Presentation of Financial Statement Disclosures – Commitments and Contingencies
Discussion
What financial statement disclosure format is most useful to lenders and other financial statement readers
for disclosing information about a not-for-profit organization’s commitments and contingencies? What
are the most common types of commitments and contingencies included in this disclosure?
For additional guidance related to presentation of commitments and contingencies, see Financial
Reporting Best Practices Paper Topic 17, Commitments, Contingencies and Guarantees, available on the
STRENGTH MATTERS® website.
GAAP Requirements
Commitments
A not-for-profit organization’s audited financial statement should disclose the combined or consolidated
organization’s commitments that are not already included as liabilities on the balance sheet, including but
not limited to:
•
•
•
•
•
•
Long-term contractual obligations with suppliers for future purchases;
Capital expenditure commitments contracted for at the balance sheet date but not yet incurred;
Contractual obligations to others that will become liabilities in the future when the terms of those
contracts or agreements are met;
Non-cancellable operating lease obligations;
Unused letters of credit; and/or
Obligations to reduce debt, maintain working capital, restrict future capital distributions, or other
significant commitments arising from loan covenants.
Commitments are distinct from contingencies since there is no uncertainty related to the existence of the
obligation.
Contingencies
Disclosures should also be made of contingencies, including but not limited to the following:
•
•
•
•
•
Contingent losses that are probable and estimable should be accrued, for example a projected loss
on the guaranty of a master lease obligation;
Contingent losses that are not accrued and yet there is a reasonable possibility that a loss may
have been incurred, should be disclosed, such as litigation as defendant;
Contingent gains are not accrued, but disclosure should be made, while avoiding misleading
implications as to the likelihood of the gain, such as litigation as plaintiff;
Guarantees require disclosure of the liability recognized (fair value of the guarantee at inception),
the maximum potential future payments that could be required by the guarantee; and/or
Contingencies resulting from noncompliance with program requirements which could result in
repayment to a funding agency of disallowed costs.
1
This document is a product of STRENGTH MATTERS®, a collaborative initiative among national and local organizations in the
affordable housing field, co-sponsored by NeighborWorks® America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Commitments and Contingencies
Analysis/Input
The consolidated financial statements should disclose commitments, contingencies and guarantees that
can or will result in obligations to entities outside of the consolidated group.
Lenders find it informative to see a disclosure of the parent company’s commitments, contingencies and
guarantees to affiliates included in the consolidated financial statement. For example, a parent company
may guarantee repayment of a subsidiary’s debt to a third-party lender, but since the debt obligation exists
on the consolidated financial statement, disclosure of the guarantee wouldn’t be required. Nevertheless,
lenders see value in learning about the parent company’s guarantees since the lenders often read the
consolidated financial statements in order to underwrite a loan to the parent company.
A table format is recommended for presentation of a large number of guarantees. The table could identify
each guaranty by entity name, although this may not be practical for a long list of guarantees.
Organizations may find it informative to distinguish the contingencies that could result in future losses
from other contingent liabilities, for example contingencies that could result in future advances or
investments in real estate. While funding contingencies such as these utilizes cash flow, it would not
necessarily result in a reduction of the organization’s net assets.
Disclosures regarding ongoing litigation are generally not too detailed, although lenders have expressed
interest in reading more informative disclosures about the likely exposure to loss and the amount of
available insurance coverage.
Lenders also find it useful to see a disclosure of the amount of payments made to date arising from all
outstanding guarantee agreements.
Organizations generally prefer to include a statement that various loan covenants are in effect and are
being complied with, rather than providing details regarding each covenant since there are often a large
number of covenants that each consolidated affiliate has entered into. However, organizations may use
the loan covenant disclosure as an opportunity to show performance achievements beyond the covenants
when they want to highlight noteworthy financial performance.
2
This document is a product of STRENGTH MATTERS®, a collaborative initiative among national and local organizations in the
affordable housing field, co-sponsored by NeighborWorks® America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Commitments and Contingencies
Sample Financial Statement Disclosures
(In the following example ABC, Inc. is the “parent organization)
NOTE __ – COMMITMENTS AND CONTINGENCIES
Commitments:
Rental Payments under Non-cancelable Operating Leases
Office Space
ABC, Inc. has leases for office space in New York, which expire between April 2013 and March
2014. The following is a schedule, by year, of the future minimum rental payments under the
office space leases:
Year ended December 31,
2013
2014
$767,000
192,000
959,000
Rent costs totaled approximately $946,000 and $965,000 for 2012 and 2011, respectively.
Property-Related Leases
ABC and affiliates lease property land, facilities, and commercial space under leases ranging
from 30 to 55 years. Rent expense totaled approximately $3,489,000 and $3,350,000 for 2012 and
2011, respectively.
Certain ground lease payments are subject to changes in net cash flow, which is a contingency
that cannot be reasonably estimated. Minimum future lease expenses under the foregoing leases
are:
Year ended December 31,
2013
2014
2015
2016
2017
Thereafter
$
352,000
352,000
352,000
353,000
353,000
13,253,000
$
15,015,000
3
This document is a product of STRENGTH MATTERS®, a collaborative initiative among national and local organizations in the
affordable housing field, co-sponsored by NeighborWorks® America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Commitments and Contingencies
Capital Commitments
Various affiliates have entered into construction contracts with unrelated parties, in the amount of
$14,750,000 (including change orders), for the construction or rehabilitation of various real properties. At
December 31, 2012, $11,375,000 of such contract commitments had not yet been incurred.
Property Management
Property management on certain properties is contracted with non-affiliated entities for annual amounts
subject to yearly increases. The term of such non-cancelable contracts is generally for one-year.
Contingencies:
Guarantees
ABC and affiliates issue a variety of guarantees in the course of developing properties. The guarantees are
generally issued in favor of limited partner investors or lenders. Guarantees as of December 31, 2012 and
2011 consist of the following:
2012
2011
Operating deficits – inter-entity
Construction loan repayment and completion
Tax benefits
Equity contribution
$ 11,717,000 $ 13,486,000
72,480,000
92,551,000
159,130,000
198,099,000
6,128,000
6,128,000
Total
$ 249,455,000 $ 310,264,000
Operating Deficits – Inter-entity
Operating deficit guarantees are commitments to fund future operating deficits of affiliated partnerships.
The guarantees are issued in favor of tax credit limited partnerships, and generally are for the fifteen-year
period when the investor is expected to hold its limited partner interest, or for shorter periods (for
example, until certain debt ratios are achieved). A payment under such a guarantee would result in the
transfer of cash resources from the guarantor to a consolidated affiliate, resulting in an obligation to repay
the advance, usually from future operating cash flow. To date, ABC and affiliates have not experienced
any calls on these guarantees.
4
This document is a product of STRENGTH MATTERS®, a collaborative initiative among national and local organizations in the
affordable housing field, co-sponsored by NeighborWorks® America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Commitments and Contingencies
Construction Loan Repayment and Completion Guarantees
ABC and affiliates provide repayment guarantees to construction loan lenders for amounts borrowed to
develop properties. ABC and affiliates also provide unlimited construction completion guarantees to fund
the development and lease-up of a project, should the project not receive expected permanent financing,
or should the cost of the development exceed permanent financing received A payment under such a
guarantee would result in the transfer of cash resources from the guarantor to a consolidated affiliate that
is obligated to complete a development, resulting in an obligation to repay the advance, usually from
future operating cash flow. There are no significant completion delays in ABC and affiliates’ current
developments. To date, ABC and affiliates have not experienced non-completion of a project, nor has it
been called on for any loan repayment guarantee.
Tax Benefits Guarantees
As the sponsor or the developer of certain properties financed in part by federal and/or state tax credit
allocations, ABC, Inc. has made certain guarantees to investors as to the tax credits and other benefits to
be derived from the properties. These guarantees generally cover the tax compliance periods of fifteen
years after initial lease-up. A payment under such a guarantee could result in a cash distribution from an
affiliate’s operating cash flow to the investor limited partner. In the opinion of management, compliance
with tax regulations and careful monitoring of the properties should preclude these contingent liabilities
from materializing. To date, ABC, Inc. has not experienced any calls on these guarantees (or ABC and
affiliates have paid $750,000 to date under outstanding tax benefit guarantees).
Equity Contribution Guarantee
ABC, Inc. and affiliates are the general partners, co-general partners, members, or co-managing members
of various limited partnerships or limited liability companies as disclosed in Note 1. ABC and affiliates
executed various performance guarantees in connection with those limited partnerships or limited liability
companies. ABC, Inc. is obligated to fund various affiliated organizations with equity contributions in the
event such guarantees are called upon. A payment under such a guarantee would result in the transfer of
cash resources from the guarantor to a consolidated affiliate. To date, ABC and affiliates have not
experienced any calls on these guarantees and considers the occurrence of such events remote.
No liability has been recorded in connection with the operating deficit, construction loan repayment and
completion, tax benefit, or equity contribution guarantees since these are guarantees to entities under
common control.
ABC, Inc. Guarantees of Subsidiary Debt
ABC, Inc. occasionally guarantees repayment of obligations incurred by affiliated organizations. Such
loans are included as liabilities in the consolidated financial statements. The balance of the outstanding
affiliate loans guaranteed by ABC, Inc. was $7,500,000 and $7,600,000 as of December 31, 2012 and
2011, respectively.
5
This document is a product of STRENGTH MATTERS®, a collaborative initiative among national and local organizations in the
affordable housing field, co-sponsored by NeighborWorks® America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Commitments and Contingencies
ABC, Inc. also guarantees the debt of affiliated organizations that are accounted for as equity-method
investments and not consolidated herein. Those guarantees amounted to $500,000 and $400,000 as of
December 31, 2012 and 2011, respectively.
Litigation
ABC and affiliates are named in various claims and legal actions in the normal course of its activities.
Based upon counsel and management’s opinion, the outcome of such matters is not expected to have a
material adverse effect on ABC and affiliates’ financial position or changes in net assets.
An affiliate of ABC, Inc. is a plaintiff in a dispute regarding construction defects. The dispute is expected
to be resolved in 2014 and the outcome is not expected to have a material impact on the combined
financial statements.
Letters of Credit
As of December 31, 2012 and 2011, ABC and affiliates had not drawn upon any letters of credit, which
have been issued in the maximum amount of $15,000,000 for repayment of bond obligations.
Surety Bonds
In connection with certain project developments, ABC and affiliates enter into surety bond agreements,
which bind ABC and affiliates to repay the surety company if the contractor is unable to successfully
perform on the contract. As of December 31, 2012 and 2011, ABC and affiliates have outstanding a
maximum of $11,394,000 and $7,270,000, respectively, in surety bonds.
Grants and Loans
In connection with various federal, state and city grants and loan programs, ABC and affiliates are
obligated to operate in accordance with those grant and loan requirements and is subject to audit by those
agencies. In cases of noncompliance, the agencies involved may require that ABC and affiliates refund
payment of program funds. The amount, if any, of expenses which may be disallowed by the agencies
cannot be determined at this time, although ABC and affiliates expect such amounts, if any, to be
immaterial.
Contingent Loans Receivable
ABC and affiliates provided deferred-repayment loans through subordinate deeds of trust in order to make
single-family homes affordable to eligible families. Outstanding notes of $285,000 as of December 31,
2012 and 2011, and accrued interest of $74,841 and $66,291 as of December 31, 2012 and 2011,
respectively, are not reflected in the accompanying combined statements of financial position since it is
anticipated that the notes will be automatically forgiven on the 30th anniversary of the original sale.
6
This document is a product of STRENGTH MATTERS®, a collaborative initiative among national and local organizations in the
affordable housing field, co-sponsored by NeighborWorks® America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Commitments and Contingencies
Environmental Guarantee
ABC and affiliates provided guarantees to certain lenders and investors against any environmental claims.
The aggregate amount guaranteed is $17,000,000 and the guarantees expire in various years up to 2030.
Loan Covenants
Loan agreements contain various financial covenants. ABC and affiliates are in compliance with all such
covenants.
Other
As general partners in various partnerships, ABC and affiliates may be subject to other liabilities, should
the affected partnerships’ assets become insufficient to meet their obligations. In the opinion of
management, future revenues and the value of the underlying assets of each of these partnerships will be
sufficient to meet ongoing and future partnership obligations.
Acknowledgements
STRENGTH MATTERS® gratefully acknowledges the work of S. Scott Seamands from Lindquist, von
Husen & Joyce LLP and the following individuals that contributed to this paper:
Denise DeMaio, Consultant, F. B. Heron Foundation, New York, NY
Art Fatum, Chief Financial Officer, MidPen Housing Corporation, Foster City, CA
Caroline Horton, Chief Financial Officer, Aeon, Minneapolis, MN
David Keene, Director of Finance and Operations, The Neighborhood Developers, Chelsea, MA
John Maneval, Director of Lending, NeighborWorks Capital Corporation, Silver Spring, MD
Timothy Martin, Chief Credit Officer, Enterprise Community Loan Fund, Columbia, MD
Mary White Vasys, Principal, Vasys Consulting Ltd, Chicago, IL
Last Updated: December 2013
DISCLAIMER
This paper contains certain recommended financial statement presentation best practices for nonprofit affordable
housing organizations that develop and own affordable housing in the United States. This paper was developed
by a working group comprised of chief financial officers from certain leading nonprofit affordable housing
organizations active in the networks of NeighborWorks® America, Housing Partnership Network and Stewards of
Affordable Housing for the Future, as well as representatives of socially responsible lenders, working in
conjunction with a representative from Lindquist, von Husen & Joyce LLP, an independent public accounting firm.
This publication should not be construed as accounting or other advice on any specific facts or circumstances.
The contents of this paper are intended for general informational purposes only, and you are urged to consult your
accountants and other professional advisors concerning your specific situation and any financial reporting or
accounting questions you may have.
For further information, contact [email protected].
7
This document is a product of STRENGTH MATTERS®, a collaborative initiative among national and local organizations in the
affordable housing field, co-sponsored by NeighborWorks® America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Old version from 2012
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 10 – RENTAL INCOME
Rental income consists of the following:
Rental income, tenants
Rental income, rent supplements
Vacancy and concessions
Rental income, commercial
Other
2012
2011
$ 44,519,999
24,596,330
(934,436)
68,181,893
494,273
219,158
$ 42,307,460
20,894,961
(2,091,952)
61,110,469
446,567
244,698
$ 68,895,324
$ 61,801,734
NOTE 11 – RETIREMENT PLAN
The Corporation participates in a 403(b) defined contribution plan (the Plan) established by MidPen
Management. Employees are eligible to contribute to the Plan on their dates of hire. Employer contributions, which
cover employees who complete one year of service with 1,000 hours during the year and are employed on the last day
of the year, are discretionary. Employee contributions are fully vested at all times whereas employer contributions are
fully vested in three years. The Corporation contributed approximately $754,000 and $570,000 to the Plan for the years
ended December 31, 2012 and 2011, respectively.
NOTE 12 – CONTINGENCIES
MidPen has provided loan, operating deficit, and development deficit guarantees as well as indemnifications
with regard to tax benefits projected for its various affiliates and projects. MidPen will be responsible for repaying a
loan if the respective affiliate or project does not make payment on the loan when the loan becomes due. MidPen will
cover operating and development deficits as needed up to a stated limit. MidPen does not require any collateral or other
security from its affiliates and projects related to these guarantees. Outstanding loan, operating deficit, and development
deficit guarantees amounted to approximately $67,000,000 at December 31, 2012. In addition, MidPen has agreed to
indemnify an aggregate amount of approximately $215,000,000 to the limited partner investors for tax credits and other
deductions for various affiliated limited partnerships at December 31, 2012.
MidPen has guaranteed a $5,514,903 letter of credit, expiring in April 2021, issued by Comerica Bank for MP
Shoreline Associates.
On January 1, 2005, MidPen entered into a guaranty agreement with California Statewide Communities
Development Authority, the bond issuer, and The Bank of New York Trust Company, N.A., the bond trustee, to
guarantee payment obligations of Italian Gardens, Inc. up to $873,000. The bond, in the amount of $4,365,000, was
used to acquire certain office condominium interests in an existing office building leased by Italian Gardens, Inc. to
MidPen as its main office. The guaranty agreement is to be terminated upon the maturity of the principal and interest in
2015.
In 2004, MidPen provided deferred loans through second deeds of trust in order to make single-family homes
affordable to eligible families. Outstanding notes of $285,000 at December 31, 2012 and 2011, and accrued interest of
$74,841 and $66,291 at December 31, 2012 and 2011, respectively, are not reflected in the accompanying combined
statements of financial position as it is anticipated that the notes will be automatically forgiven on the 30th anniversary
of the original sale.
25
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 13 – LEGAL MATTERS
An affiliated property of MidPen is a plaintiff in a dispute regarding construction defects. The dispute is
expected to be resolved in 2014 and the outcome is not expected to have a material impact to the Corporation.
The Corporation is named in various claims and legal actions in the normal course of its activities. Based upon
counsel and management’s opinion, the outcomes of such matters are not expected to have a material adverse effect on
the financial position or changes in net assets of the Corporation.
26
New version from 2013
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE 11 – RENTAL INCOME
Rental income consists of the following:
Rental income, tenants
Rental income, rent supplements
Vacancy and concessions
Rental income, commercial
Other
2013
2012
$ 47,724,188
25,869,239
(1,287,669)
72,305,758
476,415
429,818
$ 44,519,999
24,596,330
(934,436)
68,181,893
494,273
175,652
$ 73,211,991
$ 68,851,818
NOTE 12 – RETIREMENT PLAN
The Corporation participates in a 403(b) defined contribution plan (the Plan) established by MidPen
Management. Employees are eligible to contribute to the Plan on their dates of hire. Employer contributions, which
cover employees who complete one year of service with 1,000 hours during the year and are employed on the last day
of the year, are discretionary. Employee contributions are fully vested at all times whereas employer contributions are
fully vested in three years. The Corporation accrued contributions of approximately $936,000 and $754,000 to the Plan
for the years ended December 31, 2013 and 2012, respectively.
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Guarantees
MidPen has provided loan, operating deficit, and development deficit guarantees as well as indemnifications
with regard to tax benefits projected for its various affiliates and projects. MidPen will be responsible for repaying a
loan if the respective affiliate or project does not make payment on the loan when the loan becomes due. MidPen will
cover operating and development deficits as needed up to a stated limit. MidPen does not require any collateral or other
security from its affiliates and projects related to these guarantees. Outstanding loan, operating deficit, and development
deficit guarantees amounted to approximately $104,000,000 at December 31, 2013. In addition, MidPen has agreed to
indemnify an aggregate amount of approximately $190,000,000 to the limited partner investors for tax credits and other
deductions for various affiliated limited partnerships at December 31, 2013.
MidPen has guaranteed a $5,514,903 letter of credit, expiring in April 2021, issued by Comerica Bank for MP
Shoreline Associates.
On January 1, 2005, MidPen entered into a guaranty agreement with California Statewide Communities
Development Authority, the bond issuer, and The Bank of New York Trust Company, N.A., the bond trustee, to
guarantee payment obligations of Italian Gardens, Inc. up to $873,000. The bond, in the amount of $4,365,000, was
used to acquire certain office condominium interests in an existing office building leased by Italian Gardens, Inc. to
MidPen as its main office. The guaranty agreement is to be terminated upon maturity of the principal and interest in
2015.
34
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
Single-Family Homes
In 2004, MidPen provided deferred loans through second deeds of trust in order to make single-family homes
affordable to eligible families. Outstanding notes of $285,000 at December 31, 2013 and 2012, and accrued interest of
$83,391 and $74,841 at December 31, 2013 and 2012, respectively, are not reflected in the accompanying combined
statements of financial position as it is anticipated that the notes will be automatically forgiven on the 30th anniversary
of the original sale in 2034.
Residual Receipts Recapture
In August 2012, HUD issued a regulation under HUD Notice 2012-14 which requires that projects receiving
Project-Based Section 8 Housing Assistance Payments (HAP) must draw down their excess residual receipts reserve to
offset HAP until the reserve has reached an amount equal to $250 per unit. The total amount approved by HUD for
recapture for the year ended December 31, 2013 was $198,659 for two of the Corporation’s HUD properties, and is
included in other financial expenses.
NOTE 14 – LEGAL MATTERS
An affiliated partnership of MidPen is a plaintiff in a lawsuit with the general contractor regarding construction
defects at its property. The lawsuit is expected to be resolved in 2014. As of December 31, 2013, the amount of
potential recovery cannot be reasonably estimated.
The Corporation is named in various claims and legal actions in the normal course of its operations. As of
December 31, 2013, the amount of potential exposure cannot be reasonably estimated. Based upon counsel and
management’s opinion, the losses resulting from these lawsuits, if any, will be covered by insurance and will not have a
material adverse effect on the financial position or changes in net assets of the Corporation.
35
Presentation of Financial Statement Disclosures – Affiliate Relationships
Discussion
What financial statement disclosure format is the most useful to lenders and other financial statement
readers for disclosing information about a not-for-profit affordable housing developer’s list of interrelationships with combined or consolidated affiliates?
GAAP Requirements
A not-for-profit organization’s audited financial statement should disclose the combined or consolidated
organizations and their relationship to the parent company. This information generally appears in the first
note to the financial statements, which may be called ‘Organization and Nature of Activities’,
‘Description of Organization,’ or the like:
•
•
Name of each consolidated subsidiary or combined entity
Relationship of each consolidated or combined entity to the parent company
Analysis/Input
Lenders find it useful to understand more about the consolidated enterprise than the minimum GAAP
requirements for disclosure, such as:
•
•
•
•
•
•
Description of rental properties owned
Type of entity owning each rental property
Location of each property
Age of property
Size of property
Type of property
Providing this information may involve a lengthy disclosure for affordable housing developers. Not-forprofit developers with a large portfolio of properties generally present information about the entities that
are combined or consolidated in a table format that is designed to provide lenders and other readers with
the most meaningful summarized information about each entity and property in their portfolio.
Smaller organizations may choose to write a short narrative about each entity or property in paragraph
form. Such narratives can provide more information than a table, but require more time to formulate and
read. Since much of the relevant data about each property lends itself to a table format, the table is
considered a best practice, to be supplemented by narrative paragraphs as necessary.
The structure of this disclosure, as well as the amount of information provided about each affiliate, varies
in practice. A best practice is to first describe the separate legal entities that operate business lines, such
as the developer and its affiliated companies, including those that provide property management, resident
services, construction, lending or other lines of business.
1
®
This document is a product of STRENGTH MATTERS , a collaborative initiative among national and local organizations in the
®
affordable housing field, co-sponsored by NeighborWorks America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Affiliate Relationships
Next, lenders are interested in the portfolio of properties. The most significant details regarding each
property and the legal entity that owns it can be summarized in a table format.
The last section can identify other entities included in the consolidation or combination, which don’t own
properties or conduct significant separate lines of business. Examples of these entities include general
partners in limited partnerships or affiliates that own land that is leased to affiliates providing housing.
Most not-for-profit developer organizations currently disclose the percentage of each general partner’s
ownership of each consolidated limited partnership, although the range is typically between .01% and 1%
and the distinctions within that range are not meaningful to most readers. As a result, simply disclosing
that each general partner’s interest ranges from .01% to 1% may be sufficient in most cases.
Additional information that cannot fit into the table may be included in paragraph narrative form (for a
smaller portfolio) or in a supplemental portfolio summary report (which may either be included in the
audited financial statements or separately issued). A sample portfolio summary report is available on the
Strength Matters website.
Sample – Real Estate Properties are Owned by Parent Company and by Affiliates
(Note: The sample below omits the first paragraph, which provides an overview of the entity, its mission
and total size of its portfolio.)
NOTE 1 – ORGANIZATION AND NATURE OF ACTIVITIES
ABC, Inc. (ABC) is affiliated through common board control or majority board control with other notfor-profit corporations. ABC also owns and controls subsidiary entities. All affiliates are supporting
entities to ABC, or are instruments to further ABC’s organizational objectives. These entities are included
in the combined financial statements of ABC in accordance with generally accepted accounting principles
(GAAP):
•
•
•
•
ABC, Inc., a not-for-profit multi-service community development agency.
ABC Management LLC, a for-profit property management company that oversees
housing programs for low-income individuals and families, including elderly and
disabled persons.
ABC Services, Inc., a not-for-profit organization that provides or coordinates educational
and social services to residents of housing managed by ABC Management.
ABC Lending LLC, a for-profit lender that provides financing for low-income families’
home purchases.
2
®
This document is a product of STRENGTH MATTERS , a collaborative initiative among national and local organizations in the
®
affordable housing field, co-sponsored by NeighborWorks America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Affiliate Relationships
(The following section of the sample disclosure applies to organizations that own real estate)
ABC and affiliates control limited partnerships, which own affordable housing and commercial
properties. Most of the partnerships participate in the Low-Income Housing Tax Credit program described
in Section 42 of the Internal Revenue Code. ABC, or an affiliate, typically are the managing general
partners of the limited partnerships and since ABC or an affiliate controls each partnership as defined by
GAAP, the partnerships are consolidated in these financial statements. ABC also forms limited liability
companies, general partnerships and not-for-profit organizations to own affordable housing properties that
do not participate in the Low-Income Housing Tax Credit program.
The following entities own affordable housing properties and commercial properties that are included in
these financial statements:
Entity Name
Entity
Type
Relationship
Property
Location
ABC Housing I, L.P.
LP
(1)
ABC Housing II, L.P.
ABC Housing III, L.P.
Oceanview Homes, Inc.
Bayview Housing, Inc.
LP
LP
NPO
NPO
(1)
(1)
(4)
(5)
ABC, Inc.
NPO
(8)
Crestview Partners
Happy Valley
Associates
ABC Housing V, L.P.
Lonestar LLC
ABC Housing VI, L.P.
LP
LP
(6)
(6)
San Francisco,
CA
Fremont, CA
San Diego, CA
Austin, TX
New Orleans,
LA
Los Angeles,
CA
New York, NY
Memphis, TN
LP
LLC
LP
(2)
(7)
(3)
Honolulu, HI
Dallas, TX
Minneapolis,
MN
Property
Placed in
Service
Date
1998
Property
Size
Property
Type
130 units
Multi-family
1998
1999
2000
2001
102 units
78 units
96 units
85 units
Multi-family
Senior
Senior
Multi-family
2003
44 units
Multi-family
2004
2006
80,000 sq. ft
150 units
Commercial
Multi-family
2008
2011
Est 2014
212 units
224 units
162 units
Multi-family
Multi-family
Senior
Entity types in the table above consist of limited partnerships (LP), not-for-profit organizations (NPO)
and limited liability companies (LLC). Relationships are as follows:
(1) ABC directly owns managing general partner interests ranging between .01% and 1% of each
limited partnership.
3
®
This document is a product of STRENGTH MATTERS , a collaborative initiative among national and local organizations in the
®
affordable housing field, co-sponsored by NeighborWorks America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Affiliate Relationships
(2) One or more of ABC’s affiliates owns the managing and any other general partner interests
ranging between .01% and 1% of each limited partnership.
(3) One of ABC’s affiliates is the controlling co-general partner with another organization. Each
organization’s general partner interest ranges between .005% and .5% of each limited
partnership.
(4) The entity is controlled by ABC’s board of directors through 100% common board
membership.
(5) The entity is controlled by ABC’s board of directors through 51% to 99% common board
membership.
(6) ABC and/or one of its affiliates owns a 50% or greater general partner interest in the entity.
As the managing general partner, ABC is deemed to control the partnership.
(7) ABC and/or one of its affiliates is the sole member of the LLC or the sole partner in the
partnership.
(8) ABC owns the property directly.
ABC forms subsidiaries to hold partner interests in the partnerships listed above, to own land leased to
affiliated entities listed above and to perform other functions. These entities are also included in the
combined financial statements of ABC and affiliates in accordance with generally accepted accounting
principles (GAAP) because of common or majority board control of the not-for-profit organizations, or
because ABC is the sole member of the limited liability companies:
•
•
•
•
•
•
ABC GP, Inc.,
Crestview, Inc.,
Happy Valley, Inc.,
ABC Land Holdings, LLC,
ABC Master Tenant, LLC, and
ABC Support Corporation.
An alternative to the table format is to use a paragraph describing each property such as the following
example:
ABC Housing III, LP was formed in 1999 to develop a 78-unit property located in San Diego, California.
The 99.99% limited partnership interest was sold in 1999 to raise tax credit equity for the project. The
project costs, totaling approximately $7,850,000 were financed by the tax credit equity, loans from the
City of San Diego and a conventional lender.
4
®
This document is a product of STRENGTH MATTERS , a collaborative initiative among national and local organizations in the
®
affordable housing field, co-sponsored by NeighborWorks America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Presentation of Financial Statement Disclosures – Affiliate Relationships
Acknowledgements
STRENGTH MATTERS® gratefully acknowledges the work of S. Scott Seamands from Lindquist, von
Husen & Joyce LLP and the following individuals that contributed to this paper:
Denise DeMaio, Consultant, F. B. Heron Foundation, New York, NY
Art Fatum, Chief Financial Officer, MidPen Housing Corporation, Foster City, CA
Caroline Horton, Chief Financial Officer, Aeon, Minneapolis, MN
David Keene, Director of Finance and Operations, The Neighborhood Developers, Chelsea, MA
John Maneval, Director of Lending, NeighborWorks Capital Corporation, Silver Spring, MD
Timothy Martin, Chief Credit Officer, Enterprise Community Loan Fund, Columbia, MD
Mary White Vasys, Principal, Vasys Consulting Ltd, Chicago, IL
Last Updated: October 2013
DISCLAIMER
This paper contains certain recommended financial statement presentation best practices for nonprofit
affordable housing organizations that develop and own affordable housing in the United States. This paper
was developed by a working group comprised of chief financial officers from certain leading nonprofit
®
affordable housing organizations active in the networks of NeighborWorks America, Housing Partnership
Network and Stewards of Affordable Housing for the Future, as well as representatives of socially
responsible lenders, working in conjunction with a representative from Lindquist, von Husen & Joyce LLP,
an independent public accounting firm. This publication should not be construed as accounting or other
advice on any specific facts or circumstances. The contents of this paper are intended for general
informational purposes only, and you are urged to consult your accountants and other professional advisors
concerning your specific situation and any financial reporting or accounting questions you may have.
For further information, contact [email protected].
5
®
This document is a product of STRENGTH MATTERS , a collaborative initiative among national and local organizations in the
®
affordable housing field, co-sponsored by NeighborWorks America, Housing Partnership Network and Stewards of Affordable
Housing for the Future.
www.strengthmatters.net
Old version from 2012
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 1 – ORGANIZATION AND NATURE OF ACTIVITIES
MidPen Housing Corporation (MidPen or the Corporation) is a California not-for-profit public benefit
corporation, founded in 1970, for the purpose of developing affordable housing communities for low- and very
low-income residents. MidPen’s mission is to provide high-quality, safe, and affordable housing to those in need; to
help establish stability and opportunity in the lives of its residents; and to foster communities that allow citizens from all
ethnic, social and economic backgrounds to live in dignity, harmony and mutual respect. Over four decades, MidPen
has built a strong reputation as an innovative developer with a focus on effective financial management that ensures its
properties maintain affordability into perpetuity.
MidPen has developed or rehabilitated over 100 affordable housing communities across ten Northern
California counties. MidPen maintains its own property management services through MidPen Property Management
Corporation (MidPen Management), which also provides property management for a small number of other affordable
housing owners. MidPen’s portfolio currently includes approximately 6,400 units available to low-income individuals
and families, including seniors and those with disabilities. MidPen Resident Services Corporation (MidPen Services)
delivers onsite programs, education and services to MidPen residents of all ages to help them advance in all areas of
their lives.
MidPen is committed to strategically utilizing its strong financial position to increase the availability of
affordable housing in Northern California. The Corporation will continue to invest in infrastructure; particularly in its
property and asset management and services programs in order to leverage new funding and program opportunities.
MidPen intends to open affordable new or rehabilitated properties each year in response to the housing needs of the
cities and counties they serve.
MidPen is affiliated, and under common board control, with other not-for-profit corporations which have been
formed either as supporting entities to MidPen, or as instruments to further MidPen’s organizational objectives. The
entities listed below are included in the combined financial statements in accordance with generally accepted accounting
principles:

MidPen Management, a California nonprofit public benefit corporation, which was incorporated in November
1970 to provide property management services that include the oversight of housing programs for low-income
individuals and families, including elderly and disabled persons, in accordance with requirements of the U.S.
Department of Housing and Urban Development, the California Housing Finance Agency, the State of
California Tax Credit Allocation Committee, and other governmental agencies.

MidPen Services, a California nonprofit public benefit corporation, which was incorporated in November 2000
to provide direct educational and social services to residents of housing developments managed by MidPen
Management. In addition, MidPen Services coordinates extensive additional services provided to MidPen
residents by over 300 partner not-for-profit organizations.

Italian Gardens, Inc., a California nonprofit public benefit corporation, was formed in January 2005 to acquire
a condominium interest in certain real property located in Foster City, California, and leases the property to
MidPen for use as its corporate office. In 2010, Italian Gardens, Inc. acquired an additional condominium
interest in the same real property.

Two subsidiaries, MP Land Holdings, LLC and St. Matthew San Mateo, Inc., of which MidPen is the sole
member. MP Land Holdings, LLC wholly owned a piece of land in Las Lomas which was sold in 2012.

Three developments, East Palo Alto Homes, Los Gatos Fourplex, and Willow Terrace, are wholly-owned by
MidPen.
7
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011

M.C. Homes, Inc., a sole member of Vineyard Place, LLC which was established to build single-family homes
within the City of American Canyon. The houses were marketed under a Below Market Rate (BMR) program
with the City of American Canyon. As of December 31, 2012, there were two unsold homes, currently being
leased to low-income tenants.

Mid-Peninsula The Farm, Inc., a sole member of Sunny Meadows LLC was formed in June 2010 to acquire
and rehabilitate a 200-unit apartment complex in Freedom, California. The project was sold to MP Sunny
Meadows Assoicates, L.P. in 2012. Mid-Peninsula The Farm, Inc. is a separate and independent legal entity
whose board members are appointed by the board of directors of MidPen.

MP Preservation, Inc., a managing member of Marymead Affordable Housing, LLC, which is the general
partner of Marymead Affordable Housing, LP.

Mid-Peninsula Coastside, Inc., a sole member of MP Union City TOD Garage LLC which was established to
own a 117-space public garage in Union City, California, with an option to sell the public garage to the City of
Union City.

Single-purpose not-for-profit corporations holding a controlling general partner interest (ranging from .005%
to 51.000%) in their respective limited partnerships that provide affordable housing:
Not-For-Profit Corporation
Garland Plaza LLC (Sole member is MidPeninsula Carroll Street, Inc.)
MP 220 Ross Avenue LLC (Sole member is
Mid-Peninsula San Carlos Corporation)
Mid-Peninsula Baker Park, Inc.
Mid-Peninsula Carroll Street, Inc.
MV Central Park Apartments, Inc.
MP Century Village LLC (Sole member is MidPeninsula Pickering, Inc.)
Mid-Peninsula Coastside, Inc.
Mid-Peninsula Fairfield Corporation
Mid-Peninsula Greenridge, Inc.
Mid-Peninsula Half Moon Bay, Inc.
MP Mezes, Inc.
Limited Partnership(s)
Ownership
Garland Plaza Associates, L.P.
0.010%
MP Sunny Meadows Associates, L.P.
Baker Park Associates
MP Fair Oaks I, L.P.
MP Central Park Associates, L.P. (Phase II)
MP Monte Vista Associates
MP Timberwood Associates
0.010%
1.000%
0.010%
0.010%
0.010%
0.010%
New Century Village, L.P.
Hermanas II Associates, LP
MP Mission Associates
Coastside Associates
New Homestead Associates
Sunset Creek Partners
MP Greenridge Associates
MP South City, LP
MP South City II, LP
Moonridge Associates
MP Latham Associates
Mezes Court Associates
MP San Mateo Transit Associates, L.P.
0.010%
0.010%
0.010%
0.010%
0.010%
1.000%
0.100%
0.010%
0.010%
0.010%
1.000%
0.100%
0.010%
MP Milpitas Affordable Housing LLC (Sole
member is Mid-Peninsula Scotts Valley Inc.) MP Milpitas Affordable Housing Associates
Mid-Peninsula Oroysom, Inc.
MP Oroysom Limited Partnership
MP Palo Alto Gardens, Inc.
MP Palo Alto Gardens Associates
8
0.010%
0.100%
0.100%
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
Not-For-Profit Corporation
MP Preservation, Inc.
Mid-Peninsula San Carlos Corporation
Mid-Peninsula San Pedro, Inc.
MP Santa Clara Inc.
Mid-Peninsula Scotts Valley, Inc.
Mid-Peninsula Shoreline, Inc.
MP St. Matthew, Inc.
Mid-Peninsula The Farm, Inc.
Mid-Peninsula Tyrella Corporation, Inc.
Union City TOD I, LLC (Sole member is
Mid-Peninsula Coastside, Inc.)
Union City TOD II, LLC (Sole member is MidPeninsula Coastside, Inc.)
Vista Meadows LLC (Sole member is
Mid-Peninsula The Farm, Inc.)

Limited Partnership(s)
Ownership
Bridgeway East LP
Fremont Main Street Village, L.P.
MP Homestead Park Associates
MP Runnymede Associates
MP Tice Oaks Associates
MP Tyrella Associates
Laureola Oaks Associates
Mid-Peninsula San Pedro Associates
Arbor Park Community, LP
MP Italian Gardens Associates
Riverwood Grove Associates, L.P.
Riverwood Place Associates, L.P.
MP Vineyard Crossing, LP
MP New Communities Associates
MP Scotts Valley Associates
MP Shoreline Associates
St. Matthew Associates, L.P.
MP Parkhurst Associates
MP San Andreas Associates
MP Transit Center Associates
Mid-Peninsula Castroville Associates
MP Hillsdale Townhouses L.P.
0.005%
51.000%
0.100%
0.100%
0.100%
0.010%
1.000%
0.010%
0.010%
0.100%
0.009%
0.009%
0.010%
0.010%
0.010%
1.000%
1.000%
0.010%
0.010%
0.010%
0.010%
0.010%
MP Union City TOD I, L.P.
0.010%
MP Union City TOD II, L.P.
0.010%
Vista Meadows Associates, L.P.
0.010%
Single-purpose not-for-profit corporations holding a controlling general partner interest (ranging from 0.010%
to 99.000%) in their respective limited partnerships for future development of affordable housing:
Not-For-Profit Corporation
Half Moon Village I LLC (Sole member is MidPeninsula Half Moon Bay, Inc.)
MP Delaware Pacific LLC (Sole member is MidPeninsula Greenridge, Inc.)
MP Laguna Commons LLC (Sole member is
Mid-Peninsula Pickering, Inc.)
MP Land Holdings, LLC (Sole member is
MidPen Housing Corporation)
MP Manteca Affordable Housing LLC (Sole
member is Mid-Peninsula Scotts Valley,
Inc.)
Mid-Peninsula The Farm, Inc.
Limited Partnership(s)
Ownership
Half Moon Village Associates, L.P.
0.010%
MP Delaware Pacific Associates, L.P.
0.010%
Laguna Commons Associates, L.P.
0.510%
MidPen Donner Associates, L.P.
99.000%
MP Manteca Affordable Housing
Associates
Aptos Blue Associates, L.P.
MP Manzanita Associates
MP Minto Associates, L.P.
1.000%
0.010%
0.010%
0.010%
9
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011

Affordable housing limited partnerships that are wholly owned by MidPen affiliated entities:
General Partner
Mid-Peninsula Coalition Aster Park
Corporation
Mid-Peninsula Carroll Street, Inc.
MV Central Park Apartments, Inc.
Limited Partner
Mid-Peninsula San Ramon
Corporation
MP Carroll Inn LLC (Sole member is
Mid-Peninsula Baker Park, Inc.)
Mid-Peninsula Ginzton, Inc.
Mid-Peninsula Ginzton, Inc.
MP Century Village LLC (Sole
member is Mid-Peninsula
Pickering, Inc.)
Mid-Peninsula San Ramon
Corporation
Mid-Peninsula San Ramon
Corporation
Bay Oaks LLC (Sole member is MP
Can Do, Inc.)
Mid-Peninsula Half Moon Bay, Inc.
Mid-Peninsula San Ramon
Corporation
Mid-Peninsula San Ramon
Corporation
Mid-Peninsula Jardines Del Valle,
LLC (Sole member is MidPeninsula San Carlos
Corporation)
Mid-Peninsula San Ramon
Corporation
Mid-Peninsula Pickering, Inc.
Mid-Peninsula Coalition Monte Vista
Terrace Corporation
Mid-Peninsula Coastside, Inc.
Mid-Peninsula San Ramon
Corporation
Mid-Peninsula Palms II, Inc.
Mid-Peninsula Ginzton, Inc.
Mid-Peninsula San Ramon
Corporation
Mid-Peninsula Century Village, Inc.
Mid-Peninsula Woodlands
Corporation
Mid-Peninsula Ginzton, Inc.
MP Can Do, Inc.
Mid-Peninsula Hermanas, Inc.
Mid-Peninsula Holy Family
Corporation
Mid-Peninsula Coalition Monte Vista
Terrace Corporation
Mid-Peninsula Murphy’s, Inc.
Mid-Peninsula Ginzton, Inc.
Mid-Peninsula San Ramon
Corporation

MP Willow Gardens, Inc.
Limited Partnership
Aster Park Limited Partnership
Carroll Street Associates
MP Central Park Associates, L.P.
(Phase I)
Mid-Peninsula Century Village
Associates
EPA Woodlands Associates
Ginzton Associates
Gloria Way Associates
Hermanas Associates
Holy Family Associates
MP Morse Court Associates
MP Murphy’s Associates
Open Doors Associates
Pickering Associates
MP Redwood Court Associates
Mid-Peninsula Sharmon Palms
Associates
The Farm Associates
Willow Gardens Housing Associates
Not-for-profit corporations, which are recipients of capital advances, mortgages, or insured loans from the U.S.
Department of Housing and Urban Development (HUD) for the development of affordable housing:
Mid-Peninsula Colma Ridge, Inc.
Homeport, Inc.
Mid-Peninsula Horizons, Inc.
Milagro Independent Living, Inc.
Mid-Peninsula Oroysom Senior Housing, Inc.
Mid-Peninsula Page Mill Court, Inc.
San Veron Park Corporation
Saratoga Court, Inc.
Vivente 1, Inc.
Vivente 2, Inc.
10
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011

Other not-for-profit corporations owning and operating affordable housing:
Mid-Peninsula Coalition Belle Haven, Inc.
Mid-Peninsula Carroll Street, Inc. (Garland Plaza Apartments)
Mid-Peninsula Country Hills, Inc.
Crescent Terrace, Inc.
Cupertino Community Housing for the Disabled, Inc.
Mid-Peninsula Ginzton, Inc. (Dent Commons)
Menlo Gateway, Inc.
Mid-Peninsula Sharmon Palms Corporation
Entities Excluded From Combined Financial Statements
The combined financial statements do not include the following entities for which MidPen’s officers and/or
board are deemed not to have majority control:


SR Senior Housing Inc., a single-purpose not-for-profit corporation holding a general partner interest of 1% in
SR Fountains Limited Partnership.
SR Fountains Limited Partnership, of which MidPen is a limited partner holding 33% of partnership interest.
MidPen’s investment is accounted for under the equity method of accounting.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
Not-for Profit Corporations
The combined financial statements include the accounts of MidPen and other not-for-profit entities that are
commonly controlled by MidPen’s officers or board of directors, including those not-for-profit entities that are
majority controlled by MidPen. Other not-for-profit entities, over which MidPen does not exercise majority
control, are not included in the combined financial statements. All material intercompany balances and
transactions have been eliminated in the combined financial statements.
Limited Partnerships
All assets, liabilities, and partners’ equity of the partnerships that are controlled by the Corporation are
included in the combined financial statements. The partners’ equity of the partnerships are divided into two
types: unrestricted – controlling interests (equity that is held by the Corporation) and unrestricted
– non-controlling interests (equity that is held by third parties, typically limited partners). All material
intercompany balances and transactions have been eliminated in the combined financial statements.
Partnerships which the Corporation does not control, but over which the Corporation exercises significant
influence, are included in the combined financial statements using the equity method of accounting. Under the
equity method, the Corporation’s share of the net equity in these limited partnerships is shown as an asset
(Investments in Other Companies). Intercompany balances and transactions are not eliminated under the equity
method.
The Corporation’s interests generally range from 0.005% to 51.000% with the remainder of the partnership’s
equity held by limited partners and shown as non-controlling interests in unrestricted net assets.
11
New version from 2013
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE 1 – ORGANIZATION AND NATURE OF ACTIVITIES
MidPen Housing Corporation (MidPen or the Corporation) is a California non-profit public benefit corporation,
founded in 1970, for the purpose of developing affordable housing communities for low- and very low-income
residents. MidPen’s mission is to provide high-quality, safe, and affordable housing to those in need; to help establish
stability and opportunity in the lives of its residents; and to foster communities that allow citizens from all ethnic, social
and economic backgrounds to live in dignity, harmony and mutual respect. Over four decades, MidPen has built a
strong reputation as an innovative developer with a focus on effective financial management that ensures its properties
maintain affordability into perpetuity.
MidPen has developed or rehabilitated over 100 affordable housing communities across eleven Northern
California counties. MidPen maintains its own property management services through MidPen Property Management
Corporation (MidPen Management), which also provides property management for a small number of other affordable
housing owners. MidPen’s portfolio currently includes approximately 7,400 units available to low-income individuals
and families, including seniors and those with disabilities. MidPen Resident Services Corporation (MidPen Services)
delivers onsite programs, education and services to MidPen residents of all ages to help them advance in all areas of
their lives.
MidPen is committed to strategically utilizing its strong financial position to increase the availability of
affordable housing in Northern California. The Corporation will continue to invest in infrastructure; particularly in its
property and asset management and services programs in order to leverage new funding and program opportunities.
MidPen intends to open affordable new or rehabilitated properties each year in response to the housing needs of the
cities and counties they serve.
MidPen is affiliated, and under common board control, with other non-profit corporations which have been
formed either as supporting entities to MidPen, or as instruments to further MidPen’s organizational objectives. The
entities listed below are included in the combined financial statements in accordance with generally accepted accounting
principles:

MidPen Management, a California non-profit public benefit corporation, which was incorporated in November
1970 to provide property management services that include the oversight of housing programs for low-income
individuals and families, including elderly and disabled persons, in accordance with requirements of the U.S.
Department of Housing and Urban Development, the California Department of Housing and Community
Development, the California Housing Finance Agency, the State of California Tax Credit Allocation
Committee, and other governmental agencies.

MidPen Services, a California non-profit public benefit corporation, which was incorporated in November
2000 to provide direct educational and social services to residents of housing developments managed by
MidPen Management. In addition, MidPen Services coordinates extensive additional services provided to
MidPen residents in partnership with nearly 650 third-party organizations.

Italian Gardens, Inc., a California non-profit public benefit corporation, was formed in January 2005 to acquire
a condominium interest in certain real property located in Foster City, California, and leases the property to
MidPen for use as its corporate office.

Two subsidiaries, MP Land Holdings, LLC, whose sole member is MidPen, and St. Matthew San Mateo, Inc.
MP Land Holdings, LLC owned a piece of land in Las Lomas which was sold in 2012. St. Matthew San
Mateo, Inc. owns and operates St. Matthew Retail, a building consisting of 3,527 square feet of commercial
space.

Two developments, Los Gatos Fourplex (4 residential units) and Willow Terrace (31 residential units), which
are wholly-owned by MidPen. The East Palo Alto Homes development (1 residential unit), which was also
wholly-owned by MidPen, was sold in 2013.
7
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012

M.C. Homes, Inc., a sole member of Vineyard Place, LLC which was established to build single-family homes
within the City of American Canyon. The houses were marketed under a Below Market Rate program with the
City of American Canyon. As of December 31, 2013, there were two unsold homes, currently being leased to
low-income tenants.

Mid-Peninsula The Farm, Inc., a sole member of Sunny Meadows LLC which was formed in June 2010 to
acquire and rehabilitate a 200-unit apartment complex in Freedom, California. The project was sold to MP
Sunny Meadows Associates, L.P. in 2012. Mid-Peninsula The Farm, Inc. is a separate and independent legal
entity whose board members are appointed by the board of directors of MidPen.

Mid-Peninsula Coastside, Inc., a sole member of MP Union City TOD Garage LLC which was established to
own a 117-space public garage in Union City, California, with an option to sell the public garage to the City of
Union City (See Note 9).
8
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012

Affordable housing limited partnerships with single-purpose non-profit corporations holding controlling general partner interests:
Entity Name
Property Name
General Partner
Ownership
Property Location
Property Size
Residential
Commercial
Units
Square Feet
Property Type(s)
Arbor Park Community, L.P.
Arbor Park
MP Santa Clara, Inc.
0.01%
San Jose, CA
75
2,100
Mixed Use, Family
Baker Park Associates
Baker Park
Mid-Peninsula Baker Park, Inc.
1.00%
San Jose, CA
98
N/A
Family
Bridgeway East, L.P.
Rotary Bridgeway
MP Preservation, Inc.
0.005%
Fremont, CA
18
N/A
Family, Special Needs
Coastside Associates
Moonridge I
Mid-Peninsula Coastside, Inc.
0.01%
Half Moon Bay, CA
80
3,727
Mixed Use, Family
Fremont Main Street Village, L.P.
Main Street
MP Preservation, Inc.
51.00%
Fremont, CA
64
3,527
Mixed Use, Family, Special
Needs
Garland Plaza Associates, L.P.
New Garland Plaza
Garland Plaza LLC (sole member is MidPeninsula Carroll Street, Inc.)
0.01%
Sunnyvale, CA
20
N/A
Family
Hermanas II Associates, L.P.
Main Street Park II
Mid-Peninsula Coastside, Inc.
0.01%
Half Moon Bay, CA
28
N/A
Family
Laureola Oaks Associates
Laureola Oaks
Mid-Peninsula San Carlos Corporation
1.00%
San Carlos, CA
16
N/A
Family
Marymead Affordable Housing, L.P.
Marymead
MP Preservation, Inc.
0.0067%
Marysville, CA
68
N/A
Family
Mezes Court Associates
City Center Plaza
MP Mezes, Inc.
0.10%
Redwood City, CA
81
1,030
Mixed Use, Family
Mid-Peninsula Castroville Associates
Cynara Court
Mid-Peninsula Tyrella Corporation, Inc.
0.01%
Castroville, CA
58
750
Mixed Use, Family
Mid-Peninsula San Pedro Associates, L.P.
San Pedro Commons
Mid-Peninsula San Pedro, Inc.
0.01%
Colma, CA
74
1,990
Mixed-Use, Senior
Moonridge Associates
Moonridge II
Mid-Peninsula Half Moon Bay, Inc.
0.01%
Half Moon Bay, CA
80
N/A
Family
MP Central Park Associates
New Central Park
MV Central Park Apartments, Inc.
0.01%
Mountain View, CA
104
N/A
Senior
MP Delaware Pacific Associates, L.P.
Delaware Pacific
MP Delaware Pacific LLC (sole member is
Mid-Peninsula Greenridge, Inc.)
0.01%
San Mateo, CA
60
N/A
Family
MP Fair Oaks I, L.P.
Fair Oaks Plaza
Mid-Peninsula Carroll Street, Inc.
0.01%
Sunnyvale, CA
124
N/A
Senior
MP Hillsdale Townhouses, L.P.
Hillsdale Townhouses
Mid-Peninsula Tyrella Corporation, Inc.
0.01%
San Jose, CA
48
N/A
Family
MP Homestead Park Associates
Homestead Park
MP Preservation, Inc.
0.10%
Sunnyvale, CA
211
N/A
Family
MP Italian Gardens Associates
Italian Gardens
MP Santa Clara, Inc.
0.10%
San Jose, CA
148
N/A
Family
MP Latham Associates
Maryce Freelen Place
MP Mezes, Inc.
1.00%
Mountain View, CA
74
N/A
Family
MP Manzanita Associates
Manzanita Place
Mid-Peninsula The Farm, Inc.
0.01%
East Garrison, CA
66
N/A
Family
9
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
Entity Name
Property Size
Residential
Commercial
Units
Square Feet
Property Name
General Partner
Ownership
Property Location
MP Milpitas Affordable Housing Associates
DeVries Place
MP Milpitas Affordable Housing LLC (sole
member is Mid-Peninsula Scotts Valley,
Inc.)
0.01%
Milpitas, CA
MP Minto Associates, L.P.
Schapiro Knolls (Minto)
Mid-Peninsula The Farm, Inc.
0.01%
Watsonville, CA
88
N/A
Family
MP Mission Associates
Mission Gateway
Mid-Peninsula Coastside, Inc.
0.01%
Union City, CA
121
2,481
Mixed Use, Family
MP Monte Vista Associates
Monte Vista Terrace
MV Central Park Apartments, Inc.
0.01%
Mountain View, CA
150
N/A
Senior
MP New Communities Associates
Villas del Paraiso
Mid-Peninsula Scotts Valley, Inc.
0.01%
Watsonville, CA
51
N/A
Family
MP Oroysom Limited Partnership
Oroysom Village
Mid-Peninsula Oroysom, Inc.
0.10%
Fremont, CA
60
N/A
Family
MP Palo Alto Gardens Associates
Palo Alto Gardens
MP Palo Alto Gardens, Inc.
0.10%
Palo Alto, CA
156
N/A
Family, Senior
Family
103
N/A
Property Type(s)
Senior
MP Parkhurst Associates
Parkhurst Terrace
Mid-Peninsula The Farm, Inc.
0.01%
Aptos, CA
68
N/A
MP Runnymede Associates
Runnymede Gardens
MP Preservation, Inc.
0.10%
East Palo Alto, CA
78
N/A
Senior
MP San Andreas Associates
San Andreas
Mid-Peninsula The Farm, Inc.
0.01%
Watsonville, CA
43
N/A
Family
MP San Mateo Transit Associates, L.P.
Peninsula Station
MP Mezes, Inc.
0.01%
San Mateo, CA
68
1,886
Mixed Use, Family
MP Scotts Valley Associates
Emerald Hill
Mid-Peninsula Scotts Valley, Inc.
0.01%
Scotts Valley, CA
46
N/A
Family
MP Shoreline Associates
Shorebreeze
Mid-Peninsula Shoreline Inc.
1.00%
Mountain View, CA
120
N/A
Family, Senior
MP South City II, L.P.
636 El Camino B
Mid-Peninsula Greenridge, Inc.
0.01%
South San Francisco, CA
47
N/A
Family
MP South City, L.P.
636 El Camino A
Mid-Peninsula Greenridge, Inc.
0.01%
South San Francisco, CA
62
5,735
Mixed Use, Family
MP Tice Oaks Associates
Tice Oaks
MP Preservation, Inc.
0.10%
Walnut Creek, CA
91
N/A
Senior
MP Timberwood Associates
Timberwood
MV Central Park Apartments, Inc.
0.01%
San Jose, CA
286
N/A
Family
MP Transit Center Associates
Via del Mar
Mid-Peninsula The Farm, Inc.
0.01%
Watsonville, CA
40
N/A
Family
MP Tyrella Associates
Tyrella Gardens
MP Preservation, Inc.
0.01%
Mountain View, CA
56
N/A
Family
Station Center Phase I
Union City TOD I LLC (sole member is MidPeninsula Coastside, Inc.)
0.01%
Union City, CA
100
8,400
Mixed Use, Family
MP Union City TOD II, L.P.
Station Center Phase II
Union City TOD II LLC (sole member is
Mid-Peninsula Coastside, Inc.)
0.01%
Union City, CA
57
N/A
Family
MP Vineyard Crossings, L.P.
Vineyard Crossings
MP Santa Clara, Inc.
0.01%
American Canyon, CA
145
N/A
Family
New Century Village
MP Century Village LLC (sole member is
Mid-Peninsula Pickering, Inc.)
0.01%
Fremont, CA
100
N/A
Family
Family, Senior
MP Union City TOD I, L.P.
New Century Village, L.P.
New Homestead Associates
Moulton Plaza
Mid-Peninsula Coastside, Inc.
0.01%
Sunnyvale, CA
66
N/A
Riverwood Grove Associates
Riverwood Grove
MP Santa Clara, Inc.
0.009%
Santa Clara, CA
71
N/A
Family
Riverwood Place Associates
Riverwood Place
MP Santa Clara, Inc.
0.009%
Santa Clara, CA
148
N/A
Single Room Occupancy
Sunset Creek Partners
Sunset Creek
Mid-Peninsula Fairfield Corporation
1.00%
Fairfield, CA
76
1,980
Mixed Use, Family
Vista Meadows Associates, L.P.
Vista Meadows
Vista Meadows, LLC (sole member is MidPeninsula The Farm, Inc.)
0.01%
Hollister, CA
72
N/A
Senior
10
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012

Affordable housing limited partnerships that are wholly owned by MidPen affiliated entities:
Property Size
Residential
Commercial
Units
Square Feet
Entity Name
Property Name
General Partner/Limited Partner
Property Location
Aster Park Limited Partnership
Aster Park
Mid-Peninsula Coalition Aster Park Corporation /
Mid-Peninsula San Ramon Corporation
Sunnyvale, CA
95
N/A
Family
Carroll Street Associates
Carroll Inn
Mid-Peninsula Carroll Street, Inc. /
MP Carroll Inn LLC (Sole member is Mid-Peninsula Baker Park, Inc.)
Sunnyvale, CA
122
N/A
Single Room Occupancy
MP Central Park Associates
Central Park Apartments (Phase I)
MV Central Park Apartments, Inc. /
Mid-Peninsula Ginzton, Inc.
Mountain View, CA
149
N/A
Senior
EPA Woodlands Associates
Willow Court
Mid-Peninsula Woodlands Corporation /
Mid-Peninsula San Ramon Corporation
Menlo Park, CA
6
N/A
Family
Ginzton Associates
Ginzton Terrace
Mid-Peninsula Ginzton, Inc. /
Mid-Peninsula San Ramon Corporation
Mountain View, CA
107
N/A
Senior
Gloria Way Associates
Bay Oaks Apartments
MP Can Do Inc. /
Bay Oaks LLC (Sole member is MP Can Do, Inc.)
East Palo Alto, CA
38
N/A
Family
Hermanas Associates L.P.
Main Street Park I
Mid-Peninsula Hermanas, Inc. /
Mid-Peninsula Half Moon Bay, Inc.
Half Moon Bay, CA
36
N/A
Family
Holy Family Associates
Santa Familia
Mid Peninsula Holy Family Corporation /
Mid-Peninsula San Ramon Corporation
San Jose, CA
79
N/A
Family
MP Greenridge Associates
Greenridge
Mid-Peninsula Greenridge, Inc. /
MP Greenridge LLC (sole member is Mid-Peninsula Half Moon Bay, Inc.)
South San Francisco, CA
34
N/A
Family
MP Morse Court Associates
Morse Court
Mid-Peninsula Coalition Monte Vista Terrace Corporation /
Mid-Peninsula San Ramon Corporation
Sunnyvale, CA
35
N/A
Family
MP Murphy's Associates
Jardines del Valle
Mid-Peninsula Murphy's Inc. /
Mid-Peninsula Jardines De Valle, LLC (Sole member is Mid-Peninsula San Carlos Corporation)
Watsonville, CA
18
N/A
Family
Open Doors Associates
Open Doors
Mid-Peninsula Ginzton, Inc. /
Mid-Peninsula San Ramon Corporation
Los Gatos, CA
64
N/A
Family
Pickering Associates
Pickering Place
Mid-Peninsula Pickering, Inc. /
Mid-Peninsula Coastside, Inc.
Fremont, CA
43
N/A
Family
MP Redwood Court Associates
Redwood Court
Mid-Peninsula Coalition Monte Vista Terrace Corporation /
Mid-Peninsula San Ramon Corporation
Redwood City, CA
27
N/A
Family
Mid-Peninsula Sharmon Palms Associates
Palms
Mid-Peninsula Palms II, Inc. /
Mid-Peninsula Ginzton, Inc.
Campbell, CA
24
N/A
Family
St. Matthew Associates, L.P.
St. Matthew Apartments
MP St. Matthew, Inc. /
MP St. Matthew LLC (sole member is Mid-Peninsula Half Moon Bay, Inc.)
San Mateo, CA
56
N/A
Single Room Occupancy
The Farm Associates
The Farm Family Housing
Mid-Peninsula Ginzton, Inc. /
Mid-Peninsula San Ramon Corporation
Soquel, CA
39
2,178
Mixed Use, Family
Willow Gardens Housing Associates
Willow Gardens
Mid-Peninsula San Ramon Corporation /
MP Willow Gardens, Inc.
South San Francisco, CA
36
N/A
Family
11
Property Type(s)
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012

Non-profit corporations owning and operating affordable housing:
Property Size
Residential
Commercial
Units
Square Feet
Entity Name
Property Name
Property Location
Crescent Terrace, Inc.
Crescent Terrace
Sunnyvale, CA
48
N/A
Senior
Cupertino Community Housing for the Disabled, Inc.
Le Beaulieu
Cupertino, CA
27
N/A
Special Needs
Homeport, Inc.
Homeport
San Jose, CA
15
N/A
Special Needs
Menlo Gateway, Inc.
Gateway Apartments
Menlo Park, CA
130
N/A
Family
Mid Peninsula Horizons, Inc.
Horizons
Belmont, CA
24
N/A
Special Needs
Mid-Peninsula Coalition Belle Haven, Inc.
Jessie Street
Santa Cruz, CA
14
N/A
Special Needs
Mid-Peninsula Coalition Belle Haven, Inc.
Sundial
South San Francisco, CA
11
3,303
Mixed Use, Single Room
Occupancy
Mid-Peninsula Colma Ridge, Inc.
Colma Ridge
Colma, CA
20
N/A
Special Needs
Mid-Peninsula Country Hills, Inc.
Country Hills
San Jose, CA
152
N/A
Family
Mid-Peninsula Ginzton, Inc.
Dent Commons
San Jose, CA
23
N/A
Special Needs
Mid-Peninsula Oroysom Senior Housing, Inc.
Avelina
Fremont, CA
41
N/A
Senior
Mid-Peninsula Page Mill Court, Inc.
Page Mill Court
Palo Alto, CA
24
N/A
Special Needs
Mid-Peninsula Sharmon Palms Corporation
Sharmon Palms
Campbell, CA
36
N/A
Family
Milagro Independent Living, Inc.
Milagro Independent
San Jose, CA
15
N/A
Special Needs
San Veron Park Corporation
San Veron Park
Mountain View, CA
32
N/A
Family
Saratoga Court, Inc.
Saratoga Court
Saratoga, CA
20
N/A
Senior
Vivente I, Inc.
Vivente I
San Jose, CA
29
N/A
Special Needs
Vivente 2, Inc.
Vivente II
San Jose, CA
29
N/A
Special Needs
12
Property Type(s)
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012

Properties under major rehabilitation or development:
Property Size
Residential
Commercial
Units
Square Feet
Entity Name
Property Name
General Partner or Managing Member
Ownership
Property Location
Aptos Blue Associates, L.P.
Aptos Blue
Mid-Peninsula The Farm, Inc.
0.01%
Aptos, CA
40
N/A
Family
MP-CANDO University Avenue Senior Housing LLC
University Avenue Senior Housing
Mid-Peninsula The Farm, Inc.
51.00%
East Palo Alto, CA
46
N/A
Senior
MidPen Donner Associates, L.P.
Donner Lofts
MP Donner Lofts LLC (sole member is MidPeninsula Country Hills, Inc.)
99.00%
San Jose, CA
102
N/A
Special Needs
MP East Maude Associates, L.P.
Armory Apartments
MP East Maude LLC (sole member is MidPeninsula The Farm, Inc.)
99.00%
Sunnyvale, CA
57
N/A
Family, Special Needs
Half Moon Village Associates, L.P.
Half Moon Village I
Half Moon Village I LLC (sole member is
Mid-Peninsula Half Moon Bay, Inc.)
0.01%
Half Moon Bay, CA
45
N/A
Senior
Half Moon Village Phase II Associates , L.P.
Half Moon Village phase II
MP Half Moon Village II LLC (sole member
is Mid-Peninsula Half Moon Bay, Inc.)
99.00%
Half Moon Bay, CA
115
N/A
Senior
Laguna Commons Associates, L.P.
Laguna Commons
MP Laguna Commons LLC (sole member is
Mid-Peninsula Pickering, Inc.)
51.00%
Fremont, CA
64
N/A
Family, Special Needs
Main Street Park I, L.P.
Main Street Park I
Main Street Park I LLC (sole member is MidPeninsula Half Moon Bay, Inc.)
99.00%
Half Moon Bay, CA
36
N/A
Family
MidPen Housing Corporation
6800 Mission Street
N/A
100.00%
Daly City, CA
52
N/A
Family
MidPen Housing Corporation
Foster Square
N/A
100.00%
Foster City, CA
66
N/A
Senior
MidPen Housing Corporation
Kottinger Place
N/A
100.00%
Pleasanton, CA
174
N/A
Senior
MidPen Housing Corporation
Sonoma Springs
N/A
100.00%
Sonoma, CA
60
N/A
Family
MidPen Housing Corporation
St. Stephens
N/A
100.00%
Santa Cruz, CA
40
N/A
Senior
Sharmon Palms Lane Associates, L.P.
Sharmon Palms Lane
Sharmon Palms Lane LLC (sole member is
MP Palms II, Inc.)
99.00%
Campbell, CA
60
N/A
Family
Sunny Meadows Associates, L.P.
Sunny Meadows
MP 220 Ross Avenue LLC (sole member is
Mid-Peninsula San Carlos Corporation)
0.01%
Freedom, CA
200
N/A
Family
Mid-Peninsula The Farm, Inc.
Pippin Lane
N/A
100.00%
Watsonville, CA
46
N/A
Family, Special Needs
Woodlands Newell Associates, L.P.
Woodlands Newell
Mid-Peninsula The Farm, Inc.
0.01%
East Palo Alto, CA
49
N/A
Family
13
Property Type(s)
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
Entities Excluded From Combined Financial Statements
The combined financial statements do not include the following entities for which MidPen’s officers and/or board are deemed not to have majority control:


SR Senior Housing Inc., a single-purpose non-profit corporation holding a general partner interest of 1% in SR Fountains Limited Partnership.
SR Fountains Limited Partnership, of which MidPen is a limited partner holding 33% of partnership interest.
14
Presentation of Financial Statement Disclosures – Net Assets
Discussion
What financial statement disclosure format is most useful to lenders and other financial statement readers
for disclosing information about a not-for-profit organization’s temporarily or permanently restricted net
assets? What disclosure is most useful regarding unrestricted board-designated net assets?
For additional guidance related to presentation of net assets, see Financial Reporting Best Practices Paper
Topic 7, Net Assets Section of the Statement of Financial Position, available on the Strength Matters
website.
GAAP Requirements
A not-for-profit organization’s audited financial statement should disclose the combined or consolidated
organizations temporarily and permanently restricted net asset balances, and the nature and amounts of
the different types of restrictions. Internal designations of unrestricted net assets by the organization’s
board of directors should also be disclosed.
GAAP requires organizations with endowment funds to provide additional disclosures pertaining to the
Uniform Prudent Management of Institutional Funds Act (UPMIFA), such as the portion of the
endowment fund that is not classified as permanently restricted (net income and appreciation are now
classified as temporarily restricted net assets), spending and investment policies.
Analysis/Input
Unrestricted Designated Net Assets
Designations are voluntary board-approved segregations of unrestricted net assets for specific purposes.
Because designations are voluntary and may be reversed by the governing board at any time, designated
portions of net assets are not considered restricted. Disclosure of designations of unrestricted net assets is
required. The designated portion of unrestricted net assets is generally displayed on a separate line in the
net asset section of the organization’s balance sheet, with a footnote disclosure that explains the nature of
the designation(s). Other limits, such as limits resulting from loan covenants, are also required to be
disclosed, which are generally described in a footnote.
Temporarily Restricted Net Assets
Inconsistencies are noted in organizations’ disclosure of the nature of restrictions. In some cases, the
names of donors are used instead of the nature of the restriction. A best practice is to group restricted
contributions for similar purposes onto one line, although identifying the major donor names may also be
useful. Time restrictions should be grouped together by length of the restricted period. It is recommended
that a table format is used, summarizing the beginning-of-year balance, restricted contributions received,
releases from restrictions and the end-of-year balance.
1
Presentation of Financial Statement Disclosures – Net Assets
Lenders are interested in the amount of an organization’s operating cash account that is included in
temporarily restricted net assets. This may not be evident from the balance sheet since GAAP only
requires restricted cash to be separated from operating cash if it will be used for long-term purposes, such
as purchasing a fixed asset or if it will be held longer than one year. A suggested supplementary cash
composition table can be found in Strength Matters Financial Reporting Best Practice Paper 15, Cash
Presentation. An alternative is to include a disclosure of the amount of temporarily restricted net assets
held in either the operating or the restricted cash account.
Permanently Restricted Net Assets
Most organizations’ disclosures of permanently restricted net assets are in paragraph form, since there are
usually a small number of such restrictions. Contributions with restrictions on use that last into perpetuity
are generally either endowment funds or land.
While some donors require disclosure of the balance sheet accounts that comprise the permanently
restricted net assets, this level of detail is not required by GAAP. The nature of the underlying asset is
usually described in the disclosure, along with the terms of the permanent restriction.
A donor may modify their intent, which could result in the release of a permanent restriction.
Sample Financial Statement Disclosures
NOTE __ – BOARD-DESIGNATED UNRESTRICTED NET ASSETS
The Board of Directors of ABC, Inc. designated $500,000 as a general operating reserve.
NOTE __ – TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets consist of the following:
Capital Improvements:
HUD Capital Advances (1)
ARRA Recoverable Grants (2)
Resident Services Programs:
XYZ Foundation
Other Program Support
Multi-year pledges and grants: (3)
EFG Foundation Grant
Individuals and Others
Total
$
12/31/11
Contributions
8,199,046
21,466,540
$
-
251,971
-
105,796
9,600
-
15,000
5,000
$ 29,917,557
$
135,396
Releases
$
12/31/12
(312,312) $ 7,886,734
(1,589,321)
19,877,219
(126,224)
-
231,543
9,600
15,000
5,000
$ (2,027,857) $ 28,025,096
2
Presentation of Financial Statement Disclosures – Net Assets
Capital Improvements:
HUD Capital Advances (1)
ARRA Recoverable Grants (2)
Resident Services Programs:
XYZ Foundation
$
Total
12/31/10
Contributions
8,511,358
11,080,490
$
11,177,014
Releases
$
(312,312)
(790,964)
12/31/11
$
8,199,046
21,466,540
168,818
149,453
(66,300)
251,971
$ 19,760,666
$ 11,326,467
$ (1,169,576)
$ 29,917,557
(1)
HUD Capital Advances – HUD has granted capital advances to certain multi-family properties under the
Section 202 or Section 811 programs. These advances are secured by deeds of trust with assignment of rents.
The capital advances bear no interest and shall be repayable if the properties do not remain available for very
low-income housing through specific terms or the notes become due and payable by reason of default under the
regulatory agreements. In the event of noncompliance with affordability provisions as described in the notes,
interest and principal are payable on demand. Otherwise, the capital advances will not otherwise have to be
repaid. Since it is expected that the capital advances will be forgiven, they are released over 40 years from
temporarily restricted net assets to unrestricted net assets.
(2)
ARRA Recoverable Grants – The federal recoverable grants were awarded to qualifying multi-family
properties. These recoverable grants shall be repayable if the properties do not remain available for very lowincome housing through specific terms or the recoverable grants become due and payable by reason of default
under the recoverable grant agreements. In the event of noncompliance as described in the recoverable grant
agreements, the recoverable grants will be payable on demand. Otherwise, they will not need to be repaid.
Since the properties are expected to comply with the recoverable grant provisions, the recoverable grants will be
released over 15 years from temporarily restricted net assets to unrestricted net assets.
(3)
Multi-year pledges are for unrestricted purposes for use in the following years:
2013
2014
$12,500
7,500
NOTE __ – PERMANENTLY RESTRICTED NET ASSETS
Permanently restricted net assets as of December 31, 2012 and 2011 consists of land valued at $1,660,000
when it was donated to ABC in 2009 with the requirement that it be used for very low-income housing in
perpetuity.
3
Presentation of Financial Statement Disclosures – Net Assets
Acknowledgements
STRENGTH MATTERS® gratefully acknowledges the work of S. Scott Seamands from Lindquist, von
Husen & Joyce LLP and the following individuals that contributed to this paper:
Denise DeMaio, Consultant, F. B. Heron Foundation, New York, NY
Art Fatum, Chief Financial Officer, MidPen Housing Corporation, Foster City, CA
Caroline Horton, Chief Financial Officer, Aeon, Minneapolis, MN
David Keene, Director of Finance and Operations, The Neighborhood Developers, Chelsea, MA
John Maneval, Director of Lending, NeighborWorks Capital Corporation, Silver Spring, MD
Timothy Martin, Chief Credit Officer, Enterprise Community Loan Fund, Columbia, MD
Mary White Vasys, Principal, Vasys Consulting Ltd, Chicago, IL
Last Updated: November 2013
DISCLAIMER
This paper contains certain recommended financial statement presentation best practices for nonprofit
affordable housing organizations that develop and own affordable housing in the United States. This paper
was developed by a working group comprised of chief financial officers from certain leading nonprofit
®
affordable housing organizations active in the networks of NeighborWorks America, Housing Partnership
Network and Stewards of Affordable Housing for the Future, as well as representatives of socially
responsible lenders, working in conjunction with a representative from Lindquist, von Husen & Joyce LLP,
an independent public accounting firm. This publication should not be construed as accounting or other
advice on any specific facts or circumstances. The contents of this paper are intended for general
informational purposes only, and you are urged to consult your accountants and other professional advisors
concerning your specific situation and any financial reporting or accounting questions you may have.
For further information, contact [email protected].
4
Original version from 2012
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
The derivative financial instruments held by BRIDGE and affiliates are stated at fair value using a quoted price
provided by the counter party banks. Counter party banks’ valuation uses various approaches which involve using
quoted prices for economically equivalent instruments, or valuation methodologies, assumptions and inputs, which in
the case of projected future cash flows, discount such cash flows to a single net present value amount. The valuation is
either based on Level 1 inputs directly, or based on the application of valuation models, which may be proprietary, that
take into account Level 1, Level 2 and Level 3 inputs. Level 1 and Level 2 inputs are market-based utilizing observable
market data including swap rates, basis rates and currency exchange rate from sources believed to be reliable but which
counter party banks have not independently verified. Level 3 inputs may be used if counter party banks determine that
Level 1 and Level 2 inputs are unavailable, or in illiquid or dislocated markets, unreliable. In general, those inputs are
used to construct interest rate, currency exchange rate, commodity price or other curves that are placed into proprietary
valuation models to compute for fair value.
Management reviews reasonableness of counter party banks’ valuations by calculating the net present value of
projected future cash flows using the US Daily Interest Rate Data for interest rate swaps as of the valuation date.
Significant assumptions follow:
Term of swap arrangements
Average projected variable rate through 2026
Discount rate
14 – 38 years
1.14% to 2.54%
1%
NOTE 16 – TEMPORARILY RESTRICTED NET ASSETS AND NET ASSETS RELEASED FROM
RESTRICTIONS
The major programs for which BRIDGE has received restricted contributions are as follows:
HUD Capital Advances – HUD has granted capital advances to certain multi-family properties under the
Multifamily Property Disposition – Upfront Grant or the Section 202 program. These advances are secured by
deeds of trust with assignment of rents. The capital advances bear no interest and shall be repayable if the
properties do not remain available for very low-income housing through a specific term or the notes become
due and payable by reason of default under the notes, mortgages or regulatory agreements. In the event of
noncompliance with affordability provisions as described in the notes, interest and principal will be payable on
demand. The capital advances will not otherwise have to be repaid. Since the capital advances are expected to
be forgiven, they are released over 40 years from temporary restricted net assets to unrestricted net assets.
Development Restricted Proceeds – Various companies and agencies have awarded grants to certain properties
for the development of affordable housing. These grants are not secured, bear no interest and are not repayable
unless the properties do not remain available as low-income housing. These grants are released as the restricted
use is met either upon home sales or over the useful life of the property.
Stein Educational Assistance Program – Provides scholarships or awards to qualified residents in BRIDGE
developments.
Homeownership Initiative – Increases the number of new affordable homes for sale and ensures that
low-income, moderate-income and minority families have the proper level of support through services and
financial backing to purchase and sustain a new home.
Building and Technology Initiative – Enabled BRIDGE to move to new, larger headquarters in 2004 and is
bringing greater operational efficiency and improved information technology systems to BRIDGE and its
properties throughout the State of California.
30
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
Neighborhood Partnership Initiative (NPI) – Increases affordable housing and economic development in
low-income urban communities. NPI properties are ambitious, mixed-income, multi-use developments that
combine many elements of community revitalization. In addition to housing, NPI efforts also focus on creating
jobs, retail activity, services, and neighborhood facilities.
Temporarily restricted net assets were available for the following purposes:
2012
2011
HUD Capital Advances
Development Restricted Proceeds
Stein Educational Assistance Program
Neighborhood Partnership Initiative
Other
$ 32,878,000
11,594,000
2,056,000
387,000
224,000
$ 34,086,000
12,022,000
1,856,000
259,000
273,000
Total
$ 47,139,000
$ 48,496,000
Net assets were released from restrictions for the years ended December 31, 2012 and 2011 as follows:
2012
2011
HUD Capital Advances
Development Restricted Proceeds
Stein Educational Assistance Program
Homeownerships Initiative
Neighborhood Partnership Initiative
Building and Technology Initiative
Other
$
1,209,000
567,000
111,000
70,000
506,000
211,000
$
1,209,000
14,971,000
237,000
248,000
183,000
44,000
206,000
Total
$
2,674,000
$ 17,098,000
NOTE 17 – PERMANENTLY RESTRICTED NET ASSETS
Permanently restricted net assets, as of December 31, 2012 and 2011, consist of land required to be used for
low-income housing of $1,660,000.
NOTE 18 – EMPLOYEE BENEFIT PLANS
BRIDGE has employee 403(b) plans, established effective July 1, 1998, covering eligible employees. BRIDGE
contributions to the plan consist of a percentage based on eligible employees’ compensation plus a discretionary amount
to match voluntary employee contributions. Contributions and plan costs totaled approximately $806,000 and $867,000
for 2012 and 2011, respectively.
A taxable not-for-profit affiliate of BRIDGE has an employee 401(k) plan, established effective January 1,
2003, covering eligible employees. The affiliate’s contributions to the plan consist of a percentage based on eligible
employees’ compensation plus a discretionary amount to match voluntary employee contributions. Contributions and
plan costs totaled approximately $-0- and $6,000 for 2012 and 2011, respectively. The plan was terminated as of May 8,
2012.
BRIDGE has an employee 457(b) plan, established effective July 1, 2004, covering eligible employees.
BRIDGE’s contributions are discretionary. Contributions and plan costs totaled approximately $49,000 and $60,000 for
2012 and 2011, respectively.
31
New version from 2013
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
The following table for the years ended December 31, 2013 and 2012 sets forth the detailed changes in fair
value for BRIDGE and affiliates’ Level 3 derivative financial instrument:
2013
2012
Beginning balance
Unrealized gain on derivative financial instrument
$ (2,373,000)
800,000
$ (2,398,000)
25,000
Ending balance
$ (1,573,000)
$ (2,373,000)
The derivative financial instruments held by BRIDGE and affiliates are stated at fair value using a quoted price
provided by the counter party banks. Counter party banks’ valuation uses various approaches which involve using
quoted prices for economically equivalent instruments, or valuation methodologies, assumptions and inputs, which in
the case of projected future cash flows, discount such cash flows to a single net present value amount. The valuation is
either based on Level 1 inputs directly, or based on the application of valuation models, which may be proprietary, that
take into account Level 1, Level 2 and Level 3 inputs. Level 1 and Level 2 inputs are market-based utilizing observable
market data including swap rates, basis rates and currency exchange rate from sources believed to be reliable but which
counter party banks have not independently verified. Level 3 inputs may be used if counter party banks determine that
Level 1 and Level 2 inputs are unavailable, or in illiquid or dislocated markets, unreliable. In general, those inputs are
used to construct interest rate, currency exchange rate, commodity price or other curves that are placed into proprietary
valuation models to compute for fair value.
Management reviews reasonableness of counter party banks’ valuations by calculating the net present value of
projected future cash flows using the US Daily Interest Rate Data for interest rate swaps as of the valuation date.
Significant assumptions follow:
Term of swap arrangements
Average projected variable rate through 2026
Discount rate
13 to 38 years
1.14% to 3.23%
1%
NOTE 17 – TEMPORARILY RESTRICTED NET ASSETS AND NET ASSETS RELEASED FROM
RESTRICTIONS
The major programs for which BRIDGE has received restricted contributions are as follows:
HUD Capital Advances – HUD has granted capital advances to certain multi-family properties under the
Multifamily Property Disposition – Upfront Grant or the Section 202 program. These advances are secured by
deeds of trust with assignment of rents. The capital advances bear no interest and shall be repayable if the
properties do not remain available for very low-income housing through a specific term or the notes become
due and payable by reason of default under the notes, mortgages or regulatory agreements. In the event of
noncompliance with affordability provisions as described in the notes, interest and principal will be payable on
demand. The capital advances will not otherwise have to be repaid. Since the capital advances are expected to
be forgiven, they are released over 40 years from temporary restricted net assets to unrestricted net assets.
Development Restricted Proceeds – Various companies and agencies have awarded grants to certain properties
for the development of affordable housing. These grants are not secured, bear no interest and are not repayable
unless the properties do not remain available as low-income housing. These grants are released as the restricted
use is met either upon home sales or over the useful life of the property.
Stein Educational Assistance Program – Provides scholarships or awards to qualified residents in BRIDGE
developments.
33
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
Homeownership Initiative – Increases the number of new affordable homes for sale and ensures that
low-income, moderate-income and minority families have the proper level of support through services and
financial backing to purchase and sustain a new home.
Neighborhood Partnership Initiative (NPI) – Increases affordable housing and economic development in
low-income urban communities. NPI properties are ambitious, mixed-income, multi-use developments that
combine many elements of community revitalization. In addition to housing, NPI efforts also focus on creating
jobs, retail activity, services, and neighborhood facilities.
Resident Service Program – In 2013, BRIDGE celebrated its 30th anniversary and sponsored several events.
The proceeds net of fundraising related expenses are earmarked for future resident service programs.
Temporarily restricted net assets were available for the following purposes:
December 31,
2012
Contributions/
Interest Income/
Unrealized Gain
(Loss)
Releases
December 31,
2013
HUD Capital Advances
Development Restricted Proceeds
Stein Educational Assistance Program
Neighborhood Partnership Initiative
Resident Service Program
Other
$ 32,878,000
11,552,000
2,056,000
387,000
266,000
$
149,000
903,000
1,003,000
690,000
$ (1,209,000)
(308,000)
(180,000)
(835,000)
(569,000)
(389,000)
$ 31,669,000
11,244,000
2,025,000
455,000
434,000
567,000
Total
$ 47,139,000
$
2,745,000
$ (3,490,000)
$ 46,394,000
Releases
December 31,
2012
$ (1,209,000)
(567,000)
(70,000)
(111,000)
(506,000)
(211,000)
$ 32,877,000
11,594,000
2,056,000
387,000
225,000
$
$ 47,139,000
December 31,
2011
Contributions/
Interest Income/
Unrealized Gain
(Loss)
HUD Capital Advances
Development Restricted Proceeds
Homeownerships Initiative
Stein Educational Assistance Program
Neighborhood Partnership Initiative
Other
$ 34,086,000
12,022,000
1,856,000
259,000
273,000
$
139,000
70,000
311,000
634,000
163,000
Total
$ 48,496,000
$
1,317,000
2,674,000
NOTE 18 – PERMANENTLY RESTRICTED NET ASSETS
Permanently restricted net assets, as of December 31, 2013 and 2012, consist of land required to be used for
low-income housing of $1,660,000.
34
Presentation of Financial Statement Disclosures – Notes Payable
Discussion
What financial statement disclosure format is the most useful to lenders and other financial statement
readers for disclosing information about a not-for-profit affordable housing developer’s consolidated
notes payable?
GAAP Requirements
A not-for-profit organization’s financial statement must disclose the following information about notes
payable:
•
•
•
•
•
•
Significant categories are identified, such as mortgages, related-party notes, etc.
Interest rates, maturity dates, pledged assets and restrictive covenants
Effective rate of interest for discounted notes for unreasonable stated interest rates
Amount of any capitalized interest incurred during the year
Principal payments due within each of the next five years
Description and terms of short-term debt expected to be refinanced, if excluded from current
liabilities, if the organization identifies current/noncurrent liabilities, which is recommended but
not required for not-for-profit organizations
Analysis/Input
While the financial statements of individual affordable housing properties include disclosure of each note
payable, a consolidated financial statement typically groups similar loans and provides a summary
disclosure that meets the GAAP requirements for each category of long-term debt.
Lenders obtain the consolidated financial statements in order to assess the financial strength of the parent
company, so more details for parent company debt is very helpful. Lenders are particularly interested in
seeing more detail on unsecured parent company loans. The details could either be provided through a
separate section of the Note Payable disclosure or in a supplementary schedule of parent-only debt.
Lenders are also interested in guarantees provided by the parent company, even if the debt is included in
the consolidated notes payable listing, because the obligations of the parent company are considered when
evaluating the parent company’s financial strength. Although GAAP doesn’t require such disclosure since
obligations to affiliates would be eliminated in consolidation, it is considered a best practice to disclose
this information.
Categorizing Long Term Debt
Categories for grouping the long-term debt of consolidated affiliates vary in practice. Some organizations
group the loans into categories such as permanent loans, construction loans, bonds, city, county, state and
federal loans and disclose repayment terms for each grouping. Other organizations view the distinctions
between types of governmental debt as less significant than the terms of repayment. A best practice is to
group loans into categories such as mortgage loans due in monthly installments, permanent loans payable
annually from net cash flow, permanent loans due at maturity, and permanent loans with interest-only
1
Presentation of Financial Statement Disclosures – Notes Payable
payments due annually from net cash flow. Organizations may identify the type of lender (e.g. state, local
government, commercial) if this adds value to the reader.
Principal Payment Obligations
The table of principal payment obligations for each of the next five years is also more useful if it discloses
the maturities for each category of loans. Loans with repayment required only to the extent of net cash
flow should not appear in the five-year table until their maturity date, since net cash flow is a contingency
that cannot be reasonably estimated.
Predevelopment or Construction Loans
Predevelopment or construction loans will generally be refinanced with permanent debt or repaid from
investor capital contributions. GAAP allows such loans to be treated as noncurrent when a written
commitment from a refinance lender or an investor exists. Due to the uncertainty of the timing of the
permanent loan conversion, it is also difficult to reasonably estimate the principal portion of these loans
that will be repaid during each of the next five years. When no amount of estimated principal payments
are included in the 5-year table of maturities for this category of loans, management has determined that
such maturities are immaterial.
Stated Interest Rates
With respect to the GAAP requirement to convert an unreasonable stated interest rate to an effective rate,
GAAP doesn’t define what an unreasonable rate of interest is. Affordable housing developers generally
do not discount their long-term debt, even when the debt bears no interest, since programs that subsidize
affordable housing impose restrictions on tenant eligibility. The market interest rate for such loans is
often significantly lower than commercial rates and loans from governmental agencies are specifically
exempted from the discount requirements under GAAP for this reason.
Forgivable Debt
Forgivable debt should also be disclosed. If there is only a remote likelihood that the debt will not be
forgiven, not-for-profit organizations may have recognized such loans as contributions. A contingent
liability disclosure is appropriate in such cases identifying the principal amount outstanding and
summarizing the terms for forgiveness. Alternatively, if the forgiveness is not assured, the principal
amount outstanding, annual debt service, interest rate, maturity date and security are disclosed either in
the notes payable footnote, ideally as a separate category of notes payable, or in a separate footnote
devoted exclusively to forgivable loans. A table format is recommended to disclose the terms of multiple
forgivable loans.
Recourse Debt
Information about pledged assets, such as whether the loans are secured or unsecured, is required by
GAAP. Generally secured debt is nonrecourse, but identifying the recourse debt is also helpful.
Lines of Credit
Available lines of credit should also be disclosed, including the amount available, amount drawn, accrued
interest payable, interest rate, maturity date and security. A table format is recommended to disclose the
2
Presentation of Financial Statement Disclosures – Notes Payable
terms of multiple lines of credit either in the note payable disclosure or in a separate note devoted to lines
of credit.
Covenants
Covenants are often disclosed in the ‘Commitments and Contingencies’ note disclosure and material
items such as minimum cash balances and certain ratios that must be maintained are listed there along
with management’s assertion of compliance.
Four sample disclosures are presented below:
• Sample consolidated notes payable disclosure for a large not-for-profit affordable housing developer
and its affiliates
• Sample parent company supplementary schedule of notes payable
• Sample notes payable disclosure for a smaller entity
• Sample line of credit disclosure for multiple credit lines
3
Presentation of Financial Statement Disclosures – Notes Payable
Sample – Real Estate Properties are Owned by Parent Company and by Affiliates
NOTE __ - NOTES PAYABLE
Notes payable are generally nonrecourse and secured by the respective properties and bear simple interest
rates unless otherwise noted:
2012
Interest
Payable
Parent-Company Loans:
Permanent secured full-recourse conventional
loan for office building, bearing compounded
interest at 6.5%, with principal and interest
due monthly, to be repaid in full in June 2022.
Interest expense was $10,401 and $4,112 in
2012 and 2011, respectively.
Deferred payment loans from local agencies,
bearing interest from 0% to 6%, generally
payable annually from property net cash flow,
if any, to be repaid in full at various dates
through 2072. Interest expense was $348,945
and $338,600 in 2012 and 2011, respectively.
Deferred payment loans from local agencies,
bearing interest from 5.67% to 6%, with
principal and interest payments deferred until
maturity at various dates through 2049. Interest
expense was $123,588 and $123,589 in 2012
and 2011, respectively.
Deferred payment loans from state agencies,
bearing interest at 3%, with interest payable
annually from property net cash flow, if any,
to be repaid in full at various dates through
2044. Interest expense was $18,903 annually
for 2012 and 2011.
Deferred payment loan from federal
Affordable Housing Program bearing no
interest, with entire principal to be repaid in
full by 2027.
Working capital unsecured full-recourse loans
from a bank, bearing 2% interest, generally
with interest due quarterly, to be repaid in full
in various dates through 2016. Interest expense
was $25,074 and $26,000 in 2012 and 2011,
respectively.
Subtotal – Parent-Company Loans
$
2011
Interest
Payable
Principal
186
$
227,177
$
Principal
297
$
58,276
6,493,021
19,731,751
6,144,075
19,770,429
1,828,265
2,169,813
1,704,677
2,169,813
328,342
630,100
309,439
630,100
-
676,000
-
572,673
8,649,814
1,120,826
24,555,667
8,158,488
1,300,000
24,501,291
4
Presentation of Financial Statement Disclosures – Notes Payable
2012
Interest
Payable
Affiliates’ Loans:
Permanent conventional loans, bearing compound
interest from 5.95% to 6.9%, generally with
principal and interest due monthly, to be repaid in
full at various dates through 2036. Interest
expense was $750,785 and $753,656 in 2012 and
2011, respectively.
Predevelopment / construction loans, bearing
interest from 3% to 7%, generally with interestonly payments due monthly, to be repaid in full or
partially converted to permanent loans through
2070. Interest capitalized was $870,684 and
$854,228 in and , respectively. Interest expense
was $-0- and $234,524 in 2012 and 2011,
respectively.
Bond loans, bearing variable interest rates,
generally with principal and interest paid monthly,
to be repaid in full at various dates through 2036.
Principal payments are generally accumulated in a
principal fund held by a trustee. Interest expense
was $13,305 and $180,431 in 2012 and 2011,
respectively. See Note X regarding fixed-rate
swap arrangements.
Local agency loans, bearing interest from 0% to
10%, generally payable annually from property
net cash flow, if any, to be repaid in full at various
dates through 2065. Interest capitalized was
$539,880 and $488,815 in 2012 and 2011,
respectively. Interest expense was $3,122,578 and
$3,282,260 in 2012 and 2011, respectively.
State agency loans, bearing interest from 0% to
7.4%, generally payable annually from property
net cash flow, if any, to be repaid in full at various
dates through 2066. Interest expense was
$936,919 and $784,991 in 2012 and 2011,
respectively.
Federal agency loans, bearing interest from 0% to
3%, generally with principal and interest deferred
through 2065. Interest expense was $31,850 and
$31,849 in 2012 and 2011, respectively.
Subtotal – Affiliates Loans
2011
Principal
Interest
Payable
Principal
50,766
10,452,944
32,121
11,092,312
484,912
17,868,803
350,051
15,798,867
13,770
7,774,498
14,334
8,175,000
30,237,864
149,053,343
27,049,205
148,688,645
3,718,146
29,050,553
3,111,604
27,757,907
321,941
34,827,399
61,466,419
275,666,560
290,120
30,847,435
50,868,810
262,381,541
5
Presentation of Financial Statement Disclosures – Notes Payable
2012
Interest
Principal
Payable
43,477,213
300,222,227
Total loans
Less: current portion
(367,442)
Long-term portion
$ 43,109,771
2011
Interest
Principal
Payable
39,005,923
286,882,832
(2,298,913)
$ 297,923,314
(473,114)
(2,880,939)
$ 38,532,809
$ 284,001,893
Principal payments toward notes payable for the next five years are subject to changes in net cash flow,
which is a contingency that cannot be reasonably estimated. Minimum required payments are estimated as follows:
2013
Permanent
Construction (1)
Bonds
Local
State
Federal
Parent-only
2014
2015
2016
2017
(In thousands with $000 omitted)
Thereafter
$
1,923
255
121
$
1,926
275
131
$
2,026
285
156
$
1,304
295
53
51
1,275
$
1,500
305
12,000
1,000
466
192
$
1,774
17,869
6,359
137,000
28,000
61,000
22,681
$
2,299
$
2,332
$
2,467
$
2,978
$
15,463
$ 274,683
Total
$
10,453
17,869
7,774
149,053
29,051
61,466
24,556
$ 300,222
(1) Principal payments of construction loans for the next five years cannot be reasonably estimated since the
loans will be extended or repaid using funds already committed by permanent lenders and limited partners.
Principal payments due under refinanced construction loans within the next five years are not expected to
be significant. $200,000 of the construction loans payable will be repaid with limited partner capital
contributions.
6
Presentation of Financial Statement Disclosures – Notes Payable
Sample – Parent Company Supplementary Schedule of Notes Payable
2012
Interest
Payable
West Coast Bank, unsecured, due April 12,
2016, with 2% interest payable quarterly.
$
2011
Interest
Payable
Principal
-
$
500,000
$
Principal
-
$
500,000
West Coast Bank, unsecured, due April 30,
2014, with zero interest in the first five years,
and 3% interest payable quarterly beginning in
2004.
-
500,000
-
500,000
National Foundation, unsecured, due July 16,
2022, with 1% interest payable quarterly. Loan
proceeds are designated to be used in
homeownership developments.
-
120,826
-
300,000
Total
-
1,120,826
-
1,300,000
Less: current portion
-
-
-
-
Non-current portion
$
-
$
1,120,826
$
-
$
1,300,000
Sample – Notes Payable Disclosure for Smaller Entity
NOTE ___ - NOTES PAYABLE
Notes payable are secured by real estate unless otherwise noted and are summarized as follows as of June
30, 20X1:
x.x% note payable to A Bank, principal and interest payable $x,xxx per month,
with a balloon payment due December 20X6
$
x.x% note payable to B Bank, principal and interest payable $x,xxx per month,
with final payment due August 20X5.
xxx,xxx
xxx,xxx
Prime interest rate (x.xx% over prime) line of credit to B Bank, secured
by accounts receivable, authorized limit of $xx,xxx, interest (currently xx.xx%) payable
monthly, principal due on demand.
Total
xxx,xxx
Less portion considered current
Total long term liabilities
x,xxx
xx,xxx
$
xxx,xxx
7
Presentation of Financial Statement Disclosures – Notes Payable
Maturities of long-term debt for the next five years are as follows:
Year Ending
June 30
20X2
20X3
20X4
20X5
20X6
Amount
$
xx,xxx
xx,xxx
xxx,xxx
xx,xxx
x,xxx
Interest paid was $xx,xxx during the year ended June 30, 20X1.
Sample Line of Credit Disclosure
NOTE __ - LINES OF CREDIT
In 2001, ABC Developer entered into an unsecured line of credit with West Coast Bank for $2.0 million. The line of
credit bears interest at LIBOR plus 3% (4% floor) with an expiration date of April 18, 2014. At December 31, 2012
and 2011, no amounts were drawn on the line of credit. At 12/31/12, a letter of credit of $1 million has been applied
towards the line of credit’s maximum borrowing limit.”
In 2012, ABC Developer entered into an unsecured line of credit with Midwest National Bank for $3.5 million. The
line of credit bears interest at LIBOR plus 1.8% with an expiration date of October 1, 2014. At December 31, 2012
and 2011, no amounts were drawn on the line of credit.
8
Presentation of Financial Statement Disclosures – Notes Payable
Acknowledgements
STRENGTH MATTERS® gratefully acknowledges the work of S. Scott Seamands from Lindquist, von
Husen & Joyce LLP and the following individuals that contributed to this paper:
Denise DeMaio, Consultant, F. B. Heron Foundation, New York, NY
Art Fatum, Chief Financial Officer, MidPen Housing Corporation, Foster City, CA
Caroline Horton, Chief Financial Officer, Aeon, Minneapolis, MN
David Keene, Director of Finance and Operations, The Neighborhood Developers, Chelsea, MA
John Maneval, Director of Lending, NeighborWorks Capital Corporation, Silver Spring, MD
Timothy Martin, Chief Credit Officer, Enterprise Community Loan Fund, Columbia, MD
Mary White Vasys, Principal, Vasys Consulting Ltd, Chicago, IL
Last Updated: September 2013
DISCLAIMER
This paper contains certain recommended financial statement presentation best practices for nonprofit
affordable housing organizations that develop and own affordable housing in the United States. This paper
was developed by a working group comprised of chief financial officers from certain leading nonprofit
®
affordable housing organizations active in the networks of NeighborWorks America, Housing Partnership
Network and Stewards of Affordable Housing for the Future, as well as representatives of socially
responsible lenders, working in conjunction with a representative from Lindquist, von Husen & Joyce LLP,
an independent public accounting firm. This publication should not be construed as accounting or other
advice on any specific facts or circumstances. The contents of this paper are intended for general
informational purposes only, and you are urged to consult your accountants and other professional advisors
concerning your specific situation and any financial reporting or accounting questions you may have.
For further information, contact [email protected].
9
Original version from 2012
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 12 – NOTES PAYABLE
Notes payable are generally secured by the respective properties and consist of the following:
2012
Interest
Payable
Permanent loans, bearing interest from 0% to
9%, generally with principal and interest
due monthly, to be repaid in full through
2049. Interest expense was $10,799,000
and $10,849,000 for 2012 and 2011,
respectively.
Principal
958,000
$ 191,501,000
Construction loans, bearing variable interest,
generally with interest only payments due
monthly, to be repaid in full or partially
converted to permanent loans maturing
through 2071. Interest expense net of
capitalized amount was $950,000 and
$1,666,000 for 2012 and 2011,
respectively.
4,313,000
Local loans, bearing interest from 0% to 6%,
generally payable out of excess cash
annually in arrears, to be repaid in full
through 2066. Interest expense was
$4,827,000 and $4,360,000 for 2012 and
2011, respectively.
$ 187,771,000
91,163,000
3,420,000
105,235,000
33,026,000
235,613,000
28,374,000
199,186,000
Bonds, bearing interest from 2% to 14%,
generally with principal and interest paid
monthly, to be repaid in full through 2063.
Principal payments are generally
accumulated in a principal fund held by a
trustee. Interest expense was $2,838,000
and $2,927,000 for 2012 and 2011,
respectively.
1,226,000
56,965,000
1,140,000
58,036,000
County loans, bearing interest from 1% to
6.5%, generally with principal and interest
due annually out of excess cash in arrears,
to be repaid in full through 2075. Interest
expense was $1,641,000 and $1,778,000
for 2012 and 2011, respectively.
9,075,000
48,123,000
9,606,000
53,922,000
14,535,000
101,433,000
12,411,000
104,102,000
27
$
Principal
1,023,000
State loans, bearing interest from 0% to 3%,
generally with principal and interest due
annually out of excess cash in arrears, to
be repaid in full through 2066. Interest
expense was $2,833,000 and $2,340,000
for 2012 and 2011, respectively.
$
2011
Interest
Payable
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
2012
Interest
Payable
Federal loans, bearing no interest, with
principal payments generally deferred
through 2067, at which time outstanding
principal may be forgiven at the lenders’
discretion.
2011
Interest
Payable
Principal
Principal
-
22,049,000
-
12,263,000
Ground leases, bearing interest from 0% to
7.5%, generally payable out of excess cash
annually in arrears, to be repaid in full
through 2080. Interest expense was
$111,000 and $106,000 for 2012 and
2011, respectively.
240,000
4,750,000
188,000
4,453,000
Other loans, bearing interest from 0% to 8%,
generally with principal and interest due
monthly, to be repaid in full through 2059.
Interest expense was $102,000 and
$111,000 for 2012 and 2011, respectively.
398,000
5,058,000
366,000
4,443,000
63,771,000
756,655,000
56,528,000
729,411,000
4,309,000
53,741,000
4,035,000
40,875,000
$ 59,462,000
$ 702,914,000
$ 52,493,000
$ 688,536,000
Total
Less: current portion
Non-current portion
Total interest expense was $24,101,000 and $24,137,000 for 2012 and 2011, respectively.
Principal payments toward notes payable for the next five years are subject to changes in net cash flow which
is a contingency that cannot be reasonably estimated. Minimum required payments are estimated as follows:
Year ended December 31,
2013
2014
2015
2016
2017
Thereafter
Principal
Payments
$ 53,741,000
7,232,000
8,808,000
7,643,000
8,044,000
671,187,000
$ 756,655,000
NOTE 13 – LINES OF CREDIT
In 2001, BRIDGE entered into an unsecured line of credit with Wells Fargo Bank for $2.0 million. The line of
credit bears interest at LIBOR plus 3% (4% floor) with an modified expiration date of April 18, 2014. At December 31,
2012 and 2011, no amounts were drawn on the line of credit.
In 2012, BRIDGE entered into an unsecured line of credit with US Bank for $3.5 million. The line of credit
bears interest at LIBOR plus 1.8% with an expiration date of October 1, 2014. At December 31, 2012 and 2011, no
amounts were drawn on the line of credit.
28
New version from 2013
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
Summarized financial information for unconsolidated entities accounted for under the equity method, as of
December 31, 2013 and 2012, consist of the following:
Total assets
Total liabilities
Partners’ equity (1)
Income
Expenses
Results of operations
(1)
2013
2012
$ 63,214,000
70,175,000
(6,961,000)
$ 61,054,000
70,660,000
(9,606,000)
16,794,000
11,262,000
5,532,000
18,134,000
11,527,000
6,607,000
BRIDGE’s share of the equity, as of December 31, 2013 and 2012, was $(1,275,000) and $(1,143,000),
respectively.
The following financial position and activity summarizes the entities that are not included in the combined
financial statements based on BRIDGE’s board participation:
Total assets
Total liabilities
Net assets
Support and revenue
Expenses
Change in net assets
2013
2012
$ 54,392,000
53,041,000
1,351,000
$ 48,639,000
29,141,000
19,498,000
1,270,000
2,170,000
(901,000)
1,145,000
1,573,000
(428,000)
NOTE 13 – NOTES PAYABLE
Notes payable are generally secured by the respective properties and consist of the following:
2013
Interest
Payable
Notes Payable with Regular Payments
Permanent loans, bearing interest from 0% to
9%, generally with principal and interest
due monthly, to be repaid in full through
2049. Interest expense was $10,647,000
and $10,799,000 for 2013 and 2012,
respectively.
$
987,000
29
2012
Interest
Payable
Principal
$ 189,182,000
$
958,000
Principal
$ 191,501,000
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
Interest
Payable
2012
Principal
Interest
Payable
Principal
Construction loans, bearing variable interest,
generally with interest only payments due
monthly, to be repaid in full or partially
converted to permanent loans maturing
through 2071. Interest expense net of
capitalized amount was $651,000 and
$950,000 for 2013 and 2012, respectively.
2,785,000
148,970,000
4,313,000
91,163,000
Bonds, bearing interest from 2% to 14%,
generally with principal and interest paid
monthly, to be repaid in full through 2055.
Principal payments are generally
accumulated in a principal fund held by a
trustee. Interest expense was $2,749,000
and $2,838,000 for 2013 and 2012,
respectively.
1,339,000
55,598,000
1,226,000
56,965,000
Other loans, bearing interest from 0% to 8%,
generally with principal and interest due
monthly, to be repaid in full through 2059.
Interest expense was $102,000 for 2013
and 2012.
474,000
4,983,000
398,000
5,058,000
5,585,000
398,733,000
6,895,000
344,687,000
Notes Payable with Annual Payments from
Available Excess Cash
Local loans, bearing interest from 0% to 6%,
generally payable out of excess cash
annually in arrears, to be repaid in full
through 2068. Interest expense was
$5,001,000 and $4,827,000 for 2013 and
2012, respectively.
35,382,000
225,113,000
33,026,000
235,613,000
County loans, bearing interest from 0% to
6.5%, generally with principal and interest
due annually out of excess cash in arrears,
to be repaid in full through 2075. Interest
expense was $1,868,000 and $1,641,000
for 2013 and 2012, respectively.
11,534,000
55,996,000
9,075,000
48,123,000
State loans, bearing interest from 0% to 3%,
generally with principal and interest due
annually out of excess cash in arrears, to
be repaid in full through 2066. Interest
expense was $2,980,000 and $2,833,000
for 2013 and 2012, respectively.
19,487,000
106,373,000
14,535,000
101,433,000
30
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
Interest
Payable
Ground leases, bearing interest from 0% to
7.5%, generally payable out of excess cash
annually in arrears, to be repaid in full
through 2080. Interest expense was
$114,000 and $111,000 for 2013 and
2012, respectively.
Notes Payable with Repayments Due at
Maturity
Federal loans, bearing interest from 0% to 1%,
with principal payments generally deferred
through 2068, at which time outstanding
principal may be forgiven at the lenders’
discretion. Interest expense was $50,000
and $-0- for 2013 and 2012, respectively.
Total
Less: current portion
Non-current portion
2012
Principal
Interest
Payable
Principal
308,000
5,684,000
240,000
4,750,000
66,711,000
393,166,000
56,876,000
389,919,000
120,000
24,409,000
-
22,049,000
72,416,000
816,308,000
63,771,000
756,655,000
4,169,000
13,206,000
4,309,000
29,741,000
$ 68,247,000
$ 803,102,000
$ 59,462,000
$ 726,914,000
Total interest expense was $24,162,000 and $24,101,000 for 2013 and 2012, respectively.
Construction loans are generally refinanced with permanent debt or repaid from investor capital contributions.
BRIDGE and affiliates obtained written commitments from refinance lenders and/or investors, and represented the
balances as part of the long-term debt accordingly.
Principal payments toward notes payable for the next five years are subject to changes in net cash flow which
is a contingency that cannot be reasonably estimated. Minimum required payments are estimated as follows:
Year ended December 31,
Principal
Payments
2014
2015
2016
2017
2018
Thereafter
$ 13,206,000
8,275,000
10,134,000
8,989,000
11,220,000
764,484,000
Total
$ 816,308,000
31
BRIDGE HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE 14 – LINES OF CREDIT
In 2001, BRIDGE entered into an unsecured line of credit with Wells Fargo Bank for $2.0 million which was
increased to $5.0 million in 2012. The line of credit bears interest at LIBOR plus 3% (4% floor) with a modified
expiration date of April 18, 2014. Management is working with the bank to extend the line of credit. At December 31,
2013 and 2012, no amounts were drawn on the line of credit.
In 2012, BRIDGE entered into an unsecured line of credit with US Bank for $3.5 million. The line of credit
bears interest at LIBOR plus 1.8% with an expiration date of October 1, 2014. At December 31, 2013 and 2012, no
amounts were drawn on the line of credit.
NOTE 15 – DEFERRED REVENUES
Deferred revenues consist of the following:
2013
2012
Less: current portion
$ 45,107,000
23,178,000
5,769,000
74,054,000
1,164,000
$ 20,309,000
14,403,000
2,617,000
37,329,000
911,000
Non-current portion
$ 72,890,000
$ 36,418,000
Development proceeds
Development and restructuring fees – net
Other
In connection with the development of certain affordable housing projects, BRIDGE and affiliates received
financing proceeds to pay for related development costs. If all conditions specified in the financing agreements are met,
no payments are required. Until then, BRIDGE and affiliates recorded these proceeds as deferred revenue.
BRIDGE and affiliates accounted for the profit portion of the developer fees as deferred revenue. Starting the
year after the affordable housing project is placed in service, the profit portion of the developer fees is amortized over
40 years to offset the depreciation expense related to the fees originally capitalized as real property costs.
Residents of one of the leased properties purchased a leasehold condominium interest in the building by
entering into a membership agreement. Total initial membership sales proceeds amounted to $57,455,000 net of related
deferred project costs of $5,139,000 and were being deferred and amortized over the lease term. Effective January 1,
2012, the lease was modified in exchange for “fee simple interest” being transferred to the residents. BRIDGE and
affiliates recognized the remaining deferred revenue of $22,235,000 as income in 2012.
NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENT
BRIDGE and affiliates entered into various interest rate cap/swap master agreements to potentially minimize
the effect of changes in the variable interest rate of the loans.
32
Original version from 2012
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
(1)
Represents estimate of the year of completion, except for 2012 which represents completion of development.
(2)
Project currently on hold.
(3)
Project under pre-development; owned by Mid-Peninsula The Farm Inc. as of December 31, 2012.
(4)
Projects under pre-development; owned by MidPen as of December 31, 2012.
NOTE 7 – NOTES PAYABLE
Notes payable, secured by real property, are summarized as follows:
2012
Interest
Payable
Permanent loans, bearing interest from 1.00%
to 9.00%, generally with principal and
interest due monthly, to be repaid in full
through August 2042.
Principal
322,163
$ 70,247,707
Construction loans, with variable interest rates,
generally with interest only payments due
monthly, to be repaid in full or partially
converted to permanent loans through
December 2067. (1)
105,316
Bonds, bearing interest from 0.33% to 5.45%,
generally with principal and interest paid
monthly, to be repaid in full through April
2039. Principal payments are generally
accumulated in principal funds held by
trustees.
$ 56,071,181
54,496,744
207,430
62,716,546
158,482
42,046,602
161,124
43,045,863
25,097,669
174,425,151
23,877,130
164,363,734
County loans, bearing interest from 0.00% to
7.00%, generally with principal and
interest due annually out of excess cash in
arrears, to be repaid in full through August
2070.
7,394,247
54,149,664
6,350,310
41,032,394
State loans, bearing interest from 0.00% to
7.25%, generally with principal and
interest due annually out of excess cash in
arrears, to be repaid in full through
September 2067.
15,592,392
173,163,963
13,632,168
147,093,078
55,977
14,476,064
53,565
13,405,718
Federal loans, bearing interest from 0.00% to
9.25% generally with principal and interest
due monthly, to be repaid in full through
September 2067.
22
$
Principal
293,114
City loans, bearing interest from 0.00% to
7.00%, generally payable out of excess
cash annually in arrears, to be repaid in
full through February 2070.
$
2011
Interest
Payable
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2012 AND 2011
2012
Interest
Payable
Other loans, bearing interest from 0.00% to
4.50%, generally payable out of excess
cash annually in arrears, to be repaid in
full through June 2065.
2011
Interest
Payable
Principal
Principal
126,988
1,985,004
283,965
7,168,458
Total
48,853,234
584,990,899
44,858,806
534,896,972
Less: current portion
(2,501,652)
(2,028,063)
(14,680,586)
Non-current portion
(1)
$ 46,351,582
(8,776,831)
$ 576,214,068
$ 42,830,743
$ 520,216,386
Principal payments of construction loans for the next five years cannot be reasonably estimated since the loans will
be extended or repaid using funds from permanent lenders and limited partners.
Principal payments on notes payable for the next five year are subject to changes in net cash flow and are
estimated as follows:
2013
Permanent
Construction
Bonds
City
County
State
Federal
Other
2014
2015
2016
2017
(In thousands with $000 omitted)
Thereafter
Total
$
2,439
1,994
1,648
446
2,174
76
-
$
2,587
1,249
18
18
1,882
86
-
$
3,722
4,721
3,236
53
1,875
93
-
$
2,896
1,162
19
1,520
2,870
102
300
$
2,768
1,203
20
2,457
2,010
112
-
$
55,836
54,496
31,717
169,484
49,655
162,352
14,009
1,685
$
8,777
$
5,840
$
13,700
$
8,869
$
8,570
$ 539,234
$
70,248
54,496
42,046
174,425
54,149
173,163
14,478
1,985
$ 584,990
NOTE 8 – LETTERS OF CREDIT
In support of bonds, the Corporation has the following letters of credit available for the specified affiliated
partnerships:
Limited Partnership
MP Monte Vista Associates
MP Timberwood Associates
MP Tyrella Associates
Lender
Expiration Date
Maximum
Amount
Union Bank
Union Bank
Citibank
September 2022
July 2022
December 2014
$ 13,000,000
18,415,000
6,200,000
23
Outstanding
Balance
$
-
New version from 2013
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE 8 – NOTES PAYABLE
Notes payable are summarized as follows:
2013
Interest
Payable
2012
Interest
Payable
Principal
Principal
MidPen
City of Mountain View, funded under the
Community Development Block Program
(CDBG), in the original amount of
$1,200,000, bears 3% simple interest, due
in full in July 2034, nonrecourse, secured
by a lien against the land acquired by
MidPen for the Central Park Apartments
Phase I project.
$
555,200
$
1,200,000
$
519,200
$
1,200,000
City of Mountain View, funded under the
HOME Investment Partnership Program
(HOME), in the original amount of
$612,398, bears 3% simple interest, due in
full in July 2019, nonrecourse, secured by
a lien against the land acquired by MidPen
for the Central Park Apartments Phase I
project.
254
17,245
1,715
101,872
City of Mountain View, funded under CDBG,
in the original amount of $367,289, bears
0% interest, due in full in December 2063,
nonrecourse, secured by a lien against the
land acquired by MidPen for the Central
Park Apartments Phase II project.
-
367,289
-
367,289
City of Sunnyvale, funded from the City’s
Housing Mitigation Fund, in the original
amount of $4,100,000, bears 0% interest
until project completion at which time the
loan shall bear interest at 3% simple
interest, due in full 55 years after the
issuance of the Certificate of Occupancy,
nonrecourse, secured by a lien on the
Armory Apartments project.
-
178,727
-
-
County of Santa Cruz, funded from Agency
Housing Funds to reimburse MidPen for
development costs associated with the
Villas del Paraiso project, in the original
amount of $500,000, bears 0% interest,
shall be forgiven in November 2057 as
long as MidPen does not default on the
loan, nonrecourse, unsecured.
-
500,000
-
500,000
27
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
Interest
Payable
2012
Principal
Interest
Payable
Principal
County of Santa Cruz, in the original amount
of $5,393,830, bears 0% interest, due in
full on the 55th anniversary of the date on
which the Tax Credit Regulatory
Agreement is recorded, nonrecourse,
secured by a lien on the St. Stephens
Affordable Housing project. The note was
assigned to MP St. Stephens Associates,
L.P. in February 2014.
-
421,832
-
209,254
Housing Authority of the County of San
Mateo, in the original amount of
$2,323,163, bears 0% interest until project
completion at which time the loan shall
bear interest at 3% simple interest, due in
full 55 years after the issuance of the
Certificate of Occupancy, nonrecourse,
secured by a lien on the Half Moon
Village Phase II project.
-
158,080
-
158,080
Housing Authority of the County of San
Mateo, funded under HOME, in the
original amount of $227,313, bears 0%
interest until project completion, at which
time the loan shall bear interest at 3%
simple interest, due in full 55 years after
the issuance of the Certificate of
Occupancy, nonrecourse, secured by a lien
on the Half Moon Village Phase II project.
The note was assigned to Half Moon
Village II Associates, L.P. in March 2014.
-
227,165
-
227,165
Housing Authority of the County of San
Mateo, funded under CDBG, in the
original amount of $512,687, bears 0%
interest until project completion, at which
time the loan shall bear interest at 3%
simple interest due in full 55 years after
the issuance of the Certificate of
Occupancy, nonrecourse, secured by a lien
on the Half Moon Village Phase II project.
The note was assigned to Half Moon
Village II Associates, L.P. in March 2014.
-
26,512
-
20,738
28
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
Interest
Payable
2012
Interest
Payable
Principal
Principal
Housing Authority of the County of San
Mateo, funded under HOME, in the
original amount of $1,000,000, bears 0%
interest until project completion, at which
time the loan shall bear interest at 3%
simple interest, due in full 55 years after
the issuance of the Certificate of
Occupancy, nonrecourse, secured by a lien
on the Half Moon Village Phase II project.
The note was assigned to Half Moon
Village II Associates, L.P. in March 2014.
-
985,817
-
-
Community Development Agency of the City
of Menlo Park, in the original amount of
$230,000, bears 3% simple interest, was
paid off in 2013, nonrecourse, secured by
a lien on the Willow Terrace project.
-
-
1,304
87,149
San Mateo County Housing and Community
Development, in the original amount of
$100,000, bears 6% simple interest,
payable from Willow Terrace’s surplus
cash, nonrecourse, secured by a lien on the
Willow Terrace project. There is no stated
maturity date for this loan.
149,779
93,341
144,178
93,341
San Mateo County Housing and Community
Development, in the original amount of
$160,000, bears 3% simple interest,
$40,000 of the principal shall be forgiven
in October 2015, and the remaining
$40,000 shall be forgiven in October 2020.
All accrued interest shall be due in
October 2020, nonrecourse, secured by a
lien on the Willow Terrace project.
19,138
80,000
29,906
80,000
Pace Trustees, in the original amount of
$125,000, bears 6% simple interest, with
monthly payments of principal and interest
of $779 due until June 2030, nonrecourse,
secured by a lien on the Willow Terrace
project.
490
97,993
507
101,351
County of San Mateo, in the original amount of
$71,500, bears 0% interest, repaid in full
in January 2013 upon the sale of the East
Palo Alto Homes project.
-
-
-
6,480
29
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
Interest
Payable
Wells Fargo Community Development
Corporation, in the original amount of
$1,000,000, bears 2% interest, quarterly
payments of interest, due in full in January
2015, nonrecourse, unsecured.
2012
Principal
Interest
Payable
Principal
-
1,000,000
-
1,000,000
724,861
5,354,001
696,810
4,152,719
Construction loans, with variable interest rates,
generally with interest only payments due
monthly, to be repaid in full or partially
converted to permanent loans through
March 2015, recourse, secured by the
properties. (1)
126,964
76,355,971
105,316
54,496,744
Permanent loans, bearing interest from 1.00%
to 8.83%, generally with principal and
interest due monthly, to be repaid in full
through September 2048, nonrecourse,
secured by the properties.
434,570
83,237,797
374,544
69,146,355
Bonds, with variable interest rates, generally
with principal and interest paid monthly,
to be repaid in full through April 2039,
nonrecourse, secured by the properties.
154,336
41,137,827
158,482
42,046,602
City permanent loans, bearing interest from
0.00% to 3.00%, generally with principal
and interest due monthly, to be repaid in
full through April 2022, nonrecourse,
secured by the properties.
15,762
167,139
14,830
191,531
County permanent loans, bearing interest from
0.00% to 3.00%, generally with principal
and interest due monthly, to be repaid in
full through March 2024, nonrecourse,
secured by the properties.
109,281
201,920
106,374
214,796
State permanent loans, bearing interest from
3.00% to 6.55%, generally with principal
and interest due monthly, to be repaid in
full through November 2041, nonrecourse,
secured by the properties.
319,725
64,072,362
327,795
65,751,760
Federal permanent loans, bearing interest from
8.375% to 9.25%, generally with principal
and interest due monthly, to be repaid in
full through August 2031, nonrecourse,
secured by the properties.
22,339
2,953,932
22,931
3,032,115
Total MidPen Notes
Affiliates
30
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
Interest
Payable
City loans, bearing interest from 0.00% to
7.00%, generally payable out of excess
cash annually in arrears, to be repaid in
full through February 2070, nonrecourse,
secured by the properties.
2012
Principal
Interest
Payable
Principal
23,416,704
142,544,032
20,805,639
143,844,509
County loans, bearing interest from 0.00% to
7.56%, generally with principal and
interest due annually out of excess cash in
arrears, to be repaid in full through August
2070, nonrecourse, secured by the
properties.
6,556,300
47,641,070
5,366,396
43,548,225
State loans, bearing interest from 0.00% to
5.25%, generally with principal and
interest due annually out of excess cash in
arrears, to be repaid in full through
September 2067, nonrecourse, secured by
the properties.
16,469,896
88,242,564
14,538,208
87,148,557
City loans, bearing interest from 0.00% to
7.00%, to be repaid in full through
November 2068, nonrecourse, secured by
the properties.
3,190,453
25,992,378
3,313,890
26,069,149
County loans, bearing interest from 0.00% to
6.00%, to be repaid in full through June
2069, nonrecourse, secured by the
properties.
1,714,054
9,171,725
1,718,680
7,093,166
State loans, bearing interest from 0.00% to
4.85%, to be repaid in full through
December 2066, nonrecourse, secured by
the properties.
983,178
22,634,171
719,386
20,081,577
Federal loans, bearing interest from 0.00% to
1.00%, to be repaid in full through
September 2067, nonrecourse, secured by
the properties.
36,000
11,094,132
34,525
11,353,949
City loans, bearing interest from 0.00% to
4.00% with payments initially deferred,
then later payable out of excess cash, to be
repaid in full through September 2046,
nonrecourse, secured by the properties.
440,655
2,575,320
375,021
2,575,320
County loans, bearing interest at 3% with
payments initially deferred, then later
payable out of excess cash, to be repaid in
full through June 2067, nonrecourse,
secured by the properties.
9,307
1,986,749
-
1,986,749
31
MIDPEN HOUSING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
Interest
Payable
2012
Interest
Payable
Principal
Principal
State forgivable loan, bearing interest at 0%, to
be repaid in full on December 2056,
nonrecourse, secured by the properties.
-
182,069
-
182,069
Federal forgivable loans, bearing interest at
0%, to be repaid in full on April 2018,
nonrecourse, secured by the properties.
-
90,000
-
90,000
Other loans, bearing interest from 0.00% to
3.00%, to be repaid in full through June
2065, nonrecourse, secured by the
properties.
132,149
1,772,215
174,407
1,985,007
Total Affiliate Notes
54,131,673
622,053,373
48,156,424
580,838,180
Total
54,856,534
627,407,374
48,853,234
584,990,899
Less: current portion
(1,836,004)
Non-current portion
(1)
$ 53,020,530
(8,492,253)
$ 618,915,121
(2,501,652)
$ 46,351,582
(8,776,831)
$ 576,214,068
The current portion of construction loans have been excluded from current liabilities since the loans will be
extended, converted in permanent loans and/or repaid with capital contributions from limited partners. In addition,
principal payments of construction loans for the next five years cannot be reasonably estimated due to these
circumstances.
Principal payments on notes payable for the next five year are subject to changes in net cash flow and are
estimated as follows:
2014
MidPen
Construction
Permanent
Bonds
City
County
State
Federal
Other
2015
2016
2017
2018
(In thousands with $000 omitted)
Thereafter
$
4
2,851
2,196
1,275
98
1,982
86
-
$
1,044
2,953
1,142
3,236
13
1,947
94
-
$
4
3,246
1,180
19
1,520
2,940
103
-
$
4
3,105
1,228
20
1,093
2,083
112
-
$
5
3,253
1,257
21
446
3,777
213
-
$
$
8,492
$
10,429
$
9,012
$
7,645
$
8,972
$ 582,857
32
4,293
76,356
67,830
34,135
166,708
55,831
162,402
13,530
1,772
Total
$
5,354
76,356
83,238
41,138
171,279
59,001
175,131
14,138
1,772
$ 627,407