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HomeMy WebLinkAboutHuntington Beach Public Facilities Corporation Report on Exa • HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION REPORT ON EXAMINATION OF FINANCIAL STATEMENTS For The Year Ended ' June 30, 1975 I . COOPERS & LYBRAND CERTIFIED PUBLIC ACCOUNTANTS t • HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION NOTES TO FINANCIAL STATEMENTS, Continued • 1. Summary Of Accounting Policies ; Continued: d. Organization: The Huntington Beach Public Facilities Corporation was incorporated as . a nonprofit corporation for the purpose of financing the construction of public buildings for the City of Huntington Beach. The Corporation is currently completing construction of the Civic Center and Central Library ,f projects . 2. Leases : • Civic Center : The Corporation has entered into a lease and sublease agreement with the City of Huntington Beach for the Huntington Beach Civic Center. The city has leased to the Corporation the Civic Center site for $350,000 advance rental. Term of the • lease is from January 15, 1972 to one week after the termination of the sublease . The Corporation has subleased the Civic Center site and improve- ments to the city for $854,900 annual rental. The sublease commenced July 1, 1974 for a term of 30 years or until after • all debts of the first bond issue (see Note 3 ) have been discharged, whichever comes first . Library : The Corporation has entered into a lease and sublease agreement • with the City of Huntington Beach for the Central Library . The city has leased the site to the Corporation for $300,000 advance rental. Term of the lease is from September 1, 1972 to one week after termination of the sublease . The Corporation has subleased the library and improvements to the city for $399,000 annual rent . The sublease commenced • February 15, 1975 for a term of 30 years or until after all debts of the second bond issue (see Note 3) have been discharged, whichever comes first . Civic Center And Library : • The city is to pay all taxes , insurance, administrative and maintenance costs under the leases . Title to site improvements will pass to the city at the termination of the leases . Advance rentals paid to the city have been deferred and are included in long-term leases receivable . Revenue from the above leases is being recorded under the financing method. Accordingly, the • Continued • HUNTINOTON BEACH PUBLIC FACILITIES CORPORATION NOTES TO FINANCIAL STATEMENTS, Continued 1" 2. Leases, Continued: long-term leases receivable is being amortized over the total estimated lives of the leases based upon an effective interest rate of approximately 7-1/4% . The effective interest rate is subject to change based upon any reimbursements the Corporation may make to the city with excess funds (.see Note lc) or any further improvements to the projects without a rental adjustment . r - 3. Bonds Payable : Original Balance Amount Not Matured Sold June 30, 1975 First issue : Civic Center leasehold mortgage bonds, with interest rates 5. 0% to 7 . 0%, payable semiannually on January 15 and July 15. Maturing annually on January 15 in varying amounts from $210, 000 to $890, 000 with final maturity in 1998 $11 100 000 $10 900 000 • Second issue : Library leasehold mortgage bonds, with interest rates 5 . 0% to 7 . 0%, payable semi- annually on March 1 and September 1. Maturing annually on September 1 in varying amounts from $105, 000 to $385,000 with final maturity in 1997 $5 000 000 $5 000 000 The bonds were issued under separate trust indentures with the '• Bank of America N.T. & S.A. as trustee. The Corporation, at its option, may redeem first issue bonds maturing on or after January 15, 1983 and second issue bonds maturing on or after September 1, 1983 with funds from any source. Redemption shall be at the principal amount plus a premium equal to one-fourth of 1% for each year and remaining fraction of a year between .the • date of redemption and the date of maturity up to a premium of 3-1/2% plus accrued interest to the date of redemption. Continued • • HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION NOTES TO FINANCIAL STATEMENTS, Continued 4. Commitments : • Unrecorded contractual obligations for construction of the Civic Center and Library amounted to approximately $90,000 . r • • • • • • • • • HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION • REPORT ON EXAMINATION OF FINANCIAL STATEMENTS For The Year Ended June 30, 1975 • • • • • COOPERS & LYBRAND CERTIFIED PUBLIC ACCOUNTANTS IN PRINCIPAL AREAS OF THE WORLD • Board of Directors Huntington Beach Public Facilities Corporation Huntington Beach, California We have examined the balance sheet of the Civic Center Project and Library Project funds of the Huntington Beach Public Facilities Corporation as of June 30, 1975 and. the related analysis of changes in fund and reserve balances for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances . In our opinion, the aforementioned financial statements present fairly the financial position of the Civic Center Project and Library Project funds of the Huntington Beach Public Facilities Corporation at June 30, 1975, and the results of operations of such funds for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. J Newport Beach, California August 27, 1975 HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION BALANCE SHEET ALL FUNDS • June 30, 1975 Civic Center Library Total Project Project • (Memorandum (Memorandum (Memorandum Only) Only) Only) A S S E T S: Cash held by trustee $2 552 $1 972 $580 Time certificates of deposit 1 323 835 901 534 422 301 Temporary investments in U.S. Government securities, at cost (market $1,178,000) 1 263 101 854 286 408 815 Accrued interest receivable 19 . 682 9 489 10 193 Long-term leases receivable less unearned income of $14,129,873 (Note 2) 13 406 302 9 068 923 4 337 379 Due from other funds 155 135 94 311 60 824 Due from City of Huntington Beach 53 750 3 060 50 690 16 224 357 10 933 575 5 290 782 LIABILITIES, RESERVES AND FUND BALANCES: Bonds payable (Note 3) 15 900 000 10 900 000 5 000 000 Accrued interest payable 381 531 283 575 97 956 Accounts payable, construction 344 878 113 772 231 106 Due to other funds 155 135 94 311 60 824 Due to City of Huntington Beach 96 .878 91 152 5 726 16 878 422 11 482 810 5 395 612 Reserve for bond retirement 1 269 305 860 456 408 849 Fund balances (deficit ) (1 923 370) (1 4o9 691) (513 679) $16 $10 933 575 $5 290 782 The accompanying notes are an integral part of this statement . HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION BALANCE SHEET CIVIC. CENTER PROJECT June 30, 1975 Total Debt Bond Administrative (Memorandum Construction Reserve Service Redemption Expense Revenue Only) Fund Fund Fund Fund Fund Fund A S S E T S: Cash held by trustee $1 972 $902 $614 $456 Time certificates of deposit 901 534 639 000 33 404 $169 564 $2 616 $56 950 Temporary investment in U.S. Government securities, at cost (market $791,500) 854 286 854 286 Accrued interest receivable 9 489 533 5 556 842 1 480 19 1 059 Long-term lease receivable, less unearned income of $9,738,877 (Note 2) 9 068 923 9 068 923 Due from other funds 94 311 39 506 54 805 Due from City of Huntington Beach 3 060 3 060 l0 9� 575 9 748 864 860 456 8g 507 171 044 66 58 00g LIABILITIES, RESERVES AND FUND BALANCES: Bonds payable (Note 3 ) 10 900 000 10 900 000 Accrued interest payable 283 575 283 575 Accounts payable, construction 113 772 113 772 Due to other Funds 94 311 33 242 3 060 58 009 Due to City of Huntington Beach 91 152 91 152 11 482 810 11 388 499 33 242 3 060 58 009 Reserve for bond retirement 860 456 860 456 Fund balances (deficit) (1 409 691) (1 639 635) 89 507 137 802 2 635 $ $9 748 864 $860 456 $89 507 $171 044 $5 695 $58 009 The accompanying notes are an integral part of this statement. HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION BALANCE SHEET LIBRARY PROJECT June 30, 1975 Interest Total During Debt Administrative (Memorandum Construction Construction Reserve Service Expense Revenue Only) Fund Fund Fund Fund Fund Fund A S S E T S: Cash held by trustee $580 $580 Time certificates of deposit 422 301 421 000 $1 301 Temporary investment in U.S. Government securities,at cost (market .$386,500) 408 815 1 002 $407 813 Accrued interest receivable 10 193 324 20 9 849 Long-term lease receivable, less unearned income of $4,290,996 (Note 2) 4 337 379 4 337 379 Due from other funds 60 824 34 867 $25 957 Due from City of Huntington Beach 50 690 $562 $50 128 290 782 4 795 152 1 21 417 662 25 957 L22 �0 128 LIABILITIES, RESERVES AND FUND BALANCES: Bonds payable (Note 3) 5 000 000 5 000 000 Accrued interest payable 97 956 97 956 Accounts payable, construction 231 106 231 106 Due to other funds 60 824 1 321 8 813 562 50 128 Due to City of Huntington Beach 5 726 5 726 5 395 612 5 334 788 1 321 8 813 562 50 128 Reserve for bond retirement 408 849 408 849 Fund balances (deficit) (513 679) (539 636) 25 957 $5 290 782 $4 795 152 $1 i21 $417 662 $25 957 $�62 $50 128 The accompanying notes are an integral part of this statement. i HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION ANALYSIS OF CHANGES IN FUND AND RESERVE BALANCES CIVIC CENTER PROJECT For The Year Ended June 30, 1975 Interest Total During Debt Bond Administrative (Memorandum Construction Construction Reserve Service Redemption Expense Revenue Only) Fund Fund Fund Fund Fund Fund Fund Reserve balance, July 1, 1974 $861 174 $861 174 Fund balances (deficit), July 1, 1974 (1 650 396) ($1 465 856) ($184 540) Revenues: Lease 854 900 $854 900 Interest income 168 700 67 116 56 232 $31 498 $12 660 $135 1 059 Total revenue 1 023 600 67 116 56 232 31 498 12 660 135 855 959 Expenditures: Interest expense 626 293 626 293 Administrative expense 707 707 Reduction of lease receivable 156 613 156 613 Total expenditures 783 613 783 613 Excess revenue over expenditures 239 987 (716 497) 56 232 31 498 12 660 135 855 959 Transfer from (to) other funds 542 718 184 540 (56 950) 58 009 125 142 2 500 (855 959) Reserve balance, June 30, 1975 $860 456 $860 456 Fund balances (deficit), June 30, 1975 ($1 409 691) ($ $89 507 $137 802 $2 635 - The accompanying notes are an integral part of this statement. HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION ANALYSIS OF CHANGES IN RESERVE AND FUND BALANCES LIBRARY PROJECT For The Year Ended June 30, 1975 Interest Total During Debt Administrative (Memorandum Construction Construction Reserve Service Expense Revenue Only) Fund Fund Fund Fund Fund Fund Reserve balance, July 1, 1974 $417 662 $417 662 Fund balances (deficit), July 1, 1974 (486 958) ($535 936) $48 978 Revenues: Lease 149 625 $149 625 Interest income 144 416 114 286 3 865 26 265 Total revenue 294 041 114 286 3 865 26 265 149 625 Expenditures: Interest expense 293 867 110 200 183 667 Administrative expense 1 956 1 956 Reduction of lease receivable 33 752 33 752 Total expenditures 329 575 145 908 183 667 Excess revenue over expenditures (35 534) (31 622) (179 802) 26 265 149 625 Transfer from (to) other funds - 27 922 130 824 (35 078) $25 957 (149 625) Reserve balance, June 30, 1975 $408 849 $408 849 Fund balances (deficit), June 30, 1975 ($513 67g) ($519 a The accompanying notes are an integral part of this statement. • HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION NOTES TO FINANCIAL STATEMENTS 1. Summary Of Accounting Policies : a. Method Of Accounting: The Corporation uses a modified accrual basis of accounting under which expenditures are recorded when incurred and revenues are generally recorded when received. Revenue from lease operations is r.ecorded on the financing method. b. Interest Income: Until completion of a project, interest earned in the Interest During Construction Fund shall be transferred to • the Construction Fund and interest earned in the Reserve Fund may be transferred to the Construction Fund. Upon completion of a project, interest earned in the various funds will be used first to make up any deficiency in that fund and second it will be transferred to the Rental Revenue • Fund. C . Funds : Upon completion of construction, a Rental Revenue Fund will be established into which all lease and other revenues and • any excess Construction Funds will be deposited. The Constructions Funds have been left open to pay for additions , changes and modifications. to the projects as approved by the directors . Funds in the Rental Revenue Fund will be disbursed, first • to a Debt Service Fund in an amount sufficient to pay one succeeding principal and two succeeding interest install- ments, second any amount., necessary to restore Reserve Fund to an amount equal to one year' s lease revenue, third to an Administrative Expense Fund an amount equal to the budgeted administrative expenses of the Corporation, and fourth to a • Bond Redemption Fund all remaining amounts . The Bond Redemption Fund will be used first to make up any deficiency in the Debt Service Fund, Reserve Fund, or Administrative Expense Fund in that order and then may be used to purchase or redeem outstanding bonds, or for changes, • additions or alterations to the project or to reimburse the city for rent paid to the Corporation. Continued •