The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of DIMA VI, Inc., a Delaware nonprofit corporation, under programs of the federal government for the year ended September 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. DIMA VI, Inc. executed obligations with the U.S. Department of Housing and Urban Development (HUD), totaling $1,377,400 at permanent closing. HUD requires annual audits performed in accordance with the cost principles contained in the Uniform Guidance since the capital advance amount exceeds the federal expenditure threshold of $1,000,000. This capital advance is subject to annual audit requirements under the Uniform Guidance because it has ongoing compliance requirements, even though proceeds were received and expended in prior years in connection with the Project's construction or rehabilitation.
HUD awarded DIMA VI, Inc. a capital advance of $1,506,600 under Section 811 of the National Affordable Housing Act for acquisition and rehabilitation of the Project. A modification agreement was entered into on March 16,1998, which modified the maximum commitment to $1,377,400. The capital advance is deemed a contingent liability since no interest or principal payments are payable or due. The advance does not become due unless HUD operating and filing requirements, as defined under Section 811 of the National Affordable Housing Act, are not met, in which case the entire balance becomes due, including interest accrued at 6.625% per annum. DIMA VI, Inc. must continue to operate the project under HUD guidelines until July 1, 2037, before the note will be forgiven. Although the capital advance is fully forgivable if certain compliance requirements are met, the Project accounts for this obligation as debt in the accompanying financial statements. Because repayment is not expected to occur if the requirements are satisfied, no interest is imputed on the noninterest-bearing advance. The HUD capital advance is a forgivable government grant contingent on continued program compliance, not a conventional borrowing arrangement. ASC 835-30 exempts transactions where interest rates are prescribed by governmental agencies, and the substance of this advance is a conditional grant. The liability will remain until the conditions for forgiveness have been substantially met.
The Project receives rental assistance under a Section 8 Housing Assistance Payments (HAP) contract with the U.S. Department of Housing and Urban Development (HUD). Under the contract, eligible tenants pay a portion of the contract rent based on their adjusted income, and HUD pays the difference between the tenant portion and the contract rent. The Project earned rental assistance of $58,975 (47% of total revenue) during 2025.