THE HOUSING AUTHORITY OF THE CITY OF FORT WORTH, TEXAS Fort Worth, Texas. FINANCIAL STATEMENTS Year Ended December 31, 2014

THE HOUSING AUTHORITY OF THE CITY OF FORT WORTH, TEXAS Fort Worth, Texas FINANCIAL STATEMENTS Year Ended

TABLE OF CONTENTS PAGE INDEPENDENT AUDITORS REPORT... 1 MANAGEMENT S DISCUSSION AND ANALYSIS... 4 FINANCIAL STATEMENTS...10 Statement of Net Position...11 Statement of Revenues, Expenses, and Changes in Net Position...12 Statement of Cash Flows...13 Combining Statement of Net Position Discretely Presented Component Units...15 Combining Statement of Revenues, Expenses and Changes in Net Position Discretely Presented Component Units...17 Notes to Financial Statements...18 SUPPLEMENTAL INFORMATION...51 Schedule of Revenues, Expenses, and Changes in Net Position Budget And Actual Public Housing...52 Schedule of Revenues, Expenses, and Changes in Net Position Budget And Actual Housing Choice Vouchers...53 Schedule of Revenues, Expenses, and Changes in Net Position Budget And Actual Moderate Rehabilitation...54 Financial Data Schedule Entity Wide Balance Sheet...55 Entity Wide Revenues and Expenses...57 Project Balance Sheet...59 Project Revenues and Expenses...61 Schedule of Closed Grants...63

TABLE OF CONTENTS (Continued) PAGE SINGLE AUDIT REPORT...64 Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performance in Accordance with Government Auditing Standards...65 Independent Auditors Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance and on the Schedule of Expenditures of Federal Awards in Accordance With OMB Circular A 133...67 Schedule of Expenditures of Federal Awards...70 Notes to Schedule of Expenditures of Federal Awards...71 Schedule of Findings and Questioned Costs...72 Schedule of Prior Year Findings and Questioned Costs...75

CliftonLarsonAllen LLP www.claconnect.com Independent Auditors Report Board of Commissioners The Housing Authority of the City of Fort Worth, Texas Fort Worth, Texas Report on the Financial Statements We have audited the accompanying financial statements of the enterprise fund and the aggregate discretely presented component units of the Housing Authority of the City of Fort Worth, Texas (the Authority), as of and for the year ended, 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of the discretely presented component units which represent 75%, 86% and 80%, respectively, of the assets, net position and revenues of the discretely presented component units. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component units, is based solely on the report of the other auditors. 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. The financial statements of each of the discretely presented component units were not audited in accordance with Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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. An independent member of Nexia International 1

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the enterprise fund and the aggregate discretely presented component units of the Authority as of, and the respective changes in financial position and, where applicable, 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 on pages 4 through 9 are 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 basic financial statements. The schedules of budget to actual, financial data schedule, and schedule of closed grants listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A 133, Audits of States, Local Governments and Non Profit Organizations, and is not a required part of the basic financial statements. The schedules of budget to actual, the financial data schedule, the schedule of closed grants and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate 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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated July 29, 2015, 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 result 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. a CliftonLarsonAllen LLP Baltimore, Maryland July 29, 2015 3

MANAGEMENT S DISCUSSION AND ANALYSIS The Housing Authority of the City of Fort Worth, Texas (the Authority) is proud to provide this narrative overview and analysis of the Authority s financial activities for the year ended. It is designed to identify changes in the Authority s financial position as well as individual fund issues or concerns. It should be read in conjunction with the Financial Statements following this Management Discussion and Analysis (MD&A), and the Notes to the Financial Statements. The MD&A is presented in conformance with the Governmental Accounting Standards Board (GASB) financial reporting model as set forth in GASB Statement No. 34, Basic Financial Statements Management s Discussion and Analysis for State and Local Governments, GASB Statement No. 37, Basic Financial Statements Management s Discussion and Analysis for State and Local Governments: Omnibus, GASB Statement No. 38, Certain Financial Statement Note Disclosures, GASB Statement No. 40, Deposit and Investment Risk Disclosures, GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries, GASB Statement No. 44, Economic Condition Reporting: The Statistical Section, and GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position These financial reporting standards require the inclusion of 3 basic financial statements namely, the Statement of Net Position, the Statement of Revenues, Expenses and Changes in Fund Net Position, and the Statement of Cash Flows. This MD&A covers the Enterprise Fund only. FINANCIAL HIGHLIGHTS Assets of the Authority exceeded liabilities at by $56.3 million (net position). This amount represents a decrease of approximately $1.8 million from the balance at December 31, 2013. This decrease is consistent with the downward change in net position as shown on the Statement of Revenues, Expenses and Changes in Net Position. The decrease is due to the conversion of Hunter Plaza Apartments from Public Housing program to Rental Assistance Demonstration (RAD) program. This conversion necessitated its financial information be reported as a discretely presented component instead of a project. FW Hunter Plaza, LP was created to own and develop this property. The transfer of the improvements to the LP created a net loss of $1.9 million to the primary government s books. A Blended Component Unit column was added to the Financial Data Schedule in 2014. Two projects, Fair Oaks Apartments and Fair Park Apartments also became RAD units and were moved from the projects column to the blended component unit column. Public facility corporations were established to own and develop these properties. Additionally, after review of the nature of the other funds/entities, some of these entities were also reclassified as blended component units. As a result, transfers between programs and projects were booked. The Authority s cash and cash equivalents and investments balances as of was $30 million representing an increase of $2 million from December 31, 2013. This increase is mainly due to tenant rentals and other revenues, which increased by at least 16% overall. In 2014, the management of public housing units was privatized yielding higher occupancy and improved operations. 4

MANAGEMENT S DISCUSSION AND ANALYSIS OVERVIEW OF THE FINANCIAL STATEMENTS Our analysis of the Authority's financial information as a whole follows with the most important question, "Has the Authority's financial health improved or declined as a result of the year's activities?" The following analysis of entity wide net assets, revenues, and expenses is provided to assist with answering this question. This analysis includes all assets and liabilities using the accrual method of accounting, which recognizes revenue when earned and expenses when incurred regardless of when cash is received or paid. Statement of Net Position The Statement of Net Position presents information about the Authority's assets and liabilities and is similar to a balance sheet. The Statement of Net Position reports all financial and capital resources for the Authority. The statement is presented in the format where assets and deferred outflow of resources, minus liabilities and deferred inflow of resources, equals net position. Assets and liabilities are presented in order of liquidity and are classified as "current" (convertible to cash within one year), and "non current." Increases or decreases in net position will serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating. 2014 2013 Current assets $ 35,364,676 $ 35,051,552 Noncurrent assets 16,886,390 14,269,379 Capital assets, net 62,244,925 66,371,700 Total assets $ 114,495,991 $ 115,692,631 Current liabilities $ 6,902,159 $ 3,421,031 Long term liabilities 51,285,391 54,163,213 Total liabilities 58,187,550 57,584,244 Net Position: Net investment in capital assets 6,834,251 11,418,683 Restricted net position for contract obligations 966,178 746,058 Unrestricted net position 48,508,012 45,943,646 Total net position 56,308,441 58,108,387 Total liabilities and net position $ 114,495,991 $ 115,692,631 Total assets of the Authority at amounted to $114.5 million. This amount represents a decrease of approximately $1.2 million from the balance at December 31, 2013. This decrease is mainly due to the assets transferred to FW Hunter Plaza, LP (discretely presented component unit) from the projects due to the conversion of Hunter Plaza Apartments to RAD. A loss was recognized for this transfer of assets. Current assets are comprised of cash and cash equivalents and investments, accounts receivable, inventories and prepaid expenses. The non current assets include capital assets, long term notes receivable and other assets. Capital assets include land, buildings, construction in progress, and furniture and equipment and are shown net of accumulated depreciation. 5

MANAGEMENT S DISCUSSION AND ANALYSIS Total liabilities of the Authority, which are broken down into current and long term portions, amounted to $58 million at. This balance represents an increase of approximately $.6 million from what was reported at the end of 2013. This increase is mainly due to the expansion of QuadCo Management Solutions, LLC, a blended component unit. The properties under its management portfolio have increased during the year, thereby increasing its reported liabilities. Current liabilities include accounts payable and other accrued liabilities, deferred revenue, and the current portions of the notes and bonds payable. A liability is considered current if it is due within one year. The long term liabilities are comprised of the long term portion of the notes and bonds payable and compensated absences. Additional information regarding the composition of the Statement of Net Assets is detailed in Section II of this report in the Notes to the Financial Statements. Net position represents the equity of the Authority after liabilities are subtracted from assets. Net position is divided into three major categories. The first category, Net Investment in Capital Assets shows the Authority s equity in land, building structures, construction in progress and furniture and equipment, net of related capital debt outstanding. The next category, Restricted Net Position, have external limitations on the way in which they may be used. The last category, Unrestricted Net Position, is available to use for any lawful and prudent purpose of the Authority. Total Net Position of the Authority decreased by approximately $1.8 million during the year ended. Please refer to the Financial Highlights section for details of this decrease. Statement of Revenues, Expenses, and Changes in Net Position The purpose of the statement of revenues, expenses and changes in net position is to present the revenues earned and the expenses incurred, both operating and non operating and any other revenues, expenses, gains, and losses received or spent by the Authority. Generally, operating revenues are amounts received for providing housing to the Authority s residents. Operating expenses are those paid to maintain the housing units and provide other services for the residents. Non operating revenues are funds received for which goods and services are not provided. 6

MANAGEMENT S DISCUSSION AND ANALYSIS STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION 2014 2013 Operating revenues: Tenant rentals $ 13,011,291 $ 11,398,982 HUD operating grants 44,930,963 46,547,259 Other revenue 4,805,907 3,906,111 Total operating revenue 62,748,161 61,852,352 Operating expenses: Administrative 13,068,423 11,123,142 Tenant services 96,405 79,113 Utilities 2,411,056 2,355,815 Ordinary maintenance and operations 3,818,148 3,734,602 General and other 1,611,530 2,278,459 Housing assistance payments 36,140,006 38,891,436 Depreciation 3,439,247 3,596,096 Total operating expenses 60,584,815 62,058,663 Operating income (loss) 2,163,346 (206,311) Non operating revenues: Capital grants/other grants 494,119 580,672 Investment income 10,645 36,498 Casualty loss and other gains/revenues 27,465 (22,426) Total non operating revenues 532,229 594,744 Non operating expenses: Loss on sale of capital assets 69,454 (72,344) Interest expense 2,495,118 2,409,260 Loss on RAD conversion of Hunter Plaza 1,930,949 Total non operating expenses 4,495,521 2,336,916 Non operating loss (3,963,292) (1,742,172) Net decrease in net position (1,799,946) (1,948,483) Net position, beginning 58,108,387 60,056,870 Net position, ending $ 56,308,441 $ 58,108,387 Fiscal year 2014 resulted in operating income of $2.2 million, a favorable change of approximately $2.4 million from 2013. Total revenues increased by $.8 million and total expenses increased by $.7 million. While HUD operating grants decreased by $1.7 million, tenant rentals and other revenues increased by $2.5 million. The increase in expenses is mainly attributed to the expenses associated with the RAD conversion 7

MANAGEMENT S DISCUSSION AND ANALYSIS of Hunter Plaza Apartments from the projects to FW Hunter Plaza, LP (discretely presented component unit). Total non operating revenues decreased due to lower capital grants received from HUD. As shown on the above financial statements, the overall financial position of the Authority has declined compared to last year as a result of the year s financial activities. However, the rate of the decline or the decrease in net position was a bit lower compared to 2013. The operation and administration of the Authority s programs were maintained at their highest levels. We strongly believe that the main development activity that caused the decline in the net position will yield financial benefits in the future. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The summary below shows the balances by line item for 2014 and 2013. Additional details for activities affecting capital assets are presented in Note 6 of the Notes to the Financial Statements included in Section II of this report. 2014 2013 Land $ 6,770,694 $ 6,805,695 Buildings 108,482,001 112,585,861 Furniture, equipment and machinery dwellings 1,634,456 1,826,252 Furniture, equipment and machinery administrative 2,407,272 1,988,479 Leasehold improvements 110 110 Construction in progress 2,126,773 6,939,150 Total capital assets 121,421,306 130,145,547 Less: accumulated depreciation (59,176,381) (63,773,847) Net capital assets $ 62,244,925 $ 66,371,700 Debt Administration The Authority made its required debt service payments during the audit period. The table below shows the outstanding debt at the end of 2014 as compared to the end of the previous year. Additional details for activities affecting outstanding debt are presented in Note 8 of the Notes to the Financial Statements included in Section II of this report. 2014 2013 Bonds, notes and loans payable $ 55,410,674 $ 54,953,017 8

MANAGEMENT S DISCUSSION AND ANALYSIS ECONOMIC FACTORS The majority of the Authority s funding is from HUD in the form of operating subsidies, capital fund grants, housing assistance payments, administrative fees and other smaller grants. These represented about 72% of the Authority s total revenues in 2014. Additionally, a majority of its $62 million net capital assets as of were acquired and or developed over the years with financial assistance from HUD. Such assistance has typically come with use restrictions and generally limits the Authority s ability to encumber or leverage debt financing against HUD properties in its portfolio. Several significant economic factors affecting the Authority are as follows: Congress and the federal government continue to cut housing subsidies due to a shift in federal budget priorities. This funding shift impacts the Authority s economic position because federal housing dollars make up the largest source of revenue for the Authority. Based on HUD s funding letters and notices, most programs will continue to receive renewal funding, but will be reduced. Due to this uncertainty, the Authority continues to search for other financial resources in order to continue its programs. The Department of HUD has historically under estimated the subsidy and administrative fee needs of public housing authorities. In 2014 the operating fund and housing voucher administrative fee were prorated at 88.79% and 79.769%, respectively. The economic condition in the Fort Worth metropolitan area generally tracks with the national trend. The need for affordable housing is as strong as ever. The Authority is continuing to meet this need by looking for innovative ways to finance new projects and turning to the private sector for more support. REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the Fort Worth Housing Authority's finances for interested parties. Questions concerning any of the information presented in this report or requests for additional information should be addressed to: Riza Nolasco, Vice President and Chief Financial Officer Housing Authority of the City of Fort Worth, Texas 1201 E. 13 th Street Fort Worth, Texas 76102 www.ftwha.org (Fort Worth Housing Authority website) 9

FINANCIAL STATEMENTS 10

STATEMENT OF NET POSITION Discretely Presented Component Total Enterprise Units Reporting Fund (FASB) Entity ASSETS Current assets: Cash and cash equivalents unrestricted $ 28,338,379 $ 3,264,237 $ 31,602,616 Cash and cash equivalents restricted 1,699,723 15,615,368 17,315,091 Investments restricted 12,190 12,190 Accounts receivable HUD 526,897 526,897 Accounts receivable tenants (net of allowance) 76,200 41,043 117,243 Accounts receivable other (net of allowance) 1,918,885 33,916 1,952,801 Prepaid expenses 681,131 182,285 863,416 Inventories (net of allowance) 17,910 17,910 Accrued interest receivable (net of allowance) 212,223 212,223 Notes and capital lease receivable current 217,961 217,961 Due from discretely presented component units 1,675,367 1,675,367 Total current assets 35,364,676 19,149,039 54,513,715 Noncurrent assets: Capital assets: Land 6,770,694 2,867,974 9,638,668 Buildings 108,482,001 71,002,143 179,484,144 Furniture, equipment and machinery dwelling 1,634,456 1,346,340 2,980,796 Furniture, equipment and machinery administration 2,407,272 1,344,169 3,751,441 Leasehold improvements 110 6,985,992 6,986,102 Construction in progress 2,126,773 8,333,782 10,460,555 121,421,306 91,880,400 213,301,706 Accumulated depreciation (59,176,381) (20,620,937) (79,797,318) Total capital assets 62,244,925 71,259,463 133,504,388 Notes and capital lease receivable noncurrent 16,873,523 16,873,523 Other assets 621,225 621,225 Investment in joint ventures 12,867 12,867 Total noncurrent assets 79,131,315 71,880,688 151,012,003 TOTAL ASSETS $ 114,495,991 $ 91,029,727 $ 205,525,718 LIABILITIES Current liabilities: Accounts payable $ 591,417 $ 909,571 $ 1,500,988 Accounts payable HUD 66,584 66,584 Accrued wages and payroll taxes payable 517,348 11,305 528,653 Current portion of notes payable 4,542,147 767,544 5,309,691 Accrued compensated absences current 258,546 25,771 284,317 Accrued interest payable 191,982 294,562 486,544 Tenant security deposits 367,453 207,863 575,316 Unearned revenue 64,914 1,141,602 1,206,516 Other current liabilities 301,768 972,593 1,274,361 Due to primary government 1,675,367 1,675,367 Total current liabilities 6,902,159 6,006,178 12,908,337 Long term liabilities: Notes payable, net of current portion 50,868,527 61,094,839 111,963,366 Accrued compensated absences noncurrent portion 116,777 326 117,103 Noncurrent liabilities other 300,087 2,616,664 2,916,751 Total long term liabilities 51,285,391 63,711,829 114,997,220 Total liabilities 58,187,550 69,718,007 127,905,557 NET POSITION Net investment in capital assets 6,834,251 6,834,251 Restricted net position for contract obligations 966,178 966,178 Unrestricted net position 48,508,012 48,508,012 Partners' capital 21,311,720 21,311,720 Total net position 56,308,441 21,311,720 77,620,161 TOTAL LIABILITIES AND NET POSITION $ 114,495,991 $ 91,029,727 $ 205,525,718 11

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Year Ended Discretely Presented Component Total Enterprise Units Reporting Fund (FASB) Entity OPERATING REVENUES Net tenant rental revenue $ 13,011,291 $ 7,984,753 $ 20,996,044 HUD operating grants 44,930,963 44,930,963 Other governmental grants 813,498 154,598 968,096 Other revenue 3,992,409 456,928 4,449,337 Total operating revenues 62,748,161 8,596,279 71,344,440 OPERATING EXPENSES Administrative 13,068,423 2,105,943 15,174,366 Tenant services 96,405 23,752 120,157 Utilities 2,411,056 859,354 3,270,410 Ordinary maintenance and operations 3,818,148 1,681,017 5,499,165 Protective services 678,047 226,735 904,782 General 933,483 518,728 1,452,211 Housing assistance payments 36,140,006 19,891 36,159,897 Depreciation 3,439,247 2,778,917 6,218,164 Total operating expenses 60,584,815 8,214,337 68,799,152 Operating income 2,163,346 381,942 2,545,288 NONOPERATING REVENUES (EXPENSES) Investment income 10,645 1,358 12,003 Interest expense (2,495,118) (1,369,544) (3,864,662) Loss on sale of fixed assets (69,454) (69,454) Gain (loss) on RAD conversion of Hunter Plaza (1,930,949) (1,930,949) Casualty loss 27,465 (1,079) 26,386 Total nonoperating expenses, net (4,457,411) (1,369,265) (5,826,676) Gain (loss) before capital grants (2,294,065) (987,323) (3,281,388) HUD capital grants 494,119 494,119 CHANGE IN NET POSITION (1,799,946) (987,323) (2,787,269) TOTAL NET POSITION, BEGINNING OF YEAR 58,108,387 19,398,822 77,507,209 Partner capital contributions 2,900,221 2,900,221 TOTAL NET POSITION, END OF YEAR $ 56,308,441 $ 21,311,720 $ 77,620,161 12

STATEMENT OF CASH FLOWS Year Ended Enterprise Fund CASH FLOWS FROM OPERATING ACTIVITIES Dwelling rent receipts $ 13,030,801 Operating subsidy and grant receipts 45,827,695 Other receipts 5,516,159 Payments to vendors (10,355,822) Payments to employees (13,103,379) Housing assistance payments (36,140,006) Net cash provided by operating activities 4,775,448 CASH FLOWS FROM INVESTING ACTIVITIES Investment income 10,645 Net cash provided by investing activities 10,645 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital grants receipts 494,119 Purchases of capital assets (2,959,305) Proceeds from disposition of capital assets 523,895 Receipts from notes payable 2,800,362 Payments on notes payable (1,192,705) Interest paid on notes payable (2,495,118) Net cash used in capital and related financing activities (2,828,752) NET INCREASE IN CASH 1,957,341 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 28,080,761 CASH AND CASH EQUIVALENTS, END OF YEAR $ 30,038,102 13

STATEMENT OF CASH FLOWS Year Ended (Continued) Enterprise Fund RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 2,163,346 Adjustments to reconcile net operating income to net cash provided by operating activities: Depreciation and amortization 3,439,247 Provision for bad debts 206,202 Effects of changes in operating assets and liabilities: Accounts receivable HUD 93,767 Accounts receivable tenants (197,821) Accounts receivable other (507,430) Prepaid expenses and other assets 143,957 Inventories 7,431 Notes and mortgages receivable (2,617,090) Accrued interest receivable 1,898,190 Accounts payable 310,970 Accounts payable HUD (10,533) Accrued wages and payroll taxes payable 19,792 Accrued interest payable 124,153 Accrued compensated absences (54,748) Tenant security deposits 19,966 Unearned revenue (9,120) Other current liabilities (255,536) Noncurrent liabilities other 705 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 4,775,448 14

COMBINING STATEMENT OF NET POSITION DISCRETELY PRESENTED COMPONENT UNITS Candletree Overton Park Samuels Cambridge Villas Villas Wind Hunter Apartments Townhomes Avenue Court On the Hill by the Park River Plaza Total CURRENT ASSETS Cash and cash equivalents unrestricted $ 79,768 $ 151,572 $ 12,974 $ 119,274 $ 45,673 $ 382,823 $ 5,757 $ 2,466,396 $ 3,264,237 Cash and cash equivalents tenant security dep 29,309 44,758 5,850 66,643 10,275 26,717 24,311 207,863 Cash and cash equivalents restricted 533,019 688,183 90,504 671,076 243,113 40,185 485,266 12,656,159 15,407,505 Investments restricted 12,190 12,190 Accounts receivable tenants (net of allowance) 1,100 594 2,781 20,356 3,951 6 13,668 (1,413) 41,043 Accounts receivable other (net of allowance) 120 1,125 1,831 23,959 3,449 1,176 2,256 33,916 Prepaid expenses 18,792 23,668 6,661 34,122 9,649 44,498 20,806 24,089 182,285 Due from primary government Total current assets 662,108 909,900 132,791 935,430 316,110 495,405 549,808 15,147,487 19,149,039 NONCURRENT ASSETS Land 1,885,113 228,749 100 754,012 2,867,974 Buildings 15,605,591 13,459,409 4,383,992 15,444,166 8,875,271 13,233,714 71,002,143 Furniture, equipment and machinery 751,782 109,175 116,663 690,289 483,212 539,388 2,690,509 Leasehold improvements 6,985,992 6,985,992 Construction in progress 277,262 8,056,520 8,333,782 Accumulated depreciation (4,743,449) (5,845,705) (1,337,436) (5,168,161) (1,153,603) (362,679) (2,009,904) (20,620,937) Total capital assets 11,613,924 9,607,992 3,391,968 11,243,656 8,204,880 6,623,313 12,517,210 8,056,520 71,259,463 Other assets 3,444 193,055 (26,952) (135,643) 377,003 333,755 (123,437) 621,225 Total noncurrent assets 11,617,368 9,801,047 3,365,016 11,108,013 8,581,883 6,957,068 12,393,773 8,056,520 71,880,688 TOTAL ASSETS $ 12,279,476 $ 10,710,947 $ 3,497,807 $ 12,043,443 $ 8,897,993 $ 7,452,473 $ 12,943,581 $ 23,204,007 $ 91,029,727 15

COMBINING STATEMENT OF NET POSITION DISCRETELY PRESENTED COMPONENT UNITS (Continued) Candletree Overton Park Samuels Cambridge Villas Villas Wind Hunter Apartments Townhomes Avenue Court on the Hill by the Park River Plaza Total LIABILITIES AND NET POSITION CURRENT LIABILITIES Accounts payable $ 16,755 $ $ 6,827 $ 47,451 $ 6,731 $ 13,728 $ 17,967 $ 800,112 $ 909,571 Accrued wages and payroll taxes payable 2,100 426 3,191 937 2,555 2,096 11,305 Current portion of notes payable 51,875 181,267 23,853 114,828 217,961 22,302 155,458 767,544 Accrued compensated absences current 7,622 932 7,058 1,900 6,536 1,723 25,771 Accrued interest payable 31,866 47,046 150,200 47,331 8,202 9,917 294,562 Tenant security deposits 29,309 44,758 5,850 66,643 10,275 26,717 24,311 207,863 Deferred revenue 4,826 15,116 16,740 1,104,920 1,141,602 Other current liabilities 167,399 16,721 1,264 280,669 417 57,009 367,705 81,409 972,593 Due to primary government 215,785 194,511 301,900 287,729 32,266 (19,668) 375,581 287,263 1,675,367 Total current liabilities 527,537 499,419 491,252 871,640 1,383,609 109,179 944,841 1,178,701 6,006,178 LONG TERM LIABILITIES Notes payable, net of current portion 6,026,469 11,266,295 1,628,798 5,626,238 7,550,773 5,644,701 4,371,565 18,980,000 61,094,839 Accrued compensated absences noncurrent portion 229 97 326 Other noncurrent liabilities 703,184 1,615,367 298,113 2,616,664 Total long term liabilities 6,729,882 12,881,662 1,926,911 5,626,238 7,550,773 5,644,798 4,371,565 18,980,000 63,711,829 Total liabilities 7,257,419 13,381,081 2,418,163 6,497,878 8,934,382 5,753,977 5,316,406 20,158,701 69,718,007 PARTNERS' CAPITAL (DEFICIT) 5,022,057 (2,670,134) 1,079,644 5,545,565 (36,389) 1,698,496 7,627,175 3,045,306 21,311,720 TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 12,279,476 $ 10,710,947 $ 3,497,807 $ 12,043,443 $ 8,897,993 $ 7,452,473 $ 12,943,581 $ 23,204,007 $ 91,029,727 16

COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION DISCRETELY PRESENTED COMPONENT UNITS Year Ended Candletree Overton Park Samuels Cambridge Villas Villas Wind Hunter Apartments Townhomes Avenue Court on the Hill by the Park River Plaza Total OPERATING REVENUE Net tenant rental revenue $ 868,248 $ 1,408,123 $ 160,516 $ 1,505,550 $ 144,336 $ 912,974 $ 715,393 $ $ 5,715,140 Tenant other revenue 498,759 40,922 165,273 472,397 421,441 490,658 180,163 2,269,613 Other government grants 154,598 154,598 Other revenue 22,138 1,742 1,747 35,399 208,095 21,342 21,380 145,085 456,928 Total operating revenue 1,389,145 1,605,385 327,536 2,013,346 773,872 1,424,974 916,936 145,085 8,596,279 OPERATING EXPENSES Administrative 347,549 359,027 73,796 501,526 157,638 363,399 303,008 2,105,943 Tenant services 4,785 6,195 25 8,282 1,481 891 2,093 23,752 Utilities 148,099 127,171 30,921 241,358 41,108 176,734 93,963 859,354 Ordinary maintenance and operations 272,846 327,128 72,831 452,443 83,911 290,034 181,824 1,681,017 Protective services 57,464 63,196 43,365 42,242 20,468 226,735 General 91,480 50,077 81,309 127,597 31,275 68,227 68,763 518,728 Housing assistance payments 12,333 7,558 19,891 Depreciation and amortization 608,878 476,708 173,580 627,887 342,300 93,144 456,420 2,778,917 Total operating expense 1,531,101 1,346,306 432,462 2,034,622 708,636 1,034,671 1,126,539 8,214,337 Operating income (loss) (141,956) 259,079 (104,926) (21,276) 65,236 390,303 (209,603) 145,085 381,942 NON OPERATING REVENUE (EXPENSE) Investment income 184 267 47 587 113 51 109 1,358 Casualty loss (1,079) (1,079) Interest expense (370,773) (534,055) (113,285) (228,487) (99,890) (23,054) (1,369,544) Total non operating income (expense) (370,589) (534,867) (113,238) (227,900) (99,777) 51 (22,945) (1,369,265) CHANGE IN PARTNERS' CAPITAL (DEFICIT) (512,545) (275,788) (218,164) (249,176) (34,541) 390,354 (232,548) 145,085 (987,323) PARTNERS' CAPITAL (DEFICIT), BEGINNING OF YEAR 5,534,602 (2,394,346) 1,297,808 5,794,741 (1,848) 1,308,142 7,859,723 19,398,822 Equity contribution for Hunter Plaza 2,900,221 2,900,221 PARTNERS' CAPITAL (DEFICIT), END OF YEAR $ 5,022,057 $ (2,670,134) $ 1,079,644 $ 5,545,565 $ (36,389) $ 1,698,496 $ 7,627,175 $ 3,045,306 $ 21,311,720 17

NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization The Housing Authority of the City of Fort Worth, Texas (the Authority) is a public body corporate and politic organized under the laws of the State of Texas by the City of Fort Worth for the purpose of providing adequate housing for qualified low income individuals. To accomplish this purpose, the City appoints a Governing Board, but the Board designates its own management. Additionally, the Authority has entered into an Annual Contribution Contract with the U.S. Department of Housing and Urban Development (HUD) to be the administrator of the housing and housing related programs described herein. Reporting Entity On the basis of the application of these criteria, the Authority is a legally separate entity that is fiscally independent of other governments. There are no other entities that are to be reported as component units of the Authority which are not included in this report and the Authority is not included in the City of Fort Worth financial reports; therefore, the Authority reports independently. Basis of Accounting and Measurement Focus The Authority uses the accrual basis of accounting in the enterprise funds. Under this method, revenues are recorded when earned, and expenses are recorded when liabilities are incurred, regardless of when the related cash flow takes place. Basis of Presentation The financial statements of the Authority are presented from a fund perspective. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain Authority functions. The fund is a separate accounting entity with a self balancing set of accounts. The accounting and financial reporting method applied by a fund is determined by the fund's measurement focus. The accounting objectives are a determination of net income, financial position and cash flows. The Authority uses the following fund type: Enterprise Fund This type of fund is reported using an economic resources measurement focus. Additionally, it is used to account for operations that are financed and operated in a manner similar to private businesses where a fee is charged to external users for services provided. The Authority is required to follow all statements of the Governmental Accounting Standards Board (GASB). GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre November 30, 1989 FASB and AICPA Pronouncements, was issued to incorporate FASB and AICPA guidance into GASB authoritative literature. Within the enterprise fund the Authority records activities related to certain programs described below as shown on the financial data schedule in the supplemental information section. 18

NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) HUD Funded Programs Low Rent Public Housing Funding for the public housing units is provided by advances from HUD. The objective of the program is to provide decent, safe, and sanitary housing and related facilities for eligible low income families and the elderly. This program, along with the Capital Fund Program discussed below, comprise the Public Housing program. Capital Fund Program The objective of this program is to improve the physical condition of the Low Income Public Housing units and upgrade the management of the program. As noted above, this program is included in the Public Housing program. Housing Choice Voucher, Veterans Affairs Supportive Housing (VASH) and Moderate Rehabilitation Programs The objective of these programs is to provide housing for eligible low income families through housing assistance payments to private landlords. The VASH program provides rental assistance under a supportive housing program for homeless veterans and is included with the Housing Choice Voucher program. Continuum of Care Program The objective of this program is to provide housing for persons who are homeless and disabled through housing assistance payments to private landlords. Resident Opportunities and Supportive Services Program The objective of this program is to provide counseling and other services to encourage resident selfsufficiency. Family Self Sufficiency Coordinator Program The objective of this program is to provide salaries and benefits to coordinators implementing the family self sufficiency program under Public Housing and Housing Choice Voucher programs. Rental Assistance Demonstration (RAD) The Consolidated and Further Continuing Appropriations Act of 2012 authorized RAD. It allows public housing agencies to convert properties currently funded under the public housing program to long term project based Section 8 rental assistance contracts to preserve and improve these properties through access to private debt and equity to address immediate and long term capital needs. 19

NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) State and Local Programs State and Local Program Operations include the operation of the Direction Home funds that are intended to expand existing capacity of the continuum of care to serve people who are homeless residing in the City of Fort Worth. Various grants and other receipts are also accounted for under this category. Blended Component Units The Authority's financial statements also include non HUD related programs. These programs are included in the blended component unit combining schedules. The determination to include a component unit in the reporting entity was made by applying the criteria set forth in Governmental Accounting and Financial Reporting Standards and GASB Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of GASB Statements No. 14 and No. 34. These criteria include financial accountability, appointment of a voting majority, imposition of will, financial benefit to or burden on a primary organization, financial accountability as a result of fiscal dependency, potential for dual inclusion, and organizations included in the reporting entity although the primary organization is not financially accountable. The following activities are presented in the financial statements as blended component units: Trinity River Public Facility Corporation (TRPFC) TRPFC is a public, non profit corporation created and existing under the laws of the State of Texas and acting as an instrumentality of the Authority. As of, the TRPFC board composition was identical to that of the Authority. Accordingly, the financial statements are presented on a blended basis and are included in the Blended Component Unit combining statements. The TRPFC was established to finance public facilities and was specifically created to serve as the borrower for the line of credit and issuer of bonds associated with the properties acquired by the Authority. Gateway Public Facility Corporation (GPFC) GPFC is a public, non profit corporation created and existing under the laws of the State of Texas and acting as an instrumentality of the Authority. As of, the GPFC board composition was identical to that of the Authority. Accordingly, the financial statements are presented on a blended basis and are included in the Blended Component Unit combining statements. The GPFC was established to serve as the owner of the Villas of Oak Hill and as the borrower for the acquisition loan. The Villas of Oak Hill consists of a 583 unit apartment complex purchased by the Authority as part of the Ripley Arnold Redevelopment Program in 2003. Only 58 of the total 583 are public housing units. 20

NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Blended Component Units (Continued) Fort Worth Affordability, Inc. (FWAI) As part of the Authority's long range plan to expand and manage its affordable housing portfolio, it sponsored an affiliate, Fort Worth Affordability, Inc. to finance the development and rehabilitation of the Cobb Park Townhomes project. FWAI is a non profit corporation exempt from federal income tax under Section 501(c)(3) of the internal Revenue Code. It also serves as owner of Spring Hill Apartments, Spring Glen Apartments and Carlyle Apartments. Spring Glen Apartments (Spring Glen) Spring Glen Apartments consists of a 176 unit multi family apartment complex purchased by the Authority in 2008 from Fort Worth Shadow Glen Affordable Associates, L.P. Spring Hill Apartments (Spring Hill) Spring Hill Apartments consists of a 254 unit multi family apartment complex purchased by the Authority in 2008 from Fort Worth Shadow Hill Affordable Associates, L.P. Carlyle Apartments (Carlyle) Carlyle Apartments consists of a 138 unit apartment complex purchased by the Authority in 2011 from Carlyle Crossing, LLC, a Delaware LLC. QuadCo Management Solutions, LLC (QuadCo) As part of the Authority's long range plan to expand and manage its affordable housing portfolio, it sponsored an affiliate, QuadCo Management Solutions, LLC (formerly known as TriVest Management Services, LLC) to manage its newly acquired complexes and soon assume management of its other affordable housing properties currently managed by private management companies. As of December 31, 2014, the QuadCo managers are employees of the Authority. Eastwood Public Facility Corporation (EPFC) EPFC is a public, non profit corporation created and existing under the laws of the State of Texas and acting as an instrumentality of the Authority. As of, the EPFC board composition was identical to that of the Authority. Accordingly, the financial statements are presented on a blended basis and are included in the Blended Component Unit combining statements. The EPFC was established to serve as the owner of the Villas of Eastwood Terrace Apartments and to assume its HUD enhanced loan. The Villas of Eastwood Terrace Apartments consist of 160 elderly units purchased in August 2013. 21

NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Blended Component Units (Continued) Fair Oaks Public Facility Corporation (FOPFC) FOPFC is a public, non profit corporation created and existing under the laws of the State of Texas and acting as instrumentality of the Authority. As of, the FOPFC board composition was identical to that of the Authority. Accordingly, the financial statements are presented on a blended basis and are included in the Blended Component Unit combining statements. The FOPFC was established to serve as the owner of the 76 unit Fair Oaks Apartments when it converted to Project Based Rental Assistance under the Rental Assistance Demonstration program in April 2014. Fair Park Public Facility Corporation (FPPFC) FPPFC is a public, non profit corporation created and existing under the laws of the State of Texas and acting as instrumentality of the Authority. As of, the FPPFC board composition was identical to that of the Authority. Accordingly, the financial statements are presented on a blended basis and are included in the Blended Component Unit combining statements. The FPPFC was established to serve as the owner of the 46 unit Fair Park Apartments when it converted to Project Based Rental Assistance under the Rental Assistance Demonstration program in April 2014. Hillside Public Facility Corporation (HPFC) HPFC is a public, non profit corporation created and existing under the laws of the State of Texas and acting as an instrumentality of the Authority. As of, the HPFC board composition was identical to that of the Authority. Accordingly, the financial statements are presented on a blended basis and are included in the Blended Component Unit combining statements. The HPFC was established to serve as the owner of the Knights of Pythias Lofts and as the borrower for the acquisition loan. The Knights of Pythias Lofts consists of 10 affordable and 8 market rate units and was purchased in 2012. Other projects that are included in the blended component unit column include: Chrisholm V Corporation, WHAH General Partner LLC, Candletree Homes LLC, Pioneers of Samuels LLC, Sycamore Center Villas, and Barbara Holston Education Fund. Discretely Presented Component Units The Authority owns limited partnership interests in the following developments which are included in the Authority's reporting entity as discretely presented component units because the Authority does not have the ability to control the operations of the partnerships (GASB Statement No. 61): 1. Candletree Apartments Owned by South Hulen, L.P. and consists of a 216 unit multi family apartment complex that was purchased by the Authority in 1994 through the Resolution Trust Corporation. The $15,000,000 renovation of this property started in 2007 and was completed in 2008, and was financed by tax credits and construction loans. 22

NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Discretely Presented Component Units (Continued) 2. Cambridge Court Apartments Owned by Western Hills Affordable Housing, L.P. and consists of a 330 unit multi family apartment complex purchased in 2004. Renovation was completed in 2007. During 2006, third party tax credit equity was received for 99.9% of the equity. 3. The Pavilion at Samuels Avenue Owned by Samuels Avenue, L.P. and consists of a 36 unit multifamily apartment complex constructed on land the Authority purchased in 2004. Tax credit and construction loan financed construction was completed in 2007. 4. Overton Park Townhomes Owned by Overton Square, L.P. and consists of a 216 unit multi family apartment complex that was purchased by the Authority in 2002. The project was financed through a mortgage under Section 221 (d) (4) of the National Housing Act as regulated by HUD and through low income housing tax credits. 5. Villas on the Hill Owned by Lincoln Terrace, L.P. and formerly known as Lincoln Terrace Apartments consists of a 72 unit multi family apartment complex that receives project based Section 8 financial assistance. 6. Wind River Apartments Owned by Trinity Quality Housing, L.P. and consists of a 216 unit multifamily apartment complex purchased by the Authority. 7. Villas by the Park Owned by Cobb Park Townhomes II, L.P. and formerly known as Cobb Park Apartments consists of a 172 unit multi family apartment complex purchased by the Authority. 8. Hunter Plaza Owned by FW Hunter Plaza, LP and will consist of 115 affordable and 49 market rate units. Twenty five affordable units received housing assistance payment contracts under the Rental Assistance Demonstration program, Project Based Rental Assistance, in October 2014. Copies of the separately issued audited financial statements of discretely presented component units can be obtained by contacting the Department of Administrative Services, The Housing Authority of the City of Fort Worth, 1201 E. 13 th Street, Fort Worth, Texas 76102. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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. Budgets The Authority adopts budgets on the basis of accounting consistent with the basis of accounting for the fund to which the budget applies. The Authority prepares annual operating budgets, which are formally adopted by its governing Board of Commissioners. The budgets for programs funded by HUD form the basis of the Federal Financial Assistance received through HUD. The programs funded by the State of Texas are presented in the Supplemental Information Section of this report. 23