Notes to SEFA
Title: Loan/loan guarantee outstanding balances
Accounting Policies: 1. BASIS OF PRESENTATIONThe accompanying schedule of expenditures of federal awards includes the federal grant activity ofCommunity Housing Initiative, Inc. and Subsidiary and is presented on the accrual basis of accounting.The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code ofFederal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and AuditRequirements for Federal Awards. Therefore, some amounts presented in this schedule may differ fromamounts presented in, or used in the preparation of, the basic consolidated financial statements.RECOGNITION OF RENTAL REVENUEResidents in the facilities are billed a monthly rental charge. These charges are recognized as incomewhen earned. Revenue is recorded for each month a housing unit is available for occupancy. Amountsattributable to employee housing units and vacancies are charged to the appropriate accounts inaccordance with RD provisions.The Organization also receives rental assistance payments from RD, which are also recognized asincome when earned. Rental income from the RD rental assistance contracts totaled $424,111 (48% oftotal rental income) for the year ended October 31, 2022.INTEREST CREDIT/SUBSIDYThe RD Section 515 Rural Rental Housing Program provides for an interest credit to reduce the annualdebt service payable on the mortgage loans from that which is payable at the stated rate to an amountthat equates to a 1% rate. Rental collections from tenants in excess of the basic rental chargesdetermined by RD are remitted to RD to effectively reduce the amount of the interest credit. During theyear ended October 31, 2022, the Corporation recognized $150,967 of interest subsidy.
De Minimis Rate Used: N
Rate Explanation: DE MINIMIS COST RATEThe Organization does not utilize the 10% de minimis cost rate because the guidance under Part 200.414Indirect Costs does not apply.
2. MORTGAGES PAYABLEThe Organization has entered into mortgage loan agreements for loans for each individual project. Suchfunds were provided by RD pursuant to its Rural Housing Program under Section 515 of the NationalHousing Act of 1949. The terms of the loans are 50 years. The loans are secured by a mortgage on theProject, security interests in any personal property, and an assignment of any rents or income to bederived from the Project. Interest rates on the loans range from 9%-10% (before interest credit). AtOctober 31, 2022, the remaining balance on the mortgages payable was $2,967,025.