1 of 37
May 17, 2022, Item #4
DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
AGENDA REPORT CityofPoway
May 17, 2022
Honorable Chairman and Members of the Housing Authority Robert Manis, Director of Development Services /vl
Marie Sanders, Senior Management Analyst Jf
(858) 668-4637 or [email protected] ~
Poway Housing Successor Annual Report Fiscal Year 2020-21
CITY COUNCIL
Pursuant to California Health and Safety Code Sections 34176 and 34176.1 (f) (Dissolution Law), the Poway Housing Authority, in its capacity as Housing Successor to the dissolved Poway Redevelopment Agency, must prepare an annual report detailing its activities during each fiscal year. The Poway Housing Successor Annual Report for Fiscal Year 2020-21 (Attachment A), and the Poway Housing Authority Basic Financial Statements and Independent Auditors Report for the year ending June 30, 2021 (Attachment B), are included with this agenda report for review by the Poway Housing Authority Board. The Poway City Council also sits as the Poway Housing Authority Board.
Recommended Action:
It is recommended the Poway Housing Authority Board receive and file this report.
Discussion:
Part 1.85, Division 24 of the California Health and Safety Code, particularly Sections 34176 and 34176.1 (f), require that the Housing Successor provide an annual report of the Successor's activities during the prior fiscal year. The purpose of the report is to provide the governing body of the Housing Successor with an annual report on the housing assets and activities of the Housing Successor. The report is to be provided to the Poway Housing Authority Board, along with an independent financial audit of the Low-and Moderate-Income Housing Asset Fund (LMIHAF) within six months after the end of each fiscal year. Due to Poway's annual timing for completion of the Housing Authority audit, it is not possible for this report to be completed within the six-month period. However, there is no penalty for delayed submission of the report
The Poway Housing Successor Annual Report for Fiscal Year 2020-21 indicates a balance in the LMIHAF of $3,961,462. LMIHAF monies can be spent to acquire, rehabilitate, acquire long term affordability covenants for, or preserve lower income housing (affordable to households earning 80 percent of median income or less). Additionally, funds may be use for program administration and monitoring as well as used for homelessness prevention and rapid rehousing services. The source of funding for the LMIHAF is derived from the previous balance of Redevelopment financing, program income from 2 of 37
May 17, 2022, Item #4
operations, repayments of loans, and land sales.
Environmental Review:
This item is not subject to California Environmental Quality Act (CEQA) review.
Fiscal Impact:
There is no fiscal impact associated with this item.
Public Notification:
None.
Attachments:
A. Poway Housing Successor Annual Report for Fiscal Year 2020-21 B. Poway Housing Authority Basic Financial Statements and Independent Auditors Report for the year ended June 30, 2021
Reviewed/ Approved By:
Assistant City Manager
Reviewed By:
Alan Fenstermacher
City Attorney City Manager
May 17, 2022, Item #4
POWAY HOUSING SUCCESSOR ANNUAL REPORT
REGARDING THE LOW-AND MODERATE-INCOME HOUSING ASSET FUND FOR FISCAL YEAR 2020-2021
PURSUANT TO CALIFORNIA HEALTH AND SAFETY CODE SECTION 34176.1(f)
FOR THE
POWAY HOUSING AUTHORITY
This Housing Successor Annual Report (Report) regarding the Low-and Moderate-Income Housing Asset Fund (LMIHAF) has been prepared pursuant to California Health and Safety Code Section 34176.1 (f) and is dated as of May 17, 2022. This Report sets forth certain details of the Poway Housing Authority, in its capacity as Housing Successor to the dissolved Poway Redevelopment Agency, activities during Fiscal Year 2020-21 (Fiscal Year). The purpose of this Report is to provide the governing body of the Housing Successor an annual report on the housing assets and activities of the Housing Successor under Part 1.85, Division 24 of the California Health and Safety Code, in particular sections 34176 and 34176.1 (Dissolution Law).
The following Report is based upon information prepared by Housing Successor staff and information contained within the Poway Housing Authority Basic Financial Statements and Independent Auditor's Report for Fiscal Year 2020-21 as prepared by Davis Farr, LLP, which Audit is separate from this annual summary report; further, this report conforms with and is organized into sections I. through XII., inclusive, pursuant to the Dissolution Law:
I. Amount Deposited into LMIHAF: This section provides the total amount of funds deposited into the LMIHAF during the Fiscal Year. Any amounts deposited for items listed on the Recognized Obligation Payment Schedule (ROPS) must be distinguished from the other amounts deposited.
II. Ending Balance of LMIHAF: This section provides a statement of the balance in the LMIHAF as of the close of the Fiscal Year. Any amounts deposited for items listed on the ROPS must be distinguished from the other amounts deposited.
Ill. Description of Expenditures from LMIHAF: This section provides a categorized description of the expenditures made from the LMIHAF during the Fiscal Year.
IV. Statutory Value of Assets Owned by Housing Successor: This section provides the statutory value of real property owned by the Housing Successor, the value of loans and grants receivables, and the sum of these two amounts.
V. Description of Transfers: This section describes transfers pursuant to Health and Safety Code Section 34176.1 ( c)(2), if any, to another housing successor agency made in previous Fiscal Year(s), including whether the funds are unencumbered and the status of projects, if any, for which the transferred LMIHAF will be used. The sole purpose of the transfers must be for the development ~f transit priority projects, permanent supportive housing, housing for agricultural employees or special needs housing.
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2020 -2021 May 17, 2022, Item #4
VI.
Project
Descriptions:
This
section
describes
any
project
for
which
the
Housing
Successor
receives
or
holds
property
tax
revenue
pursuant
to
the
ROPS
and
the
status
of
that
project.
VII.
Status
of
Compliance
with
Section
33334.16:
This
section
provides
a status
update
on
compliance
with
Section
33334
.16
for
interests
in
real
property
acquired
by
the
former
redevelopment
agency
prior
to
February
1,
2012
. For
interests
in
real
property
acquired
on
or
after
February
1,
2012,
the
Housing
Successor
must
provide a
status
update
on
the
project.
The
Poway
Housing
Successor
has
acquired
two
properties
since
February
1,
2012.
VIII.
Description
of
Outstanding
Obligations
under
Section
33413:
This
section
describes
the
outstanding
inclusionary
and
replacement
housing
obligations,
if any,
under
Section
33413
that
remained
outstanding
prior
to
dissolution
of
the
former
redevelopment
agency
as
of
February
1,
2012,
along
with
the
Housing
Successor's
progress
in
meeting
those
prior
obligations,
if
any,
of
the
former
redevelopment
agency
and
how
the
Housing
Successor's
plans
to
meet
unmet
obligations,
if any
.
IX.
Income
Test:
This
section
provides
the information
required
by
Section
34176
.1 (a)(3)(B),
or
a
description
of
expenditures
by
income
restriction
for
five-year
period,
with
the
time
period
beginning
January
1,
2014,
and
whether
the
statutory
thresholds
have
been
met.
X.
Senior
Housing
Test:
This
section
provides
the
percentage
of
units
of
deed-restricted
rental
housing
restricted
to
seniors
and
assisted
individually
or
jointly
by
the
Housing
Successor,
its
former
redevelopment
Agency,
and
its
host
jurisdiction
within
the
previous
10 years
in
relation
to
the
aggregate
number
of
units
of
deed-restricted
rental
housing
assisted
individually
or
jointly
by
the
Housing
Successor,
its
former
Redevelopment
Agency
and
its
host
jurisdiction
within
the
same
time
period.
For
this
Report
the
ten-year
period
reviewed
is
January
1, 2011
to
December
31,
2021.
XI.
Excess
Surplus
Test:
This
section
provides
the
amount
of
excess
surplus
in
the
LMIHAF,
if any,
and
the
length
of
time
that
the
Housing
Successor
has
had
excess
surplus,
and
the
Housing
Successor's
plan
for
eliminating
the
excess
surplus.
XII.
Inventory
of
Homeownership
Units:
This
section
provides
a
summary
of
covenanted
homeownership
units
assisted
by
the
former
redevelopment
agency
or
the
housing
successor
that
are
subject
to
covenants
or
restrictions
or
to
an
adopted
program
that
protects
the
former
redevelopment
agency's
investment
of
monies
from
the
Low-
and
Moderate-Income
Housing
Fund
pursuant
to
subdivision
(f)
of
Section
33334.3
. Inventory
shall
include
the
following:
a)
the
number
of
those
units
; b)
in
the
first
report
pursuant
to
this
subdivision,
the
number
of
units
lost
to
the
portfolio
after
February
1,
2012,
and
the
reason
or
reasons
for
those
losses.
For
all
subsequent
reports,
the
number
of
the
units
lost
to
the
portfolio
in
the
last
fiscal
year
and
the
reason
for
those
losses;
c)
any
funds
returned
to
the
housing
successor
as
part
of
an
adopted
program
that
protects
the
former
redevelopment
agency's
investment
of
moneys
from
the
Low-
and
Moderate-Income
Housing
Fund;
and
d)
whether
the
housing
successor
has
contracted
with
any
outside
entity
for
the
management
of
the
units
and,
if so,
the
identity
of
the
entity
.
POWAY
HOUSING
SUCCESSOR
ANNUAL
REPORT
FISCAL
YEAR
2020
-2021
May 17, 2022, Item #4
I.
AMOUNT
DEPOSITED
INTO
LMIHAF
A
total
of
$368,684
was
deposited
into
the
LMIHAF
during
the
Fiscal
Year.
II.
ENDING
BALANCE
OF
LMIHAF
At
the
close
of
the
Fiscal
Year,
the
ending
balance
in
the
LMIHAF
was
$3,961,462
none
of
which
is
being
held
for
items
listed
on
the
ROPS.
This
includes
$3,497,983
in
cash
and
investments,
and
$490,634
in
housing
loans
receivable,
less
$27,155
in
liabilities.
The
$490,634
is
due
from
the
Successor
Agency
and
represents
the
Housing
Authority's
20%
of
the
former
Redevelopment
Agency's
loan
balance,
and
repayment
is
subject
to
approval
by
the
California
Department
of
Finance. Ill.
DESCRIPTION
OF
EXPENDITURES
FROM
LMIHAF
The
following
is
a
description
of
expenditures
from
the
LMIHAF
by
category:
Fiscal
Year
2020-21
Monitoring
&
Administration
Expenditures
$20,291
Homeless
Prevention
&
Rapid
Rehousing
Expenditures
$0
Housing
Development
Expenditures
$1,352,408
Total
LMIHAF
Expenditures
in
Fiscal
Year
$1,372,699
IV.
STATUTORY
VALUE
OF
ASSETS
OWNED
BY
HOUSING
SUCCESSOR
Under
the
Dissolution
Law
and
for
purposes
of
this
Report,
the
"statutory
value
of
real
property"
means
the
value
of
properties
formerly
held
by
the
former
redevelopment
agency
as
listed
on
the
housing
asset
transfer
schedule
approved
by
the
Department
of
Finance as
listed
in
such
schedule
under
Section
34176(a)(2),
the
value
of
the
properties
transferred
to
the
Housing
Successor
pursuant
to
Section
34181
(f),
and
the
purchase
price
of
properties
purchased
by
the
Housing
Successor.
Further,
the
value
of
loans
and
grants
receivable
are
included
in
these
reported
assets
held
in
the
LMIHAF.
The
following
provides
the
statutory
value
of
assets
owned
by
the
Housing
Successor: Fiscal
Year
2020-21
Gash
and
Cash
Equivalents
$3,497,983
Statutory
Value
of
Real
Property
Owned
by
Housing
Authority
$13,917,824
Value
of
Loans
and
Grants
Receivable
$490,634
Total
Value
of
Housing
Successor
Assets
$17,906,441
V.
DESCRIPTION
OF
TRANSFERS
The
Housing
Successor
did
not
make
any
LMIHAF
transfers
to
other
Housing
Successor(s)
under
Section
34176.1
(c)(2)
during
the
Fiscal
Year.
POWAY
HOUSING
SUCCESSOR
ANNUAL
REPORT
FISCAL
YEAR
2020
-2021
May 17, 2022, Item #4
VI.
PROJECT
DESCRIPTIONS
The
Housing
Successor
did
not
receive
and
did
not
hold
property
tax
revenue
pursuant
to
the
ROPS. VII.
STATUS
OF
COMPLIANCE
WITH
SECTION
33334.16
Section
34176.1
provides
that
Section
33334.16
does
not
apply
to
interests
in
real
property
acquired
by
the
Housing
Successor
on
or
after
February
1,
2012
.
With
respect
to
interests
in
real
property
acquired
by
the
former
redevelopment
agency
prior
to
February
1,
2012,
and
transferred
to
the
Successor
Agency
pursuant
to
Health
and
Safety
Code
Section
34176,
the
time
periods
described
in
Section
33334.16
shall
be
deemed
to
have
commenced
on
the
date
that
the
Department
of
Finance
(DOF)
approved
the
property
as
a
housing
asset
on
the
Housing
Asset
Transfer
Form;
thus
, as
to
real
property
acquired
by
the
former
redevelopment
agency
now
held
by
the
Housing
Successor,
the
Housing
Successor
must
initiate
activities
consistent
with
the
development
of
the
real
property
for
the
purpose
for
which
it
was
acquired
within
five
years
of
the
date
the
DOF
approved
such
property
as
a
housing
asset.
Poway's
Housing
Assets
Transfer
Form
was
approved
by
the
DOF
on
August
31,
2012.
The
following
provides
a
status update
on
the
real
property
housing
assets
that
were
acquired
by
the
former
redevelopment agency
prior
to
February
1,
2012,
and
transferred
to
the
Housing
Successor
on
February
1,
2012,
and
compliance
with
the
five-year
period
to
commence
development
activities.
APN
Street
Address
Date
of
Size
Status
Purchase
27546061
1267
4 Monte
Vista
Rd
02/22/2000
2.06 Acres
Housing
Authority
is
in
the
process
of
completing
an
RFP
to
choose
a
developer
to
build
an
affordable
community
for
developmentally
disabled
adults
and
veterans.
32119028
Twin
Peaks
Rd
11/03/2004
2.15 Acres
Vacant
land.
Occasionally
leased
for
non-housing
use.
31423026
13424
Scots
Way
06/27/2002
0.70 Acres
Vacant
land.
Due
to
access
issues,
development
opt
ions
are
actively
being
evaluated
.
31421418
14048
Sycamore
Ave
06/30/2005
0.32 Acres
Vacant
land.
Development
options
are
being
evaluated.
31710151
Floodway
adjacent
to
08/27/2004
2.15 Acres
Vacant
land
(remnant parcel
&
52 the
Solara
Affordable
from
development
of
ad
3acent
Housing
Development
Solara
affordable
housing
development)
. Property
is
in
the
floodway
and
cannot
be
developed.
The
following
provides
a
status
update
on
real
property
housing
assets
that
were
acquired
by
the
Housing
Successor
after
February
1,
2012.
POWAY
HOUSING
SUCCESSOR
ANNUAL
REPORT
FISCAL
YEAR
2020
-2021
7 of 37
May 17, 2022, Item #4
Date of . APN Street Address P h Size Status urc ase
31723222 12207 & 12237 Old
& 36 Pomerado Road
01/9/2018 1.07 Acres Future affordable housing site.
Funds for future demolition of
the site are budgeted.
VIII. DESCRIPTION OF OUTSTANDING OBLIGATIONS PURSUANT TO SECTION 33413 Replacement Housing: According to the 2010-2014 Implementation Plan for the former redevelopment agency, no Section 33413(a) replacement housing obligations were transferred to the Housing Successor. Furthermore, the Housing Successor has not caused the demolition of any units and no new replacement housing obligations have been created. lnclusionary/Production Housing. According to the 2010-2014 Implementation Plan for the former redevelopment agency, no Section 33413(b) inclusionary/production housing obligations were transferred to the Housing Successor.
The former redevelopment agency's Implementation Plans are posted on the City's website at http://poway.org/207 /Affordable-Housing.
IX. EXTREMELY LOW-INCOME TEST
This section provides the information required by Section 34176.1 (a)(3)(8), or a description of expenditures by income restriction for five-year period, with the time period beginning January 1, 2014 and whether the statutory thresholds have been met.
Section 34176.1 (a)(3)(8) requires that the Housing Successor must require at least 30% of the LMIHAF, after expenditures allowed pursuant to Code section 34176.1 (a)(1) and (2,) to be expended for development of housing affordable to, and occupied by, households earning 30% or less of the AMI. If the Housing Successor fails to comply with the extremely low income requirement in any five year report beginning with the five year report to be issued in 2019, then the Housing Successor shall ensure that at least 50% of these remaining LMIHAF funds expended in each fiscal year following the latest fiscal year following the five year report are expended for the development of rental housing affordable to, and occupied by, households earning 30% or less of the area AMI until the housing successor demonstrates compliance with the extremely low-income requirement in an annual report. This information is not required to be reported until 2024 for the 2020 -2024 reporting period.
X. SENIOR HOUSING TEST
The Housing Successor is required to calculate the percentage of units of deed-restricted rental housing restricted to seniors and assisted by the Housing Successor, the former redevelopment agency and/or the City within the previous 10 years in relation to the aggregate number of units of deed-restricted rental housing assisted by the Housing Successor, the former redevelopment agency, and/or City within the same time period. If this percentage exceeds 50%, then the Housing Successor cannot expend future funds in the LMIHAF to assist additional senior housing units until POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2020 -2021 May 17, 2022, Item #4
the
Housing
Successor
or
City
assists
and
construction
has
commenced
on
a
number
of
restricted
rental
units
that
is
equal
to
50%
of
the
total
amount
of
deed-restricted
rental
units.
The
following
provides
the
Housing
Successor's
Senior
Housing
Test
for
the
10-year
period
of
January
1,
2011
through
December
31,
2021:
Housing
Test
2011-2021
#
of
Assisted
Senior
Rental
Units
43 #
of
Total
Assisted
Rental
Units
246
Senior
Housing
Percentage
17%
XI.
EXCESS
SURPLUS
TEST
Excess
Surplus
is
defined
in
Section
34176.1
(d)
as
an
unencumbered
amount
in
the
LMIHAF
account
that
exceeds
the
greater
of
one
million
dollars
($1,000,000)
or
the
aggregate
amount
deposited
into
the
LMIHAF
account
during
the
Housing
Successor's
preceding
four
Fiscal
Years
,
whichever
is
greater.
The
LMIHAF
was
created
on
February
1,
2012.
The
current
uncommitted
balance
of
$3,405,644
on
deposit
in
the
LMIHAF
does
not
exceed
the
sum
of
the
annual
deposits
made
in
the
preceding
four
fiscal
years
of
$3,678,581.
The
following
provides
the
Excess
Surplus
test
for
the
preceding
four Fiscal
Years:
FY
2017/18
FY
2018/19
FY
2019/20
FY
2020/21
Total
FY18-21
Beginning
Balance
$1,987,448
$2,117,450
$1,586,131
$4,438,922
Add:
Deposits
$184,553
$240,904
$2,884,440 $368,684
$3,678,581
Transfers
In
$820,000
-
-
-
(Less)
Expenditures
$(54,552)
$(772,223)
$(31,649)
$(1,372,699)
Transfers
Out
($820,000)
-
-
-
Ending
Balance
$2,117,450
$1,586,131
$4,438,922
$3,343,907
(Less)
Commitments
$(814,
113)
$(77,366) $(81,783)
$(29,263)
Uncommitted
Balance
$1,303,337
$1,508,765
$4,357,139
$3,405,644
XII.
HOMEOWNERSHIP
UNITS
The
Housing
Successor
is
to provide
an
inventory
of
homeownership
units
assisted
by
the
former
redevelopment
agency
or
the
Housing
Successor
that
are
subject
to
covenants
or
restrictions
or
to
an
adopted
program
that
protects
the
former
redevelopment
agency's
investment
of
monies
from
the
LMIHAF
pursuant
to
Section
33334.3(f).
The
inventory
for
the
Housing
Successor
is
as
follows:
Current
Inventory
Number
of
Units
Restricted
Homeownership
Units
as
of
12/31/2021
Add:
Restricted
Homeowner
Units
Added
by
Housing
Successor (January
1,
2021
through
December
31,
2021)
30 0
PO
W
AY
HOUSING
SUCCESSOR
AN
NUAL
REPORT
FISCAL
YEAR
2020
-2021
May 17, 2022, Item #4
(Less): Restricted Homeowner Units Lost to Portfolio (January 1, 2021 through December 31, 2021) 0
Additionally, no inventory was lost in 2021. A total of $0 was returned to the Housing Successor as a result of the restrictions adopted to protect the former redevelopment agency's investment in LM I HAF monies and the Housing Successor did not contract with an outside entity for the management of the ownership portfolio.
POWAY HOUSING SUCCESSOR ANNUAL REPORT FISCAL YEAR 2020 -2021 May 17, 2022, Item #4
10 of
37 POWAY
HOUSING
AUTHORITY
(A
Component
Unit
of
the
City
of
Poway)
Financial
Statements
Year
Ended
June
30,
2021
ATTACHMENT
B
May 17, 2022, Item #4
POWAY HOUSING AUTHORITY
Table of Contents
Year Ended June 30, 2021
Independent Auditor's Report ... . ... ......... ........ ...... .. .............................. .. ................. ... ..................... 1 Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position ....................................................................................................... 4 Statement of Activities............................................................................................................ S Fund Financial Statements
Balance Sheet .......................................................................................................................... 6 Reconciliation of the Balance Sheet of the Governmental Fund to the Statement of Net Position ............................................................................................ 7 Statement of Revenues, Expenditures and Changes in Fund Balance .................................... 8 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of the Governmental Fund to the Statement of Activities ................ 9 Notes to the Basic Financial Statements ......................................................................................... 10 Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule ............................................................................................ 18 Note to Required Supplementary Information ....................................................................... 19 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 ................................................................ 21 11 of 37
May 17, 2022, Item #4
DavisFarr
CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Karman Avenue I Suite 1100 I Irvine, CA 92612 Main: 949.474.2020 I Fax: 949.263.5520
INDEPENDENT AUDITOR'S REPORT
Poway Housing Authority
City of Poway
Poway, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and the major fund of the Poway Housing Authority (the Authority), a component unit of the City of Poway, California, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Authority'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.
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 Authority'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 Authority'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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
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May 17, 2022, Item #4
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, and each major fund the Authority, as of June 30, 2021, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of a Matter
As described more fully in Note 1, the basic financial statements present only the Authority and are not intended to present fairly the financial position and results of operations of the City of Poway, California in conformity with accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Budgetary Comparison Schedule be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Management has omitted management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2021 on our consideration of the Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority's internal control over financial reporting and compliance.
Irvine, California
December 22, 2021
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May 17, 2022, Item #4
BASIC FINANCIAL STATEMENTS
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May 17, 2022, Item #4
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ASSETS
Poway Housing Authority
Statement of Net Position
June 30, 2021
Cash and investments (Note 2)
Due from other governments
Capital assets, nondepreciable (Note 3)
Total assets
LIABILITIES
Accounts payable
Unearned revenue
Total liabilities
NET POSITION
Investment in capital assets
Un restricted
Total net position
$
$
See accompanying notes to the basic financial statements 6 3,497,983
490,634
13,917,824
17,906,441
8,033
19,122
27,155
13,917,824
3,961,462
17,879,286
May 17, 2022, Item #4
Functions/Programs
Governmental activities:
General government
Development services
Total governmental activities
Poway Housing Authority
Statement of Activities
YearEndedJune30,2021
Program Revenues
Expenses
$ 20,291
1,352,408
$ 1,372,699
Operating Capital
Charges
for
Services
30,912
30,912
Contributions
and
Grants
General Revenues
Investment income
Other
Contributions
and
Grants
Total general revenues and transfers
Change in net position
Net position, beginning
Net position, ending
See accompanying notes to the basic financial statements 18 of 37 7
Totals
2021
10,621
{1,352,408)
{1,341,787)
5,151
211,664
216,815
{1,124,972)
19,004,258
$ 17,879,286
May 17, 2022, Item #4
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ASSETS
Cash and investments
Poway Housing Authority
Balance Sheet
Governmental Fund
June 30, 2021
Due from other governments
Tota I assets
LIABILITIES AND FUND BALANCE
Liabilities:
Accounts payable
Unearned revenue
Total liabilities
FUND BALANCE
Unrestricted
Total fund balances
Total liabilities and fund balance
$
$
$
$
See accompanying notes to the basic financial statements 8 3,497,983
490,634
3,988,617
8,033
19,122
27,155
3,961,462
3,961,462
3,988,617
May 17, 2022, Item #4
Poway Housing Authority
Reconciliation of the Balance Sheet of the
Governmental Fund to the Statement of Net Position
June 30, 2021
Total Governmental Fund Balance
Amounts reported for governmental activities in the Statement of Net Position were different because:
Capital assets used in governmental activities were not current financial resources and, therefore, were not reported in the funds. $ 3,961,462
13,917,824
Net position of governmental activities $ 17,879,286
=======
See accompanying notes to the basic financial statements 20 of 37 9
May 17, 2022, Item #4
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Poway Housing Authority
Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Fund
YearEndedJune3~2021
REVENUES
Lease revenue $
Investment income
Reimbursement agreement fees
Total revenues
EXPENDITURES
Current:
General government
Development services
Transfer to fiduciary funds
Total expenditures
Net change in fund balance
Fund balance, beginning of year
Fund balance, end of year $
See accompanying notes to the basic financial statements 10 30,912
5,151
211,664
247,727
20,291
1,352,408
1,372,699
(1,124,972)
5,086,434
3,961,462
May 17, 2022, Item #4
Poway Housing Authority
Reconciliation of the Statement of Revenues,
Expenditures and Changes in Fund Balance of the Governmental Fund to the Statement of Activities
Year Ended June 30, 2021
Net change in fund balance -total governmental fund
Change in net position of governmental activities
See accompanying notes to the basic financial statements 22 of 37 11
$ (1,124,972)
$ (1,124,972)
May 17, 2022, Item #4
POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2021
Note 1 -Reporting Entity and Summary of Significant Accounting Policies The accounting policies of the Poway Housing Authority (Authority) conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting and financial reporting principles. The following is a summary of the Authority's significant accounting policies:
A. Description of Reporting Entity
On March 1, 2011, the City Council of the City of Poway declared a need for a housing authority in the City of Poway and adopted a resolution forming the Poway Housing Authority. The creation of the Housing Authority provides the City legal authority to continue monitoring ongoing rent and income compliance at affordable housing developments.
The former Poway Redevelopment Agency (Agency) and the Authority prepared a Cooperation Agreement to provide for implementation of certain low and moderate income housing projects and to make payments by the Agency to the Authority for the costs to the Authority for performing its obligations. The Agency was dissolved due to the passage of Assembly Bill Xl 26 which became effective on October 1, 2011. In accordance with Health and Safety code 3417S(b), on February 1, 2012, all housing assets, liabilities and fund balance of the Agency were transferred to the Authority as the Successor Agency to the Poway Redevelopment Agency.
The Authority meets the criteria set forth in U.S. GAAP for inclusion as a blended component unit within the City reporting entity based on the City's oversight responsibility in selection of the governing board.
In addition, all of the Authority's activities are conducted within the geographic boundaries of the City.
Blended component units, although legally separate entities, are, in substance, part of the City's operations; therefore, data from these units are combined with data of the primary government in the financial statement presentation of the City. Only the funds of the Authority are included herein; therefore, these financial statements do not purport to represent the financial position or results of operations of the City.
8. Basis of Accounting/Measurement Focus
The accounts of the Authority are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. 23 of 37 12
May 17, 2022, Item #4
POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2021
Note 1-Reporting Entity and Summary of Significant Accounting Policies (Continued} Government-Wide Financial Statements
The Authority's Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of governmental activities for the Authority.
These basic financial statements are presented on an I/economic resourcesN measurement focus and the accrual basis of accounting. Accordingly, all of the Authority's assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the Authority in three categories:
• Charges for services
• Operating grants and contributions
• Capital grants and contributions
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for the governmental fund. An accompanying schedule is presented to reconcile and explain the differences in fund balance as presented in these statements to the net position presented in the Government-Wide Financial Statements.
All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balance presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.
Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the Authority, are property tax, and intergovernmental revenues. Expenditures are recorded in the accounting period in which the related fund liability is incurred. 24 of 37 13
May 17, 2022, Item #4
POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
YearEndedJune3~2021
Note 1-Reporting Entity and Summary of Significant Accounting Policies (Continued} Unearned revenues arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the unearned revenue is removed from the balance sheet and revenue is recognized.
The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of generally accepted accounting principles.
Fund Accounting
The Authority uses funds to maintain its financial records during the year. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. The Authority only has one governmental fund.
Governmental Fund
Housing Authority Fund -The Housing Authority Fund is the Authority's operating fund. It accounts for all financial resources of the Authority.
C. Cash and Investments
The Authority's cash and investment balances are included in the City's investment pool. The City pools cash resources from all City funds in order to facilitate the management of cash and achieve the goal of obtaining the highest yield with the greatest safety and least risk. The balance in the pooled cash account is available to meet current operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and other investments for varying terms. Investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.
The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund ("LAIF") which has invested a portion of the pool funds in structured notes and asset backed securities. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. LAIF investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these investments are subject to market risk and changes in interest rates.
Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the Authority and are presented as "Cash and investments" in the accompanying basic financial statements. 25 of 37 14
May 17, 2022, Item #4
POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2021
Note 1-Reporting Entity and Summary of Significant Accounting Policies (Continued) D. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, streets, sidewalks, medians and storm drains) are reported in the Government-Wide Financial Statements.
Authority policy has set the capitalization threshold for reporting capital assets at $5,000. Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available. Donated assets are valued at their estimated acquisition value on the date donated.
Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows:
Buildings
Building improvements
Furniture and equipment
Infrastructure
10-50 years
10-100 years
5-20 years
20-50 years
E. Deferred Outflows/In/lows of Resources
In addition to assets, the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of fund balance that applies to future periods and so will not be recognized as an outflow of resources (expenditure) until then. The Authority currently has no items that qualify for reporting in this category.
In addition to liabilities, the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial element, deferred inflows of resources, represents an acquisition of fund balance that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The Authority currently has no items that qualify for reporting in this category.
F. Net Position
Net position is comprised of the various net earnings from operating income, non-operating revenues and expenses. Net position is classified in the following categories:
Net Investment in Capital Assets -This component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of those assets.
Restricted -This component of net position consists of restricted assets and deferred outflows of resources reduced by liabilities and deferred inflows of resources related to those assets.
Unrestricted -This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.
When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the Authority's policy is to apply restricted net position first. 26 of 37 15
May 17, 2022, Item #4
POWAY
HOUSING
AUTHORITY
Notes
to
the
Basic
Financial
Statements
Vear
Ended
June
30,
2021
Note
1 -
Reporting
Entity
and
Summary
of
Significant
Accounting
Policies
(Continued)
G.
Fund
Balances
In
the
governmental
fund
financial
statements,
fund
balances
are
classified
in
the
following
categories:
Nonspendable
-
Nonspendable
fund
balances
are
items
that
cannot
be
spent
because
they
are
not
in
spendable
form,
such
as
prepaid
items
and
inventories,
items
that
are
legally
or
contractually
required
to
be
maintained
intact,
such
as
principal
of
an
endowment
or
revolving
loan
funds.
Restricted
-
Restricted
fund
balances
encompass
the
portion
of
net
fund
resources
subject
to
externally
enforceable
legal
restrictions.
This
includes
externally
imposed
restrictions
by
creditors,
such
as
through
debt
covenants,
grantors,
contributions,
laws
or
regulations
of
other
governments,
as
well
as
restrictions
imposed
by
law
through
constitutional
provisions
or
enabling
legislation.
Committed
-
Committed
fund
balances
encompass
the
portion
of
net
fund
resources,
the
use
of
which
is
constrained
by
limitations
that
the
government
imposes
upon
itself
at
its
highest
level
of
decision
making,
normally
the
governing
body
through
council
resolutions,
etc
., and
that
remain
binding
unless
removed
in
the
same
manner.
The
Board
of
Commissioners
is
considered
the
highest
authority
for
the
Authority.
Assigned
-
Assigned
fund
balances
encompass
the
portion
of
net
fund
resources
reflecting
the
government's
intended
use
of
resources
. Assignment
of
resources
can
be
done
by
the
highest
level
of
decision
making
or
by
a
committee
or
official
designated
for
that
purpose.
The
Board
of
Commissioners
has
authorized
the
Executive
Director
for
that
purpose.
Unassigned
-
This
category
is
for
any
remaining
balances
that
are
not
classified
as
nonspendable,
restricted,
committed
or
assigned
.
When
expenditures
are
incurred
for
purposes
for
which
both
restricted
and
unrestricted
fund
balances
are
available,
the
Authority's
policy
is
to
apply
restricted
fund
balances
first,
then
unrestricted
fund
balances
as
they
are
needed
.
When
expenditures
are
incurred
for
purposes
where
only
unrestricted
fund
balances
are
available,
the
Authority
uses
the
unrestricted
resources
in
the
following
order:
committed,
assigned,
and
unassigned.
H.
Estimates
The
preparation
of
financial
statements
in
conformity
with
U.S
. GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
certain
reported
amounts
and
disclosures.
Accordingly,
actual
results
could
differ
from
those
estimates
.
Note
2 -
Cash
and
Investments
Equity
in
Cash
and
Investment
Pool
of
the
City
of
Poway
The
Authority
does
not
have
a
separate
bank
account;
however,
the
Authority's
cash
and
investments
are
maintained
in
an
investment
pool
managed
by
the
City
.
The
Authority
is
a
voluntary
participant
in
that
pool.
This
pool
is
governed
by
and
under
the
regulatory
oversight
of
the
Investment
Policy
adopted
by
the
City
Council
of
the
City.
The
Authority
has
not
adopted
an
investment
policy
separate
from
that
of
the
City.
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May 17, 2022, Item #4
POWAY HOUSING AUTHORITY
Notes to the Basic Financial Statements
Year Ended June 30, 2021
Note 2-Cash and Investments {Continued}
The fair value of the Authority's investment in this pool is reported in the accompanying financial statements at amounts based upon the Authority's pro-rata share of the fair value calculated by the City for the entire City portfolio. The balance available for withdrawal is based on the accounting records maintained by the City, which are recorded on an original cost basis. At June 30, 2021, the Authority had a cash balance of $3,497,983.
Note 3 -Capital Assets
The summary of changes in capital assets for the year ended June 30, 2021 is as follows:
Capital assets, not being
depreciated:
Land
Total capital assets, not being
depreciated
Governmental activities -capital
assets
Note 4 -Related Party Transactions
Balance
June 30, 2020
$ 13,917,824
13,917,824
$ 13,917,824
Additions Deletions
Balance
June 30, 2021
13,917,824
13,917,824
13,917,824
In an effort to ensure that the objectives of Poway's Redevelopment Plan and the Poway Redevelopment Agency's (Agency) 5-Year Implementation Plan are fulfilled, on March 11, 2011, the Agency transferred all housing-related assets to the Authority through a Cooperation Agreement between the Agency and the Authority. Under the terms of this agreement, the Authority agreed to respectively carry out the projects and activities of the Agency in accordance with the objectives and purposes included in the Redevelopment and Implementation Plans. Projects included in the Cooperation Agreement between the Agency and the Authority further the goals of the Redevelopment Plan. It was initially anticipated that these projects would be funded based on available tax increment to be received through 2037, but because of the dissolution of the Agency under AB Xl 26, tax increment revenue has been eliminated, and therefore, no funding for these projects from that source is available.
Future project funding will come from the management of the Authority's assets and may include interest revenue, lease revenue, residual receipt revenue and the sale of assets.
Note S -Rehabilitation Loan Program
Housing Rehabilitation Loan Program
There are two types of housing rehabilitation loan. Forgivable rehabilitation loans are forgiven at a rate of 10% per year given all loan covenants are met. Non-forgivable loans are due upon the sale, transfer or foreclosure of the property. Due to the contingent nature of the repayment schedule of these loans, there is an allowance recorded at 100% of the outstanding balance. The balance of the non-forgivable rehabilitation loans at June 30, 2021 is $7,870.
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May 17, 2022, Item #4
POWAY
HOUSING
AUTHORITY
Notes
to
the
Basic
Financial
Statements
Year
Ended
June
30,
2021
Note
5 -
Rehabilitation
Loan
Program
(Continued}
Affordable
Housing
Loans
These
loans
are
made
to
aid
in
the
purchase
of
affordable
housing
in
the
City
of
Poway.
They
are
for
a
45-year
term
with
no
interest
and
if
there
is
a
sale,
transfer
or
foreclosure
before
the
end
of
the
term
the
loan
must
be
assumed
by
an
income
qualified
buyer
and
the
45-year
term
starts
over.
Due
to
the
contingent
nature
of
the
repayment
schedule
of
these
loans,
there
is
an
allowance
recorded
at
100%
of
the
outstanding
balance.
The
balance
of
these
Affordable
Housing
loans
at
June
30,
2021
is
$2,690,132.
Development
Loans
The
City,
through
the
Housing
Authority,
has
development
loans
primarily
for
affordable
rental
housing
projects
and
for
one
group
home
for
the
developmentally
disabled.
The
affordable
rental
housing
loans
have
55-year
to
57-year
terms
with
three
percent
simple
interest.
Loan
payments
are
made from
residual
receipts
and
generally
do
not
cover
the
annual
accrued
interest.
Therefore,
due
to
the
contingent
nature
of
the
repayment
schedule
of
these
loans,
there
is
an
allowance
recorded
at
100%
of
the
outstanding
balance.
The
balance
of
the
development
loans,
including
accrued
interest,
at
June
30,
2021
is
$41,585,803.
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REQUIRED SUPPLEMENTARY INFORMATION
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May 17, 2022, Item #4
REVENUES
Lease revenue
Investment income
Reimbursement agreement fees
Total revenues
EXPENDITURES
Current:
General government
Development services
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Net change in fund balance
Fund balance, beginning of year
Fund balance, end of year
33 of 37
$
$
POWAY HOUSING AUTHORITY
Budgetary Comparison Schedule
Year Ended June 30, 2021
Budget Amounts
Original Final
31,787 31,787
41,076 41,076
40,000 40,000
112,863 112,863
99,900 108,565
45,200 1,866,318
145,100 1,974,883
(32,237) (1,862,020)
(32,237) (1,862,020)
See note to required supplementary information
22 Actual Variance with
Amounts Final Budget
30,912 (875)
5,151 (35,925)
211,664 171,664
247,727 134,864
20,291 88,274
1,352,408 513,910
1,372,699 602,184
(1,124,972) 737,048
(1,124,972) 737,048
5,086,434
$ 3,961,462
May 17, 2022, Item #4
POWAY HOUSING AUTHORITY
Note to Required Supplementary Information
Year Ended June 30, 2021
Note 1-Budgetary Information
The Authority adopts an annual budget prepared on the modified accrual basis for its major fund. The Executive Director is required to prepare and submit to the Authority's Board of Commissioners the annual budget of the Authority and administer it after adoption. Any revisions that alter the total appropriations of any fund must be approved by the Board of Commissioners.
Prior year appropriations lapse unless they are encumbered at year-end or re-appropriated through the formal budget process. For the major fund, total expenditures may not legally exceed total appropriations.
Budget information is presented for the major fund on a basis consistent with generally accepted accounting principles. Budgeted revenue and expenditure amounts represent the original budget modified for adjustments during the year.
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May 17, 2022, Item #4
DavisFarr
CERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201 Von Karman Avenue I Suite 1100 I Irvine, CA 92612 Main: 949.474.2020 I Fax: 949.263.5520
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
Poway Housing Authority
City of Poway
Poway, California
INDEPENDENT AUDITOR'S REPORT
We have audited, in accordance with the 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 governmental activities, and the major fund of the Housing Authority of the City of Poway (Authority), a component unit of the City of Poway (City) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Authority's basic financial statements, and have issued our report thereon dated December 22, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Authority's internal control over financial reporting (internal control) as a basis for designing the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of The Authority's internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented 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 first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance 35 of 37 24
May 17, 2022, Item #4
with which could have a direct and material effect on the financial statements. However, providing an opinion 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 of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Authority's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Irvine, California
December 22, 2021
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