Eagle Riverview Affordable Housing Corporation (A Colorado Non-Profit Corporation and A Component Unit of Eagle County, Colorado) Financial Statements

Transcription

1 Financial Statements

2 Financial Statements TABLE OF CONTENTS Page(s) INDEPENDENT AUDITOR S REPORT 1 Statement of Financial Position 2 Statement of Activities 3 Statement of Cash Flows Supplemental Schedule: Schedule of Budget and Actual Comparison 14 i

3 M & A McMahan and Associates, l.l.c. Certified Public Accountants and Consultants Web Site: Chapel Square, Bldg C Main Office: (970) Chapel Place, Suite 300 Facsimile: (970) P.O. Box 5850, Avon, CO mcmahan@mcmahancpa.com To the Board of Directors Eagle Riverview Affordable Housing Corporation Eagle-Vail, Colorado INDEPENDENT AUDITOR'S REPORT We have audited the accompanying statement of financial position of Eagle Riverview Affordable Housing Corporation (the Corporation ), a Colorado non-profit corporation and a component unit of Eagle County, Colorado, as of and the related statements of activities, and cash flows for the years then ended. These financial statements are the responsibility of the Corporation s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Eagle Riverview Affordable Housing Corporation as of, and the changes in net assets and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Budget and Actual Comparison (page 14) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited" on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements; and in our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. McMahan and Associates, L.L.C. September 16, 2011 Member: American Institute of Certified Public Accountants D. Jerry McMahan, C.P.A. Daniel R. Cudahy, C.P.A. Paul J. Backes, C.P.A. Michael N. Jenkins, C.A., C.P.A. Avon Aspen Frisco (970) (970) (970)

4 Statement of Financial Position Assets: Current Assets: Cash and cash equivalents - Unrestricted 22, ,330 Cash and cash equivalents - Restricted - 1,386,812 Accounts receivable - net 35,872 77,660 Prepaid expenses - 2,940 Total - Current Assets 58,700 2,088,742 Note receivable 2,172,000 - Bond issue costs, net of accumulated amortization - 99,219 Fixed assets, net of accumulated depreciation - 5,322,426 Total Assets 2,230,700 7,510,387 Liabilities and Net Assets: Liabilities: Current Liabilities: Accounts payable - 75,233 Deferred revenues - 15,000 Accrued interest payable on long-term debt - 160,108 Tenant security deposits - 25,801 Current portion of long-term debt - 130,000 Total - Current Liabilities - 406,142 Long-term debt, net of current portion - 5,975,000 Total Liabilities - 6,381,142 Net Assets - Unrestricted 2,230,700 1,129,245 Total Liabilities and Net Assets 2,230,700 7,510,387 The accompanying notes are an integral part of these financial statements. 2

5 Statement of Activities For the Years Ended Revenues: Tenant rents 165, ,253 Tenant assistance payments 506, ,627 Total - Rental revenues 672,363 1,173,880 Laundry 7,337 13,706 Other 13,418 2,227 Total Revenues 693,118 1,189,813 Expenses: Repairs and maintenance 78, ,222 Utilities 46,692 74,250 General and administration 668, ,907 Management fees 25,965 45,460 Insurance 4,200 7,181 Depreciation 112, ,791 Total Operating Expenses 936, ,811 Income (Loss) from Operations (242,964) 514,002 Other Income (Expenses): Interest income 62,328 27,109 Gain on disposal of assets 1,658,422 - Loss on bond redemption (158,226) - Interest expense (213,380) (323,910) Amortization of bond issue costs (4,725) (7,161) Change in Net Assets 1,101, ,040 Net Assets - Unrestricted - Beginning 1,129, ,205 Net Assets - Unrestricted - Ending 2,230,700 1,129,245 The accompanying notes are an integral part of these financial statements. 3

6 Statement of Cash Flows For the Years Ended Cash Flows from Operations: Cash received for rent 771,866 1,080,873 Cash received from (refunded to) tenants for security deposits, net - (4,017) Other cash receipts 13,236 31,280 Cash paid for wages and benefits (78,195) (234,012) Cash paid for goods and services (847,240) (219,460) Net Cash Provided (Used) by Operating Activities (140,333) 654,664 Cash Flows from Capital and Related Financing Activities: Cash received on issuance of bonds and notes 5,205,000 - Principal repaid on bonds and notes (11,310,000) (125,000) Bond redemption costs paid (63,732) - Interest paid (373,488) (327,565) Net Cash Provided (Used) by Financing Activities (6,542,220) (452,565) Cash Flows from Investing Activities: Interest received 26,456 27,109 Proceeds on disposal of fixed assets 4,670,783 - Cash paid to purchase fixed assets - (270,220) Net Cash Provided (Used) by Investing Activities 4,697,239 (243,111) Net Increase (Decrease) in Cash and Cash Equivalents (1,985,314) (41,012) Cash and Cash Equivalents - Beginning 2,008,142 2,049,154 Cash and Cash Equivalents - Ending 22,828 2,008,142 Cash and Cash Equivalents - Ending is comprised of: Cash and cash equivalents - Unrestricted 22, ,330 Cash and cash equivalents - Restricted - 1,386,812 Total - Cash and Cash Equivalents 22,828 2,008,142 Reconciliation of Income (Loss) from Operations to Net Cash Provided (Used) by Operating Activities: Income (loss) from operations (242,964) 514,002 Adjustments to reconcile: Depreciation 112, ,791 (Increase) decrease in accounts receivable 77,660 (77,660) (Increase) decrease in prepaid expenses 2,940 (945) Increase (decrease) in accounts payable (75,233) 38,493 Increase (decrease) in other liabilities (15,000) (4,017) Total Adjustments 102, ,662 Net Cash Provided (Used) by Operating Activities (140,333) 654,664 The accompanying notes are an integral part of these financial statements. 4

7 1. Organization Eagle Riverview Affordable Housing Corporation ("Corporation") was incorporated on April 4, 1999 as a Colorado non-profit corporation for the operation, maintenance, and development of decent, safe, and sanitary housing at affordable rental rates to individuals or families of low to moderate income in Eagle County, Colorado ( County ). The Corporation owned and operated, exclusively on behalf of and for the benefit of the County, a 72-unit rental housing project known as Riverview Apartments (the Project ) located in unincorporated Eagle County. The Corporation sold this property in The formation of the Corporation was approved by the County, and its operations are governed by a Board of Directors ( Board ) appointed by the County s Board of County Commissioners. The Corporation is considered to be a component unit of the County, and its financial position, activities, and cash flow are included in the County s separate 2010 and 2009 financial statements. The Corporation began operations in The original acquisition of the Project was financed by the issuance of revenue bonds ( Bonds ) which were secured by a pledge of revenues from the Project and by a trust indenture ( Indenture ) between the Corporation and The Bank of Cherry Creek ( Trustee ). Under the terms of the Indenture, all revenues are deposited with the Trustee for determination of the priority of payments (see Note 3). The County has no financial obligation for the debt or operations of the Corporation. Rents of low income tenants within the Project were subsidized by the U.S. Department of Housing and Urban Development ( HUD ) through a Section 8 Housing Assistance Payments contract ( HAP Contract ) with the Corporation. 2. Summary of Significant Accounting Policies A. Reporting Entity The Corporation was formed under the laws of the State of Colorado and operates under the direction of the Board. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of Corporation. No additional separate governmental units, agencies, or non-profit corporations are included in the financial statements of the Corporation since none were discovered to fall within the oversight responsibility based upon the application of the following criteria: financial accountability, appointment of a voting majority of the organization's governing body, ability to impose its will on the organization, a potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. The Corporation does not exercise oversight responsibility over any other entity. However, the Corporation is a component unit of the County. B. Basis of Accounting The Corporation utilizes the accrual basis of accounting, whereby revenues are recognized when earned and expenses are recognized when incurred. C. Cash Equivalents For the purposes of the Statement of Cash Flows, the Corporation defines cash equivalents as all cash, money market, and savings accounts, plus all investments with original maturities of three months or less. 5

8 (Continued) 2. Summary of Significant Accounting Policies (continued) D. Restricted Assets Certain of the Corporation s assets are classified as restricted assets because their use is restricted to specific purposes by bond indentures or other binding commitments. E. Allowance for Uncollectible Accounts The Corporation uses the allowance method to recognize the potential uncollectibility of receivables. No allowance for bad debts was recorded at, since all receivables were considered collectible. F. Bond Issue Costs Costs incurred by the Corporation in connection with the issuance of bonds used to finance the original acquisition of the Project are amortized over the term to maturity of the bonds, using the bonds outstanding method, which approximates the effective interest method. G. Fixed Assets Fixed assets were recorded at cost and depreciated using the straight-line method over the following estimated useful lives of the underlying assets: Buildings and improvements Furniture and equipment Land was reported at cost and is not subject to depreciation years 5 years H. Deferred Revenue Deferred revenue consists of unexpended capital grants received prior to year-end. I. Federal and State Income Tax The Corporation was formed in accordance with Internal Revenue Service Revenue Ruling 63-20, which provides that a non-profit corporation may issue tax-exempt bonds for low and moderate income rental housing if it does so "on behalf of a governmental entity". The Corporation has complied with the provisions of Revenue Ruling and, therefore, is exempt from federal and state income taxes. J. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. K. Comparative Information Certain 2009 amounts have been reclassified to conform to the 2010 financial statement presentation. 6

9 (Continued) 2. Summary of Significant Accounting Policies (continued) L. Subsequent Events 3. Trust Indenture Management has evaluated subsequent events through September 16, 2011; the date these financial statements were available to be issued. The Corporation s acquisition of the Project was financed through issuance of the Bonds, which are secured by a pledge of revenues from the Project and by an Indenture between the Corporation and the Trustee. Under the terms of the Indenture, all revenues are deposited with the Trustee for payment as follows: A. Revenue Account: Monies collected and deposited into the depository accounts are swept into the Revenue Account. On the 25 th day of each month, all amounts are swept from the Revenue Account and distributed to the other accounts in accordance with the Indenture. B. Bond Fund Series 1999A Account: Required to be equal to the next maturing principal and interest payments on the 1999A Bonds. C. Operations and Maintenance Account: A monthly deposit with the management company in an amount equal to the monthly budget filed with the Trustee. D. Unpaid Management Fee Account: An amount equal to any unpaid management fees. E. Excess Investment Fee Account: An amount equal to any arbitrage owed on the Bonds. F. Debt Service Reserve Account: An amount equal to a required debt service reserve of the lesser of i) 10% of the outstanding principal of the Series 1999A bonds, ii) the maximum annual debt service requirements of the Series 1999A bonds, or iii) 125% of the average annual debt service requirements. G. Property Insurance Award Account: An amount equal to the necessary amount to restore the building to its original condition after a catastrophic event. H. Replacement Reserve Account: Beginning January 2000, an amount equal to $1,520 per month, through 2004, after which the required monthly deposit shall be based upon an engineering study. I. County Account: An amount necessary to accumulate up to $5,000 annually to be paid to the County for an affordable housing fee. J. Bond Series 1999B/1999C Default Account: An amount necessary to cure any default on the Series 1999B or Series 1999C Bonds. K. Operating Deficit Account: 50% of the remaining revenue shall go to this account in an amount necessary to accumulate 25% of the prior year s expenditures. L. Bond Fund Series 1999B Account: An amount equal to the unpaid pro-rata interest and thereafter to a sinking fund in order to accumulate the required payment. M. Operating Deficit Account: An amount necessary to accumulate 25% of the prior year s expenditures. N. Bond Fund Series 1999C Bonds: Beginning August 2029, an amount necessary to retire the Series 1999C Bonds. O. Surplus Account: Any remaining amount thereafter subject to a minimum balance in the surplus account of $200,000. Additionally, the Indenture imposes requirements regarding operations, budgeting, insurance, and management. Any surplus of operations and maintenance as compared to the budget is to be redeposited with the Trustee. 7

10 (Continued) 4. Cash and Cash Equivalents Cash and Cash Equivalents - Unrestricted: Cash in bank - Checking $ 22, ,330 Total - Cash and Cash Equivalents - Unrestricted $ 22, ,330 Cash and Cash Equivalents - Restricted: Tenant security deposits - Money market $ - 25,801 Depository - Interest-bearing checking - 2,966 Held by Trustee re: 1999 Bonds: Bond Fund account - Series 1999A - Money market - 206,977 Operations and Maintenance account - Money market Debt Service Reserve account - Money market - 416,990 Insurance Escrow account - Money market - 62,752 Replacement Reserve account - Money market - 154,183 County Fee account - Money market - 1,793 Operating Deficit account - Money market - 86,820 Bond Fund account - Series 1999B & C - Money market - 18,482 Surplus account - Money market - 409,840 Tax Escrow account - Money market - 3 Total - Cash and Cash Equivalents - Restricted $ - 1,386,812 During, 2010, all outstanding bonds were redeemed and are considered defeased for financial reporting purposes at December 31, Therefore, the trust indenture requirements did not apply to cash on hand at year-end. 5. Note Receivable In August 2010, and in connection with the sale of the Project, the Corporation executed a Promissory Note with Eagle County Housing and Development Authority ( ECHDA ), a component unit of Eagle County, in the principal amount of $2,172,000. The note bears interest at 3.94% compounded annually, with principal and accrued interest due August 1, 2025; the maturity date of the note. 6. Bond Issue Costs Bond issue costs $ - 184,798 Less: Accumulated amortization - (85,579) Net $ - 99,219 During 2010, the Corporation recorded a loss of $158,226 to write off the remaining unamortized portion of bond issue costs upon redemption of the Corporation s outstanding bonds. 8

11 (Continued) 7. Fixed Assets Capital asset activity for 2010 was as follows: Balance Balances - Jan. 1/10 Additions Disposals Dec. 31/10 Land $ 540,000 - (540,000) - Buildings and improvements 6,464,090 - (6,464,090) - Furniture and equipment 57,032 - (57,032) - Rehabilitation costs 270,221 - (270,221) - At cost 7,331,343 - (7,331,343) - Less: Accumulated depreciation for: Buildings and improvements 1,954, ,827 (2,066,232) - Furniture and equipment 54, (54,949) - Accumulated depreciation 2,008, ,264 (2,121,181) - Net $ 5,322,426 (112,264) (5,210,162) - Capital asset activity for 2009 was as follows: Balance Balances - Jan. 1/09 Additions Disposals Dec. 31/09 Land $ 540, ,000 Buildings and improvements 6,464, ,464,090 Furniture and equipment 57, ,032 Rehabilitation costs - 270, ,221 At cost 7,061, ,221-7,331,343 Less: Accumulated depreciation for: Buildings and improvements 1,770, ,071-1,954,405 Furniture and equipment 53, ,512 Accumulated depreciation 1,824, ,791-2,008,917 Net $ 5,236,996 85,430-5,322,426 9

12 (Continued) 7. Fixed Assets (continued) During 2010, the Corporation sold all of its fixed assets (which comprise the Project) upon exercise of the option agreement discussed in Note 9.D. The Corporation realized a gain of $1,658,422 on the disposition of these assets. 8. Long-term Debt On July 14, 1999, the Corporation issued the following series of bonds (the Bonds ), which are secured by a pledge of revenues from the Project and by the Indenture (see Note 3). The Bonds are not registered under the Securities Act of 1933, as amended, and have not been registered or otherwise qualified for sale under the Blue Sky laws and regulations and carry no rating from any rating service. A. Series 1999A-1 Bonds: Revenue bonds issued in denominations of $100,000 and integral multiples of $5,000 in excess thereof, with an aggregate principal amount of $2,800,000, maturing July 1, 2021, and bearing interest at a rate of 5.75% per annum. B. Series 1999A-2 Bonds : Revenue bonds issued in denominations of $100,000 and integral multiples of $5,000 in excess thereof, with an aggregate principal amount of $2,930,000, maturing July 1, 2029, and bearing interest at a rate of 6.3% per annum. C. Series 1999B Subordinate Bonds: Revenue bonds issued in denominations of $100,000 and integral multiples of $5,000 in excess thereof, with an aggregate principal amount of $455,000, maturing July 1, 2029, and bearing interest at a rate of 7% per annum. D. Series 1999C Subordinate Bonds: Revenue bonds issued in denominations of $100,000 and integral multiples of $5,000 in excess thereof, with an aggregate principal amount of $900,000, and maturing July 1, The 1999C bonds are non-interest bearing. The bonds were subject to early redemption as follows: Redemption Issue Redemption Dates Price Series 1999A-1 bonds July 1, 2008 and thereafter 100% Series 1999A-2 bonds July 1, 2009 through June 30, % July 1, 2010 through June 30, % July 1, 2011 and thereafter 100% Series 1999B bonds After July 1, % Series 1999C bonds After July 1, % During 2010, all outstanding bonds were redeemed and considered defeased by December 31,

13 (Continued) 8. Long-term Debt (continued) Changes in the Corporation s long-term debt for 2010 were as follows: Balance Balances - Jan. 1/10 Additions Reductions Dec. 31/10 Series 1999A-1 bonds $ 1,890,000 - (1,890,000) - Series 1999A-2 bonds 2,930,000 - (2,930,000) - Series 1999B bonds 385,000 - (385,000) - Series 1999C bonds 900,000 - (900,000) - Totals $ 6,105,000 - (6,105,000) - Changes in the Corporation s long-term debt for 2009 were as follows: Balance Balances - Jan. 1/09 Additions Reductions Dec. 31/09 Series 1999A-1 bonds $ 2,005,000 - (115,000) 1,890,000 Series 1999A-2 bonds 2,930, ,930,000 Series 1999B bonds 395,000 - (10,000) 385,000 Series 1999C bonds 900, ,000 Totals $ 6,230,000 - (125,000) 6,105,000 Current portions of the Corporation s principal on long-term debt at were as follows: Series 1999A-1 bonds $ - 120,000 Series 1999B bonds - 10,000 Totals $ - 130, Significant Agreements and Contracts A. Management Agreement Eagle County Effective October 1, 2001, the Corporation entered into an agreement with the County, whereby the County is to provide management of the day-to-day operations of the Project, and ensure operational compliance with all terms and conditions of the Indenture. Effective October 1, 2009, the agreement was renewed for one year, through September 30, 2010 unless otherwise terminated as provided in the agreement. Under the terms of the agreement, the County is to be reimbursed for all charges, including staffing, incurred on behalf of the Corporation in managing the Project. The agreement also provides for the County to be paid management fees equal to the sum of (1) a fixed fee in the amount of $2,000 per month; and (2) a variable fee in the amount of 4% of the gross monthly income from the Project in excess of $50,000, provided that the variable fee does not exceed the fixed fee, and that the aggregate monthly management fee does not exceed 4% of the Project s gross monthly income. 11

14 (Continued) 9. Significant Agreements and Contracts (continued) A. Management Agreement Eagle County (continued) In addition to the fees established in the agreement with the County, the Indenture requires that the County be paid an annual affordable housing fee of $5,000 from the County Account. Total expenses, including reimbursements, incurred with respect to the County s management of the Project in 2010 and 2009 were as follows: Repair and maintenance expenses $ 5,852 6,933 Maintenance wages 42,591 42,591 Administration wages 35,604 35,604 Outside services - 1,911 Automobile Telephone - 2,420 Travel and entertainment 1,691 1,279 Office supplies Insurance 4,200 - Management fees - 25,965 Totals $ 90, ,049 The Corporation had balances of $0 and $38,129 payable to the County at December 31, 2010 and 2009, respectively. B. Management Agreement Eagle County Housing and Development Authority Eagle County Housing and Development Authority ( ECHDA ) was created in 2008 to foster low income housing within Eagle County s boundaries. Before 2010, it was a fully blended component unit of the County and handled the administration, including management, of the County s various housing projects. In 2010, the composition of ECHDA s governing board was changed, making it a separate entity from the County. With that change, all management contracts of the County s housing projects (previously managed by the County itself) were assigned to ECHDA. In accordance with this assignment, the Corporation paid $25,965 to ECHDA for management in 2010 (2009 $0). The Corporation also made a grant to ECHDA in the amount of $575,000 during 2010 (2009 $0). C. HUD Contract Effective November 2, 2009, the Corporation executed a HAP Contract renewal with HUD to subsidize tenant rents. Based on the resources and income of each tenant, HUD determines the HAP subsidy to be provided to the Corporation. The HAP Contract originally had a 20-year term, expiring November 1, This contract was assigned to Riverview Apartment Preservation along with the sale of the Project in August, The HAP Contract provided the Project with 21% and 70%of its total revenue in 2010 and 2009, respectively. 12

15 (Continued) 9. Significant Agreements and Contracts (continued) D. Option Agreement During 2009, the Corporation entered into an agreement with Riverview Apartments Preservation LP ( RAP LP ) under which the Corporation granted RAP LP an exclusive option to purchase the Project for $6,500,000. The agreement permitted RAP LP to exercise its option at any time between July 1, 2009 and August 30, 2010; however, the option could not be exercised until all of the Corporation s Bonds subject to the Indenture were defeased. The General Partner of RAP LP is Riverview Apartments Preservation LLC ( RAP LLC ), of which ECHDA is the sole member. In August 2010September 16, 2011, RAP LP exercised its option under the agreement. 10. Concentration of Credit Risk The Corporation maintains cash balances with financial institutions which are insured by the Federal Deposit Insurance Corporation (the FDIC ) up to $250,000 per depositor for interestbearing accounts, and with unlimited coverage for non-interest bearing deposit accounts. At December 31, 2010, the Corporation s uninsured cash balances totaled $0 ($166 at December 31, 2009). 13

16 Schedule of Budget and Actual Comparison For the Year Ended December 31, 2010 (with Comparative Actual Amounts for the Year ended December 31, 2009) Budget Variance: (Unaudited) Actual Positive/Negative Actual Revenues: Tenant rents 228, ,494 (62,506) 309,253 Tenant assistance payments 946, ,869 (439,211) 864,627 Total - Rental revenues 1,174, ,363 (501,717) 1,173,880 Laundry 18,000 7,337 (10,663) 13,706 Other ,418 12,938 2,227 Total Revenues 1,192, ,118 (499,442) 1,189,813 Expenses: Repairs and maintenance: Repair and maintenance expenses 86,200 35,591 50,609 55,539 Maintenance wages 102,228 42,591 59, ,683 Total - Repairs and maintenance 188,428 78, , ,222 Utilities: Utilities 60,000 39,251 20,749 65,342 Trash removal 10,800 7,441 3,359 8,908 Total - Repairs and maintenance 70,800 46,692 24,108 74,250 General and administration: Administration wages 69,353 35,604 33,749 92,328 Professional fees 4,500 7,250 (2,750) 7,350 Outside services - 11,510 (11,510) - Dues and subscriptions 1, Automobile 1, Telephone 7,500 1,622 5,878 9,138 Travel and entertainment 2,400 1, ,115 Office supplies 2,500 3,037 (537) 1,965 Miscellaneous - 575,000 (575,000) - Tenant assistance - 7,481 (7,481) 15,347 Trustee fees 900 9,561 (8,661) 5,442 Other administration expenses 1,801 14,904 (13,103) 31,856 Total - General and administration 91, ,779 (577,545) 166,907 Management fees: Management fees 48,000 25,965 22,035 45,460 Insurance: Insurance 8,000 4,200 3,800 7,181 Depreciation: Depreciation 215, , , ,791 Total Operating Expenses 621, ,082 (314,616) 675,811 Income from Operations 571,094 (242,964) (814,058) 514,002 Other Income (Expenses): Interest income 18,000 62,328 44,328 27,109 Grant income Gain on disposal of assets - 1,658,422 1,658,422 - Loss on bond redemption - (158,226) (158,226) - Rehabilitation project expenses (660,000) - 660,000 - Interest expense (534,351) (213,380) 320,971 (323,910) Amortization of bond issue costs (2,025) (4,725) (2,700) (7,161) Change in Net Assets (607,282) 1,101,455 1,708, ,040 14