Financial Statements and Independent Auditor's Report December 31, 2011
Contents Independent Auditor's Report 1 Balance Sheet 2 Statement of Operations 4 Statement of Members' Equity 5 Statement of Cash Flows 6 Notes to Financial Statements 8 Supplemental Information Balance Sheet Data 15 Statement of Operations Data 17 Statement of Members' Equity Data 20 Statement of Cash Flows Data 21 Schedule of Replacement Reserves 23 Schedule of Changes in Fixed Assets 23 Computation of Surplus Cash - Mid-year and Annual 24 Independent Auditor's Report on Internal Control 25 Independent Auditor's Report on Compliance With Specific Requirements Applicable to Major HUD Programs 26 Independent Auditor's Report on Compliance with Specific Requirements Applicable to Fair Housing and Non-Discrimination 27 Schedule of Findings and Questioned costs 28 Mortgagor's Certification 29 Managing Agent's Certification 30 Auditor's Transmittal Letter 31
Certified Public Accountants (a professional corporation) 1785 West Printers Row Salt Lake City, Utah 84119 (801) 972-4800 Fax (801) 972-8941 To the Members': Jordan View, L.C. INDEPENDENT AUDITOR'S REPORT We have audited the accompanying balance sheet of Jordan View, L.C. (the Company), HUD Project No. 105-35112-PM, as of December 31, 2011, and the related statement of operations, members' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jordan View, L.C. as of December 31, 2011, and the results of its operations, members' equity, and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated February 27, 2012 on our consideration of Jordan View L.C.'s internal control over financial reporting. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and the results of that testing and not to provide an opinion on the internal control over financial reporting. In accordance with Government Auditing Standards, we have also issued an opinion dated February 27, 2012, on Jordan View L.C.'s compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters that could have a direct and material effect on a major HUD-assisted program. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplemental information shown on pages 15-24 is presented for the purposes of additional analysis and is not a required part of the financial statements of Jordan View L.C.'s. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Salt Lake City, Utah February 27, 2012 Associate Office At 5974 South Fashion Pointe Dr., Suite 200 South Ogden, UT 84403 (801) 479-4800 (801) 479-8941 Fax Associate Office At 1221 West Mineral Avenue Suite 202 Littleton, Colorado 80120-4544 (303) 734-4800 Fax (303) 795-3356
Balance Sheet December 31 2011 Assets Current assets: Cash $ 299,632 Tenant accounts receivable 3,950 Prepaid expenses 35,905 Total current assets 339,487 Deposits held in trust - funded: Tenant security deposits 82,296 Restricted deposits and funded reserves: Mortgage escrow deposits 74,734 Replacement reserves 151,213 Bond fund reserve 141,000 Debt service reserve 54,500 Mortgage reserve 80,000 Total deposits and funded reserves 501,447 Property and equipment: Land 2,270,556 Buildings and improvements 15,452,031 Furniture and equipment 621,811 Accumulated depreciation (7,158,107) Property and equipment, net 11,186,291 Intangible assets: Mortgage finance costs, net of amortization of $270,174 795,168 Tax credit monitoring fees, net of amortization of $18,261 8,730 Total intangible assets 803,898 Total assets $ 12,913,419 See accompanying notes to financial statements. 2
Balance Sheet (continued) December 31 2011 Liabilities and members' equity Current liabilities: Accounts payable $ 17,223 Accrued interest payable 65,562 Accrued management fees 22,090 Deferred rent 27,481 Current portion of mortgage payable 144,130 Total current liabilities 276,486 Deposits liability: Tenant security deposits 82,296 Long-term debt: Mortgage payable 11,959,550 Total long-term debt 11,959,550 Total liabilities 12,318,332 Members' equity 595,087 Total liabilities and members' equity $ 12,913,419 See accompanying notes to financial statements. 3
Statement of Operations For the year ended December 31 2011 Revenues: Rent revenue $ 2,588,027 Less vacancies 206,421 Net rental revenues 2,381,606 Financial revenue 107 Other revenue 44,301 Total revenues 2,426,014 Expenses: Administrative 303,562 Utilities 119,179 Operating and maintenance 458,978 Taxes and insurance 200,419 Financial 851,291 Total cost of operations before depreciation 1,933,429 Operating income before depreciation 492,585 Depreciation expense 583,043 Amortization expense 26,499 Net (loss) $ (116,957) See accompanying notes to financial statements. 4
Statement of Members' Equity For the year ended December 31 2011 Jordan Boston Partners, L.C. SLP, Inc. Financial Barnes Bank (Administrative (Special ITC XX of Utah Member) Member) (Investor Member) (Special Member) Total Members' equity (deficit), beginning $ (372,710) $ 10 $ 992,045 $ 392,700 $ 1,012,045 Distributions (264,202) - (35,799) - (300,001) Net (loss) 264,202 - (381,159) - (116,957) Members' equity (deficit), ending $ (372,710) $ 10 $ 575,087 $ 392,700 $ 595,087 Loss percentage allocation 0.10% 0.00% 99.90% 0.00% 100.00% 5
Statement of Cash Flows For the year ended December 31 2011 Cash flows from operating activities: Rental receipts $ 2,371,035 Other receipts 66,567 Administrative expenses paid (87,655) Management fees paid (89,438) Utilities paid (119,179) Salaries & wages paid (185,402) Operating and maintenance paid (386,442) Real estate taxes paid (118,146) Property insurance paid (34,053) Misc taxes and insurance paid (48,220) Other operating expenses paid (6,800) Interest on mortgages paid (791,542) Mortgage insurance paid (60,829) Net cash provided (used) by operating activities 509,896 Cash flows from investing activities: Deposits into mortgage escrow 11,749 Release from reserve for replacement (37,559) Net cash provided (used) by investing activities (25,810) Cash flows from financing activities: Payment of mortgage payable (160,083) Payment of mortgage processing fee (10,000) Capital distributions (300,001) Net cash provided (used) by financing activities (470,084) Net increase (decrease) in cash and equivalents 14,002 Cash and equivalents, beginning of year 285,630 Cash and equivalents, end of year $ 299,632 See accompanying notes to financial statements. 6
Statement of Cash Flows (continued) For the year ended December 31 2011 Cash flows from operating activities: Net income (loss) $ (116,957) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation 583,043 Amortization 26,499 (Increase) decrease in operating assets: Tenant accounts receivable 684 Accounts receivable - other 22,159 Prepaid expenses (93) Tenant security deposits 1,748 Increase (decrease) in operating liabilities: Accounts payable (284) Accrued interest payable (1,080) Accrued management & asset management fees 7,180 Deferred rent (11,255) Tenant security deposits (1,748) Net cash provided (used) by operating activities $ 509,896 Supplemental disclosures of cash flow information: Interest paid $ 852,371 See accompanying notes to financial statements. 7
Notes to Financial Statements Note 1 - Organization Jordan View, L.C. (the Company), a limited liability company, was organized under the laws of the State of Utah for the purpose of operating The Ridge at Jordan Landing, (the Project), a 264-unit rental housing project located in West Jordan, Utah. The Project is financed and constructed under Section 221 (d)(4) of the National Housing Act, and is administered by the U.S. Department of Housing and Urban Development (HUD). The Project has qualified for and been allocated low-income housing credits pursuant to Internal Revenue Code Section 42 ("Section 42"), which regulates the use of the Project as to occupant eligibility and unit gross rent, among other requirements. The Project must meet the provisions of these regulations during each of fifteen consecutive years in order to remain qualified to receive the credits. Cash distributions are limited by agreements between the Company and HUD to the extent of surplus cash as defined by HUD. Note 2 - Significant accounting policies 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 disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Basis of accounting - The financial statements of the Company are prepared on the accrual basis of accounting and in accordance with generally accepted accounting principles. Cash and cash equivalents - The Company considers all cash on hand and in banks, and all highly liquid investments with a maturity of three months or less to be cash equivalents. At December 31, 2011 Jordan View, L.C. had no balances in excess of the FDIC limit. Restricted deposits and funded reserves - Restricted deposits and funded reserves consist of monies set aside in accordance with the mortgage agreement to be used for payment of taxes and insurance. Such funds are in the custody of the mortgagee. The Company is in compliance with the mortgage agreement with regard to such deposits and reserves. Property and equipment - Land, buildings, improvements, and furnishings are recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives (27.5 years for buildings, 15 years for improvements, and 5 years for furnishings) using the declining balance method. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. Any resulting gains and losses are reflected in the statement of operations. 8
Notes to Financial Statements (continued) Note 2 - Significant accounting policies (continued) Allowance for doubtful accounts - The Company has very few cases of bad debt, which are all from tenant accounts receivable. Tenants who move out usually pay the final amounts of rent due and, if not, the security deposit is applied toward unpaid rent, thus substantially reducing bad debt expense. As such, the Company has an allowance for bad debts equal to the amount due from tenants who move out. In the event the Company ultimately collects an amount that has been charged to bad debt, the amount is recorded to revenue. Intangible assets - Mortgage finance costs consist of costs incurred to acquire or refinance long-term debt. These costs are amortized over the life of such long-term loans using the straight-line method. Amortization expense for the year ended December 31, 2011 was $26,499. Tax credit monitoring fees are amortized over the fifteen-year Low- Income Tax Credit Compliance period, using the straight-line method. Amortization expense for the year ended December 31, 2011 was $1,799. These amortization amounts will be the same each year. Intangible assets are reviewed for impairment when events and circumstances indicate their carrying value may not be recoverable. During 2011, no adjustments to the useful lives or unamortized balance was deemed necessary. Rental income - Rental income is recognized as rent becomes due. Rental payments received in advance are deferred until earned. Tenant security deposits are recognized as income when forfeited. All leases between the Company and the tenants of the property are operating leases. Advertising expense - The Company follows the policy of charging the costs of advertising to expense as incurred. Advertising expense for the year ended December 31, 2011 was $31,259. Fair value of financial instruments - The carrying amounts reported in the accompanying financial statements for cash, accounts receivable, restricted deposits and funded reserves, accounts payable, accrued interest, and accrued management fees approximate fair value because of the immediate or short-term maturities of these financial instruments. Income Taxes - The Company is a limited liability company and is not subject to federal income tax because its income and losses are included and taxed in the personal income tax returns of its partners, but may be subject to certain state taxes. The Financial Accounting Standards Board, (FASB), has provided guidance for how uncertain tax positions should be recognized, measured, disclosed and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the entity's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained "when challenged" or "when examined" by the applicable taxing authority. Tax years that remain subject to examination are years 2008 and forward. The Company adopted the provisions of the Accounting for Uncertainty in Income Taxes from the FASB Accounting Standards Codification on January 1, 2009. For 2011, management has determined that there are no material uncertain income tax positions. 9
Notes to Financial Statements (continued) Note 3 - Members' equity The Company has an administrative member, Jordan Partners, LC, a special member, SLP, Inc.; a special member, Barnes Bank of Utah; and an investor member, Boston Financial ITC XX, SLP, Inc. Note 4 - Mortgage payable The mortgage in the original amount of $13,189,500 is insured by the Federal Housing Administration (FHA) and is collateralized by a first deed of trust on the rental property. The mortgage bears interest at the rate of 6.5% per annum and was payable in monthly payments of interest only on the principal amounts advanced through February 1, 2001. Thereafter, principal and interest are payable by the Partnership in monthly installments of $77,219, commencing on March 1, 2001 through maturity on February 1, 2041. As of December 31, 2011, the principal balance outstanding is $12,103,680. The liability of the Partnership under the mortgage is limited to the underlying value of the real estate collateral plus other amounts deposited with the lender. At December 31, 2011, interest of $65,562 had been accrued related to the mortgage. The mortgage may not be prepaid in whole or in part prior to July 1, 2009 without consent of the mortgage holder. Subsequent to this date, the balance may be prepaid in part or in whole without the consent of the holder upon 30 days written notice, subject to a prepayment premium equal to the following percentages of the principal balance of the mortgage to be repaid. Prepayment date Prepayment premium July 1, 2009 through June 30, 2010 102% July 1, 2010 through June 30, 2011 101% July 1, 2011 and thereafter 100% Under agreements with the mortgage lender and FHA, the Company is required to make monthly escrow deposits for replacement of project assets, and is subject to restrictions as to operating policies, rental charges, operating expenditures and distributions to its members. Future maturities of the mortgage payable at December 31, 2011, are as follows: 2012 $ 144,130 2013 153,783 2014 164,082 2015 175,071 2016 186,796 Thereafter 11,279,818 Total $ 12,103,680 Note 5 - Related party transactions Developer fees - The Company has incurred development fees of $1,533,070 payable to Jordan Partners, L.C., the administrative member, for services rendered to the Company for overseeing the construction of the project. As of December 31, 2011, the entire amount of this fee had been paid and capitalized into the basis of the building. 10
Notes to Financial Statements (continued) Note 5 - Related party transactions (continued) Property management fee - The property is managed by Cowboy Properties, L.C., a related party. The current management agreement provides for a management fee of 4% of monthly rental collections. Such fees charged to operations during 2011 were $96,618, of which $8,640 is payable at December 31, 2011. Asset management fee - The Company shall pay an annual asset management fee to the Administrative Member pursuant to the Asset Management Agreement. The fee is payable from surplus cash each year it is available. Such fees charged to operations during 2011 were $6,800. Asset management fees of $13,450 (which includes the payable of $6,650 from December 31, 2010) is payable at December 31, 2011. Incentive management fee - The Company shall pay an incentive management fee to Jordan Partners, L.C., the administrative member, per the incentive management fee agreement dated September 8, 1999. No incentive management fees were paid for the year ending December 31, 2011. Priority distribution - Based on the operating agreement the Company may incur cumulative priority distributions each year to be paid out to the investor member. No priority distributions were paid for the year ending December 31, 2011. Note 6 - Members' equity, liability limitation, and classes of interest Jordan Partners, L.C., the Administrative Member of the Company, has the exclusive right to manage the business of the Company in accordance with the operating agreement. The aggregate capital contribution of the Administrative Member shall not exceed $100 without the consent of the Investor Member. Boston Financial Institutional Tax Credits XX is the Investor Member of the Company. The Investor Member shall not be liable for any debts, liabilities, contracts, or obligations of the Company. The Investor Member shall be liable only to make payments of its capital contributions in accordance with the operating agreement. The Investor Member has certain restricted rights to amend the operating agreement, subject to certain provisions, including removing managers or administrative members for good cause and approving or disapproving the sale of substantially all of the assets of the Company. Note 7 - Partnership profits and losses and distributions Generally, all profits and losses are allocated.1% to the Administrative Member and 99.9% to the investor member. Cash Flow, as defined by the Operating Agreement, generally is distributable as follows: First, 100% to the Investor Member to repay the Investor Member for any advances made to the Company; second, 50% to the Investor Member to pay the Cumulative Priority Distribution and 50% to the Administrative Member to pay the Asset Management Fee until the Investor Member, in aggregate, has received distributions equal to the Cumulative Priority Distribution; third, to the repayment of any Project Expense Loans then outstanding; fourth, to pay any unpaid portion of the Development Amount; fifth, 80% to the Administrative Member as first payment of the Incentive Management Fee until such fee is paid in full for such fiscal year and then as a distribution; and sixth, any balance to the Investor Member. Profit and losses arising from the sale, refinancing, or other disposition of all or substantially all of the Company's assets will be specially allocated based on the respective members' equity account balances, as prioritized in the Operating Agreement. Additionally, the Operating Agreement provides for other instances in which a special allocation of profits and losses and distributions may be required. 11
Notes to Financial Statements (continued) Note 8 - Allowable distributions to members Note 9- Restricted deposits and funded reserves Under the regulatory agreement for Section 221(d)(4) projects, distributions to partners from funds provided by rental operations are allowed, provided: 1) Surplus cash, as defined by HUD, is available for such purposes; 2) the project is in compliance with all outstanding notices of requirements for proper maintenance; and 3) there is no default under the regulatory agreement or under the mortgage note. For the year ended December 31, 2011, $300,001 of distributions were paid to the partners. Surplus cash as of December 31, 2011 amounted to $214,932, as defined above. MIP reserve Beginning balance 1/01/11 $ 52,290 Deposits 60,242 Withdrawals (60,718) Ending balance 12/31/11 $ 51,814 Property insurance reserve Beginning balance 1/01/11 $ 8,556 Deposits 35,786 Withdrawals (34,256) Ending balance 12/31/11 $ 10,086 Property Tax reserve Beginning balance 1/01/11 $ 25,637 Deposits 105,342 Withdrawals (118,145) Ending balance 12/31/11 $ 12,834 Replacement reserve Beginning balance 1/01/11 $ 113,654 Deposits 123,566 Interest 107 Withdrawals (86,114) Ending balance 12/31/11 $ 151,213 Note 10 - Rent increases Under the regulatory agreement, the Project may not increase rents charged to tenants without prior HUD approval. Note 11 - Interest Interest incurred during construction of the Project was capitalized as part of the rental property. Once operations began, interest costs have been expensed as incurred. For the year ended December 31, 2011, no interest costs had been capitalized, and interest of $790,462 had been expensed. Note 12 - Concentration of credit risk The Company's escrows are maintained by the mortgagee and are invested in various money market funds. As of December 31, 2011, a portion or all of these funds may be uninsured. 12
Notes to Financial Statements (continued) Note 13 - Contingency The Project's low-income housing credits are contingent on its ability to maintain compliance with Section 42, as applicable. Failure to maintain compliance with occupant eligibility, unit gross rent, or failure to correct non-compliance within a specified time period, could result in recapture of previously taken tax credits plus interest. In addition, such potential non-compliance may require an adjustment to the contributed capital by the members. Note 14- Subsequent events The Company evaluated all events or transactions that occurred after December 30, 2011 through February 27, 2012, the date the Company issued these financial statements. During this period, the Company did not have any material recognizable subsequent events. 13
SUPPLEMENTAL INFORMATION
Balance Sheet Data December 31, 2011 Account No. Description Amount CURRENT ASSETS 1120 Cash $ 299,632 1130 Tenant accounts receivable 3,950 1200 Prepaid expenses 35,905 1100T Total Current Assets 339,487 DEPOSITS 1191 Tenant security deposits 82,296 1310 Mortgage escrow deposits 74,734 1320 Replacement reserves 151,213 1355 Bond fund reserve 141,000 1330 Debt service reserve 54,500 1330 Mortgage reserve 80,000 1300T Total Deposits 501,447 FIXED ASSETS 1410 Land 2,270,556 1420 Buildings and improvements 15,452,031 1465 Furniture and equipment 621,811 1400T Total Fixed Assets 18,344,398 1495 Accumulated depreciation (7,158,107) 1400N Net Fixed Assets 11,186,291 INTANGIBLE ASSETS 1520 Mortgage finance costs, net of amortization of $270,174 795,168 1520 Tax credit monitoring fees, net of amortization of $18,261 8,730 1500T Total Other Assets 803,898 1000T Total Assets $ 12,913,419 15
Balance Sheet Data (continued) December 31, 2011 Account No. Description Amount CURRENT LIABILITIES 2110 Accounts payable $ 17,223 2131 Accrued interest payable 65,562 2123 Accrued management fees 8,640 2170 Current portion of mortgage payable 144,130 2190 Accrued asset management fees 13,450 2210 Deferred rent 27,481 2122T Total Current Liabilities 276,486 DEPOSITS 2191 Tenant security deposits 82,296 LONG-TERM LIABILITIES 2320 Mortgage payable 11,959,550 2300T Total Long-Term Liabilities 11,959,550 2000T Total Liabilities 12,318,332 3130 Members' Equity 595,087 2033T Total Liabilities and Member's Equity $ 12,913,419 16
Statement of Operations Data For the year ended December 31, 2011 Account No. Description Amount RENT REVENUE 5120 Rent revenue $ 2,558,252 5170 Garage and parking spaces 22,514 5190 Miscellaneous rent revenue 7,261 5100T Total Rent Revenue 2,588,027 VACANCIES 5220 Apartment vacancies 163,610 5250 Rental concessions 24,884 5290 Miscellaneous vacancies 17,927 5200T Total Vacancies 206,421 5152N Net Rental Revenue (rent revenue less vacancies) 2,381,606 FINANCIAL REVENUE 5440 Revenue from investments - replacement reserve 107 5400T Total Financial Revenue 107 OTHER REVENUE 5910 Laundry and vending revenue 135 5920 Tenant charges 35,977 5990 Miscellaneous other revenue 8,189 5990T Total Other Revenue 44,301 5000T Total Revenue $ 2,426,014 17
Statement of Operations Data (continued) For the year ended December 31, 2011 Account No. Description Amount ADMINISTRATIVE EXPENSES 6210 Advertising $ 31,259 6311 Office expenses 15,136 6320 Management fees 96,618 6330 Manager or superintendent salaries 112,866 6340 Legal expenses 1,340 6350 Audit expense 10,925 6390 Miscellaneous 28,618 6263T Total Administrative Expenses 296,762 UTILITIES EXPENSES 6450 Electricity 27,747 6451 Water 24,954 6452 Gas 15,725 6453 Sewer 50,753 6400T Total Utilities Expenses 119,179 OPERATING & MAINTENANCE EXPENSES 6510 Payroll 72,536 6515 Supplies 56,378 6520 Contracts 61,976 6525 Garbage and trash removal 21,780 6530 Security contract 32,832 6546 Maintenance and repairs 9,917 6548 Snow removal 2,830 6590 Miscellaneous operating and maintenance expenses 200,729 6500T Total Operating and Maintenance Expenses $ 458,978 18
Statement of Operations Data (continued) For the year ended December 31, 2011 Account No. Description Amount TAXES & INSURANCE 6710 Real estate taxes $ 118,146 6711 Payroll taxes 16,483 6720 Property and liability insurance 34,053 6723 Other employee benefits 31,737 6700T Total Taxes and Insurance 200,419 FINANCIAL EXPENSES 6820 Interest on mortgage payable 790,462 6850 Mortgage insurance premium 60,829 6800T Total Financial Expenses 851,291 OPERATING RESULTS 6000T Total Cost of Operations Before Depreciation 1,926,629 5060T Income (loss) before depreciation 499,385 6600 Depreciation expense 583,043 6610 Amortization expense 26,499 5060N Operating Income (Loss) (110,157) 7190 Other Expenses 6,800 3250 Net Income (Loss) $ (116,957) S1000-010 Total mortgage principal payments required during the year $ 160,083 S1000-020 Total of 12 monthly deposits during the year into the replacement reserve account, as required by the regulatory agreement $ 123,566 S1000-030 Replacement reserve or residual receipts releases which are included as expense items on this profit and loss statement $ 86,114 19
Statement of Members' Equity Data For the year ended December 31, 2011 Account No. Description Amount S1100-010 Members' equity, beginning $ 1,012,045 S1200-430 Contributions - S1200-420 Distributions (300,001) 3250 Net income (loss) (116,957) 3130 Members' equity, ending $ 595,087 20
Statement of Cash Flows Data For the year ended December 31, 2011 Account No. Description Amount Cash flows from operating activities: S1200-010 Rental receipts $ 2,371,035 S1200-030 Other receipts 66,567 S1200-040 Total Receipts 2,437,602 S1200-050 Administrative expenses paid (87,655) S1200-070 Management fees paid (89,438) S1200-090 Utilities paid (119,179) S1200-100 Salaries & wages paid (185,402) S1200-110 Operating and maintenance paid (386,442) S1200-120 Real estate taxes paid (118,146) S1200-140 Property insurance paid (34,053) S1200-150 Misc taxes and insurance paid (48,220) S1200-170 Other operating expenses (6,800) S1200-180 Interest on mortgages paid (791,542) S1200-210 Mortgage insurance paid (60,829) S1200-230 Total Disbursements (1,927,706) S1200-240 Net cash provided (used) by operating activities 509,896 Cash flows from investing activities: S1200-245 Deposits into mortgage escrow 11,749 S1200-250 Release from reserve for replacement (37,559) S1200-330 Purchases of fixed assets - S1200-350 Net cash provided (used) by investing activities (25,810) Cash flows from financing activities: S1200-360 Payment of mortgage payable (160,083) Payment of mortgage processing fee (10,000) S1200-420 Capital distributions (300,001) S1200-460 Net cash provided (used) by financing activities (470,084) S1200-470 Net increase (decrease) in cash and equivalents 14,002 S1200-480 Cash and equivalents, beginning of year 285,630 S1200T Cash and equivalents, end of year $ 299,632 21
Statement of Cash Flows Data (continued) For the year ended December 31, 2011 Account No. Description Amount Reconciliation of net loss to net cash provided by operating activities 3250 Net income (loss) $ (116,957) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: 6600 Depreciation 583,043 6610 Amortization 26,499 (Increase) decrease in operating assets: S1200-490 Tenant accounts receivable 684 S1200-500 Account receivable - other 22,159 S1200-520 Prepaid expenses (93) S1200-530 Tenant security deposits 1,748 Increase (decrease) in operating liabilities: S1200-540 Accounts payable (284) S1200-570 Accrued interest payable (1,080) S1200-560 Accrued management & asset management fees 7,180 S1200-590 Deferred rent (11,255) S1200-580 Tenant security deposits (1,748) S1200-610 Net cash provided (used) by operations $ 509,896 \ 22
Supporting Data Required by HUD Schedule of Replacement Reserves: 1320P Beginning balance 1/01/11 $ 113,654 1320DT Deposits 123,566 1320INT Interest 107 1320WT Withdrawals (86,114) 1320 Ending balance 12/31/11 $ 151,213 Schedule of Changes in Fixed Assets: Balance Assets 12/31/10 Additions Deletions 1410 Land $ 2,270,556 $ - $ - 1420 Buildings and improvements 15,452,031 - - 1465 Furniture and equipment 621,811 - - 1400T Total $ 18,344,398 $ - $ - $ $ Balance 12/31/11 2,270,556 15,452,031 621,811 18,344,398 Balance Balance Accumulated depreciation 12/31/10 Additions Deletions 12/31/11 Land $ - $ - $ - Buildings and improvements 5,953,966 582,758 - Furniture and equipment 621,098 285 - $ - 6,536,724 621,383 1495 Total $ 6,575,064 $ 583,043 $ - $ 7,158,107 23
Supporting data required by HUD Computation of surplus cash - mid-year and annual For the six months ended June 30 2011 S1400-020 Cash including tenant security deposits $ 425,846 S1400-040 Other 33,606 S1400-050 Total cash 459,452 Current obligations: S1400-090 Accounts payable 30,397 S1400-060 Accrued interest payable 65,933 S1400-130 Deferred rent 34,096 S1400-120 Accrued management fees 10,050 S1400-140 Tenant security deposits 87,442 S1400-180 Total current obligations 227,918 S1400-190 Surplus cash $ 231,534 For the year ended December 31 2011 S1300-010 Cash including tenant security deposits $ 381,928 S1300-030 Other 47,656 S1300-040 Total cash 429,584 Current obligations: S1300-075 Accounts payable 17,223 S1300-050 Accrued interest payable 65,562 S1300-100 Accrued management fees 22,090 2210 Deferred rent 27,481 2191 Tenant security deposits 82,296 S1300-140 Total current obligations 214,652 S1300-150 Surplus cash $ 214,932 24
Certified Public Accountants (a professional corporation) 1785 West Printers Row Salt Lake City, Utah 84119 (801) 972-4800 Fax (801) 972-8941 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL To the Members': Jordan View, L.C. We have audited the financial statements of Jordan View, L.C., HUD Project No. 105-35112-PM as of and for the year ended December 31, 2011, and have issued our report thereon, dated Februay 14, 2012. We have also audited the Company's compliance with specific program requirements that could have a direct and material effect on each of its major U.S. Department of Housing and Urban Development (HUD)-assisted programs for the year ended December 31, 2011, and have issued our report thereon, dated February 27, 2012. We conducted our audit 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 Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General. Those standards and the Guide require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether the Company complied the compliance requirements referred to above that could have a direct and material effect on a major HUD-assisted program. Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting and internal control over compliance with the compliance requirements referred to above. In planning and performing our audit of the financial statements and compliance, we considered the Company s internal control over financial reporting and its internal control over compliance with the specific program requirements that could have a direct and material effect on a major HUD-assisted program to determine the auditing procedures for the purpose of expressing our opinion on the financial statements and compliance but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting and internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Company's internal control over financial reporting and internal control over compliance. 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 (1) misstatements of the entity's financial statements or (2) noncompliance with specific program requirements of a HUD-assisted program on a timely basis. A material weakness is a deficiency or combination of deficiencies in internal control such that there is a reasonable possibility that (1) a material misstatement of the entity's financial statements, or (2) material noncompliance with specific program requirements of a HUD-assisted program will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over financial reporting and internal control over compliance was for the limited purpose described in the third paragraph of this report and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weakness. We did not identify any deficiencies in internal control that we consider to be material weaknesses as defined above. We noted certain matters that we reported to management of the Partnership in a separate letter, dated February 27, 2012. This report is intended solely for the information and use of the audit committee, management, others within the organization, and the Department of Housing and Urban Development, and is not intended to be and should not be used by anyone other than these specified parties. Salt Lake City, Utah February 27, 2012 Associate Office At 5974 South Fashion Pointe Dr., Suite 200 South Ogden, UT 84403 (801) 479-4800 (801) 479-8941 Fax Associate Office At 1221 West Mineral Avenue Suite 202 Littleton, Colorado 80120-4544 (303) 734-4800 Fax (303) 795-3356
Certified Public Accountants (a professional corporation) 1785 West Printers Row Salt Lake City, Utah 84119 (801) 972-4800 Fax (801) 972-8941 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS To the Members': Jordan View, L.C. We have audited Jordan View, L.C.'s compliance with the specific program requirements governing federal financial reports, mortgage status, the replacement reserve, tenant security deposits, cash receipts and disbursements, distributions to owners, tenant application, tenant eligibility, tenant recertification, management functions, management, maintenance, and reexamination of tenants, that are applicable to each of its major HUD-assisted programs for the year ended December 31, 2011. Compliance with those requirements is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's compliance based on our audit. 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 Consolidated Audit Guide of Audits of HUD Programs (the "Guide"), issued by the U.S. Department of Housing and Urban Development, Office of Inspector General. Those standards and the Guide require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the requirements referred to above that could have a direct and material effect on a major HUDassisted program occurred. An audit includes examining, on a test basis, evidence about the Company'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. Our audit does not provide a legal determination of the Company's compliance with those requirements. The results of our audit procedures disclosed certain immaterial instances of noncompliance with the requirements referred to above, which we reported to the management of the Partnership in a separate communication dated February 27, 2012. In our opinion, the Company complied, in all material respects, with the requirements described above that are applicable to each of its major HUD-assisted programs for the year ended December 31, 2011. This report is intended solely for the information and use of the audit committee, management, others within the organization, and the Department of Housing and Urban Development, and is not intended to be and should not be used by anyone other than these specified parties. Salt Lake City, Utah February 27, 2012 Associate Office At 5974 South Fashion Pointe Dr., Suite 200 South Ogden, UT 84403 (801) 479-4800 (801) 479-8941 Fax Associate Office At 1221 West Mineral Avenue Suite 202 Littleton, Colorado 80120-4544 (303) 734-4800 Fax (303) 795-3356
Certified Public Accountants (a professional corporation) 1785 West Printers Row Salt Lake City, Utah 84119 (801) 972-4800 Fax (801) 972-8941 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION To the Members': Jordan View, L.C. We have audited the financial statements of Jordan View, L.C., HUD Project No. 105-35112- PM as of and for the year ended December 31, 2011, and have issued our report thereon dated February 27, 2012. We have applied procedures to test Jordan View, L.C.'s compliance with the Fair Housing and Non-Discrimination requirements applicable to its HUD-assisted programs for the year ended December 31, 2011. Our procedures were limited to the applicable compliance requirement described by the Consolidated Audit Guide for Audits of HUD Programs (the "Guide"), issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on Jordan View, L.C.'s compliance with the Fair Housing and Non- Discrimination requirements. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under the Guide. This report is intended solely for the information and use of the audit committee, management, others within the organization, and the Department of Housing and Urban Development, and is not intended to be and should not be used by anyone other than these specified parties. Salt Lake City, Utah February 27, 2012 Associate Office At 5974 South Fashion Pointe Dr., Suite 200 South Ogden, UT 84403 (801) 479-4800 (801) 479-8941 Fax Associate Office At 1221 West Mineral Avenue Suite 202 Littleton, Colorado 80120-4544 (303) 734-4800 Fax (303) 795-3356
Schedule of Findings and Questioned Costs For the year ended December 31, 2011 No matters were reported for the year ended December 31, 2011. 28
Mortgagor's Certification We hereby certify that we have examined the accompanying financial statements and supplemental data of Jordan View, L.C. HUD Project No. 105-35112-PM and, to the best of my knowledge and belief, the same is complete and accurate. Members Signature Signature February 27, 2012 Date February 27, 2012 Date
Management Agent's Certification I hereby certify that we have examined the accompanying financial statements and supplemental data of Jordan View, L.C. HUD Project No. 105-35112-PM and, to the best of my knowledge and belief, the same is complete and accurate. Managing Agent Cowboy Properties, L.C. TIN # 87-0668462 Signature February 27, 2012 Date
Auditor's Transmittal Letter For the year ended December 31, 2011 Account No. Description Value S3200-005 Audit Firm ID (UII) 06740 S3200-010 Audit Firm Haynie & Company S3200-020 Lead Auditor First Name Randall S3200-030 Lead Auditor Middle Name J S3200-040 Lead Auditor Last Name Jensen S3200-050 Auditor Street Address Line 1 1785 W 2300 South S3200-070 Auditor City Salt Lake City S3200-080 Auditor State Utah S3200-090 Auditor Zip Code 84119 S3200-110 Telephone Number 801-972-4800 S3200-120 Audit Firm TIN 870325228 S3200-130 Date of Independent Auditor's Report 2/27/2012