JACKSONVILLE HOUSING AUTHORITY

Transcription

1 JACKSONVILLE HOUSING AUTHORITY Basic Financial Statements and Supplementary Information Year ended September 30, 2016

2 TABLE OF CONTENTS INDEPENDENT AUDITOR S REPORT 1 MANAGEMENT DISCUSSION AND ANALYSIS (Required Supplementary Information) 4 BASIC FINANCIAL STATEMENTS Statements of Net Position 11 Statements of Revenues, Expenses and Changes in Net Position 12 Statement of Cash Flows 13 Notes to Basic Financial Statements 15 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Changes in Proportional Share of Net Pension Liability - Last Ten Fiscal Years 42 SUPPLEMENTARY INFORMATION Financial Data Schedule 44 Schedule of Actual Fund Program Costs and Advances 56 SINGLE AUDIT SECTION Schedule of Expenditures of Federal Awards 58 Note to Schedule of Expenditures of Federal Awards 59 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 60 Independent Auditor s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 62 Schedule of Findings and Questioned Costs 65 Summary Schedule of Prior Year Audit Findings 67 Corrective Action Plan 68 Page

3 8035 Spyglass Hill Road Melbourne, FL Phone: Fax: S. Orange Ave. Suite 1545 Orlando, FL Phone: Fax: INDEPENDENT AUDITOR S REPORT Board of Commissioners Jacksonville Housing Authority Jacksonville, Florida Report on the Financial Statements We have audited the accompanying financial statements of the business-type activity and the discretely presented component unit of the Jacksonville Housing Authority (the Authority ), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Authority s basic financial statements as listed in the table of contents. 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 audit. We conducted our audit 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, issued by the Comptroller General of the United States. 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. 1

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activity and the discretely presented component unit of the Authority, as of September 30, 2016, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and the schedule of changes in proportional share of net pension liability be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Authority s financial statements. The accompanying financial data schedule and schedule of actual program costs and advances are presented for purposes of additional analysis as required by the U.S. Department of Housing and Urban Development, and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Title 2 U.S. Code of Federal Regulation Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is not a required part of the financial statements of the Authority. The supplementary information listed above is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic 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 basic financial statements as a whole. 2

5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 1, 2017 on our consideration of the Authority s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority s internal control over financial reporting and compliance. March 1, 2017 Melbourne, Florida Berman Hopkins Wright & LaHam CPAs and Associates, LLP 3

6 (JHA) Management Discussion and Analysis For the Year Ended September 30, 2016 As management of the Jacksonville Housing Authority (the Authority ), we offer the readers of the Authority s financial statements this narrative overview and analysis of the financial activities of the Authority for the year ended September 30, We encourage readers to consider the information presented here in conjunction with the Authority s financial statements. Financial Highlights The Authority s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources as of September 30, 2016 by $89,129,748 (net position). In accordance with reporting requirements of GASB Statement No. 68 Accounting and Financial Reporting for Pensions ( GASB 68 ), the Authority s net pension liability increased $6.9M. The Authority s current assets as of September 30, 2016 were $20,652,573 representing an increase of $1,975,500 from fiscal year The Authority received revenue from the U.S. Department of Housing and Urban Development (HUD) of $73,355,214. This figure includes funds for capital asset activities and HUD grants passed through from other governments. Public Housing has maintained an occupancy rate of 98.7% for the fiscal year. Brentwood Park Apartments Associates, Ltd. is a discretely presented component unit of the Authority. Its financial information is presented separately in the accompanying financial statements and is not included in this management discussion and analysis. Overview of Financial Statements The financial statements included in this annual report are those of a special-purpose government engaged in a single business-type activity prepared on an accrual basis. Over time, significant changes in the Authority s net position serve as a useful indicator of whether its financial health is improving or deteriorating. To fully assess the financial health of any authority, the reader must also consider other non-financial factors such as changes in family composition, fluctuations in the local economy, HUD mandated program administrative changes, and the physical condition of capital assets. The following statements are included: Statement of Net Position - reports the Authority s assets, deferred outflows of resources, liabilities, deferred inflows of resources and net position at the end of the fiscal year. The Authority s net position is the difference between the Authority s rights (assets and deferred outflows of resources) and the Authority s obligations (liabilities and deferred inflows of resources). Statement of Revenue, Expenses, and Changes in Net Position - this statement presents information showing how the Authority s net position increased or decreased during the current fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of when cash is received or paid. Thus, revenues and expenses are reported in this statement for some items that will result in cash inflows and cash outflows in future periods. 4

7 Overview of Financial Statement (continued) Statement of Cash Flows - this statement presents information showing the total cash receipts and cash disbursements of the Authority during the current fiscal year. The statement reflects the net changes in cash resulting from operations plus any other cash requirements during the current year (i.e. capital additions, debt service, prior period obligations, etc.). In addition, the statement reflects the receipt of cash that was obligated to the Authority in prior periods and subsequently received during the current fiscal year (i.e. accounts receivable, notes receivable etc.). Notes to the Basic Financial Statements - notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data provided. These notes give greater understanding on the overall activity of the Authority and how values are assigned to certain assets and liabilities and the longevity of the values. In addition, notes reflect the impact (if any) of any uncertainties the Authority may face. In addition to the basic financial statements listed above, our report includes supplemental information. This information is to provide more detail on the Authority s various programs and the required information mandated by regulatory bodies that fund the Authority s various programs. 5

8 Financial Analysis Net Change Current assets $ 20,653 $ 18,677 $ 1,976 assets, net 63,779 65,962 (2,183) Other noncurrent assets 22,566 23,013 (447) Total assets 106, ,652 (654) Deferred outflows of resources 7,782 2,868 4,914 Current liabilities 3,436 4,513 (1,077) Long-term debt 3,353 3,610 (257) Net pension liability 17,983 11,095 6,888 Other noncurrent liabilities (227) Total liabilities 25,242 19,915 5,327 Deferred inflows of resources (332) Net investment in capital assets 60,169 62,106 (1,937) Restricted net position 1,234 1, Unrestricted net position 27,727 26,550 1,177 Total net position $ 89,130 $ 89,865 $ (735) Current Assets increased by $1.9M. Net Position (in thousands of dollars) Current assets include cash (restricted and non-restricted), accounts receivable, prepaid expenses, inventory and investments. The Authority s cash increased $3M over the preceding fiscal year primarily due to collection of $1M for Community Development Block Grants (CDBG) grants due from the City of Jacksonville and $500K for the Developer s fee due from Brentwood Park Apartments Associated, Ltd. Increases in cash from operations of $900K were realized for leasing activities in the Authority s Section 8 Housing Choice Voucher Program. The increase in cash was offset by reductions in accounts receivable, prepaid expense and inventory. Net Assets decreased by $2.2M. The increase in capital of $998K was offset by a change in accumulated depreciation of $3.2M, discussed in detail in the Asset and Debt Activity section. Other Non-Current Assets decreased $447K. The decrease is primarily attributed to a reduction in the investment in Brentwood Park Apartments of $1.65M, representing the loss attributed to the general partner and a $1.6K reduction in long term notes receivables. These decreases were offset by increases of: $103K in Family Self Sufficiency escrows; $500K in net receivables from Vestor for Lindsey Terrace Apartments; and, $602K of accrued interest from Brentwood Park Apartments Associates, Ltd. 6

9 Total Assets decreased $654K due to an increase in cash, offset by decreases in net capital assets and other noncurrent assets Deferred Outflow of Resources increased $4.9M as a result of recording the Authority s net pension liability in accordance with GASB 68, further detailed in Note B-9. The deferred outflows of resources are based on the actuarial valuation and review as of October 1, 2015, which includes changes of assumptions, changes in proportion and the net difference between projected and actual earnings of pension plan investments. Current Liabilities decreased $1.1M, of which $875K is attributed to unearned revenue for operating subsidy and $295K in accounts payable. Long Term Debt decreased $257K for the Gregory West mortgage loan as further detailed in Note B-5. Net Pension Liability increased $6.9M as a result of recording the Authority s proportional share of the City of Jacksonville General Employees Retirement Plan net pension liability in accordance with GASB 68 further detailed in Note B-9. Other Non-Current Liabilities decreased by $227K. The decreases are attributable to: a reduction of $241K for an assessment from the Authority s participation in the City s Risk Management Program, which was reclassified to a current liability; and, a reduction of long term compensated absences of $88K. These decreases were offset by an increase in Family Self Sufficiency escrows of $103K. Total Liabilities increased $5.3M. Decreases in current liabilities, long term debt and other noncurrent liabilities were offset by the increase in net pension liability. Deferred Inflow of Resources decreased $332K as a result of recording the Authority s net pension liability in accordance with GASB 68 further detailed in Note B-9. The deferred inflows of resources are based on the actuarial valuation and review [as of October 1, 2015], which includes changes of assumptions, changes in proportion and the net difference between projected and actual earnings of pension plan investments. Net Position - The difference between the Authority s rights (assets and deferred outflows of resources) and the Authority s obligations (liabilities and deferred inflows of resources) is its net position. Net position is categorized as one of three types. 1. Net investment in capital assets - capital assets, net of accumulated depreciation and related debt is the capital asset balance offset by long-term debt; 2. Restricted - the Authority s net position whose use is subject to constraints imposed by law or agreement; 7

10 Financial Analysis (continued) 3. Unrestricted - the Authority s net position that is neither invested in capital assets nor restricted which increase principally due to operations. These resources are available to meet the Authority s ongoing obligations to its residents and creditors. Changes in Net Position (in thousands of dollars) Net Change revenue HUD revenue $ 71,770 $ 61,385 $ 10,385 Other revenue 7,257 6,223 1,034 Total operating revenue 79,027 67,608 11,419 expenses Housing assistance payments 52,949 45,460 7,489 Depreciation 3,672 3,927 (255) Administrative 9,435 8,093 1,342 Tenant services Utilities 2,133 2,124 9 Maintenance 7,954 7, Protective services General 4,256 2,894 1,362 Total operating expenses 81,715 70,667 11,048 income (loss) (2,688) (3,059) 371 Non-operating revenues (expenses) Grant revenue (2) Loss on disposal of capital assets (100) (355) 255 Mortgage interest income Interest income Interest expense (162) (172) 10 Total non-operating revenues (expenses) Change in net position before capital contributions and extraordinary gain (2,285) (2,927) 642 contributions 1,550 3,266 (1,716) Change in net position (735) 339 (1,074) Prior period adjustment - (9,314) 9,314 Total net position - beginning 89,865 98,840 (8,975) Total net position - ending $ 89,130 $ 89,865 $ (735) 8

11 Financial Analysis (continued) Total Revenue increased by $11.4M. Section 8 Housing Assistance Payments (HAP) subsidy increased $8.9M, resulting in increased Section 8 administrative fees of $582K. Increases in Public Housing operating subsidy of $487K, tenant revenues of $1M and capital fund revenue of $479K were also realized. Expenses are categorized by the Authority as Housing Assistance Payments (HAP), depreciation, administrative, tenant services, utilities, maintenance, protective services, and general. Overall, total operating expenses increased by $11M. The increases are primarily attributed to increased HAP payments of $7.5M based on funding required for program participants. Administrative costs increased $1.3M. In accordance with GASB 68, further detailed in Note B- 9 and B-15, JHA recorded an increase of pension expense of $1.6M offset by decreases in salaries of $261K. Tenant services expenses increased by $236K due to a reclassification of salaries and benefits from administrative expense. Maintenance costs, protective services and utilities increased by $874K. Maintenance costs increased by $843K as the Authority increases its outsourcing of services for painting, unit turns and heating, ventilation and air conditioning (HVAC). Protective services increased by $22.8K, primarily due to increases for alarm monitoring. Increases of $8.5K are due to increased water and sewer costs. General expenses increased $1.4M primarily due to recording the general partner s allocated share of expenses of $1.65M for Brentwood Park Apartments Associates, Ltd., which were offset by decreases in insurance costs. Depreciation expense decreased $255K. Non- Revenues (Expenses) increased $271K. The decrease is primarily due to a reduction of $255K in the disposal of assets over the preceding fiscal year. Community Development Block grants funding decreased $2K for Family Self Sufficiency (FSS) and Neighborhood Network Center (NNC) activities. Investment income increased $8K and Gregory West mortgage interest expense decreased $10K as a result of principal paid on the loan. Contributions decreased by $1.7M, primarily due to completing $2.3M for activities associated with the Community Development Block Grant (CDBG) Disaster Recovery passthrough funding from the City of Jacksonville from the preceding fiscal year. The Authority spent $624K of additional capital funds. Asset and Debt Activity Investment in the Authority s capital assets decreased $2.2M, presented in detail in Note B-3 - Assets. The table shows the Authority s capital assets, net of accumulated depreciation at September 30, 2016 and 2015 (in thousands): 9

12 Asset and Debt Activity (continued) Assets Land $ 19,485 $ 19,468 Construction in Progress Structures and Improvements 133, ,378 Equipment 4,297 4,266 Total Assets 157, ,641 Less Accumulated Depreciation (93,860) (90,679) Total Assets, net $ 63,779 $ 65,962 Construction in progress decreased $119K consisting of $1.3M in building improvements constructed during the year, less $1.4M of contracts completed. The major projects involved installation of roof systems at Southwind Villas as well as balcony reconstruction and elevator systems at Twin Towers. Asset disposals consist of the disposition of partial disposals of building improvements and equipment of $590K less accumulated depreciation of $490K, resulting in a $100K net book value of asset disposals. The capital acquisitions are principally renovations to various apartment complexes and purchases of vehicles. At the end of fiscal year 2016, the Authority had long term debt of $3.6M, remaining on the Gregory West loan, of which $257K is due within one year, presented in Note B-5 of the Detailed Notes. Economic Factors and Events Affecting Authority Operations Several factors may potentially affect the financial position of the Authority in any given fiscal year. These factors may include: Reliance on Federal funding provided by Congress through the Department of Housing and Urban Development. Increasing employer costs for pension contributions and health insurance premiums. Local unemployment rates, which can affect rental revenue, occupancy and HAP. Local inflationary, recessionary and employment trends, which can affect resident incomes and, therefore, tenant rent paid. Local labor supply and demand, which can affect salary and wage rates that are passed from contractors to the Authority. Federal and Florida minimum wage laws. Inflationary pressure on utility rates, supplier products and other costs. Natural disasters which can have a devastating impact on Authority capital assets and on the local economy in general. Requests for Information This financial report is designed to provide interested parties a general overview of the Jacksonville Housing Authority s finances. Questions regarding these financial statements should be addressed to the Chief Financial Officer, Jacksonville Housing Authority, 1300 Broad Street N., Jacksonville, Florida,

13 STATEMENTS OF NET POSITION Year ended September 30, 2016 ASSETS Primary Government Component Unit CURRENT ASSETS Cash - unrestricted $ 15,740,793 $ 536,061 Cash - restricted 1,855,772 1,180,920 Investments - unrestricted 258,198 - Receivables, net 435,010 26,252 Due from HUD 1,037,446 - Prepaid expenses 470, ,380 Developer fee receivable 839,104 - Development deficit guaranty receivable - 195,530 Inventory 15,648 - Total current assets 20,652,573 2,043,143 NONCURRENT ASSETS Cash - restricted 294,587 - Note receivable 500,000 - Mortgage receivable from BPAAL 13,857,561 - Interest receivable from BPAAL 4,146,338 - Intangibles, net - 240,143 assets, net 63,778,721 26,084,628 Investment in BPAAL 3,767,454 - Other assets Total assets 106,997,584 28,367,914 DEFERRED OUTFLOWS OF RESOURCES Defined benefit pension plan 7,781,979 - LIABILITIES CURRENT LIABILITIES Current portion of long-term debt 257,385 - Accounts payable and accrued invoices 735,745 87,557 Development deficit guaranty payable 195,530 - Accrued liabilities 1,691,664 85,577 Due to HUD 46,920 - Tenant security deposits 355,232 77,752 Unearned revenue 28,026 1,962 Developer fee payable - 839,104 Other current liabilities 125,640 7,420 Total current liabilities 3,436,142 1,099,372 NONCURRENT LIABILITIES Long-term debt 3,352,750 13,857,561 Accrued compensated absences 175,566 - Interest payable - 4,146,338 Net pension liability 17,982,699 - Other noncurrent liabilities 294,587 - Total liabilities 25,241,744 19,103,271 DEFERRED INFLOWS OF RESOURCES Defined benefit pension plan 408,071 - NET POSITION NET POSITION Net investment in capital assets 60,168,586 11,387,963 Restricted 1,234,297 1,103,168 Unrestricted 27,726,865 (3,226,488) Total net position $ 89,129,748 $ 9,264,643 The accompanying notes are an integral part of these financial statements. 11

14 STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Year ended September 30, 2016 OPERATING REVENUES Primary Government Component Unit HUD operating revenues $ 71,769,619 $ - Tenant revenue, net 6,079,582 1,317,421 Other operating revenue, net 1,177,312 15,630 Total operating revenues 79,026,513 1,333,051 OPERATING EXPENSES Administrative 9,434, ,991 Tenant services 802, Utilities 2,132, ,685 Maintenance 7,954, ,969 Protective services 513,380 90,706 General 4,256, ,696 Depreciation 3,671, ,218 Housing assistance payments 52,949,206 - Total operating expenses 81,714,513 2,621,499 OPERATING LOSS (2,688,000) (1,288,448) NON-OPERATING REVENUES (EXPENSES) Grant revenue 35, ,118 Gain (loss) on disposal of capital assets (99,959) (52,373) Mortgage interest income 602,804 - Interest income - unrestricted 26,146 2,834 Interest expense (161,762) (620,650) Total non-operating revenues (expenses) 402, ,929 Change in net position before capital contributions (2,285,062) (1,072,519) CAPITAL CONTRIBUTIONS HUD capital grants 1,549,886 - Change in net position (735,176) (1,072,519) Total net position - beginning 89,864,924 10,337,162 Total net position - ending $ 89,129,748 $ 9,264,643 The accompanying notes are an integral part of these financial statements. 12

15 STATEMENT OF CASH FLOWS Year ended September 30, 2016 Primary CASH FLOWS FROM OPERATING ACTIVITIES Government HUD operating grants received $ 70,736,425 Collections from tenants 6,107,531 Collections from other sources 650,921 Payments of wages and benefits (10,469,448) Payments to suppliers (11,633,827) Housing assistance payments (52,949,206) Net cash provided by operating activities 2,442,396 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Grant revenue 854,138 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES HUD capital grants received 1,439,469 Developer fee received 500,000 Proceeds from disposal of assets 500 Payments on long-term debt (246,111) Interest paid (161,762) Purchase of property and equipment (1,661,056) Net cash used in capital and related financing activities (128,960) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 22,248 NET INCREASE IN CASH 3,189,822 Cash at beginning of year 14,701,330 Cash at end of year $ 17,891,152 AS PRESENTED ON THE ACCOMPANYING STATEMENT OF NET POSITION: Cash - unrestricted $ 15,740,793 Cash - restricted - current 1,855,772 Cash - restricted - noncurrent 294,587 $ 17,891,152 The accompanying notes are an integral part of these financial statements. 13

16 STATEMENT OF CASH FLOWS (continued) Year ended September 30, 2016 RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES Primary Government loss $ (2,688,000) Adjustments to reconcile operating loss to net cash provided by operating activities Depreciation 3,671,507 Bad debt recovery (500,000) Provision for fraud losses 175,638 Loss from investment accounted for by the equity method 1,651,097 (Increase) decrease in assets and deferred outflows: Receivables (220,391) Due from HUD (128,079) Prepaid expenses 73,894 Inventory 7,794 Deferred outflow component of defined benefit plan (4,914,314) Increase (decrease) in liabilities and deferred inflows: Accounts payable and accrued invoices (221,349) Accrued liabilities (337,336) Due to HUD (30,535) Tenant security deposits 38,421 Unearned revenue (866,690) Net pension liability 6,887,850 Other liabilities 174,367 Deferred inflow component of defined benefit plan (331,478) Net cash provided by operating activities $ 2,442,396 The accompanying notes are an integral part of these financial statements. 14

17 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Reporting entity Jacksonville Housing Authority (the Authority ), a governmental agency, was created pursuant to Florida Statutes Chapter 421 by the City of Jacksonville, Florida (the City ) on October 1, The primary purpose of the Authority is to develop, acquire and operate safe, decent, sanitary, and affordable housing for low-income families in Duval County in accordance with federal legislation and regulations. The Authority's governing board consists of a seven member Board of Commissioners (the Board ), which is appointed by the Mayor of the City. The Authority is not a component unit of the City, as defined in Governmental Accounting Standards Board Statement No. 61, The Financial Reporting Entity: Omnibus, ( GASB No. 61 ) since the Board independently oversees the Authority s operations. The definition of the reporting entity as defined by GASB No. 61 is based primarily on the notion of financial accountability. A primary government is financially accountable for the organizations that make up its legal entity. It is also financially accountable for legally separate organizations if its officials appoint a voting majority of an organization s governing body and either it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or to impose specific financial burdens on, the primary government. Blended component units Some component units, despite being legally separate are so integrated with the primary government that they are in substance part of the primary government. The Authority s operations include three blended component units, which are included in the basic financial statements in the column titled primary government in the government-wide financial statements. These are legally separate entities for which the Authority is financially accountable and that have the same governing board as the Authority. The blended component units are as follows: Brentwood Park GP, Inc. JHA Brentwood Park Development, LLC. JHA Development, Inc. All of the above component units are associated with the redevelopment of the Brentwood property, except for JHA Development, Inc., which is a non-profit incorporated to assist the Authority with low-income housing activities. 15

18 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 1. Reporting entity (continued) Discretely Presented component unit The following component unit meets the criteria for discrete presentation and is presented in the component unit column in the government-wide financial statements in order to clearly distinguish its balances and transactions from the primary government. Brentwood Park Apartments Associates, LTD. ( BPAAL ) BPAAL is a for-profit, limited partnership created to redevelop the Brentwood Park Apartments using a mix of private tax-credit based financing and HUD funds. Brentwood Park GP, Inc., a blended component unit of the Authority, is the general partner of the partnership. BPAAL is not a governmental entity, does not follow government accounting, and follows all applicable FASB standards. However, for presentation purposes in order to conform to the presentation of the Authority, certain transactions may be reflected differently in these financial statements than in BPAAL s separately issued information. The complex was substantially completed in December 2006 except for the community center which was completed in April As stipulated in the Amended and Restated Agreement of Limited Partnership (the Agreement ), BPAAL received capital contributions from its Limited Partner totaling $15,390,762. In addition to the Limited Partner s capital contributions, construction was funded through a HOPE VI program award of $20,000,000 reflected principally as a $13,546,942 mortgage loan to BPAAL and $4,502,067 of site and land improvements. As part of the relationship with BPAAL, the Authority earned a $1,339,104 developer fee, incurred a development deficit obligation of $916,484, provided a $13,546,942 construction loan and provides funding of operating shortfalls up to $1,200,000 until May 1, Construction period interest of $310,619 was capitalized into the loan, increasing the total loan amount to $13,857,561. Annually, the Authority earns a management fee of 5% on specific receipts that is payable from operating cash flows as defined in the Agreement. The Authority accounts for its investment in BPAAL on the equity method. For the current year, the Authority recognized its share of BPAAL's 2015 loss of $1,649,236 as a reduction in its investment and as a general expense. BPAAL has a fiscal year end of December 31, which differs from the Authority s year end. For consolidation purposes, the information identified in these accompanying financial statements is presented as of September 30, 2016 and for the twelve month period then ended. Separate financial information for BPAAL can be obtained from the Authority. 16

19 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2. Government-wide and fund financial statements The government-wide financial statements report information about the reporting government as a whole excluding fiduciary activities. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues. Business-type activities rely to a significant extent on fees and charges for support. Funds are organized into three major categories: governmental, proprietary and fiduciary. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, deferred outflows, liabilities, deferred inflows, fund equity, revenues and expenditures/expenses. For financial reporting purposes, the Authority reports all of its operations as a single business activity in a single enterprise fund. Therefore, the government-wide and the fund financial statements are the same. Enterprise funds are proprietary funds. Proprietary funds distinguish operating revenues and expenses from non-operating items. activity generally arises from providing services in connection with a proprietary fund s principal activity. The operating revenues of the Authority consists primarily of rental charges to tenants, operating grants and, to a lesser extent, certain operating amounts of capital grants that are used to fund operating expenses. The Authority considers its HUD grants associated with operations as operating revenue because these funds more closely represent revenues generated from operating activities rather than non-operating activities. HUD and other grants associated with capital acquisition and improvements are considered capital contributions and are presented after non-operating activity on the accompanying statement of revenues, expenses and changes in net position. expenses for the Authority include the cost of administration, utilities, maintenance, protective services, tenant services, general operations, depreciation and housing assistance payments. All revenues and expenses not meeting this definition are reported as non-operating revenue and expense, except for capital contributions, which are presented separately. When restricted and unrestricted resources are available for use, it is the Authority s policy to use restricted resources first, and then unrestricted resources, as needed. 3. Measurement focus and basis of accounting Measurement focus is a term used to describe which transactions are recorded within the various financial statements. The proprietary fund utilizes an economic resources measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. All assets, deferred outflows, liabilities, and deferred inflows (whether current or noncurrent) associated with the proprietary fund s activities are reported. Proprietary fund equity is classified as net position. 17

20 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3. Measurement focus and basis of accounting (continued) Basis of accounting refers to when transactions are recorded regardless of the measurement focus applied. The basis of accounting used is similar to businesses in the private sector; thus, these funds are maintained on the accrual basis of accounting. Revenues are recognized when earned and expenses are recorded in the period incurred. As provided by GASB No. 34 and related guidance, tenant revenue is reported net of bad debt expense of $158,779 and other operating revenue is reported net of bad debt expense of $9,895 and fraud losses of $6, Use of estimates The preparation of 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 5. Summary of HUD programs The accompanying basic financial statements include the activities of several housing programs subsidized by HUD. A summary of each significant program is provided below. Low Rent Public Housing Programs The Low Rent Housing Programs include asset management projects ( AMPs ), which receive operating and capital fund subsidy. The purpose of the public housing program is to provide decent and affordable housing to low-income families at reduced rents. The developments are owned, maintained and managed by the Authority. The developments/units are acquired, developed and modernized under HUD s Fund programs. Funding of the program operations and development is provided by federal annual contributions, operating subsidies and tenant rentals (determined as a percentage of family income, adjusted for family composition and other allowances). Housing Assistance Payments Programs The Housing Assistance Payments Programs primarily utilize existing privately owned family rental housing units to provide decent and affordable housing to low-income families. Funding of the program is provided by federal housing assistance grants from HUD. 18

21 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 6. Assets, deferred outflows, liabilities, deferred inflows and net position a. Cash and cash equivalents Cash and cash equivalents are considered to be cash in banks and certificates of deposit with original maturities of three months or less. The Authority does not currently have any cash equivalents. b. Investments Investments include certificates of deposit with original maturities greater than three months. c. Receivables Receivables consist of all revenues earned at year-end and not yet received. The HUD receivable is principally a result of grant revenue being accrued for allowable program expenses not yet funded. An allowance for uncollectible amounts is based on periodic aging. d. Inventory The Authority only records inventory for the Central Office Cost Center ( COCC ). Inventory consists principally of materials held for use or consumption which is recorded at cost. If inventory falls below cost due to damage, deterioration or obsolescence, the Authority establishes an allowance for obsolete inventory. Based on management s experience with the types of items in inventory and related usage plans, there is no allowance recognized as of September 30, e. assets The Authority s policy is to capitalize purchased and self-constructed assets with a value in excess of $5,000 and a useful life in excess of two years. The Authority capitalizes the costs of site acquisition and improvement, structures, equipment and direct development costs meeting the capitalization policy. Assets are valued at historical cost, or estimated historical cost if actual historical cost is not available, and contributed assets are valued at fair value on the date contributed. Depreciation has been provided using the straight-line method over the estimated useful lives, which range as follows: Structures and improvements Equipment years 3-7 years 19

22 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 6. Assets, deferred outflows, liabilities, deferred inflows and net position (continued) f. Deferred outflows of resources In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to future periods and thus, will not be recognized as an outflow of resources until then. The Authority s balance of deferred outflows of resources relates to funding of the net pension liability (see Note B-9). g. Unearned revenue Unearned revenues include amounts collected before revenue recognition criteria are met. As of September 30, 2016, unearned revenue mainly consists of tenant prepaid rent. h. Accrued compensated absences Full-time permanent employees are granted leave benefits to specified maximums depending on tenure with the Authority. Generally, after six months of service, employees are entitled to all vested accrued leave upon termination. However, the estimated liability and expenditure is recorded in the financial statements beginning at the date of hire. Leave time in excess of 480 hours as of the fiscal-year-end becomes critical leave and is only available for extended illnesses and is not paid upon termination. i. Deferred inflows of resources In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future periods and thus, will not be recognized as an inflow of resources until then. The Authority s balance of deferred inflows of resources relates to funding of the net pension liability (see Note B-9). j. Eliminations i.) Interprogram In the normal course of operations, certain programs pay for common costs that create interprogram receivables or payables. These interprogram receivables or payables are eliminated for the presentation of the Authority as a whole. For the year ended September 30, 2016, $46,885 was eliminated from the statement of net position. 20

23 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 6. Assets, deferred outflows, liabilities, deferred inflows and net position (continued) j. Eliminations (continued) ii.) Fee for service The Authority s Central Office Cost Center ( COCC ) internally charges fees to the AMPs, affordable housing, and Section 8 programs of the Authority. These charges include management fees, bookkeeping fees, front-line service fees and asset management fees. For financial reporting purposes $3,777,609 of fee for service charges have been eliminated. iii.) Internal loans The Authority s Central Office Cost Center ( COCC ) loaned $201,188 to Gregory West to assist with refinancing its revenue bonds issued in December 2012, with a 3% fixed interest rate. As of September 30, 2016, the loan has been fully paid, however, $1,154 of interest income and expense have been eliminated for the year ended September 30, The $1,200,000 noncurrent loan to Brentwood Park GP, Inc. was issued as part of the Brentwood HOPE VI mixed-finance agreement (see Note A-1). The internal loan balance is eliminated for the year ended September 30, iv.) Internal rent charges k. Net position The Authority s Central Office Cost Center charges rent to programs within the Authority. For financial reporting purposes, $9,000 of internal rent charges have been eliminated for the year ended September 30, In accordance with GASB No. 65, net position is classified into three components: i.) Net investment in capital assets This component consists of capital assets (including restricted capital assets), net of accumulated depreciation and reduced by any outstanding balances of bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction and improvements of those assets. 21

24 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 6. Assets, deferred outflows, liabilities, deferred inflows and net position (continued) k. Net position (continued) 7. Income taxes ii.) Restricted component of net position This component consists of the difference between restricted assets and deferred outflows of resources, reduced by related liabilities and deferred inflows of resources restricted in their use by (1) external groups such as grantors, creditors or laws and regulations of other governments; or (2) law through constitutional provisions or enabling legislation. The statement of net position of the Authority reports $1,234,297 of restricted net position (see Note B-6). iii.) Unrestricted component of net position This component is the remaining balance which does not meet the definition of the other two components. The Authority is a governmental entity and is exempt from federal and state income taxes. Accordingly, no provision for income taxes has been made in the financial statements. The Authority s blended component units are subject to the income tax provisions of Florida Statutes and the Internal Revenue Code and, therefore, have adopted the Financial Accounting Standards Board Accounting Standards Codification Topic 740, Income Taxes, which clarifies the accounting and disclosure requirements for uncertainty in tax positions. It requires a two-step approach to evaluate tax positions and determine if they should be recognized in the financial statements. The two-step approach involves recognizing any tax positions that are more likely than not to occur and then measuring those positions to determine if they are recognizable in the financial statements. Management regularly reviews and analyzes all tax positions and has determined no aggressive tax positions have been taken. For the year ended September 30, 2016, no provision or liability for federal income taxes has been included in these financial statements. The Authority s blended component units income tax filings are subject to audit by various taxing authorities. The Authority s blended component units open audit periods are 2012 through

25 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 7. Income taxes (continued) Discretely presented component unit (BPAAL) BPAAL is not a taxpaying entity for federal or state income tax purposes since taxable income or loss passes through to, and is reportable by, the partners individually. BPAAL has adopted the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 740, Income Taxes, which clarifies the accounting and disclosure requirements for uncertainty in tax positions. BPAAL is following the two-step approach to evaluate tax positions and determine if they should be recognized in the financial statements. Management regularly reviews and analyzes all tax positions and has determined no aggressive tax positions have been taken. For the year ended September 30, 2016, no provision or liability for federal income taxes has been included in the financial statements for BPAAL. BPAAL s income tax filings are subject to audit by various taxing authorities. BPAAL s open audit periods are 2012 through Impact of recently issued accounting principles In June 2015, the GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement 68 and Amendments to Certain Provisions of GASB Statements 67 and 68, which clarifies certain provisions of GASB No. 68, Accounting and Financial Reporting for Pensions, and it establishes requirements for defined contribution pensions that was not within the scope of GASB Statement No. 68. This statement is effective for the Authority s September 30, 2017 fiscal year end. Management is currently evaluating the impact of the adoption of this statement on the Authority s financial statements. In January 2016, the GASB issued Statement No. 80, Blending Requirements for Certain Component Units - An Amendment of GASB Statement No. 14, which amends GASB Statement No. 14, The Financial Reporting Entity, as amended, by addressing the blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. This statement is effective for the Authority s September 30, 2017 fiscal year end. Management is currently evaluating the impact of the adoption of this statement on the Authority s financial statements. 23

26 NOTE B - DETAILED NOTES 1. Deposits and investments Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 As of September 30, 2016, the Authority s cash balance was $17,891,153 of which $294,587 is presented as noncurrent. The Authority s investment consists of a certificate of deposit in the amount of $258,198. In accordance with GASB 40, the Authority s exposure to risk is disclosed as follows: Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Authority s policy to limit its exposure to declines in fair values of its investment portfolio is to only invest in HUD allowed investments and to monitor investments. As of September 30, 2016, the Authority s interest rate risk is limited since their only investment is a fixed term, fixed rate certificate of deposit that will be held until maturity. Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. It is the Authority s policy to follow the HUD regulations by only having direct investments and investments through mutual funds to direct obligations, guaranteed obligations, or obligations of the agencies of the United States of America. As of September 30, 2016, the Authority was not exposed to credit risk since they follow HUD regulations. Custodial Credit Risk. Custodial credit risk is the risk that in the event of a bank failure, the Authority s deposits may not be returned. The Authority does have a deposit policy for custodial credit risk, which requires collateral to be held in the Authority s name by its agent or by the bank s trust department. As of September 30, 2016, $17,112,426 of the Authority s cash and investment bank balances were not exposed to custodial credit risk. Brentwood Park GP, Inc. s bank balances principally consist of a $1,200,000 interest bearing account of which $950,000 is in excess of the FDIC insurance limit. Restricted Cash As of September 30, 2016, restricted cash consists of: Current HAP Reserves - Housing Choice Voucher $ 34,297 deficit escrow reserve 1,200,000 Restricted interest due to HUD 5,456 Tenant security deposits 355,232 Family self-sufficiency program 260,787 Subtotal current 1,855,772 Noncurrent Family self-sufficiency program 294,587 $ 2,150,359 24

27 NOTE B - DETAILED NOTES (continued) 2. Receivables, net Current receivables Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 As of September 30, 2016, receivables, net consist of: Noncurrent receivables Current Due from other governments $ 185,802 Tenant receivables 52,267 Fraud recovery 286,866 Notes receivable - tenants 8,177 Other receivables 14, ,529 Allowance for doubtful accounts - tenants (16,652) Allowance for doubtful accounts - fraud $ (95,867) 435,010 The $13,857,561 mortgage receivable from BPAAL bears interest at 4.35%, matures in July 2060, and is secured by the Brentwood Park Apartments. Interest and principal are payable from available cash flows as defined in the mixed financing agreements. In 2002, the Authority lent $1,500,000 to Vestcor Fund XVI, LTD, ( Vestcor ), from funds provided by the City of Jacksonville. The promissory note bears no interest and balloons on March 13, 2042 (a 40 year note). The Authority has a 40-year commitment with Vestcor as discussed further in Note B-11-d. The original promissory note was Amended and Restated as of March 7, During the current fiscal year, the Authority determined that the likelihood of repayment had increased and reduced the collection allowance to $1,000,

28 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE B - DETAILED NOTES (continued) 3. assets, net A summary of changes in capital assets is as follows: Balance at October 1, 2015 Transfers in/ Additions Transfers out/ Deletions Balance at September 30, 2016 Non-depreciable: Land $ 19,468,286 $ 17,112 $ - $ 19,485,398 Construction in progress 528,766 1,258,616 (1,377,180) 410,202 Total non-depreciable 19,997,052 1,275,728 (1,377,180) 19,895,600 Depreciated: Structures and improvements 132,377,892 1,572,920 (504,111) 133,446,701 Equipment 4,265, ,977 (86,086) 4,296,736 Total depreciated 136,643,737 1,689,897 (590,197) 137,743,437 Total capital assets 156,640,789 2,965,625 (1,967,377) 157,639,037 Less accumulated depreciation Structures and improvements (87,005,006) (3,482,992) 403,654 (90,084,344) Equipment (3,673,539) (188,515) 86,082 (3,775,972) Total accumulated depreciation (90,678,545) (3,671,507) 489,736 (93,860,316) assets, net $ 65,962,244 $ (705,882) $ (1,477,641) $ 63,778, Accrued liabilities As of September 30, 2016, accrued liabilities consist of: Accrued salaries and benefits $ 338,773 Accrued compensated absences 702,265 FSS current 260,787 Insurance reserves 148,659 Insurance risk pool shortfall 241,152 Other 29 $ 1,691,665 26

29 NOTE B - DETAILED NOTES (continued) 5. Noncurrent liabilities Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 A summary of changes in noncurrent liabilities is as follows: Payable at October 1, 2015 Additions Reductions Gregory West loan $ 3,856,246 $ - (246,111) Payable at September 30, 2016 Due Within One Year $ $ 257,385 $ 3,610,135 Compensated absences 909, ,591 (831,381) 877, ,265 Net pension liability 11,094,849 9,027,493 (2,139,643) 17,982,699 - FSS escrow 397, ,166 (730,872) 555, ,787 Insurance risk-pool shortfall 554,301 - (313,149) 241, ,152 Other noncurrent liabilities (631) - - Total noncurrent liabilities $ 16,812,728 $ 10,716,250 $ (4,261,787) $ 23,267,191 $ 1,461,589 Long-term debt at September 30, 2016 consists of the following: Gregory West mortgage loan On November 30, 2012, the Authority refinanced the Gregory West revenue bonds with a $4,500,000 mortgage note payable. The loan has a fixed interest rate of 4.25% and matures on November 30, Principal and interest are paid in monthly installments of $33,989. The debt is secured by the property and has debt-ratio and liquidity covenants in addition to separate financial reporting requirements. 27

30 NOTE B - DETAILED NOTES (continued) 5. Noncurrent liabilities (continued) Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 As of September 30, 2016, the future principal maturities are as follows for the years ending September 30: Gregory West Loan Principal Interest 2017 $ 257,385 $ 150, , , , , , , , , ,741, , ,280 12, Net position Total $ 3,610,135 $ 944,504 At September 30, 2016, restricted net position consists of the following: 7. BPAAL activity Housing Assistance Program reserves $ 34,297 deficit escrow reserve 1,200,000 $ 1,234,297 During this fiscal year, the Authority and BPAAL engaged in several transactions that are reflected in these basic financial statements. The Authority recognized $602,804 of mortgage note interest from BPAAL. At September 30, 2016, the Authority s receivables from BPAAL are $4,146,338 for interest, $839,104 for the developer fee, and $13,857,561 for the construction loan. The Authority s only payable to BPAAL is the $195,530 remaining balance of the $916,484 development deficit guaranty payable. In addition, during the fiscal year the Authority provided rental subsidy payments to BPAAL of $665,744 for low rent public housing tenants and $629,927 for Section 8 housing tenants. The Authority also subsidized $220,374 from the HUD Fund program for public housing tenant security services and renovations and received $500,000 of the outstanding developer fee from BPAAL. 28

31 NOTE B - DETAILED NOTES (continued) 8. Leasing activities Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 The Authority is the lessor of dwelling units to low-income residents. The rents under the leases are determined generally by the resident s income as adjusted for eligible deductions regulated by HUD, although the resident may opt for a flat rent. Leases may be cancelled by the lessee at any time or renewed every year. The Authority may cancel the leases only for cause. Revenues associated with these leases are recorded in the accompanying financial statements and related schedules within tenant revenue. Rental property consists of land and buildings with an estimated cost of $147,022,797 and associated accumulated depreciation of $90,066, Retirement plans Effective October 1, 2009, employees have a choice of participating in the defined benefit pension plan or the 401(a) defined contribution plan, in addition to the 457 deferred compensation plan. Defined benefit pension plan The Authority participates in the City of Jacksonville General Employees Pension Plan (the Plan ). Although the Plan is technically a single-employer Plan, the Plan has multiple employers and allocates the Plan s components as if the Plan was a cost-sharing multipleemployer contributory defined benefit pension plan. All full-time employees of the Authority, the City of Jacksonville, and other agencies within the City, are eligible to participate in the Plan upon employment. The Plan is administered by a nine-member Board of Trustees that makes recommendations to the City Council. The City Council is responsible for establishing or amending the pension plan provisions. The Plan provides for retirement, survivor, death and disability benefits. Under normal retirement provisions, a participant in the plan may retire after reaching age 55 with at least 20 years of credited service, at age 65 with at least 5 years of credited service, or any age with at least 30 years of credited service. The normal benefit rate is 2.5% of the final monthly compensation times the years of credited service, up to a maximum of 80%, with a minimum annual accrual rate of 4%. The requirements for early retirement are: (1) age 50 to age 55, 20 years of credited service, benefits rate reduced 0.5% for each month of age before age 55; or (2) any age after 25 years of service, benefit accrual rate adjusted to 2%. There is no mandatory retirement age. Final monthly compensation is the average monthly salary or wages for the highest 36 consecutive months of employment within the last ten years preceding retirement. Five years after benefit payments commence, the regular benefit is increased by a 3% annual cost of living adjustment on April 1 st. 29

32 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE B - DETAILED NOTES (continued) 9. Retirement plans (continued) Defined benefit pension plan (continued) The Plan's funding policy provides for contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are adequate to accumulate sufficient assets to pay benefits when due. Level percentages of payroll employer contribution rates are determined using the "entry age" actuarial cost method. Under this method, the cost of each member's projected retirement benefit is funded through a series of payments, determined as a level percentage of each year's earnings, from age at hire to assumed exit age. Participants are required to contribute 8% of their earnings based on an actuarial determination and the rate may change based on the earnings of the Plan s investments. Benefits vest after 5 years of credited service. Participants in the plan who terminate covered employment with less than five years of credited service shall be refunded 100% of their contributions to the Plan. The Authority s contributions and percentage of qualifying wages for the current and past three years are as follows: Year Percentage Contributions September 30, % $ 1,558,173 September 30, % $ 1,518,238 September 30, % $ 1,311,961 The 2016 contributions were made in accordance with contribution requirements determined through an actuarial valuation performed in As a percentage of projected pay, the contribution has increased from 33.20% of projected pay for the current year to 36.79% of projected pay for the fiscal year beginning October 1, Change in proportional share methodology For the October 1, 2015 actuarial valuation, the methodology for allocation of the net pension liability, deferred outflows, deferred inflows and pension expense changed from an allocation proportional to the present value of all future benefits calculated under the actuarial assumptions used to determine contribution requirements, to an allocation proportional to the actual contributions paid during the year. The effect of the change is recognized currently and increased the Authority s proportional share of the Plan s net pension liability and pension expense approximately $5,000,000 and $600,000, respectively. 30

33 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE B - DETAILED NOTES (continued) 9. Retirement plans (continued) Net pension liability The Jacksonville Housing Authority is allocated a proportional share of 1.90% of the net pension liability of the City of Jacksonville General Employees Retirement Plan based on an allocation proportional to the actual contributions paid during the year ended September 30, The Jacksonville Housing Authority s allocated share of the net pension liability is $18,569,091. The Plan s September 30, 2015 actuarial valuation incorrectly identified the contributions paid by the Authority. This error resulted in an overstatement of the Authority s share of the pension activity by a net $586,392, which is being amortized over five years starting with this year ended September 30, The pension liability was determined by an actuarial valuation as of September 30, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: 1) Inflation 2.75%, 2) Salary increases 3.00% %, of which 2.75% is the Plan s long-term payroll inflation assumption, 3) Investment rate of return 7.50%, net of pension plan investment expense, including inflation, and 4) Mortality tables used: a) RP Employee Mortality Table, set forward four years for males and three years for females, projected generationally with Scale MP b) RP-2014 Healthy annuitant mortality rates RP-2014 Healthy Annuitant Mortality Table, set forward four years for males and three years for females, projected generationally with Scale MP-2015, and c) RP-2014 Disabled annuitant mortality rates RP-2014 Disabled Retiree Mortality Table, set forward four years, projected generationally with Scale MP The actuarial assumptions used in the October 1, 2015 valuation were based on the results of an experience study for the period October 1, 2007 to September 30, 2012, with additional changes based on an interim study of mortality experience through September 30, 2014, and an update of the mortality projection scale in In 2015, the assumed investment return was lowered from 7.75% to 7.50% and the mortality assumptions were changed to reflect recent experience and to include generational projection of mortality improvements. The discount rate used to measure the total pension liability is 7.50%. The projection of cash flows used to determine the discount rate assumed plan member contributions will be made at their applicable contribution rates and that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on these assumptions, the Plan s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on the Plan s investments was applied to all periods of projected benefit payments to determine the total pension liability. Cash flow projections were run for a 120-year period. 31

34 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE B - DETAILED NOTES (continued) 9. Retirement plans (continued) Net pension liability (continued) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan s target asset allocation as of September 30, 2015 are summarized in the following table. The long-term expected real rates of return are based on 20-year projections of capital market assumptions provided by Segal Rogers Casey. Long-Term Asset Class Target Allocation Expected Real Rate of Return Domestic equity 35% 6.34% International equity 20% 7.04% Fixed income 19% 1.34% Real estate 25% 4.14% Cash 1% 0.74% Total 100% Sensitivity of the net pension liability to changes in the discount rate The following presents the Jacksonville Housing Authority s proportional share of the net pension liability of the Jacksonville General Employees Retirement Plan, calculated using the discount rate of 7.50%, as well as what the proportional share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: 1% Decrease (6.50%) Current Discount (7.50%) 1% Increase (8.50%) Jacksonville Housing Authority's proportional share of Net Pension Liability $ 23,752,331 $ 17,982,699 $ 13,154,443 32

35 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE B - DETAILED NOTES (continued) 9. Retirement plans (continued) Sensitivity of the net pension liability to changes in the discount rate (continued) For the year ended September 30, 2016 the Jacksonville Housing Authority s recognized pension expense is $2,974,168. At September 30, 2016, the Jacksonville Housing Authority reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ - $ 133,794 Impact of Plan error in actual contributions (469,115) - Changes of assumptions 1,157, ,276 Changes in proportion 3,592,712 - Contributions made in FYE September 30, ,558,173 - Net difference between projected and actual earnings on pension plan investments 1,942,816 - Total $ 7,781,979 $ 408,070 Contributions of $1,558,173 were reported as deferred outflows of resources related to pension resulting from Jacksonville Housing Authority contributions subsequent to the September 30, 2015 measurement date and will be recognized as a reduction of the net pension liability in the year ended September 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Recognition of Measurement Date deferred outflows/(inflows) September 30, 2017 $ 1,484,846 September 30, ,484,846 September 30, ,484,846 September 30, ,361,200 September 30, Thereafter - 33

36 NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 NOTE B - DETAILED NOTES (continued) 9. Retirement plans (continued) Defined contribution 401(a) plan Substantially all of the employees of the Authority are eligible to participate in and contribute to the City of Jacksonville 401(a) Plan. As of September 30, 2016, approximately 5% of Authority employees participated in this plan. The defined contribution alternative plan was established within the Jacksonville Retirement System and is administered by the same nine-member Board of Trustees. The City Council is responsible for establishing or amending plan provisions. Employees may participate in this or the defined benefit plan, but not both. Employees contribute 8% of earnings to the plan and the Authority contributes a matching 8%. Participants are immediately 100% vested in participant contributions and become vested 100% in the Authority s contributions after five years of credited service. For the year ended September 30, 2016, the employer and employees each contributed $28, Deferred compensation plan All of the Authority s employees may participate in the City of Jacksonville s 457 deferred compensation plan after ninety (90) days of employment. Employees may contribute 100% of compensation up to the IRS contribution limits for regular and catch-up contributions. Employees are 100% vested in their balances upon contribution to the Plan, and the Authority makes no matching contributions. There are no separately issued financial statements for the City of Jacksonville Retirement System. Financial information, for the plans in which the Authority s employees participate, is included in the City of Jacksonville s Comprehensive Annual Financial Report (CAFR) and may be obtained from the City of Jacksonville, Department of Finance, Accounting Division, 117 West Duval Street, Suite 375, Jacksonville, Florida 32202, or call (904) Risk management The Authority is exposed to various risks of loss related to torts; theft of, damages to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. As part of the Authority s risk management program, certain commercial insurance policies are purchased, and the Authority participates in a commercial risk management pool to cover designated exposures and potential loss situations. The Authority participates in the City s experience rated self-insurance plan that provides for comprehensive general liability and workers compensation insurance, with excess coverage of $1 million per occurrence basis for workers compensation claims over $1 million. The Authority's property is insured for $191 million through the Florida Public Housing Authority Self Insurance Fund (FPHASIF), a public entity risk pool. The pool does not retain the risk of loss and all members share a $47.5 million loss limit for any one occurrence or named storm. The Authority has flood insurance coverage with the same coverage amounts as the property insurance for any individual property located in a flood zone. 34

37 NOTE B - DETAILED NOTES (continued) 10. Risk management (continued) Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 There were no significant reductions of insurance coverage from prior years and settlements did not exceed insurance coverage for each of the past three years. Annually, the Authority reviews and estimates its risk for claims in process and claims incurred but not yet reported. Actual results could differ from these estimates and a gain or loss could be incurred. As of September 30, 2016, the financial statements of the Authority reflect a $241,152 payable to the City s pool and a contingent liability for incurred but not reported unknown claims of $148, Commitments and contingencies a. Legal The Authority is party to various pending or threatened legal actions arising in the normal course of operations. Although the outcome of these actions is not presently determinable, it is the Authority s opinion that any ultimate liability is not expected to have a material adverse effect on the Authority s financial position and should be fully covered by insurance and the Authority s sovereign immunity. b. Grants and contracts The Authority participates in various federally-assisted grant programs that are subject to review and audit by the grantor agencies. Entitlement to these resources are generally conditional upon compliance with the terms and conditions of grant agreements and applicable federal regulations, including the expenditure of resources for allowable purposes. Any disallowance resulting from a federal audit may become a liability of the Authority. As of the date of this report, management is not aware of any such examinations. In accordance with HUD regulations, the amount of current year program subsidy received in excess of associated qualifying expenses of the Housing Choice Voucher program is presented as net program income or loss with the cumulative excess funding being reflected in restricted net position in the basic financial statements. As of September 30, 2016, the remaining unspent Housing Choice Voucher HAP of $34,297 is presented as restricted net position. c. Funds awarded The Authority receives funding from HUD through the Fund program to help subsidize the cost of project repairs, improvements, and certain operating costs. Unspent awarded amounts as of September 30, 2016 amounted to $3,296,249 for the Fund program. 35

38 NOTE B - DETAILED NOTES (continued) Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, Commitments and contingencies (continued) d. Lindsey Terrace The Authority has entered into a 40-year regulatory and operating agreement with Vestcor Fund XVI, LTD. to provide operating subsidy to Lindsey Terrace Apartments commencing January In exchange for the subsidy, the Authority has the right to lease 84 units to public housing tenants. The subsidy is $380 per unit per month, or approximately $383,000 annually with a maximum 3% per year escalation clause. The subsidy actually remitted by the Authority to Vestcor is net of the rent billed to Authority tenants. The net subsidy paid for the year ending September 30, 2016 was approximately $262,565. e. Environmental issues 12. Concentrations Several parcels of land owned by the Authority have been identified as being contaminated with ash. The City of Jacksonville has assumed the responsibility for the cleanup and is actively cleaning up the sites. These financial statements do not reflect any charges to operations for this contingency since amounts, if any, attributed to the Authority cannot be reasonably determined. For the year ended September 30, 2016, approximately 90% of all revenues and 45% of current receivables reflected in the basic financial statements are from HUD. The Authority operates in a heavily regulated environment. The operations of the Authority are subject to the administrative directives, rules and regulations of federal, state and local regulatory agencies, including, but not limited to HUD. Such administrative directives, rules and regulations are subject to change by an act of Congress or an administrative change mandated by HUD. Such changes may occur with little notice or inadequate funding to pay for the related costs and the additional administrative burden to comply with the changes. In addition, any excess reserves may reduce future funding levels and possibly be subject to recapture. 13. Financial data schedule As required by HUD, the Authority prepares its financial data schedule in accordance with HUD requirements in a prescribed format which differs from the presentation of the basic financial statements. The schedule s format presents certain operating items as non-operating such as depreciation expense, housing assistance payments and extraordinary maintenance expense. In addition, the schedule s format includes non-operating items as operating such as investment revenue, HUD capital grants revenue, interest expense, and gains and losses on the disposal of fixed assets. Furthermore, the schedule reflects tenant revenue and bad debt expense separately. 36

39 NOTE B - DETAILED NOTES (continued) Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, Segment and blended component unit information Gregory West. The Authority took out a mortgage to refinance Gregory West Apartments revenue bonds. The mortgagee relies on the revenues generated by the rental income of the apartments to fund the liability and requires separate financial information. Summary financial information for Gregory West is presented below. Brentwood Park GP, Inc. and JHA Brentwood Park Development, LLC. In accordance with GASB 61, the Authority is presenting the following condensed financial statements for its major blended component units. Assets: Condensed Statement of Net Position Gregory West Brentwood Park GP, Inc. JHA Brentwood Park Dev. LLC Current assets $ 1,208,492 $ 442 $ 839,104 Restricted assets 37,716 1,200,000 - assets 3,892, Other noncurrent assets - 3,767,454 - Total assets 5,138,272 4,967, ,104 Liabilities: Current liabilities 279, ,191 6,611 Current liabilities payable from restricted assets 37, Internal loans from other programs - 1,200,000 - Noncurrent liabilities 3,352, Total liabilities 3,670,146 1,397,191 6,611 Net position: Net investment in capital assets 281, Restricted - 1,200,000 - Unrestricted 1,186,197 2,370, ,493 Total net position $ 1,468,126 $ 3,570,705 $ 832,493 37

40 NOTE B - DETAILED NOTES (continued) Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, Segment and blended component unit information (continued) Condensed Statement of Revenues, Expenses, and Changes in Net Position Gregory West Brentwood Park GP, Inc. JHA Brentwood Park Dev. LLC Tenant revenue, net $ 1,399,350 $ - $ - Other operating revenues 2, Depreciation (155,716) - - Other operating expenses (739,583) (1,654,597) (1,139) income 506,587 (1,654,597) (1,139) Non-operating revenues and (expenses) Loss on disposal of capital assets (2,438) - - Interest income 1, Internal loan interest expense (1,154) - - Interest expense (161,762) - - Total Non-operating revenues and (expenses) (163,636) Transfers (2,203) - (500,000) Change in net position 340,748 (1,654,427) (501,139) Beginning net position 1,127,378 5,225,132 1,333,632 Ending net position $ 1,468,126 $ 3,570,705 $ 832,493 Condensed Statement of Cash Flows Gregory West Brentwood Park GP, Inc. JHA Brentwood Park Dev. LLC Net cash provided by (used in): activities $ 659,284 $ (3,548) $ (1,061) Noncapital financing activities (51,412) - - and related financing activities (411,199) - 500,000 Investing activities 1, Net increase (decrease) in cash 198,300 (3,378) 498,943 Beginning cash 1,028,371 1,203,772 - Ending cash $ 1,226,671 $ 1,200,394 $ 498,943 38

41 NOTE B - DETAILED NOTES (continued) 15. Subsequent events Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, 2016 In preparing these financial statements, the Authority has evaluated events and transactions for potential recognition or disclosure through March 1, 2017, the date the financial statements were available to be issued, and noted no additional significant items to be disclosed, except as follows: In February 2016, the BPAAL partnership agreement was amended, effective January 1, 2015, as to allocations of revenues, deductions, profits, and losses between the partners. Brentwood Park GP, Inc. is the general partner for BPAAL. For BPAAL s year ended December 31, 2016, Brentwood Park GP, Inc. s share of BPAAL s loss will be approximately $1,760,000. This loss will be recognized in Brentwood Park GP, Inc. s year ending September 30, 2017 statement of revenues, expenses, and changes in net position. 16. Discretely presented component unit - BPAAL a. Deposits and investments As of September 30, 2016, BPAAL s cash balance is $1,716,981 of which $1,389,229 is in excess of FDIC insurance. BPAAL s restricted cash consists of tenant security deposits in the amount of $77,752 a replacement reserve in the amount of $411,608 and an affordability reserve in the amount of $691,560. b. assets As of September 30, 2016, BPAAL had capital assets consisting of: Land $ 6,258,733 Structures and improvements 26,305,391 Equipment 737,402 33,301,526 Less accumulated depreciation (7,216,898) $ 26,084,628 39

42 NOTE B - DETAILED NOTES (continued) Jacksonville Housing Authority NOTES TO BASIC FINANCIAL STATEMENTS September 30, Discretely presented component unit - BPAAL (continued) c. Intangibles BPAAL s intangible assets consist of tax credit and closing costs which are being amortized over the fixed life of the partnership and debt. The total cost of $419,033 is being presented net of accumulated amortization of $178,890. Amortization expense for the year was $17,846. d. Mortgage note payable The note payable to the Authority for $13,857,561 has an interest rate of 4.35% and a maturity date of July 25, Interest was $620,650 for the fiscal year, including amortization expense. Principal and interest are payable from available cash flows as defined in the Amended and Restated Agreement of Limited Partnership. The note is secured by the Brentwood Park Apartments and a lien on the revenues from the operation of the apartments. e. Net investment in capital assets This equity category consists of capital assets (including restricted capital assets), net of accumulated depreciation and reduced by any outstanding balances of bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, and improvements of those assets. In addition to the mortgage payable, BPAAL has reduced the net asset amount by directly related construction liabilities. f. Pass through revenue from the Authority BPAAL received $886,118 of funding from the Jacksonville Housing Authority, of which $665,744 represents subsidy from HUD that is to be used for operating public housing units, and $220,374 is from a Fund grant. In addition, BPAAL s tenant revenue includes $629,927 of Section 8 subsidy received from the Authority. g. Contingencies BPAAL is party to various pending or threatened legal actions arising in the normal course of operations. Although the outcome of these actions is not presently determinable, it is BPAAL s opinion that any ultimate liability is not expected to have a material adverse effect on BPAAL s financial position and should be fully covered by insurance. h. Subsequent events In preparing these financial statements, BPAAL s Management has evaluated events and transactions for potential recognition or disclosure through March 1, 2017, the date the financial statements were available to be issued. 40

43 REQUIRED SUPPLEMENTARY INFORMATION 41

44 SCHEDULE OF CHANGES IN PROPORTIONAL SHARE OF NET PENSION LIABILITY - LAST TEN FISCAL YEARS Year ended September 30, Proportional share percentage 1.90% 1.34% 1.34% Net pension liability $ 17,982,699 $ 11,094,868 $ 10,609,966 (Historical information prior to Covered employee payroll 4,535,512 4,961,709 5,090,332 implementation of GASB 68 is Net pension liability as percentage of covered employee payroll % % % not required) Plan fiduciary net position as a percentage of the total pension liability 64.03% 69.06% 68.64% *All information is on a measurement year basis. Notes to schedule: Benefit changes: There have been no changes in benefit provisions. Change of Assumptions: In 2014, the assumed investment return was lowered from 7.75% to 7.50%. Based on the Society of Actuaries most recently published analysis and guidance on projected national mortality improvements, the mortality improvement scale was changed from MP2014 to MP2015. See independent auditor's report. 42

45 SUPPLEMENTARY INFORMATION 43

46 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016 Line Item No. Account Description AMP07 Jax Beach AMP07 Jax Beach AMP10 Twin Towers AMP10 Twin Towers AMP12 Fairway Oaks AMP12 Fairway Oaks 111 Cash - Unrestricted 412, , ,935-1,028, , , , , , Cash - other restricted Cash - Tenant Security Deposits 20,105-23,395-8,125-32,350-25,930-23,450-23,840-11,270-19, Cash - Restricted for payment of current liability Total Cash 432, , ,060-1,060, , , , , , Accounts Receivable - HUD Other Projects 17, ,131-5, ,261-12,843-43,018-72,624-30, , Accounts Receivable - other government 6,582-6,705-3,317-7,897-4,999-6,833-8,558-4,862-7, Accounts Receivable - Miscellaneous Accounts Receivable - Tenants - Dwelling Rents 2, ,790-3,333-11, ,912-1, Allowance for Doubtful Accounts - Dwelling Rents (982) - (224) - (159) - (1,880) - (1,707) - (1,493) - (687) - (1,400) - (604) Notes, Loans, & Mortgages Receivable - current Fraud recovery 9,381-3,505-13, , , Allowance for doubtful accounts - fraud (3,135) - (1,171) - (4,504) - (61) - (1,780) - (162) (408) Accrued interest receivable Total Receivables, net of allowances for doubtful accounts 31, ,315-18, ,303-23,143-60,475-81,412-37, , Investments - Unrestricted Prepaid Expenses and Other Assets 18,923-28,339-9,905-28,409-22,203-21,517-33,167-13,098-29, Inventories Interprogram due from Total Current Assets 483,486-1,024, ,311-1,243, , , , , , Land 1,119,650-75, , , ,460-2,486, ,675-1,366, , Buildings 4,257,785-3,846,652-5,845,786-17,749,928-8,565,700-9,399,796-3,780,187-10,577,633-5,580, Furniture, Equipment & Machinery - Dwellings 161, , , ,815-87, ,194-98,094-43, , Accumulated Depreciation (3,271,559) - (2,585,702) - (5,498,610) - (14,561,793) - (7,300,399) - (7,860,068) - (3,600,305) - (9,289,808) - (5,648,743) Construction In Progress , , Total Fixed Assets, Net of Accumulated Depreciation 2,267,249-1,896,693-1,035,379-4,302,754-2,171,174-4,275, ,651-2,698, ,597-1 Notes, loans, and mortgages receivable - Noncurrent Other Assets Investment in joint ventures Total Non-Current Assets 2,267,499-1,896,693-1,035,379-4,302,754-2,171,174-4,275, ,651-2,698, ,597 - AMP13 SW Villas AMP13 SW Villas AMP14 Victory Point AMP14 Victory Point AMP15 Anders/FME AMP15 Anders/FME AMP17 Cent. Tower AMP17 Cent. Tower AMP18 Cent. E,W AMP18 Cent. E,W AMP19 Hogan Creek AMP19 Hogan Creek 190 Total Assets 2,750,985-2,921,367-1,242,690-5,546,131-3,054,755-4,907,106-1,706,345-3,040,857-1,650, Deferred Outflows of Resources 152, ,344-60, , , , , , , Total Assets and Deferred Outflow of Resources 2,903,657-3,114,711-1,303,022-5,844,384-3,287,056-5,178,728-1,915,507-3,173,801-1,856,960 - See Independent Auditor's Report 44

47 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016 Line Item No. Account Description AMP07 Jax Beach AMP07 Jax Beach AMP10 Twin Towers AMP10 Twin Towers AMP12 Fairway Oaks AMP12 Fairway Oaks AMP13 SW Villas AMP13 SW Villas AMP14 Victory Point AMP14 Victory Point AMP15 Anders/FME AMP15 Anders/FME AMP17 Cent. Tower AMP17 Cent. Tower AMP18 Cent. E,W AMP18 Cent. E,W AMP19 Hogan Creek AMP19 Hogan Creek 312 Accounts Payable <= 90 Days ,695-1,122-7,216-1,261-11,339-3,351-3,964-87, Accrued Wage/Payroll Taxes Payable 8,756-9,300-3,607-10,288-8,537-9,695-10,207-6,009-10, Accrued Compensated Absences 17,851-19,209-9,070-34,404-19,446-12,412-27,531-8,869-16, Accounts Payable - HUD PHA Programs Tenant Security Deposits 20,105-23,395-8,125-32,350-25,930-23,450-23,840-11,270-19, Unearned Revenues , Current portion of L-T debt - capital projects Other current liabilities 8,004-41,497-4,923-62,270-9,489-10,314-12,693-7,254-22, Accrued Liabilities - Other 14,440-32,798-5,280-74,098-22,125-48,183-32,006-25,289-42, Interprogram due to Total Current Liabilities 69, ,900-32, ,810-86, , ,711-63, , Long-term debt, net of current - capital projects Noncurrent Liabilities - Other Accrued compensated Absences - Non Current 4,463-4,802-2,267-8,601-4,861-3,103-6,883-2,217-4, Net pension liability 349, , , , , , , , , Total Noncurrent Liabilities 353, , , , , , , , , Total Liabilities 423, , , , , , , , , Deferred Inflows of Resources 7,522-9,257-4,141-16,362-10,734-14,053-8,190-4,188-19, Total Liability and Deferred Inflow of Resources 430, , , , , , , , , Net Investment in Assets 2,267,249-1,896,693-1,035,379-4,302,754-2,171,174-4,275, ,651-2,698, , Restricted Net Position Unrestricted Net Position 205, ,897-82, , , , , , , Total Equity 2,472,923-2,416,590-1,117,619-4,903,928-2,658,688-4,419,397-1,328,458-2,818,081-1,091, Total Liabilities, Deferred Inflows and Equity 2,903,657-3,114,711-1,303,022-5,844,384-3,287,056-5,178,728-1,915,507-3,173,801-1,856,960 - See Independent Auditor's Report 45

48 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016 Line Item No. Account Description AMP07 Jax Beach AMP07 Jax Beach AMP10 Twin Towers AMP10 Twin Towers AMP12 Fairway Oaks AMP12 Fairway Oaks AMP13 SW Villas AMP13 SW Villas AMP14 Victory Point AMP14 Victory Point AMP15 Anders/FME AMP15 Anders/FME AMP17 Cent. Tower AMP17 Cent. Tower AMP18 Cent. E,W AMP18 Cent. E,W AMP19 Hogan Creek AMP19 Hogan Creek Net Tenant Rental Revenue 113, ,037-42, , , , , , , Tenant Revenue - Other 30,489-14,247-9,244-53,622-32,422-22,460-6,319-13,664-10, Total Tenant Revenue 144, ,284-51, , , , , , , HUD PHA Grants 701, , , , ,454 45,926 1,134, , ,577 86, , , , , , , , , HUD PHA Grants - 6, ,382-6, , ,933-58, ,225-69, Management Fee Asset Management Fee Book-Keeping Fee Front Line Service Fee Total Fee Revenue Other government grants Investment Income - Unrestricted 805-1, ,763-1, , , Mortgage interest income Fraud recovery 8,758-4,275-7,542-1,861-12,682-5, , Other revenue , , , Gain/Loss on Sale of Fixed Assets (8,854) - (8,824) (440) - (3,051) - (5,185) (4,273) Total Revenue 846, ,327 1,253, , ,920 52,221 1,590, ,144 1,213,905 86,657 1,107, ,857 1,180, , , ,331 1,126, , Administrative salaries 71,748-73,269-61, ,253-87,200-87,906-94,032-61,804-71, Auditing fees 2,273-3,025-1,038-3,672-3,010-2,875-3,131-1,340-2, Management Fee 98,486 17, ,097 23,365 45,003 8, ,142 29, ,445 23, ,575 22, ,662 24,178 58,048 10, ,357 21, Book-Keeping Fee 11,985-15,953-5,477-19,367-15,874-15,156-16,509-7,064-14, Advertising and Marketing Employee benefit contributions - administrative 49,757-56,924-37,280-86,884-74,258-78,556-71,959-50,918-46, Office Expenses 79,869-53,320-32,180-94,874-66,906-72,759-43,831-74,138-36, Legal Expense , , Travel Asset Management Fee 16,127-21,467-7,369-26,059-21,360-20,399-22,214-9,505-19, Tenant services - salaries , , , Employee benefit contributions - tenant services - - 7, , , Tenant Services - Other 4,515-5,393-1,387-5,555-4,836-5,124-5,757-2,595-4, Water 1,413-17,718-2,183-44,713-24,449-36,397-22,904-31,759-27, Electricity 13, ,684-12,128-25,847-18,377-35, ,216-9, , Gas , , , Sewer 1,524-46,953-1, ,000-70,312-65,626-49,399-69,669-72, Ordinary Maintenance and Operations - Labor 95, ,745-40, , , , ,002-79, , OMO - Materials and Other 75,271-77,769-34,547-98,045-56,335-56,498-57,320-24,708-49, Ordinary Maintenance and Operations - Contract Costs 281, , , , , , , , , Employee Benefit Contributions - Ordinary Maintenance 59,876-76,692-22,624-99,989-84,797-95,147-81,795-60,027-75, Protective Services - Other Contract Costs 2,233-12,236-2,910-9,958-1,193-1,452-4, , Protective Services - Other , , , Property Insurance 30,386-45,555-15,721-44,158-36,868-35,457-57,400-21,401-48, Liability Insurance 6,181-9,266-3,198-8,981-7,499-7,214-11,672-4,351-9, Workmen's Compensation 2,921-2,643-1,437-3,387-1,946-2,973-3,339-2,167-2, All other Insurance See Independent Auditor's Report 46

49 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016 Line Item No. Account Description AMP07 Jax Beach AMP07 Jax Beach AMP10 Twin Towers AMP10 Twin Towers AMP12 Fairway Oaks AMP12 Fairway Oaks Other General Expenses Compensated Absences 16,776-18,722-10,382-24,005-20,299-18,620-23,278-12,152-25, Payments in Lieu of Taxes Bad Debt - Tenant Rents 19, ,504-31,084-11,050-7,378-4,439-7,013-6, Bad Debt - Other Interest on Mortgage (or Bonds) Payable Interest on Notes Payable (Short and Long Term) Amortization of Bond Issue Costs Severance Expense Total Expenses 942,091 17,668 1,346,528 23, ,603 8,487 1,645,081 29,061 1,137,271 23,248 1,244,449 22,783 1,244,766 24, ,557 10,461 1,358,063 21,272 AMP13 SW Villas AMP13 SW Villas AMP14 Victory Point AMP14 Victory Point AMP15 Anders/FME AMP15 Anders/FME AMP17 Cent. Tower AMP17 Cent. Tower AMP18 Cent. E,W AMP18 Cent. E,W AMP19 Hogan Creek AMP19 Hogan Creek Excess Revenue over Expenses (95,197) 97,659 (93,510) 576,861 (68,683) 43,734 (54,368) 803,083 76,634 63,409 (136,602) 216,074 (64,184) 218,809 (161,237) 297,870 (231,270) 317, Housing Assistance Payments HAP Portability - In Depreciation Expense 178, , , , , ,882-34, ,157-84, Fraud losses - - 1, Total Expenses 1,120,631 17,668 1,483,034 23, ,357 8,487 1,878,557 29,061 1,374,562 23,248 1,529,331 22,783 1,279,645 24,178 1,112,714 10,461 1,442,504 21, transfers in 91, ,479-37, ,055-63, , , , , transfers out - (91,364) - (219,479) - (37,439) - (204,055) - (63,409) - (139,141) - (160,809) - (115,645) - (248,020) Inter-project excess cash transfer in , , Inter-project excess cash transfer out - - (25,000) (60,000) Transfers between programs and projects in , Transfers between programs and projects out Total other financing sources (Uses) 91,364 (91,364) 194,479 (219,479) 64,642 (37,439) 204,055 (204,055) 63,409 (63,409) 139,141 (139,141) 100,809 (160,809) 175,645 (115,645) 248,020 (248,020) Excess (deficiency) of total revenue over (under) total expenses (182,373) 6,295 (35,537) 357,382 (237,795) 6,295 (83,789) 599,028 (97,248) - (282,343) 76,933 1,746 58,000 (299,749) 182,225 (67,691) 69, Debt Principal Payments - Enterprise Funds Beginning Equity 2,649,001-2,094,745-1,349,119-4,388,689-2,755,936-4,624,807-1,268,712-2,935,605-1,089, Total Prior Period Adjustments and Equity Transfers 6,295 (6,295) 357,382 (357,382) 6,295 (6,295) 599,028 (599,028) ,933 (76,933) 58,000 (58,000) 182,225 (182,225) 69,847 (69,847) Administrative Fee Equity Housing Assistance Payments Equity Unit Months Available 1,824-2, ,928-2,400-2,292-2,496-1,068-2, Number of Unit Months Leased 1,790-2, ,867-2,378-2,268-2,479-1,046-2, Excess Cash 316, , , , , , , , , Land Purchases Building Purchases , , ,933-58, ,225-49, Furniture & Equipment - Dwelling Purchases 6, ,295-6, , Replacement Housing Factor Funds See Independent Auditor's Report 47

50 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016, Line Item No. Account Description 111 Cash - Unrestricted 113 Cash - other restricted 114 Cash - Tenant Security Deposits 115 Cash - Restricted for payment of current liability 100 Total Cash 122 Accounts Receivable - HUD Other Projects 124 Accounts Receivable - other government 125 Accounts Receivable - Miscellaneous 126 Accounts Receivable - Tenants - Dwelling Rents Allowance for Doubtful Accounts - Dwelling Rents 127 Notes, Loans, & Mortgages Receivable - current 128 Fraud recovery Allowance for doubtful accounts - fraud 129 Accrued interest receivable 120 Total Receivables, net of allowances for doubtful accounts 131 Investments - Unrestricted 142 Prepaid Expenses and Other Assets 143 Inventories 144 Interprogram due from 150 Total Current Assets 161 Land 162 Buildings 163 Furniture, Equipment & Machinery - Dwellings 166 Accumulated Depreciation 167 Construction In Progress 160 Total Fixed Assets, Net of Accumulated Depreciation 1 Notes, loans, and mortgages receivable - Noncurrent 174 Other Assets 176 Investment in joint ventures 180 Total Non-Current Assets AMP27 Scattered Sites AMP27 Scattered Sites AMP32 Blodgett Villas AMP32 Blodgett Villas AMP36 Oaks at Durkeeville AMP36 Oaks at Durkeeville AMP45 AMP45 Lindsey Terrace Lindsey Terrace AMP46 Colonial/ Baldwin AMP46 Colonial/ Baldwin AMP47 Riviera 792, , , , , , , ,483-8, ,609, ,219 32,438-20,744-25, ,687-17, ,166-1, , , , , , , , , , ,649-10, ,929,589 42,274-18,158-22, ,276-10,075-93,406-6, ,414 10,748-6,741-6, ,577-4, , , ,803-4,177-3, , ,006-1, ,691 (2,238) - (2,364) - (982) (421) - (1,198) (24) - (289) (16,652) 794-2, ,177 21,906-21, ,205-4, ,585 (7,321) - (7,051) - (40) (2,742) - (1,633) (263) (30,271) ,439 72,477-43,069-32, ,305-19,040-93,466-13, ,165, ,953-20,419-26, ,001-19, ,714-2, , , , , , , , , ,189-13, ,445, ,598-2,365,446-5,097, ,124, , , ,240,133 6,204,605-18,935,515-17,204, ,591,029-4,556, ,401, , ,047, , , , , , ,110-37, ,190,080 (4,467,250) - (10,010,453) - (8,677,711) (2,208,486) - (2,189,184) (632,021) - (28,943) (87,831,035) , , ,202 2,541,489-11,443,980-13,764, ,745,425-3,332, ,277, , ,057, , ,857, ,357, ,346, ,346, ,541,489-11,443,980-13,764, ,000-3,745,425-3,332,192-19,203,899-2,277, , ,761,314 AMP47 Riviera AMP48 Brentwood AMP48 Brentwood AMP50 Carrington AMP50 Carrington AMP51 Durkeeville 8 AMP51 Durkeeville 8 Other AMP Other AMP Total AMPs / Total Assets 200 Deferred Outflows of Resources 290 Total Assets and Deferred Outflow of Resources 3,469,365-11,886,147-14,636, ,499-4,164,410-3,704,471-19,588,786-2,718, , ,206, , , , ,528-92, , ,027,163 3,908,596-12,122,156-14,908, ,499-4,274,938-3,796,729-19,588,786-2,838, , ,233,540 See Independent Auditor's Report 48

51 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016, Line Item No. Account Description AMP27 Scattered Sites AMP27 Scattered Sites AMP32 Blodgett Villas AMP32 Blodgett Villas AMP36 Oaks at Durkeeville AMP36 Oaks at Durkeeville AMP45 AMP45 Lindsey Terrace Lindsey Terrace AMP46 Colonial/ Baldwin AMP46 Colonial/ Baldwin AMP47 Riviera AMP47 Riviera AMP48 Brentwood AMP48 Brentwood AMP50 Carrington AMP50 Carrington AMP51 Durkeeville 8 AMP51 Durkeeville 8 Other AMP Other AMP Total AMPs / Accounts Payable <= 90 Days 321 Accrued Wage/Payroll Taxes Payable 322 Accrued Compensated Absences 331 Accounts Payable - HUD PHA Programs 341 Tenant Security Deposits 342 Unearned Revenues 343 Current portion of L-T debt - capital projects 345 Other current liabilities 346 Accrued Liabilities - Other 347 Interprogram due to 310 Total Current Liabilities 351 Long-term debt, net of current - capital projects 353 Noncurrent Liabilities - Other 354 Accrued compensated Absences - Non Current 357 Net pension liability 350 Total Noncurrent Liabilities 56-2,995-6, ,252-1, ,479 14,251-7,882-10, ,027-4,880-3,353-5, ,492 32,914-16,450-24, ,805-9,600-9,566-7, , ,438-20,744-25, ,687-17, ,166-1, , , ,385-10,830-9, ,457-6, , ,490 11,214-18,939-17, ,279-17, , , ,804-78,186-95, ,254-59,351-14,476-50,325-1, ,600, ,219 8,229-4,113-6, ,451-2,400-2,392-1, ,868 1,042, , , , , , ,064,576 1,050, , , , ,427-2, , ,135, Total Liabilities 400 Deferred Inflows of Resources 490 Total Liability and Deferred Inflow of Resources Net Investment in Assets Restricted Net Position Unrestricted Net Position 513 Total Equity 1,157, , , , ,778-16, ,298-1, ,735,915 26,632-8,991-13, ,965-7, , ,885 1,184, , , , ,363-16, ,569-1, ,903,800 2,541,489-11,443,980-13,764, ,745,425-3,332, ,277, , ,057, ,931-66, , , , ,174-19,571, ,052-11, ,272,575 2,724,420-11,510,303-14,168, ,499-3,930,802-3,493,366-19,571,918-2,486, , ,329, Total Liabilities, Deferred Inflows and Equity 3,908,596-12,122,156-14,908, ,499-4,274,938-3,796,729-19,588,786-2,838, , ,233,540 See Independent Auditor's Report 49

52 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016, Line Item No. Account Description AMP27 Scattered Sites AMP27 Scattered Sites AMP32 Blodgett Villas AMP32 Blodgett Villas AMP36 Oaks at Durkeeville AMP36 Oaks at Durkeeville AMP45 AMP45 Lindsey Terrace Lindsey Terrace AMP46 Colonial/ Baldwin AMP46 Colonial/ Baldwin AMP47 Riviera AMP47 Riviera AMP48 Brentwood AMP48 Brentwood AMP50 Carrington AMP50 Carrington AMP51 Durkeeville 8 AMP51 Durkeeville 8 Other AMP Other AMP Total AMPs / Net Tenant Rental Revenue Tenant Revenue - Other Total Tenant Revenue HUD PHA Grants HUD PHA Grants Management Fee Asset Management Fee Book-Keeping Fee Front Line Service Fee Total Fee Revenue Other government grants Investment Income - Unrestricted Mortgage interest income Fraud recovery Other revenue Gain/Loss on Sale of Fixed Assets Total Revenue Administrative salaries Auditing fees Management Fee Book-Keeping Fee Advertising and Marketing Employee benefit contributions - administrative Office Expenses Legal Expense Travel Asset Management Fee Tenant services - salaries Employee benefit contributions - tenant services Tenant Services - Other Water Electricity Gas Sewer Ordinary Maintenance and Operations - Labor OMO - Materials and Other Ordinary Maintenance and Operations - Contract Costs Employee Benefit Contributions - Ordinary Maintenance Protective Services - Other Contract Costs Protective Services - Other Property Insurance Liability Insurance Workmen's Compensation All other Insurance 256,059-66, ,043-99, , , ,335-21, ,501,284 24,520-36,874-31, ,982-11, ,012-1, , , , ,290-99, , , ,347-23, ,838,465 1,216, , ,939 99, , , , ,880 73, ,054 98, , , ,642 31,686 7,940 19, ,580,864-14,132-25, ,789-64, ,549, , , , , ,804 21,201-15,967-3,131-1,246-5,211-5, , , ,000-3, , ,304 (5,159) - (11,263) - (26,732) (10,993) - (12,547) (97,321) 1,514, , , ,686 1,101, , , ,037 73, ,689 98,112 1,348, , , ,475 30,956 84, ,260, ,841-78,059-88, ,007-79, , ,229,666 3,793-2,348-3, ,776-2, , , ,360 29, ,746 18, ,010 23, ,962 13,833 90,659 16,157 73,972 26,270 91,963 16, ,060,804 20,002-12,382-16, ,366-11, , , ,646-70,998-78, ,355-45, , ,528 83,486-71,353-69, ,612-34, ,923-2, , , , ,193 26,914-16,661-22, ,602-14, , , , , , ,012 6,351-3,828-4,287-2,058-3,002-2,653-5,551-4, ,458 17,438-2,552-7,129-18,770-17,972-14, ,195-1, ,116 3,027-14,515-47,676-7,978-14,488-11, ,666-1, , , , , ,115 38,512-3,445-2,769-21,165-39,640-45, ,859-1, , , , , ,484-66, ,142-3, ,585, ,893-67,962-65, ,715-50, , , , , , , , , ,709-16, ,903, ,684-99, , ,165-35, ,453-1, ,129, ,272-2, ,511-15, ,992-3, , , ,616 50,502-33,578-41, ,932-25, , ,483 10,273-6,830-8, ,257-5, , ,594 4,758-2,927-2, ,517-1, , , See Independent Auditor's Report 50

53 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016, Line Item No. Account Description Other General Expenses Compensated Absences Payments in Lieu of Taxes Bad Debt - Tenant Rents Bad Debt - Other Interest on Mortgage (or Bonds) Payable Interest on Notes Payable (Short and Long Term) Amortization of Bond Issue Costs Severance Expense Total Expenses AMP27 Scattered Sites AMP27 Scattered Sites AMP32 Blodgett Villas AMP32 Blodgett Villas AMP36 Oaks at Durkeeville AMP36 Oaks at Durkeeville AMP45 AMP45 Lindsey Terrace Lindsey Terrace AMP46 Colonial/ Baldwin AMP46 Colonial/ Baldwin AMP47 Riviera , ,119 32,706-25,216-25, ,661-15,220-7,023-15, , ,190-20,937-7, ,474-2, ,459-1, , ,496,561 29,292 1,042,831 18,365 1,222,764 23, , ,037 13, ,403 16,157 1,060,595 26, ,582 16,507 31, ,853,668 AMP47 Riviera AMP48 Brentwood AMP48 Brentwood AMP50 Carrington AMP50 Carrington AMP51 Durkeeville 8 AMP51 Durkeeville 8 Other AMP Other AMP Total AMPs / Excess Revenue over Expenses Housing Assistance Payments HAP Portability - In Depreciation Expense Fraud losses Total Expenses transfers in transfers out Inter-project excess cash transfer in Inter-project excess cash transfer out Transfers between programs and projects in Transfers between programs and projects out Total other financing sources (Uses) 17, ,906 (135,602) 106,321 (121,404) 184, ,817 - (1,000) 59,666 (33,714) 81, , ,328 (28,149) 104,968 (936) 84, ,406, , , , , , ,086-27, ,381, , ,307 1,766,897 29,292 1,489,640 18,365 1,571,734 23, , ,837 13, ,060 16,157 1,060,595 26, ,668 16,507 59, ,239, ,774-80, , ,666-81, ,328-15,179-19, ,184,388 - (147,774) - (80,901) - (184,478) (59,666) - (81,955) - (315,328) - (15,179) - (19,746) - - (2,184,388) , (85,000) , ,774 (147,774) 80,901 (80,901) 184,478 (184,478) ,666 (59,666) 81,955 (81,955) 315,328 (315,328) 15,179 (15,179) 19,746 (19,746) - - 2, Excess (deficiency) of total revenue over (under) total expenses Debt Principal Payments - Enterprise Funds Beginning Equity Total Prior Period Adjustments and Equity Transfers Administrative Fee Equity Housing Assistance Payments Equity Unit Months Available Number of Unit Months Leased Excess Cash Land Purchases Building Purchases Furniture & Equipment - Dwelling Purchases Replacement Housing Factor Funds (104,687) 14,132 (501,510) 25,420 (285,896) - 515,817 - (78,134) - (228,416) - 603,516 - (154,056) 89,789 (8,679) 64, , ,814,975-11,986,393-14,343, ,682-4,008,936-3,721,782-18,968,402-2,550, ,834-82,306,678 14,132 (14,132) 25,420 (25,420) 110, ,789 (89,789) 579,506 (64,540) (625,834) ,024-1,872-2,392-1,008-1,416-1,656-2,712-1, ,310 2,951-1,845-2, ,400-1,634-2,700-1, , , , , , , , , ,768 6,581-7,033, , ,112 14,132-19, ,382-26, ,443, , ,295-37, , ,494-63, ,167 See Independent Auditor's Report 51

54 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016 Line Item No. Account Description 111 Cash - Unrestricted 113 Cash - other restricted 114 Cash - Tenant Security Deposits 115 Cash - Restricted for payment of current liability 100 Total Cash 122 Accounts Receivable - HUD Other Projects 124 Accounts Receivable - other government 125 Accounts Receivable - Miscellaneous 126 Accounts Receivable - Tenants - Dwelling Rents Allowance for Doubtful Accounts - Dwelling Rents 127 Notes, Loans, & Mortgages Receivable - current 128 Fraud recovery Allowance for doubtful accounts - fraud 129 Accrued interest receivable 120 Total Receivables, net of allowances for doubtful accounts 131 Investments - Unrestricted 142 Prepaid Expenses and Other Assets 143 Inventories 144 Interprogram due from 150 Total Current Assets 161 Land 162 Buildings 163 Furniture, Equipment & Machinery - Dwellings 166 Accumulated Depreciation 167 Construction In Progress 160 Total Fixed Assets, Net of Accumulated Depreciation 1 Notes, loans, and mortgages receivable - Noncurrent 174 Other Assets 176 Investment in joint ventures 180 Total Non-Current Assets Section 8 Housing Choice Voucher Program Section 8 MOD Rehab Program Section 8 MOD Rehab Program - SRO Shelter Plus Care Continuum of Care ROSS - Public Housing FSS Resident Opportunity and Community Supportive Development Services Block Grant Community Development Block Grant - State Business Activities, Gregory West Component Unit - Brentwood Park GP, Inc. Component Unit - Jax Development, Inc. Component Unit - JHA Brentwood Park Dev., LLC Blended Component Units Subtotal Central Office Cost Center Elimination Primary Government Subtotal 1,401,298 1,024, , , ,188, ,943 (1,139) 498,198 2,677,114-15,740, ,061 16,276, , ,200, ,200, ,528,884 1,103,168 2,632, , ,232 77, , , , ,243 1,994,127 1,024, , , ,226,671 1,200, ,943 (1,139) 1,698,198 2,677,114-17,891,152 1,716,981 19,608,133-24, ,868 35, ,037,446-1,037,446 30, , , , , , , ,104 3, , ,406 1,057,983 4, ,267 5,226 57, (16,652) (2,182) (18,834) , , ,471 6, ,866 7, ,371 (63,321) (2,275) (95,867) (2,508) (98,375) ,893-8, , ,713 29, ,868 35,957 14,234-1, , ,104 56,436-2,311, ,782 2,533, , , ,198 46, , , , , , ,648-15,648-15, ,885 (46,885) ,202,746 1,053, , ,909 35,957 14,234-1,246,208 1,200, , ,965 2,537,350 3,110,424 (46,885) 20,947,160 2,043,143 22,990, , ,762-19,485,398 6,258,733 25,744, , ,510, ,779, ,446,701 26,305, ,752, , , ,044-4,296, ,402 5,034,138 (228,091) (2,457,995) (3,343,195) - (93,860,316) (7,216,898) (101,077,214) , ,202 7, ,892, ,822,027-63,778,721 26,084,628 89,863, ,357,811-14,357, (1,200,000) 4,146, ,143 4,386, ,767, ,767, ,767,454-3,767,454 7, ,892,064 3,767, ,767,454 1,822,127 (1,200,000) 86,050,424 26,324, ,375,195 Component Unit - Brentwood Park LTD (BPAAL) Total 190 Total Assets 200 Deferred Outflows of Resources 290 Total Assets and Deferred Outflow of Resources 2,210,211 1,053, , ,909 35,957 14,234-5,138,272 4,967, , ,965 6,304,804 4,932,551 (1,246,885) 106,997,584 28,367, ,365,498 1,754, ,999,817-7,781,979-7,781,979 3,965,210 1,053, , ,909 35,957 14,234-5,138,272 4,967, , ,965 6,304,804 7,932,368 (1,246,885) 114,779,563 28,367, ,147,477 See Independent Auditor's Report 52

55 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016 Line Item No. Account Description Section 8 Housing Choice Voucher Program Section 8 MOD Rehab Program Section 8 MOD Rehab Program - SRO Shelter Plus Care Continuum of Care ROSS - Public Housing FSS Resident Opportunity and Community Supportive Development Services Block Grant Community Development Block Grant - State Business Activities, Gregory West Component Unit - Brentwood Park GP, Inc. Component Unit - Jax Development, Inc. Component Unit - JHA Brentwood Park Dev., LLC Blended Component Units Subtotal Central Office Cost Center Elimination Primary Government Subtotal Component Unit - Brentwood Park LTD (BPAAL) Total 312 Accounts Payable <= 90 Days 321 Accrued Wage/Payroll Taxes Payable 322 Accrued Compensated Absences 331 Accounts Payable - HUD PHA Programs 341 Tenant Security Deposits 342 Unearned Revenues 343 Current portion of L-T debt - capital projects 345 Other current liabilities 346 Accrued Liabilities - Other 347 Interprogram due to 310 Total Current Liabilities 351 Long-term debt, net of current - capital projects 353 Noncurrent Liabilities - Other 354 Accrued compensated Absences - Non Current 357 Net pension liability 350 Total Noncurrent Liabilities 8, , , ,782 87, ,339 71, ,881 6, , , , ,545 6,658 1, ,822 8, , , ,265 5,456 38,338 3, ,920-46, , ,232 77, ,984 14, ,679-28,026 1,962 29, , , , , , , ,579 7, ,999 7, , , , , , ,682 1,700, ,285 14, ,661 6,867 5,472 14,000 - (46,885) ,918 44,997 4, ,703 33,713 14, , ,191 6,867 5, , ,986 (46,885) 3,436,142 1,099,373 4,535, ,352, ,352,750 13,857,561 17,210, , ,200, ,200,000 - (1,200,000) 294,587 4,146,337 4,440,924 30,136 1, ,206 2, , , ,566 4,111, ,806,190-17,982,699-17,982,699 4,435,437 1, ,206 2, ,352,750 1,200, ,200,000 6,875,186 (1,200,000) 21,805,602 18,003,898 39,809, Total Liabilities 400 Deferred Inflows of Resources 490 Total Liability and Deferred Inflow of Resources Net Investment in Assets Restricted Net Position Unrestricted Net Position 513 Total Equity 4,974,355 46,661 5, ,909 35,957 14,234-3,670,146 1,397,191 6,867 5,472 1,409,530 7,578,172 (1,246,885) 25,241,744 19,103,271 44,345,015 99, , , ,071 5,073,827 46,661 5, ,909 35,957 14,234-3,670,146 1,397,191 6,867 5,472 1,409,530 7,718,886 (1,246,885) 25,649,815 19,103,271 44,753,086 7, , ,822,027-60,168,586 11,387,963 71,556,549 34, ,200, ,200, ,234,297 1,103,168 2,337,465 (1,150,379) 1,007, , ,186,197 2,370, , ,493 3,695,274 (1,608,545) - 27,726,865 (3,226,488) 24,500,377 (1,108,617) 1,007, , ,468,126 3,570, , ,493 4,895, ,482-89,129,748 9,264,643 98,394, Total Liabilities, Deferred Inflows and Equity 3,965,210 1,053, , ,909 35,957 14,234-5,138,272 4,967, , ,965 6,304,804 7,932,368 (1,246,885) 114,779,563 28,367, ,147,477 See Independent Auditor's Report 53

56 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016 Line Item No. Account Description Section 8 Housing Choice Voucher Program Section 8 MOD Rehab Program Section 8 MOD Rehab Program - SRO Shelter Plus Care Continuum of Care ROSS - Public Housing FSS Resident Opportunity and Community Supportive Development Services Block Grant Community Development Block Grant - State Business Activities, Gregory West Component Unit - Brentwood Park GP, Inc. Component Unit - Jax Development, Inc. Component Unit - JHA Brentwood Park Dev., LLC Blended Component Units Subtotal Central Office Cost Center Elimination Primary Government Subtotal Component Unit - Brentwood Park LTD (BPAAL) Total Net Tenant Rental Revenue Tenant Revenue - Other Total Tenant Revenue HUD PHA Grants HUD PHA Grants Management Fee Asset Management Fee Book-Keeping Fee Front Line Service Fee Total Fee Revenue Other government grants Investment Income - Unrestricted Mortgage interest income Fraud recovery Other revenue Gain/Loss on Sale of Fixed Assets Total Revenue Administrative salaries Auditing fees Management Fee Book-Keeping Fee Advertising and Marketing Employee benefit contributions - administrative Office Expenses Legal Expense Travel Asset Management Fee Tenant services - salaries Employee benefit contributions - tenant services Tenant Services - Other Water Electricity Gas Sewer Ordinary Maintenance and Operations - Labor OMO - Materials and Other Ordinary Maintenance and Operations - Contract Costs Employee Benefit Contributions - Ordinary Maintenance Protective Services - Other Contract Costs Protective Services - Other Property Insurance Liability Insurance Workmen's Compensation All other Insurance ,330, ,832,179 1,279,942 7,112, , ,182 54, , ,399, ,238,361 1,334,152 7,572,513 54,364,727 2,581, ,434 50, , , , ,769,619-71,769, ,549,886-1,549, ,852,898 (2,852,898) ,233 (272,233) ,314 (202,314) ,164 (450,164) ,777,609 (3,777,609) , , , , , , ,757-26,146 2,834 28, ,154 (1,154) 602, , ,000 7, ,697 13, , ,414 1, , ,133 (9,000) 894,474 4, , (2,438) (200) - (99,959) (52,373) (152,332) 54,665,888 2,593, ,120 50, , , ,898 35,709-1,401, ,904,453 (3,787,763) 81,316,737 2,188,869 83,505,606 1,426,297 78,764 21,370-9,858 40,296 4, , ,072,064-3,963, ,094 4,068,434 25,976 1, , ,000 1,000 2,500 9,312-80,200 14,500 94, ,283 38,394 10, , (2,852,898) (202,314) ,136,338 42,671 11,578-4,030-2, , ,128,804-3,288,799 44,481 3,333, ,244 28,041 7, , , ,590-2,013, ,466 2,170,594 2, , ,850 12,215-42, ,572 24,377 1, , ,515-47,100-47, (272,233) , ,947 10, , , , ,590 60,811 6, , , , , , , , , , , ,471 25, , , ,137 80,860 1,024, , ,420-29,158-29,158 1, , , , ,508 1,031, , ,261-1,895, ,309 2,025, , , , ,617 1,025, , ,237 (459,164) 3,770, ,412 4,280, , ,106-1,371,167 52,631 1,423, ,121-99,442 12, ,943 2, , , ,938 78, ,143 1, , , ,628 78, , , , , , ,391 14,497 2, , ,008-77,684 2,722 80, ,893 1,893 See Independent Auditor's Report 54

57 FINANCIAL DATA SCHEDULE Year ended September 30, 2016 PHA: FL001 FYE: 09/30/2016 Line Item No. Account Description Other General Expenses Compensated Absences Payments in Lieu of Taxes Bad Debt - Tenant Rents Bad Debt - Other Interest on Mortgage (or Bonds) Payable Interest on Notes Payable (Short and Long Term) Amortization of Bond Issue Costs Severance Expense Total Expenses Section 8 Housing Choice Voucher Program Section 8 MOD Rehab Program Section 8 MOD Rehab Program - SRO Shelter Plus Care Continuum of Care ROSS - Public Housing FSS Resident Opportunity and Community Supportive Development Services Block Grant Community Development Block Grant - State Business Activities, Gregory West Component Unit - Brentwood Park GP, Inc. Component Unit - Jax Development, Inc. Component Unit - JHA Brentwood Park Dev., LLC Blended Component Units Subtotal Central Office Cost Center Elimination Primary Government Subtotal 102, ,651, ,651, ,640,170-2,640, ,975 8,933 2, ,743 17, , , , ,555 86, ,779 16, ,510 7,443 2, ,895-9, , , , , , (1,154) ,846 17, ,142, ,942 54,938-13, , ,898 35, ,499 1,654,597 1,061 1,139 1,656,797 3,897,710 (3,787,763) 25,424,236 2,587,662 28,011,898 Component Unit - Brentwood Park LTD (BPAAL) Total Excess Revenue over Expenses Housing Assistance Payments HAP Portability - In Depreciation Expense Fraud losses Total Expenses transfers in transfers out Inter-project excess cash transfer in Inter-project excess cash transfer out Transfers between programs and projects in Transfers between programs and projects out Total other financing sources (Uses) 50,523,064 2,388, ,182 50, , ,667 (1,654,427) (1,057) (1,139) (1,656,623) 6,743-55,892,501 (398,793) 55,493,708 49,981,636 2,259, ,688 50, , ,932,454-52,932,454 16, ,752-16,752 9, , ,285-3,671, ,218 4,342,725-2, ,964 2,508 9,472 54,150,952 2,466, ,626 50, , , ,898 35,709-1,058,215 1,654,597 1,061 1,139 1,656,797 4,021,995 (3,787,763) 82,051,913 3,261,388 85,313, (2,184,388) ,184, (85,000) , (2,203) (2,203) , (2,203) Excess (deficiency) of total revenue over (under) total expenses Debt Principal Payments - Enterprise Funds Beginning Equity Total Prior Period Adjustments and Equity Transfers Administrative Fee Equity Housing Assistance Payments Equity Unit Months Available Number of Unit Months Leased Excess Cash Land Purchases Building Purchases Furniture & Equipment - Dwelling Purchases Replacement Housing Factor Funds 514, ,749 33, ,748 (1,654,427) (1,057) (1,139) (1,656,623) (117,542) - (735,176) (1,072,519) (1,807,695) , , ,112 (1,623,553) 880, , ,127,378 5,225,132 (6,867) 1,333,632 6,551, ,024-89,864,924 10,337, ,202, ,000 (500,000) (1,142,914) (1,142,914) - (1,142,914) 34, ,297-34,297 87,264 4,764 1, , ,938 3, ,874 84,578 4,573 1, , ,475 3, , ,033,043-7,033, ,112-17, ,443,276-1,443, ,498-89, , ,167 See Independent Auditor's Report 55

58 SCHEDULE OF ACTUAL CAPITAL FUND PROGRAM COSTS AND ADVANCES Year ended September 30, 2016 FL29P FL29P FL29P FL29R FL29R PROGRAM CFP CFP CFP CFP CFP Total BUDGET $ 3,150,397 $ 3,241,946 $ 3,399,188 $ 424,276 $ 1,214 $ 10,217,021 ADVANCES Cash receipts - prior years $ 2,129,786 $ - $ - $ 129,583 $ - $ 2,259,369 Cash receipts - current year 1,020,611 2,375, ,693 1,214 3,691,989 Cumulative as of September 30, ,150,397 2,375, ,276 1,214 5,951,358 COSTS Prior years 2,583, ,323-2,862,181 Current year 566,539 3,241, , ,953 1,214 4,058,591 Cumulative as of September 30, ,150,397 3,241, , ,276 1,214 6,920,772 RECEIVABLE FROM HUD $ - $ 866,475 $ 102,939 $ - $ - $ 969,414 SOFT COSTS Prior years $ 1,919,166 $ - $ - $ 42,428 $ - $ 1,961,594 Current year 377,333 2,046,504 69,645 15, ,508,705 Cumulative as of September 30, ,296,499 2,046,504 69,645 57, ,470,299 HARD COSTS Prior years 664, , ,587 Current year 189,206 1,195,442 33, ,851 1,093 1,549,886 Cumulative as of September 30, ,898 1,195,442 33, ,746 1,093 2,450,473 CUMULATIVE HARD AND SOFT COSTS $ 3,150,397 $ 3,241,946 $ 102,939 $ 424,276 $ 1,214 $ 6,920,772 See independent auditor's report. 56

59 SINGLE AUDIT SECTION 57

60 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year ended September 30, 2016 Federal Grantor/Pass-Through Grantor/ Program or Cluster Title U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Federal CFDA Number Expenditures Public and Indian Housing $ 11,072,159 Housing Voucher Cluster: Section 8 Housing Choice Voucher Program ,364,727 Section 8 Project-Based Cluster: Section 8 Moderate Rehabilitation $ 2,581,866 Section 8 Moderate Rehabilitation - SRO ,434 Subtotal Section 8 Project-Based Cluster 3,190,300 Fund Program ,058,591 Resident Opportunity and Supportive Services ,898 Public Housing Family Self Sufficiency (ROSS) ,126 Continuum of Care ,022 Shelter Plus Care ,682 Pass through from the City of Jacksonville: Community Development Block Grant ,709 TOTAL U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT $ 73,355,214 See independent auditor's report. 58

61 NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year ended September 30, 2016 NOTE 1 - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Jacksonville Housing Authority and is presented on the accrual basis of accounting. The information on this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance ). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. In accordance with HUD regulations, HUD considers the Annual Budget Authority for the Section 8 Housing Choice Voucher program ( HCV ) to be an expenditure for the purposes of this schedule. Therefore, the amount in this schedule is the total amount received directly from HUD and not the total expenditures paid by the Authority. 59

62 8035 Spyglass Hill Road Melbourne, FL Phone: Fax: S. Orange Ave. Suite 1545 Orlando, FL Phone: Fax: 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 Board of Commissioners Jacksonville Housing Authority Jacksonville, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activity of the Jacksonville Housing Authority (the Authority ), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Authority s basic financial statements and have issued our report thereon dated March 1, The financial statements of the Authority s discretely presented component unit, Brentwood Park Apartments Associates, LTD. were not audited in accordance with Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Authority s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority s internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Authority s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 60

63 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority s financial statements are free of 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 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 Authority s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority s internal control over compliance. Accordingly, this communication is not suitable for any other purpose. March 1, 2017 Melbourne, Florida Berman Hopkins Wright & LaHam CPAs and Associates, LLP 61

64 8035 Spyglass Hill Road Melbourne, FL Phone: Fax: S. Orange Ave. Suite 1545 Orlando, FL Phone: Fax: INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Board of Commissioners Jacksonville Housing Authority Jacksonville, Florida Report on Compliance for Each Major Federal Program We have audited Jacksonville Housing Authority (the Authority ) with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Authority s major federal programs for the year ended September 30, The Authority 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 federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of the Authority 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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance ). Those standards and the Uniform Guidance 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 the Authority 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 the Authority s compliance. 62

65 Opinion on Each Major Federal Program In our opinion, the Authority complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal programs for the year ended September 30, Other Matters The results of our auditing procedures disclosed an instance on noncompliance, which is required to be reported in accordance with the Uniform Guidance and which is described in the accompanying schedule of findings and questioned costs as item Our opinion on each major federal program is not modified with respect to these matters. The Authority s response to the noncompliance finding identified in our audit is described in the accompanying corrective action plan. The Authority s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Management of the Authority 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 the Authority 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 the Uniform Guidance, 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 the Authority 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. 63

66 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. March 1, 2017 Melbourne, Florida Berman Hopkins Wright & LaHam CPAs and Associates, LLP 64

67 SCHEDULE OF FINDINGS AND QUESTIONED COSTS September 30, 2016 A. SUMMARY OF AUDITOR S RESULTS Financial Statements Type of auditor s report issued: Unmodified Internal control over financial reporting: Material weakness identified? No Significant deficiency identified? None Reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weakness identified? No Significant deficiency identified? None Reported Type of auditor s report issued on compliance for major programs: Unmodified Any audit findings required to be reported in accordance with 2 CFR (a) are included in this schedule. The programs tested as major programs are as follows: Fund Program - CFDA No Housing Choice Voucher Cluster Section 8 Housing Choice Voucher Program - CFDA No The threshold for distinguishing types A and B programs was $2,200,656 Did the auditee qualify as a low-risk auditee? No B. FINDINGS - FINANCIAL STATEMENTS AUDIT None. 65

68 SCHEDULE OF FINDINGS AND QUESTIONED COSTS September 30, 2016 C. FINDINGS AND QUESTIONED COSTS - FEDERAL AWARD PROGRAMS Eligibility Housing Voucher Cluster Other matter required to be reported in accordance with 2 CFR (a) Condition: Out of a total tenant population of approximately 7,050 tenants, 43 tenant files were tested and exceptions were noted as follows: Two files had incorrectly calculated incomes and One file had an unsupported full-time student deduction. Context: The auditor randomly selected 43 tenants out of the population, which we consider to be a statistically valid sample size, for testing HAP calculation and monthly HAP payments for the fiscal year. The auditor reviewed the tenant file and support to ensure controls over compliance were operating effectively. Criteria: 24 CFR requires internal controls to be in place to ensure compliance with HUD requirements, as well as complete and accurate tenant files. In addition, the Authority s administrative plan also requires following proper procedures for determination of HAP and documentation in the tenant files. Effect: The Authority is not in full compliance with all of the HUD requirements regarding eligibility and tenant recertification, which could result in incorrect total tenant payments for rent and HAP payments to landlords. Cause: Procedures to ensure compliance with all of the HUD requirements were not being fully implemented. Auditor s Recommendation: The Authority should correct the deficiencies noted in the tested files and utilize an ongoing quality control review process on the entire tenant population to ensure proper compliance with the requirements related to tenant eligibility. Ongoing staff training and timely management reviews should be utilized to ensure staff is aware of acceptable procedures. 66

69 SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS September 30, 2016 SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS Software controls Significant Deficiency Condition: The Authority s primary software system contains thousands of individual access authorization points that were primarily established during the software implementation process several years ago. Through review of the individual access and approval listings, and testing of tenant data, we noted the following: 1) two (2) purchasing level permissions were lower than those allowed by the Authority s purchasing procedures, 2) we noted that the Authority s management was not aware that the access was set-up to allow more individuals then intended to have the ability to change certain tenant data, and 3) we observed that changes were able to be made to tenant data that was not supposed to be able to be changed. Auditor s Recommendation: We recommend that the Authority consider 1) modifying its procedures for changing an individuals access to aspects of its system, 2) periodic reviews of critical sections of the system, 3) establishing system generated reports to be provided to the appropriate management level for critical system modifications including individuals access to critical areas, and 4) establish procedures, or unmodifiable data fields, for data that should not be changed. Current Year Status: Cleared. 67

70 JACKSONVILLE HOUSING AUTHORITY President & CEO's Office February 24, 2017 U. S. Department of Housing and Urban Development Attention: Mr. Ellis Henry Jacksonville Field Office Charles Bennett Federal Building 400 West Bay Street, Suite 1015 Jacksonville, FL RE: Corrective Action Plan Audit Period: October 1, September 30, 2016 Audited By: Berman Hopkins Wright & LaHam, CPA & Associates, LLP 8035 Spyglass Hill Road Melbourne, FL The Jacksonville Housing Authority (JHA) respectfully submits the following corrective action plan for the year ended September 30, The Auditor's Recommendation from the September 30, 2016 Schedule of Findings is restated and discussed below: Findings and Questioned Costs - Federal Award Programs Eligibility Housing Voucher Cluster Other matter required to be reported in accordance with 2CFR (a) Condition: Out of a total tenant population of approximately 7,050 tenants, 43 tenant files were tested and exceptions were noted as follows: Two files had incorrectly calculated incomes and One file had an unsupported full-time student deduction. Context: The auditor randomly selected 43 tenants out of the population, which we consider to be a statistically valid sample size, for testing HAP calculation and monthly HAP payments for the fiscal year. The auditor reviewed the tenant file and support to ensure controls over compliance were operating effectively Broad Street Jacksonville, Florida Tel.: (904) FAX (904)

71 Page 2 JHA Corrective Action Plan February 24, 2017 Criteria: 24 CFR requires internal controls to be in place to ensure compliance with HUD requirements, as well as complete and accurate tenant files. In addition, the Authority's administrative plan also requires following proper procedures for determination of HAP and documentation in the tenant files. Effect: The Authority is not in full compliance with all of the HUD requirements regarding eligibility and tenant recertification, which could result in incorrect total tenant payments for rent and HAP payments to landlords. Cause: Procedures to ensure compliance with all of the HUD requirements were not being fully implemented. Auditor's Recommendation: The Authority should correct the deficiencies noted in the tested files and utilize an ongoing quality control review process on the entire tenant population to ensure proper compliance with the requirements related to tenant eligibility. Ongoing staff training and timely management reviews should be utilized to ensure staff is aware of acceptable procedures. JHA Corrective Actions: The JHA concurs with the auditor's recommendation. The three audit exceptions noted in the tenant files have been corrected. The Operations and Compliance Department (OCD) conducts monthly audits of randomly selected tenant files to review YARDI procedures and HUD regulatory standards. The Quality Control staffs main focus is on addressing reoccurring findings to reduce/eliminate errors in income calculations, documentation and ensure the Section 8 staff is following YARDI software procedures. A monthly management review report identifying any findings is distributed to the appropriate team supervisor for follow up. A copy of the review is provided to the Section 8 Vice President. If the U.S. Department of Housing and Urban Development (HUD) has any questions regarding the subject plan, please contact Mr. Fred E. McKinnies, President and CEO at (904) Thank you for your consideration in this matter. Sincerely, Fred E. ckinnies President and CEO