Notes to SEFA
Title: Loan/loan guarantee outstanding balances
Accounting Policies: Basis of Presentation The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the Project under programs of the federal government for the year ended May 31, 2022. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Project, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Project. Nonmonetary Assistance At the beginning of the year, the mortgage note payable was $1,498,806. At year ended May 31, 2022, the mortgage note payable in the amount of $1,456,828, to Gershman, is guaranteed by the U.S. Department of Housing and Urban Development and secured by the housing project.
De Minimis Rate Used: Y
Rate Explanation: The auditee used the de minimis cost rate.
MORTGAGE INSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING MULTIFAMILY HOUSING PROJECTS (14.155) - Balances outstanding at the end of the audit period were 1456828. In September 2007, the Project and Center Apartments merged to form a new HUD projectunder Section 223(f)/207 of the National Housing Act. The Projects mortgage in the face amount of $1,790,500, is secured by the land, buildings, and equipment and is to be paid in equal monthly payments of $10,817, including interest at 6.5% through October 2042. The mortgage loan was amended in December 2021 to modify the interest rate to 2.46%. Beginning in January 2022, the remaining loan amount of $1,479,604 is to be paid in equal monthly payments of $7,570, including interest at 2.64% through October 2042. Original fees associated with refinancing the mortgage loan of $85,522 are included as debt issuance costs. The fees are being amortized using the effective interest method over the term of the mortgage loan. During the year ended May 31, 2022, related interest of $66,461 and mortgage insurance of $6,663, were charged entirely to expense. The Project amortized $3,175 of debt issuance costs which is treated as interest expense. The remaining balance for Debt Issuance Cost at May 31, 2022, was $36,202.