chinatown community development center, … · 2019. 7. 3. · chinatown community development...

CHINATOWN COMMUNITY DEVELOPMENT CENTER,

SUBSIDIARIES AND AFFILIATED PARTNERSHIPS

CONSOLIDATED FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITOR’S REPORT

YEAR ENDED DECEMBER 31, 2018



CONSOLIDATED FINANCIAL STATEMENTS


TABLE OF CONTENTS

Page

Independent Auditor’s Report ................................................................................................................................................1

Consolidated Statement of Financial Position........................................................................................................................3

Consolidated Statement of Activities .....................................................................................................................................5

Consolidated Statement of Net Assets ...................................................................................................................................6

Consolidated Statement of Functional Expenses ...................................................................................................................7

Consolidated Statement of Cash Flows..................................................................................................................................8

Notes to the Consolidated Financial Statements ....................................................................................................................9

Supplementary Information..................................................................................................................................................43

Schedule of Low-Income Housing Operations – Unrestricted – Total ..................................................................44

Schedule of Low-Income Housing Operations – Unrestricted – CCDC Owned Projects .....................................45

Schedule of Low-Income Housing Operations – Unrestricted – Subsidiaries .......................................................46

Schedule of Low-Income Housing Operations – Unrestricted – Affiliated Partnerships ......................................47

Schedule of Assets, Liabilities and Net Assets – Chinatown Community Development Center Only ................................................................................................................................................................48

Schedule of Support and Revenue, and Expenses – Chinatown Community Development Center Only.....................................................................................................................................................50

Schedule of Notes Payable.....................................................................................................................................51

Schedule of Expenditures of Federal Awards ......................................................................................................................57

Notes to the Schedule of Expenditures of Federal Awards ..................................................................................................59

Schedule of Findings and Questioned Costs ........................................................................................................................60

Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards ...................................................................................................................................61

Independent Auditor’s Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance .................................................................................................63

* * * *

1

Board of DirectorsChinatown Community Development CenterSan Francisco, California

INDEPENDENT AUDITOR’S REPORT

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Chinatown Community Development Center, subsidiaries and affiliated partnerships, which comprise the consolidated statement of financial position as of December 31, 2018, and the related consolidated statements of activities, net assets, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Chinatown Community Development Center, subsidiaries and affiliated partnerships as of December 31, 2018, and the changes in their net assets and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

Chinatown Community Development Center, subsidiaries and affiliated partnerships adopted the new accounting guidance required by accounting principles generally accepted in the United States of America and changed their classification of net assets and enhanced their disclosures about liquidity disclosures in Note 2 and 23. The change in accounting principle has been applied retrospectively to the prior period presented. Our opinion is not modified with respect to this matter.

Report on Supplementary Information

Our audit was conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The accompanying supplementary information on pages 44 through 56 is presented for purposes of additional analysis and is not a required part of the basic consolidated financial statements. The accompanying schedule of expenditures of federal awards on pages 57 and 58 is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic consolidated financial statements.Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects, in relation to the consolidated financial statements as a whole.

Report on Other Legal and Regulatory Requirements

In accordance with Government Auditing Standards, we have also issued a report dated June 25, 2019 on our consideration of Chinatown Community Development Center, subsidiaries and affiliated partnerships’ internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts andgrant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Chinatown Community Development Center, subsidiaries and affiliated partnerships’ internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Chinatown Community Development Center, subsidiaries and affiliated partnerships’ internal control over financial reporting and compliance.

June 25, 2019



The accompanying notes are an integral part of these financial statements.

3

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2018

Owned Affiliated Other

Notes Projects Partnerships Programs Eliminations Total

Current assets:

Cash and cash equivalents 3,234,946$ 11,013,552$ 6,516,883$ -$ 20,765,381$

Cash and cash equivalents – development 164,265 2,355,933 - - 2,520,198

Cash held as trustee (contra) 3 - - 28,448 - 28,448

Investments in marketable securities 10 - - 7,064,676 - 7,064,676

Receivables:

Rent and subsidy 403,937 697,943 6,903 (6,903) 1,101,880

Government contracts 4 - - 1,128,800 - 1,128,800

Grants and contributions 5 - - 285,108 - 285,108

Other 6 166,303 72,982 364,292 - 603,577

Project development fee receivable 13 - - 5,145,850 (4,630,000) 515,850

Management and other fees receivable 13 - - 1,106,277 (1,058,129) 48,148

Inter-fund receivable (payable) - - 2,147,976 (2,147,976) -

Receivable from related parties

and affiliated partnerships 13 383,972 - 461,750 (656,153) 189,569

Prepaid ground lease 20 27,000 393,525 - - 420,525

Prepaid expenses 77,441 228,994 249,896 - 556,331

Total current assets 4,457,864 14,762,929 24,506,859 (8,499,161) 35,228,491

Property and equipment,

net of accumulated depreciation of $106,662,940 8 53,750,086 522,037,722 47,160 (7,753) 575,827,215

Cash – restricted 7 5,877,334 10,841,557 - - 16,718,891

Grants and contributions receivable 5 - - 14,360 - 14,360

Tenant security deposits 352,685 830,900 - - 1,183,585

Investments in real estate limited partnerships 11 10,839,026 - - (9,803,703) 1,035,323

Investment in SEA 12 - - 25,000 - 25,000

Other fees receivable – noncurrent - - 108,985 (108,985) -

Project development fee receivable – noncurrent 13 - - 2,506,700 (2,318,400) 188,300

Deposits 5,000 - 108,945 - 113,945

Prepaid ground lease – noncurrent 20 49,414 11,773,926 - - 11,823,340

Notes receivable 13 - - 5,328,330 (3,800,770) 1,527,560

Interest receivable inter-company 13 - - 180,501 (180,501) -

Capitalized fees,

net of accumulated amortization of $648,353 9 371,749 372,585 - - 744,334

Total non-current assets 71,245,294 545,856,690 8,319,981 (16,220,112) 609,201,853

Total assets 75,703,158$ 560,619,619$ 32,826,840$ (24,719,273)$ 644,430,344$

Low-Income Housing Operations

ASSETS




4

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2018

Owned Affiliated Other

Notes Projects Partnerships Programs Elimination Total

Current liabilities:

Accounts payable 1,580,730$ 571,033$ 235,545$ -$ 2,387,308$

Accrued payroll and vacation 28,047 98,174 1,148,126 - 1,274,347

Unearned revenue 33,516 97,753 - - 131,269

Other accrued liabilities 249,422 373,884 58,122 - 681,428

Accrued interest 14 86,700 563,375 2,500 - 652,575

Management and other fees payable 13 131,921 1,186,107 - (328,531) 989,497

Project development fee payable - 8,614,000 - (8,614,000) -

Trustee funds (contra) 3 - - 28,448 - 28,448

Payable to CCDC, affiliates, and related parties 13 2,236,586 1,432,236 103,035 (3,771,857) -

Ground lease payable, current portion 20 941,553 357,286 - - 1,298,839

Current portion of unsecured note payable 14 - - 187,500 - 187,500

Current portion of notes payable

to City and State – nonforgivable 14 2,330,788 - - - 2,330,788

Current portion of other secured notes payable 14 4,831,885 1,213,157 - - 6,045,042

Current portion of accrued deferred interest

– nonforgivable loans 14 235,149 379,824 - - 614,973

Current portion of construction loans payable (to be

funded by additional loans and capital contributions) 10,835,376 - - - 10,835,376

Total current liabilities 23,521,673 14,886,829 1,763,276 (12,714,388) 27,457,390

Non-current liabilities:

Construction costs payable (to be funded

by additional loans and capital contributions) 279,657 8,850,189 - (70,454) 9,059,392

Tenant security deposits 336,149 807,117 - - 1,143,266

Ground lease payable 20 1,946,474 2,743,649 - - 4,690,123

Deferred development fee 16 - - 211,100 6,957,736 7,168,836

Swap contract liability 15 - 768,971 - - 768,971

Notes payable to CCDC 13 309,523 2,991,248 - (3,300,771) -

Unsecured loans payable 14 - - 312,500 - 312,500

Secured notes payable to City – forgivable 14 6,412,929 - - - 6,412,929

Secured notes payable to City and State

– nonforgivable 14 25,592,031 240,959,649 - - 266,551,680

Other secured notes payable 14 7,695,440 44,998,737 1,829,560 - 54,523,737

Construction loans payable (to be funded by additional 14

loans and capital contributions) - 117,601,984 - - 117,601,984

Unamortized loan costs,

net of accumulated amortization of $1,397,309 14 (331,493) (1,330,596) - - (1,662,089)

Accrued interest payable – inter-company 13 - 180,501 - (180,501) -

Accrued deferred interest – forgivable loans 14 6,413,425 - - - 6,413,425

Accrued deferred interest – nonforgivable loans 14 13,150,734 20,958,066 - - 34,108,800

Total non-current liabilities 61,804,869 439,529,515 2,353,160 3,406,010 507,093,554

Total liabilities 85,326,542 454,416,344 4,116,436 (9,308,378) 534,550,944

Net assets (deficit):

Without donor restrictions – controlling interest (19,633,134) 9,803,627 27,474,730 (15,410,895) 2,234,328

Without donor restrictions – non-controlling partners’ interests - 96,399,648 - - 96,399,648

Total unrestricted (19,633,134) 106,203,275 27,474,730 (15,410,895) 98,633,976

With donor restrictions 17 10,009,750 - 1,235,674 - 11,245,424

Total net assets (deficit) (9,623,384) 106,203,275 28,710,404 (15,410,895) 109,879,400

Total liabilities and net assets (deficit) 75,703,158$ 560,619,619$ 32,826,840$ (24,719,273)$ 644,430,344$


LIABILITIES AND NET ASSETS




5

CONSOLIDATED STATEMENT OF ACTIVITIES


AffiliatedPartnerships

Without Donor With Donor Without Donor Without Donor With DonorNotes Restrictions Restrictions Restrictions Restrictions Restrictions Elimination Total

Support and revenue:Rental 9,053,315$ -$ 28,449,063$ 33,217$ -$ (182,772)$ 37,352,823$ Government grants and contracts 575,884 - 39,285 4,569,933 83,960 - 5,269,062 Management and workforce service fees 13 - - - 2,667,386 - (2,547,730) 119,656 Technical assistance fees - - - 312,780 - - 312,780 Developer and project administrative fees 13 - - - 4,673,950 - (1,176,547) 3,497,403 Tenant services fees 13 - - - 1,283,303 - (1,283,303) - Outreach and relocation service fees 13 - - - 686,572 - - 686,572 Bookkeeping and others 13 - - - 281,486 - (259,993) 21,493 Investment income 18 1,938,067 - 111,059 52,069 - (2,004,872) 96,323 Foundation grants 1,300,000 - - 265,226 740,000 - 2,305,226 Contributions - - - 583,523 100,000 - 683,523 Miscellaneous 158,843 - 221,772 82,594 - - 463,209 Net assets released from restrictions:

Satisfaction of grant restrictions 17 57,000 (57,000) - 448,333 (448,333) - - Total support and revenue 13,083,109 (57,000) 28,821,179 15,940,372 475,627 (7,455,217) 50,808,070

Expenses:Program services:

Low-income housing projects:Operating 7,878,066 - 24,539,276 - - (4,091,034) 28,326,308 Deferred interest 739,145 - 4,156,239 - - (98,508) 4,796,876 Loss on disposal of fixed assets 7,252 - - - - - 7,252 Depreciation and amortization 1,927,411 - 12,859,062 - - (389) 14,786,084 Amortization of permanent loan costs 97,325 - 137,827 - - - 235,152

Property management - - - 1,093,070 - (15,354) 1,077,716 Housing development - - - 1,801,007 - (17,802) 1,783,205 Program and planning - - - 5,121,693 - (78,811) 5,042,882

Costs of direct benefits to donors - - - 165,006 - - 165,006 Management and general:

Operating - - - 4,494,201 - (61,777) 4,432,424 Depreciation and amortization - - - 18,707 - - 18,707 Amortization of permanent loan costs - - - 35,953 - - 35,953

Fund-raising - - - 449,947 - (9,029) 440,918 Total expenses 10,649,199 - 41,692,404 13,179,584 - (4,372,704) 61,148,483

Change in net assets from operations 2,433,910 (57,000) (12,871,225) 2,760,788 475,627 (3,082,513) (10,340,413)

Change in net assets, before non-controlling partners’ interest 2,433,910 (57,000) (12,871,225) 2,760,788 475,627 (3,082,513) (10,340,413)

Less: non-controlling partners’ interests - - 14,777,414 - - - 14,777,414

Change in net assets 2,433,910$ (57,000)$ 1,906,189$ 2,760,788$ 475,627$ (3,082,513)$ 4,437,001$

Owned Projects Other Programs





6

CONSOLIDATED STATEMENT OF NET ASSETS


Beginning of

Year

Contributed

Capital Distribution

Accumulated

Other

Comprehensive

Loss

Syndication

Costs

Change in Net

Assets from

Operations Subtotal

Inter-program

Reclassification End of Year

(Note a) (Note a)

Net assets without donor restrictions:

Controlling interest – low-income housing:

Owned projects (23,351,882)$ 1,888,498$ (44,796)$ -$ -$ 2,433,910$ (19,074,270)$ (558,864)$ (19,633,134)$

Affiliated partnerships 6,897,421 1,000,000 (7) 24 - 1,906,189 9,803,627 - 9,803,627

Other program 25,401,644 - - - - 2,760,788 28,162,432 (687,702) 27,474,730

Inter-program elimination (11,021,253) (2,888,498) 44,803 - - (3,082,513) (16,947,461) 1,536,566 (15,410,895)

Subtotal – net assets without donor restrictions (2,074,070) - - 24 - 4,018,374 1,944,328 290,000 2,234,328

Non-controlling interest – low-income housing:

Affiliated partnerships 74,396,234 36,625,762 (69,560) 237,126 (12,500) (14,777,414) 96,399,648 - 96,399,648

Subtotal – net assets without donor restrictions 74,396,234 36,625,762 (69,560) 237,126 (12,500) (14,777,414) 96,399,648 - 96,399,648

Total without donor restrictions 72,322,164 36,625,762 (69,560) 237,150 (12,500) (10,759,040) 98,343,976 290,000 98,633,976

Net assets with donor restrictions:

Low-income housing – owned projects 10,356,750 - - - - (57,000) 10,299,750 (290,000) 10,009,750

Other program 760,047 - - - - 475,627 1,235,674 - 1,235,674

Total – with donor restrictions 11,116,797 - - - - 418,627 11,535,424 (290,000) 11,245,424

Total net assets 83,438,961$ 36,625,762$ (69,560)$ 237,150$ (12,500)$ (10,340,413)$ 109,879,400$ -$ 109,879,400$

Note a: This is inter-program reclassifications resulted from inter-program activities.




7

CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES


Costs of

Low-Income Direct Management

Housing Property Housing Program and Benefits and

Projects Management Development Planning to Donors General Fund-raising Elimination Total

Expenses:

Salaries, payroll taxes and fringes 5,254,412$ 954,257$ 1,628,623$ 3,121,271$ -$ 3,190,795$ 354,640$ -$ 14,503,998$

Tenant services 1,519,049 - 651 125,354 - - - (1,283,313) 361,741

Repairs, maintenance and garbage 5,610,147 10,913 10,287 55,098 - 46,745 4,395 - 5,737,585

Professional fees 900,093 27,044 900 1,173,070 - 194,745 4,828 (259,993) 2,040,687

Management fees 3,662,681 - - - - - - (2,547,729) 1,114,952

Rent/ground lease 1,399,796 39,019 56,154 117,523 - 85,876 12,555 (182,772) 1,528,151

Utilities 3,632,585 2,685 3,535 9,541 - 8,651 1,093 - 3,658,090

Office supplies and expenses 426,259 39,109 33,982 229,568 - 248,252 29,386 - 1,006,556

Travel and conference 9,675 7,050 18,012 45,595 - 160,139 970 - 241,441

Insurance 918,519 1,228 1,417 898 - 105,785 735 - 1,028,582

Property taxes, licenses and permits 636,431 5,818 2,722 6,421 - 58,152 1,382 - 710,926

Bad debts 304,197 - 14,182 - - 1,580 - - 319,959

Marketing and advertising 538,168 - - - - - 15,280 - 553,448

Interest 6,404,478 - 10,000 - - - - - 6,414,478

Interest – amortization of permanent and construction loan costs 235,152 - - - - 35,953 - - 271,105

Other financial expenses 710,771 - - - - - - - 710,771

Contribution expenses - - - - - 312,500 (23) - 312,477

Catering - - - - 135,849 572 1,351 - 137,772

Other event expenses - - - - 29,157 1,963 18,357 - 49,477

Community outreach and events - - 10,847 202,195 - 48,009 3,163 - 264,214

Depreciation and amortization 14,786,473 - - - - 18,707 - (389) 14,804,791

Loss of disposal of fixed assets 7,252 - - - - - - - 7,252

Miscellaneous 440,423 5,947 9,695 35,159 - 30,437 1,835 - 523,496

Insurance claim expense – net of insurance claim income 49,658 - - - - - - - 49,658

47,446,219 1,093,070 1,801,007 5,121,693 165,006 4,548,861 449,947 (4,274,196) 56,351,607

Inter-program eliminations (4,189,931) (15,354) (17,802) (78,811) - (61,777) (9,029) 4,372,704 -

Total operating expenses 43,256,288 1,077,716 1,783,205 5,042,882 165,006 4,487,084 440,918 98,508 56,351,607

Deferred interest – nonforgivable loans 4,812,440 - - - - - - (98,508) 4,713,932

Deferred interest – forgivable loans 82,944 - - - - - - - 82,944

Total deferred rent and interest 4,895,384 - - - - - - (98,508) 4,796,876

Total expenses 48,151,672$ 1,077,716$ 1,783,205$ 5,042,882$ 165,006$ 4,487,084$ 440,918$ -$ 61,148,483$




8

CONSOLIDATED STATEMENT OF CASH FLOWS


Owned Affiliated Other Projects Partnerships Programs Elimination Total

Cash flows from operating activities:Change in net assets 2,376,910$ (12,871,225)$ 3,236,415$ (3,082,513)$ (10,340,413)$ Adjustments to reconcile change in net assets to

net cash provided by operating activities:Depreciation and amortization 1,927,411 12,859,062 18,707 (389) 14,804,791 Amortization of ground lease 27,000 393,527 - - 420,527 Interest – amortization of permanent and construction loan costs 97,325 137,827 35,953 - 271,105 Unrealized loss on investment in marketable securities - - 591,032 - 591,032 Realized loss on investment in marketable securities - - 75,682 - 75,682 Income from grants and contributions for purchase of fixed assets (1,862,412) (39,285) - - (1,901,697) (Gain) loss in investment in real estate limited partnerships (1,899,910) - - 1,906,364 6,454 Amortization of grants (13,742) - - - (13,742) Deferred interest 739,145 4,156,239 - (98,508) 4,796,876 Loss of disposal of fixed assets and adjustment to prior year's fixed assets 7,252 - 34,959 - 42,211 (Increase) decrease in operating assets:

Rent receivable (342,790) 454,297 (6,903) 6,903 111,507 Contracts receivable - - (284,388) - (284,388) Grants and contributions receivable - - (15,368) - (15,368) Other receivables (6,655) 87,583 19,436 - 100,364 Inter-fund receivable/payable (848,864) - (2,835,678) 3,684,542 - Receivables from related parties and affiliated partnerships (235,365) 457 84,343 184,030 33,465 Interest receivables - - 494,151 (189,727) 304,424 Project developer fee receivable - - 446,801 (995,501) (548,700) Management and other fees receivable - - 150,447 (156,615) (6,168) Prepaid expenses (9,919) (37,264) (134,986) - (182,169) Deposits 78,640 - (2,556) - 76,084

Increase (decrease) in operating liabilities:Accounts payable and other accrued liabilities 573,080 (2,467) 79,248 - 649,861 Unearned revenue 3,578 (95,668) (52,132) - (144,222) Accrued interest (157,036) (2,532,208) - - (2,689,244) Payable to CCDC, affiliates, and other partners 2,127,601 322,578 15,054 (2,465,306) (73) Management and other fees payable 40,585 - - 619,304 659,889 Ground lease payable (120,623) 233,159 - - 112,536 Deferred developer fee - - 211,100 - 211,100 Tenant security deposits, net (3,663) (14,386) - - (18,049)

Net cash provided by operating activities 2,497,548 3,052,226 2,161,317 (587,416) 7,123,675

Cash flows from investing activities:Increase in restricted fund (999,192) (970,509) - - (1,969,701) Investment in limited partnerships (2,042,544) - - 999,994 (1,042,550) Net investment in marketable securities - - 28,001 - 28,001 Decrease in energy rebate receivable - 409,258 - - 409,258 Payments for rehabilitation and pre-development

costs and other fixed assets (3,482,032) (44,189,559) (29,679) 138,485 (47,562,785) Net cash used in investing activities (6,523,768) (44,750,810) (1,678) 1,138,479 (50,137,777)

Cash flows from financing activities:Capital contributions 1,888,498 1,670,290 - (1,888,498) 1,670,290 Capital distributions (44,796) (69,567) - 44,803 (69,560) Payment for syndication costs - (5,000) - - (5,000) Payment for permanent loan costs (25,352) - - - (25,352) Intercompany loan payable - 2,969 - (2,969) - Principal payments of notes payable (397,936) (2,275,039) - 105,623 (2,567,352) Net proceeds from loan payable 1,473,645 60,600,972 105,623 (105,623) 62,074,617 Proceeds from grants and contributions for purchase of fixed assets 1,862,412 39,285 - - 1,901,697 Payment of developer fee - (1,295,601) - 1,295,601 - Payment of short-term development costs payable (162,938) (13,370,628) - - (13,533,566)

Net cash provided by financing activities 4,593,533 45,297,681 105,623 (551,063) 49,445,774

Net increase in cash and cash equivalents 567,313 3,599,097 2,265,262 - 6,431,672

Cash and cash equivalents, beginning of year before reclassification 2,831,898 8,517,462 4,251,621 - 15,600,981 Reclassification from restricted cash to development cash - 1,252,926 - - 1,252,926

Cash and cash equivalents, beginning of year after reclassification 2,831,898 9,770,388 4,251,621 - 16,853,907

Cash and cash equivalents, end of year 3,399,211$ 13,369,485$ 6,516,883$ -$ 23,285,579$

Supplemental disclosures of cash flow information:Interest paid during the year (net of capitalization) 997,616$ 6,619,967$ 10,000$ -$ 7,627,583$ Noncash investing and financing activities:

Assets acquired by assuming liabilities 16,983,680$ 13,845,095$ -$ -$ 30,828,775$ Loan costs acquired by assuming liabilities 170,606$ -$ -$ -$ 170,606$ Syndication costs incurred through capital contribution -$ 7,500$ -$ -$ 7,500$ Construction loan repaid from capital contributions -$ 328,201$ -$ -$ 328,201$ Loan costs reclassified from assets -$ 41,571$ -$ -$ 41,571$ Permanent loan costs acquired through capital contributions -$ 118,405$ -$ -$ 118,405$ Assets acquired through capital contributions -$ 1,700,000$ -$ (1,000,000)$ 700,000$ Net loan repaid from capital contributions -$ 33,801,366$ -$ -$ 33,801,366$ Contribution adjustments -$ 876,966$ -$ -$ 876,966$




9

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 – ORGANIZATION AND NATURE OF ACTIVITIES

Chinatown Community Development Center is a nonprofit public benefit organization incorporated in California in 1978. Chinatown Community Development Center serves the Chinatown, North Beach and Tenderloin areas of San Francisco, and its main purpose is to improve the quality of housing for low-income individuals, elderly, and families in San Francisco.

Chinatown Community Development Center receives a substantial amount of its support from government grants, loans and private foundations. A significant reduction in the level of this support, if this was to occur, wouldhave an adverse effect on Chinatown Community Development Center’s programs and activities.

Chinatown Community Development Center has formed a number of LLCs and nonprofit entities (see Note 2 (i)) to facilitate the organizational structure of its low-income housing tax credit partnerships (see Note 2 (ii)). All of these entities are solely controlled by Chinatown Community Development Center. Chinatown CommunityDevelopment Center and these entities are jointly referred to as “CCDC” in these notes to the consolidated financial statements.

The activities/programs of CCDC include:

(a) Low-Income Housing Operations

Except as otherwise noted, CCDC manages the following low-income housing projects in San Francisco. The rental operations are subject to various covenants (including restrictions on rental charges and on tenants to only those that are income-qualified) imposed by loan and regulatory agreements applicable to each property.

Property Name Place in Service Number of Units Property TypeCCDC

Ownership

Consorcia 1982 24 Multi-family 100%Clayton Hotel 1983 82 Senior-SRO 100%

Tower Hotel 1984 33Multi-family-

SRO 100%Swiss American 1986 66 Senior-SRO 100%St Claire Residences 1987 41 Multi-family 100%Bayside 1990 31 Senior Sponsored NPO

Hamlin Hotel (3) 1992 67Special Needs-

SRO 99%

William Penn Hotel 1993 91Special Needs-

SRO 99%Tenderloin Family Housing (1) 1993 175 Multi-family <1%Larkin Pine Senior Housing 1994 63 Senior-SRO 100%1370 California Street 1995 49 Multi-family 100%Golden Gate Apartments (3) 1999 72 Multi-family <1%Notre Dame Senior Apartments 2000 204 Senior 99.9%

665 Clay 2000 25Multi-family-

SRO 100%Namiki Apartments 2001 34 Senior <1%International Hotel 2005 105 Senior Sponsored NPOCrescent Cove 2007 236 Multi-family <1%Parkview Terrace Apartments 2008 100 Senior <1%1150 Grant Avenue 2008 14 Multi-family 100%Broadway Family Apartments 2008 81 Multi-family <1%Mary Helen Rogers Sr. Community 2012 101 Senior <1%





10


Ownership

Veterans Commons (2) 2012 76 Special Needs <1%Broadway Sansome Apartments 2015 75 Multi-family <1%462 Green Street (3) 2016 6 Multi-family 100%900 Jackson Street(3) 2017 17 Multi-family 100%

227 Bay 2017 50Multi-family-

SRO <1%

990 Pacific 2017 92Multi-family-

SRO <1%Mission Bay Block 7 (2) 2017 200 Multi-family <1%937 Clay 2018 78 Multi-family 100%9th Avenue (4) 2018 16 Multi-family 100%

(1) Tenderloin Family Housing is the successor of 201 Turk Street Apartment, a project managed by CCDC.

(2) CCDC is the manager but subcontracts property management to the Co-general partner.

(3) CCDC contracted an outside party for management of these properties, and took on management effectiveFebruary 1, 2018 for Golden Gate Apartments and January 1, 2019 for 462 Green Street and 900 Jackson Street.

(4) CCDC acquired the property of 9th Avenue on December 7, 2018 and continued to provide property management service.

Non-CCDC managed projects:


Ownership

Wharf Plaza I & II 1983 230 Multi-family 1%

Property under construction or rehabilitation:

Property NameExpected Year

Place in Service Number of Units Property TypeCCDC

Ownership

Ping Yuen (4) 2019 234 Multi-family <1%North Ping Yuen (4) 2019 200 Multi-family <1%

(5) These projects are Phase II projects under the Rental Assistance Demonstration (RAD) program. The acquisition of these Phase II projects and rehabilitation construction started in October 2016.

(b) Property Management

CCDC has a property management division that oversees the low-income housing operations.





11

(c) Housing Development

CCDC initiates and develops low-income housing projects in San Francisco, and also provides technical assistance to other not-for-profit organizations in the planning, development and construction of affordable housing projects. On occasion, CCDC teams up with for-profit partners to develop low-income housing projects and becomes the managing general partner of the limited partnership.

(d) Program and Planning

CCDC prepares written plans involving public transportation and housing for city agencies, and also serves as a “watch dog” over private development. It works with tenant organizations to advocate for the community in the involvement of public policy decisions and improves landlord/tenant relationships through counseling, educational seminars and community events. It implements neighborhood environmental projects to improve primarily the streets, alleyways, recreation centers and open spaces in the Chinatown neighborhood. It provides outreach, referral, translation, and health and wellness services as well as eviction prevention assistance and conflict mediation services to the residents in the CCDC buildings. In addition, CCDC engages immigrant youth, including low-income youth living in SRO hotels, in leadership development activities.CCDC works with community stakeholders and merchants to provide and implement projects and programs that lift up the culture of the community.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Method

The accompanying consolidated financial statements use the accrual method of accounting, which recognizesincome in the period earned and expenses when incurred, regardless of the timing of payments.

Principle of Consolidation

Generally accepted accounting principles require limited partnerships to be consolidated in the general partner’s financial statements when the general partner has control over the limited partnership. The presumption of control by the general partner can be overcome if the limited partners have either (a) the substantive ability to dissolve (liquidate) the limited partnership or otherwise remove the general partners without cause or (b) substantive participating rights.

The limited partnerships where CCDC is the managing partner generally do not overcome the presumption of control by CCDC. When there is a co-general partner, CCDC is also deemed to have ultimate control of the partnership. Therefore, these limited partnerships (“affiliated partnerships”) are required to be consolidated with CCDC, except for certain jointly-controlled partnerships with a third party.

The accompanying consolidated financial statements include the accounts of CCDC and the following entities:

(i) Wholly or Majority-Owned Entities by CCDC

Non-profit organizations and LLCs formed by CCDC (CCDC subsidiaries) as the general partner for affordable housing partnerships or owner of wholly owned projects:

- Larkin Pine Senior Housing Corporation- William Penn Hotel Corporation- Hamlin Hotel Corporation- GGA Corporation - Broadway Family Apartments LLC- Parkview Terrace LLC- Notre Dame Housing LLC





12

- Senior Apartments Namiki LLC - 701 Golden Gate LLC- CCDC-150 Otis LLC- CCDC-MBB7 LLC- CCDC 1296 Shotwell LLC- CCDC 2060 Folsom LLC- CCDC-MB3E LLC- Tenderloin Family Housing LLC- Chinatown Public Housing LLC- CCDC Small Sites LLC- CCDC Legacy Foundation- 900 Jackson LLC- CCDC-Maceo May Apts., LLC- North Ping Yuen GP DE LLC- Ping Yuen GP DE LLC- Chinatown SROS LLC

Non-profit organization formed by CCDC to own and operate a HUD-financed project:- Bayside Elderly Housing Corporation (a CCDC subsidiary)

Partnerships wholly or majority-owned (99%) by CCDC’s subsidiaries:

- William Penn Hotel L.P. (William Penn) - 99% owned, a CCDC subsidiary- Hamlin Hotel L.P. (Hamlin Hotel) - 99% owned, a CCDC subsidiary- Larkin Pine Limited Partnership (Larkin Pine) - wholly owned by CCDC (1)

- GGA 1820 Post, L.P. (Golden Gate) - wholly owned by CCDC(1)

- Namiki Apartments Limited Partnership (Namiki) - wholly owned by CCDC(1)

(1) These were formerly a tax credit limited partnership. The limited partners assigned their limited partner interest to Parkview Terrace LLC, which is solely owned by CCDC, after the tax credit compliance period.The limited partner interest of Golden Gate and Namiki was then transferred to Larkin Pine Senior Housing Corporation on October 24, 2018.

(ii) Affiliated Partnerships

Tax Credit Partnerships

These are partnerships which qualify for or will apply for low-income housing tax credits under IRC Section 42. Either CCDC or one of its subsidiaries is the managing general partner with less than 1% partnership interest in these entities. These partnerships own and operate low-income housing projects in San Francisco.

- Broadway Family Apartments, L.P. (Broadway Family) - Notre Dame Housing Partners L.P. (Notre Dame)- Parkview Terrace Partners, L.P. (Parkview Terrace)- Mission Bay Housing Partners, L.P. (Crescent Cove) - MHRSC, L.P. (MHRSC)- Broadway Sansome Associates, L.P. (Broadway Sansome)- Tenderloin Family Housing, L.P. (Tenderloin Family)- Bay Street, L.P. (227 Bay) (1)

- Pacific Avenue, L.P. (990 Pacific) (1)

- Ping Yuen, L.P. (Ping Yuen) (2)

- North Ping Yuen, L.P. (North Ping Yuen) (2)





13

(1) Rental operations for 227 Bay and 990 Pacific were transferred from the San Francisco Housing Authority (SFHA) in November 2015 and construction was completed in 2017.

(2) Rental operations for Ping Yuen and North Ping Yuen were transferred from SFHA in October 2016 and construction is expected to be completed in 2019.

The activities of the above entities are shown in gross amounts, and significant inter-company accounts and transactions are eliminated in the consolidated totals.

Non-Consolidated Entities:

The following are projects/entities in which CCDC is involved but does not control:

150 Otis Associates, L.P. (150 Otis) – CCDC is the managing general partner with less than a 1% ownership interest and there is an unrelated nonprofit organization as the co-general partner. Both general partners have equal percentages of ownership. Essentially, this project is jointly controlled by the two general partners. CCDC's role in this partnership is mainly in the rehabilitation of the project. The land and the original building of this project were donated to the partnership by the co-general partner. Management of the rental operation is handled by the co-general partner. CCDC has no intention of acquiring control ofthis project in the future.

Maceo May Apts., L.P. (Maceo May) – CCDC is the general partner with less than a 1% ownership interest with an unrelated nonprofit organization as the co-general partner with the same percentage of interest. CCDC is also the initial limited partner and there is an unrelated nonprofit organization as initial limited partner with same percentage of interest. This partnership was formed in March 2018 to acquire and develop a project. CCDC has no intention of acquiring control of this project in the future.

Mission Bay Block 7 Housing Partners, L.P. (MBB7) – this partnership completed construction in 2017. CCDC is the managing general partnership with less than a 1% ownership interest. There is afor-profit general partner that handles the development and the future property management of the project. CCDC has no intention of acquiring control of the project in the future.

MB3E, L.P. (MB3E), 1296 Shotwell Housing, L.P. (Shotwell), and 2060 Folsom Housing, L.P. (Folsom) – Folsom is in the pre-development stage and MB3E and Shotwell are in construction stage. CCDC is the co-general partner with equal percentages of ownership with the other co-general partners. CCDC has no intention of acquiring control of these projects in the future.

Wharf Plaza I and II – CCDC is a limited partner holding 1% interest of each of the two partnerships –Wharf Plaza I and Wharf Plaza II. Each of these partnerships owns and operates an apartment complex located in San Francisco for low-income and elderly households.

International Hotel Senior Housing, Inc. (I-Hotel) – I-Hotel is a nonprofit public benefit corporation, which owns a senior housing project. I-Hotel is co-sponsored by CCDC and Kearny Street Housing Corporation, a California nonprofit public benefit corporation, both of which have equal voting rights. CCDC is the developer and the property manager for this project.





14

Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of the revenue and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Presentation

The consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America (GAAP), which requires information regarding the financial position and activities to be as net assets without donor restrictions and net assets with donor restrictions:

Net assets without donor restrictions – Net assets not subject to donor-imposed restrictions.

Net assets with donor restrictions include those assets subject to donor restrictions and for which the applicable restrictions were not met as of the end of the current reporting period. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates the resources be maintained in perpetuity.

Revenue Recognition

Rental Income:

Rental income is shown at its maximum gross potential. Vacancy loss is shown as a reduction in rental income. Rental units occupied by employees are included in rental income and as an expense of operations.

Government Contracts:

Government contracts, which are funded on a reimbursement basis, are shown as unrestricted revenue.

Contributions:

Contributions are recognized as revenue when they are unconditionally communicated. Grants represent contributions if resource providers receive no value in exchange for the assets transferred. Contributions are recorded at their fair value as support without donor restrictions or support with donor restrictions, depending on the absence or existence of donor-imposed restrictions as applicable. When a restriction expires (that is when a stipulated time restriction ends or purpose restriction is accomplished), net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the consolidated statements of activities as net assets released from restrictions. If donors’ restrictions are satisfied in the same period that the contribution is received, the contribution is reported as support without donor restrictions. Contributions restricted for the purchase of long-lived assets, are reported as without donor restriction when expended for that purpose.

Noncash contributions are recorded at fair market value on the date of receipt.





15

Development and Project Administrative Fees:

CCDC earns fees for development of properties and generally recognizes fees as earned over the development period. Fees are recognized based on milestones in the agreement, generally consisting of a portion earned upon the initial loan closing, a portion earned during the construction phase which is recorded using the percentage of completion method, and a portion earned at the permanent loan closing or upon receipt of Form 8609 from the California Tax Credit Allocation Committee.

The profit portion of development and project administrative fees recognized from owned projects and affiliated partnerships are eliminated as intercompany transactions. CCDC estimates that 70% of its development fees generally cover related project costs as of December 31, 2018. To the extent thatinter-company developer fees are recognized, the profit portion of the fee is eliminated and will be recognized as income over the buildings’ 40-year depreciable life upon completion of construction (see Note 16).

Management Fee Revenue and Related Accounts

CCDC provides property management, tenant service, bookkeeping and other services to the subsidiaries and partnerships. Income is earned in accordance with the terms of the agreements and recorded as revenue. Such intercompany revenue has been eliminated in the consolidated financial statements.

Cash and Cash Equivalents

Cash is defined as cash in demand deposit accounts as well as cash on hand. Not included as cash are funds restricted as to their use, regardless of liquidity, such as replacement reserves, operating reserves, other restricted reserves and tenant security deposits. CCDC and certain affiliates occasionally maintain cash on deposit at a bank in excess of the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation limit. The uninsured cash balance, including restricted cash, was approximately $8,961,000 and $15,319,000 for CCDC and owned projects, and affiliated partnerships, respectively, as of December 31, 2018.

Cash equivalents are highly liquid investments that are readily convertible to known amounts of cash. Generally, money market accounts and investments with original maturities of three months or less qualify as cash equivalents.

Receivables

Rent:

CCDC elects to record bad debts using the direct write-off method. GAAP requires that the allowance method be used to reflect bad debts. However, the effect of the use of the direct write-off method is not materially different from the result that would have been obtained had the allowance method been followed.

Government Contracts:

Receivables for service contracts with government and outside parties are deemed fully collectible; therefore, no allowance for doubtful accounts is deemed necessary.

Grants and Contributions:

Receivables from foundations and donors are deemed fully collectible and therefore, no allowance for doubtful accounts is necessary. For promises-to-give, a reserve of 30% for uncollectible receivables is provided for.





16

Property and Equipment and Capitalized Fees

Property and equipment is stated at cost of acquisition or construction. The costs of maintenance and repairs below $5,000 that neither significantly add to the permanent value of a property and equipment nor prolong its intended useful life are charged to expense as incurred. Interest incurred during a construction period is capitalized to the cost of the building. Land is not depreciated. Depreciation is computed based on the straight-line method over the estimated useful lives of the assets.

Capitalized fees include fees and costs incurred to obtain tax credits and loans for the low-income housing projects, lease commissions, ground lease acquisition costs, and an air rights development fee (Larkin Pine only). These fees are stated at cost and amortized on a straight-line basis. Organization costs are expensed as incurred.

CCDC incurs costs during the development phase of each affordable housing project undertaken. Such costs include governmental fees, legal and consulting fees, and supplies needed to investigate the feasibility and arrange for the financing of each project under consideration. CCDC records these costs as fixed assets (development costs) and the costs are usually recoverable from the projects either from loan proceeds, limited partner contributions or residual receipts generated by project operations. Any funds expended on a project that do not pass beyond the development stage are recorded as expenses when activity on the project ceases. Management estimates that no material portion of the development costs is unrealizable at December 31, 2018.

The useful lives of the assets are estimated as follows:

Site improvements 15 to 70 yearsBuilding and improvements 5 to 40 yearsLeasehold improvements 5 to 10 yearsFurniture, fixtures and equipment 3 to 10 yearsTax credit related costs 10 to 15 yearsLease commission costs 5 yearsGround lease costs 20 to 65 yearsAir rights development fee 75 years

Donated fixed assets are recorded at fair market value as of the date of receipt.

CCDC reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the property and equipment to the future net undiscounted cash flows expected to be generated by the rental property, including any estimated proceeds from the eventual disposition of the property and equipment. If the property and equipment is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the property and equipment exceeds the fair value of such property. There were no impairment losses recognized in 2018.

Permanent and Construction Loan Costs

Costs incurred in order to obtain permanent and construction financing are stated at cost and amortized on a straight-line basis into interest expense over the term of the loan. Permanent and construction loan costs are reported as a direct deduction from the face amount of the related debt.

Investments – Fair Value Measurement

Under GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date.





17

GAAP establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability basedon market data obtained from sources independent of the CCDC. Unobservable inputs, if any, reflects CCDC’sassumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that CCDC has the ability to access at measurement date. Valuation adjustments and block discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 – Valuations based on significant inputs that are observable, either directly or indirectly or quoted prices in markets that are not active, that is, markets in which there are few transactions, the prices are not current or price quotations vary substantially either over time or among market makers.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors, including the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed.

Marketable Securities:

Investments in marketable securities consist of municipal bonds, mutual funds, stocks and real estate investment trust (REITs), and commodities managed through an investment brokerage account. CCDC reports all investments in marketable securities with readily determinable fair values based on quoted prices in active markets with realized and unrealized gains and losses on the investments included in the consolidated statement of activities. Marketable securities are generally categorized in Level 1 of the fair value hierarchy.

Real Estate Limited Partnerships:

Real estate limited partnerships are generally not traded in the public market and are subject to certain time restrictions on resale, and are categorized in Level 3 of the fair value hierarchy. The cost method of accounting is used for investments in Wharf Plaza I and Wharf Plaza II where CCDC is a limited partner and holds less than 20% of the controlling interest. The equity method accounting is used for investments in 150 Otis, MBB7, MB3E, Shotwell, Folsom and Maceo May since CCDC is deemed to have more than 20% of the controlling interest or have influence over the limited partnerships as the co-general partner.

Swap Contract:

The value of the swap contract is recorded as an asset or a liability depending on the fair value valuation and the change in the value of the swap contract is recorded as other comprehensive income or loss. Swap contractsare generally categorized in Level 2 and 3 of the fair value hierarchy. (See Note 15)





18

Lease-up/Marketing Costs

Lease-up/marketing costs are capitalized before a project is placed in service and are expensed at the beginning of actual occupancy.

Syndication Costs

Syndication costs are recorded as a reduction of partners’ equity.

Income Taxes

CCDC and its tax-exempt subsidiaries are all exempt from Federal income tax and California franchise taxunder provisions of Section 501(c)(3) of the Internal Revenue Code and Section 23701d of the California Code, respectively. However, the net income from commercial rental operations for some properties is debt-financed income and is therefore subject to income tax under Internal Revenue Code Section 514. CCDC is required to file annual informational returns and business income tax returns with the Internal Revenue Services and the California Franchise Tax Board.

The limited partnerships are not subject to income tax (except for the California limited partnership fee of $800) since taxable income or loss from a partnership passes through to, and is reportable by, the partners individually.

Management has considered its tax positions and believes that all of the positions taken in the federal and state tax returns are more likely than not to be sustained upon examination. CCDC, subsidiaries, and the affiliated partnerships file the required tax returns with the Internal Revenue Service and the California Franchise Tax Board, and these returns for the years 2014 through 2017 are subject to examination by the taxing authorities generally for three years and four years for Federal and California, respectively, starting with the date of filing or the due date of the tax return, whichever is later.

CCDC, its subsidiaries, and the affiliated partnerships have not received notifications and are not currently undergoing any tax examinations.

Non-controlling Partners’ Interests

Non-controlling partners’ interests are the unrelated partners’ share of the partnerships’ income or loss and their equity in the affiliated partnerships.

Allocation of Partnership Income/Loss and Tax Credits

The affiliated partnerships are generally expected to generate low-income housing tax credits, which will be allocated in the same manner as the income or loss of the affiliated partnerships. Because the limited partners’ losses are limited to their investments, the limited partners’ capital will generally not be reduced below zero unless future capital contributions will be made in an amount sufficient to absorb the losses. All remaining losses are allocated to the general partners. Any subsequent income allocable to the limited partners is allocated to the general partners first until the general partners’ share of that income offsets the losses not previously recognized by the limited partners.

Functional Expenses Allocation

The costs of providing program services and supporting services are summarized on a functional basis in the statements of activities and statements of functional expenses. Accordingly, certain costs are allocated among program services and supporting services based on usage of resources.





19

Subsequent Events

Management has evaluated subsequent events through June 25, 2019, the date on which the financial statements were available to be issued.

NOTE 3 – CASH HELD AS TRUSTEE

At December 31, 2018, the balance of the trustee accounts totaled $28,448, which were held by CCDC in bank accounts for the following agencies and properties that it manages:

Chinatown Alleyway Improvement Association (CAIA) Chinatown Coalition for Better Housing (CCBH) Russian Hill Neighbors

NOTE 4 – GOVERNMENT CONTRACTS RECEIVABLE

Government contracts receivable for CCDC’s Other Programs as of December 31, 2018 are as follows:

City and County of San FranciscoMayor’s Office of Community Development $ 216,204Department of Building Inspection 702,130Department of Children, Youth and Their Families 48,513Department of Homeless and Supportive Housing 22,452Human Services Agency 68,347Department of Public Health 3,745City of San Francisco Rent Board 9,676Causa Justa: Just Cause 14,005

OtherLocal Initiatives Support Corp. 3,728Enterprise Community Partners, Inc. 40,000

Total contracts receivable $ 1,128,800

Amounts expected to be received in:Less than one year $ 1,128,800

NOTE 5 – GRANTS AND CONTRIBUTIONS RECEIVABLES

Grants and contributions receivable for CCDC Other Programs, net of allowances of $9,528, at December 31, 2018 are as follows:

Contributions with donor restrictions $ 277,225Contributions without donor restrictions 22,233

Total contribution receivable 299,468Amounts expected to be received in:

Less than one year (285,108)

One to five years $ 14,360





20

NOTE 6 – OTHER RECEIVABLES

Other receivables at December 31, 2018 are summarized as follows:

Owned Properties

Affiliated Partnerships

Other Programs Total

Property tax refund $ 116,487 $ - $ - $ 116,487Technical assistance fees – Central Subway - - 338,927 338,927Energy rebate - 20,455 - 20,455Insurance claim 12,610 - - 12,610Other 37,206 52,527 25,365 115,098

Total – net $ 166,303 $ 72,982 $ 364,292 $ 603,577

Amounts expected to be received in:Less than one year $ 166,303 $ 72,982 $ 364,292 $ 603,577

Certain affiliated partnerships made payments for property taxes pending approval and receipt of a property tax exemption of the affordable housing projects. As the property tax exemption is received, refunds were requested. While the approval process and the receipt of refunds involves a considerable amount of time, management believes that the full amount of property tax refunds is collectible.

NOTE 7 – CASH – RESTRICTED

Cash restricted for varying purposes at December 31, 2018 are summarized as follows:

Owned Properties



Replacement reserves $ 2,925,095 $ 5,803,515 $ - $ 8,728,610Operating and transition reserves 1,058,394 3,326,420 - 4,384,814Debt services reserves held by trustee 127,997 11,530 - 139,527RAD service reserves - 314,126 - 314,126Restricted capital funds 26,243 - - 26,243Residual receipts reserves 888,318 - - 888,318Other reserves 851,287 1,385,966 - 2,237,253

Total $ 5,877,334 $ 10,841,557 $ - $ 16,718,891

Replacement, Operating and Transition Reserves

CCDC-owned projects and affiliated partnerships are required to maintain operating and transition reserves as well as replacement reserves for property and equipment in accordance with partnership and other lenders’ regulatory agreements. Withdrawals usually require approval from the lender and/or the limited partner.





21

Debt Services Reserve Held by Trustee

Certain affiliated partnerships are required to maintain debt service reserves in accordance with partnership and other lenders’ regulatory agreements.

RAD Service Reserves

Certain affiliated partnerships are required to maintain a tenant service reserve during the rehabilitation period in accordance with the requirements of RAD agreements.

Restricted Capital Fund

CCDC maintains a separate account for the unused balance of the grants from NeighborWorks America, which is restricted for project rehabilitation.

Residual Receipts Reserve

Bayside, one of CCDC’s subsidiaries, is required to deposit any excess cash into a separate bank account in accordance with the requirements of the Department of Housing and Urban Development (HUD).

Other Reserves

Certain other restricted cash reserves are maintained by CCDC and affiliated partnerships for property development and other purposes.

NOTE 8 – PROPERTY AND EQUIPTMENT

Property and equipment is summarized as follows:

Owned Projects



Land $ 18,398,247 $ 2,141,775 $ - $ 20,540,022Site improvements - 1,698,907 - 1,698,907Building and improvements 69,368,320 540,755,308 22,567 610,146,195Leasehold improvements 15,000 73,208 71,680 159,888Development costs 2,976,926 41,504,884 - 44,481,810Furniture, fixtures and equipment 624,040 4,709,482 137,564 5,471,086

91,382,533 590,883,564 231,811 682,497,908Less: accumulated depreciation (37,632,447) (68,845,842) (184,651) (106,662,940)

Total property and equipment – net,before elimination 53,750,086 522,037,722 47,160 575,834,968

Elimination (7,753) - - (7,753)

Total property and equipment – net $ 53,742,333 $ 522,037,722 $ 47,160 $ 575,827,215





22

NOTE 9 – CAPITALIZED FEES

Capitalized fees are summarized as follows:

Owned Projects



Tax credit related costs $ - $ 657,815 $ - $ 657,815Lease commission costs - 28,213 - 28,213Ground lease acquisition costs - 158,704 - 158,704Air rights development fee 547,955 - - 547,955

547,955 844,732 - 1,392,687Less: accumulated amortization (176,206) (472,147) - (648,353)

Total capitalized fees – net $ 371,749 $ 372,585 $ - $ 744,334

NOTE 10 – INVESTMENTS IN MARKETABLE SECURITIES

Investments in marketable securities recorded at fair value have been categorized based upon a fair value hierarchy of inputs in accordance with generally accepted accounting principles (Note 2).

The following table presents information about the fair value hierarchy inputs used in determining the fair value of the marketable securities as of December 31, 2018:

Owned Projects



Mutual funds $ - $ - $ 731,758 $ 731,758Equities - - 2,891,807 2,891,807Fixed income - - 3,329,244 3,329,244Commodities - - 111,867 111,867

Total $ - $ - $ 7,064,676 $ 7,064,676

All marketable securities held by CCDC were categorized as Level 1 of the fair value hierarchy.





23

NOTE 11 – INVESTMENT IN REAL ESTATE LIMITED PARTNERSHIPS

CCDC has financial interests in the following real estate limited partnerships and CCDC’s capital account balances at December 31, 2018 are summarized as follows:

Percentage of Ownership

Capital Account Balance

Affiliated Partnerships:Notre Dame Housing Partners L.P. 99.9% $ 4,176,327Broadway Family Apartments, L.P. 0.01% 6,671,894Mission Bay Housing Partners, L.P 0.001% (123)Broadway Sansome Associates, L.P. 0.01% 28,751MHRSC, L.P. 0.0051% (1,331)Tenderloin Family Housing, L.P. 0.01% (2,066,608)Parkview Terrace Partners, L.P. 0.005% (686)Bay Street, L.P. 0.01% 499,854Pacific Street, L.P. 0.01% 499,577Ping Yuen, L.P. 0.01% (1,973)North Ping Yuen, L.P. 0.01% (1,979)

Total $ 9,803,703

Non-consolidated Partnerships:150 Otis Associates, L.P. 0.005% $ (837)Mission Bay Block 7 Housing Partners, L.P. 0.0049% 499,758MB3E, L.P. (3) 0.005% (800)1296 Shotwell Housing, L.P. (3) 0.005% 541,7002060 Folsom Housing, L.P. (1) 0.005% (4,498)Maceo May Apts., L.P. (1) 50% -Wharf Plaza I & II (2) 1% -

Total $ 1,035,323

(1) These projects are in pre-development stage.(2) CCDC is a limited partner and its capital account has been fully depleted by net losses allocated in prior years.(3) These projects have commenced constructions in late 2018 and limited partners’ interest have been transferred to

unrelated limited partners. .

NOTE 12 – INVESTMENT IN SEA

In 2001, CCDC joined the Sustained Excellence Alliance Corporation (SEA) as a charter member. The mission of SEA is to build the capacity of the community development industry: by resource development, by fostering a learning environment, and by sharing findings with other community development organizations, investors and policy makers, so that it might provide better diverse and comprehensive services to build healthy communities on a local and national scale. CCDC participates in the loan fund of SEA; and as part of the arrangement, CCDC advanced $25,000 to SEA for establishing a loan loss reserve. The reserve fund balance will be distributed as equity among all organizations participating in the fund upon the fund’s termination.





24

NOTE 13 – RELATED PARTY TRANSACTIONS

Receivables and Payables

At December 31, 2018, the affiliated partnerships and related parties (except as noted) receivable are as follows:

Various ChargesManagement

and Other Fees

Resident Serviceand Relocation

Fees

Billed and Unbilled

Development and Project Admin

Fees Interest

Owned ProjectsBayside $ 3,281 $ - $ - $ - $ -1150 Grant 1,370 - - - -Consorcia 80,793 - - - -665 Clay 40,148 - - - -Clayton 290,419 - - - -Tower Hotel 193,057 - - - -Larkin Pine 131,601 - - - -Namiki 3,120 74,191 - - -Swiss America 91,136 - - - -St. Claire 36,082 - - - -1370 California 4,305 - - - -Hamlin Hotel 929,588 13,517 - - -William Penn (13,726) 5,000 - - -462 Green 99,382 4,680 - - -Golden Gate 8,123 21,132 - - -900 Jackson 708,350 18,400 - - -937 Clay 9,289 - - - -9th Avenue 5,539 - - - -Legacy Foundation 1,673 - - - -Other 30,800 - - - -

Affiliated PartnershipsNotre Dame 20,408 90,880 - - -Tenderloin Family 43,602 20,082 - - 180,501(a)

Broadway Family 8,508 60,062 - - -Broadway Sansome 13,704 33,476 - - -MHRSC 10,875 85,292 - - -Parkview Terrace 18,223 69,409 - - -Crescent Cove 31,334 116,564 - - -227 Bay 8,674 40,846 - - -990 Pacific 11,843 40,846 - 250,000 -Ping Yuen 47,617 80,430 89,299 3,770,400 -North Ping Yuen 26,593 111,275 82,748 2,928,000 -





25

Various ChargesManagement

and Other Fees

Resident Serviceand Relocation

Fees

Billed and Unbilled

Development and Project Admin

Fees Interest

Related Parties150 Otis 25,901 26,000 - - -I-Hotel 188,668 - - - -Shotwell - - - - -Folsom (25,000) - - 15,000 -MBB7 - 22,148 - 70,000 -MB3E - - - 619,150 -

Total 3,085,280 934,230 172,047 7,652,550 180,501

Current portion 3,085,280 934,230 172,047 5,145,850 -Inter-division elimination (b) (2,239,558) - - - -

Current portion beforeinter-company elimination 845,722 934,230 172,047 5,145,850 -

Inter-company elimination (656,153) (886,082) (172,047) (4,630,000) -

Net – current portion 189,569 48,148 - 515,850 -

Non-current portion - - - 2,506,700 180,501Inter-company elimination - - - (2,318,400) (180,501)

Net – noncurrent portion $ - $ - $ - $ 188,300 $ -

(a) This interest is payable based on available excess cash only. See Note Receivable – Related Parties below.

(b) This is the elimination of receivables within the Owned Projects category.

Management and other fees payable also includes fees payable to unrelated parties, co-general partners and limited partners. The net management fees and other payable at December 31, 2018 are as follows:

OwnedProjects

Affiliated Partnerships Other Total

Management and other fees payable,before elimination $ 131,921 $ 1,186,107 $ - $ 1,318,028

Inter-company elimination (131,921) (196,610) - (328,531)

Total management and other fees payable –current $ - $ 989,497 $ - $ 989,497





26

Inter-company Revenue and Expenses

Significant related party transactions for CCDC, subsidiaries, affiliated partnerships and other related parties in 2018 are summarized below:

(a) Leases

CCDC’s Housing Development Department has a month-to-month lease for an office space at Notre Dame Apartments which is free-of-charge.

CCDC also leases various office space from certain owned projects under various lease terms. The rental revenue and expense is eliminated for consolidation purpose. CCDC paid rent expense to the following properties in 2018:

665 Clay $ 62,736Clayton 32,976Tower Hotel 87,060

Total $ 182,772

(b) Developer and Project Administrative Fees

CCDC earned development and project administrative fees from the following projects during the year:

Ping Yuen $ 1,208,400North Ping Yuen 1,380,000Folsom 150,000Shotwell 606,400MB3E 619,150MBB7 450,0009th Avenue 80,000937 Clay 80,000Hamlin Hotel 25,000Maceo May 75,000

Total before inter-company elimination 4,673,950Inter-company elimination (1,176,547)

Net total $ 3,497,403

The profit portion of developer and project administrative fees revenue are eliminated in the consolidation (see Note 16).





27

(c) Service Fees

Bookkeeping and Other

Property Management

Partnership Management

Asset /Supervisory /

Incentive Management

Tenant Services

Relocation Fee

RAD Service Fee

Owned ProjectsBayside $ 3,534 $ 29,016 $ - $ - $ - $ - $ -1150 Grant 3,024 10,920 - - 5,100 - -Consorcia 3,456 18,720 - - 5,463 - -665 Clay 3,600 19,500 - - 10,000 - -Clayton 11,316 39,360 - - 3,600 - -Tower Hotel 4,896 28,557 - - 3,600 - -Larkin Pine 7,560 40,584 - - 3,600 - -Namiki 6,605 28,881 - 37,441 53,276 - -Swiss America 7,525 53,175 - - 4,285 - -St. Claire 4,674 29,520 - - 5,891 - -1370 California 7,056 38,220 - - 11,792 - -Hamlin Hotel - - 5,000 8,517 - - -William Penn 10,378 45,816 5,000 - - - -462 Green 684 - - 4,680 - - -Golden Gate 7,849 46,728 - 21,132 - - -900 Jackson 2,052 3,060 - 15,228 - - -937 Clay 3,955 25,308 - - 4,583 - -9th Avenue (after acquisition) 168 910 - - - - -

Affiliated Partnerships227 Bay 5,950 39,914 20,423 20,423 123,217 - -990 Pacific 10,738 73,441 20,423 20,423 145,269 - -Ping Yuen 27,001 267,122 20,439 20,439 173,539 123,847 210,012North Ping Yuen 23,150 167,145 20,439 20,439 173,539 149,258 203,455Tenderloin Family 25,700 165,626 20,082 - 103,991 - -Notre Dame 34,372 171,635 30,046 60,834 238,902 - -Broadway Family 12,600 56,607 20,062 40,000 97,491 - -Broadway Sansome 11,350 50,300 13,719 19,756 72,155 - -Parkview 9,125 68,975 16,798 24,087 - - -MHRSC 11,425 88,364 18,446 66,846 44,010 - -Crescent Cove 250 232,639 13,291 103,273 - - -

Related Parties150 Otis 7,500 12,000 - 12,500 - - -I-Hotel 12,145 63,000 - - - - -MBB7 - - - 22,147 - - -





28

Bookkeeping and Other

Property Management

Partnership Management

Asset /Supervisory /

Incentive Management

Tenant Services

Relocation Fee

RAD Service Fee

Managed Properties9th Avenue (before acquisition) 1,848 10,010 - - - - -

Total beforeinter-company elimination 281,486 1,925,053 224,168 518,165 1,283,303 273,105 413,467

Inter-company elimination (259,993) (1,840,043) (224,168) (483,519) (1,283,303) - -

Net total $ 21,493 $ 85,010 $ - $ 34,646 $ - $ 273,105 $ 413,467

(d) Notes Receivable/Payable

Notes receivable/payable from/to certain related parties, owned projects and affiliated partnerships at December 31, 2018 are as follows:

Principal

Interest Receivable/

Payable

Related Parties

Wharf Plaza I & II – $349,000 was loaned to each partnership from a $700,000 fund received from the Site Acquisition Program of the Community Development Grant Funds of the City. The notes are payable upon the dissolution of the partnerships and bear interest based on 29% of the gross receipts less operating costs. Interest earned in 2018 totaled $319,717. $ 698,000 $ -

I-Hotel – CCDC borrowed $829,560 from the Affordable Housing Program (AHP) of the Federal Home Loan Bank of San Francisco through Bank of America and assigned it to I-Hotel. This loan is secured with a deed of trust on the project, bears no interest and will be due in 15 years from date of completion of project in 2020. Such loan may be forgiven if certain conditions are met. 829,560 -

Subtotal 1,527,560 -

Owned Projects

Tower Hotel – This note became non-interest bearing effective January 1, 1996, and CCDC does not intend to call this loan in the near future. 309,523 -

Subtotal 309,523 -





29

Principal

Interest Receivable/

Payable


Parkview Terrace – CCDC obtained a loan through the AHP program and loanedthe proceeds to Parkview Terrace. This note is secured by a deed of trust. Such note is non-interest bearing and is due in 2063. 500,000 -

990 Pacific – CCDC obtained a loan through the AHP program and loaned the proceeds to 900 Pacific. This note is secured by a deed of trust. Such note is non-interest bearing and is due in 2072. 500,000 -

Tenderloin Family – CCDC loaned $1,596,870 to Tenderloin Family for financing the development of the project. This note is secured by deed of trust and bearsinterest at 3.32% compounded annually. Annual principal and interest are paid based upon available excess cash starting June 1, 2016. All accrued interest and principal are due in 2070. Interest earned/paid in 2018 totaled $60,574. 1,491,247 -

Tenderloin Family – CCDC was assigned the note from TSA Inc. when it was dissolved. This note is secured by deed of trust and bears interest at 3.32% compounded annually. Annual principal and interest are paid based upon available excess cash starting May 1, 2016. All accrued interest and principal are due in 2070. Interest earned/paid in 2018 totaled $37,933. 1,000,000 180,501

Subtotal 3,491,247 180,501

Total before inter-company elimination 5,328,330 180,501

Inter-company elimination (3,800,770) (180,501)

Net total 1,527,560 -

Less: current portion - -

Non-current portion $ 1,527,560 $ -

NOTE 14 – NOTES PAYABLE

Notes payable are generally secured by the respective properties and bear simple interest rates unless otherwise stated. Notes payable and related interest payable balances at December 31, 2018 are summarized as follows:

PrincipalInterestPayable

Owned ProjectsBond and permanent loans, bearing interest from 4.25% to 8.38%, generally with

principal and interest payable monthly, to be repaid in full on various dates through 2031. Interest expense was $526,172. $ 13,177,325 $ 27,738





30


Construction loans, bearing 4% interest, generally with interest payable monthly and principal to be repaid upon maturity through 2019. Interest expense was $526,172. 10,835,376 58,962

State loans, bearing 3.00% interest, generally with principal and interest payments deferred and payable upon maturity at various dates through 2058. Interest expense was $190,709. 6,567,205 4,243,611

State loans, bearing 3.00% interest, generally with principal and interest due monthly until paid in full. Interest expense was $4,995. 100,000 12,100

State loans, bearing 3.00% interest, generally payable out of excess cash in arrears, to be repaid in full at various dates through 2049. Interest expense was $54,587. 1,819,585 1,344,639

State loans, bearing 3.00% interest, generally with interest payable out of excess cash in arrears, to be repaid in full at various dates through 2057. Interest expense was $27,957. 1,389,326 322,972

City loans, bearing interest from 0.00% to 6.00%, generally payable out of excess cash in arrears, to be repaid in full at various dates through 2074. Interest expense was $194,339. 6,050,791 2,125,040

City loans, bearing interest from 2.50% to 6.00%, generally with principal and interest payments deferred and payable upon maturity at various dates through 2048. Interest expense was $183,679. 11,345,911 5,337,521

City loans, bearing interest from 0.00% to 10.00%, generally with principal and interest payments deferred, then later forgiven upon maturity at various dates through 2041. Interest expense was $82,944. 2,684,167 6,413,425

City loans, bearing 0% interest to be forgiven upon maturity at various dates through 2073. 3,728,763 -

Subtotal – owned projects 57,698,449 19,886,008

Affiliated PartnershipsBond and permanent loans, bearing interest from 5.45% to 6.85%, generally with

principal and interest payable monthly, to be repaid in full on various dates through 2040. Interest expense was $3,143,587. (1) 45,229,118 135,437

Construction loans, bearing 1.50% interest, with principal and interest to be repaid upon maturity through 2020. Interest capitalized was $1,191,358. Interest expense was $2,308,119. 117,444,760 427,938

State loans, bearing 3% interest, generally payable upon maturity through 2071. Interest expense was $425,609. 15,236,836 1,973,105





31


State loans, bearing 3% interest, generally payable out of excess cash, to be repaid in full through 2048. Interest expense was $229,015. 8,876,616 6,612,235

City loans, bearing compounded interest from 1.95% to 2.57%, generally with $15,000 payable annually upon the completion of the rehabilitation, to be repaid in full through 2076. Interest capitalized was $464,737. Interest expense was $1,587,648. 93,355,000 4,859,575

City loans, bearing interest from 0.00% to 6.00%, generally with principal and interest payments payable out of excess cash in arrears, to be repaid in full at various dates through 2072. Interest expense was $995,654. 58,704,450 5,137,430

City loans, bearing 3.32% compounded interest, generally payable upon maturity through 2068. Interest expense was $24,666. 546,747 5,597

City loans, bearing interest from 0.00% to 1.95%, generally payable upon maturity through 2076. . Interest capitalized was $410,451. Interest expense was $825,536. 64,240,000 2,749,948

Affordable Housing Program (AHP) loans, bearing no interest, payable upon maturity through 2068. 1,140,000 -

Subtotal – affiliated partnerships 404,773,527 21,901,265

Other Programs

Unsecured loan from Wells Fargo, bearing 2% interest, with interest payable quarterly, to be repaid in full through 2021. Interest expense was $10,000. 500,000 2,500

AHP loans through CCDC, bearing no interest, payable upon maturity through 2061. 1,829,560 -

Subtotal – other programs 2,329,560 2,500

Total 464,801,536 41,789,773

Less: unamortized loan costs (2) (1,662,089) -

Net 463,139,447 41,789,773

Less: current portion (19,398,706) (1,267,548)

Long-term portion $ 443,740,741 $ 40,522,225

(1) In connection with the issuance of bonds to Notre Dame, an irrevocable letter of credit (LOC) has been obtained from Citibank, N.A. for the benefit of the Trustee and the holders of the bond to secure payment of principal and interest of the bonds, and the purchase price of the bonds tendered for purchase pursuant to the indenture. The LOC amounted to $16,831,475.





32

(2) Costs incurred in order to obtain permanent financing were $2,985,877 and are amortized on a straight-line basis into interest expense over the term of the loans. Interest expense for amortization of permanent loan costs was $206,019 in 2018. Cost incurred relating to construction loan were $73,521, which were also amortized on a straight-line basis into interest expense over the term of the loan. Interest expense for amortization of construction loan costs were $65,086 in 2018.

Principal payments towards notes payable for the next five years are subject to changes in net cash flow which is a contingency that cannot be reasonably estimated. Minimum required payments are estimated as follows:

2018 2019 2020 2021 2022 Thereafter

Permanent Bond $ 6,056,059 $ 1,541,967 $ 1,634,244 $ 1,732,224 $17,389,059 $18,604,804Construction 45,303,402 34,825,387 23,566,408 - - -AHP - - 829,560 - - 1,640,000State 19,598 5,900 15,000 15,000 15,000 33,528,669City 645,612 - - - - 225,709,665Unsecured - - - 500,000 - -

Not included in the schedule are forgivable city loans of $6,412,929 which are currently under negotiation for an extension and are presented as noncurrent in the statement of financial position.

NOTE 15 – SWAP CONTRACTS

Tenderloin Family entered into an interest rate swap contract with MUFG Union Bank, N.A. for the permanent portion of the MUFG Union Bank, N.A. loan. The effective date of the swap contract is December 2, 2013 with a termination date of June 1, 2040; however, Tenderloin Family has the right to change the termination date once to any date between June 1, 2029 and June 3, 2030. The fixed interest rate to be paid by Tenderloin Family is 4.15% for the duration of the swap contract.

The swap contract is valued based on the present value of the differential future cash flows resulting from utilization of the swap. At December 31, 2018, the notional amounts were $6,644,447 and the fair value of the swap contract was minus $768,971 to Tenderloin Family as computed by MUFG Union Bank, N.A. The value of the swap contract is recorded as an asset or a liability depending on the fair market value valuation, and the change in the value of the swap contract is recorded as other comprehensive income or loss. This swap contract was categorized as Level 2 of the fair value hierarchy.

Notre Dame also entered into an interest rate swap contract with Citibank covering the SFRA Multifamily Housing Revenue Bonds payable. The effective date of the swap contract is December 3, 2003 with a termination date of December 7, 2033. The fixed interest rate to be paid by Notre Dame is 6.5% for the duration of the swap. The swap’s fair value, which is estimated annually by management, represents the net present value of the stream of expected net interest receipts and payment over the life of the swap agreement. At December 31, 2018, the swap’s fair value was estimated to be zero. The assumptions underlying this Level 3 valuation by management are that the net present value of the cash flows paid to, or received from, Citibank under the swap contract will approximate zero over the term of the swap agreement.

NOTE 16 – DEFERRED REVENUE

Deferred revenue includes $7,168,836 as of December 31, 2018 related to the 30% estimated profit portion of CCDC’s development fees. In 2018, amortization of deferred revenue was $60,638. As of December 31, 2018 the accumulated amortization of deferred revenue was $167,550.





33

NOTE 17 – NET ASSETS WITH DONOR RESTRICTIONS

Net assets subject to donor restrictions for which the applicable restrictions were not met as of the end of December 31, 2018 are as follows:

December 31, 2017 Contributions

Releases/Reclassification from Restrictions

December 31, 2018

Community organizing and advocacy $ 30,000 $ 50,000 $ (80,000) $ -General program service - 383,960 - 383,960

Sustainable Chinatown - 215,000 - 215,000SRO program - 145,000 - 145,000CATs 10,000 - (10,000) -RAD Public Housing Project 296,714 115,000 (120,000) 291,714Small sites program - 15,000 (15,000) -Chinatown creative placemaking project 333,333 - (133,333) 200,000New Asia 50,000 - (50,000) -Digital Storytelling 20,000 - (20,000) -Youth Leadership 20,000 - (20,000) -

Subtotal – other programs 760,047 923,960 (448,333) 1,235,674

Broadway Family Apts. – city grant 6,000,000 - - 6,000,000665 Clay – city grant 1,852,500 - (57,000) 1,795,500NeighborWorks America 2,504,250 - (290,000) 2,214,250

Subtotal – owned projects 10,356,750 - (347,000) 10,009,750

Total $ 11,116,797 $ 923,960 $ (795,333) $ 11,245,424

Net assets with donor restrictions from NeighborWorks America are perpetual in nature, which arerestricted for establishing and maintaining a Permanently Restricted Revolving Loan and Capital Projects Fund. As of December 31, 2018, the balance includes $2,188,008 expended for capital improvements on various projects owned and operated by CCDC. In 2018, amount of $290,000 was reclassified to unrestricted net assets for the 2017 additions, which was determined to be unrestricted by NeighborWorks America.





34

NOTE 18 – INVESTMENT INCOME

The investment income for 2018 consists of the following:

CCDC and Legacy

FoundationAffiliated

Partnerships Total

Interest from notes receivable $ 418,227 $ - $ 418,227Interest and dividends earned 323,436 111,059 434,495Net unrealized loss on investments (591,032) - (591,032)Net realized loss on investments (32,902) - (32,902)Investment expenses (42,780) - (42,780)Distributions from Wharf Plaza I and II 15,277 - 15,277Income from real estate limited partnerships 1,899,910 - 1,899,910

Total before inter-company elimination 1,990,136 111,059 2,101,195Inter-company elimination (2,004,872) - (2,004,872)

Net investment income (loss) $ (14,736) $ 111,059 $ 96,323

NOTE 19 – AIR RIGHT LEASES

Bayside has an agreement with San Francisco Housing Authority to lease the air space above the project site for a period of 75 years commencing December 1990. The rent is 1.4% of the effective gross income from the operations of the project as long as the percentage increase in rent does not exceed 4% annually. The rent for 2018 was $13,166. Future rent is not expected to be materially different from the current rent.

Larkin Pine leases air rights above the postal facility owned by the United States Postal Service on which the project was constructed. The lease is for 75 years and commenced in 1994. The lease required an initial payment of $38,000 as rent for the first year, and annual rent was a fixed percentage (approximately 14%) of the gross income. In May 2002, the new arrangement provided that the monthly rent would be adjusted every June 1st based on the gross rental income of the prior year. The rent for 2018 was $57,871. Future rent is not expected to be materially different from the current rent.

Estimated non-cancelable lease payments are as follow:

Bayside Larkin Pine Total

2019 $ 13,166 $ 57,871 $ 71,0372020 13,166 57,871 71,0372021 13,166 57,871 71,0372022 13,166 57,871 71,0372023 13,166 57,871 71,037Annually thereafter through 2066 13,166 57,871 71,037Annually from 2067 through 2068 - 57,871 57,871





35

NOTE 20 – GROUND LEASES

Certain owned project and affiliated partnerships made lease prepayments to various regulatory agencies upon the closing of escrow on the purchase of properties. These prepayments are amortized on a straight-line basis over the terms of the leases. The following table summarizes the lease prepayment amounts and related terms:

Term PrepaymentAnnual

Amortization

Balance at December 31,

2018

Owned ProjectsNamiki (1) First 20 years $ 540,000 $ 27,000 $ 76,414

Subtotal – owned projects 76,414

Affiliated PartnershipsBroadway Family Initial 65 years 500,000 7,692 387,355Notre Dame (1) First 20 years 5,390,403 269,520 539,041North Ping Yuen (2) 99 years 4,640,000 46,869 4,536,498Ping Yuen (2) 99 years 5,110,000 51,616 4,996,014227 Bay (3) 99 years 375,000 3,788 363,005990 Pacific (3) 99 years 1,390,000 14,040 1,345,538

Subtotal – affiliated partnerships 12,167,451

Total 12,243,865

Current portion ** (420,525)

Noncurrent portion $ 11,823,340

(1) The annual amortized amount is applied against the residual rent.

(2) Ground lease prepayments were funded by a seller acquisition loan from SFHA in October 2016.

(3) Ground lease prepayments were funded by a seller acquisition loan from SFHA in November 2015.

Certain owned projects and affiliated partnerships also lease land where the projects are situated, generally from the San Francisco Mayor’s Office of Housing (SF-MOH). The leases range from an initial term of 50 to 70 years and have options to renew for an additional 29 to 49 years. Annual rent is composed of base rent and residual rent which are payable in arrears and are due on January 31st and April 15th of the following year, respectively. Base rent is accrued without interest until paid if no surplus cash is available while residual rent is accrued and is payable to the extent that the properties have excess cash. Nonpayment of base rent and/or residual rent is subject to stipulated terms in the ground lease agreements with SF-MOH.





36

Annual rent expense for each affiliated partnership is summarized as follows:

Base Rent Residual RentTotal

Annual Rent

Owned ProjectsNamiki $ 15,000 $ 175,000 $ 190,000Golden Gate (4) 15,000 150,317 165,317

Affiliated PartnershipsBroadway Sansome (5) 15,000 360,000 375,000MHRSC (5) 15,000 440,000 455,000Notre Dame 15,000 525,000 540,000Parkview Terrace 15,000 273,750 288,750

(4) Base rent, in any given year, is $15,000 plus the difference between (a) the HUD §236 Approved Rent fornon-Section 8 rental assistance units and (b) the estimated tenant rent payment for those units. Base rent, besides the $15,000, is paid with the level rent payments.

(5) If no surplus cash is available, any unpaid residual rent shall not accrue.

Ground lease expenses for 2018 and related payable balances at December 31, 2018 are as follows:

Ground Lease Expense

Ground Lease Payable

Owned ProjectsNamiki $ 144,000 $ 1,997,825Golden Gate 165,317 890,202Subtotal – owned projects 309,317 2,888,027

Broadway Sansome 15,000 15,000MHRSC 24,685 24,685Notre Dame 270,479 270,479Parkview Terrace 288,750 2,790,771Subtotal – affiliated partnerships 598,914 3,100,935

Total $ 908,231 5,988,962

Current portion ** (1,298,839)

Noncurrent portion $ 4,690,123

** The current portion included base rent of $90,000 and residual rent of $1,208,839, which was the accumulated available excess cash from past years.





37

NOTE 21 – EMPLOYEE RETIREMENT PLAN

CCDC established a retirement plan for its employees to participate in. The IRC §403(b) plan coversemployees after one year of service as defined in the plan. Employees are not required to contribute to the plan and employee contributions are immediately vested upon becoming eligible. The employer contributes a dollar-for-dollar matching up to a designated percentage based on the employee’s length of service. The employer’s maximum contribution has increased from 3% to 4% effective July 2018. For 2018, the employer contributions to the plan for CCDC and subsidiaries were $167,415 and for the affiliated partnerships were $26,724.

NOTE 22 – COMMITMENT, CONTINGENCIES AND OTHER MATTERS

Contingent Notes Payable

Notes payable of $1,027,833 and $709,921 from North of Market Development Corporation (NOMDC), which was the managing partner of the partnerships that owned the properties, to CCSF were transferred to William Penn Hotel L.P. and Hamlin Hotel L.P, respectively, at the time of restructuring. However, there have not been any amendments to the loan agreements for such transfer. These notes were secured by the 4th deeds of trust on the properties, and are due in October 2041, but may be forgiven if the terms and covenants of the loans are complied with. Had these obligations been recognized by the affiliated partnerships, the cost basis of the real estate acquired would have been increased by the same amount. The terms of the note with William Penn Hotel is non-interest bearing, while the note with Hamlin Hotel bears interest at 10% compounded annually. At December 31, 2018, the contingent deferred interest expense payable on note with Hamlin Hotel totaled $8,760,334.

571 Broadway/1150 Grant Avenue Property

In November 2005, CCDC received a donation of real property located at 571 Broadway/1150 Grant Avenue in San Francisco from Wells Fargo Bank. As part of this donation, Wells Fargo Bank reimbursed CCDC for the alterations, repairs, upgrades, replacement and improvements to the building, which was completed in 2008.

As part of this donation, Wells Fargo Bank obtained a lease for the ground floor space for its branch office for 99 years at $1 rent per year. There is also an extension option for nine terms of ten years each. The fair value of the discounted lease income was not determinable at the time that CCDC received the donation from Wells Fargo Bank.

Lease Commitments and Obligations

On December 1, 2010, CCDC leased an office space for the program department at a monthly rate of $2,900. The lease expired on December 31, 2013 and is currently on month-to-month basis. On August 12, 2016, CCDC entered into a lease agreement for an office space with Hank K. Fung, a third party, with an initial term of three years starting on September 1, 2016 and an option to extend the term for additional three years. The monthly rent for the first year is $4,500 which shall increase on an annual basis thereafter as specified in lease term. Other CCDC departments also occupied office space on a month-to-month basis at various properties owned or managed by CCDC. See Note 13.

In August 2016, CCDC entered an office lease with June Chin, a third party. The lease is based on a 15-year term starting from May 2017 to May 2032 at a monthly rate of $10,437 with a $60,000 rent credit. This lease has been terminated as of June 30, 2018.

In addition, CCDC also has operating leases for copiers, telephone system, and a postage meter with various terms and maturity dates that are expiring in 2018.





38

The future minimum rental payments for the non-cancelable operating leases are as follows:

Office Equipment Total

2019 $ 38,192 $ 20,196 $ 58,3882020 - 20,196 20,1962021 - 20,196 20,1962022 - 13,464 13,4642023 - - -Thereafter - - -

Thermal Energy Services Agreement

In August 2013, CCDC entered into an agreement with Renewable Technology Development, Inc. (RTD) for space leasing so that RTD would install and maintain a commercial solar heating system for no cost on the rooftop of the buildings at 1370 California and at Notre Dame Apartments. These systems will be connected to the projects’ existing water heating system. The projects agreed to purchase 100% of the energy delivered by the system at a 20% discount to the prevailing monthly published PG&E GMT Master Metered Multi-Family Service Gas Tariff, including PPP surcharge. This agreement is for 15 years until 2029 commencing with starting of the commercial operation date, with an option to renew for another 5 years ending 2034. The energy production began in February 2014. Total payments made to RTD for energy production in 2018 amounted to $2,297 and $11,420 for 1370 California and Notre Dame, respectively.

The projects also have an option to purchase the system at a buyout value as stated in the agreement no later than 180 days prior to the expiration date. If no option is exercised by the projects, then RTD will, at their expense, remove the system from the premises no later than 180 days after the expiration date. In addition, on the 6th anniversary of the 15-year term (year 2020) and each subsequent anniversary, the projects may elect to purchase the system at the greater of the buyout value and the fair market value. RTD is given sole and absolute discretion to terminate this agreement with not less than 60 days written notice to the projects; if that is to happen, the projects have an option to buy the system at the greater of the buyout value and the fair market value. The buyout value is stated in the agreement with the first year value stated at $158,927 and $324,000, and decreasing annually to $3,082 and $9,261 at year 15 for 1370 California and Notre Dame, respectively.

Equity Investments

150 Otis was formed jointly with Swords to Plowshares: Veteran Rights Organization (Swords) who also formed an LLC to act as the administrative general partner, and is currently operating the affordable housing complex under the name of Veteran Commons. This complex participates in the low-income housing tax credit program under Section 42 of the Internal Revenue Code. 150 Otis is structured so that both CCDC and Swords have equal ownership, control and authority. It is intended that Swords will acquire the entire ownership of the project at the end of the tax credit period.

MBB7 was formed jointly with Related Companies of California (Related) who formed an LLC to act as the administrative general partner for the purpose of operating an affordable housing complex under the name of Mission Bay Block 7. Construction began in May 2015 and was completed in February 2017. This partnership participates in the low income housing tax credit program under Section 42 of the Internal Revenue Code. It is intended that Related will acquire the entire ownership of the project at the end of the tax credit period.

Folsom and Shotwell were formed jointly with Mission Economic Development Agency (MEDA) who formed two separate LLCs to act as co-general partner for each limited partnership, for the primary purpose to acquire, construct, own, hold for investment, operate, manage, lease or sell an affordable rental housing development forlow-income persons. Shotwell construction has commenced in late 2018 while Folsom is still at pre-development stage as of December 31, 2018.





39

MB3E was formed jointly with Swords to Plowshares: Veteran Eights Organization (Swords) who also formed an LLC to act as co-general partner, for the primary purpose to acquire, construct, own, hold for investment, operate, manage, lease or sell an affordable rental housing development for low-income persons. The project has commenced construction in 2018.

Maceo May was formed jointly with Swords to Plowshares: Veteran Eights Organization (Swords) who also formed an LLC to act as co-general partner, for the primary purpose to acquire, construct, own, hold for investment, operate, manage, lease or sell an affordable rental housing development for low-income persons. The project is still at pre-acquisition stage.

CCDC uses the equity method of accounting for reporting these investments and recorded its allocated shareof losses from the above six partnerships. The following are key financial information for the six partnerships at December 31, 2018, and for the year then ended:

150 Otis MBB7 Folsom Shotwell MB3E Maceo May

Property and equipment, net $23,148,083 $75,419,536 $ - $ - $ - $ -

Construction in progress - - 5,954,651 16,008,665 30,641,553 1,833,439

Total assets 24,347,249 80,294,610 6,772,213 16,282,987 33,121,598 1,833,439Notes payable 7,438,846 47,470,984 4,942,423 10,385,809 20,150,410 1,413,756Construction costs and

other payable - - 78,234 2,410,596 6,317,963 410,976Total liabilities 7,887,313 49,364,869 5,020,688 12,992,957 26,758,943 1,834,239Partners’ capital 16,459,936 30,929,741 1,751,525 3,290,030 6,362,655 (800)Net revenue for 2018 1,394,286 3,849,241 - - 1,425 -Total expenses for 2018 2,015,933 6,026,170 7,600 7,600 2,900 800Net loss (621,647) (2,176,929) (7,600) (7,600) (1,475) (800)Investment loss –

CCDC’s share (31) (99) (4,548) (800) (800) -

Guarantees

Operating Deficit Guarantee:

Operating deficit guarantees are commitments to fund future operating deficits of affiliated partnerships. The guarantees are issued in favor of tax credit limited partnerships, and generally are for the fifteen-year period during which the investor is expected to hold its limited partner interest, or for shorter periods (for example, until certain debt coverage ratios are achieved for Tenderloin Family). A payment under such a guarantee would result in the transfer of cash resources from the guarantor to a consolidated affiliate, resulting in an obligation to repay the advance, usually from future operating cash flow. To date, CCDC and affiliates have not experienced any calls on these guarantees.





40

Together with the administrative or co-general partner, CCDC as the sole member, sponsor, or controlling interest of the affiliated partnership’s managing general partner, guarantees the following amounts:

150 Otis $ 625,000Broadway Sansome 200,000Ping Yuen 2,083,028Ping Yuen North 1,834,740227 Bay 321,173990 Pacific 655,962

Total $ 5,719,903

Development Deficiency:

Tenderloin Family – The general partner promises to lend to the partnership all funds necessary for completion of the rehabilitation and to pay all development costs of the project. The development deficiency Loan shall be unsecured and non-recourse to the partners without interest. If the general partner fails to make the development deficiency loan as requested, the general partner will pay the partnership interest at prime plus 2% per annum from the date the development deficiency loan is requested until it is made.

Ping Yuen and North Ping Yuen – The general partner is obligated to assume all responsibility for the completion of the rehabilitation of the project in accordance with the construction contract and the requirements of all lenders in accordance with the plans, and at general partner’s own cost and expense, cause the projects to reach completion no later than 30 days after the outside completion date on November 1, 2019and January 31, 2020, respectively. The general partner shall pay for all bills, expenses, charges, costs and fees relating in any manner to or otherwise in connection with such rehabilitation. The general partner covenants, agrees and promises to pay to the partnership the funds required to pay any development deficiency incurred by the partnership during the development deficiency guaranty period, which will end on the rent-up date as defined in the partnership agreements.

Construction Contracts:

Ping Yuen and North Ping Yuen entered into a construction contract with unrelated third party general contractor to provide general contractor services in the construction of respective projects. The other ongoing contracts, as adjusted by changes orders and amount incurred as of December 31, 2018 are as follows:

Contract Amount Incurred

Ping Yuen $ 60,624,758 $ 58,799,999North Ping Yuen 55,107,786 40,227,848

Total $ 115,732,544 $ 99,027,847

Payment Guarantee:

MHRSC – In the event that the general partners have not substantially complied with any material provisions of the Amended and Restated Limited Partnership Agreement, or default of the construction loan or foreclosure proceedings have been commenced against the Project for reasons other than the failure to make payment of the capital contribution from the limited partner, which the failure is not a result of a default by the general partners, the partnership shall withhold payment of the developer fee, incentive management fee, and partnership management fee. The general partners shall be liable for the developer fee paid.





41

Energy Tax Credit Compliance Guarantee:

MHRSC – CCDC and the co-general partner irrevocably and unconditionally guarantee payments to the limited partner equal to the greater of either (i) the amount of energy tax credit recapture plus interest in connection with such recapture or (ii) the amount of the deficiency assessed against the limited partner with respect to the recapturing of energy tax credits plus an amount sufficient to pay any tax liability owed by the limited partner, including interest. Such guaranty would not apply to amounts due solely to transfer by the limited partner's interest or to changes in tax law, which the general partner is unable to comply despite the exercise of its good faith and reasonable efforts.

Property Purchase Options

CCDC, as the sponsor or sole member of its affiliated partnerships’ general partner, is granted the option to purchase the project or the limited partner’s interest, and the right of first refusal. The purchase price of the aforementioned and the option period when they can exercise such rights are stipulated in each partnership’s purchase option and right of first refusal agreement.

Line of Credit

CCDC has a $6,000,000 revolving line of credit with Community Housing Capital, Inc. which matures onNovember 1, 2020. The line of credit shall be available to finance the acquisition of affordable multifamily rental properties located in San Francisco. The credit line bear interest at 6% fixed interest. The outstanding balances at December 31, 2018 were $3,870,000.

Others

For the low-income housing tax credit partnerships for which CCDC is the general partner, CCDC has to indemnify the limited partners for shortfall in the tax credits and other tax benefits. The aggregate outstanding amount of such guarantees is approximately $133,000,000 at December 31, 2018.

CCDC has received various grants and contracts, which are restricted for their intended purposes. Such funding may be subject to audit by the funding agencies, and costs disallowed will need to be refunded. In the opinion of management, any liability, which may arise as the result of such audits, would not be material.

Subsequent Event

462 Green also obtained a new loan in the amount of $650,000 from NeighborWorks Capital Corporation in March 2019 to fund the rehabilitation costs. The note bears 5.75% interest compounded monthly with the interest due monthly and the entire principal and interest due in February 2020.

Contingencies

CCDC was named in a lawsuit relating to the operation of Clayton Hotel in December 2016. It was settled in May 2019 and the settlement was covered by CCDC’s insurance policy. Hamlin and William Penn were also named in various complaints in the normal course of business. No amounts have been accrued in the statement of operations since the outcome of this matter is uncertain and the amount of liability, if any, cannot be determined or estimated, including any potential insurance recovery.





42

NOTE 23 – LIQUIDIY AND AVAILABILITY

Financial assets available for general expenditure, that is, without donor or other restrictions limiting their use, within one year of the balance sheet date, are comprised of the following:

OwnedProjects


OtherPrograms Elimination Total

Cash and cash equivalents, net of unavailable portion $ 2,759,895 $ 10,979,925 $ 5,264,056 $ - $ 19,003,876

Investment in marketable securities, net of unavailable portion - - 731,758 - 731,758

Receivables, net ofunavailable portion 570,190 770,925 1,507,868 (6,903) 2,842,080

Project development fee receivable - - 5,145,850 (4,630,000) 515,850

Management and other fees receivable - - 1,106,277 (1,058,129) 48,148

Receivable from related parties and affiliated partnerships 383,972 - 309,515 (503,918) 189,569

Financial assets available for general expenditures within one year $ 3,714,057 $ 11,750,850 $ 14,065,324 $ (6,198,950) $ 23,331,281

Financial assets include amounts that will be used to pay accounts payable, accrued expenses and other distributions from operating cash flow, if any, in the subsequent year. As part of its liquidity management, CCDC maintains reserve accounts as described in Note 7, a portion of which may be available to cover debt service, capital expenditures and project operating needs within one year of balance sheet date upon approval from regulatory agencies. CCDC has a goal to maintain financial assets to cover three to six months of normal operating expenses. In addition, CCDC invests cash in excess of daily requirements in various short-term investments including certificates of deposits and mutual funds.

CCDC also has marketable securities investments in the Legacy Foundation (whose mission is to support, benefit, and carry out the purpose of CCDC); however, these investments are only available for general expenditures upon approval of the Legacy Foundation board of directors.

43

SUPPLEMENTARY INFORMATION



44

SCHEDULE OF LOW-INCOME HOUSING OPERATIONS – UNRESTRICTED – TOTAL


See page 45 See page 46 See page 47

CCDC Owned

Total

Subsidiaries

Total

Other

Low-Income

Housing

Operations

Total Owned

Projects

Affiliated

Partnerships Grand Total

Revenue:

Rental 2,838,360$ 6,214,955$ -$ 9,053,315$ 28,449,063$ 37,502,378$

Investment income (loss) 11,412 11,468 1,915,187 1,938,067 111,059 2,049,126

Government grants and contracts 562,412 - - 562,412 39,285 601,697

Foundation grants and contributions - - 1,300,000 1,300,000 - 1,300,000

Miscellaneous 99,444 59,399 - 158,843 221,772 380,615

Total revenue 3,511,628 6,285,822 3,215,187 13,012,637 28,821,179 41,833,816

Expenses:

Salaries, payroll taxes and fringes 475,124 889,160 - 1,364,284 3,890,128 5,254,412

Tenant services 54,314 93,854 - 148,168 1,370,881 1,519,049

Repairs, maintenance and garbage 583,509 1,260,112 - 1,843,621 3,766,526 5,610,147

Professional fees 162,647 161,982 - 324,629 575,464 900,093

Management fees 329,015 320,039 - 649,054 3,013,627 3,662,681

Rent - 380,354 - 380,354 598,915 979,269

Utilities 424,640 473,308 - 897,948 2,734,637 3,632,585

Office supplies and expenses 54,565 87,389 - 141,954 284,305 426,259

Travel and conference - 9,675 - 9,675 - 9,675

Insurance 120,253 123,419 - 243,672 674,847 918,519

Property taxes, licenses and permits 180,920 58,208 - 239,128 397,303 636,431

Bad debt 11,982 50,847 - 62,829 241,368 304,197

Marketing and Service Startup 2,735 4,184 - 6,919 531,249 538,168

Interest 670,326 170,254 - 840,580 5,563,898 6,404,478

Other financial expense - 509,498 - 509,498 201,273 710,771

Miscellaneous 93,838 56,457 200 150,495 289,928 440,423

Insurance claim expense – net of insurance claim income 10,000 28,258 - 38,258 11,400 49,658

Subtotal 3,173,868 4,676,998 200 7,851,066 24,145,749 31,996,815

Changes in net assets without donor restrictions

before noncash income (expenses) 337,760 1,608,824 3,214,987 5,161,571 4,675,430 9,837,001

Noncash income (expenses):

Annual amortization of loan/grant 70,472 - - 70,472 - 70,472

Loss of disposal of fixed assets - (7,252) - (7,252) - (7,252)

Ground lease amortization - (27,000) - (27,000) (393,527) (420,527)

Deferred rent - - - - - -

Deferred interest – forgivable loans - (82,944) - (82,944) - (82,944)

Deferred interest – nonforgivable loans (354,266) (301,935) - (656,201) (4,156,239) (4,812,440)

Depreciation and amortization (719,054) (1,208,357) - (1,927,411) (12,859,062) (14,786,473)

Interest – amortization of permanent loan costs (88,700) (8,625) - (97,325) (137,827) (235,152)

Total noncash income (expenses) (1,091,548) (1,636,113) - (2,727,661) (17,546,655) (20,274,316)

Change in net assets (deficit) without donor restrictions (753,788) (27,289) 3,214,987 2,433,910 (12,871,225) (10,437,315)

Net assets (deficit) without donor restrictions, beginning of year (6,662,463) (17,888,873) 1,199,454 (23,351,882) 81,293,655 57,941,773

Other accumulated comprehensive income - - - - 237,150 237,150

Syndication costs - - - - (12,500) (12,500)

Cash distribution (44,796) - - (44,796) (69,567) (114,363)

Contributed capital 1,888,498 - - 1,888,498 37,625,762 39,514,260

Net assets (deficit) without donor restrictions, end of year (5,572,549)$ (17,916,162)$ 4,414,441$ (19,074,270)$ 106,203,275$ 87,129,005$

The Low-Income Housing Operations include the following:

- Allocated income (loss) from the investments in low-income housing limited partnerships;

- The distributions from the investments in Wharf Plaza I and II; and

- The activities (excluding partnership management fee revenue and note receivable interest income) of the CCDC controlled entities,

which are the general partners of the CCDC sponsored limited partnerships.



45

SCHEDULE OF LOW-INCOME HOUSING OPERATIONS – UNRESTRICTED – CCDC OWNED PROJECTS


Consorcia Clayton

Swiss

American St. Claire

1370

California Tower 665 Clay 462 Green 900 Jackson 937 Clay 9th Avenue 1150 Grant Total

Revenue:

Rental 201,060$ 346,636$ 323,030$ 266,570$ 655,336$ 193,104$ 226,545$ 69,042$ 253,669$ 194,488$ 16,416$ 92,464$ 2,838,360$

Investment income 2,590 193 739 2,796 2,327 18 2,727 - - - - 22 11,412

Government grants and contracts - - 562,412 - - - - - - - - - 562,412

Miscellaneous 14,927 5,959 4,132 441 2,797 41,888 2,185 25 250 870 - 25,970 99,444

Total revenue 218,577 352,788 890,313 269,807 660,460 235,010 231,457 69,067 253,919 195,358 16,416 118,456 3,511,628

Expenses:

Salaries, payroll taxes and fringes 43,004 48,941 47,976 60,969 127,339 31,396 53,897 224 7,911 35,081 2,184 16,202 475,124

Tenant services 5,463 3,600 4,285 5,891 11,792 3,600 10,000 - - 4,583 - 5,100 54,314

Repairs, maintenance and garbage 21,857 84,544 100,107 72,517 87,232 47,958 25,531 10,501 36,618 59,921 3,189 33,534 583,509

Professional fees 15,808 26,584 28,934 19,754 20,658 11,870 12,619 2,434 4,825 11,080 239 7,842 162,647

Management fees 23,690 45,526 58,839 29,520 38,220 28,557 22,912 9,871 34,050 26,000 910 10,920 329,015

Utilities 34,965 40,478 61,805 52,751 60,320 23,900 40,643 12,496 24,980 41,228 3,210 27,864 424,640

Office supplies and expenses 1,573 6,921 8,657 10,436 9,690 3,141 5,758 - - 4,432 50 3,907 54,565

Insurance 7,964 21,374 17,440 12,618 15,929 11,701 10,980 2,102 4,216 9,804 1,380 4,745 120,253

Property taxes, licenses and permits 6,071 10,962 18,646 3,531 4,976 6,796 18,246 2,945 61,039 46,906 45 757 180,920

Bad debt - - 3,392 - 564 914 - 507 - 6,605 - - 11,982

Marketing and advertising 13 940 432 23 357 81 12 - - 872 - 5 2,735

Interest - 16,412 - - 83,918 - - 19,939 235,649 310,436 3,972 - 670,326

Miscellaneous 2,120 2,692 36,364 2,862 4,179 16,279 3,377 971 638 21,050 227 3,079 93,838

Insurance claim expense – net of insurance claim income 10,000 - - - - - - - - - - - 10,000

Subtotal 172,528 308,974 386,877 270,872 465,174 186,193 203,975 61,990 409,926 577,998 15,406 113,955 3,173,868

Changes in net assets without donor restrictions

before noncash income (expenses) 46,049 43,814 503,436 (1,065) 195,286 48,817 27,482 7,077 (156,007) (382,640) 1,010 4,501 337,760


Annual amortization of loan/grant - 13,472 - - - - 57,000 - - - - - 70,472

Deferred interest – nonforgivable loans (22,251) (30,075) (46,863) (42,900) (44,004) (38,717) (74,431) (45,925) - - (9,100) - (354,266)

Depreciation and amortization (25,639) (99,569) (27,687) (39,620) (145,470) (35,520) (152,331) (28,599) (43,382) (50,247) (8,941) (62,049) (719,054)

Interest – amortization of permanent loan costs - (668) (827) (142) (5,231) - (3,013) (625) - (78,194) - - (88,700)

Total noncash income (expenses) (47,890) (116,840) (75,377) (82,662) (194,705) (74,237) (172,775) (75,149) (43,382) (128,441) (18,041) (62,049) (1,091,548)

Change in net assets (deficit) without donor restrictions (1,841) (73,026) 428,059 (83,727) 581 (25,420) (145,293) (68,072) (199,389) (511,081) (17,031) (57,548) (753,788)

Net assets (deficit) without donor restrictions, beginning of year (16,998) (2,218,049) (1,763,984) (1,315,462) (741,760) (1,660,456) (851,119) (81,936) (29,339) - - 2,016,640 (6,662,463)

Contributed capital - - - - - - - 458,498 - 130,000 1,300,000 - 1,888,498

Distribution to CCDC - - - - (44,796) - - - - - - - (44,796)

Net assets (deficit) without donor restrictions, end of year (18,839)$ (2,291,075)$ (1,335,925)$ (1,399,189)$ (785,975)$ (1,685,876)$ (996,412)$ 308,490$ (228,728)$ (381,081)$ 1,282,969$ 1,959,092$ (5,572,549)$



46

SCHEDULE OF LOW-INCOME HOUSING OPERATIONS – UNRESTRICTED – SUBSIDIARIES


Golden Gate

Apartments William Penn Larkin Pine Hamlin Namiki Bayside Total

Revenue:Rental 1,886,209$ 787,455$ 432,670$ 981,875$ 1,175,159$ 951,587$ 6,214,955$ Investment income 4,166 164 786 36 4,734 1,582 11,468 Miscellaneous 9,963 11,759 1,666 33,074 1,737 1,200 59,399

Total revenue 1,900,338 799,378 435,122 1,014,985 1,181,630 954,369 6,285,822

Expenses:Salaries, payroll taxes and fringes 157,414 187,556 110,927 254,304 93,574 85,385 889,160 Tenant services 24,805 - 3,600 - 53,276 12,173 93,854 Repairs, maintenance and garbage 212,000 279,516 165,092 430,069 103,848 69,587 1,260,112 Professional fees 32,433 41,017 24,782 20,033 22,813 20,904 161,982 Management fees 70,527 55,853 40,584 57,737 66,322 29,016 320,039 Rent 165,317 - 57,871 - 144,000 13,166 380,354 Utilities 146,606 77,270 85,093 83,981 42,774 37,584 473,308 Office supplies and expenses 22,366 18,818 13,624 7,362 12,976 12,243 87,389 Travel and conference - - 9,675 - - - 9,675Insurance 28,084 27,849 22,250 19,076 13,093 13,067 123,419 Property taxes, licenses and permits 30,375 11,625 800 7,722 6,770 916 58,208 Bad debt 35,532 4,514 - 10,801 - - 50,847 Marketing and advertising 1,247 1,418 566 475 335 143 4,184Interest 76,112 - - - - 94,142 170,254 Other financial expense 6,607 - - - 6,306 496,585 509,498 Miscellaneous 2,727 33,824 1,504 12,108 4,164 2,130 56,457 Insurance claim expense – net of insurance claim income - 28,258 - - - - 28,258

Subtotal 1,012,152 767,518 536,368 903,668 570,251 887,041 4,676,998

Changes in net assets without donor restrictionsbefore noncash income (expenses) 888,186 31,860 (101,246) 111,317 611,379 67,328 1,608,824

Noncash income (expenses):Loss of disposal of fixed assets - (7,252) - - - - (7,252) Ground lease amortization - - - - (27,000) - (27,000)Deferred interest – forgivable loans - - - - - (82,944) (82,944)Deferred interest – nonforgivable loans (44,810) (83,490) (54,588) (80,307) (38,740) - (301,935)Depreciation and amortization (344,403) (177,108) (229,438) (109,367) (228,267) (119,774) (1,208,357)Interest – amortization of permanent loan costs (8,535) - - (90) - (8,625)

Total noncash income (expenses) (397,748) (267,850) (284,026) (189,674) (294,097) (202,718) (1,636,113)

Changes in net assets (deficit) without donor restrictions 490,438 (235,990) (385,272) (78,357) 317,282 (135,390) (27,289)

Net assets (deficit) without donor restrictions, beginning of year (420,470) (5,993,524) (3,171,476) (5,457,108) 204,776 (3,051,071) (17,888,873)

Net assets (deficit) without donor restrictions, end of year 69,968$ (6,229,514)$ (3,556,748)$ (5,535,465)$ 522,058$ (3,186,461)$ (17,916,162)$

-



47

SCHEDULE OF LOW-INCOME HOUSING OPERATIONS – UNRESTRICTED – AFFILIATED PARTNERSHIPS


Notre Dame

Broadway

Family

Tenderloin

Family Crescent Cove

Parkview

Terrace

Broadway

Sansome 227 Bay 990 Pacific MHRSC Ping Yuen

North Ping

Yuen Total

Revenue:

Rental 5,703,230$ 1,980,802$ 2,749,476$ 4,605,984$ 1,362,365$ 1,237,729$ 934,196$ 1,653,515$ 1,198,600$ 4,119,413$ 2,903,753$ 28,449,063$

Investment income 61,904 1,856 2,366 6,676 206 1,525 1,539 7,480 7,664 15,080 4,763 111,059

Government grants and contracts - - - - - - - 39,285 - - - 39,285

Miscellaneous 12,090 12,309 61,397 71,960 18,022 21,266 2,534 6,027 11,506 3,114 1,547 221,772

Total revenue 5,777,224 1,994,967 2,813,239 4,684,620 1,380,593 1,260,520 938,269 1,706,307 1,217,770 4,137,607 2,910,063 28,821,179

Expenses:

Salaries, payroll taxes and fringes 540,104 222,413 592,039 371,832 382,427 287,470 111,475 194,775 318,171 418,202 451,220 3,890,128

Tenant services 238,902 97,491 103,991 72,982 54,614 72,155 124,467 147,569 100,782 179,389 178,539 1,370,881

Repairs, maintenance and garbage 355,634 261,779 384,053 395,656 216,546 176,692 188,740 237,716 228,340 809,761 511,609 3,766,526

Professional fees 65,224 44,257 58,610 41,219 25,946 32,417 30,854 35,890 31,863 119,495 89,689 575,464

Management fees 274,521 121,165 203,219 1,289,686 135,935 94,298 86,116 112,862 179,804 307,998 208,023 3,013,627

Rent 270,480 - - - 288,750 15,000 - - 24,685 - - 598,915

Utilities 466,171 224,725 304,391 276,844 168,120 172,875 81,685 141,212 136,086 423,070 339,458 2,734,637

Office supplies and expenses 18,602 10,050 35,718 23,400 24,029 24,831 19,237 24,071 24,619 52,018 27,730 284,305

Insurance 72,561 50,110 108,115 73,100 48,810 49,080 33,870 53,110 48,979 98,559 38,553 674,847

Property taxes, licenses and permits 64,967 38,538 59,432 173,147 13,769 10,395 4,323 5,559 11,871 9,488 5,814 397,303

Bad debts 46 - 4,228 10,947 738 1,486 - - 3,244 176,196 44,483 241,368

Marketing and Service Startup 422 494 3,690 2,371 324 13,015 209 863 751 237,318 271,792 531,249

Interest 480,202 114,412 417,095 995,019 110,943 - 97,714 1,040,394 - 1,376,517 931,602 5,563,898

Other financial expense 30,374 46,096 47,239 22,843 7,721 30,399 4,202 12,399 - - - 201,273

Miscellaneous 14,065 5,354 25,421 23,388 10,592 42,219 9,592 26,112 10,649 34,754 87,782 289,928

Insurance claim expense – net of insurance claim income - - 1,400 10,000 - - - - - - - 11,400

Subtotal 2,892,275 1,236,884 2,348,641 3,782,434 1,489,264 1,022,332 792,484 2,032,532 1,119,844 4,242,765 3,186,294 24,145,749

Changes in unrestricted net assets

before noncash income (expenses) 2,884,949 758,083 464,598 902,186 (108,671) 238,188 145,785 (326,225) 97,926 (105,158) (276,231) 4,675,430


Ground lease amortization (269,520) (7,693) - - - - (3,788) (14,040) - (51,617) (46,869) (393,527)

Deferred rent - - - - - - - - - - - -

Deferred interest – nonforgivable loans - (332,745) (352,190) (303,797) (134,243) (592,317) (221,982) (487,139) (27,762) (878,528) (825,536) (4,156,239)

Depreciation and amortization (698,057) (834,722) (1,041,384) (1,319,721) (839,369) (965,115) (608,873) (1,546,417) (927,375) (2,446,007) (1,632,022) (12,859,062)

Interest – amortization of permanent loan costs (7,873) (8,301) (21,312) (25,665) (7,872) (306) (11,360) (54,301) (837) - - (137,827)

Total noncash income (expenses) (975,450) (1,183,461) (1,414,886) (1,649,183) (981,484) (1,557,738) (846,003) (2,101,897) (955,974) (3,376,152) (2,504,427) (17,546,655)

Change in net assets (deficit) without donor restrictions 1,909,499 (425,378) (950,288) (746,997) (1,090,155) (1,319,550) (700,218) (2,428,122) (858,048) (3,481,310) (2,780,658) (12,871,225)

Net assets (deficit) without donor restrictions, beginning of year 7,116,251 8,972,657 7,572,728 13,078,618 3,911,400 11,082,835 216,470 1,037,197 21,434,148 4,179,072 2,692,279 81,293,655

Accumulated other comprehensive income - - 237,150 - - - - - - - - 237,150

Syndication costs - - - - - - (5,000) (7,500) - - - (12,500)

Capital distribution - - - (69,567) - - - - - - - (69,567)

Capital contribution - - 577,147 - - - 9,846,020 27,202,595 - - - 37,625,762

Net assets (deficit) without donor restrictions, end of year 9,025,750$ 8,547,279$ 7,436,737$ 12,262,054$ 2,821,245$ 9,763,285$ 9,357,272$ 25,804,170$ 20,576,100$ 697,762$ (88,379)$ 106,203,275$



48

SCHEDULE OF ASSETS, LIABILITIES AND NET ASSETS –

CHINATOWN COMMUNITY DEVELOPMENT CENTER ONLY

DECEMBER 31, 2018

Owned

Projects

LIHO –

CCDC Only

Other

Program –

CCDC Only

CCDC Only –

Total Elimination Total

Current assets:

Cash and cash equivalent 528,860$ -$ 6,374,730$ 6,374,730$ -$ 6,903,590$

Cash and cash equivalent – development 20,875 - - - - 20,875

Cash held as trustee (contra) - - 28,448 28,448 - 28,448

Investments in marketable securities - - 731,758 731,758 - 731,758

Receivables:

Rent 4,625 - 6,903 6,903 - 11,528

Government contracts - - 1,128,800 1,128,800 - 1,128,800

Grants and contributions - - 285,108 285,108 - 285,108

Other 36,730 - 365,965 365,965 - 402,695

Inter-fund receivable - 7,482,797 (6,899,826) 582,971 (87,908) 495,063

Project development fee receivable - - 5,145,850 5,145,850 - 5,145,850

Management and other fees receivable - - 520,710 520,710 - 520,710

Receivables from related parties - 768,939 5,437,613 6,206,552 (649,402) 5,557,150

Prepaid expenses 36,825 - 249,896 249,896 - 286,721

Total current assets 627,915 8,251,736 13,375,955 21,627,691 (737,310) 21,518,296

Property and equipment, net of

accumulated depreciation of $15,252,484 14,598,202 47,167 47,160 94,327 (7,753) 14,684,776

Fund – restricted 1,845,053 26,242 - 26,242 - 1,871,295

Contributions receivables - - 14,360 14,360 - 14,360

Tenant security deposits 140,825 - - - - 140,825

Investments in real estate limited partnerships - 5,553,845 - 5,553,845 - 5,553,845

Investment in SEA - - 25,000 25,000 - 25,000

Project development fee receivable – non-current - - 2,506,700 2,506,700 - 2,506,700

Management and other fees receivable – non-current - - 108,985 108,985 - 108,985

Deposits - - 108,945 108,945 - 108,945

Notes receivables - - 5,328,330 5,328,330 (309,523) 5,018,807

Interest receivable – related party - - 180,501 180,501 - 180,501

Total assets 17,211,995$ 13,878,990$ 21,695,936$ 35,574,926$ (1,054,586)$ 51,732,335$

ASSETS



49

SCHEDULE OF ASSETS, LIABILITIES AND NET ASSETS –


DECEMBER 31, 2018

Owned

Projects

LIHO –

CCDC Only

Other

Program –

CCDC Only

CCDC Only –


Current liabilities:

Accounts payable 57,891$ -$ 235,545$ 235,545$ -$ 293,436$

Trustee funds (contra) - - 28,448 28,448 - 28,448

Accrued payroll and vacation 9,422 - 1,148,126 1,148,126 - 1,157,548

Other accrued liabilities 27,112 - 57,102 57,102 - 84,214

Unearned revenue 19,710 - 211,100 211,100 - 230,810

Accrued interest 1,289 - 2,500 2,500 - 3,789

Payable to related parties 994,754 495,640 850,203 1,345,843 (737,310) 1,603,287

Unsecured loan payable - - 187,500 187,500 - 187,500

Current portion of secured notes payable 13,340 - - - - 13,340

Current portion of accrued deferred interest – nonforgivable loans 61,225 - - - - 61,225

Total current liabilities 1,184,743 495,640 2,720,524 3,216,164 (737,310) 3,663,597

Non-current liabilities:

Construction costs payable 167,287 - - - - 167,287

Tenant security deposits 136,391 - - - - 136,391

Notes payable to CCDC 309,523 - - - (309,523) -

Unsecured loan payable, non-current - - 312,500 312,500 - 312,500

Secured notes payable to City – forgivable 3,728,763 - - - - 3,728,763

Secured notes payable to City and State

– non-forgivable, net of current portion 9,027,303 - - - - 9,027,303

Secured notes payable, net of current portion 2,240,071 - 1,829,560 1,829,560 - 4,069,631

Unamortized loan costs

net of accumulated amortization of $191,669 (116,991) - - - - (116,991)

Accrued deferred interest – nonforgivable loans 5,243,603 - - - - 5,243,603

Total non-current liabilities 20,735,950 - 2,142,060 2,142,060 (309,523) 22,568,487

Total liabilities 21,920,693 495,640 4,862,584 5,358,224 (1,046,833) 26,232,084

Net assets:

Without donor restrictions (6,554,198) 5,219,100 15,597,678 20,816,778 (7,753) 14,254,827

With donor restrictions 1,845,500 8,164,250 1,235,674 9,399,924 - 11,245,424

Total net assets (4,708,698) 13,383,350 16,833,352 30,216,702 (7,753) 25,500,251

Total liabilities and net assets 17,211,995$ 13,878,990$ 21,695,936$ 35,574,926$ (1,054,586)$ 51,732,335$

LIABILITIES AND NET ASSETS



50

SCHEDULE OF SUPPORT AND REVENUE, AND EXPENSES –



Owned

Projects

LIHO –

CCDC only

Other –

CCDC only

CCDC Only –


Support and revenue:

Rental 2,304,745$ -$ 33,217$ 33,217$ (182,772)$ 2,155,190$

Government grants and contracts 575,884 - 4,653,893 4,653,893 - 5,229,777

Management and RAD service fees - - 2,177,088 2,177,088 (237,972) 1,939,116

Technical assistance fees - - 312,780 312,780 - 312,780

Developer and project administrative fees - - 4,673,950 4,673,950 - 4,673,950

Tenant services fees - - 1,283,303 1,283,303 (49,731) 1,233,572

Outreach and relocation service fees - - 686,572 686,572 - 686,572

Bookkeeping and others - - 273,986 273,986 (45,547) 228,439

Investment income 11,413 15,277 431,886 447,163 - 458,576

Foundation grants - - 1,005,226 1,005,226 - 1,005,226

Contributions - - 683,523 683,523 - 683,523

Miscellaneous 98,299 - 82,594 82,594 - 180,893

Total support and revenue 2,990,341 15,277 16,298,018 16,313,295 (516,022) 18,787,614

Expenses:

Program services:

Low-income housing projects:

Operating 2,108,544 - - - (516,022) 1,592,522

Deferred interest 299,242 - - - - 299,242

Depreciation and amortization 587,886 - - - - 587,886

Interest – amortization of permanent loan costs 9,880 - - - - 9,880

Property management - - 1,093,070 1,093,070 - 1,093,070

Housing development - - 1,801,007 1,801,007 - 1,801,007

Program and planning - - 5,121,693 5,121,693 - 5,121,693

Management and general:

Operating - 200 4,160,833 4,161,033 - 4,161,033

Depreciation and amortization - - 18,707 18,707 (389) 18,318

Fundraising - - 614,953 614,953 - 614,953

Total expenses 3,005,552 200 12,810,263 12,810,463 (516,411) 15,299,604

Change in net assets (15,211) 15,077 3,487,755 3,502,832 389 3,488,010

Net assets, beginning of year (4,648,691) 13,368,273 13,300,801 26,669,074 (8,142) 22,012,241

Transfer (to) from affiliates (44,796) - 44,796 44,796 - -

Net assets, end of year (4,708,698)$ 13,383,350$ 16,833,352$ 30,216,702$ (7,753)$ 25,500,251$



51

SCHEDULE OF NOTES PAYABLE


Notes payable are generally secured by the respective properties and under simple interest rates unless otherwise stated:

Notes Payable – City and State

CA=StateSF = City Principal Amount Deferred Interest

Property Year Due* Interest Rate Non-forgivable Forgivable Payable **

Owned Projects:

Consorcia Hotel 2011 6% SF (a) $ 330,898 $ - $ 538,539Consorcia Hotel 2054 3% SF (b)(d) 13,340 - 1,200Clayton Hotel 2012 3% CA (f) 100,000 - 12,100Clayton Hotel 1999 6% SF (a) 334,604 - 734,097Clayton Hotel 2073 0% SF (b)(c) - 469,963 -Clayton Hotel 2049 0% SF (b)(e) - 417,632 -Clayton Hotel 2051 0% SF (b)(d) - 60,000 -Clayton Hotel 2052 3% SF (b)(d) 232,945 - 123,237665 Clay St. 2026 2.5% SF (d) 2,977,245 - 888,776462 Green 2046 3% SF (d) 1,530,839 - 106,666Swiss American Hotel 2057 3% CA (d) 979,326 - 20,876Swiss American Hotel 2072 3% SF (d) 1,040,214 - 676,659St Claire Hotel 2016 3% CA (a) 410,000 - 302,096St Claire Hotel 2006 6% SF (b)(c) 510,000 - 986,326St Claire Hotel 2050 0% SF (d) - 478,168 -1370 California St. 2065 3% SF (d)(l) 1,466,785 - 40,1661370 California St. (land) 2069 0% SF (c)(g) - 2,303,000 -9th Ave 2048 3% SF (h) 3,747,879 - 9,100William Penn Hotel 2041 3% CA (d) 2,783,001 - 2,216,362William Penn Hotel 2041 0% SF (d)(l) 183,661 - 248,501William Penn Hotel 2041 0% SF (c)(g) - 1,073,820 2,308,453Larkin Pine Hotel 2048 3% CA (d) 1,819,585 - 1,344,639Larkin Pine Hotel 2048 3% SF (n) 2,800,000 - 1,261,151Tower Hotel 2005 6% SF (a) 645,286 - 919,532Hamlin Hotel 2041 3% CA (d) 2,282,663 - 1,700,198Hamlin Hotel 2041 0% SF (l) 16,514 - 27,069Hamlin Hotel 2041 0% SF (c)(g) - 780,960 1,678,872Hamlin Hotel 2074 3% SF (d) 419,660 - 14,970Hamlin Hotel 2075 3% SF (d) 400,000 - 9,167Golden Gate Apts. 2049 6% SF (d) 746,833 - 877,405Bayside Housing 2039 10% SF (c) - 829,386 2,426,100Namiki 2058 3% CA (d)(i) 1,501,542 - 327,053

Subtotal 27,272,820 6,412,929 19,799,310





52

CA=StateSF = City Principal Amount Deferred Interest

Property Year Due* Interest Rate Non-forgivable Forgivable Payable **

Affiliated Partnerships:227 Bay 2072 0% SF (b)(d) 3,309,891 - -227 Bay 2070 0% SF (d) 400,000 - -227 Bay 2073 2.57% SF (k) 8,175,000 - 500,169990 Pacific 2072 0% SF (b)(d) 8,419,603 - -990 Pacific 2073 2.57% SF (k) 17,940,000 - 1,370,774Ping Yuen 2076 1.95%SF (k) 67,240,000 - 2,988,632Ping Yuen 2071 0%SF (b)(d) 920,000 - -Ping Yuen 2076 0%SF (b)(d) 1,050,000 - -North Ping Yuen 2076 1.95%SF (k) 61,870,000 - 2,749,948Broadway Family 2057 3% SF (d) 4,142,286 - 1,406,674Broadway Family 2065 3% CA (b)(d)(i) 7,999,094 - 1,516,438Mission Bay 2062 6% SF (d) 4,837,780 - 22,267Tenderloin Family 2048 3% CA (m) 8,876,616 - 6,612,235Tenderloin Family 2068 3.32 % SF (d)(j) 546,747 - 5,597Parkview Terrace 2060 1% SF (d) 13,424,376 - 1,554,946MHRSC 2065 0.25% SF (b)(d) 11,051,099 - 16,831Broadway Sansome 2071 3% CA (b)(d) 7,237,742 - 456,667Broadway Sansome 2070 3% SF (b)(d) 13,519,414 - 2,136,710

Subtotal 240,959,648 - 21,337,888

Total 268,232,468 6,412,929 41,137,198

Less: current portion - - (614,973)

Non-current portion $ 268,232,468 $ 6,412,929 $ 40,522,225

CCDC has the following loans from the City and County of San Francisco (City) and the State of California (State), which were used for the purposes of acquiring and/or rehabilitating real properties for low and moderate-income housing. The loans payable balances and deferred interest payable to the City and State at December 31, 2018 were as follows:

* The entire principal and deferred interests of the above loans are due in one payment on the due date, except as noted below:

(a) Requests for long-term extension for these loans have been made/will be made and management believes that the extensions will be granted.

(b) In the event of default (as defined in the loan agreements), interest will be deemed to have accrued at 10% or 12% compounded annually.

(c) These loans are forgivable upon maturity if all the terms and covenants of the loan are met.

(d) Interest is due based on available cash flows upon submission of annual report. Amount not paid is deferred.

(e) For such period that this project is operated for the benefit of qualifying tenants, 1/50th of the original principal will be reduced at the end of each year. Accordingly, the principal is being amortized for $13,472 annually.





53

(f) These loans were due in 2012. The agreed repayments started on August 1, 2013 with monthly payments of $1,500. The monthly payments will continue until the loans are paid in full and are first applied against deferred interest payable.

(g) Interest was at 12% per annum up to December 31, 2001 then changed to 0% starting January 1, 2002.

(h) Interest is at 3% per annum. Annual payments are to be made in an amount equal to two thirds of the Residual Receipts, if any, attributable to the prior calendar year, beginning December 31st after the end of the calendar year of the Completion Date.

(i) Annual payment of 0.42% on the unpaid principal balance as monitoring fee for the first 30 years. Commencing the 30th anniversary and continuing thereafter, the annual required payment is the lesser of (1) the full amount of interest accruing on the unpaid principal amount for the immediately preceding 12 month period, or (2) the amount determined by the SF-MOH/HCD to be necessary to cover the costs of continued monitoring of the project for compliance with the Program requirements.

(j) This loan was assumed by Tenderloin Family through acquisition of Turk Street Apt. from 201 Turk Street, L.P., on December 3, 2013. Interest previously accrued by 201 Turk Street, L.P. was forgiven.

(k) Interest at 2.57% compounded annually with $15,000 required monthly payment beginning June 30 after the completion of the rehab.

(l) Interest at 10% compounded annually, then changed to 0% starting January 1, 2002.

(m) This loan was assumed by Tenderloin Family through acquisition of Turk Street Apt. from 201 Turk Street, L.P., on December 3, 2013. It requires annual interest payment of 0.42% on the unpaid principal balance starting December 31, 2013.

(n) This note bears simple interest per annum for the first 15 years and bears no interest thereafter.

** The total deferred interest payable of the above loans included $6,413,425 from forgivable loans.

Other secured Notes Payable

Property Interest RateMonthlyPayment Maturity

Loan balance at December 31,

2018

Owned Projects:Bond and Permanent Loans:Clayton Hotel 7.75% $ 3,557 2024 $ 199,6351370 California St. (g) 4.25% 24,282 2027 2,101,661462 Green 5.25% 1,663 2026 378,687900 Jackson 6.00% 19,350 2018 3,870,000900 Jackson 6.75% - 2020 19,6009th Ave 2.60% - 2028 2,200,000Bayside 8.375% 12,046 2031 1,100,794Hamlin Hotel 5.50% - 2019 650,000Golden Gate (c) 6.02% 28,754 2029 2,656,948

Total 13,177,325

Less: current portion (4,831,885)

Non-current portion $ 8,345,440





54

Property Interest RateMonthlyPayment Maturity


2018

Other Program:Affordable Housing Program (AHP) loans: (d)

I-Hotel 0% $ - 2020 $ 829,560Parkview Terrace 0% - 2061 500,000990 Pacific 0% - 2072 500,000

Total – non-current portion $ 1,829,560

Affiliated Partnerships:Bond and Permanent Loans:Notre Dame (a)(b) 6.50% 61,721 2033 $ 7,062,057Crescent Cove 5.45% 127,556 2022 18,004,150Broadway Family 6.85% 12,188 2040 1,640,640227 Bay 4.13% 8,624 2033 1,108,972990 Pacific 4.59% 44,326 2035 9,158,698Parkview Terrace 6.77% 14,268 2033 1,610,156Tenderloin Family (f) LIBOR + 2% - 2040 6,644,447

Total bond and permanent loans 45,229,120



Affordable Housing Program (AHP) loans: (d)

Broadway Family 0% 2063 $ 400,000Broadway Sansome (e) 0% 2068 740,000

Total AHP loans $ 1,140,000

Grand total $ 50,458,335



(a) In connection with the issuance of bonds to Notre Dame, an irrevocable letter of credit (LOC) has been obtained from Citibank, N.A. for the benefit of the Trustee and the holders of the bond to secure payment of principal and interest of the bonds, and the purchase price of the bonds tendered for purchase pursuant to the indenture. The LOC amounted to $16,831,475.

(b) As part of the financing arrangement for the project, Notre Dame obtained a Standby Payment Agreement fromSF-MOH, whereby, SF-MOH agreed to fund, at its option, either payoff of a portion of the loan (amount to be determined at that time) or monthly advances enough to meet the monthly debt services for the Tranche B loan in the event that the HAP contract is not renewed or the payment is reduced by HUD. SF-MOH’s obligation under this agreement only arises if Notre Dame does not have sufficient funds available to make the debt service payments as required.





55

If SF-MOH advances the payoff for the loan, Notre Dame agrees to repay SF-MOH for the payoff amount on terms and conditions equivalent to those provided for in connection with the loan of funds (other than bond proceeds) by SF-MOH to Notre Dame in connection with the project. If SF-MOH funds the monthly debt services, the partnership would not be required to repay SF-MOH for the amount funded unless reimbursement from HUD or other funding sources are received. This Standby Payment Agreement is effective for 15 years in addition to the rehabilitation period.

(c) Golden Gate has an interest reduction agreement with HUD by which HUD assists in the monthly debt service payment based on a preset formula with an annual limit of $127,911 per year. This arrangement ends in 2018. CCDC guarantees payment on this loan.

(d) AHP of the Federal Home Loan Bank loans are due immediately if the project is not in compliance with the terms set forth in the loan agreement.

(e) This loan is due in full in the later of (a) 55 years after recordation of security instrument or (b) 15 years after the date of completion of construction of the project.

(f) This loan requires monthly principal and interest payment based on the amortization schedule of the loan agreement.

(g) This loan requires monthly principal and interest payment of $22,690 are due until the entire note is repaid in full by February 2027.

Construction Loans Payable

CCDC has the following loans for construction in progress. Interest payments on the loans are added to the principal balance. Loans payable are secured with the real and personal properties of the respective property, and are expected to be refinanced or paid off with a combination of new permanent loans and equity financing. The loans payable balances and deferred interest payable at December 31, 2018 were as follows:

Property Interest RateRequiredPayment Maturity


2018

Owned Projects:

937 Clay LIBOR+4%Interest paid

monthly 2019 $ 10,835,376

Affiliated Partnerships:

North Ping Yuen LIBOR +195 basis points

Interest paid monthly 2020 45,890,753

Ping YuenLIBOR +180 basis points

Interest paid monthly 2019 71,554,005

Total construction loans 128,280,134







56

Unsecured Loans Payable

Property Interest RateQuarterly Payment Maturity


2018

Other Program:CCDC 2% $ 2,500 2019 (1) $ 500,000

Total unsecured loans 500,000

Less: current portion (187,500)

Total – non-current portion $ 312,500

(1) CCDC extended a loan agreement with Wells Fargo Bank on March 6, 2015 to March 6, 2019, with an automatic extension for two additional years unless CCDC notifies the bank in writing not to extend.



57

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Federal Grantor/Pass-Through Grantor/Program Title

Federal CFDA

Number

Agency Pass-Through Number

Federal Expenditures

U.S. Department of Housing and Urban Development (HUD): Loan BalancePass through City and County of San Francisco

Community Development Block Grants Cluster (1)

- Consorcia Hotel 14.218 $ 330,898- Consorcia Hotel 14.218 13,340- Clayton Hotel 14.218 295,565- Clayton Hotel 14.218 39,039- Clayton Hotel 14.218 232,945- Clayton Hotel 14.218 431,104- Clayton Hotel 14.218 60,000- Swiss American Hotel 14.218 1,040,214- St. Claire Hotel 14.218 510,000- St. Claire Hotel 14.218 478,468

HOME Program Loan – 1370 California 14.239 2,303,000HOME Program Loan – Clayton Hotel 14.239 469,963

Total loans 6,204,536

U.S. Department of Housing and Urban Development (HUD): GrantPass through City and County of San Francisco

Community Development Block Grant Cluster (1)

- 665 Clay 14.218 1,795,500



SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


58

Federal Grantor/Pass-Through Grantor/Program Title

Federal CFDA

Number

Agency Pass-Through Number

Federal Expenditures

Program Expenditures

U.S. Department of Housing and Urban Development (HUD):

Community Development Block Grants Cluster (1)

Pass through City and County of San Francisco Mayor’s Office of Housing and Community Development

- Consorcia Project 14.218 109224-17 740- Housing Counseling 14.218 96435-17 51,101- Tower Project 14.218 109225-17 969- Swiss America Project 14.218 109223-17 52,164- Ping Yuen and North Ping Yuen Project 14.218 96635-17 78,967

183,941

Section 4 Capacity Building for Community Development and Affordable Housing

Pass through Local Initiative Support Corporation 14.252 B-16-CB-NY-0001 3,7283,728

Pass through Enterprise Community Partners, Inc. 14.252 #17SG0715 96,19996,199

Department of the Treasury / Community Development Financial Institutions Fund:

Community Development Financial Institutions FundPass through NeighborWorks America 21.020 2,893,110

Total program expenditures 2,893,110

Total federal awards $ 11,177,014

(1) Total for Community Development Block Grants Cluster is $5,411,014.



59

NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


NOTE 1 – BASIS OF PRESENTATION

The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal grant and loan activities of Chinatown Community Development Center only and is presented on the accrual basis of accounting. The schedule does not include Bayside Elderly Housing Corporation (HUD Project No. 121-EH-271-NP-WAH-L8),a subsidiary of Chinatown Community Development Center, which has been reported to HUD separately for the year ended December 31, 2018. 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). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. The purpose of the Schedule is to present a summary of those activities of Chinatown Community Development Center for the year ended December 31,2018, which have been financed by the U.S. Government. For purposes of the Schedule, federal awards include all federal assistance entered into directly and indirectly between Chinatown Community Development Center and the federal government.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

NOTE 3 – INDIRECT COST RATE

Chinatown Community Development Center did not elect to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.

NOTE 4 – LOANS OUTSTANDING

The loans outstanding at December 31, 2018 require continuous compliance with certain provisions of the loan agreements. The amount outstanding at December 31, 2018 is $6,191,064.

NOTE 5 – UNAMORTIZED GRANT OUTSTANDING

The grant of $1,795,500 was received in prior year and requires continuous compliance with the terms on the grant agreement. This grant is being amortized over 50-year compliance period.



60

SCHEDULE OF FINDINGS AND QUESTIONED COSTS


Section I – Summary of Auditor’s Results

Financial Statements

Type of auditor’s report issued: Unmodified

Internal control over financial reporting:

Material weakness(es) identified? Yes X NoSignificant deficiency(ies) identified that are not considered to be

material weakness(es)? Yes X None reported

Noncompliance material to financial statements noted? Yes X No

Federal Awards

Internal control over major programs:

Material weakness(es) identified? Yes X NoSignificant deficiency(ies) identified that are not considered to be

material weakness(es)? Yes X None reported

Type of auditor’s report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with Section 200.516 of the Uniform Guidance? Yes X No

Identification of major programs:

CFDA Number(s) Name of Federal Program or Cluster

14.239 HOME Investment Partnerships Program

Dollar threshold used to distinguish between Type A and Type B programs: $750,000

Auditee qualified as low-risk auditee? X Yes No

Section II – Financial Statement Findings

None noted.

Section III – Federal Awards Findings and Questioned Costs

None noted.

61


INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the consolidated financial statements of Chinatown Community Development Center, subsidiaries and affiliated partnerships, which comprise the consolidated statement of financial position as of December 31, 2018, and the related consolidated statements of activities, net assets, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon datedJune 25, 2019.

Internal Control Over Financial Reporting

In planning and performing our audit of the consolidated financial statements, we considered Chinatown Community Development Center, subsidiaries and affiliated partnerships’ internal control over financial reporting(internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of Chinatown Community Development Center, subsidiaries and affiliated partnerships’ internal control. Accordingly, we do not express an opinion on the effectiveness of Chinatown Community Development Center, subsidiaries and affiliated partnerships’ internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

62

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Chinatown Community Development Center, subsidiaries and affiliated partnerships’ consolidated financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts.However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of This Report

The purpose of this report is solely to describe the scope of testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Chinatown Community Development Center, subsidiaries and affiliated partnerships’ internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Chinatown Community Development Center, subsidiaries and affiliated partnerships’ internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

June 25, 2019

63


INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER

COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

Report on Compliance for Each Major Federal Program

We have audited Chinatown Community Development Center’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Chinatown Community Development Center’s major federal programs for the year ended December 31, 2018. Chinatown Community Development Center’s major federal programs are identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs.

Management’s Responsibility

Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions of its federal awards applicable to its major federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Chinatown Community Development Center’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit 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). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Chinatown Community Development Center’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination on Chinatown Community Development Center’scompliance.

64

Opinion on Each Major Federal Program

In our opinion, Chinatown Community Development Center complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2018.

Report on Internal Control Over Compliance

Management of Chinatown Community Development Center is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Chinatown Community Development Center’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly we do not express an opinion on the effectiveness of Chinatown Community Development Center’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weakness may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

June 25, 2019

chinatown community development center, … · 2019. 7. 3. · chinatown community development...

Documents