THE NHP FOUNDATION AND ITS AFFILIATED ENTITIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2017 and 2016 __________
recognizes its share of NHPF/UA income or losses in the statement of activities, and discloses how it accounts for this investment in its financial statements. NDFD’s balance in investment in NHPF/UA represents its maximum exposure to loss. NHPF/UA’s exposure to loss on NHPF/UA is assessed by the condition and financial performance of the underlying projects as well as the strength of the general partners and their guarantees. Investment in Housing Partnership Equity Trust, LLC NHPF is a member of Housing Partnership Network (HPN). HPN is a collaborative membership organization composed of significant housing and community development not-for-profit organizations that support its members through policy initiatives, capital initiatives and other programs to promote the long-term development, preservation and operation of affordable and workforce housing throughout the United States. Twelve HPN members, including NHPF, are investing members in Housing Partnership Equity Trust, LLC (HPET) and collectively hold a 13.48% investment in HPET. NHPF accounts for its 1.123% investment in HPET under the cost method. As such, the initial investment is recorded at cost and cash distributions are reported as income. NHPF’s maximum exposure to loss is estimated to be the entire balance of its investment in HPET, which includes its estimated future funding commitments. NHPF has no obligation to fund liabilities of HPET beyond its investment, including loans and advances. NHPF may be subject to additional losses to the extent it provides any voluntary subordinated financial support to HPET in the future. NHPF regularly assesses its investment in HPET for impairment if NHPF believes that it may not recover the carrying amount of the investment or if the investee is unable to sustain an earnings capacity that would justify the carrying amount of the investment. Impairment is based on the amount that NHPF expects to recover from the investment should it be sold or should the investee liquidate, taking into account NHPF’s claim on the investee’s book value. A recordation of an impairment loss has no effect on the actual fair market value of the underlying property or performance of the overall investment. If the investment in HPET is considered to be permanently impaired, NHPF would reduce its investment balance in HPET and include such reduction in other income (losses) in housing projects on the consolidated statement of activities. Investment in Workforce Housing I LLC During 2015, NHPF entered into a joint venture with Urban Atlantic: WorkForce Housing I LLC. NHPF formed NHPF/WFH, LLC to be its participant in the joint venture. NHPF/WFH, LLC exercises significant influence, but not control, so is accounted for under the equity method. NHPF/WFH recorded its initial investment at cost, recognizes its share WorkForce Housing’s income or loss, increases its investment for capital contributions, and reduces its investment balance by any distributions received.
Cash distributions that NHPF/WFH receives in excess of the carrying amount of its investment are recorded as other revenue (if certain criteria are met), and the equity method of accounting is
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