The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of Luther Towers of Milton under programs of the federal government for the year ended June 30, 2025. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) 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 Project’s financial position, changes in net assets, or cash flows. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Management did not elect to use the 15% de minimis indirect cost rate as allowed under the Uniform Guidance. Luther Towers of Milton executed obligations with the United States Department of Housing and Urban Development (HUD) totaling $2,182,300 at permanent closing. HUD requires annual audits performed in accordance with the cost principles contained in the Uniform Guidance since the total loan amount exceeded the federal expenditure threshold of $750,000. This loan is subject to annual audit requirements under the Uniform Guidance because it has ongoing compliance requirements, even though loan proceeds were received and expended in prior years in connection with the Project's construction or rehabilitation.
Luther Towers of Milton executed a first mortgage payable to HUD on August 1, 1992, in the original amount of $2,182,300 at 8.375% interest per annum. The monthly payments are $15,971 through July 2032. The mortgage is secured by real estate, rights to rental income, and a security interest in all other assets of the Project. At June 30, 2025, and 2024, the outstanding principal balances were $1,018,514 and $1,110,143, respectively, with accrued interest of $7,108 and $0, respectively. The mortgage's outstanding principal balance as of July 1, 2024, was $1,110,143, which is the amount reported on the SEFA as it represents the highest loan balance during the fiscal year, in accordance with the requirements of the Uniform Guidance.
Subsidy revenue for eligible tenants is provided under a Section 8 housing assistance payment contract. This contract requires tenants to contribute a portion of the contract rent based on formulas prescribed by HUD. The difference between the calculated tenant rent and the contract rent is paid by HUD. The Project earned rental assistance of $375,431 in 2025.