ST. AUGUSTINE’S NATIONAL FOUNDATION
FINANCIAL STATEMENTS
For the Year Ending December 31, 2011
St. Augustine’s National Foundation
Table of Contents
Page
Accountant’s Compilation Report………………………………………………………...1
Financial Statements:
Statement of Financial Position……………………………………………………….2
Statement of Activities……………………………………………………………...…3
Statement of Cash Flows……………………………………………………...………4
Notes to Financial Statements………………………..…..……………………....5 – 10
Accountant’s Compilation Report
Pevos and Associations, P.C.
1985 W. Big Beaver Road – Suite 302
Troy, MI 48084-3409
To the Trustees
St. Augustine’s National Foundation
Flint, Michigan
I have compiled the accompanying statement of financial position of St. Augustine’s
National Foundation as of December 31, 2011, and the related statements of activities
and cash flows for the year then ended. I have not audited or reviewed the accompanying
financial statements and, accordingly, do not express an opinion or provide any assurance
about whether the financial statements are in accordance with accounting principles
generally accepted in the United States of America.
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with accounting principles generally accepted in the United
States of America and for designing, implementing, and maintaining internal control
relevant to the preparation and fair preparation of financial statements.
My responsibility is to conduct the compilation in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. The objective of a compilation is to assist management in
presenting financial information in the form of financial statements without undertaking
to obtain or provide any assurance that there are no material modifications that should be
made to the financial statements.
Harry D. Pevos
Certified Public Accountant
January 31, 2012
ST. AUGUSTINE’S NATIONAL FOUNDATION
STATEMNT OF FINANCIAL POSITION
DECEMBER 31, 2011
ASSETS
Current Assets:
Cash
Pledges Receivable (Note 3)
Grant Receivable
Supplies Inventory
New Market Tax Credit Receivable
$
Total Current Assets
361,628
55,694,931
3,135,007
53,643
10,000,000
69,245,209
Property and Equipment (Notes 2 and 5):
St. Augustine’s Senior Living Project (Note 5)
Other Land and Buildings
Furniture and Fixtures
$ 13,932,000
2,215,000
215,180
16,362,180
2,273,625
Less: Accumulated Depreciation
Net Property and Equipment
14,088,555
Other Assets:
Inventory – Library Books
Other Assets
400,433
250,000
Total Other Assets
650,433
Total Assets
$ 83,984,197
LIABILITIES AND NET ASSETS
Net Assets:
Unrestricted
Permanently Restricted
Temporarily Restricted
$ 36,984,051
11,918,689
35,081,457
$ 83,984,197
See Accompanying Account’s Compilation Report
And Notes to Financial Statements
-2-
ST. AUGUSTINE’S NATIONAL FOUNDATION
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDING DECEMBER 31, 2011
Unrestricted
Permanently
Restricted
Temporarily
Restricted
Total
SUPPORT AND
REVENUE:
Grants
$ 1,521,000
Contributions
$
-0-
$
-0- $ 1,521,000
276,698
-0-
-0-
276,698
( 200,000)
-0-
200,000
-0-
1,597,698
-0-
200,000
1,797,698
Program Services
131,855
-0-
-0-
131,855
Support Services
Management and
General
307,034
-0-
-0-
307,034
-0-
455,843
-0-
455,843
438,889
455,843
-0-
894,732
1,158,809
(455,843)
200,000
902,966
35,825,242
12,374,532
34,881,457
83,081,231
$ 36,984,051
$ 11,918,689
Transfer of Cash
Total Support and
Revenue
EXPENSES:
Depreciation
Total Expenses
Changes in Net Assets
NET ASSETS:
January 1, 2011
December 31, 2011
$ 35,081,457 $ 83,984,197
See Accompanying Accountant’s Compilation Report
And Notes to Financial Statements
-3-
ST. AUGUSTINE’S NATIONAL FOUNDATION
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDING DECEMBER 31, 2011
CASH FLOWS FROM OPERATIONS:
Change in Net Assets
Noncash Changes:
Depreciation
Decrease in Pledges Receivable
Increase in Grants Receivable
Increase in Supplies Inventory
$
902,966
455,843
29,948
( 1,348,562)
(
5,114)
Cash Provided by Operating Activities
35,081
CASH FLOWS FROM INVESTING ACTIVITIES
-0-
CASH FLOWS FROM FINANCING ACTIVITIES
-0-
INCREASE IN CASH
35,081
CASH – January 1, 2011
326,547
CASH - December 31, 2011
$
See Accompanying Accountant’s Compilation Report
And Notes to Financial Statements
-4-
361,628
ST. AUGUSTINE’S NATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE 1 – ORGANIZATION
St. Augustine’s National Foundation Trust (the “Foundation”) is committed to raising
necessary funds to develop the University of St. Augustine’s. The University of St.
Augustine’s is committed to providing the highest education services in a caring and
efficient manner without discrimination, regardless of the person’s religion, race,
gender, ethnic identification, or economic status. The University of St. Augustine’s
strives to be the region’s premier educational resource, through a broad curriculum,
the discovery and application of new knowledge, and the education of practitioners,
teachers, scientists, and students.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIEIS
A) BASIS OF ACCOUNTING
The financial statements of the Foundation have been prepared on the accrual basis of
accounting in accordance with generally accepted accounting principles.
B) FINANCIAL STATEMENTS PRESENTATION
Financial statement presentation follows the recommendations of the Financial
Accounting Standard of Not-for-Profit Organizations. Under SFAS No. 117, the
organization is required to report information regarding its financial position and
activities according to three classes of net assets: unrestricted net assets, temporarily
restricted net assets, and permanently restricted net assets.
C) REVENUE RECOGNITION
Contributions received are recorded as unrestricted, temporarily restricted, or
permanently restricted support, depending on the existence and/or nature of any donor
restrictions.
See Accompanying Accountant’s Compilation Report
-5-
ST. AUGUSTINE’S NATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Continued)
NOTE 2 –
(Continued)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
All donor-restricted support is reported as an increase in temporarily or permanently
restricted net assets, depending on the nature of the restriction. When a restriction
expires (that is, when a stipulated time restriction ends or purpose restriction is
accomplished), temporarily restricted net assets are reclassified to unrestricted net
assets and reported in the statement of activities as net assets released from
restriction.
Donations of property, equipment and library books are recorded as support at their
estimated fair value at the date of donation. Such donations are reported as
unrestricted support unless the donor has restricted the donated asset to a specific
purpose.
Assets donated with explicit restrictions regarding their use and
contributions of cash that must be used to acquire the equipment are reported as
restricted support. Absent donor stipulations regarding how long those donated assets
must be maintained, the Foundation reports expirations of donor restrictions when the
donated or acquired assets are placed in service as instructed by the donor. The
Foundation reclassifies temporally restricted net assets to unrestricted net assets at
that time.
D) PROPERTY AND EQUIPMENT
Property and equipment is stated at cost or approximate market value at the date
acquired, if acquired by gift. Depreciation is provided over the estimated useful lives
of the assets using the straight-line method of depreciation.
E) ALLOCATION OF EXPENSES BY ACTIVITY
Employee salaries and wages are allocated between program and supporting services
on the basis of the actual or estimated time devoted to those activities. Other
expenses have been allocated on various bases as determined by management.
Management and general expenses include those expenses that are not directly
identifiable with any other specific function but to provide the overall support and
direction of the Foundation.
See Accompanying Accountant’s Compilation Report
-6-
ST. AUGUSTINE’S NATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Continued)
NOTE 2 –
(Continued)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
F) USE OF ESTIMATES
In preparing the financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosures of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
G) TAX STATUS
The Foundation is an organization described in Internal Revenue Code (IRS) Section
501(c)(3) as such is exempt from taxation under IRS Section 501(a).
NOTE 3 – PLEDGES RECEIVABLE
Pledges receivable include $23,917,000 granted to the St. Augustine’s University
Foundation Endowment Program pursuant to resolution by the Board of Directors, by
Klyce Real Estate Investment Trust, LLC. The proceeds will be used to fund the
Missions of the St. Augustine’s University Foundation.
NOTE 4 – TEMPORARY RESTICTED NET ASSETS
Temporary restricted net assets represent donor-restricted assets provided for the
Foundation’s Endowment Program.
In 2011, the Foundation allocated $200,000 cash for deposits on future projects.
Good faith deposits of cash are being held in escrow to secure deeds of interest in the
following real estate transactions:



645 South Telegraph Road, Pontiac, MI; $100,000
Oakland Hunt South, Oakland Twp.; $20,000
Annapolis, Inkster, MI; $65,000
See Accompanying Accountant’s Compilation Report
-7-
ST. AUGUSTINE’S NATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Continued)
NOTE 5 – BOND FINANCING
St. Augustine’s National Foundation has proposed three senior housing projects in
Oakland Township, Novi, and Genesee County, Michigan requiring bond financing
totaling $36 million. The Foundation will issue $36 million in bonds through a BTU
for Sustainable & Renewable Energy. The annual repayment on the bonds will be $2
million per year over a 35 year period. The annual debt obligation will be paid by
pledging the earnings from the senior housing projects, pledging the earnings from
other commercial leaseholds owned by the Foundation, and by pledging the interest
earnings from investments:
SOURCES OF ANNUAL INCOME:
Net Income from Senior Citizens Projects:
$200,000 from Each Project in Oakland Twp., Novi, and Genesee
County
Earnings from Reserve Fund:
$200,000 from Each Project
Interest Income Earned the Initial Investment
Net Income - Commercial Leasehold on Eight Mile Property
Net Income – St. Augustine’s Institute – University Academic PCC’s
Total Income
AMOUNT
$
600,000
600,000
250,000
200,000
450,000
$ 2,100,000
$7 million of the initial $36 million proceeds will be invested in a sinking fund at
Ameriprise Financial servicing the debt over a 35 year period. In addition, the $2.1
million in annual earnings will also be invested in the Ameriprise Financial sinking
fund to service the debt. The sinking fund is forecasted to have annual earnings from
interest earned on the initial investment totaling $250,000.
See Accompanying Accountant’s Compilation Report
-8-
ST. AUGUSTINE’S NATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Continued)
NOTE 6 – SECTION 1603 TREASURY TAX CEDIT PROGRAM (FEDERAL
TAX CREDITS)
The proposed senior housing projects in Oakland Township, Novi, and Genesee
County plan to install geo-thermal, hydro-thermal, and solar systems at a cost of $30
million.
The Federal Tax Credit, Section 1603 Treasury Tax Program, provides a 20% - 30 %
cash grant to St. Augustine’s National Foundation upon completing installation of the
energy savings systems.
St. Augustine’s subsidiary affiliated corporation, Olympus Energy will be eligible for
a cash grant of $6 million. The Tax Credit Syndicator has committed to purchase Tax
Credits at 80% of the grant, or $4.8 million.
NOTE 7 – U.S.D.C./MSU SUB-GRANT CONTRACT
U.S.D.C./MSU sub-grant contract in the amount of $150,000 was disbursed for
capital equipment acquisition. St. Augustine’s demonstrated matching funds in the
amount of $60,000 as required.
NOTE 8 – ENERGY TAX CREDIT GRANT AWARD
St. Augustine’s National Foundation asserts the Energy Tax Credit Grant Award in
lieu of Tax Credits was carried over from 2010 to 2011 pursuant to Congressional
approval of a hybrid amendment extending time lines and authorizing carryover of
Treasury Tax Credit Section 1603 of Division B of the ARRA 2009.
Olympus Energy, on behalf of development projects St. Augustine’s is sponsoring
engaged professional services of contractors to issue quotations for costs associated
with the installation of energy efficiency systems and to initiate architectural plans for
the design and installation of geo-thermal, hydrothermal, and if practical, solar
systems.
See Accompanying Accountant’s Compilation Report
-9-
ST. AUGUSTINE’S NATIONAL FOUNDATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Continued)
NOTE 8 - ENERGY TAX CREDIT GRANT AWARD (Continued)
On September 14, 2011, at a meeting of St. Augustine’s Board of Trustees, the Board
of Trustees resolved the following:

US Treasury 1603 Notice for Assignment of Payment shall issue consistent
with regulatory requirements;

To establish a trust for deposit of proceeds disbursed consistent with award of
Energy Tax Credit Grant for deposit within the account of St. Augustine’s
Endowment Trust Fund administered by either Citi Bank or Ameriprise
Financial Services or their designated affiliated commercial financial
institutions;

Citi Bank shall serve in the capacity as lead Syndicator of the Tax Credits on
behalf of the St. Augustine’s National Foundation.
See Accompanying Accountant’s Compilation Report
- 10 -