ALLIANCE FOR DOWNTOWN NEW YORK, INC. FINANCIAL STATEMENTS AND AUDITORS' REPORT JUNE 30, 2017 AND 2016

Transcription

1 ALLIANCE FOR DOWNTOWN NEW YORK, INC. FINANCIAL STATEMENTS AND AUDITORS' REPORT JUNE 30, 2017 AND 2016

2 Index Page Independent Auditors' Report 1 Statements of financial position as of June 30, 2017 and Statements of activities for the years ended June 30, 2017 and Statements of cash flows for the years ended June 30, 2017 and Notes to financial statements 5-10 Supplementary Financial Information Independent Auditors' Report on Supplementary Information 11 Schedule of functional expenses for the year ended June 30, Schedule of expenses and budget for the year ended June 30, 2017 with comparative totals for

3 To: The Board of Directors of Alliance for Downtown New York, Inc. INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of Alliance for Downtown New York, Inc. (a nonprofit organization), which comprise the statements of financial position as of June 30, 2017 and 2016, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these 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 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 financial statements based on our audits. We conducted our audits 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the 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 entity 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alliance for Downtown New York, Inc. as of June 30, 2017 and 2016, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. New York, NY October 11, 2017 Skody Scot & Company, CPAS, P.C

4 STATEMENTS OF FINANCIAL POSITION JUNE 30, 2017 AND 2016 ASSETS Cash and cash equivalents $ 3,618,522 $ 3,347,954 Certificates of deposit 2,762,707 2,268,574 Contracts and contributions receivable 2,894,797 2,816,000 Prepaid expenses 307, ,824 Property and equipment, net 2,436,468 2,669,419 Security deposits and other assets 118, ,315 Total assets $ 12,138,726 $11,586,086 LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses $ 1,072,952 $ 921,590 Deferred income 532,217 22,500 Deferred rent expense 531, ,507 Security deposit payable 5,000 Total liabilities 2,136,217 1,461,597 Commitments and contingencies (see notes) Net Assets: Unrestricted 9,974,335 10,086,923 Temporarily restricted 28,174 37,566 Permanently restricted Total net assets 10,002,509 10,124,489 Total liabilities and net assets $ 12,138,726 $11,586,086 See accompanying notes to financial statements

5 STATEMENTS OF ACTIVITIES YEARS ENDED JUNE 30, 2017 AND Support and Revenues: Unrestricted: Assessment revenue $ 15,900,000 $ 15,898,372 Contract service revenue 1,335,876 1,312,387 Program service revenue 1,264,798 1,107,968 Contributions 171, ,231 Contributions in-kind 135, ,277 Government grant revenue 66,500 2,177,625 Interest income 34,258 36,655 Release of restricted assets 9,392 34,088 Temporarily Restricted: Release of restricted assets (9,392) (34,088) Total support and revenues 18,908,259 20,937,515 Expenses: Program Expenses: Public safety 4,051,661 3,977,832 Sanitation 5,199,996 4,898,506 Communications 3,156,515 3,377,263 Economic development 2,629,737 2,711,602 Transportation 1,899,447 2,087,854 Social services 374, ,958 Total program expenses 17,312,279 17,528,015 Supporting Services: Management and general 1,694,652 1,690,656 Fundraising 23,308 8,657 Total expenses 19,030,239 19,227,328 Increase/(Decrease) In Net Assets: Unrestricted (112,588) 1,744,275 Temporarily restricted (9,392) (34,088) Permanently restricted Increase/(decrease) in net assets (121,980) 1,710,187 Net assets, beginning of year 10,124,489 8,414,302 Net assets, end of year $ 10,002,509 $ 10,124,489 See accompanying notes to financial statements

6 STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2017 AND 2016 Cash flows from operating activities: Increase/(decrease) in net assets $ (121,980) $ 1,710,187 Adjustments for non-cash items included in operating activities: Depreciation and amortization 365, ,919 Changes in assets and liabilities: Accounts payable and accrued expenses 151,362 (152,814) Deferred income 509,717 Deferred rent expense 18, ,930 Security deposits payable (5,000) 5,000 Contracts and contributions receivable (78,797) (2,151,000) Prepaid expenses 63,390 (44,194) Security deposits and other assets (5,483) 2,213 Net cash provided/(used) by operating activities 896,973 (118,759) Cash flows from investing activities: Purchase of certificates of deposit (494,133) (566,843) Redemption of certificates of deposit 1,006,297 Purchase of property and equipment (132,272) (1,012,150) Net cash provided/(used) by investing activities (626,405) (572,696) Cash flows from financing activities - - Net increase/(decrease) in cash and cash equivalents 270,568 (691,455) Cash and cash equivalents at beginning of year 3,347,954 4,039,409 Cash and cash equivalents at end of year $ 3,618,522 $ 3,347,954 Supplemental information: Asset retirement $ 105,982 $ 78,128 See accompanying notes to financial statements

7 NOTES TO FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies The Organization Alliance for Downtown New York, Inc. (Organization), a not-for-profit organization, was incorporated in the State of New York on September 30, The Organization is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for federal, state or local income taxes has been recorded. The Organization does not believe its financial statements contain any uncertain tax positions. The Organization primarily receives its support from a real estate special assessment levied by The City of New York (City) on properties located in the Downtown-Lower Manhattan Business Improvement District (BID), and from several organizations, which are not legally required to make special assessment payments, but voluntarily choose to make contributions or have entered into a service agreement. The BID boundaries are approximately from City Hall to The Battery and from the East River to West Street. Programs and services provided: The Organization's six major programs include the following: Sanitation - Maintaining clean streets/curbs and litter removal, as well as enhancing the district through plantings, public space improvements and facade lighting; Public Safety - Providing increased public security through a combination of uniformed guards and working relationship with the New York City Police Department; Communications - Promoting Lower Manhattan through the general media and special events; Economic Development - Through research and advocacy seeks to retain and attract businesses to the district and also operates LMHQ, a new space for collaboration; Transportation - Improving transportation to and from, as well as within the district through joint partnership with city agencies and providing a free jitney service; and Social Services - To develop and implement social programs and coordinate with other social service organizations located within the District. Basis of Accounting The financial statements of the Organization have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. Basis of Presentation In accordance with GAAP the Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. In addition, the Organization is required to present a statement of cash flows. Use of Estimates Management uses estimates and assumptions in preparing the financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates

8 NOTES TO FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies (Continued) Cash Equivalents For the purposes of the statements of financial position and the statements of cash flows, the Organization considers as cash equivalents money market funds and all highly liquid resources, such as investments in certificates of deposit, with an original maturity of three months or less. Property and Equipment The Organization capitalizes certain property and equipment with estimated lives of three years or more. Property and equipment are stated at cost, less accumulated depreciation. Depreciation of furniture and equipment is computed by the straight-line method over estimated useful lives ranging from three to ten years. Leasehold improvements are amortized by the straight-line method over the life of the improvement or the term of the lease, whichever is shorter. Expenditures for repairs and maintenance are charged as an expense, and major renewals and betterments are capitalized. Organizational Relationships The Organization receives services from and has representation on the boards of several not-for-profit organizations (Alliance officers and directors). All transactions are conducted at fair-market value and no control is exercised over the other organizations. These organizations include: Downtown-Lower Manhattan Association, The Battery Conservancy and Lower Manhattan Cultural Council. Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities and in the schedule of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. The Organization allocates salaries based on estimated time and other expenses are allocated based on usage. The Organization classifies expenses, which are not directly related to a specific program, as Management and General expenses. Receivables Receivables that are expected to be collected within one year are recorded at their net realizable value. Receivables that are expected to be collected in future years are recorded at the present value of estimated future cash flows. All receivables are expected to be received within one year and as such have been stated at their net realizable value with no allowance for uncollectable receivables

9 NOTES TO FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies (Continued) Revenue Recognition The real estate assessment levied by the City is recorded by the Organization when earned. The City remits these assessments to the Organization in two installments. An allowance for doubtful accounts is not provided because all assessments are received in the current year. Assessment billing errors are recorded as a direct reduction of assessment revenue. Program service revenue relates to fees received in exchange for program services and includes providing additional security, sanitation and transportation services. Revenue is recognized when the program service is provided. Any revenue received which has not been earned is recorded as deferred income. Contributions are considered available for the Organization s general programs unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor are reported as temporarily or permanently restricted support and increases in the respective class of net assets. Contributions received with temporary restrictions that are met in the same reporting period are reported as unrestricted support and increase unrestricted net assets. Investment income and gains restricted by donors are reported as increases in unrestricted net assets if the restrictions are met (either a stipulated time period ends or a purpose restriction is accomplished) in the reporting period in which the income and gains are recognized. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. The Organization received several grants from governmental agencies. In accordance with the grant provisions, the Organization either receives grant funds following the disbursement of approved expenses or is authorized to receive funds in advance of anticipated expenditures. All unreimbursed expenses as of period-end are recorded as grant receivables and all advanced funds not expended are recorded as deferred income. Note 2 - Cash and Cash Equivalents Cash and cash equivalents consisted of the following at June 30, 2017 and 2016: Checking and savings $ 3,615,402 $ 2,879,790 Money market funds 3, ,164 $ 3,618,522 $ 3,347,

10 NOTES TO FINANCIAL STATEMENTS Note 3 - Restricted Assets As of June 30, 2017 and 2016, corporate contributions are restricted for the following program activities: Louise Nevelson Plaza Maintenance $ 28,174 $ 37,566 Note 4 - Property and Equipment Property and equipment by major class consisted of the following at June 30, 2017 and 2016: Furniture and fixtures $ 337,197 $ 337,197 Equipment 294, ,621 Vehicles 164, ,278 Leasehold improvements 4,572,610 4,546,110 5,368,496 5,342,206 Less: Accumulated depreciation and amortization (2,932,028) (2,672,787) $ 2,436,468 $ 2,669,419 Note 5 - Commitments and Contingencies The Organization leases space under noncancellable operating leases. As of June 30, 2017 minimum aggregate annual rentals are as follows: Year ended June 30, 2018 $1,366, ,388, ,139, , , to ,771,231 Total rent expense charged to operations for the years ended June 30, 2017 and 2016 was $1,588,851 and $1,688,677, respectively. The Organization has an unused $2,500,000 line of credit secured by all of its assets. The Organization has signed multiple five year agreements, with renewal options, with the New York City Department of Transportation to maintain physical improvements that it has made within the district. In lieu of an escrow account, the Organization has a letter of credit for $65,000 with a financial institution, which is secured by its cash balances. The estimated future annual maintenance costs will be approximately $300,000 per year

11 NOTES TO FINANCIAL STATEMENTS Note 6 - Donated Services and Facilities Significant services and facilities were donated to the Organization by various organizations and meet the criteria for being recognized as contributions in accordance with GAAP. Amounts are recorded at their estimated fair market values at the date of donation using published rates and prices. For the years ended June 30, 2017 and 2016, $135,000 and $260,277, respectively, was received and reported as contributions in-kind on the accompanying statements of activities and mainly consisted of donated ad space, products, design, production, broadcast and distribution of promotional material. Note 7 - Pension Plan On September 3, 1996, the Organization adopted a qualified cash or deferred profit sharing plan (Old Plan), effective January 1, The Old Plan allowed the Organization to make discretionary contributions based on the participant's compensation and vesting. Effective July 1, 2013, the Organization established a new 401K plan (New Plan) that consolidated the deferred profit sharing plan and the employee paid 403B plans into a single plan. The prior profit sharing plan and 403B plans were terminated and holdings for current employees were transferred to the New Plan or to a retirement vehicle of their choosing. Accounts for former employees were either transferred to a retirement vehicle of their choosing or placed into an IRA. Organization contributions amounted to $254,619 for 2017 and $337,468 for Note 8 - Related Party The Organization has common management, shares office space and incurred joint expenses of approximately $5,000 with a related charitable not-for-profit entity. The Organization leases administrative office space, at fair market value, from an entity whose officer was on the Organization s Board of Directors during the year ended June 30, Total payments for the fiscal year ended June 30, 2016 was $439,732. The Organization pays tuition for the utilization of educational services to an entity whose officer is on the Organization s Board of Directors. Total payments for the fiscal years ended June 30, 2017 and 2016 were $4,432 and $19,642, respectively

12 NOTES TO FINANCIAL STATEMENTS Note 9 - Concentrations The Organization maintains its cash, cash equivalents, and certificates of deposit with major financial institutions. The Federal Deposit Insurance Corporation (FDIC) insures bank deposits up to $250,000 per financial institution. At times, the balances of the accounts may have exceeded the limits during the years ended June 30, 2017 and Note 10 - Subsequent Events Subsequent events were evaluated for potential additional disclosures and corrections through October 11, 2017, which is the date the financial statements were available to be issued

13 INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION To: The Board of Directors Alliance for Downtown New York, Inc. We have audited the financial statements of Alliance for Downtown New York, Inc. as of and for the years ended June 30, 2017 and 2016, and have issued our report thereon dated October 11, 2017, which contained an unmodified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses, and expenses and budget are presented for the purpose of additional analysis and are not a required part of the 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 financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 financial statements as a whole. New York, NY October 11, 2017 Skody Scot & Company, CPAs, PC

14 SCHEDULE OF FUNCTIONAL EXPENSES (Supplemental Financial Information) YEAR ENDED JUNE 30, 2017 Program Expenses Supporting Services Public Com- Economic Trans- Social Total Management Fund- Total Safety Sanitation munications Develop. portation Services Program and General raising Expenses Personnel costs: Executive salaries $ 179,365 $ 183,764 $ 301,140 $ 269,139 $ 179,365 $ 68,812 $ 1,181,585 $ 289,455 $ 17,978 $ 1,489,018 Supervisors salaries 344, , , ,598 1,335,425 1,335,425 Program staff salaries 202, , , ,676 1,335,088 1,335,088 Support salaries 120, , , , ,871 10, , , ,602 Part-time staff 84,214 64,386 41,213 18, ,185 24, ,688 Payroll taxes 85,085 92, ,828 91,970 42,944 7, ,879 37,368 1, ,045 Health and state insurance 56,575 86,440 68,095 83,986 38,808 10, , ,657 3, ,927 Pension 55,056 65,799 44,243 42,472 22,369 7, ,483 17, ,619 Total personnel costs 1,127,569 1,245,916 1,393,280 1,242, , ,173 5,682, ,191 23,308 6,293,412 Direct expenses: Rent and maintenance 373, , ,701 88,383 1,100, ,334 1,610,634 Uniforms 28,599 28,599 28,599 Depreciation & amortization 7,150 24, , ,288 53, ,223 Grants to organizations 25,000 25,000 25,000 Insurance 168, ,621 Street improvement/maint. 787,515 12, , ,081 Subcontractors 2,480,212 2,594,247 1,205,539 6,279,998 6,279,998 Communications 330,154 65, , ,798 LMHQ expenses 244, , ,383 Professional services 241, , , , , ,555 Program expense/supplies 33, , ,385 36, , , ,483 Equipment 1,308 67, , , ,248 42, ,808 Program planning 27,427 2,379 29,806 29,806 Vehicles 28,547 83, , ,838 Total direct expenses 2,924,092 3,954,080 1,763,235 1,387,717 1,330, ,750 11,629,366 1,107,461 12,736,827 Total expenses $4,051,661 $5,199,996 $3,156,515 $2,629,737 $1,899,447 $374,923 $17,312,279 $1,694,652 $ 23,308 $19,030,

15 SCHEDULE OF EXPENSES AND BUDGET (Supplemental Financial Information) YEAR ENDED JUNE 30, 2017 WITH COMPARATIVE TOTALS FOR Actual Budget (*) Actual Personnel costs: Executive salaries $ 1,489,018 $ 1,406,603 $ 1,492,936 Supervisors salaries 1,335,425 1,477,127 1,311,114 Program staff salaries 1,335,088 1,395,872 1,433,590 Support salaries 722, , ,611 Part-time staff 232, , ,237 Payroll taxes 474, , ,591 Health and state insurance 449, , ,076 Pension 254, , ,468 Total personnel costs 6,293,412 6,512,534 6,538,623 Direct expenses: Rent and maintenance 1,610,634 1,258,000 1,713,470 Uniforms 28,599 40,500 30,752 Depreciation and amortization 365,223 60, ,919 Grants to other organizations 25,000 25,000 Insurance 168, , ,178 Street improvement/maintenance 800, , ,473 Subcontractors 6,279,998 6,434,800 5,933,014 Communications 395, , ,112 LMHQ expenses 244, , ,593 Professional services 927,555 1,286, ,469 Program expenses/supplies 951,483 1,429,000 1,871,492 Equipment 797, , ,587 Program planning 29, , ,266 Vehicles 111, , ,380 Total direct expenses 12,736,827 13,448,600 12,688,705 Total expenses $ 19,030,239 $ 19,961,134 $ 19,227,328 * Note - The 2017 Budget excludes the capital-related expenses of $366,000, and in-kind contributions to communications of $135,