Oakman Village Manor Senior Housing Development Corp. d/b ...financials.pvm.org/files/PVM-The Village of Oakman... · belief, the same is a true statement of the financial condition

Oakman Village Manor Senior HousingDevelopment Corp.

d/b/a The Village of Oakman Manor(a not-for-profit corporation)

HUD Project No. 044-EE087

Financial Report

with Supplemental Information

June 30, 2016

Oakman Village Manor Senior HousingDevelopment Corp.d/b/a The Village of Oakman ManorHUD Project No. 044-EE087

Certificate of Officers

We certify that we have examined the attached financial statements and supplementalinformation of HUD Project No. 044-EE087, Oakman Village Manor Senior HousingDevelopment Corp. d/b/a The Village of Oakman Manor, and to the best of our knowledge andbelief, the same is a true statement of the financial condition as of June 30, 2016.

______________________________Maynard TimmChair

September 15, 2016

Date

______________________________Elaine HearnsVice-Chair

September 15, 2016

Date

ID# 56-2438797

Employer Identification Number


Management Agent's Certification

We certify that we have examined the attached financial statements and supplementalinformation of HUD Project No. 044-EE087, Oakman Village Manor Senior HousingDevelopment Corp. d/b/a The Village of Oakman Manor, and to the best of our knowledge andbelief, the same is a true statement of the financial condition as of June 30, 2016.

______________________________Kesha AkridgeManagement Agent Representative

September 15, 2016

Date

(248) 281-2020

Telephone Number

ID# 38-1387145

Management Company EmployerIdentification Number

Deborah Beard

Property Manager


Contents

Report Letter 1-2

Financial Statements

Balance Sheet 3-4

Statement of Activities 5-7

Statement of Changes in Deficiency in Net Assets 8

Statement of Cash Flows 9-10

Notes to Financial Statements 11-15

Supplemental Information 16

Report Letter 17

Balance Sheet Data 18-19

Statement of Activities Data 20-22

Statement of Changes in Deficiency in Net Assets Data 23

Statement of Cash Flows Data 24-25

Supplemental Information 26-27

Schedule of Changes in Fixed Asset Accounts 28

Schedule of Expenditures of Federal Awards 29

Computation of Surplus Cash 30

Report on Internal Control Over Financial Reporting and on Compliance andOther Matters Based on an Audit of Financial Statements Performed inAccordance with Government Auditing Standards 31-33

Report on Compliance for Each Major Federal Program; Report on InternalControl Over Compliance 34-37

Schedule of Findings and Questioned Costs 38-40

Independent Auditor's Report

To the Board of DirectorsOakman Village Manor Senior Housing Development Corp.

d/b/a The Village of Oakman Manor

Report on the Financial Statements

We have audited the accompanying financial statements of HUD Project No. 044-EE087, Oakman VillageManor Senior Housing Development Corp. d/b/a The Village of Oakman Manor (the "Organization"),which comprise the balance sheet as of June 30, 2016 and 2015 and the related statements of activities,changes in deficiency in net assets, and cash flows for the years then ended, and the related notes to thefinancial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud orerror.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. Weconducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. Those standards require that we plan andperform the audits to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to theOrganization’s preparation and fair presentation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the Organization’s internal control. Accordingly, we express no such opinion. Anaudit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

1

pat.lomerson

Southfield West

pat.lomerson

Praxity



Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of Oakman Village Manor Senior Housing Development Corp. d/b/a The Village ofOakman Manor as of June 30, 2016 and 2015 and the results of its changes in deficiency in net assets andits cash flows for the years then ended in accordance with accounting principles generally accepted inthe United States of America.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 15,2016 on our consideration of Oakman Village Manor Senior Housing Development Corp. d/b/aThe Village of Oakman Manor's internal control over financial reporting and on our tests of itscompliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters.The purpose of that report is to describe the scope of our testing of internal control over financialreporting and compliance and the results of that testing, and not to provide an opinion on internalcontrol over financial reporting or on compliance. That report is an integral part of an audit performedin accordance with Government Auditing Standards in considering Oakman Village Manor SeniorHousing Development Corp. d/b/a The Village of Oakman Manor's internal control over financialreporting and compliance.

September 15, 2016By: Yvonne McNulty, CPA

Engagement Partner27400 Northwestern Highway

P.O. Box 307

Southfield, MI 48037-0307

Federal ID Number: 38-1357951

Phone Number: (248) 352-2500

2


Balance Sheet

June 30, 2016 June 30, 2015

Assets

Current AssetsCash - Operations $ 8,913 $ 4,027Tenant accounts receivable - 563Accounts receivable - HUD - 673

Prepaid expenses 9,220 4,349

Total current assets 18,133 9,612

Deposits - Held in TrustTenant deposits held in trust 16,336 13,737

Deposits - FundedEscrow deposits 9,251 9,249Replacement reserve 180,840 169,035

Residual receipts reserve 13,489 55,312

Total deposits - Funded 203,580 233,596

Fixed Assets

Land and land improvements 46,092 46,092

Buildings and building improvements 6,070,296 6,062,872

Building equipment (portable) 1,831 1,831

Furniture for project/tenant use 63,654 63,654

Furnishings 109,421 109,421

Maintenance equipment 6,334 6,334

Miscellaneous fixed assets 29,804 29,804

Total fixed assets 6,327,432 6,320,008

Accumulated depreciation (1,656,966) (1,489,047)

Net fixed assets 4,670,466 4,830,961

Total assets $ 4,908,515 $ 5,087,906

See Notes to Financial Statements. 3


Balance Sheet (Continued)

June 30, 2016 June 30, 2015

Liabilities and Deficiency in Net Assets

Current LiabilitiesAccounts payable - Operations (Note 4) $ 5,392 $ 7,111Accounts payable - Section 8 and other 1,451 -Accrued wages payable 7,254 3,856Accrued payroll taxes payable 383 295Residual receipts liability 13,489 55,312

Prepaid revenue 970 -

Total current liabilities 28,939 66,574

Tenant deposits held in trust (contra) 13,379 13,264

Long-term Liabilities

Capital advance (Note 2) 4,778,700 4,778,700

HOME loans (Note 3) 872,000 872,000

Total long-term liabilities 5,650,700 5,650,700

Total liabilities 5,693,018 5,730,538

Deficiency in Net Assets Deficiency in unrestricted net assets (784,503) (642,632)

Total deficiency in net assets (784,503) (642,632)

Total liabilities and deficiency in net assets $ 4,908,515 $ 5,087,906



Statement of Activities

Year Ended

June 30, 2016 June 30, 2015

Rent RevenueRent revenue - Gross potential $ 181,861 $ 178,818Tenant assistance payments 256,337 256,410

Miscellaneous rent revenue 11 -

Total rent revenue (potential at 100%occupancy) 438,209 435,228

VacanciesApartments (10,763) (7,802)

Residual receipts adjustment - (46)

Total vacancies (10,763) (7,848)

Net rent revenue (rent revenue lessvacancies) 427,446 427,380

Financial RevenueProject operations 9 -Investments - Residual receipts 54 55

Investments - Replacement reserve 171 158

Total financial revenue 234 213

Other RevenueLaundry and vending revenue 2,559 3,009Tenant charges 1,429 2,764Gifts (Note 4) 4,569 4,000

Miscellaneous revenue 409 750

Total other revenue 8,966 10,523

Total revenue 436,646 438,116



Statement of Activities (Continued)

Year Ended

June 30, 2016 June 30, 2015

Administrative ExpensesConventions and meetings $ 899 $ 1,459Management consultants 21,496 21,737Advertising and marketing 1,042 341Other renting expenses 508 573Office salaries 3,054 7,415Office expenses 6,784 4,781Management fee (Note 4) 28,930 27,720Manager or superintendent salaries 61,312 56,615Legal expenses 4,845 2,092Auditing expenses 6,500 6,750Bookkeeping fees/Accounting services (Note 4) 6,600 6,600Bad debts 2,831 481

Miscellaneous administrative expenses 3,393 2,258

Total administrative expenses 148,194 138,822

Utilities ExpenseElectricity 22,603 25,381Water 5,623 5,420Gas 11,787 16,159Sewer 13,737 12,852

Total utilities expense 53,750 59,812

Operating and Maintenance ExpensesPayroll 33,918 30,989Supplies 10,118 8,644Contracts 37,198 48,666Garbage and trash removal 1,728 2,268Security payroll/Contract 65,273 60,505Heating/Cooling repairs and maintenance 586 240Snow removal 1,127 2,346

Miscellaneous operating and maintenance expenses 25,285 18,872

Total operating and maintenance expenses 175,233 172,530

Taxes and InsurancePayroll taxes (FICA) 7,202 7,634Property and liability insurance (hazard) 20,112 17,787Workers' compensation 1,909 1,822

Health insurance and other employee benefits 4,139 4,408

Total taxes and insurance 33,362 31,651



Statement of Activities (Continued)

Year Ended

June 30, 2016 June 30, 2015

Financial Expenses

Miscellaneous financial expenses $ 59 $ 54

Total financial expenses 59 54

Total Costs of Operations BeforeDepreciation 410,598 402,869

Change in Net Assets BeforeDepreciation 26,048 35,247

Depreciation Expense 167,919 170,610

Change in Total Net Assets $ (141,871) $ (135,363)



Statement of Changes in Deficiency in Net Assets

Deficiency in Net Assets - July 1, 2014 $ (507,269)

Increase in deficiency in net assets (135,363)

Deficiency in Net Assets - June 30, 2015 (642,632)

Increase in deficiency in net assets (141,871)

Deficiency in Net Assets - June 30, 2016 $ (784,503)



Statement of Cash Flows

Year Ended

June 30, 2016 June 30, 2015

Cash Flows from Operating ActivitiesReceipts:

Rental $ 429,652 $ 425,933Interest 234 213Gifts 4,569 4,000

Other cash receipts 4,397 6,523

Total receipts 438,852 436,669

Disbursements:Administrative (93,362) (43,520)Management fee (28,930) (30,030)Utilities (53,832) (59,812)Salaries and wages (98,284) (101,373)Operating and maintenance (141,351) (141,541)Property insurance (20,126) (17,787)Miscellaneous taxes and insurance (18,130) (14,559)Tenant security deposits (2,484) 885

Miscellaneous financial (59) (54)

Total disbursements (456,558) (407,791)

Net cash (used in) provided by operatingactivities (17,706) 28,878

Cash Flows from Investing ActivitiesNet (deposit to) withdrawal from the mortgage escrow

account (2) 622Net deposit to the reserve for replacement account (11,805) (22,141)Net withdrawal from (deposit to) the residual receipts

account 41,823 (46)

Net purchase of fixed assets (7,424) (4,000)

Net cash provided by (used in) investingactivities 22,592 (25,565)

Net Increase in Cash 4,886 3,313

Cash - Beginning of year 4,027 714

Cash - End of year $ 8,913 $ 4,027



Statement of Cash Flows (Continued)

A reconciliation of change in deficiency in net assets to net cash from operating activities is as follows:

Year Ended

June 30, 2016 June 30, 2015

Change in deficiency in net assets $ (141,871) $ (135,363)Adjustments to reconcile change in deficiency in net assets to net

cash from operating activities:Depreciation 167,919 170,610Decrease (increase) in assets:

Tenant accounts receivable 563 (563)Accounts receivable - Other 673 (529)Prepaid expenses (4,871) (695)Cash restricted for tenant security deposits (2,599) 1,616

(Decrease) increase in liabilities:Accounts payable - Operations (268) (4,970)Accrued liabilities 3,486 (96)Tenant security deposits held in trust 115 (731)Prepaid revenue 970 (401)

Other changes to reconcile change in deficiency in netassets to net cash (used in) provided by operatingactivities (41,823) -

Net cash (used in) provided by operatingactivities $ (17,706) $ 28,878


Oakman Village Manor Senior HousingDevelopment Corp.d/b/a The Village of Oakman Manor

Notes to Financial StatementsJune 30, 2016 and 2015

Note 1 - Nature of Business and Significant Accounting Policies

Nature of Business - Oakman Village Manor Senior Housing Development Corp. d/b/aThe Village of Oakman Manor (the "Organization") is a not-for-profit organization thatowns and operates a 55-unit housing facility project for elderly persons (the "Project").The Project, located in Detroit, Michigan, is operated under HUD Section 202 of theNational Housing Act and is regulated by the U.S. Department of Housing and UrbanDevelopment (HUD) with respect to rental charges and operating methods.

The Organization is sponsored by Presbyterian Villages of Michigan (PVM). PVM is acomprehensive, diverse, and faith-based organization serving seniors in multiple settingssince 1945. Its mission, guided by its Christian heritage, is to serve seniors of all faithsand to create new possibilities for quality living. PVM's traditions of social accountabilityand servant leadership are further reflected in its statements of beliefs and values and itsvarious operational philosophies and practices.

Significant accounting policies are as follows:

Basis of Accounting - The Organization maintains its accounting records and preparesits financial statements on an accrual basis, which is in accordance with accountingprinciples generally accepted in the United States of America.

The accompanying schedule of expenditures of federal awards includes the federal grantactivity of Oakman Village Manor Senior Housing Development Corp. d/b/a The Villageof Oakman Manor and is presented on the same basis of accounting as the basic financialstatements. The information in this schedule is presented in accordance with therequirements of Uniform Administrative Requirements, Costs Principles, and AuditRequirements for Federal Awards (the "Uniform Guidance"). Therefore, some amountspresented in this schedule may differ from amounts presented in, or used in thepreparation of, the basic financial statements.

Deposits Held in Trust - In accordance with the Regulatory Agreement with HUD,the Organization is required to maintain a tenant security deposit trust account. Theamount of the trust account must at all times be equal to or exceed the aggregate of alloutstanding obligations to tenants for refundable security deposits. The tenant securitydeposits fund consists of cash.

Tenant Accounts Receivable and Allowance for Bad Debts - Accounts receivablerepresents amounts due from tenants. Tenant accounts generally are collectible as longas the tenant is occupying the unit. When the tenant vacates the unit, any unpaid balanceremaining after application of the security deposit is charged to bad debt expense.There was no allowance for bad debts at June 30, 2016 and 2015.

11



Note 1 - Nature of Business and Significant Accounting Policies(Continued)

Deposits - Funded - The funds held by the Organization represent a replacementreserve, a residual receipts reserve, and an insurance escrow. The insurance escrowrepresents funds set aside by the Organization to offset insurance expenses. Thereplacement reserve consists of deposits by the Organization to offset specific expensesand to replace structural elements and mechanical equipment upon the consent ofHUD. Future monthly commitments for the funding of the replacement reserve total$2,183. The residual receipts reserve consists of surplus funds calculated based on aHUD-prescribed formula and can be disbursed only at HUD's discretion. Excess residualreceipts are required to be remitted to HUD upon termination of the PRAC contract.Excess residual receipts that are deemed probable to be paid to or recaptured by HUDare recorded as a liability. The excess residual receipts reserve was $13,489 and$55,312 at June 30, 2016 and 2015, respectively, and is included in current liabilities onthe balance sheet. Each year, the liability is adjusted to reflect current-year activity tothe residual receipts, including required deposits, earned interest, approvedwithdrawals, and any adjustments to the amounts deemed probable to be paid to orrecaptured by HUD.

Fixed Assets - Land, buildings, furnishings, and furniture and equipment are recordedat cost when purchased or appraised value if donated. Depreciation is computed on astraight-line basis over the estimated useful lives of the assets, which range from 5 yearsto 40 years.

Maintenance, repairs, and renewals that do not involve any substantial betterments arecharged to expense when incurred. Expenditures that increase the useful life of theproperty are capitalized.

Impairment of Assets - The Organization recognizes impairment of long-lived assetsused in operations when indicators of impairment are present and the undiscountedcash flows estimated to be generated by those assets are less than the assets' carryingamount. No impairment of the Organization's rental property has occurred.

Classification of Net Assets - Net assets of the Organization are classified aspermanently restricted, temporarily restricted, or unrestricted depending on thepresence and characteristics of donor-imposed restrictions limiting the Organization'sability to use or dispose of contributed assets or the economic benefits embodied inthose assets. All net assets of the Organization at June 30, 2016 and 2015 are consideredunrestricted.

12



Note 1 - Nature of Business and Significant Accounting Policies(Continued)

Federal Income Taxes - No provision has been included in the financial statementssince the Organization is exempt from federal income taxes under Section 501(c)(3) ofthe Internal Revenue Code.

Rental Income - Units are designated for occupancy by eligible low-income tenantsunder an annual HUD Section 202 project rental assistance contract (PRAC) expiring onJanuary 9, 2017. These tenants contribute a portion of the contract rent based onformulas prescribed by the U.S. Department of Housing and Urban Development.Housing assistance payments are received for the balance of contract rent from HUD.

Regulatory Agreement - A Regulatory Agreement with HUD was signed inconnection with the mortgage note. No violations of this agreement were noted for theyears ended June 30, 2016 and 2015.

Use of Estimates - The preparation of financial statements in conformity withaccounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenue and expenses during thereporting period. Actual results could differ from those estimates.

Subsequent Events - The financial statements and related disclosures includeevaluation of events up through and including September 15, 2016, which is the date thefinancial statements were issued.

Note 2 - Capital Advance

The Organization obtained a capital advance from HUD which was used to assist infinancing the construction of the Project in accordance with the provisions of Section202 of the Housing Act of 1959. The capital advance at June 30, 2016 and 2015 is$4,778,700, bears no interest, and is not required to be repaid as long as the housingremains available to very low-income households and the aged and/or handicapped for aperiod of 40 years, ending August 2045. In addition, the Organization is subject to theadditional requirements of the HUD Section 202 program. If default occurs, then HUD,at its option, may accelerate the entire principal balance and charge interest. It is theOrganization's intent to comply with the program requirements. Based on the time andprovision requirements, the advance is recorded as a long-term liability. The capitaladvance is collateralized by the land and building of the Organization.

13



Note 3 - HOME Loans Funds

The Organization received a HOME loan from the City of Detroit under the HomeInvestments Partnership Act for a maximum amount of $222,000. The proceeds of theloan were used in connection with construction of the Project. The loan bears nointerest and will be deemed satisfied over 20 years if the Organization complies with theaffordable housing restrictions, in accordance with the HOME program. It is theOrganization's intent to comply with these restrictions ending January 2025. At June 30,2016 and 2015, the balance of the loan is the maximum amount of $222,000.

The Organization also received a HOME loan from Wayne County under the HomeInvestments Partnership Act for a maximum amount of $250,000. The proceeds of theloan were used in connection with construction of the Project. The loan bears nointerest and will be deemed satisfied over 20 years if the Organization complies with theaffordable housing restrictions, in accordance with the HOME program. It is theOrganization's intent to comply with these restrictions ending December 2025. At June30, 2016 and 2015, the balance of the loan is the maximum amount of $250,000.

In addition, the Organization received a HOME loan from the Michigan State HousingDevelopment Authority (MSHDA) under the Home Investments Partnership Act for amaximum amount of $400,000. The proceeds of the loan were used in connection withconstruction of the Project. The loan bears no interest over its 30-year term and is notrequired to be repaid as long as the property is not sold, transferred, or otherwiseconveyed voluntarily or involuntarily through foreclosure and as long as the Organizationcomplies with the affordable housing restriction agreement, which restricts the use andoccupancy of the Project and the Project's rental rates. It is the Organization's intent tocomply with these restrictions ending October 2035. At June 30, 2016 and 2015, thebalance of the loan is the maximum amount of $400,000.

Note 4 - Related Party Transactions

Director appointments are approved by Presbyterian Villages of Michigan (PVM), arelated not-for-profit organization that is also the HUD-approved management agent.

As of June 30, 2016 and 2015, $5,392 and $7,111, respectively, is due to PVM foradvance payment of operating expenditures and is included in accounts payable.

In addition, during the years ended June 30, 2016 and 2015, PVM Foundation providedthe Organization with $4,569 and $4,000, respectively, in contribution support throughthe allocation of funds raised by the Organization and matching grants from the PVMFoundation.

14



Note 4 - Related Party Transactions (Continued)

The property management agreement provides that a management fee in the amount of6.97 percent of gross rents collected be paid to PVM, limited to $44 per unit per month.In addition, the Organization pays accounting service fees to PVM, which are included inthe annual budget. The Organization paid management fees of $28,930 and $27,720 forthe years ended June 30, 2016 and 2015, respectively, to PVM. Also, the Organizationpaid accounting fees to PVM totaling $6,600 for both years ended June 30, 2016 and2015.

Note 5 - Current Vulnerability Due to Certain Concentrations

The Organization's sole asset is Oakman Village Manor Senior Housing DevelopmentCorp. d/b/a The Village of Oakman Manor. The Organization's operations areconcentrated in the senior housing market. In addition, the Organization operates in aheavily regulated environment. The operations of the Organization are subject to theadministrative directives, rules, and regulations of federal, state, and local regulatoryagencies, including, but not limited to, HUD. Such administrative directives, rules, andregulations are subject to change by an Act of Congress or an administrative changemandated by HUD. Such changes may occur with little notice or inadequate funding topay for the related cost, including additional administrative burden, to comply with achange.

15

Supplemental Information

16

Auditor's Report on Supplemental Information



We have audited the financial statements of HUD Project No. 044-EE087, Oakman VillageManor Senior Housing Development Corp. d/b/a The Village of Oakman Manor as of and for theyear ended June 30, 2016, and have issued our report thereon dated September 15, 2016, whichcontained an unmodified opinion on those financial statements. Our audit was performed forthe purpose of forming an opinion on the financial statements of Oakman Village Manor SeniorHousing Development Corp. d/b/a The Village of Oakman Manor taken as a whole. Theaccompanying supplemental information, including the schedule of expenditures of federalawards, is presented for the purpose of additional analysis as required by HUD and the UniformGuidance, and is not a required part of the financial statements. For purposes of electronicsubmission to the U.S. Department of Housing and Urban Development, Real EstateAssessment Center (REAC), the supplemental information is also deemed to include the financialdata template information as presented in the balance sheet and the statements of activities,changes in deficiency in net assets, and cash flows. Such information is the responsibility ofmanagement and was derived from and relates directly to the underlying accounting and otherrecords used to prepare the financial statements. The information has been subjected to theauditing procedures applied in the audit of the financial statements and certain additionalprocedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the financial statements or to the financialstatements themselves, and other additional procedures in accordance with auditing standardsgenerally accepted in the United States of America. In our opinion, the information is fairlystated in all material respects in relation to the financial statements as a whole.

September 15, 2016

17

pat.lomerson

Southfield West

pat.lomerson

Praxity


Balance Sheet DataJune 30, 2016

Assets

Current Assets1120 Cash - Operations $ 8,913

1200 Prepaid expenses 9,220

1100T Total current assets 18,133

Deposits - Held in Trust1191 Tenant deposits held in trust 16,336

Deposits - Funded1310 Escrow deposits 9,2511320 Replacement reserve 180,840

1340 Residual receipts reserve 13,489

1300T Total deposits - Funded 203,580

Fixed Assets

1410 Land and land improvements 46,092

1420 Buildings and building improvements 6,070,296

1440 Building equipment (portable) 1,831

1450 Furniture for project/tenant use 63,654

1460 Furnishings 109,421

1470 Maintenance equipment 6,334

1490 Miscellaneous fixed assets 29,804

1400T Total fixed assets 6,327,432

1495 Accumulated depreciation (1,656,966)

1400N Net fixed assets 4,670,466

1000T Total assets $ 4,908,515

18


Balance Sheet Data (Continued)June 30, 2016

Liabilities and Deficiency in Net Assets

Current Liabilities2110 Accounts payable - Operations $ 5,3922116 Accounts payable - Section 8 and other 1,4512120 Accrued wages payable 7,2542121 Accrued payroll taxes payable 3832190 Residual receipts liability 13,4892210 Prepaid revenue 970

2122T Total current liabilities 28,939

2191 Tenant deposits held in trust (contra) 13,379

Long-term Liabilities2310 Capital advance 4,778,7002322 HOME loans 872,000

2300T Total long-term liabilities 5,650,700

2000T Total liabilities 5,693,018

Deficiency in Net Assets3131 Deficiency in unrestricted net assets (784,503)

3130 Total deficiency in net assets (784,503)

2033T Total liabilities and deficiency in net assets $ 4,908,515

19


Statement of Activities DataYear Ended June 30, 2016

Rent Revenue5120 Rent revenue - Gross potential $ 181,8615121 Tenant assistance payments 256,3375190 Miscellaneous rent revenue 11

5100T Total rent revenue (potential at 100% occupancy) 438,209

Vacancies5220 Apartments (10,763)

5200T Total vacancies (10,763)

5152N Net rental revenue (rent revenue less vacancies) 427,446

Financial Revenue5410 Project operations 95430 Investments - Residual receipts 545440 Investments - Replacement reserve 171

5400T Total financial revenue 234

Other Revenue5910 Laundry and vending revenue 2,5595920 Tenant charges 1,4295970 Gifts 4,5695990 Miscellaneous revenue 409

5900T Total other revenue 8,966

5000T Total revenue 436,646

Administrative Expenses6203 Conventions and meetings 8996204 Management consultants 21,4966210 Advertising and marketing 1,0426250 Other renting expenses 5086310 Office salaries 3,0546311 Office expenses 6,7846320 Management fee 28,9306330 Manager or superintendent salaries 61,3126340 Legal expenses 4,8456350 Auditing expenses 6,5006351 Bookkeeping fees/Accounting services 6,6006370 Bad debts 2,8316390 Miscellaneous administrative expenses 3,393

6263T Total administrative expenses 148,194

20


Statement of Activities Data (Continued)Year Ended June 30, 2016

Utilities Expense6450 Electricity $ 22,6036451 Water 5,6236452 Gas 11,7876453 Sewer 13,737

6400T Total utilities expense 53,750

Operating and Maintenance Expenses6510 Payroll 33,9186515 Supplies 10,1186520 Contracts 37,1986525 Garbage and trash removal 1,7286530 Security payroll/contract 65,2736546 Heating/Cooling repairs and maintenance 5866548 Snow removal 1,127

6590 Miscellaneous operating and maintenance expenses 25,285

6500T Total operating and maintenance expenses 175,233

Taxes and Insurance6711 Payroll taxes (FICA) 7,2026720 Property and liability insurance (hazard) 20,1126722 Workers' compensation 1,909

6723 Health insurance and other employee benefits 4,139

6700T Total taxes and insurance 33,362

Financial Expenses

6890 Miscellaneous financial expenses 59

6800T Total financial expenses 59

6000T Total Costs of Operations Before Depreciation 410,598

5060T Change in Net Assets Before Depreciation 26,048

6600 Depreciation Expense 167,919

3250 Change in Total Net Assets $ (141,871)

21


Statement of Activities Data (Continued)Supplemental InformationYear Ended June 30, 2016

S1000-010 1 Total principal required under the mortgage, even if payments undera workout agreement are less or more than those required under themortgage $ 0

S1000-020 2 Replacement reserve deposits required by the Regulatory Agreementor amendments thereto, even if payments may be temporarilysuspended or waived 26,192

S1000-030 3 Replacement reserve or residual receipt releases that are included asexpense items on this profit and loss statement 7,066

S1000-040 4 Project improvement reserve releases under the flexible subsidyprogram that are included as expense items on this profit and lossstatement 0

22


Statement of Changes in Deficiency in Assets DataYear Ended June 30, 2016

S1100-050 Deficiency in Net Assets - July 1, 2015 $ (642,632)

3250 Increase in deficiency in net assets (141,871)

3130 Deficiency in Net Assets - June 30, 2016 $ (784,503)

23


Statement of Cash Flows DataYear Ended June 30, 2016

Cash Flows from Operating ActivitiesReceipts:

S1200-010 Rental $ 429,652S1200-020 Interest 234S1200-025 Gifts 4,569

S1200-030 Other cash receipts 4,397

S1200-040 Total receipts 438,852

Disbursements:S1200-050 Administrative (93,362)S1200-070 Management fee (28,930)S1200-090 Utilities (53,832)S1200-100 Salaries and wages (98,284)S1200-110 Operating and maintenance (141,351)S1200-140 Property insurance (20,126)S1200-150 Miscellaneous taxes and insurance (18,130)S1200-160 Tenant security deposits (2,484)

S1200-220 Miscellaneous financial (59)

S1200-230 Total disbursements (456,558)

S1200-240 Net cash used in operating activities (17,706)

Cash Flows from Investing ActivitiesS1200-245 Net deposit to the mortgage escrow account (2)S1200-250 Net deposit to the reserve for replacement account (11,805)S1200-260 Net withdrawal from the residual receipts account 41,823

S1200-330 Net purchase of fixed assets (7,424)

S1200-350 Net cash provided by investing activities 22,592

S1200-470 Net Increase in Cash 4,886

S1200-480 Cash - Beginning of year 4,027

S1200T Cash - End of year $ 8,913

24


Statement of Cash Flows Data (Continued)Year Ended June 30, 2016

A reconciliation of change in deficiency in net assets to net cash from operating activities is as follows:

3250 Change in deficiency in deficiency in net assets $ (141,871)Adjustments to reconcile change in deficiency in net assets to net cash

from operating activities:6600 Depreciation 167,919

Decrease (increase) in assets:S1200-490 Tenant accounts receivable 563S1200-500 Accounts receivable - Other 673S1200-520 Prepaid expenses (4,871)S1200-530 Cash restricted for tenant security deposits (2,599)

(Decrease) increase in liabilities:S1200-540 Accounts payable - Operations (268)S1200-560 Accrued liabilities 3,486S1200-580 Tenant security deposits held in trust 115S1200-590 Prepaid revenue 970S1200-600 Other changes to reconcile change in deficiency in net assets to

net cash used in operating activities (41,823)

S1200-610 Net cash used in operating activities $ (17,706)

25


Supplemental InformationYear Ended June 30, 2016

1. Schedule of Reserve for Replacements - In accordance with the provisions of theRegulatory Agreement, restricted cash is held by Huntington Bank to be used for replacementof property with the approval of HUD as follows:

1320P Balance - July 1, 2015 $ 169,035

1320DT Monthly deposits ($2,182.66 x 12) 26,192

1320INT Interest 171

1320WT Approved withdrawals (14,491)

1320OWT Other withdrawals - Bank service charges (67)

1320 Balance - June 30, 2016 $ 180,840

2. Schedule of Residual Receipts - In accordance with the provisions of the RegulatoryAgreement, surplus cash is calculated per the HUD formula and deposited into the residualreceipts account. Restricted cash is held by Huntington Bank to be used for any projectpurpose with the approval of HUD as follows:

1340P Balance - July 1, 2015 $ 55,312

1340INT Interest 54

1340WT Approved withdrawals (41,812)

1340OWT Other withdrawals - Bank service charges (65)

1340 Balance - June 30, 2016 $ 13,489

3. Computation of Surplus Cash - Form HUD 93486 - See attached

4. Schedule of Changes in Fixed Asset Accounts - See attached

5. Schedule of 5300 Accounts - N/A

6. Schedule of 6900 Accounts - N/A

7. Nursing Home Data - N/A

26


Supplemental Information (Continued)Year Ended June 30, 2016

8. Detail of Accounts:

2190 Residual receipts liability $ 13,489

2322 HOME loan funds $ 872,000

6390 Miscellaneous $ 81Bank charges 1,019Professional service fees 625Computer user training 24Dues and memberships 844Unemployment 800

Total $ 3,393

6590 Miscellaneous maintenance $ 933Vehicle maintenance 1,507System maintenance, repair, and support 4,987Connectivity 11,419Minor system purchases 6,015Municipal fees 424

Total $ 25,285

S1200-600 Recapture of excess residual receipts $ (41,812)Residual receipts liability adjustment (11)

Total $ (41,823)

S1200-030 Laundry revenue $ 2,559Tenant damages 1,429Miscellaneous 209Beauty shop 200

Total $ 4,397

27


Schedule of Changes in Fixed Asset AccountsYear Ended June 30, 2016

Assets Accumulated Depreciation

Balance

July 1, 2015 Additions Deductions

Balance

June 30, 2016

Balance

July 1, 2015

Current

Provision Deductions

Balance

June 30, 2016

Net BookValue

June 30, 2016

1410 Land and land improvements $ 46,092 $ - $ - $ 46,092 $ 4,086 $ 874 $ - $ 4,960 $ 41,1321420 Buildings and building improvements 6,062,872 7,424 - 6,070,296 1,292,245 155,420 - 1,447,665 4,622,6311440 Building equipment (portable) 1,831 - - 1,831 1,281 366 - 1,647 1841450 Furniture for project/tenant use 63,654 - - 63,654 63,654 - - 63,654 -1460 Furnishings 109,421 - - 109,421 93,340 10,774 - 104,114 5,3071470 Maintenance equipment 6,334 - - 6,334 4,637 485 - 5,122 1,2121490 Miscellaneous fixed assets 29,804 - - 29,804 29,804 - - 29,804 -

Total $ 6,320,008 $ 7,424 $ - $ 6,327,432 $ 1,489,047 $ 167,919 $ - $ 1,656,966 $ 4,670,466

Fixed Asset Addition Detail:

Buildings and building improvements -

Flooring $ 7,424

28


Schedule of Expenditures of Federal AwardsYear Ended June 30, 2016

Federal Agency/Pass-through Agency/Program TitleCFDA

NumberFederal

Expenditures

U.S. Department of Housing and Urban Development - SupportiveHousing for the Elderly:

Capital Advance 14.157 $ 4,778,700Project Rental Assistance Contract 14.157 256,337

Total federal awards $ 5,035,037

29


Computation of Surplus CashYear Ended June 30, 2016

S1300-010 Cash $ 25,249

S1300-040 Total Cash 25,249

Current Obligations

S1300-075 Accounts Payable - 30 Days 6,843

S1300-100 Accrued Expenses (Not Escrowed) 7,637

2210 Prepaid Revenue 970

2191 Tenant/Patient Deposits Held In Trust (Contra) 13,379

S1300-140 Total Current Obligations 28,829

S1300-150 Surplus Cash (Deficiency) $ (3,580)

S1300-210 Deposit Due Residual Receipts $ -

30

Report on Internal Control Over FinancialReporting and on Compliance and OtherMatters Based on an Audit of Financial

Statements Performed in Accordance withGovernment Auditing Standards

31

Report on Internal Control Over Financial Reporting and on Complianceand Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards


To Management and the Board of DirectorsOakman Village Manor Senior Housing Development Corp.


We have audited, in accordance with the auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States, the financialstatements of Oakman Village Manor Senior Housing Development Corp. d/b/a The Village ofOakman Manor (the "Organization"), which comprise the balance sheet as of June 30, 2016, andthe related statements of activities, changes in deficiency in net assets, and cash flows for theyear then ended, and the related notes to the financial statements, and have issued our reportthereon dated September 15, 2016.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Oakman VillageManor Senior Housing Development Corp. d/b/a The Village of Oakman Manor's internalcontrol over financial reporting (internal control) to determine the audit procedures that areappropriate in the circumstances for the purpose of expressing our opinion on the financialstatements, but not for the purpose of expressing an opinion on the effectiveness of theOrganization's internal control. Accordingly, we do not express an opinion on the effectivenessof the Organization's internal control.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, toprevent, or detect and correct, misstatements on a timely basis. A material weakness is adeficiency, or a combination of deficiencies, in internal control such that there is a reasonablepossibility that a material misstatement of the Organization's financial statements will not beprevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency,or a combination of deficiencies, in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the firstparagraph of this section and was not designed to identify all deficiencies in internal control thatmight be material weaknesses or significant deficiencies. Given these limitations, during our auditwe did not identify any deficiencies in internal control that we consider to be materialweaknesses. However, material weaknesses may exist that have not been identified.

32

pat.lomerson

Southfield West

pat.lomerson

Praxity

To Management and the Board of DirectorsOakman Village Manor Senior Housing Development Corp.


Compliance and Other Matters

As part of obtaining reasonable assurance about whether Oakman Village Manor Senior HousingDevelopment Corp. d/b/a The Village of Oakman Manor's financial statements are free frommaterial misstatement, we performed tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements, noncompliance with which could have a direct andmaterial effect on the determination of financial statement amounts. However, providing anopinion on compliance with those provisions was not an objective of our audit and, accordingly,we do not express such an opinion. The results of our tests disclosed no instances ofnoncompliance or other matters that are required to be reported under Government AuditingStandards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control andcompliance and the results of that testing, and not to provide an opinion on the effectiveness ofthe Organization's internal control or on compliance. This report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the Organization'sinternal control and compliance. Accordingly, this communication is not suitable for any otherpurpose.

Southfield, MichiganSeptember 15, 2016

33

Report on Compliance for Each MajorFederal Program; Report on Internal

Control Over Compliance

34

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance




Report on Compliance for Each Major Federal Program

We have audited Oakman Village Manor Senior Housing Development Corp. d/b/a The Villageof Oakman Manor's (the "Organization") compliance with the types of compliance requirementsdescribed in the U.S. Office of Management and Budget (OMB) Compliance Supplement thatcould have a direct and material effect on its major federal program for the year ended June 30,2016. Oakman Village Manor Senior Housing Development Corp. d/b/a The Village of OakmanManor's major federal program is identified in the summary of auditor's results section of theaccompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts,and grants applicable to its federal program.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of Oakman Village ManorSenior Housing Development Corp. d/b/a The Village of Oakman Manor's major federalprograms based on our audit of the types of compliance requirements referred to above.

We conducted our audit of compliance in accordance with auditing standards generally acceptedin the United States of America; the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States; and theaudit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards (the "UniformGuidance"). Those standards and the Uniform Guidance require that we plan and perform theaudit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on amajor federal program occurred. An audit includes examining, on a test basis, evidence aboutOakman Village Manor Senior Housing Development Corp. d/b/a The Village of OakmanManor's compliance with those requirements and performing such other procedures as weconsidered necessary in the circumstances.

35

pat.lomerson

Southfield West

pat.lomerson

Praxity



We believe that our audit provides a reasonable basis for our opinion on compliance for eachmajor federal program. However, our audit does not provide a legal determination of OakmanVillage Manor Senior Housing Development Corp. d/b/a The Village of Oakman Manor'scompliance.

Opinion on Each Major Federal Program

In our opinion, Oakman Village Manor Senior Housing Development Corp. d/b/a The Village ofOakman Manor complied, in all material respects, with the types of compliance requirementsreferred to above that could have a direct and material effect on its major federal program forthe year ended June 30, 2016.

Report on Internal Control Over Compliance

Management of Oakman Village Manor Senior Housing Development Corp. d/b/a The Village ofOakman Manor is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning andperforming our audit of compliance, we considered Oakman Village Manor Senior HousingDevelopment Corp. d/b/a The Village of Oakman Manor's internal control over compliance withthe types of requirements that could have a direct and material effect on each major federalprogram to determine the auditing procedures that are appropriate in the circumstances for thepurpose of expressing an opinion on compliance for each major federal program and to test andreport on internal control over compliance in accordance with Uniform Guidance, but not forthe purpose of expressing an opinion on the effectiveness of internal control over compliance.Accordingly, we do not express an opinion on the effectiveness of the Organization's internalcontrol over compliance.

A deficiency in internal control over compliance exists when the design or operation of a controlover compliance does not allow management or employees, in the normal course of performingtheir assigned functions, to prevent, or detect and correct, noncompliance with a type ofcompliance requirement of a federal program on a timely basis. A material weakness in internalcontrol over compliance is a deficiency, or a combination of deficiencies, in internal control overcompliance such that there is a reasonable possibility that material noncompliance with a type ofcompliance requirement of a federal program will not be prevented, or detected and corrected,on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or acombination of deficiencies, in internal control over compliance with a type of compliancerequirement of a federal program that is less severe than a material weakness in internal controlover compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described inthe first paragraph of this section and was not designed to identify all deficiencies in internalcontrol over compliance that might be material weaknesses or significant deficiencies. We didnot identify any deficiencies in internal control over compliance that we consider to be materialweaknesses. However, material weaknesses may exist that have not been identified.

36



The purpose of this report on internal control over compliance is solely to describe the scope ofour testing of internal control over compliance and the results of that testing based on therequirements of the Uniform Guidance. Accordingly, this report is not suitable for any otherpurpose.

Southfield, MichiganSeptember 15, 2016

37

Schedule of Findings and Questioned Costs

38


Schedule of Findings and Questioned CostsYear Ended June 30, 2016

Section I - Summary of Auditor's Results

Financial Statements

Type of auditor's report issued: Unmodified

Internal control over financial reporting:

Material weakness(es) identified? Yes X No

Significant deficiency(ies) identified that arenot considered to be material weaknesses? Yes X No

Noncompliance material to financial statements noted? Yes X None reported

Federal Awards

Internal control over major programs:

Material weakness(es) identified? Yes X No

Significant deficiency(ies) identified that arenot considered to be material weaknesses? Yes X None reported

Type of auditor's report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance withSection 2 CFR 200.516 (a)? Yes X No

Identification of major program:

CFDA Number Name of Federal Program or Cluster Opinion

14.157 Supportive Housing for the Elderly - Project RentalAssistance Contract and Capital Advance Unmodified

Dollar threshold used to distinguish between type A and type B programs: $750,000

Auditee qualified as low-risk auditee? X Yes No

39


Schedule of Findings and Questioned Costs (Continued)Year Ended June 30, 2016

Section II - Financial Statement Audit Findings

ReferenceNumber Finding

QuestionedCosts

CurrentYear: None


QuestionedCosts

PriorYear: None

Section III - Federal Program Audit Findings


QuestionedCosts

CurrentYear: None


QuestionedCosts

PriorYear: None

40

Documents

Oakman Village Manor Senior Housing Development Corp. d/b ...financials.pvm.org/files/PVM-The Village of Oakman... · belief, the same is a true statement of the financial condition