Attachment 16 - Charities Housing financial statementCHARITIES HOUSING DEVELOPMENT CORPORATION
OF SANTA CLARA COUNTY
(A California Nonprofit Public Benefit Corporation)
AND AFFILIATES
krs
CONSOLIDATED FINANCIAL STATEMENTS
AND
SUPPLEMENTARY INFORMATION
Years Ended December 31, 2013 and 2012
ATTACHMENT 1 6
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 M C. Bondi p+` �yGE LEWIS
Lawrence S. Buechler j�-g�' j(,�/\
Roberta M. Maragoni
_.. .__..,,.... .. ....
Frank A. PAInuEi, Jr. A c c o u N r a .v c v c o a r o k ,a r I o ry
FOUNDERS
Al CERTIFIED PUBLIC ACCOUNT- ANTSAND BUSINESS ADVISORS
exander W. Berger (19i6 -2Utl5}
Griffith R. LemAs (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
Davie. R. Sheets
Robert W. Smiley
We have audited the accompanying consolidated financial statements of Charities Housing
Development Corporation of Santa Clara County (a Califomia 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 fur 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 auditors 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 9 51 13 -1605 (408) 494 -1200 till (408) 2798186 (F)
MFMBER OF AGiV 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
_Mays, 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
Due from Affiliates
2013
2012
CURRENT ASSETS:
1,141,510
1,451,479
Cash - CH & Mngt. Affiliates
$ 4,354,780
$ 1,035,422
Cash - Partnerships /HUD Entities
1,838,958
2,020,900
Accounts Receivables:
400,000
400,000
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
6.752.597
8.500.502
Property, Furnishings and Fixtures, NET
167.976.872
171.891552
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
10394
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
CURRENT LIABILITIES:
Accounts Payables:
Affiliates
Trade
Accrued Expenses
Rent Received in Advance
Notes and Mortgages Payable
Accrued Interest
Total Current Liabilities
LONG -TERM LIABILITIES, NET OF CURRENT
PORTION:
Notes and Mortgages Payable
Due to Affiliates
Accrued Interest
Total Long -Term Liabilities, Net of Current Portion
TENANT SECURITY DEPOSITS
Total Liabilities
OBLIGATION UNDER INTEREST RATE SWAP
NET ASSETS:
Unrestricted Net Assets:
Non - Controlling Interest
Controlling Interest
Total Unrestricted Net Assets
Temporarily Restricted Net Assets - Controlling Interest
Total Net Assets
TOTAL LIABILITIES AND NET ASSETS
2013 2012
$ 117,656 $
145,066
410,184
339,235
735,553
407,114
33,653
6,657
7,395,595
846,297
372.691
338.404
9.065.332 2.082.773
132,201,164 133,114,959
- 5,625
9.669.732 7.728.715
141.870.896
743.513
151.679.741
613.167
140.849.299
738.528
143.670.600
839.617
42,009,614 44,304,984
14.046A93 14.681.997
56,056,107 58,986,981
1.595 1.595
56.057.702 58.988.576
$208.350.610 $201498.793
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):
Unrealized Gain (Loss) on Interest Rate Swap
CHANGE IN NET ASSETS *
2013 2012
$ 9,988,709
195,997
760
825,567
15,510
6,737
(309,968)
(22.891)
10.700.421
$ 9,568,131
161,595
18,352
75,558
353,534
32,826
95,926
(214)
(4.193)
10.301.515
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)
226.450 (6.0411
$ (4.900.739) $ (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.
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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
Non -
Controlling
Total Net
Controlling 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
(5.405.370)
(4.346.0311
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
(125.000)
(125.000)
Balance at December 31, 2013 $ 14.046.493 $ 1,595 $ $ 14.048.088
$ 42.009.614
$ 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 their
investment, the limited partners' equity cannot be reduced below zero unless future capital contributions will he 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
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 (2316,3211 (7,991,132)
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.
a
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
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
3,056,322
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 Count' - 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 11, 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)
Sierra 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 Mana¢ement 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 1 - 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.
Pensione 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 Charities 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 Charities ceases to exist, this authority passes to the Roman
Catholic Bishop of San Jose.
Catholic Charities 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 terms 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
ME,E
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.
Proiects 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 I) 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 I - 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.
Property 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 Intemal 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-
As of December 31, 2012, the Organization's property, furnishings and fixtures consisted of the
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
107 220 Tax Credit
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
$ 385,755
$ 663,362
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 18J91 3,300 2,129 2.416.161 44.531
2,530,189
Total Property,
7,357,170
Building and Building
Improvements -
Furnishings and
1,407,342
2,097,892
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) (434316) (1.549.938) (21.549.871) (1173.503)
(24.953.313)
Property
54,493
3,931,594
Furnishings
Furnishings and Fixtures 41,390
18,191
and Fixtures,
Net
$ 90.080 $ 866.710 $ 1.641.893 $ 1.931.708 $ 159.454.016 $ 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 Gatos
Los Gatos
Westwood
Partnerships
HUD Entities
Total
Land $ -
$ 385,755
$ 663,362
$ 754,870
$ 29,190,490
$ 5,463,474
$ 36,457,951
Land Improvements -
-
2,205
62,050
6,925,033
367,882
7,357,170
Building and Building
Improvements -
590,411
1,407,342
2,097,892
131,122,230
14,196,005
149,413,880
Building Renovations 120,429
141,812
-
473,442
54,493
3,931,594
4,721,770
Furnishings and Fixtures 41,390
18,191
3.300
2.129
2.402.419
936.334
3.403.763
Total Property,
Furnishings and
Fixtures 161,819
1,136,169
2,076,209
3,390,383
169,694,665
24,895,289
201,354,534
Accumulated
Depreciation (68.839)
(2493301
(398.655)
(1,448.743)
(17.626.230)
(9.670.785)
(29.4629821
Property
Furnishings
and Fixtures,
Net $ 92.980
$ 886.439
13 1.677.554
$ 1.941.640
L1141.6
$ 15124.504
$ 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) *
Sierra 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 Siena 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
(485.0571 (795.5611
$ 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 $ 1.032.978
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 mortgages payable as of December 31
Westwood Apartments:
City of Santa Clara (HOME) note
Maturity
Interest
Payment
(2)
Date
Rate
Terms 2013 2012
CH:
1, 2025
5.63%
(3)
City of San Jose note
Jan. 2, 2021
0.00%
(7) $ 400,000 $ 400,000
Wells Fargo Community
Development Corporation note
Jun. 10, 2014
2.00%
(8) - 200,000
Westwood Apartments:
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):
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 Senter 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
AM? note
Dec. 1, 2016
Maturity
Interest
Payment
329,452
Jan. 12, 2062
3.00%
Date
Rate
Terms
2013
2012
Tax Credit Partnerships:
809,000
809,000
Apr. 24, 2057
0.00%
(4)
Sunset Square, L.P.:
2,467,451
Apr. 24, 2057
0.00%
(4)
2,188,814
Berkadia note
lun.1,2034
4.71%
(3)
$ 3,921,394
$ 4,019,113
City of San Jose note 1
Jul. 1, 2042
3.00%
(2)
2,429,900
2,429,900
City of San Jose note 2
Sep. 30, 2035
3.00%
(3)
286,128
295,713
City of San Jose note 3
Sep. 30, 2061
0.00%
(2)
3,915,125
3,915,125
Opportunity Fund note
Feb. 2, 2034
2.00%
(2)
500,000
500,000
County of Santa Clara (HOME) note
May 3, 2060
6.00%
(4)
118,367
118,367
Pension Bird SRO, L.P.:
0.00%
(4)
500,000
500,000
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 Senter 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
AM? 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):
Parkside Studios, L.P.:
City of Sunnyvale (Local) note
County of Santa Clara CDBG
County of Santa Clan CDBG
County of Santa Clan (HOME) note
San Tomas Gardens, L.P.:
Citibank note
Sierra Vista 1, L.P.:
Citibank note
City of Mountain View note
HUD Entities:
San Tomas /Charities Housing
Corporation:
PNC Multifamily Finance, Inc. note
Oct.
Maturity
Interest
Payment
3,148,447 -
Mar.
19, 2069
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.:
Sept.
1, 2070
Various
(1)
5,649,445 -
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
CalHFA 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
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.:
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
Ca1HFA note
Oct. 1, 2067
0.00%
(2)
597,783
600,000
Parkside Studios, L.P.:
City of Sunnyvale (Local) note
County of Santa Clara CDBG
County of Santa Clan CDBG
County of Santa Clan (HOME) note
San Tomas Gardens, L.P.:
Citibank note
Sierra Vista 1, L.P.:
Citibank note
City of Mountain View note
HUD Entities:
San Tomas /Charities Housing
Corporation:
PNC Multifamily Finance, Inc. note
Oct.
1, 2069
Various
(5)
3,148,447 -
Mar.
19, 2069
3.00%
(2)
400,000 -
Mar.
19, 2069
3.00%
(2)
232,493 -
Dec.
17,2068
3.00%
(2)
200,000 -
Oct.
1, 2045
Various
(1)
13,045,171 -
Sept.
1, 2070
Various
(1)
5,649,445 -
Oct.
1, 2070
3.28%
(4)
368,983 -
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 Clara (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 -Term Portion
Maturity
Interest
Payment
(7)
Date
Rate
Terms 2013
2012
3.00%
(4)
420,000
420,000
Apr. 1, 2016
3.00%
(11) $ -
$ 42,432
Apr. 1, 2036
0.00%
(2) -
226,229
Aug. 1, 2035
5.67%
(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
(7395.595) (846.297)
$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 I, 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 we 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 aantun 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 terms 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 lose 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 tranches 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:
2013
2012
$ 8,821,267
$ 6,812,235
980,149
979,132
210,682
248,862
30,325
25,890
NEEMENIKOH4
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 be 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.
WPM
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 Propertv 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 Manaeement 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:
2013
2012
Receivables from Affiliates:
Due from Belovida Santa Clara, L.P.:
Partnership Management Fee
$ 6,366
$ 5,241
Property Management Fee
1,167
1,167
Other
358
509
HomeSafe Santa Clara, L.P.:
Notes Receivable
400,000
400,000
Operating Deficit Advances
88,930
77,617
Partnership Management Fee
50,000
40,000
Property Management Fee
1,042
1,042
Other
487
428
Due from HS San Jose, L.P.:
Operating Deficit Loan
140,000
140,000
Partnership Management Fee
64,996
50,958
Management Fee
1,042
1,041
Other
483
430
Raymond James Tax Credit Fund 36, LLC:
Kings Crossing, L.P.'s Capital Contribution
232,500
4,591,944
Wells Fargo Affordable Housing Community Development
Corporation:
90 Archer, L.P.'s Capital Contribution
-
227,741
All Properties:
Other
1.469
7.901
Total Receivables from Affiliates
$ 988.840
$ 5.546.019
W!z
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 terns 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:
Partnershio 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
Pensione Bird SRO, L.P. 01/01/2015- 06/30/2016
HomeSafe Santa Clara, L.P. 01/01/2017- 12/31/2018
Sunset Square, L.P. 01/01/2018- 12/31/2019.
HS San Jose, L.P. 01/01/2019- 12/31/2020
San Antonio Place, L.P. 01/01/2021- 12/31/2022
Paseo Senter, L.P. 01/01/2019- 12/31/2026
Paseo Senter II, L.P. 01/01/2019 - 12/31/2026
90 Archer, L.P. 01/01/2027 - 12/31/2028
Kings Crossing, L.P. 01/01/2023 - 12/31/2029
-32-
Refusal
07/01/2016-12/31/2016
01 /01/2017-06/30/2017
01/0 1 /2018 -12/31 /2019
01/01/2019- 12/31/2020
01/01/2021- 12/31/2022
01 /01/2023 -12/31 /2026
01 /01/2023 -12/31 /2026
01/01/2027- 12/31/2028
01/01/2023-12/31/2029
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
Contineencies 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
Contineencies 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
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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)
VAR
Federal CFDA
Federal
Title of Program
Number
Expenditures
Supportive Housing Program:
14.235
McKinney Grant - Paseo Senter
$ 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
VAR
CHARITIES HOUSING DEVELOPMENT CORPORATION
OF SANTA CLARA COUNTY
(A California Nonprofit Public Benefit Corporation)
NOTES TO SCHEDULE OF EXPENDITURES
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
Charities 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.
1%11e
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. Buechler
Roberto M. MaraP.oni
Frank A. Minuti. Ir.
FOUNDERS
Alexander W. Berger (1916 -2005)
Griffith R. Lewis (1930 -2012)
BirRGE A LEWIS
-7,
A C C O U N T A N C Y C U R F O R 6 T! 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
GOVERNMSNTAUDITING 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. ?eterson
Todd W. Robinson
David R. Sheets
Robert W. Schley
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 propose 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 95)13-1605 (408) 494 -1200 (P) (408) 279 -8186 (F)
MEMBER OF AM 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.
f� �64,
BERGER LEWIS ACCOUNTANCY CORPORATION
San Jose, California
May 5, 2014
-54-
Thomas Bondi
Lawrence S. Kuec her
Roberto M .Maa gdni {E RGE ` LEWIS
Frank A. Minuti.jr. A C c o U h i A N C Y C O R" O R A T 1 G N
FOUNDERS Berger (19 t6-
Alexander Nl 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 AUDITOR'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
Dm,id 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 Responsibility
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 COO SAN JOSF_, CA 95113 -1605 (408) 494 -1200 (P) (408) 279 -6186 (F)
.MEMBER OF :�. G.I AN ASSOCIATION OF SEPARATE ANF ?NDEPENDENT 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-
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