THE NHP FOUNDATION AND ITS AFFILIATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED YEARS ENDED DECEMBER 31, 2017 and 2016
contract, St. Luke’s Preservation pays a fixed interest rate of 3.68% per annum and receives a floating interest rate based on the USD-SIFMA Municipal Swap Index (1.21% and 0.64% at December 31, 2017 and 2016, respectively). This swap contract matures on December 1, 2026. The fair value of the interest rate swap liability represents an estimate of the amount that the affiliated entities would have to pay the other party to the swap contracts to cancel the swaps as of December 31, 2017 and 2016 and is based on current interest rates for similar contracts. The recorded amount of the liability or asset representing the fair value of the swap contracts will vary from year-to-year with fluctuations in the interest rates and the swaps move closer to their maturity dates. The change in the fair value of the interest rate swaps is recorded in interest expense on the consolidated statement of activities and statement of functional expenses for the years ended December 31, 2017 and 2016. At December 31, 2017 and 2016, the interest rate swap contracts represent a liability of $2,100,592 and $2,426,437, which is included in other liabilities on the consolidated statements of financial position. NOTE 10 - LEASES NHPF leased office space under a standard commercial operating lease extending through September 30, 2018 for its main office in New York, NY. In January, 2017 the lease agreement was amended to reflect new office space and the lease was extended through March, 2027. NHPF leases office space under a standard commercial operating leases extending through December 31, 2026 for its Washington, DC office. Rent expense for the years ended December 31, 2017 and 2016 totaled $961,885 and $536,067, respectively, which is net of all sublease payments and rent concessions.
Future minimum lease commitments at December 31, 2017, are as follows:
2017 2018 2019 2020 2021
$
691,999 708,021 724,416 741,191 790,460
Thereafter
3,558,387
$
7,214,474
NOTE 11 - FAIR VALUE Accounting standards require disclosure of fair value information about financial instruments when it is practicable to estimate that value. Mortgage and other notes payable that were issued in conjunction with a regulatory agreement with various mortgage lenders, whereby the project receives U.S. Department of Housing and Urban Development (HUD) financial assistance in return for providing housing for low- and moderate-income tenants, or are with various state and local housing authorities, were not subject to market conditions at the time of original issuance. Current financing rates are not determinable since the projects are dependent on HUD financial assistance
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