THE NHP FOUNDATION AND ITS AFFILIATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED YEARS ENDED DECEMBER 31, 2017 and 2016
Benning’s acquisition and renovation work was financed with mortgage loans and federal low- income housing tax credits. The most significant guarantee is:
(1) Completion guarantee - NHPF is responsible for any cost overruns relating to development cost, bills, expenses, charges, cost and fees relating to the construction of Benning.
(2) Operating deficit guarantee - Benning Heights GP guaranteed to pay all operating deficits during construction and operating deficits not to exceed a specified amount and time period, after the property achieves stabilized occupancy, as defined in Benning’s operating agreement. (3) Tax credit recapture guarantee - If the property does not generate the promised amount of housing tax credits or does not generate them in the timeframe agreed to, then then the amount then the final pay-in by the equity investor will be adjusted per the terms of the operating agreement. Litigation In the ordinary course of business, NHPF and its affiliated entities are involved in a number of lawsuits, claims and assessments. During 2016, a fatal accident at the pool at Asmara occurred. As of December 31, 2017, this lawsuit has been settled through the insurance company. In the opinion of management, no loss contingencies are required to be recorded in the accompanying financial statements. NOTE 16 - JOINT AND SEVERAL LIABILITY On March 12, 2015, NHPF through a joint venture with Urban Atlantic, an unrelated party, closed a revolving line of credit for $10,000,000 with the Low-Income Investment Fund. This facility will be used to purchase multi-family properties where the tenants earn between 80% and 120% of the Area Median Income. The line of credit will be secured by the underlying properties. NHPF and Urban Atlantic have jointly and severally guaranteed the line of credit. As of December 31, 2017, no funds have been drawn on this line of credit. During 2016, the joint venture was modified with Urban Atlantic withdrawing from the joint venture leaving NHPF as the sole guarantor. Also, during 2016, $3,700,000 was drawn against this line and used in the purchase of Pines. NOTE 17 - CONCENTRATION OF CREDIT RISK The Organization and its affiliated entities maintain its cash balances at various financial institutions. The institutions are members of the Federal Deposit Insurance Corporation (FDIC). Money market fund balances, classified as cash and cash equivalents or restricted cash on the consolidated statements of financial position, are protected by the Securities Investor Protection Corporation (SIPC). During 2017 and 2016, the balance in these accounts may have, from time-to-time, exceeded the FDIC and SIPC insurance limits; however, the Organization and its affiliated entities have not experienced any losses with respect to these balances in excess of the government provided
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