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HomeMy WebLinkAbout2020 - Housing Catalyst - Annual Report1,204 families assisted with housing vouchers 3,500meals provided through the JumpStart program 60 new apartments built for permanent supportive housing 1,093 local residences owned and managed by Housing Catalyst 2020 AT A GLANCE CARES Act impact Housing Catalyst received $1,073,919 through the CARES Act to help navigate and mitigate the COVID-19 outbreak in our community. Funds were used to ensure uninterrupted, accessible service while protecting the safety of our residents and staff. Housing Catalyst: • Created professional videos to provide contactless onboarding for Housing Choice Voucher holders, program education for local property managers, and information for community partners. • Modified usage of our office space to help prevent infection during necessary in-person visits, and purchased equipment to allow staff to work remotely. • Built capacity to match increased pandemic response funding for vouchers, including hiring staff and contracting with a local nonprofit to provide housing services. 20% seniors 30% individuals with disabilities 33% children 4,300+ INDIVIDUALS SERVED ANNUALLY REVENUES 1 Grant $17,289,270 2 Rent $11,095,524 3 Other $6,289,175 total revenues $34,673,969 1 2 3 EXPENSES * 1 Housing Assistance $12,279,216 2 Administrative $8,988,369 3 Maintenance $3,309,099 4 Utilities $836,695 5 Depreciation $6,781,803 6 Interest $3,212,628 7 Other $1,042,827 *For all owned and managed properties HousingCatalyst.com  970.416.2910  1715 W. Mountain Avenue, Fort Collins, CO 80521 total expenses $36,450,637 1 2 3 4 5 7 6 Certificate of Achievement for Excellence in Financial Reporting Housing Catalyst has received the Government Finance Officers Association’s Certificate of Achievement for Excellence in Financial Reporting for 6 years in a row, which is awarded to only 20 housing authorities. This achievement recognizes the transparency of the organization and demonstrates that our financial reporting is robust and comprehensive. 2020 FINANCIALS Unaudited Financial Data $233,371,224 in owned and managed assets $113,044,703 in liabilities AA-Standard & Poor’s Rating Housing Catalyst Fort Collins, Colorado Comprehensive Annual Financial Report and Single Audit Report Year ended December 31, 2020 With Comparative Totals for the Year Ended December 31, 2019 Housing Catalyst Fort Collins, Colorado Comprehensive Annual Financial Report and Single Audit Report Year ended December 31, 2020 With Comparative Totals for the Year Ended December 31, 2019 Issued by: Finance and Accounting Department of Housing Catalyst Tonya Frammolino, Chief Financial Officer Housing Catalyst Table of Contents December 31, 2020 Introductory Section Letter of Transmittal i Government Finance Officers Association of the United States and Canada (GFOA) December 31, 2019 Certificate vii Organizational Chart viii List of Principal Officials ix Financial Section Report of Independent Auditors 1 Management's Discussion and Analysis 4 Basic Financial Statements: Statements of Net Position 13 Statements of Revenues, Expenses and Changes in Net Position 17 Statements of Cash Flows 19 Combining Statement of Net Position - Discretely Presented Component Units 23 Combining Statement of Revenues, Expenses and Changes in Net Position - Discretely Presented Component Units 24 Notes to Financial Statements 25 Combining Schedule of Net Position 58 Combining Schedule of Revenues, Expenses and Changes in Net Position 60 Statistical Section (Unaudited) Statistical Section Table of Contents 62 Net Position (Table 1) 63 Changes in Net Position (Table 2) 64 Operating Revenues by Source (Table 3) 66 Non-Operating Revenues by Source (Table 4) 67 Debt Service Coverage (Table 5) 68 Ratio of Debt to Capital Assets (Table 6) 70 Service Area Demographics / Statistics (Table 7) 71 Principal Employers for the City of Fort Collins (Table 8) 72 Resident Demographics / Population Statistics (Table 9) 73 Resident Demographics / Ethnicity Statistics (Table 10) 74 Number of Housing Catalyst Dwelling Units (Table 11) 75 Property Characteristics and Unit Composition (Table 12) 76 Number of Housing Catalyst Staff (Table 13) 77 Single Audit Section Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 78 Independent Auditors' Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance 80 Schedule of Findings and Questioned Costs 83 Schedule of Expenditures of Federal Awards 86 Housing Catalyst Fort Collins, Colorado Introductory Section: Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart List of Principal Officials June 11, 2021 Cathy Mathis, Chairperson of the Board of Commissioners Members of the Board of Commissioners of Housing Catalyst We are pleased to present the Comprehensive Annual Financial Report (Annual Report)for Housing Catalyst for the year ended December 31,2020.This report is prepared in conformance with standards of financial reporting as established by the Governmental Accounting Standards Board and the Government Finance Officers Association.The United States Department of Housing and Urban Development (HUD)requires that all public housing authorities publish within nine months after the fiscal year-end,financial statements presented in conformity with United States Generally Accepted Accounting Principles (GAAP),Housing Catalyst's financial statements presented here have been audited by Eide Bailly,LLP.The auditors issued an unmodified opinion on Housing Catalyst's financial statements for the year ended December 31,2020.The financial statements for the year ended December 31,2019 were audited by Novogradac &Company,LLP and an unmodified opinion was issued for those statements.The data presented in this report is the responsibility of the management of Housing Catalyst.To the best of our knowledge and belief,the data as presented is accurate in all material aspects;is presented in a manner designed to fairly state the financial position and results of operations of Housing Catalyst;and all disclosures necessary have been included to enable the reader to gain an understanding of Housing Catalyst's financial affairs.GAAP requires that management provide a narrative introduction,overview and analysis to complement the basic financial statements in the form of Management's Discussion and Analysis (MD&A).Housing Catalyst's MD&A can be found immediately following the report of the independent auditors.This transmittal letter is designed to complement the MD&A and should be read in conjunction with it. Housing Catalyst is required to undergo an annual single audit in conformity with the provisions of Title 2 U.S.Code of Federal Regulations (CFR)Part 200,Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance).Information related to this single audit,including the independent auditors'report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards;the independent auditors'report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with the Uniform Guidance;the Schedule of Federal Awards;Schedule of Findings and Questioned Costs;and the schedule of prior year audit findings are included in the Single Audit Section of this report. Letter of Transmittal 2020 Comprehensive Annual Financial Report Organizational Overview Maintaining the fiscal viability of the organization. Achieving a social goal through the provision of affordable housing and supportive services. Achieving environmental sustainability. Housing Catalyst was created in 1971 by a petition of twenty-five citizens who were concerned about the community's lack of adequate,safe housing for all of its inhabitants.This report includes all programs of Housing Catalyst as well as all of its component units.Component units are legally separate entities for which a government is financially accountable.Housing Catalyst is not a component unit of the City of Fort Collins (the City)as defined by the pronouncements of the Governmental Accounting Standards Board.The governing body for Housing Catalyst is its Board of Commissioners (Board)comprised of seven members appointed by the City Council.The Board appoints a Chief Executive Officer (CEO)to administer the affairs of Housing Catalyst.Sources of funding include resident rents,administration of HUD programs and HUD subsidies passed through to program participants.The City is not financially accountable for the operations of Housing Catalyst,has no responsibility to fund deficits or receive surpluses and has not guaranteed Housing Catalyst's debt. Housing Catalyst's goals are accomplished through a variety of housing programs and activities. These activities include several programs developed by HUD such as the Low Rent Housing Program (Public Housing)and the Housing Choice Voucher Program.In addition to these federal programs,Housing Catalyst has established various instrumentalities to explore and develop innovative techniques for providing a variety of housing possibilities for the low to moderate-income residents of Fort Collins.These programs have allowed Housing Catalyst the flexibility to develop several private/public partnerships providing a variety of housing opportunities for Fort Collins residents. Housing Catalyst is our community’s leader in sustainable,long-term affordable housing solutions. Each year,the agency helps over 5,000 lower income individuals through innovative,award-winning affordable housing and programs that also benefit the city’s economy and revitalize neighborhoods. Housing Catalyst is a progressive housing provider and developer,offering permanent solutions that move people out of homelessness, stabilize families, and improve lives. To achieve our mission,all Housing Catalyst functions are operated with attention paid to a triple bottom line: Housing Catalyst currently owns and operates 70 Public Housing units in addition to administering over 1,200 Housing Choice Vouchers for Fort Collins and Larimer County.The Larimer County allocation of 100 of these vouchers,65 of which are targeted specifically to people with disabilities,is administered through an intergovernmental agreement.Housing Catalyst administered over $12 million in Housing Assistance Payments (HAP)to local landlords on behalf of participating families in 2020.This amount includes funding for 152 Veterans Affairs Supportive Housing program vouchers. HUD grades this program through its Section 8 Management Assessment Program (SEMAP). Housing Catalyst was designated a High Performer and has utilized approximately 97%of its authorized annual funding. ii Letter of Transmittal 2020 Comprehensive Annual Financial Report Economic Condition and Outlook Long-Term Planning and Major Commitments and Initiatives Congressional housing legislation and the federal budget affect Housing Catalyst more than local economic factors.Housing Catalyst's primary sources of funding are HUD,administrative management fees and other grants.As with most housing authorities,much of Housing Catalyst's operating and capital funding comes from federal dollars in the form of public housing operating subsidies and capital fund grants and Housing Choice Voucher administrative fees and Housing Assistance Payments.During the year ended December 31,2020,HUD and other federal agencies provided over 74%of Housing Catalyst's operating revenue and approximately 70%of Housing Catalyst's total revenues (including $1,011,004 in pass-through grant funding). For the Housing Choice Voucher program,HUD provides housing authorities with a fixed annual budget for Housing Assistance Payments (HAP)and for administration fees.Funding for the Housing Choice Voucher program was prorated at 100%and 81%of eligibility for HAP and administration fees,respectively.During the year ended December 31,2020,HUD also disbursed CARES Act funding to housing authorities nationwide to assist with additional administrative costs related to the preparation and response to the COVID-19 pandemic.Housing Catalyst received a total of $414,097 in funding for administrative costs of which $303,515 remains unspent at year-end and will be spent during 2021.Housing Catalyst also received an additional $617,460 in HAP funding to assist with rising costs. For the Public Housing program,housing authorities receive operating subsidies in accordance with an operating subsidy funding formula.In general,the calculated subsidy amount is the difference between an estimate of operating costs minus an estimate of income from rents.Operating subsidies are subject to annual appropriation by Congress.In 2020,Housing Catalyst,like all housing authorities nationwide,was funded at 112%of eligibility in order to provide additional funding from the CARES Act.Housing Catalyst was allocated a total of $42,362 and those funds are still available for use during 2021. Housing Catalyst supports the development and preservation of affordable housing throughout Fort Collins,with funding from the City,State Division of Housing,Colorado Housing and Finance Authority,equity investors,and lenders.Along with its partners,Housing Catalyst combines high quality design with sustainable development principles and sound planning to develop and maintain a vibrant and diverse affordable housing portfolio.Housing Catalyst employs many strategies to create and preserve its stock of affordable housing.These strategies include new construction, acquisition,rehabilitation and preservation of existing housing to create and maintain high-quality sustainable units. Fort Collins has an estimated population of 174,871 (2020).Median household income for Larimer County is $67,200 and median family income is $95,900 (Colorado Housing and Finance Authority, 2021 Colorado County Income and Rent Tables).The rental market has tightened considerably in the past years and rents continue to increase with recent vacancy rates as low as 1-3%. iii Letter of Transmittal 2020 Comprehensive Annual Financial Report PAB Authority City of Fort Collins 48,219,578$ Larimer County 18,939,405 Weld County 16,165,035 State of Colorado 55,641,372 Other Counties 11,266,846 Total 150,232,236$ Projects have utilized or will utilize PAB authority as follows: Bonds PAB Authority Issued Village on Plum 8,750,000$ 2014 Village on Redwood 12,000,000 2016 Village on Horsetooth 19,190,000 2017 Village on Shields 35,000,000 2017 Lakeview on the Rise 30,950,600 2018 Meadows Townhomes 6,500,000 2020 Future Projects 37,841,636 - Total 150,232,236$ Between 2011 and 2013,Housing Catalyst analyzed options to dispose of or reposition the 154 units of public housing operated by the organization.This analysis included both a disposition strategy under Section 18 of the Housing Act of 1937 (Section 18)and the use of the opportunities available under the HUD Rental Assistance Demonstration (RAD)Program.In late 2013 it was determined that the best approach would be to reposition the entire portfolio of 154 public housing units using a combination of disposition and conversion utilizing the HUD RAD program.In mid-2014,Housing Catalyst submitted an application for a multi-phase development under the RAD program which proposed to use proceeds from the disposition of the public housing portfolio in seven separate projects.The seven projects were projected to result in the development,or renovation,of 665 units of affordable housing within Fort Collins. In 2019,after completing three projects under the RAD program,which resulted in the disposition of 84 of the 154 public housing units,a decision was made to once again pursue a disposition strategy for the remaining 70 public housing units using the Section 18 criteria.The first three projects resulted in the construction or preservation of 453 affordable housing units.The repositioning of the remaining 70 public housing units is now expected to be completed over the next 2-3 years.Housing Catalyst plans to utilize proceeds from the Section 18 disposition to renovate and preserve 26 existing units,known as Impala,which will also result in the construction of an additional 40 new units. A separate renovation will preserve another 15 existing units located at 2155 Plum. iv Housing Catalyst began to accumulate the assignment of significant Private Activity Bond (PAB) authority in 2013 for the purpose of rehabilitating,developing and refinancing affordable housing units located in Fort Collins,Colorado.Through 2020,Housing Catalyst had secured the following assignments: Letter of Transmittal 2020 Comprehensive Annual Financial Report Financial Information In addition to other funding sources,projects that have used portions of the PAB authority include: Village on Plum,a 95 unit rehabilitation project;Village on Redwood,a new-build project that consists of 72 units of affordable housing;Village on Horsetooth,a new-build project of 96 affordable units;Village on Shields,a 285 unit rehabilitation project;Lakeview on the Rise,a 180 affordable unit new-build project with a private developer for which Housing Catalyst was the conduit issuer and Meadows Townhomes,a 51 affordable unit new-build project with a private developer for which Housing Catalyst was also the conduit issuer. In early 2021,Housing Catalyst utilized $13.2 million of PAB authority as a conduit issuer for an 84- unit rehabilitation project in partnership with CARE Housing,Inc.Housing Catalyst is the developer on this project. Housing Catalyst is expected to secure financing later in 2021 for a 79-unit new-build project located in downtown Fort Collins that will include commercial space on the ground floor.This project is in partnership with the Fort Collins Downtown Development Authority.Housing Catalyst will be the developer for the project and own and operate the 79 affordable units while the Downtown Development Authority will own and operate the commercial space.The project will be financed using 4%LIHTC’s,City of Fort Collins grant funds,loan from Housing Catalyst and use of PAB authority accumulated by Housing Catalyst.Housing Catalyst intends to utilize its Standard &Poors' credit rating enhanced by a general revenue pledge for the public bond offering. Housing Catalyst expects to utilize additional PAB authority later in 2021 as a conduit issuer for an 84-unit new-build project with developer, Mercy Housing, Inc. Management of Housing Catalyst is responsible for establishing and maintaining an internal control structure designed to ensure that Housing Catalyst's assets are protected from loss,theft or misuse and that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with GAAP.Housing Catalyst has designed its internal control structure to provide reasonable,but not absolute,assurances that those objectives are met.The concept of reasonable assurance recognizes that:(1)the costs of a control should not exceed the benefits likely to be derived and (2)the valuation of costs and benefits requires estimates and judgment by management. As a recipient of federal awards,Housing Catalyst is responsible for ensuring that adequate internal controls are in place to provide compliance with applicable laws,regulations,contracts and grants related to those programs.Those internal controls are subject to periodic evaluation by management, and their independent auditors. As part of Housing Catalyst's single audit,tests are made to determine the adequacy of the internal controls,including that portion related to federal award programs,as well as to learn whether Housing Catalyst has complied with applicable laws,regulations,contracts and grants.Housing Catalyst's single audit for the year ended December 31,2020 found no instances of material weakness in internal control.Audit reports regarding this are included in this Annual Report in the Single Audit Section. v Letter of Transmittal 2020 Comprehensive Annual Financial Report Other Information - Awards Acknowledgments Respectfully submitted, Julie Brewen Chief Executive Officer Tonya Frammolino Chief Financial Officer vi Preparation of the Comprehensive Annual Financial Report on a timely basis was accomplished through the dedicated service of the entire staff of the Finance and Accounting department.Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. Our sincere appreciation is also extended to the management and staff of Eide Bailly, LLP who provided necessary expertise and technical assistance. In closing,without the leadership and support of the members of the Board of Commissioners, preparation of this report would not have been possible. The Government Finance Officers Association of the United States and Canada (GFOA)awarded a Certificate of Achievement for Excellence in Financial Reporting to Fort Collins Housing Authority dba Housing Catalyst for its comprehensive annual financial report for the year ended December 31, 2019.This was the seventh consecutive year that Housing Catalyst has achieved this prestigious award.In order to be awarded a Certificate of Achievement,a government must publish an easily readable and efficiently organized comprehensive annual financial report.This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only.We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. vii Housing Catalyst Organizational Chart December 31, 2020 viii Housing Catalyst List of Principal Officials December 31, 2020 Board of Commissioners: Management: Cathy Mathis Julie Brewen Chairperson Chief Executive Director Jennifer Wagner Michele Christensen Vice-Chairperson Chief Operating Officer David Bye Tonya Frammolino Commissioner Chief Financial Officer Emily Gorgol Kristin Fritz Commissioner Chief Real Estate Officer Ann Green Resident Commissioner Hep Wilkins Commissioner ix Housing Catalyst Fort Collins, Colorado Financial Section: Report of Independent Auditors Management's Discussion and Analysis Basic Financial Statements Notes to Basic Financial Statements Combining Financial Schedules What inspires you, inspires us. | eidebailly.com 4310 17th Ave. S. | P.O. Box 2545 | Fargo, ND 58108-2545 | T 701.239.8500 | F 701.239.8600 | EOE 1  Independent Auditor’s Report  To the Board of Commissioners  Housing Catalyst  Fort Collins, Colorado  Report on the Financial Statements  We have audited the accompanying financial statements of the business‐type activities and the  aggregate discretely presented component units of the Housing Catalyst as of and for the year ended  December 31, 2020, and the related notes to the financial statements, which collectively comprise  Housing Catalyst’s basic financial statements as listed in the table of contents.  Management’s Responsibility for the Financial Statements  Management is responsible for the preparation and fair presentation of these financial statements in  accordance with accounting principles generally accepted in the United States of America; this includes  the design, implementation, and maintenance of internal control relevant to the preparation and fair  presentation of financial statements that are free from material misstatement, whether due to fraud or  error.  Auditor’s Responsibility  Our responsibility is to express opinions on these financial statements based on our audit. We  conducted our audit in accordance with auditing standards generally accepted in the United States of  America and the standards applicable to financial audits contained in Government Auditing Standards,  issued by the Comptroller General of the United States. The financial statements of the discretely  presented component units were not audited in accordance with Government Auditing Standards,  except for Mason Place, LLLP, which was audited in accordance with Government Auditing Standards.  Those standards require that we plan and perform the audit to obtain reasonable assurance about  whether the financial statements are free from material misstatement.  An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in  the financial statements. The procedures selected depend on the auditor’s judgment, including the  assessment of the risks of material misstatement of the financial statements, whether due to fraud or  error. In making those risk assessments, the auditor considers internal control relevant to the entity’s  preparation and fair presentation of the financial statements in order to design audit procedures that  are appropriate in the circumstances, but not for the purpose of expressing an opinion on the  effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also  includes evaluating the appropriateness of accounting policies used and the reasonableness of  significant accounting estimates made by management, as well as evaluating the overall presentation of  the financial statements.