain. Sale - Aifilime 17.574662 7,718.034 25.291696 25292696 T9ml Uuremicred Revenue and Suppon 189372 19320009 8.405.820 27915101 27.915201 EXPENSES: ft p Services: Rental Operaa.s 348.083 3,820967 1.195.289 5.364.239 5364139 Taal &,nau 348.083 3.820.367 1.195389 5.361.239 5364.239 GRANGE IN NET ASSETS (158,711) 15,499,142 7,210,531 22,550,962 - 22,550,962 NET ASSETS, RegiomWg of Yur (1158.2871 (549.049) (372261 0844562) (1844.5621 NETASSETS,Endof Year $ (1416.998) S 14950.093 S 7.173305 S 20706.40D S S 20706.400 48- ADDITIONAL SUPPLEMENTARY INFORMATION CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended December 31, 2013 Federal Grantor U. S. Department of Housing and Urban Development (HUD) -49- Federal CFDA Federal Title of Program Number Expenditures Supportive Housing Program: 14.235 McKinney Grant- Pasco Seater $ 400,000 McKinney Grant - San Antonio 400.000 Total Supportive Housing Program 800,000 HOME Investment Partnerships Programs: 14.239 Passed through Loan - City of Santa Clara (Westwood) 600.720 Community Development Block Grants/Entitlement Grants: 14.218 Passed through Loans Made in Prior Years for Which Continuing Compliance is Required: County of Santa Clara - 107 Los Gatos 4,871 City of San Jose 400.000 Total Community Development Block Grants/Entitlement Grants 404.871 Section 8 Housing Choice Vouchers (Westwood) 14.871 34.611 Lower Income Housing Assistance Program- Section 8 14.856 Moderate Rehabilitation (Westwood) 99.611 Total $ 1.939.813 -49- CHARITIES HOUSING DEVELOPMENT CORPORATION OF SANTA CLARA COUNTY (A California Nonprofit Public Benefit Corporation) NOTES TO SCHEDULE OF EXPEA OF FEDERAL AWARDS NOTE I - BASIS OF PRESENTATION: The accompanying schedule of expenditures of federal awards (the "Schedule ") includes the federal grant and loan activity of Charities Housing Development Corporation of Santa Clara County under programs of the federal government for the year ended December 31, 2013. The information in this schedule is presented in accordance with the requirements of OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Because the Schedule presents only a selected portion of the operations of Charities Housing Development Corporation of Santa Clara County, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Charities Housing Development Corporation of Santa Clara County. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Expenditures - Expenditures reported on the schedule of expenditures of federal awards are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the OMB Circular A -122, Cost Principles for Non - Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. -50- CHARITIES HOUSING DEVELOPMENT CORPORATION of Santa Clara County (A California Nonprofit Public Benefit Corporation) SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ending December 31, 2013 SUMMARY OF AUDITOR'S RESULTS: 1. The auditor's report expresses an unmodified opinion on the consolidated financial statements of Chanties Housing Development Corporation of Santa Clara County. 2. No significant deficiencies in internal control are reported in the Independent Auditor's report on Compliance and on the Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. 3. No instances of noncompliance material to the consolidated financial statements of Charities Housing Development Corporation of Santa Clara County, which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. 4. No significant deficiencies in internal control over major federal award programs are reported in the Independent Auditor's Report on Compliance for Each Major Program and on Internal Control over Compliance required by OMB Circular A -133. 5. The auditor's report on compliance for the major federal award program for Charities Housing Development Corporation of Santa Clara County expresses an unmodified opinion on the major federal programs. 6. There were no audit findings required to be reported in accordance with Section 510(a) of OMB Circular A -133 7. The program tested as a major program was: DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 14.235 Supportive Housing Program 8. The threshold used for distinguishing between Type A and B programs was $300,000. 9. Charities Housing Development Corporation of Santa Clara County qualified as a low -risk auditee. -51- CHARITIES HOUSING DEVELOPMENT CORPORATION of Santa Clara County (A California Nonprofit Public Benefit Corporation) SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) For the Year Ending December 31, 2013 CURRENT YEAR AUDIT FINDINGS: NONE PRIOR YEAR AUDIT FINDINGS: NONE -52- Thomas C. Bondi Lawrence S. Kuechler Roberto M. Maragoni Frank A. Minuti, Jr. FOUNDERS Alexander W. Berger (1916 -2005) Griffith R. Lewis (1930 -2012) BERGER LEWIS__ A C C O U N T A N C Y C 0 R P O R A T 1 O N CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH G0VERNMENTAUDITING STANDARDS To the Board of Directors Charities Housing Development Corporation of Santa Clara County (A California Nonprofit Public Benefit Corporation) San Jose, California Daniel C. Moors Randy G. Peterson Todd W. Robinson David R. Sheets Robert W. Smiley 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 consolidated financial statements of Charities Housing Development Corporation of Santa Clara County (a California nonprofit public benefit corporation), which comprise the statement of financial position as of December 31, 2013, and the related statements of activities, and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated May 5, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the consolidated financial statements, we considered Charities Housing Development Corporation'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 opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of Charities Housing Development Corporation's internal control. Accordingly, we do not express an opinion on the effectiveness of Charities Housing Development Corporation'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 Organization's consolidated 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. 55 ALMADEN BLVD, SUITE 600 SAN JOSE, CA 95113 -1605 (408) 494 -1200 (P) (408) 279 -8186 (F) MEMBER OF AGiY AN ASSOCIATION OF SEPARATE AND INDEPENDENT ACCOUNTING & CONSULTING FIRMS -53- 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 Charities Housing Development Corporation's consolidated 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 consolidated 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 Organization'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 Organization's 's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. �1 BERGER LEWIS ACCOUNTANCY CORPORATION San Jose, California May 5, 2014 -54- Thomas C. Bondi ✓- BERGER - LEWIS Lawrence S. Kuechler Roberto M. Maragoni "-""'� _.._._.____.- -,___. ...-- ._.___. -__.- Frank A. Mlnutl, Jr. A C C O U N T A N C Y C O R P O R A T I O N FOUNDERS— ..— _-- ._._ –__.- Alexander W. Berger (1916 -2005) CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS Griffith R. Lewis (1930 -2012) INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A -133 INDEPENDENT AUDTTOR'S REPORT To the Board of Directors Charities Housing Development Corporation of Santa Clara County (A California Nonprofit Public Benefit Corporation) San Jose, California Report on Compliance for Each Major Federal Program Daniel C. Moors Randy G. Peterson Todd W. Robinson David R. Sheets Robert W. Smiley We have audited Charities Housing Development Corporation of Santa Clara County's (a California nonprofit public benefit corporation) compliance with the types of compliance requirements described in the OMB Circular A -133 Compliance Supplement that could have a direct and material effect on each of Charities Housing Development Corporation's major federal programs for the year ended December 31, 2013. Charities Housing Development Corporation's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's ResponsibWly Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of Charities Housing Development Corporation's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Those standards and OMB Circular A -133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Charities Housing Development Corporation's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Charities Housing Development Corporation's compliance. 55 ALMADEN BLVD. SUITE 600 SAN JOSE, CA 95113 -1605 (408) 494 -1200 (P) (408) 279 -8186 (F) MEMBER OF QGN AN ASSOCIATION OF SEPARATE AN ?INDEPENDENT ACCOUNTING & CONSULTING FIRMS Opinion on Each Major Federal Program In our opinion, Charities Housing Development Corporation complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2013. Report on Internal Control Over Compliance Management of Charities Housing Development Corporation is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Charities Housing Development Corporation's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A -133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Charities Housing Development Corporation's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A -133. Accordingly, this report is not suitable for any other purpose. -56- Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A -133 We have audited the consolidated financial statements of Charities Housing Development Corporation as of and for the year ended December 31, 2013, and have issued our report thereon dated May 5, 2014, which contained an unmodified opinion on those consolidated financial statements. Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A -133 and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the consolidated financial statements as a whole. BERGER LEWIS ACCOUNTANCY CORPORATION San Jose, California May 5, 2014 57- This Page Intentionally Left Blank OFFICERS: CHAIR Michael Schall Essex Property Trust 925 E. Meadow Drive Palo Alto, CA 94303 President and Chief Executive Officer Term expires: December 31, 2015 VICE -CHAIR Mark Mikl Essex Property Trust 925 E. Meadow Drive Palo Alto, CA 94303 Senior Vice President Term expires: December 31, 2013 SECRETARY Martin Hypolite - resident 1909 Hackett Avenue, Apt. #33 Mountain View, CA 94043 Retail Term expires: December 31, 2014 TREASURER Hugh Isola 905 Mockingbird Lane Palo Alto, CA 94113 Retired: Real Estate Attorney, Berliner Cohen Term expires: December 31, 2014 ASST. SECRETARY (only in abmm ofsecmay) [vacant) MEMBERS: Aster Teklu - resident 825 S. San Tomas Aquino Road, #44 Campbell, CA 95008 Homemaker Term expires: December 31, 2015 Debbie Ferreira - resident 825 S. San Tomas Aquino Road, #8 Campbell, CA 95008 Homemaker Term expires: December 31, 2015 Mickel McLaren - resident 925S i San Tomas Road, #43 Campbell, CA 95008 Student Term expires: December 31, 2015 Charities Housing Board of Directors Roster CO- TERMINUS MEMBERS: PRESIDENT Greg Kepferle Catholic Charities of Santa Clara County 2526 Zanker Road San Jose, CA 95134 CEO No tern (co- terminus with position) Dan Wu Charities Housing 1400 Parkmoor Avenue, Suite 190 San Jose, CA 95126 Executive Director No term (co- terminus with position) Revised: October 27, 2014 ATTAcIt 4ENT 4 This Page Intentionally Left Blank