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Home My WebLink About21- Grant Subrecipient Agreement - ARPA Household Efforts Sub Award - HRDC FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 1 GRANT SUBRECIPIENT AGREEMENT AMERICAN RESCUE PLAN HOUSEHOLD EFFORTS SUB AWARD THIS AGREEMENT is made and entered into this 24th day of November, 2021 by and between the City of Bozeman, Montana, a self-governing municipal corporation located at 121 N. Rouse Ave., Bozeman MT 59771 (“City”) as GRANTOR and HRDC, a non-profit located at 32 South Tracy St Bozeman 59715 as SUBRECIPIENT. WHEREAS, on October 17, 2005 the Bozeman City Commission adopted Resolution No. 3866 establishing policies for the granting of funds from the City of Bozeman to a requesting entity; and WHEREAS, HRDC submitted a proposal to the City for a program that complies with the term of the American Rescue Plan for household assistance efforts for $100,000; and THE PARTIES AGREE: 1. The Sub Award. The City will award and release to SUBRECIPIENT a sum of up to one hundred thousand dollars ($100,000) from its American Result Plan Act (ARPA) award [name of fund] Fund, (the “Grant”) pursuant to the payment terms in Section 3. 2. Use of Funds. Grant funds in the amount of up to one hundred thousand dollars ($100,000) will be used by SUBRECIPIENT for the sole purpose of Economic Impact Response- Childcare subsidies, unexpected household expenses and Financial Coaching, which is a permissible use of ARPA funds, as described in the proposal submitted by Subrecipient, attached hereto as Exhibit A and by this reference incorporated herein. 3. Term. Program and expenditures must be performed during the term of the date of execution of this agreement through June 30, 2023 (FY24). 4. Payment of Funds a. The agrees to reimburse Subrecipient for costs actually incurred and paid by Subrecipient in accordance with the Approved Budget attached hereto as Exhibit B and for the performance of the Approved Services under this Agreement in an amount not to exceed $100,000 (the “Total Agreement Funds”). b. The amount of Total Agreement Funds, however, is subject to adjustment by City if a substantial change is made in the Approved Services that affects this Agreement or if this Agreement is terminated prior to the expiration of the DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 2 Agreement as provided in Section 3 above. Program funds shall not be expended prior to the Effective Date, or following the earlier of the expiration or termination of this Agreement. c. Costs incurred shall only be as necessary and allowable to carry out the purposes and activities of the Approved Services and may not exceed the maximum limits set in the Approved Budget. d. Expenses charged against the Total Agreement Funds shall be incurred in accordance with the American Rescue Plan and the Federal Treasury’s guidance, Office of Budget and Management Guidance, and City purchasing policies. e. Invoices. On or before the twentieth (20th) day of each month and in any event no later than thirty (30) days after the earlier of the expiration or termination of this Agreement, Subrecipient shall submit invoices, in a form supplied by City, for the most recent month ended, to City, setting forth actual expenditures of Subrecipient in accordance with this Agreement. Within ten (10) working days from the date it receives such invoice, City may disapprove the requested compensation. If the compensation is so disapproved, City shall notify Subrecipient as to the disapproval. If payment is approved, no notice will be given. f. Subrecipient may request the Grant funds during the fiscal year ending June 30, 2022 and June 30, 2023 as needed by providing proof of expenses paid. Acceptable forms of proof of payment shall be as determined in the sole discretion of the City’s Director of Finance. g. Any funds from the sub award not awarded during the fiscal year ending June 30, 2023 will remain in the City’s ARPA Fund and will be available for other appropriation. 5. Subrecipient Representations a. SUBRECIPIENT has familiarized itself with the nature and extent of this Agreement and with all local conditions and federal, state and local laws, ordinances, rules, and regulations that in any manner may affect Subrecipient’s performance under this Agreement. Specific Treasury Guidance attached in Exhibit B. b. SUBRECIPIENT represents and warrants to City that it has the experience and ability to perform its obligations under this Agreement; that it will perform said obligations in a professional, competent and timely manner and with diligence and skill; that it has the power to enter into and perform this Agreement and DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 3 grant the rights granted in it; and that its performance of this Agreement shall not infringe upon or violate the rights of any third party, whether rights of copyright, trademark, privacy, publicity, libel, slander or any other rights of any nature whatsoever, or violate any federal, state and municipal laws. The City will not determine or exercise control as to general procedures or formats necessary for SUBRECIPIENT to meet this warranty. c. SUBRECIPIENT represents and warrants to City that the Grant funds are necessary to accomplish the financial requirements of the Economic Impact Response- Childcare subsidies, unexpected household expenses and Financial Coaching. d. SUBRECIPIENT shall maintain a financial management system and financial records and shall administer funds received pursuant to this Agreement in accordance with all applicable federal and state requirements. Subrecipient shall adopt such additional financial management procedures as may from time to time be prescribed by City if required by applicable laws, regulations or guidelines from its federal and state government funding sources. Subrecipient shall maintain detailed, itemized documentation and records of all income received and expenses incurred pursuant to this Agreement. e. Any item of expenditure by Subrecipient under the terms of this Agreement which is found by auditors, investigators, and other authorized representatives of City, the City’s external Auditor, the U.S. Government Accountability Office or the Comptroller General of the United States to be improper, unallowable, in violation of federal or state law or the terms of the Notice of Prime Award or this Agreement, or involving any fraudulent, deceptive, or misleading representations or activities of Subrecipient, shall become Subrecipient’s liability, to be paid by Subrecipient from funds other than those provided by City under this Agreement or any other agreements between City and Subrecipient. This provision shall survive the expiration or termination of this Agreement. f. In any fiscal year in which Subrecipient expends $750,000 or more in federal awards during such fiscal year, including awards received as a subrecipient, Subrecipient must comply with the federal audit requirements contained in the Uniform Guidance, [45 CFR Part 75], including the preparation of an audit by an independent Certified Public Accountant in accordance with the Single Audit Act Amendments of 1996, 31 U.S.C. 7501-7507, and with Generally Accepted Accounting Principles. If Subrecipient expends less than $750,000 in federal awards in any fiscal year, it is exempt from federal audit requirements, but its records must be available for review by City and appropriate officials. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 4 Subrecipient shall provide City with a copy of Subrecipient’s most recent audited financial statements, federal Single Audit report, if applicable (including financial statements, schedule of expenditures of federal awards, schedule of findings and questioned costs, summary of prior audit findings, and corrective action plan, if applicable), and management letter within thirty (30) days after execution of this Agreement and thereafter within nine (9) months following the end of Subrecipient’s most recently ended fiscal year. g. Final payment request(s) under this Agreement must be received by City no later than thirty (30) days from the earlier of the expiration date or termination date of this Agreement. No payment request will be accepted by City after this date without authorization from City. In consideration of the execution of this Agreement by City, Subrecipient agrees that acceptance of final payment from City will constitute an agreement by Subrecipient to release and forever discharge City, its agents, employees, representatives, affiliates, successors and assigns from any and all claims, demands, damages, liabilities, actions, causes of action or suits of any nature whatsoever, which Subrecipient has at the time of acceptance of final payment or may thereafter have, arising out of or in any way relating to any and all injuries and damages of any kind as a result of or in any way relating to this Agreement. Subrecipient’s obligations to City under this Agreement shall not terminate until all closeout requirements are completed to the satisfaction of City. Such requirements shall include, without limitation, submitting final reports to City and providing any closeout-related information requested by City by the deadlines specified by City. This provision shall survive the expiration or termination of this Agreement. 6. Cooperation in Monitoring and Evaluation. a. City Responsibilities. City shall monitor, evaluate and provide guidance and direction to Subrecipient in the conduct of Approved Services performed under this Agreement. City has the responsibility to determine whether Subrecipient has spent funds in accordance with applicable laws, regulations, including the federal audit requirements and agreements and shall monitor the activities of Subrecipient to ensure that Subrecipient has met such requirements. City may require Subrecipient to take corrective action if deficiencies are found. b. Subrecipient Responsibilities. i. Subrecipient shall permit City to carry out monitoring and evaluation activities, including any performance measurement system required by applicable law, regulation, funding sources guidelines or by the terms and conditions of the applicable Notice of Prime Award, and Subrecipient DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 5 agrees to ensure, to the greatest extent possible, the cooperation of its agents, employees and board members in such monitoring and evaluation efforts. This provision shall survive the expiration or termination of this Agreement. ii. Subrecipient shall cooperate fully with any reviews or audits of the activities under this Agreement by authorized representatives of City, the U.S. Government Accountability Office or the Comptroller General of the United States and Subrecipient agrees to ensure to the extent possible the cooperation of its agents, employees and board members in any such reviews and audits. This provision shall survive the expiration or termination of this Agreement. 7. Reports/Accountability/Public Information. SUBRECIPIENT must allow the City, its auditors, and other persons authorized by the City to inspect and copy its books and records for the purpose of verifying that monies provided to SUBRECIPIENT pursuant to this Agreement were used in compliance with this Agreement and all applicable provisions of federal, state, and local law. SUBRECIPIENT will retain such records for seven years after receipt of final payment under this Agreement unless permission to destroy them is granted by the City. SUBRECIPIENT shall not issue any statements, releases or information for public dissemination without prior approval of the City. 8. Permits and Compliance With Laws. Subrecipient will obtain, in a timely manner, all required permits, licenses and approvals, and will meet all requirements of all local, state and federal laws, rules and regulations which must be obtained or met in connection with construction of the Project 9. Independent Contractor Status. The parties agree that SUBRECIPIENT, its agents, employees, contractors, or subcontractors, are independent contractors for purposes of this Agreement and are not to be considered employees or agents of the City for any purpose. SUBRECIPIENT and its agents, employees, contractors, or subcontractors, are not subject to the terms and provisions of the City’s personnel policies handbook and may not be considered a City employee for workers’ compensation or any other purpose. SUBRECIPIENT, its agents, employees, contractors, or subcontractors, are not authorized to represent the City or otherwise bind the City in any way. 10. Default and Termination. If SUBRECIPIENT fails to comply with any condition of this Agreement at the time or in the manner provided for, the City may terminate this Agreement if the default is not cured within fifteen (15) days after written notice is DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 6 provided to SUBRECIPIENT. The notice will set forth the items to be cured. If this Agreement is terminated pursuant to this Section, SUBRECIPIENT will repay to the City any Grant funds already delivered to SUBRECIPIENT for the Economic Impact Response- Childcare subsidies, unexpected household expenses and Financial Coaching. 11. Limitation on SUBRECIPIENT’s Damages; Time for Asserting Claim a. In the event of a claim for damages by SUBRECIPIENT under this Agreement, SUBRECIPIENT’s damages shall be limited to contract damages and SUBRECIPIENT hereby expressly waives any right to claim or recover consequential, special, punitive, lost business opportunity, lost productivity, field office overhead, general conditions costs, or lost profits damages of any nature or kind. b. In the event SUBRECIPIENT wants to assert a claim for damages of any kind or nature, SUBRECIPIENT must first provide City with written notice of its claim, the facts and circumstances surrounding and giving rise to the claim, and the total amount of damages sought by the claim, within ninety (90) days of the facts and circumstances giving rise to the claim. In the event SUBRECIPIENT fails to provide such notice, SUBRECIPIENT shall waive all rights to assert such claim. 12. Representatives a. City’s Representative. The City’s Representative for the purpose of this Agreement shall be Anna Rosenberry or such other individual as City shall designate in writing. Whenever approval or authorization from or communication or submission to City is required by this Agreement, such communication or submission shall be directed to the City’s Representative and approvals or authorizations shall be issued only by such Representative; provided, however, that in exigent circumstances when City’s Representative is not available, SUBRECIPIENT may direct its communication or submission to other designated City personnel or agents and may receive approvals or authorization from such persons. b. SUBRECIPIENT’s Representative. SUBRECIPIENT’s Representative for the purpose of this Agreement shall be Heather Grenier or such other individual as SUBRECIPIENT shall designate in writing. Whenever direction to or communication with SUBRECIPIENT is required by this Agreement, such direction or communication shall be directed to SUBRECIPIENT’s Representative; provided, however, that in exigent circumstances when SUBRECIPIENT’s Representative is DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 7 not available, City may direct its direction or communication to other designated SUBRECIPIENT personnel or agents. 13. Indemnity/Waiver of Claims/Insurance. To the fullest extent permitted by law, SUBRECIPIENT agrees to defend, indemnify and hold the City and its agents, representatives, employees, and officers (collectively referred to for purposes of this Section as the City) harmless against all third party claims, demands, suits, damages, losses, and expenses, including reasonable defense attorney fees, which arise out of, relate to or result from SUBRECIPIENT’s (i) negligence, or (ii) willful or reckless misconduct. Such obligations shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity that would otherwise exist. The indemnification obligations of this Section must not be construed to negate, abridge, or reduce any common-law or statutory rights of the indemnitee(s) which would otherwise exist as to such indemnitee(s). SUBRECIPIENT’s indemnification obligations under this Section shall be without regard to and without any right to contribution from any insurance maintained by City. Should any indemnitee described herein be required to bring an action against SUBRECIPIENT to assert its right to defense or indemnification under this Agreement or under SUBRECIPIENT’s applicable insurance policies required below the indemnitee shall be entitled to recover reasonable costs and attorney fees incurred in asserting its right to indemnification or defense but only if a court of competent jurisdiction determines SUBRECIPIENT was obligated to defend the claim(s) or was obligated to indemnify the indemnitee for a claim(s) or any portion(s) thereof. In the event of an action filed against City resulting from the City’s performance under this Agreement, the City may elect to represent itself and incur all costs and expenses of suit. SUBRECIPIENT also waives any and all claims and recourse against the City or its officers, agents or employees, including the right of contribution for loss or damage to person or property arising from, growing out of, or in any way connected with or incident to the performance of this Agreement except “responsibility for his own fraud, for willful injury to the person or property of another, or for violation of law, whether willful or negligent” as per 28-2-702, MCA. These obligations shall survive termination of this Agreement. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 8 In addition to and independent from the above, SUBRECIPIENT shall at SUBRECIPIENT’s expense secure insurance coverage through an insurance company or companies duly licensed and authorized to conduct insurance business in Montana which insures the liabilities and obligations specifically assumed by SUBRECIPIENT in this Section. The insurance coverage shall not contain any exclusion for liabilities specifically assumed by SUBRECIPIENT in this Section unless and to the extent coverage for such liability is not reasonably available. The insurance shall cover and apply to all claims, demands, suits, damages, losses, and expenses that may be asserted or claimed against, recovered from, or suffered by the City without limit and without regard to the cause therefore and which is acceptable to the City and SUBRECIPIENT shall furnish to the City an accompanying certificate of insurance and accompanying endorsements in amounts not less than as follows: • Workers’ Compensation – statutory; • Employers’ Liability - $1,000,000 per occurrence; $2,000,000 annual aggregate; • Commercial General Liability - $1,000,000 per occurrence; $2,000,000 annual aggregate The City of Bozeman, its officers, agents, and employees, shall be endorsed as an additional or named insured on a primary non-contributory basis on the Commercial General Liability policy. The insurance and required endorsements must be in a form suitable to City and shall include no less than a thirty (30) day notice of cancellation or non-renewal. The City must approve all insurance coverage and endorsements prior to delivery of Grant funds to SUBRECIPIENT. SUBRECIPIENT shall notify City within two (2) business days of SUBRECIPIENT’s receipt of notice that any required insurance coverage will be terminated or SUBRECIPIENT’s decision to terminate any required insurance coverage for any reason. 14. Nondiscrimination and Equal Pay. SUBRECIPIENT agrees that all hiring by Subrecipient of persons performing this Grant Agreement shall be on the basis of merit and qualifications. SUBRECIPIENT will have a policy to provide equal employment opportunity in accordance with all applicable state and federal anti-discrimination laws, regulations, and contracts. SUBRECIPIENT will not refuse employment to a person, bar a person from employment, or discriminate against a person in compensation or in a term, condition, or privilege of employment because of race, color, religion, creed, political ideas, sex, age, marital status, national origin, actual or perceived sexual orientation, gender identity, physical or mental disability, except when the reasonable DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 9 demands of the position require an age, physical or mental disability, marital status or sex distinction. SUBRECIPIENT represents it is, and for the term of this Agreement will be, in compliance with the requirements of the Equal Pay Act of 1963 and Section 39-3-104, MCA (the Montana Equal Pay Act). SUBRECIPIENT must report to the City any violations of the Montana Equal Pay Act that Contractor has been found guilty of within 60 days of such finding for violations occurring during the term of this Agreement. SUBRECIPIENT shall require these nondiscrimination terms of its subcontractors providing services under this Grant Agreement. 15. Public Meetings and Access to Public Records a. Meetings of SUBRECIPIENT that pertain to the receipt or expenditure of Grant funds from the City are subject to the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To ensure compliance, SUBRECIPIENT will provide agendas for meetings that pertain to the receipt or expenditure of Grant funds covered by this Agreement to the City Clerk’s office no later than 72 working hours prior to meeting for notice on the City’s official posting board and any other sites deemed reasonable by the Clerk’s office. In addition, meeting minutes will be kept by SUBRECIPIENT and provided to the City Clerk’s office no later than 90 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk’s office except for those minutes taken during a closed meeting in accordance with 2-3-203, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk’s office but shall be handled in accordance with the City Clerk’s regular executive session protocol and kept private in a secured cabinet. b. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, SUBRECIPIENT shall make such records available for inspection and copying by members of the public. SUBRECIPIENT may charge for such copying in accordance with the policies of the City, which SUBRECIPIENT hereby adopts for such purposes. c. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in SUBRECIPIENT documents is protected by law from disclosure, SUBRECIPIENT may seek a determination of the City Attorney at no cost to SUBRECIPIENT. Such request and determination shall not create an attorney-client relationship between SUBRECIPIENT and the City. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 10 16. Attorney’s Fees and Costs. In the event it becomes necessary for a party to this Agreement to retain an attorney to enforce any of the terms or conditions of this Agreement or to give any notice required herein, then the prevailing party shall be entitled to reasonable attorney’s fees and costs, including fees, salary, and costs of in- house counsel to include City Attorney. 17. Integration and Modification. This document contains the entire agreement between the parties and no statements, promises or inducements made by either party or agents of either party not contained in this written Agreement may be considered valid or binding. This Agreement may not be modified except by written agreement signed by both parties. 18. Dispute Resolution a. Any claim, controversy, or dispute between the parties, their agents, employees, or representatives shall be resolved first by negotiation between senior-level personnel from each party duly authorized to execute settlement agreements. Upon mutual agreement of the parties, the parties may invite an independent, disinterested mediator to assist in the negotiated settlement discussions. b. If the parties are unable to resolve the dispute within thirty (30) days from the date the dispute was first raised, then such dispute may only be resolved in a court of competent jurisdiction in compliance with the Applicable Law provisions of this Agreement. 19. No Assignment. SUBRECIPIENT may not subcontract or assign SUBRECIPIENT’s rights, including the right to Grant payments, or any other rights or duties arising hereunder, without the prior written consent of City. 20. No Third Party Beneficiary. The terms and provisions of this Agreement are intended solely for the benefit of each party and their respective successors and assigns. It is not the parties’ intent to confer third party beneficiary rights upon any other person or entity. 21. Choice of Law. This Agreement shall be governed and construed in accordance with the laws of the State of Montana without regard to conflict of law provisions. The Parties agree to submit to the personal and exclusive jurisdiction of the courts located within Gallatin County, Montana. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Page 11 22. Non-Waiver. A waiver by either party of any default or breach by the other party of any terms or conditions of this Agreement does not limit the other party’s right to enforce such term or conditions or to pursue any available legal or equitable rights in the event of any subsequent default or breach. 23. Severability. If any portion of this Agreement is held to be void or unenforceable, the balance of the Agreement shall continue in effect. 24. Counterparts. This Agreement may be executed in counterparts, which together constitute one instrument. 25. Consent to Electronic Signatures. The Parties have consented to execute this Agreement electronically in conformance with the Montana Uniform Electronic Transactions Act, Title 30, Chapter 18, Part 1, MCA. IN WITNESS WHEREOF, the parties hereto have executed this instrument the day and year indicated below. _______________________ Date: __________ Jeff Mihelich, City Manager City of Bozeman _______________________ Date: __________ Print name and Title:___________________________ SUBRECIPIENT Approved as to form: _______________________ Date: __________ Greg Sullivan, City Attorney City of Bozeman DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E 11/30/2021 President/CEOHeather Grenier 11/30/2021 11/30/2021 FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Exhibit Exhibit A Program Proposal DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Proposal to City of Bozeman American Rescue Plan Economic Stabilization Response Human Resource Development Council, IX Executive Summary In response to the economic impacts of COVID-19 pandemic on Bozeman residents, the HRDC is proposing to utilize the Coronavirus State and Local Fiscal Recovery Funds noted in the Request for Proposal released by the City of Bozeman to support the immediate economic stabilization for households and businesses. It is our intention to pair much needed financial support in the areas of childcare and unanticipated household expenses with financial coaching in order to support families to more effectively achieve economic stability during this current period of economic insecurity. Recent and ongoing partnerships with the City of Bozeman and HRDC work to address the housing needs of so many local families who are struggling as a result of the pandemic. With this funding request, HRDC aims to connect with families who are currently housed, but whose economic stability is tenuous due to the high cost and high demand for childcare and other unforeseen household expenses. In our conversations with both local employers as well as local families, the availability and affordability of childcare is one of the critical factors that impact the ability of our local workforce to return to their jobs. We propose that a direct subsidy to households with children in care, or seeking care will create an immediate increase in economic stability for the families as well as provide greater workforce security for our local employers by helping capable, talented people return or enter our local job market. We recognize that as the result of the pandemic, the cost of living in our area has increased rapidly. HRDC works with many customers who have been impacted by COVID who are faced with one time unforeseen household expenses, which impact the health and safety of our local families, such as frozen pipes, leaking roofs, transportation or other emergency needs. This proposal aims to support those impacted Bozeman families with not only the financial support for household crises or childcare subsidies, but also to pair this with a financial coach who can assist them in developing plans and habits to support their long term economic stability. Economically healthy citizens help not only our local families, but the economic health of our local business and the entire Bozeman community. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HRDC Profile The Human Resource Development Council of District IX, Inc. (HRDC), a private not-for-profit 501(c)(3) Community Action Agency, formed in 1975 to instill hope, develop resources, design solutions and change lives. As a Community Action Agency, HRDC’s responsibility is to identify and respond to our community’s most pressing needs and support resilience in a place where opportunity and quality of life are equally afforded to everyone. Our breadth of programs demonstrate our commitment to this: Housing, Child & Youth Development, Food & Nutrition, Senior Empowerment, Community Transportation, Energy Assistance and Community Development. We provide services across the entire continuum of need. We tackle housing instability, operating two warming centers. Rental assistance, down payment assistance, transitional housing, and homeless support help around 500 families a year find stable housing (and educate and prepare hundreds more for home ownership); while property management of 8 facilities guarantees affordable housing for hundreds more. Our approach to hunger and food security includes operating three food banks, a pay what you can social enterprise restaurant , culinary training opportunities, and food-to-school initiatives. Early Childhood Education and HeadStart programs serve 200 families annually; Senior programming supports more than 1700 elders in the community, meeting their unique needs. Our transportation services, Streamline and Galavan, provide more than 313,000 free rides each year, and Energy Assistance supports 2500 families paying their energy bills. While the Covid-19 pandemic has certainly added challenges to this programming, HRDC has never wavered in its commitment to address the systemic needs of our community. Audit Report - see attached Related Experience HRDC has a long and successful history in partnering with the City of Bozeman as a subcontractor or sub recipient of funding in the provision of services to the benefit of Bozeman residents. Previous experience includes the provision of homebuyer education to local residents, the maintenance of the City’s affordable housing waitlist and ongoing compliance with the affordable housing programs, as well as previous COVID response grants which are directly administering benefits to Bozeman residents in their pursuit of stable and secure housing. HRDC also has been successful in the provision of financial coaching to local residents with a national proven system for supporting growth in economic stability. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Program Description Economic Impact Response Child care is an essential part of our economy, enabling families to work while preparing children for school and employing a large workforce. Unfortunately, the coronavirus public health crisis has exacerbated the challenges that decades of underinvestment have produced in the child care system. Bozeman has a large population of working parents with young children who need child care to work. Prior to the pandemic, our child care system served only half of children needing care, and the number of providers had decreased in the previous decade. In Montana, 320 of the 859 licensed and registered family, group, and child care providers closed following the April 1 stay-at-home order, reducing Montana’s child care capacity by over 10,000 slots. At the same time we have a shortage of available workers to keep our local businesses open and operating. This proposal aims to support both local families and local businesses in supporting Bozeman residents to reenter the workforce with the support of a childcare subsidy. In addition to the cost of childcare being out of reach for families who have been financially impacted by the COVID public health emergency, we also recognize that there are also many families who are now unprepared to respond to unforeseen household expenses. Examples of these expenses include home repairs such as plumbing or roof repair, as well as auto repair. For our Bozeman families who are already grappling with a high cost of living, these one time expenses can often mean the difference between economic stability and dire consequences. Our proposal pairs financial support for these unexpected expenses and childcare subsidies with one on one financial coaching for the families that are accessing these supports. HRDC currently offers financial and career coaching to local residents. Financial coaches work with local families to support them in achieving their financial goals and taking control of their financial situation through spending and savings plans, credit support and accessing additional income support. It is our aim that by pairing coaching with financial support, we can strengthen our Bozeman community to weather the impacts of the pandemic. Funding Requested HRDC is currently requesting $100,000 in funding to immediately address the economic stability of Bozeman residents. This funding will support the following activities. Childcare Subsidies: Direct Payment to local childcare providers on behalf of local families to support parents in getting back to work estimated at $55,000 for the contract period DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Subsidies of $200/month will be provided to families who are earning between 180-250% of the Federal Poverty Level A limited number of $500/month subsidies will be provided to families who are earning less than $180% of the Federal Poverty Level AND were screened to ineligible for the Best Beginnings Scholarships Unexpected Household Expenses: These direct payments to households or household vendors (i.e. plumber, mechanic, repairs, etc.) will be made to support local households who have been impacted by covid and are experiencing and unanticipated household expense that jeopardizes their economic stability; estimated at $25,000 for the contract period. Financial Coaching: One half of an FTE dedicated to providing financial coaching and determining eligibility for the assistance noted above for Bozeman households who are cost burdened and financially insecure; estimated at $20,000 for contract period. Funding Distribution Bozeman families who are seeking support with either childcare subsidies or unforeseen household expenses will initially meet with a financial coach. Those who are determined to be eligible and appropriate for financial assistance based on the criteria outlined above, will receive that assistance directly to their childcare provider or to the repair company or plumber providing the assistance. HRDC in its current provision of services already has the financial capacity and mechanisms in place to support these activities. In cases in which financial assistance cannot be provided directly to the service provider, that assistance can be provided to the household. Administrative Fees There will be no administrative fees associated with the provision of these services. Federal Compliance The HRDC has an annual operating budget of approximately $9 million, total assets of approximately $22 million, and employs over 100 individuals. The HRDC administers over 60 individual grants and contracts on an annual basis as the grantee. A full set of audited financial statements are available. In addition, the HRDC has served as the fiscal sponsor for several community projects, including the Community Incentive Program, Bozeman Turner Youth Initiative, HRDC Directors Association, and Volunteer Connections of Southwest Montana. Community groups approach the HRDC for fiscal sponsorship due DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E to our excellent track record and expertise in managing federal grants and our high level of accountability for funds placed in our care. The HRDC has an established system of internal controls to ensure that financial transactions are properly authorized, accounted for, executed in compliance with laws, regulations and the provisions of contracts, and that assets are safeguarded against loss from unauthorized use or disposition. This system also functions to minimize the time elapsed between the receipt of funds and the disbursement of those funds for program activity. The HRDC’s internal controls are tested each year during the annual external audit (see below under Financial Accountability). The HRDC is able to trace expenditures for individual programs to a level adequate to establish that funds have not been used in violation of specific program requirements. A strong audit trail exists for all accounting transactions, and every dollar expended on a program can be traced to the General Ledger and to supporting documentation. The HRDC maintains a tight internal control structure to ensure that grant funds are only used in accordance with the terms of the grant agreement, applicable OMB Circulars, and Generally Accepted Accounting Principles. The HRDC’s fiscal staff has over 30 years of combined experience administering federal, state, and local grants and contracts. Fiscal staff members are very knowledgeable of Generally Accepted Accounting Principles (GAAP), federal and state laws and regulations, OMB Circulars, and specific requirements of federal grants. City Compliance HRDC has an agency-wide belief in the power of evaluation and assessment, and a long history of programmatic tracking, as well as a long history of complying with a wide variety of funder requests for reporting and validation. We believe that accurate collection of data and tracking individual and program progress is the best, and really the most reliable, measure of our effectiveness at achieving outcomes and having the impacts we (and our funders) desire. We have also had a successful history in meeting City Compliance requirements as identified in the subrecipient agreement with this request for proposal. Equity in service provision HRDC has a long-standing commitment to racial justice, coordinated through the Racial Equity Working Group (which actively works to diversify staff and Board, ensures principles of equity and racial justice are aligned throughout policy, governance, and delivery of services. It also oversees direct outreach to communities of color in our region). That said, census data confirms our service area (and Montana generally) to be around 90% white, non-Hispanic or Latino (those identifying as Native American are the DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E second largest racial group, at around 6-7%). We actively engage Native communities and the increasing numbers of Latinx members of our communities; at the same time, HRDC works diligently to dismantle, structural white privilege (ongoing, efforts to redress widespread poverty and its effects speak to this) Our housing, hunger, transportation, education, finances--all our programs tackle systemic barriers to equity and opportunity; our financial education and economic stability focus is a direct action against historical privileging of white citizens--and arguably, white men--in areas of economic prosperity, wealth accumulation, and legacy policies. In other parts of the country, our work would manifest as direct support of people of color; here, it manifests as a concerted effort to deconstruct systems that perpetuate poverty and economic inequity. HRDC is also engaged in a partnership with Montana Language Services to ensure that all local community members have access to our services regardless of their home language or english proficiency. Schedule for Program and Funding Distribution HRDC is currently prepared to begin offering these services upon receipt of the funding. We are currently working with families who would benefit from financial assistance, as well as financial coaching. We anticipate that during the remainder of 2021 our agency would work with existing customers, while concurrently engaging in outreach to our community partner and business partners in order to connect with Bozeman residents who may best benefit from the services indicated in this proposal. We anticipate that the majority of the funding would be allocated and distributed to households during 2023, as word of mouth and other outreach efforts ensure we are reaching a wide spectrum of Bozeman residents. The funding would be fully expended in early 2024, prior to the July 2024 requirement. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED FINANCIAL REPORT June 30, 2020 and 2019 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E C O N T E N T S PAGE INDEPENDENT AUDITOR’S REPORT......................................................................1 through 3 MANAGEMENT’S DISCUSSION AND ANALYSIS.................................................4 through 6 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statements of Financial Position...............................................................7 and 8 Consolidated Statements of Activities...........................................................................9 and 10 Consolidated Statements of Functional Expenses.......................................................11 and 12 Consolidated Statements of Cash Flows .....................................................................13 and 14 Notes to Consolidated Financial Statements ........................................................15 through 56 SUPPLEMENTAL INFORMATION Explanation of Supplemental Schedules .................................................................................57 Consolidating Schedules of Financial Position...........................................................58 and 59 Consolidating Schedules of Activities.........................................................................60 and 61 Home Corporation Schedules of Financial Position.............................................................................................62 Schedules of Activities..........................................................................................................63 Schedules of Cash Flows.......................................................................................................64 Sherwood Inn Apartments, Inc. Schedules of Financial Position.............................................................................................65 Schedules of Activities..........................................................................................................66 Schedules of Cash Flows.......................................................................................................67 Unrestricted Corporate Funds Schedules of Financial Position.............................................................................................68 Schedules of Revenues, Expenses and Changes in Net Assets.............................................69 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E C O N T E N T S ( C O N T I N U E D ) PAGE Schedules of Revenues, Expenses, and Changes in Net Assets Weatherization Assistance –LIEAP .....................................................................................70 Weatherization Assistance -DOE.........................................................................................71 LIEAP Administration Program............................................................................................72 Low Income Energy Assistance Program .............................................................................73 LIEAP Client Education & Outreach Program .....................................................................74 Northwestern Energy Weatherization Program.....................................................................75 Energy Share .........................................................................................................................76 Supplemental Weatherization Assistance..............................................................................77 LISC ......................................................................................................................................78 Healthy Housing Housing First Village ................................................................................79 Bridges to Career Opportunities............................................................................................80 Section 8 Housing Program...................................................................................................81 HUD Emergency Shelter Grants Program.............................................................................82 Home to Stay -Emergency Services.....................................................................................83 Federal Emergency Management Agency.............................................................................84 Ryan White Part B HIV Care ................................................................................................85 Partnerships for Permanently Supportive Housing ...............................................................86 Rapid Re-Housing .................................................................................................................87 Warming Center ....................................................................................................................88 Livingston Warming Center –Pilot.......................................................................................89 Gallatin Valley Food Bank....................................................................................................90 Gallatin Valley Food Bank -Senior CFSP............................................................................91 Fork & Spoon Homestyle Kitchen ........................................................................................92 Healthy KidsPack Program ...................................................................................................93 Summer Lunch Program........................................................................................................94 Headwaters Area Food Bank.................................................................................................95 Big Sky Community Food Bank ...........................................................................................96 In Home Services ..................................................................................................................97 In Home Services –Park County ..........................................................................................98 State Health Insurance Program (SHIP) –Information and Assistance................................99 Retired Senior Volunteer Program ......................................................................................100 Senior Medicare Patrol........................................................................................................101 Sherwood Service Coordinator............................................................................................102 Galavan/Senior Transportation............................................................................................103 Streamline Bus/Public Transportation.................................................................................104 Work Force Innovation and Opportunity Act –Youth .......................................................105 Chafee Foster Care Independence Program ........................................................................106 Blueprint -Youth Transitional Living House .....................................................................107 Head Start Program .............................................................................................................108 Head Start Private Pay Program..........................................................................................109 Pre-School Development.....................................................................................................110 Head Start Facilities ............................................................................................................111 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E C O N T E N T S ( C O N T I N U E D ) PAGE Big Sky Community Housing Trust....................................................................................112 Road To Home (Homeownership Center)...........................................................................113 Resource Property Management..........................................................................................114 Community Services Block Grant.......................................................................................115 HRDC Central Office/HRDC Annex Office.......................................................................116 Schedule of Administrative Costs Allocated.......................................................................117 SINGLE AUDIT SECTION Schedule of Expenditures of Federal Awards ..................................................118 through 122 Notes to Schedule of Expenditures of Federal Awards.........................................................123 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 GOVERNMENTAL AUDITING STANDARDS ...........................................................124 and 125 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE .................126 and 127 Schedule of Findings and Questioned Costs ...............................................................................128 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E -1-1019 E MAIN ST• SUITE 201• BOZEMAN, MONTANA 59715 TEL: 406.556.6160• FAX:406.586.8719• WEB: www.azworld.comANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR’S REPORT To the Board of Directors Human Resource Development Council of District IX, Inc. Bozeman, Montana Report on the Financial Statements We have audited the accompanying consolidated financial statements of Human Resource Development Council of District IX, Inc.(a nonprofit organization), which comprise the consolidated statements of financial position as of June 30, 2020 and 2019, and the related consolidated statements of activities, functional expenses, and cash flows for the year s then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated 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 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable t o 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 s to obtain reasonable assurance about whether the 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E ANDERSON ZURMUEHLEN & CO., P.C CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS -2- Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Human Resource Development Council of District IX, Inc.as of June 30, 2020 and 2019, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Effect of Adopting New Accounting Standards As discussed in Note 1, the Organization adopted the Financial Accounting Standards Board’s Accounting Standard Updates (ASU) 2014-09, Revenue from Contracts with Customers (Topic 958), ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-15 Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, ASU 2016-18, Statement of Cash Flows (Topic 230) –Restricted Cash and ASU 2018-13 Disclosure Framework –Changes to the Disclosure Requirements for Fair Value Measurement as of and for the year ended June 30, 2020. Our opinion is not modified with respect to these matters. Other Matters Supplemental and Other Information Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplemental information on pages 57 through 117 is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. The accompanying schedule of expenditures of federal awards is presented for the purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the 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 audits 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 consolidated 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. Management’s discussion and analysis on pages 4 through 6, which is the responsibility of management, includes information of a nonaccounting nature and has not been subjected to the auditing procedures applied in the audits of the financial statements. Accordingly, we do not express an opinion or provide any assurance on it. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E ANDERSON ZURMUEHLEN & CO., P.C CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS -3- Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 16, 2021, on our consideration of the Human Resource Development Council of District IX, Inc.’s.internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant 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, a nd not to provide an opinion on the effectiveness of the Human Resource Development Council of District IX, Inc.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 the Human Resource Development Council of District IX, Inc.internal control over financial reporting and compliance. Bozeman, Montana June 16, 2021 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E -4- Management Discussion & Analysis Our previous fiscal year started with an urgent need to find funding and financing to preserve a rare, local, irreplaceable treasure, the Boulevard Apartments. This downtown Bozeman apartment complex has been home to some of our community’s most vulnerable for decades. Everyone who lives there is either extremely low income or very low income and struggling to find ways to put food on the table each and every day, yet grateful for the place they call home. Thanks to a patient and committed seller, local investors wanting to make a difference in our community, and a Board of Directors that understands the critical nature of preserving subsidized housing in our community, we were able to save 41 homes. This started our pilot of local social impact investing and resulted in a low income housing tax credit award that will rehabilitate and preserve 230 homes in Bozeman and Livingston, affordable for our low and extremely low income residents. These are the partnerships and community solutions we are chartered to identify and implement. We had many other housing successes throughout the year –the development and completion of the first 18 homes affordable to families that live and work in Big Sky, with 34 more being developed in Phase 2. We got final plat approval on the first missing middle homeownership development in Bozeman. We also worked with local partners to reinvent and revision public transit in the greater Bozeman area, mapping out a plan to build and implement a strategic, regional public transit solution. We also experienced the onset of the Pandemic. From providing portable restrooms to leasing a hotel to provide shelter in place space for our neighbors without homes to virtual pre-K to ensuring every essential worker still had a ride to work and every senior had a ride to dialysis treatment to transitioning our youth home to a supportive classroom to make sure our youth graduate high school to partnering with the school districts to make sure every student had food to delivering essential products to our homebound neighbors, we were here for every member of our community. This response exposed the very weaknesses in our economy and community that we respond to each and every day, highlighting how vulnerable all of us can be. It also forced us to work without 3,500 of our team members –our volunteer workforce. We miss you and we cannot wait to have each and every one of you back at the helm. We are committed to continuing to respond to and meet surfacing needs resulting from the impact of the pandemic. Financially, HRDC continues to operate very efficiently. Our combined administration and fundraising expense ratio is less than 10% of our total annual expenses of operations based on HRDC’s Consolidated Statement of Functional Expenses for fiscal year 2019-20. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E -5- In addition to our 2019-20 ongoing core operations, HRDC’s Consolidated Statement of Activities for the fiscal year ended June 30, 2020 includes: nonrecurring sales of 29 affordable workforce housing units constructed in Big Sky and Bozeman totaling $7,210,000; pledged contributions restricted for future capital projects of $2,611,601; nonrecurring capital grants of $2,323,375 consisting of o $1,884,163 to assist affordable workforce housing construction in Big Sky and Bozeman, o $355,000 to assist with downpayment assistance loans to eligible homebuyers of affordable workforce housing units constructed in Big Sky, and o $84,212 to assist with the purchase of two additional Galavan vehicles to help meet our area’s growing public transportation and paratransit needs. The prior fiscal year 2018-19 also included nonrecurring activities, primarily: nonrecurring capital grants of $1,919,865 consisting of o $1,750,000 to purchase land for workforce housing construction in Big Sky, and o $169,865 to assist with purchasing three Galavan vehicles for paratransit transportation; nonrecurring non-cash land donation $1,600,000 for Bozeman workforce housing development; pledged contributions restricted for future capital projects of $585,720; and nonrecurring sales of affordable condominiums and other housing units of $344,400. Excluding these nonrecurring activities, HRDC had ongoing revenues from our core operations of $17.8 million and corresponding expenses of $18.0 million in fiscal year 2019-20, compared with ongoing core revenues of $16.0 million and expenses of $16.4 million in the prior fiscal year 2018- 19. In short, HRDC’s programs and activities, taken as a whole, used slightly more resources to sustain our ongoing core operations than we received and mobilized in resources during fiscal years 2019-20 and 2018-19. The revenues reported in HRDC’s Consolidated Statement of Activities also include $2.9 million in non-cash contributions of food received from donors in fiscal year 2019-20, as required by U.S. generally accepted accounting principles, and the reported expenses include a corresponding amount of non-cash distributions of food to customers. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E -6- These non-cash contributions and distributions of food are valued at $1.62 per pound, which is the industry standard estimate of their fair market value. If these non-cash contributions and distributions of food were also excluded, in addition to the nonrecurring activities excluded in the paragraph above, HRDC’s adjusted ongoing core revenues would be $14.9 million and adjusted ongoing core expenses would be $15.1 million for fiscal year 2019-20. Additional information on the revenues, expenses, and net results of the ongoing, individual programs and activities of HRDC is reported in the supplemental schedules found on pages 57 through 117. As we look to 2021, we will craft a new strategic plan, continue our development and preservation of affordable homes, and break ground on our new facilities. Our Strategic Plan will focus on the top 5 pressing issues facing our community (as identified in our Community Needs Assessment): Housing, Childcare, Transportation, Medical and Behavioral Health Care. We will preserve 230 homes and build many new ones. Our partnerships will create hundreds of rental units across Bozeman and Livingston, creating homes on the ground that are affordable to Montana families. We promise to continue to forge new ground in creative solutions to address homelessness, bringing the first tiny home community to Montana –Housing First Village. We will also continue our work to create a regional public transportation system, and develop and implement programming that will help families not only survive, but thrive. HRDC’s mission is to instill hope, develop resources, design solutions and change lives. We envision a place where poverty has no impact because opportunity and quality of life are equally afforded to everyone. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION June 30, 2020 and 2019 The Notes to Consolidated Financial Statements are an integral part of these statements. -7- 2020 2019 ASSETS Cash and cash equivalents 2,853,933$ 2,422,500$ Escrow and building reserve 1,897,627 552,285 Certificates of deposit - 155,673 Receivables (Note 3) Grantors 2,045,186 920,989 Accounts receivable, net 1,170,936 711,123 Pledges, net 2,897,321 585,720 Prepaid expenses 200,476 57,298 Investments (Note 4)1,204,145 1,173,750 Inventory - supplies and food bank 321,827 289,686 Inventory - condominiums, federal constraints 1,264,406 323,076 Inventory - condominiums - 402,533 Other asset - housing units 494,323 486,282 Deferred loans receivable, net (Note 3)2,991,791 2,720,374 Construction in progress (Note 6)7,524,701 4,875,658 Construction in progress, federal constraints (Note 6)1,308,709 1,077,239 Property and equipment, net, federal constraints (Note 6)8,929,031 9,644,261 Property and equipment, net (Note 6)14,330,666 8,333,594 Total assets 49,435,078$ 34,732,041$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED) June 30, 2020 and 2019 The Notes to Consolidated Financial Statements are an integral part of these statements. -8- 2020 2019 LIABILITIES Accounts payable 1,742,379$ 886,266$ Accrued liabilities 374,819 331,100 Accrued vacation, sick, and paid time off 271,123 182,155 Accrued interest payable 16,605 20,067 Deposits payable 300,690 142,839 Unearned revenue (Note 7)47,717 5,028 Notes payable (Note 8)17,984,413 9,682,105 Total liabilities 20,737,746 11,249,560 NET ASSETS Without donor restrictions Undesignated 12,272,854 7,895,443 HRDC general endowment fund - board designated 5,542 5,542 Federal constrained inventory and capital assets 11,502,146 11,044,576 Total net assets without donor restrictions 23,780,542 18,945,561 With donor restrictions Purpose or time restrictions 4,752,978 4,382,317 Perpetual in nature (endowment)163,812 154,603 Total net assets with donor restrictions 4,916,790 4,536,920 Total net assets 28,697,332 23,482,481 Total liabilities and net assets 49,435,078$ 34,732,041$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED STATEMENTS OF ACTIVITIES For the Years Ended June 30, 2020 and 2019 The Notes to Consolidated Financial Statements are an integral part of these statements. -9- 2020 2019 NET ASSETS WITHOUT DONOR RESTRICTIONS REVENUES Contract revenue 999,029$ 1,071,907$ Rental income 1,692,370 1,317,700 City/County/Local Government support 2,031,227 2,384,583 Sale of housing units 7,210,423 344,400 Contributions (including Fundraising): Grants: Federal 6,280,805 6,438,959 State 893,961 641,441 Private 1,278,455 305,447 Food (non-cash contributions)2,920,791 3,164,087 Pledged contributions 2,611,601 585,720 Contributions & fundraising 2,994,590 1,794,979 Net investment income 38,968 116,870 Gain on sale of property 56,249 196,401 Other 342,476 186,707 Net assets released from program restrictions 573,668 107,523 Total revenues 29,924,613 18,656,724 EXPENSES Program services: Energy 1,077,026 1,326,870 Food and nutrition 4,738,571 4,693,394 Senior citizens 496,126 526,825 Community development 8,554,815 977,268 Economic and youth development 546,348 398,509 Housing 3,442,876 2,738,398 Early childhood education 1,980,674 2,220,007 Transportation 2,542,983 2,343,930 Total program services 23,379,419 15,225,201 Supporting services: Administration 1,063,464 1,041,368 Fundraising 646,749 466,397 Total supporting services 1,710,213 1,507,765 Total expenses 25,089,632 16,732,966 Change in net assets without donor restrictions 4,834,981$ 1,923,758$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED STATEMENTS OF ACTIVITIES (CONTINUED) For the Years Ended June 30, 2020 and 2019 The Notes to Consolidated Financial Statements are an integral part of these statements. -10- 2020 2019 NET ASSETS WITH DONOR RESTRICTIONS Purpose or time restricted contributions 944,329$ 2,862,207$ Perpetually restricted contributions 9,209 100,372 Net assets released from restrictions (573,668) (107,523) Change in net assets with donor restrictions 379,870 2,855,056 Total change in net assets 5,214,851 4,778,814 Net assets, beginning of year 23,482,481 18,703,667 Net assets, end of year 28,697,332$ 23,482,481$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2020 The Notes to Consolidated Financial Statements are an integral part of these statements. -11- Early Food & Senior Community Economic Childhood Total Energy Nutrition Programs Development Development Housing Education Transportation Administration Fundraising 2020 Program Expenses: Salaries 363,348$ 702,395$ 308,377$ 490,325$ 296,111$ 744,744$ 1,106,264$ 366,264$ 575,622$ 187,076$ 5,140,526$ Bad debt - - - - - 18,803 - 6,300 - - 25,103 Client assistance 277,727 - 1,000 - 5,255 747,331 19,234 106,753 522 6,688 1,164,510 Closing costs and housing fees - - - 314,592 - 2,850 - - - - 317,442 Contract services 208,996 8,459 47,972 147,641 - 158,387 126,108 833,687 59,786 265,112 1,856,148 Cost of goods sold - - - 7,112,408 - - - - - - 7,112,408 Depreciation and amortization 16,399 55,730 - 4,721 32,342 384,452 87,723 398,258 11,446 3,564 994,635 Food - 3,306,394 - - - - 76,130 - - 426 3,382,950 Fundraising - 28,538 3,903 90 821 2,317 - 64 10 12,349 48,092 Insurance 13,353 24,862 4,134 34,666 6,066 38,638 22,196 97,725 4,354 1,364 247,358 Interest - 10,744 - (1,553) 20,959 260,773 37,982 - 16,313 - 345,218 Legal and audit - 220 - 5,017 - 4,785 290 135 44,658 - 55,105 Loans forgiven - - - 51,840 - - - - - - 51,840 Office costs 10,106 25,195 11,820 32,901 5,494 37,627 27,487 28,106 40,327 21,054 240,117 Other 291 10,630 832 80,876 4,661 14,430 5,438 614 39,171 1,858 158,801 Outreach and marketing 3,362 9,055 208 690 3,743 3,071 418 68,997 7,681 19,302 116,527 Payroll taxes and benefits 101,466 190,667 76,144 142,988 90,312 186,258 331,008 107,251 164,856 55,704 1,446,654 Repairs and maintenance 3,218 12,652 - 1,013 2,975 136,835 6,258 236,853 20,421 - 420,225 Space and occupancy costs 28,021 104,748 27,112 95,150 33,700 448,248 73,346 58,561 (38,068) 20,901 851,719 Subgrants - 187,976 - 6,324 - - - - - - 194,300 Supplies 30,221 39,502 7,669 7,487 8,839 229,465 39,086 38,316 108,138 41,674 550,397 Trainee wages and benefits - - - - 24,188 - - - - - 24,188 Training 3,336 6,580 3,585 23,810 - 17,372 15,451 785 5,819 3,766 80,504 Travel and transportation 17,182 14,224 3,370 3,829 10,882 6,490 6,255 194,314 2,408 5,911 264,865 Total expenses 1,077,026$ 4,738,571$ 496,126$ 8,554,815$ 546,348$ 3,442,876$ 1,980,674$ 2,542,983$ 1,063,464$ 646,749$ 25,089,632$ 4.3%18.9%2.0%34.1%2.2%13.7%7.9%10.1%4.2%2.6%100.0% Program Supporting DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2019 The Notes to Consolidated Financial Statements are an integral part of these statements. -12- Early Food &Senior Community Economic Childhood Total Energy Nutrition Programs Development Development Housing Education Transportation Administration Fundraising 2019 Program Expenses: Salaries 356,617$ 643,366$ 297,047$ 323,588$ 213,952$ 646,142$ 1,177,463$ 385,564$ 530,392$ 133,260$ 4,707,391$ Bad debt - - - - - 30,179 - - - - 30,179 Client assistance 363,014 - - 1,687 6,007 585,909 25,428 1,161 6,261 15,539 1,005,006 Closing costs and housing fees - - - - - 2,628 - - - - 2,628 Contract services 404,887 25,315 84,032 52,545 - 116,982 201,387 777,738 21,587 146,294 1,830,767 Cost of goods sold - - - 297,336 5,744 - - - - - 303,080 Depreciation and amortization 16,375 56,500 - 4,719 10,504 286,786 113,792 405,609 12,103 3,564 909,952 Food - 3,536,328 - - - - 82,132 - - - 3,618,460 Fundraising - 22,101 4,366 92 353 3,928 19 115 - 8,819 39,793 Insurance 10,826 26,352 5,009 11,033 3,293 20,958 22,639 76,572 3,758 773 181,213 Interest - 10,846 - 11,768 3,280 92,379 42,223 - 18,109 - 178,605 Legal and audit - 542 - 1,638 792 2,555 - 347 44,380 - 50,254 Loans forgiven - - - 52,319 - - - - - - 52,319 Office costs 10,067 20,411 16,945 33,890 6,165 39,329 25,837 30,809 58,729 10,448 252,630 Other 1,927 9,109 1,528 1,736 2,808 6,161 4,496 22,393 8,038 2,054 60,250 Outreach and marketing 1,855 10,100 837 3,875 6,324 5,525 3,361 62,805 4,280 44,888 143,850 Payroll taxes and benefits 83,271 144,620 62,925 80,552 51,965 157,240 295,164 86,589 115,138 32,185 1,109,649 Repairs and maintenance 607 11,934 - 5,986 863 349,191 19,638 244,665 34,477 - 667,361 Space and occupancy costs 28,360 99,457 20,538 43,396 29,385 325,461 130,093 31,399 100,732 16,200 825,021 Subgrants - - - 9,087 - - - - - - 9,087 Supplies 19,187 55,507 17,621 16,611 13,582 35,154 34,928 11,764 65,467 42,443 312,264 Trainee wages and benefits - - - - 30,079 - - - - - 30,079 Training 3,899 6,229 12,543 16,800 2,797 17,900 28,852 7,593 15,383 75 112,071 Travel and transportation 25,978 14,677 3,434 8,610 10,616 13,991 12,555 198,807 2,534 9,855 301,057 Total expenses 1,326,870$ 4,693,394$ 526,825$ 977,268$ 398,509$ 2,738,398$ 2,220,007$ 2,343,930$ 1,041,368$ 466,397$ 16,732,966$ 7.9%28.0%3.1%5.8%2.4%16.4%13.3%14.0%6.2%2.8%100.00% Program Supporting DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2020 and 2019 The Notes to Consolidated Financial Statements are an integral part of these statements. -13- 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from grantors 7,371,713$ 7,253,183$ Cash received from contracts 421,141 1,443,368 Cash received from rentals 1,850,221 1,398,744 Cash received from City/County/Local Government 2,031,227 2,384,583 Cash received from sale of housing units 7,210,423 344,400 Cash received from contributions 4,248,128 4,657,186 Cash received from interest and dividends 40,315 116,673 Cash received from other activities 342,476 186,707 Cash paid to employees (6,478,681) (5,812,675) Cash paid to suppliers (5,706,887) (5,615,048) Cash paid for direct assistance to clients (1,164,510) (1,005,006) Cash paid for other operational expenses 753,792 (52,279) Cash paid for fundraising activities (48,092) (39,793) Interest paid (348,680) (158,538) Net cash flows from operating activities 10,522,586 5,101,505 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of capital assets (3,087,495) (10,687,655) Investment purchases (31,742) (210,000) Proceeds from sales of investments 155,673 - Principal loan receivable payments received 259,441 1,141,734 Principal loan receivable advances (582,298) (112,600) Net cash flows from investing activities (3,286,421) (9,868,521) CASH FLOWS FROM FINANCING ACTIVITIES Contributions to endowment 9,209 100,372 Proceeds from long-term debt - 5,534,893 Proceeds from payroll protection program (PPP) loan 407,000 - Cash paid on notes payable (5,875,599) (1,485,869) Investment in partnership - 312,083 Net cash flows from financing activities (5,459,390) 4,461,479 Net change in cash and cash equivalents 1,776,775 (305,537) Cash and cash equivalents, beginning of year 2,974,785 3,280,322 Cash and cash equivalents, end of year 4,751,560$ 2,974,785$ Reconciliation to Consolidated Statements of Financial Position Cash and cash equivalents 2,853,933$ 2,422,500$ Escrow and building reserve 1,897,627 552,285 4,751,560$ 2,974,785$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) For the Years Ended June 30, 2020 and 2019 The Notes to Consolidated Financial Statements are an integral part of these statements. -14- 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets 5,214,851$ 4,778,814$ Adjustments to reconcile change in net assets to net cash flows from operating activities: Depreciation and amortization 994,635 909,952 Bad debt, allowances, and loans forgiven 26,737 7,539 Contributions to Endowment (9,209) (100,372) Unrealized loss (gain) on investments 1,347 (197) Gain on sale of property and equipment and homes (56,249) (366,401) Proceeds from sale of housing units and condomimiums 7,210,423 344,400 Change in operating assets and liabilities: Inventory (32,141) (331,065) Grants receivable (1,124,197) (114,945) Accounts receivable (434,710) 348,541 Pledges receivable (2,311,601) (585,720) Prepaid expenses (143,178) 22,920 Accounts payable 856,113 70,203 Accrued liabilities 43,719 30,042 Vacation payable 88,968 4,402 Accrued interest payable (3,462) 20,067 Rent deposits 157,851 81,044 Unearned revenue 42,689 (17,719) Net cash flows from operating activities 10,522,586$ 5,101,505$ SUPPLEMENTAL SCHEDULE OF NON-CASH OPERATING ACTIVITIES Contributions of food 2,920,791$ 3,164,087$ SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES Fixed assets and inventory purchased or constructed with debt 13,770,507$ 1,900,797$ Fixed assets acquired through Miles Limited Partnership -$ 1,850,061$ SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES Debt acquired through Miles Limited Partnership -$ 1,900,797$ SUPPLEMENTAL CASH FLOW INFORMATION Interest paid (includes capitalized interest)915,798$ 683,666$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2020 and 2019 -15- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the assets, liabilities, net assets, and financial activities of Human Resource Development Council of District IX, Inc. and its wholly owned subsidiaries, the Home Corporation, The Miles Building, Inc., Summit Apartments, Inc., Sherwood Inn Apartments, Inc., Darlinton Apartments, Inc., Big Sky Villas Rural Partners, LLC, and Miles Limited Partnership. All significant inter-company transactions and balances have been eliminated. Subsidiary elimination worksheets are included as supplementary schedules on pages 57 to 61. Organization Human Resource Development Council of District IX, Inc. (HRDC) is a private not-for-profit corporation under Internal Revenue Code Section 501(c)(3). HRDC is located in Bozeman, Montana. HRDC is a non-profit community action agency, dedicated to strengthening community and advancing the quality of people’s lives. HRDC works to achieve this by developing the resources (talent and capital) to help people of all ages and situations confront and overcome obstacles so that they can improve their lives. HRDC focuses on seven strategic challenges and operates multiple programs to address these pressing human needs. HRDC serves the community in these seven areas: Food and Nutrition, Housing and Homelessness, Child and Youth Development, Senior Empowerment, Community Transportation, Home Heating, Efficiency, and Safety, and Community (Economic) Development. Through HRDC programs, sustainable results are fostered through practical, comprehensive approaches to social and economic challenges. Services are delivered statewide with an emphasis in Gallatin, Park, and Meagher Counties. The Board of Directors is composed of individuals from the private sector, public sector, and representatives of the low-income sector. Colorado Apartments,West Edge Condominiums, Cottages at Menicucci Square, and Boulevard Apartments are HRDC owned properties which are accounted for separately from HRDC’s programs. Financial data has been reported accordingly in the supplementary consolidating schedules on pages 57 to 61. The Home Corporation is a private not-for-profit title holding company under Internal Revenue Code Section 501(c)(2). The Home Corporation was formed as a single asset entity in order to facilitate financing with the Montana Board of Housing (MBOH) for the West Babcock Apartment Affordable Housing project. The Miles Building, Inc. is defined as a 501(c)(3) Supporting Organization under the Internal Revenue Code. The Miles Building, Inc. was formed as a single asset entity to facilitate financing with the Montana Board of Housing and U.S. Department of Housing and Urban Development for the purchase of the Miles Building Apartments in Livingston, Montana in May,1999. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -16- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Organization (Continued) The Miles Building was purchased to preserve 40 units of existing low-income housing stock in the Livingston community. In December, 2001, the Miles Building, Inc. transferred all of its assets and liabilities to the Miles Limited Partnership in order to facilitate the sale of low income housing tax credits. The Miles Building, Inc. serves as the non-profit managing general partner of the Miles Limited Partnership. The Miles Building, Inc. owns 0.01 percent of the Miles Limited Partnership. During the year ended June 30, 2019, Miles 2017, LLC (a new subsidiary) was created and purchased the remaining .99 percent of the Miles Limited Partnership. The Darlinton Apartments, Inc. is defined as a 501(c)(3) Supporting Organization under the Internal Revenue Code. The Darlinton Apartments, Inc. was formed to participate in a statewide initiative to preserve low-income housing in Montana. The Darlinton Apartments, Inc. is the Non-Profit General Partner in a Limited Partnership which owns the 100-unit Darlinton Apartments in Bozeman, Montana. The Sherwood Inn Apartments, Inc. is defined as a 501(c)(3) Supporting Organization under the Internal Revenue Code. The HRDC formed the Sherwood Inn Apartments, Inc. a wholly owned subsidiary to act as a single asset entity to hold and operate the 49-unit low income Apartment Complex. In May, 2001, the HRDC signed a memorandum of understanding and a 24 month option for the purchase of the Sherwood Inn Apartments in Livingston, Montana. The purchase was completed on February 1, 2004 for a purchase price of $1,375,000. The Sherwood Inn Apartments, Inc. purchase financing included the following: the seller’s donation of $209,922; a private mortgage for $475,139; a Home Investment Partnership Grant of $371,000; an existing HUD mortgage on the property (the 1st HUD mortgage) in the amount of $444,268 which was assigned by HUD to HRDC for future collection; and another existing HUD mortgage on the property (the 2nd HUD mortgage) in the amount of $127,023 which was forgiven by HUD. Neither HUD mortgage loan remained FHA insured; therefore the HUD loan regulatory agreements were not assumed by the purchaser. The Summit Apartments, Inc. is defined as a 501(c) (3) Supporting Organization under the Internal Revenue Code. Summit Apartments, Inc. was formed to facilitate the transfer of physical assets of the Summit Place Apartments in Livingston, Montana, through the U.S. Department of Housing and Urban Development. The transfer of physical assets of the seven-unit low-income apartment complex was completed in September,2006 through the assumption of the HUD deferred mortgage on the property in the amount of $438,100 and related regulatory and use agreements until the maturity date of the note in January,2037. Big Sky Villas Rural Partners, LLC (a limited liability company) was formed to purchase and rehabilitate the Big Sky Villas Apartments in Belgrade, Montana. The Big Sky Villas Apartment Complex was purchased to preserve 24 units of existing low-income housing stock in the Belgrade community. Big Sky Villas Rural Partners, LLC serves as the managing general partner of West Jefferson Partners, LLP and owns 0.01 percent of West Jefferson Partners, LLP. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -17- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Accounting The accompanying consolidated financial statements have been prepared on the accrual basis in accordance with accounting principles generally accepted in the United States of America (GAAP), as codified by the Financial Accounting Standards Board (FASB). New Accounting Pronouncements On July 1, 2019, HRDC adopted the following Accounting Standards Updates (ASUs): ASU No. 2014-09, Revenue from Contracts with Customers including the subsequent revisions (collectively referred to as Topic 606). This accounting standard was issued to clarify the principles of recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS). The Council adopted Topic 606 using the modified retrospective method. Implementation of the standard did not have a material effect on HRDC’s methodology for the recognition of revenue, nor required any adjustment of activity reported in a prior period. ASU 2018-08, Not-for-Profit Entities (Topic 958) – Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. This update provides guidance on (1) evaluating whether transactions should be accounted for as contributions (nonreciprocal transactions) or as exchange (reciprocal) transactions subject to other guidance and (2) determining whether a contribution in conditional. The ASU has been applied retrospectively to all periods presented. Implementation of the standard has changed the way HRDC accounts for Federal grants received. HRDC previously accounted for Federal awards as exchange (reciprocal) transactions and revenue was recognized as reimbursable expenses were incurred. HRDC now accounts for Federal grants as conditional grant contributions. Revenue is recognized as the condition is met, incurring the qualifying expense under Uniform Guidance. Consequently, revenue is recognized at the same point under both accounting policies. Thus, implementation of the standard required no adjustment of activity reported in the prior period. ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective of this accounting standard was to enhance the reporting model for financial instruments and to provide users of the financial statements with more decision-useful information. The standard was implemented on a retrospective basis. Implementation of the standard had no effect on HRDC’s existing policies, nor required any adjustment of activity reported in a prior period. ASU 2016-18, Statement of Cash Flows (Topic 230) – Restricted Cash. The update addresses the classification and presentation of changes in restricted cash on the statement of cash flows. The ASU has been applied retrospectively to all periods presented, which had no effect on the total assets, liabilities or net assets previously stated. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -18- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New Accounting Pronouncements (Continued) ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This update provides clarify for certain aspects for ASU 2016-01. The standard was implemented on a retrospective basis. Implementation of the standard had no effect on HRDC’s existing policies, nor required any adjustment of activity reported in a prior period. ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The objective of the update is to reduce the diversity in practice over certain cash flow issues. HRDC adopted this update using a retrospective transition method to each period presented. Accordingly, the information is presented as if the accounting policy had been adopted in the prior year. HRDC has elected to report distributions received from equity method investees using the cumulative earnings approach where distributions received are considered returns on investment and classified as cash inflows from operating activities. ASU 2018-13, Disclosure Framework –Changes to the Disclosure Requirements for Fair Value Measurement. The main objective of the update is to improve the effectiveness of disclosures in the notes to the financial statements. HRDC adopted the ASU on a retrospective basis to all periods presented, which had no effect on the total assets, liabilities or net assets previously presented. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include cash in banks and on hand, and highly liquid debt instruments with an original maturity of three months or less. HRDC has restricted cash accounts related to reserves and escrows for several of their properties. Such amounts are required to be held in separate accounts and require the amounts to be expended for specific purposes, such as repairs and maintenance of the properties. HRDC participates in a Master Sweep Repurchase Agreement (Agreement) through a reputable financial institution. Daily, the financial institution sells to HRDC a unified fractional interest in the principal amount of government securities. The securities must be direct obligations of, or guaranteed by, the United States, its agencies, or instrumentalities. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -19- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Cash Equivalents (Continued) Market risks associated with this agreement are similar to market risks of any government security; the securities have a current market value equal to or greater than the principal amount of the transactions. The funds invested in the Agreement are not considered deposits and are not insured by the Federal Deposit Insurance Corporation; however, the funds are collateralized by the government securities purchased with those funds. At June 30, 2020 and 2019, HRDC has no uninsured balances. All other accounts are either fully insured by the Federal Deposit Insurance Corporation or collateralized. Although management has expressed no intention to do so, HRDC may terminate the Agreement at any time. Certificates of Deposit HRDC had one certificate of deposit (CD) at June 30, 2019. The CD term was six months maturing in July 2019,with an interest rate of 0.60%. The CD is stated at the principal balance. Investments and Investment Income Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair value in the consolidated statement of financial position with the unrealized gains (losses) in the consolidated statement of activities. Gains and losses on investments and other assets are reported as unrestricted net assets unless their use is restricted by explicit donor stipulation. Promises to Give and Other Receivables Unconditional promises to give (pledges receivable) are recognized at fair value in the period received. Unconditional promises to give that will be collected beyond one year are reported at the present value of the anticipated cash flows. HRDC has elected under GAAP to subsequently report pledges receivable at fair value by evaluating and adjusting the initial discount rate. Management elected the fair value method to improve valuation of pledges received in current and previous years. HRDC has discounted the pledge receivable based on the present value discount for a multi-year pledge. In subsequent years, amortization of the discounts is included in contributions in the statement of activities. Management has determined that an allowance for uncollectible amounts to be $-0-at June 30, 2020 and 2019. Conditional promises to give are recognized when the conditions on which they depend are substantially met. At June 30, 2020 and 2019, there were no conditional promises to give. HRDC has an additional $3,512,858 and $2,383,481 in unearned grant commitments as of June 30, 2020 and 2019, respectively. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -20- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Inventories Inventories include 14 manufactured housing units at June 30, 2020 and 2019. HRDC purchased 75 manufactured housing units in July and September 2016 and had sold 43 of these units and transferred 18 of these units to property and equipment to be used for the Cottages at Menicucci Square during the year ended June 30, 2019. These housing units are planned as affordable housing units to be placed in a variety of developments in HRDC’s service area communities in Gallatin and Park Counties. The total cost of the 14 unsold manufactured housing units is $494,323 and $486,282 at June 30, 2020 and 2019, respectively. Inventories include 3 unsold condominium units which are carried at the lower of cost or net realizable value amounting to $323,076 for the years ended June 30, 2020 and 2019.HRDC purchased 23 units and constructed 60 units of an affordable housing development, West Edge Condominiums, during fiscal years 2010-2014 under the Neighborhood Stabilization Program (NSP). Through June 30, 2020 and 2019, HRDC had cumulatively sold 80 of the 83, condominium units, at an average sale price of $115,000 and cost basis of $138,000. The remaining three units will be sold upon the current occupants’ decision to vacate the property under the terms of the original lease agreements assumed at the time of acquisition in 2010. During the year ended June 30, 2019, 2 humble homes were constructed, for which 1 unit was sold during the year. The remaining humble home carried at the lower of cost or net realizable value amounting to $137,869 was sold during the year ended June 30, 2020. Inventories include a condo that was purchased during the year ended June 30, 2019. The condo is carried at the lower of cost or net realizable value amounting to $264,664. The condo was sold during the year ending June 30, 2020. During the year ended June 30, 2020, 12 affordable townhomes were completed, for which 9 units were sold during the year. The remaining affordable townhomes are carried at the lower of cost or net realizable value amounting to $941,330. Supplies and food bank inventories contain repair parts used in the weatherization program ($1,214 and $4,113 on June 30, 2020 and 2019, respectively) and the food inventory at the Gallatin Valley Food Bank, Big Sky Community Food Bank and Headwaters Area Food Bank ($320,613 and $285,573 on June 30, 2020 and 2019, respectively). All inventories are recorded at the lower of cost or net realizable value. Property and Equipment HRDC capitalizes equipment with a purchase price of at least $5,000 or lower amount if required by grantors, and an expected life of at least three years. Property and equipment are carried at cost. Depreciation is allocated between program support and supporting services. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -21- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and Equipment (Continued) Depreciation is computed on a straight-line basis over the following estimated useful lives: Furniture and Equipment 3 to 10 years Vehicles 7 to 10 years Land Improvements 20 years Building and Improvements 20 to 30 years Software 3 years Depreciation expense for the years ended June 30, 2020 and 2019 was $994,635 and $909,952, respectively. Vacation/Paid Time Off and Sick Leave HRDC charges the individual programs for vacation and paid time off (PTO) leave earned by employees. These monies are deposited in the Vacation Leave Fund. When an employee uses vacation benefits, the vacation time is charged against this fund. As of June 30, 2020 and 2019, the Vacation Leave/PTO Fund had a liability balance of $251,953 and $162,157, respectively. HRDC pays terminating employees one quarter of the value of their unused sick leave.On June 30, 2020 and 2019, the liability for one quarter unused sick leave was $19,170 and $19,998 including related payroll taxes. The other three quarters of sick leave expenses are recorded when paid. Classification of Net Assets The Organization reports information regarding its financial position and activities according to two classes of net assets, as follows: Net assets without donor restrictions consist of investments and amounts that are available for use in carrying out the mission of HRDC, and include those expendable resources that have been designated by the Board of Directors for special use by the HRDC. Net assets with donor restrictions represent those amounts that are subject to donor or certain grantor imposed stipulations. Some donor or grantor restrictions are temporary in nature such as those that will be met by passage of time or other events specified by the donor or grantor. Other donor imposed restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled or both. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -22- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Classification of Net Assets (Continued) A summary of net assets restricted for purpose or time at June 30 is as follows: 2020 2019 Bridger View Redevelopment - land 1,600,000$ 1,600,000$ Griffin Site Development 1,411,626 597,920 Galavan Transportation operations 1,057,568 1,043,780 Big Sky Community Food Bank 250,848 256,074 Road to Home homeownership center 213,087 187,635 Bridger View Redevelopment - 341,952 Healthy Kids Pack Food program 63,871 53,871 LISC Citi Bridges 45,716 - Title 3 Home Care 37,431 27,039 Partnership for Permanent Supportive Housing 32,662 45,052 Sunset Park Hope Relocation 21,920 - Fork and Spoon 10,568 7,213 School Food Pantry 5,045 5,044 National Council on Aging: SNAP 2,636 14,198 Big Sky Community Land Trust - 183,539 Livingston Warming Center - 11,000 GVFB Story Mill Learning Garden - 8,000 Total purpose or time restricted 4,752,978$ 4,382,317$ A summary of net assets perpetual in nature at June 30 is as follows: 2020 2019 Warming Center 76,302$ 76,302$ Gallatin Valley Food Bank 76,301 76,301 Greatest Needs of HRDC 11,209 2,000 Total perpetually restricted (endowment)163,812$ 154,603$ Contributed Support HRDC recognizes all unconditional gifts and promises to give in the period notified. Contributed support is reported as net assets with or without donor restrictions depending upon the existence of donor stipulations. Purpose or time restricted contributions whose restrictions have been fulfilled in the current year are reported as net assets without donor restriction. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -23- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenue Recognition Contract revenues are recognized as performance obligations are met on the contract based on input and output methods, dependent on the individual contract. This may include the delivery of goods or services, as costs are incurred to deliver services, or upon completion of events. Contract revenue included in the financial statements at June 30, 2020 and 2019 are recognized monthly over the contract period. This revenue includes property management income and public transportation contracted services. Contributed service revenue results when donated services create or enhance non-financial assets or when they require specialized skills provided by people possessing those skills that would typically be purchased if not provided by donation. Contributed goods are valued at their estimated fair value at the date of contribution. Professional services donated to HRDC that are included in the consolidated financial statements as of June 30, 2020 and 2019 total $105,972 and $121,492, respectively. Additional non-cash donations of clothing, volunteer time, and miscellaneous items have also been contributed to HRDC that have not been included in these consolidated financial statements because they do not meet the requirements for recognition or are considered immaterial for inclusion in the financial statements. Advertising HRDC expenses advertising costs as incurred. Total advertising and outreach costs were $105,972 and $143,870 for the years ended June 30, 2020 and 2019, respectively. Income Taxes HRDC is exempt from income taxes under §501(c)(3) of the Internal Revenue Code. Accordingly, the increase in net assets is generally not subject to taxation. No provision for income tax has been recorded in these financial statements because the HRDC believes it had no income unrelated to its tax-exempt purpose in 2020 or 2019. Reclassifications Certain reclassifications have been made to the June 30, 2019 financial statements to conform to the June 30, 2020 presentation. Such reclassifications had no effect on previously reported amounts. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -24- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Description of the HRDCs’ Program Activities and Expense Classification Separate accounts are maintained for each fund; however, in the accompanying consolidated financial statements, funds that have similar characteristics have been combined into activity groups. The primary activity groups and their related purposes are summarized as follows: Energy Activities HRDC’s Energy Initiative combines emergency assistance, heat bill supplements, and home energy savings measures to offset heating costs for limited income households. Food & Nutrition Activities HRDC’s Nutrition Initiatives work to improve food security across the Gallatin Valley. Through the Gallatin Valley, Headwaters Area, and Big Sky Community Food Banks, emergency food assistance is provided in the form of emergency food boxes. Additionally, the Fork & Spoon Homestyle Kitchen provides a ‘pay what you can’ model for evening dinner service six nights a week, the KidsPack Program provides supplemental weekend food to children experiencing hunger, the Summer Lunch Program provides free lunchtime meals to children during the summer months, and the Senior Grocery Program provides supplemental food to low income seniors. Senior Programs Activities HRDC’s Senior Empowerment Initiative addresses quality of life and independence in the home for many area seniors. With door to door transportation to medical and other appointments, meaningful volunteer opportunities, supplemental food, and in-home health care, HRDC works to provide each and every senior with wrap-around services that enable them to maintain independence and be engaged with the community. Community Development Activities HRDC’s Community Development Initiative provides innovative and creative solutions to identified community needs. The goal is to build and sustain healthy communities through the construction of housing and community facilities and the development of community programs that educate and support families and individuals. Economic Development Activities  HRDC’s Economic Development Initiatives work to provide free tax filing assistance, job readiness training and placement for the area’s at risk youth populations. Housing Activities HRDC’s Housing initiative works across all levels of housing security, from homelessness to homeownership. HRDC’s Housing programs work to ensure that every member of the community can afford to have and preserve a place to call home, whether it is in the form of emergency shelter, transitional housing, affordable rentals, rental subsidies, down payment assistance, or home repairs. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -25- NOTE 1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Description of the HRDCs’ Program Activities and Expense Classification (Continued) Early Childhood Education Activities HRDC’s Early Childhood Care and Education Initiative provides for the healthy development of children and strengthening families through education, health, nutrition, mental health, and disability services. Transportation Activities HRDC’s Public Transportation Initiative, Streamline, provides fare free public transit serving the communities of Belgrade, Bozeman, and Livingston. HRDC’s Para Transit Initiative, Galavan, serves the senior and disabled residents with door to door transportation to medical and other appointments. Administrative Activities Consists of funds that are used for administering HRDC. Fundraising Activities These activities provide low-cost supplies and services for special events and activities designed to create public awareness and support for community based activities operated by HRDC. Cost Allocation HRDC allocates costs that can be identified specifically with a particular final cost objective directly to the individual program benefiting. Joint costs are allocated directly to individual programs using a base most appropriate to the particular cost being prorated. HRDC utilizes following bases for allocated costs: Occupancy costs square footage* Telephone number of telephones* Copies, print, postage actual usage Agency wide audit, fiscal office number of accounting transactions** Common supplies, general number of FTEs** liability insurance, human resources office, receptionist, executive, computer network * For staffing in multiple HRDC programs, costs are further allocated in a second tier based on hours work by program. ** Time which is easily and specifically identifiable to a particular program may be alternatively charged as a Specific Direct Cost via a Time Sheet. In no case is a cost charged both as a specific direct cost and as an allocated cost. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -26- NOTE 2.LIQUIDITY AND AVAILABILITY Financial assets available for general expenditure include only those without donor restrictions, excluding board designated net assets or other restrictions limiting their use within one year of the statement of financial position date. General expenditures include those listed with the management and general classification of the statement of activities. The following financial assets are expected to be available to support HRDC in the years ending June 30, 2021 and 2020: 2020 2019 Cash and cash equivalents 2,853,933$ 2,422,500$ Escrow and building reserve 1,897,627 552,285 Certificates of deposit - 155,673 Receivables 6,113,443 2,217,832 Prepaid expenses 200,476 57,298 Investments 1,204,145 1,173,750 Inventories 1,586,233 1,015,295 Other asset - housing units 494,323 486,282 Deferred loans receivable, net 2,991,791 2,720,374 Construction in progress 8,833,410 5,952,897 Property and equipment, net 23,259,697 17,977,855 Total assets 49,435,078 34,732,041 Escrow and building reserve (1,897,627) (552,285) Receivables (grantors)(2,045,186) (920,989) Receivables (pledges)(2,897,321) (585,720) Prepaid expenses (200,476) (57,298) Inventories (1,586,233) (1,015,295) Other asset - manufactured homes (494,323) (486,282) Deferred loans receivable, net (2,991,791) (2,720,374) Construction in progress (8,833,410) (5,952,897) Property and equipment, net (23,259,697) (17,977,855) Financial assets 5,229,014 4,463,046 Board designated (5,542) (5,542) Donor restricted net assets*(3,316,790) (2,936,920) Cash committed to HRDC projects (799,570) (1,030,576) Financial assets available within 1 year 1,107,112$ 490,008$ *Amount excludes land recorded at $1,600,000 that is donor restricted and removed from property and equipment, net, above. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -27- NOTE 2.LIQUIDITY AND AVAILABILITY (CONTINUED) As part of HRDC’s liquidity management plan, HRDC has a policy to structure its financial assets to be available as general expenditures, liabilities, and/or obligations as they become due. Escrows and building reserves and grants receivable are excluded from financial assets available for general as they are generally restricted for specific grant purposes. During the course of the year, HRDC has numerous capital projects in process, in which cash committed has been excluded from financial assets. Schedules of unrestricted corporate funds are included on pages 68 and 69 in the supplemental information. NOTE 3.RECEIVABLES Grants Receivable represents the balance of grant funds earned but not yet received in cash. Most grants allow monthly draw-downs of cash which provide operating capital for program operation. Accounts Receivable represent amounts owing to HRDC from program service contracts stated at unpaid balances. Contracts call for a fixed fee for service and are primarily comprised of property management and other service contracts. Delinquent accounts are reviewed on an annual basis, when it is decided whether to write off an account. These amounts are shown net of a provision for bad debts of $21,435 and $39,745 as of June 30, 2020 and 2019, respectively. Pledges Receivable represents an unconditional promise to give by a donor. Pledges receivable consist of the following: 2020 2019 Receivable in one year or less 1,447,442$ 300,000$ Receivable in one to five years 1,559,379 300,000 3,006,821 600,000 Less discount (109,500) (14,280) Net unconditional promises to give 2,897,321$ 585,720$ The rates used for the pledge discounts range from .7835% -.9524%. Deferred Loans Receivable represents amounts advanced by BSV Rural Partners, LLC to West Jefferson Partners, LLLP for the rehabilitation of the Big Sky Villas Apartments, down payment assistance loans through the HRDC Homeownership Center, and second mortgage loans through the Neighborhood Stabilization Program. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -28- NOTE 3.RECEIVABLES (CONTINUED) Deferred Loans Receivable (Continued) The following table presents deferred loans receivable from related parties at June 30, 2020 and 2019: BSV Rural Partners, LLC HOME Loan 832,000$ Date of loan December 14, 2016 Maturity date December 14, 2046 Interest rate 1.00% Terms Collateral Secured by revenues of West Jefferson Partners, LLLP Loan deferred until available cash flow after all other debts and HRDC’s Homeownership Center provides financial assistance to first-time homebuyers in the form of a no-interest, deferred payment, equity-share mortgage loan to help the household complete down payment needs or fill the gap between the total purchase price and the maximum loan amount offered by the lender. Repayments of the loans are required upon satisfaction of the primary mortgage loan, refinance, or sale of the home and property. HRDC shares in the equity of the home and the total amount due to HRDC upon repayment conditions is based upon the appraised value of the home. As of June 30, 2020, HRDC had thirty-one outstanding down payment assistance loans totaling $506,328, offset by a provision for loan losses of $105,699.As of June 30, 2019, HRDC had thirty- four outstanding down payment assistance loans totaling $554,490, offset by a provision for loan losses of $91,648. As of June 30, 2020 and 2019, HRDC had forty-one and forty-five small housing assistance loans to clients totaling $22,494 and $24,523, respectively. HRDC West Edge Condominiums development provided financial assistance through the Neighborhood Stabilization Program (NSP) to acquire twenty-three condominiums in 2010 and construct sixty additional affordable condominium units through 2014. HRDC sold the condominiums to income-eligible buyers with a maximum of 50% of the mortgage amount being financed through NSP funds in the form of no-interest, deferred payment, second mortgage loans to help fill the gap between the total purchase price and the maximum loan amount offered by the primary lender. Repayment of the second mortgage is required upon the sale of the residence, cash- out refinance, full payment of the first mortgage, or if the condominium is no longer used as the primary residence. Upon repayment, an appreciation share formula is applied in lieu of interest to determine the amount of repayment. As of June 30, 2020, there were forty-one second mortgage loans outstanding in the amount of $1,282,918, offset by a provision for loan losses of $77,000. As of June 30, 2019, there were forty-one second mortgage loans outstanding in the amount of $1,468,009, offset by a provision for loan losses of $67,000.The provision for loan losses is based on approximately six percent of the amount loaned in the final phase of the program. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -29- NOTE 3.RECEIVABLES (CONTINUED) Deferred Loans Receivable (Continued) HRDC Willow Springs Townhomes development in Bozeman is an initiative to increase homeownership among low to moderate income households. When completed, the development project will consist of 24 townhome units. Land and infrastructure for the Willow Springs townhomes was partially funded with program revenue from a previous federal Neighborhood Stabilization (NSP) program grant, to be maintained permanently affordable via a Community Land Trust. Construction of the townhomes is being funded through conventional bank construction loan financing, as well as grant assistance from the City of Bozeman. Funding from NSP and the City of Bozeman requires that eligible buyer households earn no more than 120% of the Area Median Income, have no more than $70,000 in total family assets, contribute $1,500 towards the purchase, and complete structured homeownership education. Upon resale of a townhome, the owner’s equity share is limited to a maximum of 2% per year of ownership, to maintain permanent affordability of the townhomes for future eligible buyers. As of June 30, 2020, twelve townhome units had been completed and nine townhome sales had been closed. Seven of these townhome buyers received down payment assistance loans from HRDC ranging from $10,000 to $15,000 each, with deferred payment terms. Repayment of these loans is deferred until the townhome is sold or refinanced. As of June 30, 2020, there were seven loans outstanding in the total amount of $75,000. HRDC Meadowview Condominiums development in Big Sky is an initiative to increase homeownership among low to moderate income households participating in the local Big Sky workforce. When completed, the development project will consist of 52 condominium units. Land and infrastructure for the Big Sky Meadowview condominiums was partially funded through grant assistance from the Big Sky Resort Area District, to be maintained permanently affordable via a Community Land Trust. Construction of the condominiums is being funded through conventional bank construction loan financing. Upon resale of a condominium, the owner’s equity share is limited, to maintain permanent affordability of the condominiums for future eligible buyers in Big Sky. As of June 30, 2020, eighteen condominium units had been completed and sold to eligible homebuyers participating in the local Big Sky workforce. Ten of these condominium buyers received down payment assistance loans from HRDC ranging from $30,000 to $55,000 each, with deferred payment terms. Repayment of these loans is deferred until the condominium is sold or refinanced. As of June 30, 2020, there were ten loans outstanding in the total amount of $455,750. Due to inherent uncertainties in the estimate of a provision for loan losses, it is reasonably possible this estimate could change in the near term. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -30- NOTE 3.RECEIVABLES (CONTINUED) Deferred Loans Receivable (Continued) A summary of loans receivable and their related allowances at June 30, 2020 and 2019, is as follows: Allowance for Allowance for Loan Doubtful Loan Doubtful Receivable Accounts Receivable Accounts 2020 2020 2019 2019 Affordable Housing Road to Home down-payment assistance 506,328$ 105,699$ 554,490$ 91,648$ West Edge condo loans 1,282,918 77,000 1,468,009 67,000 Rental housing assistance loans 22,494 - 24,523 - Big Sky Meadowview condo loans 455,750 - - - Willow Spring condo loans 75,000 - - - Intercompany Loans Sherwood Inn Apartments 442,801 - 483,160 - West Babcock Apartments 167,138 - 172,391 - Miles LP 815,649 - 821,118 - Related Party Commercial West Jefferson Partners, LLLP 832,000 - 832,000 - Total 4,600,078 182,699$ 4,355,691 158,648$ Intercompany elimination (1,425,588) (1,476,669) Less: allowance (182,699) (158,648) Deferred loans receivable, net 2,991,791$ 2,720,374$ An analysis of credit exposure by internally assigned grade at June 30, 2020 and 2019, is as follows: 2020 2019 2020 2019 Pass - performing loans 2,342,490$ 2,047,022$ 832,000$ 832,000$ Pass with collateral deficiencies - - - - Non-performing, collateralized - - - - Non-performing, collateral deficiencies - - - - Total 2,342,490$ 2,047,022$ 832,000$ 832,000$ Residential Commercial Related Party An analysis of past due financing receivables as of June 30, 2020 and 2019, is as follows: 2020 2019 2020 2019 30 - 59 days past due -$ -$ -$ -$ 60 - 89 days past due - - - - Greater than 90 days past due - - - - Total past due - - - - Current financing receivables 2,342,490 2,047,022 832,000 832,000 Total financing receivables 2,342,490$ 2,047,022$ 832,000$ 832,000$ Related Party Residential Commercial DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -31- NOTE 3.RECEIVABLES (CONTINUED) HRDC recognizes interest income on loans receivable on the accrual basis. Loan fees and costs are recognized as income in the period the fees or costs are earned. Loans receivable accrue interest under the applicable loan document terms until the loan is deemed uncollectible. Loans are considered delinquent after 30 days of non-payment from the original due date or deferred due date. Loans are considered impaired when collection of the full amount of the loan is unlikely based on various factors discussed below. HRDC uses multiple bases to estimate the allowance for credit losses including historical losses of the loan program, existing economic conditions related to the industry in which the loan recipient operates, collateral of the loan recipient, loan payment history and actual or likely events which have occurred or will occur. The risk characteristics of the individual loan programs are similar in nature. HRDC operates loan programs for recipients who cannot generally obtain conventional financing under the requirements and restrictions placed on them by federal and state loan funding sources. Therefore, due to the nature of the loan programs operated, HRDC’s loan portfolio is generally of inherently higher risk than typical conventional financing loans; however the loans are collateralized by the property. HRDC’s loans receivable are considered deferred loans, therefore no loans are considered past due as of June 30, 2020 and 2019, and all amounts are considered current under the terms of the loans. Impaired loans are valued at the estimated value of the remaining recoverable assets after consideration of collateral and guarantees. An allowance for bad debt is recorded against these impaired loans for the difference between the balance of the loan and estimated recovery value. As of June 30, 2020 and 2019, HRDC did not have any impaired loans. NOTE 4.INVESTMENTS Investments carried at fair value, as of June 30, 2020, are as follows: Amortized Cost Fair Value Net Unrealized Gain (Loss) Cash held for investment $ 20,318 $ 20,318 $ - Equity securities: Mutual funds 700,738 747,145 46,407 Exchange traded funds 440,782 436,682 (4,100) Total investments 1,161,838$ 1,204,145$ 42,307$ 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -32- NOTE 4.INVESTMENTS (CONTINUED) Investments carried at fair value, as of June 30, 2019, are as follows: Amortized Cost Fair Value Net Unrealized Gain Cash held for investment $ 9,483 $ 9,483 $ - Certificates of deposit 155,673 155,673 - Mutual funds 1,122,562 1,164,267 41,705 Total investments 1,287,718$ 1,329,423$ 41,705$ 2019 The following summarizes investment return and its classifications on the statement of activities: 2020 2019 Interest, dividends and capital gains (losses)(1,588)$ 30,206$ Loan and other interest income 60,388 97,900 Realized losses (7,479) (1,382) Unrealized (losses) gains (1,347) 197 Net realized/unrealized loss on investments (8,826) (1,185) Investment fees (11,006) (10,051) Total investment income 38,968$ 116,870$ A significant portion of HRDC’s investments are subject to the risk of value fluctuation that is inherent in the market. As such, the value of HRDC’s assets may change frequently. To help manage this risk, HRDC utilizes professional investment management firms to oversee the HRDC portfolio and monitor its performance. Total investment fees paid to the investment managers were $11,006 and $10,051 for the years ended June 30, 2020 and 2019, respectively. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -33- NOTE 5.FAIR VALUE MEASUREMENTS The Organization has determined the fair value of its investments through the application of accounting standards for Fair Value Measurements. This standard establishes a fair value hierarchy, which prioritizes the valuation into three broad levels: Level 1:Quoted prices in active markets for identical assets or liabilities Level 2:Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3:Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in methodologies used at June 30, 2020 and 2019. Cash Held for Investment: valued at the balance held in this account. Certificates of Deposit: valued at the closing price reported in the active market in which the instrument is traded. Equity Securities: valued at the closing price reported on the active market on which the individual securities are traded. Pledges Receivable: valued at fair value based on the net present value of expected future cash flows discount rate for a multi-year pledge. Charitable Gift Annuities: valued at fair value based on the present value of the future payments over the beneficiaries’ estimated remaining lives using the original discount rates at the date of the gift and applicable mortality tables. Investment assets are classified in their entirety based upon the lowest level of input that is significant at the fair value measurement. The following tables present by level, within the fair value hierarchy, HRDCs’investment assets at fair value, as of June 30, 2020. Fair Value Level 1 Level 2 Level 3 Total Cash held for investment $ 20,318 $ 20,318 $ - $ - $ 20,318 Equity securities: Mutual funds 747,145 747,145 - - 747,145 Exchange traded funds 436,682 436,682 - - 436,682 Total investments at fair value 1,204,145 1,204,145 - - 1,204,145 Pledges receivable 2,897,321 - - 2,897,321 2,897,321 Total assets at fair value 4,101,466$ 1,204,145$ -$ 2,897,321$ 4,101,466$ June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -34- NOTE 5.FAIR VALUE MEASUREMENTS (CONTINUED) The following table sets forth by level, within the fair value hierarchy, HRDC’s liabilities measure at fair value on a reoccurring basis as of June 30, 2020: Fair Value Level 1 Level 2 Level 3 Total Charitable gift annuity obligations 12,176$ -$ -$ 12,176$ 12,176$ The following tables present by level, within the fair value hierarchy, HRDCs’investment assets at fair value, as of June 30, 2019. Fair Value Level 1 Level 2 Level 3 Total Cash held for investment $ 9,483 $ 9,483 $ - $ - $ 9,483 Certificates of deposit 155,673 155,673 - - 155,673 Equity securities: Mutual funds 1,164,267 1,164,267 - - 1,164,267 Total investments at fair value 1,329,423 1,329,423 - - 1,329,423 Pledges receivable 585,720 - - 585,720 585,720 Total assets at fair value 1,915,143$ 1,329,423$ -$ 585,720$ 1,915,143$ June 30, 2019 The following table sets forth by level, within the fair value hierarchy, HRDC’s liabilities measure at fair value on a reoccurring basis as of June 30, 2019: Fair Value Level 1 Level 2 Level 3 Total Charitable gift annuity obligations 11,204$ -$ -$ 11,204$ 11,204$ Changes in level 3 assets and liabilities for the years ended June 30, 2020 and 2019, are as follows: Pledges Charitable receivable gift annuities Balance, July 1, 2018 $ - $ 3,882 Additions 900,000 7,322 Payments (300,000) - Changes in discount (14,280) - Balance, June 30, 2019 585,720 11,204 Additions 2,728,050 972 Payments (321,230) - Changes in discount (95,219) - Balance, June 30, 2020 2,897,321$ 12,176$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -35- NOTE 6.PROPERTY AND EQUIPMENT Equipment purchased with grant funds is subject to rights of rescission of the grantors. Equipment purchased with grant monies is limited to use by the grant program that purchases the equipment. Should the program terminate, grantors may invoke claim to that equipment purchased through the grant agreement terms. Property and equipment consisted of the following at June 30,2020 and 2019: 2020 2019 Furniture and equipment 777,332$ 777,332$ Vehicles 4,789,454 4,789,454 Land and improvements 11,248,596 8,717,952 Buildings 17,527,638 13,781,808 Less accumulated depreciation (11,083,323) (10,088,691) Total land, buildings, equipment and vehicles 23,259,697 17,977,855 Software 139,440 139,440 Less accumulated depreciation (139,440) (139,440) Total software - - Construction in progress 8,833,410 5,952,897 Total property and equipment 32,093,107$ 23,930,752$ Presented on the statement of financial position as: Construction in progress 7,524,701$ 4,875,658$ Construction in progress, federal contraints 1,308,709 1,077,239 Property and equipment, net, federal constraints 8,929,031 9,644,261 Property and equipment, net 14,330,666 8,333,594 Total 32,093,107$ 23,930,752$ NOTE 7.UNEARNED REVENUE Unearned revenue consists of cash received from grantors that was not earned as of June 30, 2020 and 2019. The activity in the unearned revenue account is as follows: 2020 2019 Unearned revenue, beginning of year 2,830,925$ 1,324,837$ Grant awards received 6,660,397 7,708,799 Grant expenditures (6,440,597) (6,202,711) Gross unearned revenue, end of year 3,050,725 2,830,925 Less amount not received in cash (3,003,008) (2,825,897) Net unearned revenue 47,717$ 5,028$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -36- NOTE 8.NOTES PAYABLE HRDC’s notes payable at June 30, 2020 and 2019 are as follows: Original Loan 2020 Balance 2019 Balance Amount Outstanding Outstanding Big Sky Western Bank 660,578$ 361,339$ 372,723$ Original loan date November 18, 1996 Refinanced April 29, 2010 Modified May 30, 2013 Maturity date May 5, 2040 Monthly payment 2,233$ Interest rate 4.21% Terms Resets every 7 years to 3.00% above the Federal Home Loan Bank Bullet Rate (1.21% at June 30, 2020 and 2019). Collateral First lien on the West Babcock Apartments and guaranteed by HRDC. City of Bozeman Community Affordable Housing 150,000$ 32,916$ 37,916$ Loan date January 1, 1997 Maturity date January 1, 2027 Monthly payment 417$ Interest rate 0.00% Collateral Second lien on the West Babcock Apartments. U.S. Department of Agriculture - Rural Development 116,415$ 81,744$ 84,340$ Loan date October 6, 1999 Maturity date October 3, 2039 Monthly payment 543$ Interest rate 4.75% Collateral Revenue from the Livingston Child Care Center. U.S. Department of Agriculture - Rural Development 30,000$ 21,043$ 21,686$ Loan date October 6, 1999 Maturity date October 6, 2039 Monthly payment 140$ Interest rate 4.75% Collateral Revenue from the Livingston Child Care Center. U.S. Department of Agriculture - Rural Development 450,000$ 338,802$ 347,618$ Loan date February 1, 2002 Maturity date February 1, 2042 Monthly payment 2,097$ Interest rate 4.75% Collateral HRDC Central Office building and land. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -37- NOTE 8.NOTES PAYABLE (CONTINUED) Original Loan 2020 Balance 2019 Balance Amount Outstanding Outstanding First Interstate Bank 152,800$ 58,653$ 65,938$ Original loan date December 28, 1999 Refinanced June 19, 2003 Maturity date May 1, 2028 Monthly payment 893$ Interest rate 3.75% Terms Resets every 5 years to .50% above the Wall Street Journal Prime Rate (3.25% and 5.50% at June 30, 2020 and 2019, respectively) Collateral First lien on the Gallatin Valley Food Bank building and land. Stockman Bank of Montana 252,287$ 188,365$ 198,628$ Loan date April 17, 2013 Maturity date May 17, 2033 Monthly payment 1,633$ Interest rate 4.80% Terms Resets every 10 years to 4.00% above the 5-year U.S. Treasury Constant Maturity Index (.29% and 1.79% at June 30, 2020 and 2019, respectively) Collateral First lien on the HRDC Annex building Big Sky Western Bank 275,000$ 138,081$ 144,583$ Loan date May 22, 2014 Maturity date May 20, 2034 Monthly payment 1,709$ Interest rate 4.29% Terms Resets every 5 years to 3.00% above the Federal Home Loan Bank Bullet Rate (1.21% at June 30, 2020 and 2019, respectively) with a floor of 4.29% Collateral First lien on the Fork & Spoon Homestyle Kitchen building, land, and all equipment, furniture, and fixtures. U.S. Department of Housing and Urban Development 438,100$ 438,100$ 438,100$ Loan date September 30, 2006 Maturity date January 1, 2037 Monthly payment Interest rate 0.00% Collateral Summit Apartments. The loan terms call for no payments with the loan balance forgiven at maturity if all compliance requirements are met. If default occurs, interest is 7% and the loan is due and payable without notice. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -38- NOTE 8.NOTES PAYABLE (CONTINUED) Original Loan 2020 Balance 2019 Balance Amount Outstanding Outstanding Community First Fund of Montana 92,500$ 83,487$ 85,511$ Loan date August 24, 2015 Maturity date September 1, 2045 Monthly payment 415$ Interest rate 3.50% Collateral First lien on the Youth Transitional Home building. Big Sky Western Bank 540,000$ 507,559$ 524,909$ Loan date July 14, 2017 Maturity date July 14, 2038 Monthly payment 3,499$ Interest rate 4.78% Terms Resets every 5 years to 2.50% above the Federal Home Loan Bank 5-year long-term fixed rate (.78% and 2.16% at June 30, 2020 and 2019, respectively) with a minimum rate of 4.78% Collateral First lien on the Belgrade Child Care Center building and land Big Sky Western Bank 1,342,500$ 1,265,237$ 1,312,803$ Loan date October 23, 2017 Maturity date October 23, 2037 Monthly payment 8,978$ Interest rate 4.60% Terms Resets every 5 years to 2.50% above the Federal Home Loan Bank 5-year long-term fixed rate (.78% and 2.16% at June 30, 2020 and 2019, respectively) with a minimum rate of 4.60% Collateral First lien on the Cottages at Menicucci Square buildings and land First Security Bank 4,971,317$ 699,607$ 3,914,321$ Loan date December 20, 2018 Modified August 21, 2020 Maturity date June 18, 2040 Interest rate 5.25% Terms Note is a construction loan with multiple draws, up to a maxmium of $5,239,537. Due in monthly installments beginning September 18, 2021 of $4,881. Collateral Deed of trust on 18 condominiums and land for the Meadowview Development in Big Sky, MT. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -39- NOTE 8.NOTES PAYABLE (CONTINUED) Original Loan 2020 Balance 2019 Balance Amount Outstanding Outstanding First Security Bank 2,656,362$ 2,656,362$ -$ Loan date September 23, 2019 Modified August 21, 2020 Maturity date March 23, 2041 Interest rate 5.00% Terms Note is a construction loan with multiple draws, up to a maxmium of $6,221,027. Due in monthly installments beginning September 23, 2021 of $42,660. Collateral Deed of trust on 52 condominiums and land for the Meadowview Development in Big Sky, MT. First Security Bank 1,125,000$ 1,125,000$ 1,125,000$ Loan date July 6, 2018 Maturity date July 6, 2020 Monthly payment 4,922$ Interest rate 5.25% Terms Principal due upon maturity. Monthly interest payments beginning August 6, 2018 until maturity. Collateral Deed of trust dated July 6, 2018, on to a trustee in favor of Lender on 5.73 acres of land located in Bozeman, MT. Private Loan 890,100$ 890,100$ 375,000$ Loan date October 2, 2018 Maturity date October 2, 2022 Monthly payment 1,484$ Interest rate 2.00% Terms Note agrees to loan up to $1,000,000. Principal due upon maturity. Monthly interest only payment. Collateral Deed of trust to a trustee in favor of Lender on real property located in Gallatin County, MT. US Department of Housing and Urban 388,532$ 293,050$ 316,011$ Development, Mortgage Restructuring Loan Loan date May 12, 1999 Maturity date July 1, 2029 Interest rate 1.00% Terms Payments dependent on remaining cash from operations Collateral Secured by second lien on Miles Building Apartments DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -40- NOTE 8.NOTES PAYABLE (CONTINUED) Original Loan 2020 Balance 2019 Balance Amount Outstanding Outstanding Montana Board of Housing 550,000$ 274,661$ 297,018$ Loan date May 6, 1999 Maturity date June 1, 2029 Monthly payment 3,298$ Interest rate 6.00% Collateral Secured by first lien on Miles Building Apartments Local Initiatives Support Corporation 20,000$ -$ 20,000$ Original loan date October 1, 2018 Maturity date September 30, 2019 Interest rate 0.00% Terms Principal due upon maturity Collateral Secured by Housing First Village Recoverable Grant First Security Bank 3,111,200$ 1,892,640$ -$ Loan date May 28, 2019 Maturity date November 28, 2020 Interest rate 5.34% Terms Note is a construction loan up to a maxium of $3,111,200. Principal and accrued interest due upon maturity Collateral Secured by Willow Springs property First Security Bank 2,498,492$ 6,433$ -$ Loan date May 14, 2020 Maturity date November 14, 2021 Interest rate 4.59% Terms Note is a construction loan up to a maxium of $2,498,492. Principal and accrued interest due upon maturity Collateral Secured by Willow Springs property First Security Bank 423,750$ 416,527$ -$ Loan date August 23, 2019 Maturity date August 23, 2044 Monthly payment 2,477$ Interest rate 5.00% Terms Resets every 5 years to 2.75% above the Federal Home Loan Bank 5-year long-term fixed rate (currently at 0.78%) with a minimum rate of 5.00% Collateral Deed of trust dated August 23, 2019 on property located at 214 & 216 N. 15th Ave located in Bozeman, MT. First Security Bank 407,000$ 407,000$ -$ Loan date April 16, 2020 Maturity date April 16, 2022 Interest rate 1.00% Terms Due in monthly installments beginning September 16, 2021 of $22,904; Loan is a payroll protection program (PPP) loan, subject to forgiveness upon meeting certain criteria. Collateral Loan is unsecured DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -41- NOTE 8.NOTES PAYABLE (CONTINUED) Original Loan 2020 Balance 2019 Balance Amount Outstanding Outstanding First Security Bank 585,000$ 585,000$ -$ Loan date June 26, 2020 Maturity date June 26, 2022 Interest rate 4.59% Terms Principal and accrued interest due upon maturity American Bank 751,195$ 751,195$ -$ Loan date December 30, 2019 Maturity date December 31, 2020 Interest rate 4.75% Terms Note is a construction loan up to a maxium of $950,000. Principal and accrued interest due upon maturity Collateral Secured by Livingston Housing Development property Private Loan 1,471,512$ 1,471,512$ -$ Loan date August 30, 2019 Maturity date August 30, 3022 Interest rate 2.00% Terms Monthly interest only payments. Principal and accrued interest due upon maturity Private Loan 3,000,000$ 3,000,000$ -$ Loan date August 31, 2019 Maturity date August 31, 2024 Interest rate 6.00% Terms Monthly interest only payments. Principal and accrued interest due upon maturity Total notes payable 17,984,413$ 9,682,105$ Annual maturities for the fiscal years ending June 30 are as follows: 2021 7,282,989$ 2022 1,164,365 2023 2,535,686 2024 182,617 2025 3,190,978 Thereafter 3,627,778 17,984,413$ On April 16, 2020, HRDC received loan proceeds in the amount of $407,000 under the Paycheck Protection Program (PPP). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), provides for loans to qualifying organizations for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -42- NOTE 8.NOTES PAYABLE (CONTINUED) The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the covered period. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first ten months following the end of the covered period. While HRDC currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan,it is possible HRDC may be ineligible for forgiveness of the loan in whole or in part. In addition, HRDC uses corporate unrestricted funds received from donations and other sources to finance housing programs and social programs through intercompany loans. The loans bear interest at rates of 0 to 8 percent and carry terms of various lengths. A summary of these intercompany loans from HRDC funds is as follows: Original Loan 2020 Balance 2019 Balance Amount Outstanding Outstanding Sherwood Inn Apartments, Inc. loan - Corporate funds 444,269$ 223,853$ 238,678$ Loan date February 1, 2004 Maturity date February 1, 2034 Annual payment 17,215$ Interest rate 1.00% Collateral Sherwood Inn Apartments Sherwood Inn Apartments, Inc. loan - Corporate funds 142,642$ 79,542$ 88,817$ Loan date August 30, 2012 Maturity date September 1, 2027 Annual payment 1,055$ Interest rate 4.00% Collateral Sherwood Inn Apartments Sherwood Inn Apartments, Inc. loan - Smyth funds 250,000$ 139,406$ 155,665$ Loan date August 30, 2012 Maturity date September 1, 2027 Annual payment 1,849$ Interest rate 4.00% Collateral Sherwood Inn Apartments 200,000$ 167,138$ 172,391$ Loan date April 29, 2013 Maturity date May 5, 2040 Annual payment 1,034$ Interest rate 4.21% Collateral West Babcock Apartments Home Corporation (West Babcock Apartments) - Smyth funds DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -43- NOTE 8.NOTES PAYABLE (CONTINUED) Original Loan 2020 Balance 2019 Balance Amount Outstanding Outstanding Miles LP - Miles Building, Inc. CDBG Loan 500,000$ 500,000$ 500,000$ Original date of loan July 1, 2002 Loan acquired in acquisition January 1, 2019 Maturity date July 1, 2042 Annual payment Loan deferred until available cash flow and reserves are funded Interest rate 5.70% Collateral Secured by revenues of Miles Limited Partnership Miles LP - Miles Building, Inc. Equity Loan 259,947$ 251,729$ 257,198$ Original date of loan December 4, 2001 Loan acquired in acquisition January 1, 2019 Maturity date December 4, 2041 Annual payment Loan deferred until available cash flow and reserves are funded Interest rate 1.00% Collateral Secured by revenues of Miles Limited Partnership Miles LP - Miles Building, Inc. Reserves Loan N/A 63,920$ 63,920$ Original date of loan March 31, 2013 Loan acquired in acquisition January 1, 2019 Maturity date Not Specified Annual payment Loan deferred until available cash flow and reserves are funded Interest rate 0.00% Collateral Secured by revenues of Miles Limited Partnership Total long-term intercompany notes payable 1,425,588$ 1,476,669$ There are no intercompany loans due within the next five years. Other temporary intercompany loans provided from HRDC funds are as follows: 2020 2019 Other temporary intercompany loans Miles Building, Inc. 0%151,713$ 151,713$ Koch Home 8%18,952 21,401 HRDC Annex Building 0%145,355 145,355 Fork & Spoon Building 0%100,208 100,208 Belgrade Head Start Center 0%317,638 317,638 Cottages at Menicucci Square 0%519,147 519,147 Boulevard Apartments 0%34,703 - Total temporary intercompany loans 1,287,716$ 1,255,462$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -44- NOTE 9.LEASES HRDC classifies its leases as either operating or capitalized leases. Currently all leases are operating leases. Office space in Livingston,Montana is leased for $500 per month to effectively serve the Livingston community with HRDC programs and services. The lease renews on an annual basis. HRDC also began leasing a networked copier/printer system for $1,573 per month under a 5 year term beginning March 2012. This lease has been renewed on a month to month basis. HRDC entered into a lease agreement for parking space for the Fork & Spoon in October 2015 continuing through September 2021. Rent was $1,000 per month and increased to $1,100 per month in October 2018. HRDC entered into a lease agreement in January 2018 for facilities used by the Big Sky Food Bank that expires December 31, 2020. Rent under the agreement is $1,500 per month for the first year; $1,550 per month for the second year; and $1,600 for the third year. HRDC entered into a month-to-month lease agreement in September 2015 for lot rental for the Youth Transitional Home. Rent was $335 per month and increased to $350 per month in November 2015 and remains at this amount. HRDC entered into a lease agreement in January 2017 to store manufactured housing units in Belgrade for $30 per unit per month. HRDC entered into a lease agreement in April 2017 to lease land in Three Forks for 20 years for $100 per month. HRDC entered into a month-to-month lease agreement in October 2018 for office space in Helena for $250 per month. HRDC entered into a month-to-month lease agreement in November 2018 for office space in Big Sky for $550 per month. HRDC entered into a month-to-month lease agreement in November 2018 for seven additional offsite parking spaces for $350 per month through November 2019. This lease has been renewed on a month to month basis. HRDC entered into a lease agreement in January 2019 for office space that expires December 31, 2019 for $1,300 per month. This lease has been renewed through December 2021 for $1,313 per month. HRDC entered into a lease agreement in February 2019 for office space that expires September 30, 2021 for $2,200 per month. Rent will be adjusted annually with the consumer price index rate. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -45- NOTE 9.LEASES (CONTINUED) HRDC entered into a lease agreement in December 2019 for a warming center in Bozeman that expires December 2024 for $10,000 per month. Rent expense totaled $180,732 and $100,412 for 2020 and 2019, respectively. Future minimum payments due under lease agreements is as follows: Year ending June 30, 2021 189,756$ 2022 146,286 2023 132,324 2024 68,730 2025 1,200 Thereafter 17,000 555,296$ NOTE 10.EMPLOYEE BENEFITS HRDC employees may participate in a Code Section 401(k) Retirement Plan. 401(k) Retirement Plan Employees are eligible to make elective deferrals upon meeting the plans hour and service requirements and can contribute up to the maximum amount allowed by law. Employees meeting the plan’s hour and service requirements are eligible for employer matching contributions. HRDC matches employee contributions up to 7% of the employee’s salary. Employer matching contributions vest as follows: Years of Service Non-forfeitable Less than 1 year 0% One year 33% Two years 67% Three years 100% For the years ended June 30, 2020 and 2019, HRDC contributed $184,030 and $169,930 in matching contributions to the 401(k) Retirement Plan. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -46- NOTE 10.EMPLOYEE BENEFITS (CONTINUED) Health Insurance HRDC participates in a Group Health Benefit Plan (Health Plan) which provides eligible employees and their dependents with medical insurance. Employees can choose between a traditional plan where the Health Plan has a $2,500 deductible provision whereby the first $2,500 of medical expense annually is paid by the employee or a high deductible plan with $3,500 deductible. Any cost in excess of the deductible is covered through an insurance policy from an insurance provider. HRDC paid $470,242 and $422,165 for insurance premiums for the years ended June 30, 2020 and 2019, respectively. The employee maximum annual responsibility for the traditional plan and high deductible plan is $4,500 for single coverage and $9,000 for family coverage, respectively. NOTE 11.LAND TRUSTS Bozeman, Montana HRDC created the West Babcock Land Trust in Bozeman, Montana in 1994 upon which twenty-three homes have been constructed and sold to income eligible individuals (including three homes constructed by Habitat for Humanity). The purpose of the Land Trust is to provide housing that is permanently affordable to low and moderate income levels, while creating home ownership opportunities. HRDC is able to stimulate the availability of long-term affordable housing through the use of long-term Ground Leases. HRDC retains title to the Land, and shares in the equity of the home with eligible individuals who purchase the homes for a price based upon their ability to pay. The total equity is determined by independent appraisals. A summary of sales prices and equity percentages are as follows: 2020 %2019 % Appraised value of homes at the time of purchase (excluding land)2,450,300$ 100.0%2,300,300$ 100.0% Sales price to individuals 2,077,425 84.8%1,927,425 83.8% Balance of equity to HRDC 372,875$ 15.2%372,875$ 16.2% When the individuals sell their homes, they must sell either to HRDC or to other income eligible individuals. Proceeds from a sale are allocated between the individual and HRDC in the relative proportion of equity at the time of purchase in accordance with the Ground Lease Agreement. Each homeowner has signed a 99-year renewable Ground Lease which is paid in semiannual installments of $180. Lease payments billed during the years ending June 30, 2020 and 2019 totaled $8,280 per year. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -47- NOTE 11.LAND TRUSTS (CONTINUED) Bozeman, Montana (Continued) HRDC has agreed to act as a guarantor on two individual Deeds of Trust with local lenders with a combined original mortgage amount of $95,600 as of June 30, 2020 and 2019. HRDC serves as a guarantor in order to secure financing for purchasers of these affordable homes. HRDC’s guarantee is secured by land held in the Land Trust. HRDC created the Willow Springs Land Trust in Bozeman, Montana in 2019-2020, upon which up to twenty-four townhomes may be constructed and sold to income eligible individuals. The construction of the townhomes was facilitated by program revenue from a previous Neighborhood Stabilization Program grant from the U.S. Department of Housing and Urban Development (HUD) through the Montana Department of Commerce. Twelve townhome units were completed in Phase 1, and nine townhomes sales to individuals had been finalized as of June 30, 2020. A summary of sales prices and equity percentages for the homes sold are as follows: 2020 %2019 % Appraised value of homes at the time of purchase (excluding land)2,137,500$ 100.0%-$ 100.0% Sales price to individuals 2,062,500 96.5%- 100.0% Balance of equity to HRDC 75,000$ 3.5%-$ 100.0% Livingston, Montana HRDC created a Land Trust in Livingston, Montana in 1998, upon which up to twenty-two homes may be constructed and sold to income eligible individuals. The construction of the homes was facilitated by a HOME grant from the U.S. Department of Housing and Urban Development (HUD) through the Montana Department of Commerce. Eighteen homes were completed and sales to individuals were finalized. During fiscal year 1997, land valued at $90,000 was donated to HRDC for the Livingston Land Trust. A summary of sales prices and equity percentages for the homes sold are as follows: 2020 %2019 % Appraised value of homes at the time of purchase (excluding land)913,500$ 100.0%913,500$ 100.0% Sales price to individuals 837,522 91.7%837,522 91.7% Balance of equity to HRDC 75,978$ 8.3%75,978$ 8.3% Each homeowner has signed a 99-year renewable Ground Lease which includes provisions required for use with homeowner mortgages insured by HUD/Federal Housing Authority. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -48- NOTE 11.LAND TRUSTS (CONTINUED) Big Sky, Montana HRDC created the Meadowview Land Trust in Big Sky, Montana in 2019-2020, upon which up to fifty-two condominium homes may be constructed and sold to income eligible individuals. The construction of the condominium units was facilitated by grant funding from the Big Sky Resort Area District. Eighteen condominium units were completed in Phase 1, and sales to individuals were finalized during the year ending June 30, 2020. A summary of sales prices and equity percentages for the homes sold are as follows: 2020 %2019 % Appraised value of homes at the time of purchase (excluding land)4,756,600$ 100.0%-$ 100.0% Sales price to individuals 4,071,634 85.6%- 100.0% Balance of equity to HRDC 684,966$ 14.4%-$ 100.0% NOTE 12.RISK MANAGEMENT HRDC faces a number of risks including (1) loss or damage to property, (2) general liability, and (3) employee medical insurance. Commercial insurance policies are purchased for loss or damage to property, general liability, and employee medical insurance to manage these risks. NOTE 13.PLANNED GIFT LIABILITIES The liability of each type of planned gift changes each year with receipts of new gifts, payments under contracts, change in trust asset values, and the change in present value of required payments to beneficiaries. The present value of the future payments over the beneficiaries’ estimated remaining lives was calculated using the original discount rates at the date of the gift and applicable mortality tables. The discount rate used in the calculation was 2.6%. The following table summarizes the change to planned gift liabilities for the year ended June 30, 2020 and 2019: Estimated present value of liability at July 1, 2018 3,882$ Increase in estimated present value of liability from contributions 7,322 Estimated present value of liability at July 1, 2019 11,204 Increase in estimated present value of liability from contributions 972 Estimated present value of liability at June 30, 2020 12,176$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -49- NOTE 13.PLANNED GIFT LIABILITIES (CONTINUED) HRDC is subject to certain provisions of the Montana Code Annotated which specify that a charitable organization may only issue a “qualified charitable gift annuity” if it meets the following statutory requirements on the date of the annuity agreement: Has a minimum of $300,000 net assets or has a minimum of $100,000 in unrestricted cash, cash equivalents, or publicly traded securities, exclusive of the assets funding the annuity agreement; Has been in continuous operation for at least three years or is a successor or affiliate of a charitable organization that has been in continuous operation for at least three years; and Maintains a separate annuity fund with at least one-half the value of the initial amount transferred for outstanding annuities. If the charitable organization cannot meet the requirements, the issuance of a qualified charitable gift annuity by a charitable organization must be commercially insured by a licensed insurance company that is qualified to do business in Montana. For the year ended June 30, 2020, HRDC met the requirements to issue qualified charitable gift annuities. NOTE 14.ENDOWMENT NET ASSETS HRDC maintains endowments within its permanently restricted net assets established for the greatest needs of HRDC. Contributions to the endowment funds are subject to donor restrictions that stipulate the original principal of the gift is to be held and invested by the HRDC indefinitely, and income from the fund is to be expended for the greatest needs of the HRDC. As required by GAAP, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Interpretation of Relevant Law HRDC has interpreted the Montana Uniform Prudent Management of Institutional Funds Act (MUPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result, HRDC classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, and (b) the original value of subsequent gifts to the permanent endowment. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the HRDC in a manner consistent with the standard of prudence prescribed by MUPMIFA. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -50- NOTE 14.ENDOWMENT NET ASSETS (CONTINUED) In accordance with MUPMIFA, HRDC considers the following factors when making a determination to appropriate or accumulate donor-restricted endowment funds. The duration and preservation of the fund The purpose of HRDC and the donor-restricted endowment fund General economic conditions The possible effect of inflation and deflation The expected total return from income and the appreciation of investments Other resources of HRDC The investment policies of HRDC Funds with Deficiencies From time to time, the fair value of assets associated with the endowment funds may fall below the level that the donor or MUPMIFA requires HRDC to retain as a fund of perpetual duration. In accordance with generally accepted accounting principles, deficiencies of this nature are reported in unrestricted net assets. These deficiencies result from unfavorable market fluctuations that occur during the investment of contributions and continued appropriation, if any, for certain programs that are deemed prudent by the Board of Directors. There were no such deficiencies as of June 30, 2020 and 2019. Return Objectives and Risk Parameters HRDC has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor- restricted funds that the organization must hold in perpetuity or for a donor-specified period as well as board-designated funds. Under this policy, endowment assets are invested in a manner that is intended to produce results that exceed the market rate while assuming a prudent level of investment risk. The HRDC targets an asset allocation of fixed income and cash equivalents until the balances in the endowment are great enough for investment. Spending Policy and How the Investment Objectives Relate to Spending Policy HRDC’s spending policy allows an annual distribution not to exceed the average net earnings, growth, and income. Any portion of the annual distribution funds not distributed in any given year will be retained in the endowment fund for expenditure in future years. The HRDC expects its spending policy to allow the endowment to grow and to maintain the purchasing power of the endowment assets. No funds were distributed in 2020 and 2019. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -51- NOTE 14.ENDOWMENT NET ASSETS (CONTINUED) Endowment net asset composition by type of fund as of June 30, 2020 and 2019 are as follows: Without Donor With Donor Restrictions Restrictions Total 2020 Donor-restricted endowment funds -$ 163,812$ 163,812$ Board designated endowment funds 5,542 - 5,542 5,542$ 163,812$ 169,354$ 2019 Donor-restricted endowment funds -$ 154,603$ 154,603$ Board designated endowment funds 5,542 - 5,542 5,542$ 154,603$ 160,145$ Changes in HRDC General Endowment net assets for the years ended June 30, 2020 and 2019 are as follows: Without Donor With Donor Restrictions Restrictions Total Endowment net assets, July 1, 2018 5,542$ 54,231$ 59,773$ Contributions and transfers - 100,372 100,372 Endowment net assets, June 30, 2019 5,542 154,603 160,145 Contributions and transfers - 9,209 9,209 Endowment net assets, June 30, 2020 5,542$ 163,812$ 169,354$ NOTE 15.RELATED PARTIES HRDC is the non-profit general partner of the Bridger Peaks Village Associates, LP, Darlinton Apartments, LP, and Stoneridge Apartments, LP. HRDC entered into these limited partnership agreements to facilitate the construction and operation of low-income housing partially financed by the sale of low-income housing tax credits. HRDC has a 0.01 percent ownership interest in the Bridger Peaks Village Associates, LP, Darlinton Apartments, LP, and Stoneridge Apartments, LP. HRDC is not considered to have any liability nor asset relating to its interests in the Bridger Peaks Village Associates, LP, Darlinton Apartments, LP, or Stoneridge Apartments, LP. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -52- NOTE 15.RELATED PARTIES (CONTINUED) In August 2011, HRDC’s Board of Directors approved the divestiture of HRDC’s Community First Fund program to the Community First Fund of Montana, a separate 501(c)(4) not-for-profit corporation. The Chief Executive Officer and the past Chief Executive Officer of HRDC make up two of three board members of the Community First Fund of Montana. HRDC’s Community First Fund program was founded in 1999 through support from the Willow Springs Foundation. The program was created out of previous HRDC community development initiatives with a goal of generating funds that were available for projects with fewer restrictions than State and Federal funding sources. HRDC’s Community First Fund was designed to encourage growth and positive elements within the region through enhanced job creation, business promotion, construction of affordable housing, and establishing enduring physical and social institutions. Effective June 1, 2019, HRDC purchased a condominium from a board member in the amount of $264,000. The purpose of purchasing this property is to implement a deed restriction on the property in perpetuity requiring that future buyers meet certain affordable housing qualifications, thus increasing Bozeman’s supply of owner-occupied affordable housing units. The condominium unit was sold to a qualifying third party on September 10, 2019 for $230,000, after implementing the affordable deed restriction, which also reduced its appraised fair market value at sale. NOTE 16.CONCENTRATION OF RISK HRDC has invested in apartment complex buildings and equipment with a cost basis of $14,261,873 and net book value of $9,745,715 as of June 30, 2020, representing a concentration in the real estate rental market. Additionally, the low-income housing sector operates in a heavily regulated environment which is subject to the directives, rules, and regulations of federal, state, and local regulatory agencies, which could change with little notice. For the year ended June 30, 2020, revenues generated from rental operations were $1,692,370 or six percent of the HRDC’s total revenues. Corresponding debt service payments made to third parties were $109,264 for the year with total outstanding debts related to the apartment units of $7,136,816 or thirty-two percent of HRDC’s total liabilities. If there was a change in the demand for rental housing in the area, or change in federal, state, or local regulations, it could adversely affect the operations of HRDC. HRDC receives a significant portion of its revenue from grants from government agencies; thus, the HRDC is subject to possible cutbacks due to changes in funding priorities. During the years ended June 30, 2020 and 2019, HRDC received approximately 24% and 37%, respectively, of its gross public support from such grants. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -53- NOTE 17.RISKS AND UNCERTAINTIES The COVID-19 outbreak in the United States has caused business disruption to HRDC. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration of the financial impact of the disruption. At this time, HRDC cannot reasonably estimate the financial impact of COVID-19 on its overall operations. NOTE 18.SUBSEQUENT EVENTS On July 10, 2020, HRDC purchased the Rodeway Inn in Bozeman, a hotel property with 42 rooms, for the primary purpose of providing temporary shelter for community members under short-term COVID-19 quarantine and isolation restrictions. The purchase price was $1,950,000, financed by two loans. HRDC entered into a new loan agreement with Yellowstone Bank to borrow $1,462,500 at an initial interest rate of 4.03% variable, with monthly principal and interest payments of $10,820 per month for 15 years and a maturity date of July 10, 2035. The loan is secured by the hotel land, improvements and rental revenue. HRDC also borrowed $473,315 from a private lender, evidenced by a new loan agreement dated July 9, 2020. The loan terms include an interest rate of 2.00% fixed, with monthly interest only payments averaging $789 per month for three years, followed by a balloon payment of all outstanding principal and accrued interest due on the maturity date of July 9, 2023. This bridge loan is secured by a second position lien on the hotel land and improvements. Effective July 28, 2020, HRDC and its wholly owned subsidiaries, Darlinton Apartments, Inc. and Darlinton 2020, LLC, acquired 100% of the existing partners’ ownership interests in the Darlinton Manor HP/HRDC Limited Partnership, owner of the Darlinton Manor Apartments. HRDC had previously exercised its Right of First Refusal to purchase the Darlinton Manor Apartments, a multifamily affordable housing property consisting of 100 subsidized rental units in Bozeman. Under the Purchase Option and Right of First Refusal Agreement dated October 29, 1999, as amended by the Interests Purchase Agreement (Conversion to Partnership Interests) dated July 23, 2020, the purchase price was stipulated as the amount of outstanding debt plus exit taxes plus net current assets as of the purchase closing date. Based on this, the purchase price was $1,989,817, consisting of the outstanding debt balances of two loans owed to the Montana Board of Housing (MBOH) and HUD in the amounts of $1,747,742 and $41,274 respectively, plus exit taxes of $129,382, plus net current assets of $71,419. The Darlinton Manor Apartments continued to be owned by the Darlinton Manor HP/HRDC Limited Partnership after HRDC’s acquisition of the controlling ownership interest. In September 2020, construction of HRDC’s affordable rental housing development project in Livingston was substantially completed, including infrastructure and placement of 12 manufactured housing units purchased in July 2016 on previously undeveloped lots in HRDC’s Livingston Community Land Trust. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -54- NOTE 18.SUBSEQUENT EVENTS (CONTINUED) Total development cost was $1,283,741, consisting of $423,706 for the 12 manufactured housing units and $860,035 of additional construction costs including the cost of landscaping completed in March 2021. To provide permanent financing for the Livingston development, on September 29, 2020, HRDC entered into a new loan agreement with the Montana Board of Housing (MBOH) to borrow $900,000 at an initial interest rate of 3.56%, with monthly principal and interest payments of $4,072 per month for 30 years and a maturity date of October 1, 2050. The loan is secured by the land and improvements. In addition, HRDC borrowed $200,000 from Montana Homeownership Network, Inc., dba NeighborWorks Montana, evidenced by a new loan agreement dated October 1, 2020. The loan terms include an initial interest rate of 4.00%, with monthly principal and interest payments of $955 per month for 30 years and a maturity date of October 1, 2050. This loan is secured by a second position lien on the land and improvements. HRDC’s construction loan of $950,000 previously received from American Bank for the Livingston development was paid off with the new mortgage loan proceeds. On October 30, 2020, HRDC purchased property in Gardiner, Montana consisting of a 4.6 acre land parcel with one residential structure for future development of affordable workforce housing units to serve the increasing needs of the Gardiner community. The purchase price was $875,000, financed by two loans. HRDC entered into a new loan agreement with First Security Bank, a Division of Glacier Bank, to borrow $656,250 at an initial interest rate of 4.19% variable, with monthly principal and interest payments of $3,534 per month for 10 years, followed by a balloon payment of all outstanding principal and accrued interest of approximately $475,193 due on the maturity date of November 1, 2030. The loan is secured by the land and improvements. HRDC also borrowed $220,000 from Montana Homeownership Network, Inc., dba NeighborWorks Montana, evidenced by a new loan agreement dated February 17, 2021. The loan terms include an interest rate of 6.50% fixed, with quarterly interest only payments averaging $3,575 per calendar quarter for two years, followed by a balloon payment of all outstanding principal and accrued interest due on the maturity date of February 28, 2023. This bridge loan is secured by a second position lien on the land and improvements. During July-December 2020, HRDC undertook a construction project to make significant leasehold improvements and alterations to a recently leased facility. The leasehold improvements were substantially completed in December 2020 at a cost of $834,186, and the new facility began serving the Warming Center program of HRDC. Effective January 21, 2021, HRDC conveyed a land parcel of 8.03 acres known as the Bridger View Redevelopment tract in Bozeman to the Headwaters Community Housing Trust by means of a Special Warranty Deed at no cost to the recipient. This land parcel had been previously conveyed by the Trust for Public Lands (TPL) to HRDC by donation on June 26, 2019, with an appraised fair market value of $1,600,000, for future development of workforce housing and mixed-income housing units. HRDC will in turn treat this conveyance transaction as a corresponding donation to the recipient. As the new owner, Headwaters Community Housing Trust has assumed responsibility for future housing development activities at the Bridger View Redevelopment tract. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -55- NOTE 18.SUBSEQUENT EVENTS (CONTINUED) Construction activity continued in progress on Phase 2 of HRDC’s Meadowview condominium development project, which will produce 34 additional new affordable workforce housing units in Big Sky. Total construction cost to date through March 2021 is $9,571,863, and corresponding construction loan draws total $6,919,996. As Phase 2 condominium units are completed, they are being sold to qualifying homebuyers who will live and work in Big Sky, with the sales proceeds applied toward repayment of the construction loan balance with First Security Bank, a Division of Glacier Bank. Construction activity has also continued to progress on Phase 2 of HRDC’s Willow Springs Planned Unit Development, which will produce 12 additional new affordable townhouse units in Bozeman. Total construction cost to date through March 2021 is $3,492,456, and corresponding construction loan draws total $2,498,492. As Phase 2 townhouse units are completed, they are being sold to qualifying homebuyers, with the sales proceeds applied toward repayment of the construction loan balance with First Security Bank, a Division of Glacier Bank. In addition, predevelopment and early construction activity has continued on future facilities of HRDC currently under development. In February 2021, construction commenced on the tiny house development known as Housing First Village on a land parcel purchased by HRDC in June 2020, with total development costs to date through March 2021 of $296,661. Predevelopment, design and engineering activities have also continued to progress on another land parcel previously acquired by HRDC for future expansion of facilities, with total development costs to date through March 2021 of $727,615. Effective March 1, 2021, HRDC and its affiliates sold four multifamily affordable rental housing properties located in Bozeman and Livingston to a newly formed limited partnership for the purpose of rehabilitating and preserving the combined 230 subsidized rental units as affordable housing, utilizing financing provided by federal Low Income Housing Tax Credit investors, tax- exempt bonds, new loans and other related sources. The four sold properties are: Boulevard Apartments, a 40-unit building in downtown Bozeman owned by HRDC; Darlinton Manor Apartments, a 100-unit building in Bozeman owned by the Darlinton Manor HP-HRDC Limited Partnership, whose partner-owners are Darlinton Apartments Inc. and Darlinton 2020 LLC, both wholly owned subsidiaries of HRDC; Miles Building Apartments, a 40-unit building in downtown Livingston owned by the Miles Limited Partnership, whose partner-owners are Miles Building Inc. and Miles 2017 LLC, both wholly owned subsidiaries of HRDC; and Sherwood Inn Apartments, a 50-unit building in downtown Livingston owned by Sherwood Inn Apartments Inc., a wholly owned subsidiary of HRDC. The new owner of these four properties as of March 1, 2021 is HRDC IX Affordable Housing Solutions LP (Limited Partnership). Its co-general partners are GHP BZLV Holdings LLC, an affiliate of Good Housing Partnership LLC (Administrative GP with an ownership interest of .0051%) and 4 Property LLC, a wholly owned subsidiary of HRDC newly formed for this purpose (Managing GP with .0049%). DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 and 2019 -56- NOTE 18.SUBSEQUENT EVENTS (CONTINUED) Its limited partner ownership interests (99.99%) are held by affiliates of CREA. Resource Property Management, an operating division of HRDC, serves as property manager for the four properties. The March 1, 2021 sales transaction and formation of the new limited partnership owner, HRDC IX Affordable Housing Solutions LP, was preceded by a Memorandum of Understanding between Good Housing Partnership LLC and HRDC and its affiliates executed on December 5, 2019, which outlined the intent and general framework of the arrangement. Management has evaluated events through June 16, 2021, the date on which the financial statements were available for issue. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E S U P P L E M E N T A L I N F O R M A T I O N DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. EXPLANATION OF SUPPLEMENTAL SCHEDULES June 30, 2020 and 2019 -57- NOTE 1.BUDGET COLUMN The grant award budget column is based upon the last formally approved budget provided by the grantor. In addition, the grantee is allowed to make certain budget transfers within prescribed limits. These latter transfers are not reflected. The intention of HRDC is to show the budget based upon the final budget including all transfers, to provide a more meaningful presentation to the reader. NOTE 2.EXPLANATION OF ACRONYMS Acronyms used in the grant number indicate the grantor agency. Acronyms used in the supplemental schedules follow: CDBG = Community Development Block Grant CSBG = Community Service Block Grant DOC = Montana Department of Commerce DOE = U.S. Department of Energy DOLI = Montana Department of Labor and Industry DOT = U.S. Department of Transportation DPHHS= Montana Department of Public Health and Human Services FEMA = Federal Emergency Management Agency FTA = Federal Transit Administration HHS = U.S. Department of Health and Human Services HUD = U.S. Department of Housing and Urban Development LIEAP = Low Income Energy Assistance Program MBOH = Montana Board of Housing MDT = Montana Department of Transportation RSVP = Retired Senior Volunteer Program TANF = Temporary Assistance to Needy Families WIA = Workforce Investment Act WX = Weatherization DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATING SCHEDULE OF FINANCIAL POSITION June 30, 2020 See Independent Auditor’s Report. -58- HRDC HRDC Colo. Apts. HRDC West Edge Cottages at Menicucci Square Home Corporation Miles Building, Inc.Miles, LP Darlinton Apts., Inc. Sherwood Inn Apts., Inc. Summit Apts., Inc Boulevard Apartments BSV Rural Partners, LLC Eliminations Consolidated Total ASSETS Cash and cash equivalents 2,226,277$ 43,081$ 15,886$ 20,940$ 60,223$ 221,419$ 73,844$ 20,421$ 79,102$ 14,112$ 46,135$ 32,493$ -$ 2,853,933$ Escrow and building reserve 1,022,249 21,900 - - 116,810 - 265,386 58,533 315,314 97,435 - - - 1,897,627 Receivables (Note 3) Grantors 2,045,186 - - - - - - - - - - - - 2,045,186 Accounts receivable, net 1,231,124 - - 10,701 88 515,774 (2,537) - 1,015 3,459 1,850 19,791 (610,329) 1,170,936 Pledges, net 2,897,321 - - - - - - - - - - - - 2,897,321 Prepaid expenses 188,428 347 121 808 1,006 - 5,059 - 2,768 283 1,656 - - 200,476 Investments (Note 4)1,204,145 - - - - - - - - - - - - 1,204,145 Inventory - supplies and food bank 321,827 - - - - - - - - - - - - 321,827 Inventory - condominiums, federal constraints 1,264,406 - - - - - - - - - - - - 1,264,406 Other assets - manufactured homes 494,323 - - - - - - - - - - - - 494,323 Deferred loans receivable, net (Note 3)3,475,294 - - - - 815,649 - - - - - 832,000 (2,131,152) 2,991,791 Investment in partnership 2,099,850 - - - - 312,083 - - - - - - (2,411,933) - Construction in progress (Note 6)7,524,701 - - - - - - - - - - - - 7,524,701 Construction in progress, federal constraints (Note 6)1,308,709 - - - - - - - - - - - - 1,308,709 Property and equipment, net, federal constraints (Note 6)5,665,982 - - - 530,907 - 1,796,854 - 662,928 272,360 - - - 8,929,031 Property and equipment, net (Note 6)8,038,519 21,006 - 1,801,117 - - 15,661 - - 2,252 4,452,111 - - 14,330,666 Total assets 41,008,341$ 86,334$ 16,007$ 1,833,566$ 709,034$ 1,864,925$ 2,154,267$ 78,954$ 1,061,127$ 389,901$ 4,501,752$ 884,284$ (5,153,414)$ 49,435,078$ LIABILITIES Accounts payable 1,666,390$ 1,661$ 215$ 56,359$ 14,492$ -$ 13,656$ 58,533$ 14,310$ 2,059$ 9,156 -$ (94,452)$ 1,742,379$ Accrued liabilities 371,338 - - - 881 - 2,600 - - - - - - 374,819 Accrued vacation, sick, and paid time off 271,123 - - - - - - - - - - - - 271,123 Accrued interest payable 10,163 - - 1,169 2,000 - 516,494 - 2,656 - - - (515,877) 16,605 Deposits payable 225,702 4,071 2,610 19,621 17,558 - 10,320 - 13,148 826 6,834 - - 300,690 Unearned revenue (Note 7)47,717 - - - - - - - - - - - - 47,717 Notes payable (Note 8)10,847,597 - - 1,784,384 561,394 151,713 1,383,361 - 442,801 438,100 4,506,215 - (2,131,152) 17,984,413 Total liabilities 13,440,030 5,732 2,825 1,861,533 596,325 151,713 1,926,431 58,533 472,915 440,985 4,522,205 - (2,741,481) 20,737,746 NET ASSETS Without donor restrictions Undesignated 14,406,882 80,602 13,182 (27,967) (418,198) 1,713,212 (1,569,018) 20,421 (74,716) (323,444) (20,453) 884,284 (2,411,933) 12,272,854 HRDC General Endowment fund 5,542 - - - - - - - - - - - - 5,542 Federal constrained inventory and capital assets 8,239,097 - - - 530,907 - 1,796,854 - 662,928 272,360 - - - 11,502,146 Total net assets without donor restrictions 22,651,521 80,602 13,182 (27,967) 112,709 1,713,212 227,836 20,421 588,212 (51,084) (20,453) 884,284 (2,411,933) 23,780,542 With donor restrictions Purpose or time restrictions 4,752,978 - - - - - - - - - - - - 4,752,978 Perpetual in nature (endowment)163,812 - - - - - - - - - - - - 163,812 Total net assets with donor restrictions 4,916,790 - - - - - - - - - - - - 4,916,790 Total net assets 27,568,311 80,602 13,182 (27,967) 112,709 1,713,212 227,836 20,421 588,212 (51,084) (20,453) 884,284 (2,411,933) 28,697,332 Total liabilities and net assets 41,008,341$ 86,334$ 16,007$ 1,833,566$ 709,034$ 1,864,925$ 2,154,267$ 78,954$ 1,061,127$ 389,901$ 4,501,752$ 884,284$ (5,153,414)$ 49,435,078$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATING SCHEDULE OF FINANCIAL POSITION June 30, 2019 See Independent Auditor’s Report. -59- HRDC HRDC Colo. Apts. HRDC West Edge Cottages at Menicucci Square Home Corporation Miles Building, Inc.Miles, LP Darlinton Apts., Inc. Sherwood Inn Apts., Inc. Summit Apts., Inc BSV Rural Partners, LLC Eliminations Consolidated Total ASSETS Cash and cash equivalents 1,724,347$ 29,187$ 11,122$ 20,459$ 38,766$ 197,004$ 54,589$ 15,945$ 27,142$ 12,457$ 291,482$ -$ 2,422,500$ Escrow and building reserve 10,000 17,000 - - 86,189 - 89,529 - 271,562 78,005 - - 552,285 Certificates of deposit - - - - - - 155,673 - - - - - 155,673 Receivables (Note 3) Grantors 920,989 - - - - - - - - - - - 920,989 Accounts receivable, net 723,831 - 4,592 3,880 293 491,727 1,901 - 2,011 3,570 15,631 (536,313) 711,123 Pledges, net 585,720 - - - - - - - - - - - 585,720 Prepaid expenses 50,360 321 - 804 964 - 519 - 4,049 281 - - 57,298 Investments (Note 4)1,173,750 - - - - - - - - - - - 1,173,750 Inventory - supplies and food bank 289,686 - - - - - - - - - - - 289,686 Inventory - condominiums, federal constraints 323,076 - - - - - - - - - - - 323,076 Inventory - condominiums 402,533 - - - - - - - - - - - 402,533 Other assets - manufactured homes 486,282 - - - - - - - - - - - 486,282 Deferred loans receivable, net (Note 3)3,214,784 - - - - 821,118 - - - - 832,000 (2,147,528) 2,720,374 Investment in partnership 2,303,733 - - - - 312,083 - - - - - (2,615,816) - Construction in progress 4,875,658 - - - - - - - - - - - 4,875,658 Construction in progress, federal constraints (Note 6)1,077,239 - - - - - - - - - - - 1,077,239 Property and equipment, net, federal constraints (Note 6)6,180,994 - - - 582,857 - 1,885,208 - 707,944 287,258 - - 9,644,261 Property and equipment, net (Note 6)6,401,520 21,925 - 1,887,391 - - 20,057 - - 2,701 - - 8,333,594 Total assets 30,744,502$ 68,433$ 15,714$ 1,912,534$ 709,069$ 1,821,932$ 2,207,476$ 15,945$ 1,012,708$ 384,272$ 1,139,113$ (5,299,657)$ 34,732,041$ LIABILITIES Accounts payable 862,336$ 2,007$ 374$ 30,043$ 9,277$ -$ 15,499$ -$ 13,213$ 1,659$ -$ (48,142)$ 886,266$ Accrued liabilities 321,069 - - - 936 - 9,095 - - - - - 331,100 Accrued vacation, sick, and paid time off 182,155 - - - - - - - - - - - 182,155 Accrued interest payable 14,304 - - 1,280 1,981 - 488,864 - 1,809 - - (488,171) 20,067 Deposits payable 75,225 4,680 5,414 15,746 16,956 - 10,285 - 13,358 1,175 - - 142,839 Unearned revenue (Note 7)5,028 - - - - - - - - - - - 5,028 Notes payable (Note 8)6,907,534 - - 1,831,949 583,026 151,713 1,434,148 - 483,163 438,100 - (2,147,528) 9,682,105 Total liabilities 8,367,651 6,687 5,788 1,879,018 612,176 151,713 1,957,891 - 511,543 440,934 - (2,683,841) 11,249,560 NET ASSETS Without donor restrictions Undesignated 10,253,080 61,746 9,926 33,516 (485,964) 1,670,219 (1,635,623) 15,945 (206,779) (343,920) 1,139,113 (2,615,816) 7,895,443 HRDC General Endowment fund 5,542 - - - - - - - - - - - 5,542 Federal constrained inventory and capital assets 7,581,309 - - - 582,857 - 1,885,208 - 707,944 287,258 - - 11,044,576 Total net assets without donor restrictions 17,839,931 61,746 9,926 33,516 96,893 1,670,219 249,585 15,945 501,165 (56,662) 1,139,113 (2,615,816) 18,945,561 With donor restrictions Purpose or time restrictions 4,382,317 - - - - - - - - - - - 4,382,317 Perpetual in nature (endowment)154,603 - - - - - - - - - - - 154,603 Total net assets without donor restrictions 4,536,920 - - - - - - - - - - - 4,536,920 Total net assets 22,376,851 61,746 9,926 33,516 96,893 1,670,219 249,585 15,945 501,165 (56,662) 1,139,113 (2,615,816) 23,482,481 Total liabilities and net assets 30,744,502$ 68,433$ 15,714$ 1,912,534$ 709,069$ 1,821,932$ 2,207,476$ 15,945$ 1,012,708$ 384,272$ 1,139,113$ (5,299,657)$ 34,732,041$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATING SCHEDULE OF ACTIVITIES For the Year Ended June 30, 2020 See Independent Auditor’s Report. -60- HRDC HRDC Colo. Apts. HRDC West Edge Cottages at Menicucci Square Home Corporation Miles Building, Inc.Miles, LP Darlinton Apts., Inc. Sherwood Inn Apts., Inc. Summit Apts., Inc Boulevard Apartments BSV Rural Partners, LLC Eliminations Consolidated Total NET ASSETS WITHOUT DONOR RESTRICTIONS REVENUES Contract revenue 1,124,007$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ (124,978)$ 999,029$ Rental income 55,744 53,797 33,780 189,075 204,597 11,955 366,465 - 397,793 62,260 316,904 - - 1,692,370 City/County/Local Government support 2,031,227 - - - - - - - - - - - - 2,031,227 Sale of manufactured homes and condominiums 7,210,423 - - - - - - - - - - - - 7,210,423 Contributions (including Fundraising): Grants: Federal 6,280,805 - - - - - - - - - - - - 6,280,805 State 893,961 - - - - - - - - - - - - 893,961 Private 1,278,455 - - - - - - - - - - - - 1,278,455 Food (non-cash contributions)2,920,791 - - - - - - - - - - - - 2,920,791 Pledged contributions 2,611,601 - - - - - - - - - - - - 2,611,601 Contributions & fundraising 2,994,590 - - - - - - - - - - - - 2,994,590 Net investment income 51,201 6 - 4 28 31,058 748 - 1,233 151 - 4,160 (49,621) 38,968 Income from subsidiaries 96,337 - - - - - - - - - - - (96,337) - Gain on sale of property 56,249 - - - - - - - - - - - - 56,249 Other 248,763 - - - - - 34,573 7,383 - - 35,326 16,431 - 342,476 Net assets released from program restrictions 573,668 - - - - - - - - - - - - 573,668 Total revenues 28,427,822 53,803 33,780 189,079 204,625 43,013 401,786 7,383 399,026 62,411 352,230 20,591 (270,936) 29,924,613 EXPENSES Program services: Energy 1,077,026 - - - - - - - - - - - - 1,077,026 Food and nutrition 4,738,571 - - - - - - - - - - - - 4,738,571 Senior citizens 496,126 - - - - - - - - - - - - 496,126 Community development 8,554,447 - - - - - - - - - - 368 - 8,554,815 Economic and youth development 546,348 - - - - - - - - - - - - 546,348 Housing 1,969,844 34,947 8,524 250,562 188,809 20 423,535 2,907 311,979 56,833 372,683 - (177,767) 3,442,876 Early childhood education 1,980,674 - - - - - - - - - - - - 1,980,674 Transportation 2,542,983 - - - - - - - - - - - - 2,542,983 Total program services 21,906,019 34,947 8,524 250,562 188,809 20 423,535 2,907 311,979 56,833 372,683 368 (177,767) 23,379,419 Supporting services: Administration 1,063,464 - - - - - - - - - - - - 1,063,464 Fundraising 646,749 - - - - - - - - - - - - 646,749 Total supporting services 1,710,213 - - - - - - - - - - - - 1,710,213 Total expenses 23,616,232 34,947 8,524 250,562 188,809 20 423,535 2,907 311,979 56,833 372,683 368 (177,767) 25,089,632 Change in net assets without donor restrictions 4,811,590 18,856 25,256 (61,483) 15,816 42,993 (21,749) 4,476 87,047 5,578 (20,453) 20,223 (93,169) 4,834,981 NET ASSETS WITH DONOR RESTRICTIONS Purpose or time restricted contributions 944,329 - - - - - - - - - - - - 944,329 Perpetually restricted contributions 9,209 - - - - - - - - - - - - 9,209 Net assets released from program restrictions (573,668) - - - - - - - - - - - - (573,668) Change in net assets with donor restrictions 379,870 - - - - - - - - - - - - 379,870 Change in total net assets 5,191,460 18,856 25,256 (61,483) 15,816 42,993 (21,749) 4,476 87,047 5,578 (20,453) 20,223 (93,169) 5,214,851 Net assets, beginning of year 22,376,851 61,746 9,926 33,516 96,893 1,670,219 249,585 15,945 501,165 (56,662) - 1,139,113 (2,615,816) 23,482,481 Capital contribution - - - - - - - - - - - - - - Distribution to owner - - (22,000) - - - - - - - - (275,052) 297,052 - Net assets, end of year 27,568,311$ 80,602$ 13,182$ (27,967)$ 112,709$ 1,713,212$ 227,836$ 20,421$ 588,212$ (51,084)$ (20,453)$ 884,284$ (2,411,933)$ 28,697,332$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. CONSOLIDATING SCHEDULE OF ACTIVITIES For the Year Ended June 30, 2019 See Independent Auditor’s Report. -61- HRDC HRDC Colo. Apts. HRDC West Edge Cottages at Menicucci Square Home Corporation Miles Building, Inc.Miles, LP Darlinton Apts., Inc. Sherwood Inn Apts., Inc. Summit Apts., Inc BSV Rural Partners, LLC Eliminations Consolidated Total NET ASSETS WITHOUT DONOR RESTRICTIONS REVENUES Contract revenue 912,272$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 255,000$ (95,365)$ 1,071,907$ Rental income 211,475 55,166 31,980 187,733 208,890 8,235 174,070 - 382,938 57,213 - - 1,317,700 City/County/Local Government support 2,384,583 - - - - - - - - - - - 2,384,583 Sale of manufactured homes and condominiums 344,400 - - - - - - - - - - - 344,400 Contributions (including Fundraising): Grants: Federal 6,438,959 - - - - - - - - - - - 6,438,959 State 641,441 - - - - - - - - - - - 641,441 Private 305,447 - - - - - - - - - - - 305,447 Food (non-cash contributions)3,164,087 - - - - - - - - - - - 3,164,087 Pledged contributions 585,720 - - - - - - - - - - - 585,720 Contributions & fundraising 1,794,979 - - - - - - - - - - - 1,794,979 Net investment income 94,751 5 - 4 20 47,922 486 - 2,366 114 8,320 (37,118) 116,870 (Loss) from subsidiaries (26,310) - - - - - - - - - - 26,310 - Gain on sale of property 196,401 - - - - - - - - - - - 196,401 Other 185,910 - 3,987 3,390 - - - 10,776 - - 16,430 (33,786) 186,707 Net assets released from program restrictions 107,523 - - - - - - - - - - - 107,523 Total revenues 17,341,638 55,171 35,967 191,127 208,910 56,157 174,556 10,776 385,304 57,327 279,750 (139,959) 18,656,724 EXPENSES Program services: Energy 1,326,870 - - - - - - - - - - - 1,326,870 Food and nutrition 4,693,394 - - - - - - - - - - - 4,693,394 Senior citizens 526,825 - - - - - - - - - - - 526,825 Community development 909,714 - - - - - - - - - 67,554 - 977,268 Economic and youth development 398,509 - - - - - - - - - - - 398,509 Housing 1,669,276 49,280 2,488 277,242 192,293 2,503 203,268 222 370,539 103,770 - (132,483) 2,738,398 Early childhood education 2,220,007 - - - - - - - - - - - 2,220,007 Transportation 2,343,930 - - - - - - - - - - - 2,343,930 Total program services 14,088,525 49,280 2,488 277,242 192,293 2,503 203,268 222 370,539 103,770 67,554 (132,483) 15,225,201 Supporting services: Administration 1,041,368 - - - - - - - - - - - 1,041,368 Fundraising 466,397 - - - - - - - - - - - 466,397 Total supporting services 1,507,765 - - - - - - - - - - - 1,507,765 Total expenses 15,596,290 49,280 2,488 277,242 192,293 2,503 203,268 222 370,539 103,770 67,554 (132,483) 16,732,966 Change in net assets without donor restrictions 1,745,348 5,891 33,479 (86,115) 16,617 53,654 (28,712) 10,554 14,765 (46,443) 212,196 (7,476) 1,923,758 NET ASSETS WITH DONOR RESTRICTIONS Purpose or time restricted contributions 2,862,207 - - - - - - - - - - - 2,862,207 Perpetually restricted contributions 100,372 - - - - - - - - - - - 100,372 Net assets released from program restrictions (107,523) - - - - - - - - - - - (107,523) Change in net assets with donor restrictions 2,855,056 - - - - - - - - - - - 2,855,056 Change in total net assets 4,600,404 5,891 33,479 (86,115) 16,617 53,654 (28,712) 10,554 14,765 (46,443) 212,196 (7,476) 4,778,814 Net assets, beginning of year 17,776,447 70,855 1,077 231 80,276 1,616,565 - 5,391 486,400 (10,219) 926,917 (2,250,273) 18,703,667 Capital contribution - - - - - - 278,297 - - - - (278,297) - Distribution to owner - (15,000) (24,630) 119,400 - - - - - - - (79,770) - Net assets, end of year 22,376,851$ 61,746$ 9,926$ 33,516$ 96,893$ 1,670,219$ 249,585$ 15,945$ 501,165$ (56,662)$ 1,139,113$ (2,615,816)$ 23,482,481$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. THE HOME CORPORATION SCHEDULES OF FINANCIAL POSITION June 30, 2020 and 2019 See Independent Auditor’s Report. -62- 2020 2019 ASSETS CURRENT ASSETS Cash and cash equivalents (net of reserved cash)44,122$ 22,868$ Accounts receivable (net of allowance of $-0- and $12,000, respectively)88 293 Prepaid assets 1,006 964 Total current assets 45,216 24,125 PROPERTY AND EQUIPMENT Land 193,094 193,094 Buildings and improvements 1,558,503 1,558,503 Accumulated depreciation (1,220,690) (1,168,740) Total property and equipment 530,907 582,857 OTHER ASSETS Cash reserved for tenant deposits 16,101 15,898 Cash reserved for replacements 38,731 26,724 Cash reserved for taxes and insurance 78,079 59,465 Total other assets 132,911 102,087 Total assets 709,034$ 709,069$ LIABILITIES AND NET ASSETS CURRENT LIABILITIES Operating accounts payable 14,492$ 9,277$ Accrued liabilities 2,881 2,917 Rent deposits 17,558 16,956 Current portion of long-term debt 21,464 21,464 Total current liabilities 56,395 50,614 LONG TERM LIABILITIES Long-term debt, net of current portion 539,930 561,562 Total liabilities 596,325 612,176 NET ASSETS Without donor restrictions Undesignated 112,709 96,893 Total liabilities and net assets without donor restrictions 709,034$ 709,069$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. THE HOME CORPORATION SCHEDULES OF ACTIVITIES For the Years Ended June 30, 2020 and 2019 See Independent Auditor’s Report. -63- 2020 2019 UNRESTRICTED REVENUES Rental income 202,707$ 208,222$ Tenant fees 1,890 668 Interest income 28 20 Total revenues 204,625 208,910 EXPENSES Administration Advertising and leasing 247 263 Bank and misc fees 962 88 Bookkeeping fees 4,183 3,244 Legal and accounting 800 999 Management fee 18,396 19,337 Office supplies 1,065 666 Professional fees 1,750 - Operating and maintenance Bad debts 1,376 (4,651) Contract on-site manager 10,633 14,765 Depreciation 51,950 51,950 Insurance 3,353 2,957 Interest 22,594 25,255 Key replacement 70 - Maintenance and supplies 33,912 35,987 Pest control - 1,393 Property taxes 1,720 1,923 Repairs 1,380 1,114 Snow plowing and lawn care 15,041 19,383 Utilities, phone, garbage 19,377 17,620 Total expenses 188,809 192,293 Change in net assets 15,816 16,617 Net assets without donor restrictions, beginning of year 96,893 80,276 Net assets without donor restrictions, end of year 112,709$ 96,893$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. THE HOME CORPORATION SCHEDULES OF CASH FLOWS For the Years Ended June 30, 2020 and 2019 See Independent Auditor’s Report. -64- 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from tenants 204,802$ 211,233$ Cash received for interest 28 20 Cash paid for management and bookkeeping (1,209) (22,581) Cash paid for property operations (114,873) (96,996) Cash paid for interest (15,041) (25,255) Net cash flows from operating activities 73,707 66,421 CASH FLOWS FROM FINANCING ACTIVITIES Cash paid on loan principal (21,629) (20,933) Net cash flows from financing activities (21,629) (20,933) Net change in cash and cash equivalents 52,078 45,488 Cash and cash equivalents, beginning of year 124,955 79,467 Cash and cash equivalents, end of year 177,033$ 124,955$ Reconciliation to Statements of Financial Position Cash and cash equivalents 44,122$ 22,868$ Cash reserves 132,911 102,087 177,033$ 124,955$ CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets 15,816$ 16,617$ Adjustments to reconcile change in net assets to net cash flows from operating activities: Depreciation 51,950 51,950 Change in operating assets and liabilities: Accounts receivable 205 2,343 Prepaid expenses (42) (964) Accounts payable 5,179 (4,758) Rent deposits 599 1,233 Net cash flows from operating activities 73,707$ 66,421$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX,INC. SHERWOOD INN APARTMENTS, INC. SCHEDULES OF FINANCIAL POSITION June 30, 2020 and 2019 See Independent Auditor’s Report. -65- 2020 2019 ASSETS CURRENT ASSETS Cash and cash equivalents (net of reserved cash)65,836$ 13,998$ Accounts receivable (net of allowance of $500)1,015 2,011 Prepaid expenses 2,768 4,049 Total current assets 69,619 20,058 PROPERTY AND EQUIPMENT Land 59,562 59,562 Furniture and fixtures 77,701 77,701 Buildings and improvements 1,277,660 1,277,660 Accumulated depreciation (751,995) (706,979) Total property and equipment 662,928 707,944 OTHER ASSETS Cash reserved for tenant deposits 13,266 13,144 Cash reserved for replacements 315,314 271,562 Total other assets 328,580 284,706 Total assets 1,061,127$ 1,012,708$ LIABILITIES AND NET ASSETS CURRENT LIABILITIES Operating accounts payable 14,310 13,213$ Accrued interest 2,656 1,809 Rent deposits 13,148 13,358 Current portion of long-term debt 40,507 40,507 Total current liabilities 70,621 68,887 LONG TERM LIABILITIES Long-term debt, net of current portion 402,294 442,656 Total liabilities 472,915 511,543 NET ASSETS Without donor restrictions Undesignated 588,212 501,165 Total liabilities and net assets without donor restrictions 1,061,127$ 1,012,708$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SHERWOOD INN APARTMENTS, INC. SCHEDULES OF ACTIVITIES For the Years Ended June 30, 2020 and 2019 See Independent Auditor’s Report. -66- 2020 2019 UNRESTRICTED REVENUES Rental income 394,649$ 378,561$ Tenant fees 3,144 4,377 Interest income 1,233 2,366 Total revenues 399,026 385,304 EXPENSES Administration Accounting fees 8,578 7,171 Advertising and leasing 636 867 Bank and misc fees 66 30 Legal and accounting 1,343 4,789 Management fee 32,055 30,891 Office supplies 8,418 4,293 Operating and maintenance Contract management 38,975 46,523 Depreciation 45,017 45,017 Insurance 7,349 6,499 Interest 12,550 13,604 Maintenance and supplies 57,912 118,518 Pest control 10 4 Repairs 24,237 17,495 Snow plowing and lawn care 4,709 6,298 Utilities, phone, garbage 70,124 68,540 Total expenses 311,979 370,539 Change in net assets 87,047 14,765 Net assets without donor restrictions, beginning of year 501,165 486,400 Net assets without donor restrictions, end of year 588,212$ 501,165$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SHERWOOD INN APARTMENTS, INC. SCHEDULES OF CASH FLOWS For the Years Ended June 30, 2020 and 2019 See Independent Auditor’s Report. -67- 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from tenants 398,789$ 381,561$ Cash received for interest 1,233 2,366 Cash paid for management (8,578) (30,891) Cash paid for property operations (251,508) (294,778) Cash paid for interest (3,862) (12,851) Net cash flows from operating activities 136,074 45,407 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for property and equipment - (2,559) Net cash flows from investing activities - (2,559) CASH FLOWS FROM FINANCING ACTIVITIES Cash paid on loan principal (40,362) (39,216) Net cash flows from financing activities (40,362) (39,216) Net change in cash and cash equivalents 95,712 3,632 Cash and cash equivalents, beginning of year 298,704 295,072 Cash and cash equivalents, end of year 394,416$ 298,704$ Reconciliation to Statements of Financial Position Cash and cash equivalents 65,836$ 13,998$ Cash reserves 328,580 284,706 394,416$ 298,704$ CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets 87,047$ 14,765$ Adjustments to reconcile change in net assets to net cash flows from operating activities: Depreciation 45,017 45,017 Change in operating assets and liabilities: Accounts receivable 996 (1,377) Prepaid expenses 1,281 (1,835) Accounts payable 1,097 (12,678) Accrued interest 847 753 Rent deposits (211) 762 Net cash flows from operating activities 136,074$ 45,407$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. UNRESTRICTED CORPORATE FUNDS SCHEDULES OF FINANCIAL POSITION June 30, 2020 and 2019 See Independent Auditor’s Report. -68- 2020 2019 ASSETS Cash - operating savings 153,887$ 153,238$ Cash - operating checking 966,003 554,209 Less: cash currently committed to HRDC capital projects (799,570) (1,030,086) Unrestricted corporate cash available 320,320 (322,639) Investments in marketable securities 393,304 388,242 Accounts receivable 3,047 3,350 Interest receivable 1,198 1,291 Prepaid expense 9,696 9,696 Escrow account - 10,000 Loans receivable 303,394 327,498 Intercompany loans receivable 1,935,573 2,133,833 Investment in subsidiaries 650,185 650,185 Buildings 535,365 500,397 Land 56,267 56,267 Accumulated depreciation (240,378) (216,066) Total assets 3,967,971$ 3,542,054$ LIABILITIES Accounts payable 15,499$ 25,094$ Rental deposits 675 675 Loan payable 188,365 198,628 Intercompany loans payable 164,307 166,755 Total liabilities 368,846 391,152 NET ASSETS Net assets, beginning of fiscal year 3,150,902 3,214,669 Change in net assets, current year 448,223 (63,767) Total net assets 3,599,125 3,150,902 Total liabilities and net assets 3,967,971$ 3,542,054$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. UNRESTRICTED CORPORATE FUNDS SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the Years Ended June 30, 2020 and 2019 See Independent Auditor’s Report. -69- 2020 2019 REVENUE Donations - unrestricted (HRDC Greatest Needs)629,650$ 261,335$ Fundraising income - unrestricted (HRDC Greatest Needs)105,510 79,411 Rent income 45,300 56,118 Partnership distribution income 8,466 7,516 Loan interest income 7,303 8,328 Investment interest income 2,708 13,007 Realized and unrealized gain on investments 8,427 27,474 Total revenues 807,364 453,189 EXPENSES Salaries and fringe 342,747 231,652 Admin.service cost allocations 51,737 44,717 Bad debt expense - 6,844 Business meals/meetings 2,596 4,341 Contract services 47,887 13,572 Depreciation expense 24,312 24,312 Dues 3,320 9,411 Equipment and supplies 12,297 22,282 Fundraising expense 11,722 8,291 Insurance 5,494 5,188 Interest expense 14,692 11,942 Investment management fees 3,365 3,267 Janitorial expense 4,972 6,160 Legal 450 628 Other 7,490 8,222 Outreach/advertising/public relations 17,421 40,203 Property management 2,400 2,500 Property taxes 508 1,356 Recognition 7,196 10,723 Repairs and maintenance 2,648 8,408 Software 16,117 7,588 Space 16,547 11,740 Travel/training 6,563 10,663 Utilities 5,298 7,392 Total expenses 607,779 501,402 REVENUE OVER/(UNDER) EXPENSES 199,585 (48,213) Transfers in 877,564 346,758 Transfers out (628,926) (362,312) Net assets, beginning of fiscal year 3,150,902 3,214,669 Net assets, end of fiscal year 3,599,125$ 3,150,902$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -70- Budget Actual REVENUE Grant 401,531$ 370,158 Total Revenue 401,531$ 370,158 EXPENSES Administration 40,153$ 40,153 Program Support 361,378 361,378 Total Expenses 401,531$ 401,531 Revenue Over/Under Expenses -$ - Transfer In -$ Net Assets at July 1, 2018 0$ Net Assets at September 30, 2019 0$ WEATHERIZATION ASSISTANCE Grant Perio d: July 1, 2018 to September 30, 2019 - LIEAP Grant Number: DPHHS 18-028-16007-0 ----LIEAP---- DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -71- Budget Actual REVENUE Grant 208,648$ 185,482 Total Revenue 208,648$ 185,482 EXPENSES Administration 22,996$ 14,049 Program Operations 143,268 134,171 Liability Insurance 200 113 Financial Audit 1,000 1,176 Training & Technical Assistance 17,000 19,153 Health & Safety 24,184 16,821 Total Expenses 208,648$ 185,482 Revenue over/under expenses -$ - Transfer In -$ Net Assets at July 1, 2019 0$ Net Assets at June 30, 2020 0$ WEATHERIZATION ASSISTANCE Grant Period: July 1, 2019 to June 30, 2020 - DOE Grant Number: DPHHS 19-028-30027-0 ----DEPT OF ENERGY---- DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -72- Budget Actual REVENUE Grant 73,205$ 73,205 Total Revenue 73,205$ 73,205 EXPENSES 73,205$ Salaries and Fringe Benefits 61,588 Supplies 850 Communication 1,520 Space Costs 3,607 Travel 871 Office Costs 4,769 Direct Services 0 Total Expenses 73,205$ 73,205 Revenue Over/Under Expenses (0)$ Net Assets at October 1, 2017 0$ Net Assets at September, 2019 0$ LIEAP ADMINISTRATION PROGRAM Grant Period: October 1, 2017 to September 30, 2019 - ADMIN Grant Number: DPHHS 18-028-13007-0 ----LIEAP ADMIN---- DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -73- ----LIEAP CRF---- Actual REVENUE Grant 170,864$ Total Revenue 170,864$ EXPENSES Direct Services 170,864$ Total Expenses 170,864$ Revenue Over/Under Expenses -$ Net Assets at November 1, 2018 0$ Net Assets at November 13, 2019 0$ LOW INCOME ENERGY ASSISTANCE PROGRAM Grant Period: November 1, 2018 to November 13, 2019 - Contingency Revolving Fund (CRF) Grant Number: DPHHS 19-028-13007-0 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -74- Budget Actual Budget Actual REVENUE Grant 32,807$ 32,807 52,630 52,630 Total Revenue 32,807$ 32,807 52,630 52,630 EXPENSES Salaries & Fringe Benefits 26,284 30,806 44,455 42,624 Communications 3,714 214 175 Space Costs 1,809 1,695 3,000 2,193 Travel 1,000 0 1,000 511 Office Costs 92 4,174 7,126 Total Expenses 32,807$ 32,807 52,630 52,630 Revenue Over/Under Expenses 0$ 0 Net Assets at October 1, 2017 0$ 0 Net Assets at September 30, 2019 0$ 0 ----CLIENT ED--------OUTREACH---- LIEAP CLIENT EDUCATION & OUTREACH PROGRAM Grant Period: October 1, 2017 to September 30, 2019 - CLIENT ED October 1, 2017 to September 30, 2019 - OUTREACH Grant Numbers: DPHHS 18-028-13007-0 DPHHS 18-028-15057-0 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -75- Budget Actual REVENUE Grant 359,966$ 359,966 Total Revenue 359,966$ 359,966 EXPENSES NWE Program Overhead 125,988$ 124,113 NWE Program Operations 233,978 236,971 Total Expenses 359,966$ 361,084 Revenue Over/Under Expenses 0$ (1,118) Transfer In 1,118$ Net Assets at January 1, 2019 0$ Net Assets at December 10, 2019 0$ NORTHWESTERN ENERGY WEATHERIZATION PROGRAM Grant Perio d: January 1, 2019 to December 10, 2019 Grant Number: DPHHS 19-028-33007-0 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -76- Actual REVENUE General Energy Funds 2,606$ USB Funds 28,317 Energy Deposits 3,765 TEAM: Temporary Energy Assist for Minor Needs 254 TEAM: Deposits 335 Water Heater 1,339 Administrative Funds 6,904 Donations 815 Total Revenues 44,336$ EXPENSES Energy Assistance 3,123$ Energy Assistance - USB 28,317 Energy Assistance - Deposits 3,765 Energy Assistance - TEAM 254 Energy Assistance - TEAM Deposits 335 Energy Assistance - Water Heater 1,339 Administration 22,853 Total Expenses 59,986$ Revenue Over/Under Expenses (15,650)$ Transfer In/Out 0$ Net Assets at July 1, 2019 29,124$ Net Assets at June 30, 2020 13,474$ ENERGY SHARE Grant Period: July 1, 2019 to June 30, 2020 Grant Number: FY 2019-2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -77- Actual REVENUE Energy Share Fees/Reimb 2,664$ Contract Income 400 Total Revenue 3,064$ EXPENSES Labor and Materials 2,044$ Subcontractor Services 540 Total Expenses 2,584$ Revenue over/under expenses 480$ Net Assets at July 1, 2019 0$ Net Assets at June 30, 2020 480$ SUPPLEMENTAL WEATHERIZATION ASSISTANCE Grant Period: July 1, 2019 to June 30, 2020 - ESOM DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -78- Budget Actual REVENUE Grant 39,500$ 39,500 Total Revenue 39,500$ 39,500 EXPENSES Salaries and Fringe Benefits 27,000 25,628 Travel and Training 9,500$ 7,396 Administration 3,000 8,896 Total Expenses 39,500$ 41,920 Revenue Over/Under Expenses -$ (2,420) Transfer In 2,420$ Net Assets at October 1, 2017 0$ Net Assets at September 30, 2019 (0)$ LISC Grant Perio d: October 1, 2017 to September 30, 2019 - LISC Grant Number: 41189-0038 ----LISC---- DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -79- Budget Actual REVENUE Grant 16,830$ 16,830 Total Revenue 16,830$ 16,830 EXPENSES Salaries and Fringe Benefits 15,000 15,995 Administration 1,830$ 1,668 Total Expenses 16,830$ 17,663 Revenue Over/Under Expenses -$ (833) Transfer In 833$ Net Assets at July 1, 2018 0$ Net Assets at September 30, 2019 0$ HEALTHY HOUSING HOUSING FIRST VILLAGE Grant Perio d: July 1, 2018 to September 30, 2019 - LISC Grant Number: 41189-0040 ----LISC---- DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -80- Budget Actual REVENUE Grant 30,000$ 30,000 Total Revenue 30,000$ 30,000 EXPENSES Salary and Fringe Benefits 27,273 31,622 Administration 2,727$ 1,506 Total Expenses 30,000$ 33,128 Revenue Over/Under Expenses -$ (3,128) Transfer Out 3,128$ Net Assets at February 1, 2019 0$ Net Assets at December 31, 2019 0$ BRIDGES TO CAREER OPPORTUNITIES Grant Period: February 1, 2019 to December, 31 2019 Grant Number: 41189-0042 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -81- Actual REVENUE MDOC Contract Income 201,658$ NWMT Contract Income 2,023 Other Income 0 Total Revenue 203,681$ EXPENSES Salaries & Fringe Benefits 156,909$ Travel & Training 4,187 Space 11,382 Office Costs 8,902 Insurance 1,370 Communications 1,274 Ready to Rent Program - Housing Assistance Payments 8,255 Other 911 Total Expenses 193,190$ Revenue Over/Under Expenses 10,491$ Net Assets at July 1, 2019 35,812$ Net Assets at June 30, 2020 46,303$ SECTION 8 HOUSING PROGRAM Grant Period: July 1, 2019 to June 30, 2020 Grant Number: MT DOC 20-745-0006 NeighborWorks Montana (NWMT) DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -82- Budget Actual REVENUE Grant 64,667$ 64,667 Total Revenue 64,667$ 64,667 EXPENSES Prevention of Homelessness - Security Deposits 3,250$ 3,250 Prevention of Homelessness - Rental Assistance 5,283 5,283 Prevention of Homelessness - Rental Assistance Medium 566 566 Prevention of Homelessness - Rental Assistance Arrears 9,696 9,696 Prevention of Homelessness - Rental Assistance Medium Term Arrears - - Prevention of Homelessness - Housing Search & Placement 7,181 13,407 Homeless Services - Security Deposits 13,373 13,373 Homeless Services - Rental Assistance 8,640 8,640 Homeless Services - Rental Assistance Medium Term 1,881 1,881 Homeless Services - Rental Assistance Arrears 0 0 Homeless Services - Housing Search & Placement 11,101 14,524 Administration 3,696 7,306 Total Expenses 64,667$ 77,926 Revenue Over/Under Expenses 0$ (13,259) Transfer In 13,259$ Net Assets at August 1, 2018 0$ Net Assets at July 31, 2019 0$ HUD EMERGENCY SHELTER GRANTS PROGRAM Grant Period: August 1, 2018 to July 31, 2019 Grant Number: DPHHS 18-028-51007-0 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -83- April 1, 2019 to March 31, 2020 Actual REVENUE Private Grant Revenue 35,000$ United Way 21,000 Donations 5,386 MHN / NWMT 31,761 Total Revenues 93,146$ EXPENSES Prevention of Homelessness 12,833$ Homeless Services 0 Salaries & Fringe Benefits 74,165 Supportive Services 4,292 Office Expenses 13,510 Total Expenses 104,801$ Revenue Over/Under Expenses (11,654)$ Transfer In 32,126$ Paycheck Protection Program Loan Proceeds 1,374 Transfer Out (15,755)$ Net Assets at July 1, 2019 -$ Net Assets at June 30, 2020 6,091$ HOME TO STAY - EMERGENCY SERVICES Report Period: July 1, 2019 to June 30, 2020 Grant Number: MT HomeOwnership Network (MHN) / NeighborWorks MT (NWMT) DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -84- Food Bank Gallatin County Housing Park County Housing Actual Actual Actual REVENUE Grant 18,835$ 19,605 3,236 Total Revenue 18,835$ 19,605 3,236 EXPENSES Preventative & Homeless Services 0$ 19,605 3,236 Food Expense 18,835$ 0 0 Total Expenses 18,835$ 19,605 3,236 Revenue Over/Under Expenses 0$ (0) (0) Transfer Out -$ - - Net Assets at July 1, 2019 0$ 0 0 Net Assets at June 30, 2020 0$ 0 0 FEDERAL EMERGENCY MANAGEMENT AGENCY Grant Period: July 1, 2019 to June 30, 2020 Grant Number: LRO 556000-003 Phase 35 Food LRO 556000-002 Phase 35 Gallatin County Housing LRO 559600-008 Phase 35 Park County Housing DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -85- Budget Actual REVENUES Grant 33,885$ 33,885 Total Revenues 33,885$ 33,885 EXPENSES Rental Assistance 30,066$ Security Deposit Assistance 0 Case Management 2,248 Administration 1,713 Total Expenses 34,027$ Revenue Over/Under Expenses (142)$ Transfer In/Out 142$ Net Assets at October 1, 2018 0$ Net Assets at September 29, 2019 0$ RYAN WHITE PART B HIV CARE Grant Period: October 1, 2018 to September 29, 2019 Grant Number: 17-07-4-51-310-0 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -86- Budget Actual REVENUE Grant 60,000$ 43,073 Total Revenue 60,000$ 43,073 EXPENSES Salary and Fringe Benefits 35,000 17,239 Program Operations 25,000$ 25,000 Total Expenses 60,000$ 42,239 Revenue Over/Under Expenses -$ 833 Transfer Out (833)$ Net Assets at November 1, 2018 0$ Net Assets at December 31, 2019 0$ PARTNERSHIPS FOR PERMANENTLY SUPPORTIVE HOUSING Grant Perio d: November 1, 2018 to December, 31 2019 Grant: Montana Healthcare Foundation DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -87- Budget Actual REVENUE Grant 110,353$ 110,353 Donations 400 Total Revenues 110,353$ 110,753 EXPENSES 110,353$ Rental Assistance 84,586 Security Deposit Assistance 8,619 Case Management 9,151 Administration 10,750 Total Expenses 110,353$ 113,106 Revenue Over/Under Expenses (2,353)$ Transfer In 2,353$ Net Assets at July 1, 2019 0$ Net Assets at June 30, 2020 0$ RAPID RE-HOUSING Grant Period: July 1, 2019 to June 30, 2020 Grant Number: HUD MT0055L8T001803 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -88- Actual REVENUE Donations 343,651$ City of Bozeman 25,000 Fund Raising 39,225 Rental Income 12,100 Total Revenues 419,976$ EXPENSES Salaries & Fringe Benefits 260,578$ Contract Services 1,108 Rent 79,100 Travel & Training 6,555 Supplies 6,058 Communications 1,649 Office Costs 7,640 Equipment 4,814 Supportive Services 6,607 Other 3,600 Utilities 12,523 Maintenance & Repairs 4,658 Fund Raising 2,007 Insurance 3,916 Advertising - Audit 1,472 Total Expenses 402,284$ Revenue Over/Under Expenses 17,691$ Transfer In/Out (29,121) Paycheck Protection Program 7,221 Net Assets at July 1, 2019 47,889$ Net Assets at June 30, 2020 43,680$ WARMING CENTER Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -89- Actual REVENUE Donations 41,959$ Private Grant Revenue 11,000 United Way Income 5,000 Fundraising 257 Total Revenues 58,216$ EXPENSES Salaries & Fringe Benefits 55,679$ Rent 9,875 Travel & Training 1,469 Supplies 418 Communications 963 Office Costs 1,991 Other 195 Utilities 940 Maintenance & Repairs 535 Fund Raising 310 Insurance 620 Advertising 144 Audit 362 Total Expenses 73,501$ Revenue Over/Under Expenses (15,285)$ Transfer In 15,285$ Net Assets at July 1, 2019 0$ Net Assets at June 30, 2020 0$ LIVINGSTON WARMING CENTER - PILOT Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -90- Actual REVENUE Contributions: Food *2,797,928$ United Way 2,000 Gallatin County Senior Mill Levy 10,500 Other 1,295,310 Fund Raising 176,229 Senior Food Contract Income - Other Grant Revenue 10,800 Other Income 8,290 Total Revenues 4,301,058$ EXPENSES Salaries & Fringe Benefits 511,083$ Travel & Training 1,863 Warehouse Space 11,486 Communication 3,416 Utilities, Garbage, Snow Removal 14,965 Fund Raising 13,558 Outreach/Public Relations 1,689 Vehicle 5,305 Repairs & Maintenance 10,738 Supplies 10,213 Insurance 15,107 Food Purchases 57,013 Food Distributions *2,706,564 Office costs 17,716 Audit 2,435 Interest Expense 3,422 Meat Processing - Senior Food Program - Depreciation Expense 29,523 Other 9,746 Total Expenses 3,425,843$ Revenue Over/Under Expenses 875,215$ Transfer Out (35,000) Net Assets at July 1, 2019 792,973$ Net Assets at June 30, 2020 1,633,188$ * Food Contributions In-Kind valued at $1.62 per pound GALLATIN VALLEY FOOD BANK Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -91- Grant Number: DPHHS 19-027-21002-0 Actual REVENUE Fund Raising 500 Senior Food Contract Income 219,923 Other Grant Revenue - Other Income - Contributions 6,108 Total Revenues 226,531$ EXPENSES Salaries & Fringe Benefits 15,902$ Fund Raising 34 Supplies 218 Insurance 105 Food Purchases 1,680 Food Distributions *203,402 Office costs 710 Audit 310 Other 472 Total Expenses 222,831$ Revenue Over/Under Expenses 3,700$ Net Assets at October 1, 2018 16,408$ Net Assets at September 30, 2019 20,108$ * Food Contributions In-Kind valued at $1.62 per pound GALLATIN VALLEY FOOD BANK - SENIOR CFSP Report Period: October 1, 2018 to September 30, 2019 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -92- Actual REVENUES Donations 143,113$ Meals Service (Net of Discounts)54,824 Catering & Space Rental 123,989 City of Bozeman Support 25,000 Fund Raising 66,912 Private Grant 4,300 Kitchen Rental Fees 2,762 Catering Private Grant 5,845 Total Revenues 426,745$ EXPENSES Salaries & Fringe Benefits 337,763$ Contract Services 2,859 Parking Lot Space 13,200 Travel & Training 4,355 Communications 2,634 Utilities, Garbage, Grounds Maintenance 31,000 Fund Raising 7,751 Outreach/Public Relations 5,445 Vehicle 1,371 Equipment - Repairs & Maintenance 7,760 Supplies 17,776 Insurance 5,859 Food Purchases 84,962 Office Costs 6,776 Audit 3,528 Interest Expense 7,322 Depreciation Expense 11,880 Other 12,509 Total Expenses 564,749$ Revenue Over/Under Expenses (138,004)$ Transfers In From: Summer Lunch 5,099$ HRDC Unrestricted Donations (Greatest Need)43,846$ Paycheck Protection Program Loan Proceeds 69,059$ GVFB 20,000$ Net Assets at July 1, 2019 (230,858)$ Net Assets at June 30, 2020 (230,858)$ FORK AND SPOON HOMESTYLE KITCHEN Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -93- Actual REVENUE Private Grant Revenue 2,000$ Fund Raising 18,458 Donations 40,223 Restricted Donations 10,000 Total Revenues 70,681$ EXPENSES Salaries & Fringe Benefits 16,361$ Travel and Training 591 Fund Raising 1,449 Outreach - Supplies 56 Insurance 169 Food Purchases 40,700 Office Costs 613 Audit 355 Other - Total Expenses 60,295$ Revenue Over/Under Expenses 10,386$ Paycheck Protection Program Loan Proceeds 2,261$ Net Assets at July 1, 2019 58,916$ Net Assets at June 30, 2020 71,563$ HEALTHY KIDSPACK PROGRAM Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -94- Actual REVENUE Summer Lunch Contract Income 91,373$ Donations 614 Other Income - Private Grant 2,400 Total Revenue 94,387$ EXPENSES Salaries & Fringe Benefits 43,695$ Vehicle 799 Travel & Training 1,741 Supplies 1,734 Office Costs 2,847 Food Purchases 38,471 Total Expenses 89,287$ Revenue Over/Under Expenses 5,099$ Transfer Out (5,099)$ Net Assets at October 1, 2018 -$ Net Assets at September 30, 2019 (0)$ SUMMER LUNCH PROGRAM Grant Period: October 1, 2018 to September 30, 2019 Grant Number: MT OPI 16-6512 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -95- Actual REVENUE Contributions: Food *81,433$ United Way 2,500 Other 91,030 Private Grant - Building Fund 11,310 Fund Raising 6,389 Total Revenues 192,661$ EXPENSES Salaries & Fringe Benefits 44,590$ Travel & Training 107 Communications 1,906 Rent 1,200 Utilities, Garbage, Snow Removal 3,561 Fund Raising 3,241 Vehicle 988 Repairs & Maintenance 850 Insurance 2,066 Food Purchases 2,081 Food Distributions *84,850 Office Costs 2,341 Audit 769 Other 1,763 Total Expenses 150,313$ Revenue Over/Under Expenses 42,349$ Transfer In 29,000$ Paycheck Protection Program Loan Proceeds 12,980$ Net Assets July 1, 2019 50,751$ Net Assets at June 30, 2020 135,080$ * Food Contributions In-Kind valued at $1.62 per pound HEADWATERS AREA FOOD BANK Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -96- Actual REVENUE Contributions: Food *60,667$ United Way - Big Sky Resort Tax 26,296 Other 145,168 Private Grant 17,509 Fund Raising 6,187 Total Revenues 255,828$ EXPENSES Salaries & Fringe Benefits 55,296$ Travel & Training 0 Communic ations 1,254 Space Rental 18,900 Utilities, Garbage, Snow Removal 3,150 Fund Raising 2,488 Outreach/Public Relations 519 Vehicle 2,956 Repairs & Maintenance 4,813 Insurance 1,380 Food Purchases 16,294 Food Distributions *45,339 Office Costs 2,944 Audit 775 Meat Processing 0 Other 748 Total Expenses 156,856$ Revenue Over/Under Expenses 98,972$ Net Assets at July 1, 2019 34,031$ Net Assets at June 30, 2020 133,003$ * Food Contributions In-Kind valued at $1.62 per pound BIG SKY COMMUNITY FOOD BANK Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -97- Budget Actual REVENUE Title III Revenue 52,766$ 52,766 Title III Revenue - Respite 19,597 19,597 United Way 8,000 6,000 Donations 25,422 1,022 Other Grant Revenue 17,000 22,000 Total Revenues 122,785$ 101,385 EXPENSES Salaries & Fringe Benefits 104,535$ 106,548 Supplies 650 705 Communications 250 340 Travel & Training 1,300 1,582 Insurance 1,115 1,240 Audit 250 484 Other - Program Support 16,263 1,451 Total Expenses 124,363$ 112,349 Revenue Over/Under Expenses 0$ (10,964)$ Paycheck Protection Program Loan Proceeds 21,356$ Net Assets at July 1, 2019 27,039$ Net Assets at June 30, 2020 37,431$ IN HOME SERVICES Grant Period: July 1, 2019 to June 30, 2020 Grant Number: Area IV Agency on Aging 2020-004-013 (Gallatin County) DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -98- Budget Actual REVENUE Title III Revenue 24,500$ 24,500 Title III Revenue - Respite 18,750 18,750 United Way 6,000 6,000 Park County 0 Donations 0 0 Other Grant Revenue 11,000 Total Revenues 60,250$ 49,250 EXPENSES Salaries & Fringe Benefits 47,993$ 56,778 Supplies 700 313 Communicatio ns 0 0 Travel & Training 1,450 433 Building Space 0 Insurance 750 676 Audit 200 341 Other - Program Support 9,157 305 Total Expenses 60,250$ 58,846 Revenue Over/Under Expenses 0$ (9,596)$ Paycheck Protection Program Loan Proceeds 11,871 Net Assets at July 1, 2019 4,499$ Net Assets at June 30, 2020 6,773$ IN HOME SERVICES - PARK COUNTY Grant Period: July 1, 2019 to June 30, 2020 Grant Number: Area IV Agency on Aging 2020-004-013 (Park County) DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -99- Budget Actual REVENUE Grant 50,000$ 50,000 Other Income 5,000 0 Total Revenue 55,000$ 50,000 EXPENSES Salaries & Fringe Benefits 47,500$ 46,903 Supplies 500 191 Communications 1,750 Travel 750 766 Insurance 500 17 Audit 500 250 Other 3,500 2,772 Total Expenses 55,000$ 50,899 Revenue Over/Under Expenses 0$ (899) Transfer In 899$ Net Assets at July 1, 2019 0$ Net Assets at June 30, 2020 0$ STATE HEALTH INSURANCE PROGRAM (SHIP) - INFORMATION & ASSISTANCE Grant Period: July 1, 2019 to June 30, 2020 Grant Number: Area IV Agency on Aging 2020-004-013 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -100- Budget Actual In-Kind Excess Non- Federal Share REVENUE Federal Grant 86,161$ 86,161 Federal Grant - 3-Year Augmentation Carryfwd 244,222 136,627 Gallatin County Senior Mill Levy 11,000 11,000 United Way 5,000 5,000 Title III Grant 6,425 3,934 2,491 Donations 14,746 10,765 Work site 6,506 1,375 Other Grant Revenue 20,000 In-Kind 17,330 16,224 Total Revenues 411,390$ 254,862 16,224 2,491 EXPENSES Personnel Expense Project Director 57,923$ 51,509 2,163 Program Coordinators 36,411 34,218 Senior Reach Program Manager 28,080 21,957 Fiscal Staff 6,123 6,614 Executive 4,000 5,053 Personnel 3,163 4,549 Receptionists 1,721 2,229 Fringe Benefits 20,363 22,778 328 Agency-wide Insurance 3,750 1,581 Local Travel 500 1,229 Long Distance Travel 4,500 593 Supplies 5,000 3,655 Computer Service 1,650 3,437 Senior Reach: Community Health Partners 47,860 47,860 Senior Reach Licensing Fee 6,200 6,200 Communications 5,000 3,124 Printing 5,977 376 2,531 Space 24,694 19,344 9,694 Audit 567 808 Other 500 370 Volunteer Expense Meals 1,000 804 Insurance 1,060 1,221 Travel 2,009 430 3,999 Recognition 10,571 9,623 Augmentation Year 3 101,536 Total Expenses 380,158$ 249,563 16,224 2,491 Revenue Over/Under Expenses 31,232$ 5,299 0 0 Net assets at April 1, 2019 0$ 0 0 Net assets at March 31, 2020 5,299$ 0 0 RETIRED SENIOR VOLUNTEER PROGRAM Grant Period: April 1, 2019 to March 31, 2020 Grant Number: CNCS 18SRPMT002 Area IV Agency on Aging (Title III) 2020-004-013 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -101- Budget Actual REVENUE Grant 9,537$ 9,535 Total Revenue 9,537$ 9,535 EXPENSES Salaries & Fringe Benefits 9,537$ 8,216 Travel & Training 86 Space 1,233 Total Expenses 9,537$ 9,535 Revenue Over/Under Expenses 0$ 0$ Transfer In -$ Net Assets at June 1, 2019 0$ Net Assets at May 31, 2020 0$ SENIOR MEDICARE PATROL Grant Period: June 1, 2019 to May 31, 2020 Grant Number: Area XI Agency on Aging MOU DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -102- Budget Actual REVENUE Grant 34,577$ 33,174 Total Revenue 34,577$ 33,174 EXPENSES Salaries & Fringe Benefits 26,408$ 26,886 Travel & Training 3,571 2,391 Other 4,598 8,531 Total Expenses 34,577$ 37,808 Revenue Over/Under Expenses 0$ (4,634.05) Transfer In from Sherwood Apts Inc 4,635$ Net Assets at January 1, 2019 0$ Net Assets at December 31, 2019 0$ SHERWOOD SERVICE COORDINATOR Grant Period: January 1, 2019 to December 31, 2019 Grant Number: MFSC179734-01-01 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -103- Capital Budget Actual Actual REVENUE Title III Revenue 21,400$ 21,400 ParaTransit Contract - Streamline 101,500 101,500 MT DOT Transade 210,717 210,717 MT DOT Capital Grants - Vehicles 0 - 29,084 MT DOT CARES Funding - 212,024 Local Revenue Friends of Galavan - 3,500 Gallatin County 78,500 78,500 City of Bozeman 105,000 122,183 City of Belgrade 10,000 10,000 United Way 10,000 5,000 Rider Donations 15,000 4,884 Contributions 2,000 2,655 Other (Advertising) Income 8,400 - Storage Space Rental Income 4,000 5,596 Investment Income/Other 10,500 553 Adopt-A-Bus - 0 Contract Income-Headstart/Family Promise 6,400 - Sale Proceeds 0 0 Other - 6,422 Total Revenues 583,417$ 784,934 29,084 EXPENSES Salaries & Fringe Benefits 380,000$ 349,499 HRDC Admin. Cost Allocations 45,000 44,028 Gas & Oil 55,000 42,980 Repairs & Maintenance 40,000 36,685 Insurance 18,000 20,008 Voucher Program Contract - - Bus Barn Operating Costs 5,000 5,898 Travel & Training 2,500 411 Advertising/PR 1,500 457 Cleaning - 12,150 Supplies 3,500 4,134 Communications 4,500 6,090 Audit 1,000 1,386 Other (incl RM software)5,000 11,145 Equipment-Other 500 413 Equipment-Vehicles 0 0 34,216 Total Expenses 561,500$ 535,283 34,216 Revenue Over/Under Expenses 21,917$ 249,651 (5,132) Operating Funds Applied to Capital (5,132)$ 5,132 Transfer Out (1,995) Transfer In - Smyth Interest Income 10,500$ Net Assets at July 1, 2019 23,845$ 0 Net Assets at June 30, 2020 276,868$ 0 GALAVAN / SENIOR TRANSPORTATION Grant Period: July 1, 2019 to June 30, 2020 Grant Names: Not for Profit Work & Services Agreement - 2020318 MT DOT 111074 - Section 5311 Capital MT DOT - TransAde DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -104- Montana State University - Contract # CS180031 Streamline Bridger Bowl Service Contract City of Bozeman - Transfer Station Contract Budget Actual Capital Actual REVENUE MT DOT Operating Grant 1,150,046$ 1,602,247 MT DOT Capital Grant - Vehicle Repair 0 18,581 Local Revenue Associated Students of MSU 164,500 188,556 Contract Income 101,000 135,125 City of Bozeman 150,000 150,000 City of Belgrade 8,000 10,000 Gallatin County - 20,000 Montana State University 112,000 69,167 Other (Advertising) Income 2,000 85 Storage Space Rental Income 14,000 14,200 Contributions 1,000 31,305 Insurance Revenue - 4,858 Total revenues 1,702,546$ 2,225,543 18,581 EXPENSES Salaries & Fringe Benefits 145,000$ 124,490 HRDC Admin Cost Allocations 63,000 63,560 Contract Services 860,465 935,056 Gas & Oil 188,000 116,681 Repairs & Maintenance 250,000 175,856 24,312 Insurance 59,000 77,717 Bus Barn Operating Costs 13,000 16,271 Parking Garage Cleaning/Security 15,000 13,317 - Travel & Training 8,000 2,560 Advertising/PR & Outreach 40,000 70,474 Supplies 5,000 5,069 Communications 8,000 9,681 Space 0 0 Audit 2,000 2,080 Other 2,000 473 Equipment - Other 1,000 3,366 Equipment - Vehicles 0 23,419 Equipment - Vehicle Wraps 0 0 Equipment - GPS Tracking Software 20,000 21,826 Bus Shelters/Street Furniture 0 0 Transportation Development Plan - 105,440 Total Expenses 1,679,465$ 1,767,337 24,312 Revenue Over/Under Expenses 23,081$ 458,206 (5,731) Operating Funds Applied to Capital (5,731)$ 5,731 Transfer Out (212,024) - Net Assets at July 1, 2019 420,046$ 0$ Net Assets at June 30, 2020 660,497$ 0$ STREAMLINE BUS / PUBLIC TRANSPORTATION Grant Period: July 1, 2019 to June 30, 2020 Grant Names: MT DOT 110742 - Section 5311 Operating MT DOT 110656 - Section 5311 Capital Grant - Vehicle Repair DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -105- Budget Actual Budget Actual REVENUE Grant 160,042$ 160,042 7,145 7,145 Other Income 0 0 0 0 Total Revenues 160,042$ 160,042 7,145 7,145 EXPENSES In-School 40,010$ 4,723 1,786 154 Out-of-School 120,031 158,800 5,359 6,999 Total Expenses 160,041$ 163,524 7,145 7,153 Revenue Over/Under Expenses 1$ (3,482) 0 (8) Transfer In 3,482$ 0 Net Assets at July 1, 2019 0$ 0 Net Assets at June 30, 2020 0$ (8) WORKFORCE INNOVATION & OPPORTUNITY ACT - YOUTH Grant Period: July 1, 2019 to June 30, 2020 Grant Name: DLISF13_WIAYouth09-6 Modification #1 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -106- Budget Actual REVENUE Grant 107,100$ 107,900 Other Income Total Revenues 107,100$ 107,900 EXPENSES Salaries & Fringe Benefits 83,500$ 83,567 Rent Expenses 3,000 3,110 Administrative 8,500 16,802 Travel & Training 6,600 7,102 Equipment & Supplie s 3,000 1,593 Youth Stipends/Support 2,200 2,714 NYTD Survey Incentives 300 120 Total Expenses 107,100$ 115,008 Revenue Over/Under Expenses -$ (7,108) Transfer In 7,108$ Net Assets at July 1, 2019 0$ Net Assets at June 30, 2020 0$ CHAFEE FOSTER CARE INDEPENDENCE PROGRAM Grant Period: July 1, 2019 to June 30, 2020 Contract Number: DPHHS 20193FCIP0009 Action Inc (Butte) MOU for Combined Service Area DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -107- Actual REVENUE Donations 69,469$ Gallatin County 545 United Way 5,000 Fund Raising Income 4,354 Private Grants 12,500 Insurance Revenue 39,578 Misc Income 255 Total Revenues 131,701$ EXPENSES Salaries & Fringe Benefits 97,487$ Youth Stipends/Support 2,239 Rent 4,400 Utilities & Phone 3,580 Maintenance & Repairs 3,775 Supplies/Office Costs 2,980 Travel & Training 2,571 Legal & Audit 875 Insurance 3,405 Taxes 2,639 Interest Expense 20,959 Depreciation 24,975 Other Expenses 5,934 Total Expenses 175,818$ Revenue Over/Under Expenses (44,116)$ Paycheck Protection Program Loan Proceeds 36,321$ Transfers Out Foster Youth Support (6,775)$ WIOA Youth Support (3,482)$ Net Assets at July 1, 2019 60,724$ Net Assets at June 30, 2020 42,673$ BLUEPRINT - YOUTH TRANSITIONAL LIVING HOUSE Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -108- Budget Actual In-Kind REVENUE Grant 1,571,938$ 1,599,373 USDA Child Care Food Contract 95,000 108,492 Other Income 9,100 10,665 In-kind 392,985 318,496 Total Revenues 2,069,023 1,718,530$318,496$ EXPENSES Salaries 1,011,472$ 1,062,848 Fringe Benefits 278,459 309,615 Travel/Training 9,500 28,474 Supplies 14,034 30,393 Contract Services 8,225 16,192 Other 354,348 291,481 In-kind Expenses 392,985 318,496 Total Expenses 2,069,023$ 1,739,003 318,496 Revenue Over/Under Expenses 0$ (20,473) (0) Transfer In 20,473$ Net Assets at April 1, 2019 0$ 0 Net Assets at March 31, 2020 (0)$ (0) HEAD START PROGRAM Grant Period: April 1, 2019 to March 31, 2020 Grant Number: HHS 08CH010871-01-01 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -109- Budget Actual REVENUE Grant 30,000$ 1,437 Contract Income 88,000 62,258 Other Income 10,000 10,000 Total Revenues 128,000$ 73,695$ EXPENSES Salaries 139,820$ 70,575 Fringe Benefits 46,607 21,393 Travel/Training 1,300 279 Supplies 3,325 1,541 Contract Services - 133 Other 36,832 22,996 Total Expenses 227,883$ 116,916 Revenue Over/Under Expenses (99,883)$ (43,221) Transfer In 43,221$ Net Assets at April 1, 2019 0$ Net Assets at March 31, 2020 0$ Grant Period: April 1, 2019 to March 31, 2020 HEAD START PRIVATE PAY PROGRAM DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -110- Budget Actual REVENUE Grant 116,937$ 116,937 Total Revenue 116,937$ 116,937 EXPENSES Salaries 74,429$ 77,558 Fringe Benefits 18,728 25,563 Purchased Professional & Technical 10,000 7,500 Purchased Property Services 543 - Other Purchased Services 4,500 - Supplies 8,737 7,154 Property & Equipment - - Total Expenses 116,937$ 117,775 Revenue Over/Under Expenses -$ (838) Transfer In 838$ Net Assets at July 1, 2019 0$ Net Assets at June 30, 2020 0$ PRE-SCHOOL DEVELOPMENT Report Period: July 1, 2019 to June 30, 2020 Grant Number: MT OPI 16 6646 16 20 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -111- Bozeman Center Livingston Center Belgrade Center Actual Actual Actual REVENUE Rental Income 32,400$ 42,000 74,400 Total Revenue 32,400$ 42,000 74,400 EXPENSES Gas & Electric 3,495$ 3,216 6,201 Water, Sewer, & Garbage 2,484 2,081 2,629 Maintenance & Repairs 7,976 10,604 9,560 Janitorial/Grounds 7,196 6,541 9,373 Property Management/Audit 2,000 2,000 2,000 Insurance 2,051 1,788 2,973 Taxes 500 0 83 Interest Expense 0 5,014 23,650 Depreciation 1,800 1,794 62,174 Total Expenses 27,502$ 33,038$ 118,643$ Revenue Over/Under Expenses 4,898$ 8,962 (44,243) Net Assets at July 1, 2019 52,617$ (28,685) 379,698 Net Assets at June 30, 2020 57,515$ (19,723) 335,455 HEAD START FACILITIES Report Period: For the Year Ended June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -112- Operations DPA Lending REVENUE Big Sky Resort Tax Revenue 125,501$ 110,000 Donations 11,000 Fund Raising Income 350 Underwriting Fees 4,858 Grants 90,000 Total Revenue 136,851$ 204,858 EXPENSES Salaries & Fringe Benefits 109,893$ 8,753 Consultant Services 10,643 0 Travel & Training 1,766 0 Legal/Audit 58 0 Supplies 2,106 0 Office Space 8,704 0 Other 4,287 0 Total Expenses 137,457$ 8,753 Revenue Over/Under Expenses (606)$ 196,105 Homebuyer Loans Disbursed (455,750) Transfer Out (27,933) 0 Net Assets at July 1, 2019 28,539$ 154,275 Net Assets at June 30, 2020 0$ (105,370) BIG SKY COMMUNITY HOUSING TRUST Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -113- HOME COB COB AHO Other Total Actual Actual Actual Actual Actual Actual REVENUE Grant 172,002$ 172,002 Contract Income 40,000 78,150 95,153 213,303 Contributions 5,485 5,485 Homebuyer Loans Repaid 75,955 35,000 13,159 124,114 Appreciation Share Realized 16,139 15,634 31,773 Total Revenues 264,096$ 90,634 78,150 13,159 100,638 546,677 EXPENSES Salaries & Fringe 19,554$ 13,417 4,144 106,266 143,381 Space 1,066 1,383 241 3,841 6,531 Communications 86 41 4 451 582 Supplies 1,000 6,620 7,620 Contract Services 419 419 Audit & Legal 1,280 1,280 Travel & Training 34 4,899 4,933 Homebuyer Loan Fees 962 1,400 2,362 Total Expenses 21,702$ 14,841 6,789 0 123,776 167,109 Revenue Over/(Under) expenses 242,394$ 75,792 71,361 13,159 (23,138) 379,568 Homebuyer Loans Disbursed (235,957)$ 0 (70,000) 0 0 (305,957) Transfer Out *(81,193) (81,193) Net assets at July 1, 2019 (1,525)$ 399,251$ 1,123$ 180,112$ (73,296)$ 505,666$ Net Assets for Operations at June 30, 2020 4,912$ 285,145$ 2,484$ 31,277$ (107,753)$ 216,065$ Net Assets for Lending at June 30, 2020 0$ 189,898$ 0$ 80,800$ 11,320$ 282,019$ * CDBG Program Income Applied to Humble Homes and Scattered Sites Land Trust RTH Lending Pool: July 1, 2006 to June 30, 2020 Grant Number: HOME M13-SG300100-01-A/B/C/D/E/F/G/H CDBG Pgm Inc ROAD TO HOME - HOMEOWNERSHIP CENTER Report Period: July 1, 2019 to June 30, 2020 Grant Periods: MT Dept of Commerce (HOME) November 7, 2013 to September 30, 2020 City of Bozeman (COB) November 25, 2003 to June 30, 2020 City of Bozeman Affordable Hsg Ordinance (AHO) March 30, 2018 to June 30, 2020 MT HomeOwnership Network (MHN)/NeighborWorks MT (NWMT) October 1, 2004 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -114- Actual REVENUE HRDC Owned Management fees: Big Sky Villas Apts (24 units)17,912$ Management fees: Boulevard Apts (42 units)23,492 Management fees: Colorado Apts (8 units)4,035 Management fees: Cottages @ Menicucci Sq (18 units)13,692 Management fees: Miles Apts (40 units)26,804 Management fees: Sherwood Inn Apts (50 units)31,806 Management fees: Summit Place Apts (7 units)4,387 Management fees: West Babcock Apts (24 units)18,396 Management fees: West Edge Condos (4 units)2,365 Management fees: HRDC Facilities (14 buildings)29,600 Third-Party Owned Management fees: Antelope Court Apts (30 units)16,393 Management fees: Buffalo Court Apts (20 units)9,443 Management fees: Castle Mountain Apts (10 units)8,026 Management fees: Guardian Apts (118 units)63,821 Total Revenues 270,173$ EXPENSES Salaries & Fringe Benefits 176,396$ Contract Services 2,630 Travel & Training 1,031 Space Costs 7,517 Communications 1,267 Supplies 5,638 Office Costs 1,432 Liability Insurance 3,151 Legal 45 Other 663 Total Expenses 199,770$ Revenue over/under expenses 70,403$ Transfer In (Out) (8,867)$ Net assets at July 1, 2019 85,039$ Net assets at June 30, 2020 146,575$ RESOURCE PROPERTY MANAGEMENT Report Period: July 1, 2019 to June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -115- Budget Actual REVENUE Grant 317,785$ 317,785 Misc Income 1,556 Total Revenue 317,785$ 319,341 EXPENSES Salaries & Fringe 147,233$ 168,543 Consultants & Contract Services 4,600 9,276 Travel/Training 3,000 10,862 Space 7,500 9,954 Supplies 4,000 600 Small Equipment 6,000 0 Other Non-Direct Expenses 0 10,738 Support for Programs/Projects and Other Costs 145,442 109,369 Total Expenses 317,775$ 319,341 Revenue Over/Under Expenses 10$ (0) Net Assets at January 1, 2018 0$ Net Assets at August 31, 2019 0$ COMMUNITY SERVICES BLOCK GRANT Grant Period: January 1, 2018 to August 31, 2019 Grant Number: DPHHS 18-028-10007-0 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -116- Budget Actual Budget Actual REVENUE Rental Income 110,400$ 110,400 37,200 37,200 Other Income 0 4,800 0 0 Total Revenue 110,400$ 115,200 37,200 37,200 EXPENSES Gas & Electric 13,200$ 13,844 3,600 3,778 Water, Sewer, & Garbage 3,800 3,693 700 1,220 Maintenance & Repairs 40,808 39,430 2,200 1,425 Janitorial/Grounds 15,800 15,600 5,800 6,440 Property Management/Audit 7,200 7,200 1,000 800 Insurance 2,796 2,567 1,048 2,238 Taxes 620 932 130 204 Interest Expense 17,516 16,313 10,682 9,318 Depreciation 42,297 42,297 16,742 16,742 Total Expenses 144,037$ 141,876 41,902 42,166 Revenue Over/Under Expenses (33,637)$ (26,676) (4,702) (4,966) Net Assets at July 1, 2019 734,301$ (120,939) Net Assets at June 30, 2020 707,625$ (125,905)$ HRDC CENTRAL AND ANNEX OFFICES Report Period: July 1, 2019 to June 30, 2020 HRDC Central Office HRDC Annex Office DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SUPPLEMENTAL SCHEDULE SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS See Independent Auditor’s Report. -117- Actual REVENUE Allo cation Payments from Programs 911,061$ Total Revenues 911,061$ EXPENSES Salaries & Fringe Benefits 724,750$ Space Costs 31,651 Financial Audit 44,405 Communications 10,173 Office Costs 2,771 Small Equipment 5,672 Computer Service 79,196 Travel/Training 6,966 Contract Services 15,948 Other 2,357 Total Expenses 923,889$ Revenue Over/Under Expenses (12,827)$ Transfer In 8,683$ Net Assets at July 1, 2019 -$ Net Assets at June 30, 2020 (4,144)$ SCHEDULE OF ADMINISTRATIVE COSTS ALLOCATED Report Period: For the Year Ended June 30, 2020 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E S I N G L E A U D I T S E C T I O N DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended June 30, 2020 -118- FEDERAL SOURCE Total Total PASS THROUGH SOURCE CFDA Pass Through Dollars Federal Awards to PROGRAM NAME No.Grant Term Number Awarded Expenditures Subrecipients Dept. of Housing and Urban Development Montana Dept. of Health and Human Services Emergency Shelter Grant 19-20 14.231 08/01/19 - 07/31/20 19-028-51007-0 76,337 75,037$ -$ Emergency Shelter Grant 20-21 14.231 08/01/20 - 03/31/21 20-028-51007-0 257,067 43,129 - Total Emergency Shelter Grant 118,166 - Direct Continuum of Care - Rapid Re-Housing 14.267 07/01/19 - 06/30/20 MT0055L8T1802 110,353 110,353 - Total Continuum of Care 110,353 - Direct Multifamily Housing Service Coordinators 14.191 01/01/20 - 12/31/20 MFSC179734-01-04 28,661 20,346 - Multifamily Housing Service Coordinators 14.191 01/01/19 - 12/31/19 MFSC179734-01-03 15,365 15,365 - 35,711 - Montana Dept. of Commerce Home Investment Partnership Program - RTH 14.239 07/01/19 - 09/30/20 M13-SG300100-01-G 2,159,000 247,957 - Local Initiatives Support Corporation Rural LISC 14.252 10/01/17 - 09/30/19 41189-0038 39,500 2,792 - Rural LISC - Health Housing HFV 14.252 07/01/18 - 09/30/19 41189-0040 16,830 5,218 - Rural LISC - Health Housing HFV 14.252 07/01/19 - 09/30/20 41189-0043 15,300 10,406 - Rural LISC 14.252 10/01/19 - 09/30/21 41189-0044 36,000 17,708 - Rural LISC - Bridges to Career Opportunities 14.252 01/01/20 - 12/31/20 41189-0045 30,000 2,376 - Total LISC 38,500 - Total Department of Housing and Urban Development 550,687 - Department of Labor Montana Department of Labor WIA/WIOA Cluster Workforce Innovation & Opportunity Act 17.259 07/01/19 - 06/30/20 DLISF20CONWSD_102 160,042 160,042 - Workforce Innovation & Opportunity Act - MOD 17.259 07/01/19 - 06/30/20 DLISF20CONWSD_102_1 7,145 7,145 - Total Department of Labor, WIA/WIOA Cluster 167,187 - DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED) Year Ended June 30, 2020 -119- FEDERAL SOURCE Total Total PASS THROUGH SOURCE CFDA Pass Through Dollars Federal Awards to PROGRAM NAME No.Grant Term Number Awarded Expenditures Subrecipients Department of Transportation Montana Department of Transportation Formula Grants for Other Than Urbanized Areas 20.509 07/01/19 - 06/30/20 110742 1,150,046 696,669 - Formula Grants for Other Than Urbanized Areas 20.509 07/01/18 - 06/30/20 110656 36,517 18,581 - COVID-19 Formula Grants for Other Than Urbanized Areas 20.509 01/20/20 - 12/31/20 REIMB 961,130 - 1,676,380 - Montana Department of Transportation Capital Assistance Program Enhanced Mobility 20.513 07/01/19 - 06/30/20 111074 29,084 29,084 - Federal Transit Cluster Bus and Bus Facilities Formula Program 20.526 07/01/18 - 06/30/19 110507 - - - Bus and Bus Facilities Formula Program 20.526 07/01/18 - 06/30/19 110579 - - - Total Federal Transit Cluster - Total Department of Transportation 1,705,464 - Department of Energy Montana Dept. of Health and Human Services DOE Weatherization 19-20 81.042 07/01/19 - 06/30/20 20-028-30027-0 208,648 185,482 - Total Department of Energy 185,482 - Department of Education Montana Office of Public Instruction Preschool Development 19-20 84.419 07/01/19 - 06/30/20 016-6646-1616 116,937 116,937 - Total Department of Education 116,937 - Federal Emergency Management Agency United Way Emergency Food and Shelter Program Cluster FEMA - Housing, Park County 97.024 10/01/18 - 05/31/20 559600-008 (36)3,236 3,236 - FEMA - Housing, Gallatin County 97.024 10/01/18 - 05/31/20 559600-002 (36)19,605 19,605 - FEMA - Food 97.024 10/01/18 - 05/31/20 559600-003 (36)18,835 18,835 - Total Federal Emergency Management Agency, Emergency Food and Shelter Cluster 41,676 - DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED) Year Ended June 30, 2020 -120- FEDERAL SOURCE Total Total PASS THROUGH SOURCE CFDA Pass Through Dollars Federal Awards to PROGRAM NAME No.Grant Term Number Awarded Expenditures Subrecipients Department of Health and Human Services Rocky Mountain Development Council, Inc. Aging Cluster TITLE III-B Homemaker Services 93.044 07/01/19 - 06/30/20 2020-004-013 381 381 - TITLE III-B Respite / Caregiver Support 93.052 07/01/19 - 06/30/20 2020-004-013 19,597 19,597 - TITLE III-E Caregiver Support - Park County 93.052 07/01/19 - 06/30/20 2020-004-013 18,750 18,750 - Total Aging Cluster 38,728 - State Health Insurance Assistance Program 93.324 07/01/19 - 06/30/20 2019-004-013 25,000 25,000 - Missoula Aging Services (Area XI Agency on Aging) Senior Medicare Patrol 19-20 93.048 06/01/19 - 05/31/20 None 10,537 8,667 - Senior Medicare Patrol 20-21 93.048 06/01/20 - 05/31/21 None 9,537 951 - Total Senior Medicare Patrol 9,618 - CSBG 18 93.569 01/01/18-08/31/19 18-028-10007-0 317,785 9,451 - CSBG 19 93.569 01/01/19-08/31/20 19-028-10007-0 332,667 332,667 6,324 Total 477 Cluster 342,118 6,324 Direct Head Start Head Start 19-20 93.600 04/01/19 - 03/31/20 08CH010871-01 1,571,886 1,146,886 - In-Kind - 251,938 - Head Start 20-21 93.600 04/01/20 - 03/31/21 08CH010871-02 1,579,444 396,783 - In-Kind - 10,275 - Less In-Kind (262,213) - COVID - 19 Head Start 40,774 - Total Head Start 1,584,443 - Montana Dept. of Health and Human Services 477 Cluster DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED) Year Ended June 30, 2020 -121- FEDERAL SOURCE Total Total PASS THROUGH SOURCE CFDA Pass Through Dollars Federal Awards to PROGRAM NAME No.Grant Term Number Awarded Expenditures Subrecipients Department of Health and Human Services, continued Montana Dept. of Health and Human Services LIEAP Client Education/Advocacy 18-19 93.568 10/01/18 - 08/31/20 19-028-13007-0 40,771 40,739 - LIEAP Client Education/Advocacy 19-20 93.568 10/01/19 - 08/31/21 20-028-13007-0 38,557 928 - LIEAP Outreach 17-18 93.568 10/01/17 - 09/30/19 18-028-15057-0 52,630 2,203 - LIEAP Outreach 18-19 93.568 10/01/18 - 08/31/20 19-028-13007-0 48,061 48,061 - LIEAP Outreach 19-20 93.568 10/01/19 - 10/01/20 20-028-13007 35,437 348 LIEAP Administration 18-19 93.568 10/01/18 - 09/31/20 19-028-13007-0 80,716 75,538 - LIEAP Administration 20-21 93.568 10/01/19 - 09/30/21 20-028-13007-0 77,807 7,292 - LIEAP Contingency Revolving Fund 18-19 93.568 11/01/18 - 11/13/19 19-028-13007-0 REIMB 44,063 - LIEAP Contingency Revolving Fund 20-21 93.568 11/14/19 - 09/30/20 20-028-11007-0 REIMB 93,584 - LIEAP Weatherization 18-19 93.568 07/01/18 - 09/30/19 19-028-16007-0 401,531 103,747 - LIEAP Weatherization 20-21 93.568 07/01/19 - 08/31/21 20-028-16007-0 491,413 283,027 - COVID-19 LIEAP Administration 93.568 05/01/20 - 09/30/21 20-028-19067-0 28,685 8,492 - COVID-19 CRF 20-21 93.568 05/01/20 - 09/30/21 20-028-19067-0 REIMB 6,673 - Total LIEAP 714,695 - Chafee Foster Care Independence 93.674 07/01/19 - 06/30/20 20123FCIP0008 107,900 107,900 - Ryan White Part B HIV Care Formula Grant 93.917 10/01/18 - 09/30/19 17-07-4-51-310-0-2 33,885 14,713 - Ryan White Part B HIV Care Formula Grant 93.917 10/01/19 - 09/29/20 17-07-4-51-310-0-2 33,885 15,179 - Total Ryan White 29,892 - Total Department of Health and Human Services 2,852,394 6,324 Corporation for National and Community Service Direct RSVP 2019-20 94.002 04/1/19 - 03/31/20 18SRPMT002 86,161 35,998 - RSVP 2019-20 Senior Reach Augmentation 94.002 04/1/19 - 03/31/20 18SRPMT002 244,222 136,627 Match - 22,049 - RSVP 2020-21 94.002 04/1/20 - 03/31/21 18SRPMT002 86,161 23,107 - RSVP 2020-21 Senior Reach Augmentation 94.002 04/1/20 - 03/31/21 18SRPMT002 107,596 15,788 Match - 13,951 - Less Match (36,000) - Total Corporation for National and Community Service 211,520 - DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED) Year Ended June 30, 2020 -122- FEDERAL SOURCE Total Total PASS THROUGH SOURCE CFDA Pass Through Dollars Federal Awards to PROGRAM NAME No.Grant Term Number Awarded Expenditures Subrecipients Department of Agriculture Montana Department of Health and Human Services Child and Adult Care Food Program 19-20 10.558 04/01/19-03/31/20 HS 04087C - 75,934 - Child and Adult Care Food Program 20-21 10.558 04/01/20-03/31/21 HS 04087C - 9,928 - Total Child and Adult Care Food Program 85,862 - Montana Office of Public Instruction Child Nutrition Cluster Summer Food Service Program for Children '19 10.559 10/01/18 - 09/30/19 16-6512 - 63,854 - Summer Food Service Program for Children '20 10.559 10/01/19 - 09/30/20 16-6512 - 19,768 - COVID-19 Summer Food Service Program for Children 10.559 03/16/20 - 09/30/20 208,081 187,976 Total Summer Food Service Program for Children 291,703 187,976 Montana Dept. of Health and Human Services Food Distribution Cluster Commodity Supplemental Food Program 18-19 10.565 10/01/18 - 09/30/19 19-027-21002-0 - 50,316 - Commodity Supplemental Food Program 20-21 10.565 10/01/19 - 09/30/20 20-027-21002-0 - 160,361 - Total Food Distribution Cluster 210,677 - Local Initiatives Support Corporation Non-Research and Dev Technical Assistance Program 10.446 02/01/19 - 12/31/19 41189-0042 30,000 21,009 - Total Department of Agriculture 609,251 187,976 TOTAL FEDERAL AWARDS EXPENDED 6,440,598$ 194,300$ Principal Amount Owed LOAN AND LOAN GUARANTEES Repayment June 30, 2020 Direct Loan Guaranteed by the U.S. Department of Housing 14.181 - 438,100$ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended June 30, 2020 -123- NOTE 1.BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes federal award activity of HRDC under programs of the federal government for the year ended June 30, 2020. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a select portion of the operations of HRDC,it is not intended to, and does not present, the financial position, changes in net assets, or cash flows of HRDC. NOTE 2.SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES The Schedule has been prepared on the accrual basis of accounting, which is the method of accounting used for the financial statements. Such expenditures are recognized following Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule present adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. NOTE 3.INDIRECT COST RATE HRDC has elected not to use the optional 10-percent de minimis indirect cost rate allowed by Uniform Guidance. NOTE 4.MATCHING In accordance with the terms of the grants, HRDC has expended matching contributions during the year ended June 30, 2020 for the following programs: Department of Health and Human Services: Head Start $251,938 Retired and Senior Volunteer Program $ 36,000 NOTE 5.LOAN AND LOAN GUARANTEES HRDC has one direct loan guaranteed by the U.S. Department of Housing, CFDA 14.181, with a balance of $438,100 at June 30, 2020. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E -124-1019 E MAIN ST• SUITE 201• BOZEMAN, MONTANA 59715 TEL: 406.556.6160• FAX:406.586.8719• WEB: www.azworld.comANDERSON ZURMUEHLEN & CO.,P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 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 To the Board of Directors Human Resource Development Council of District IX, Inc. Bozeman, Montana 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 Human Resource Development Council of District IX, Inc.(HRDC) which comprise the consolidated statements of financial position as of June 30, 2020, and the related consolidated statements of activities, and consolidated cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated June 16, 2021. Internal Control over Financial Reporting In planning and performing our audit of the consolidated financial statements, we considered HRDC’s 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 HRDC’s internal control. Accordingly, we do not express an opinion on the effectiveness of HRDC’s 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 over financial reporting 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 financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E ANDERSON ZURMUEHLEN & CO., P.C CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS -125- Compliance and Other Matters As part of obtaining reasonable assurance about whether the HRDC’s consolidated financial statements are free of 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 our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of HRDC’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the HRDC’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Bozeman, Montana June 16, 2021 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E -126-1019 E MAIN ST• SUITE 201• BOZEMAN, MONTANA 59715 TEL: 406.556.6160• FAX:406.586.8719• WEB: www.azworld.comANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Directors Human Resource Development Council of District IX, Inc. Bozeman, Montana Report on Compliance for Each Major Federal Program We have audited Human Resource Development Council of District IX, Inc.(HRDC) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of HRDC’s major federal programs for the year ended June 30, 2020. The HRDC’s major federal programs are identified in the summary of auditor’s results section of the accom panying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of HRDC’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 HRDC’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 of HRDC’s compliance. Opinion on Each Major Federal Programs In our opinion, HRDC 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 June 30, 2020. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E ANDERSON ZURMUEHLEN & CO., P.C CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS -127- Report on Internal Control Over Compliance Management of HRDC 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 HRDC’s internal control over compliance with the types of requirements that could have a direct and material effect on a 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 the 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 HRDC’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 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 report 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 weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely based 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. Bozeman, Montana June 16, 2021 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E HUMAN RESOURCE DEVELOPMENT COUNCIL OF DISTRICT IX, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2020 -128- SECTION I –SUMMARY OF AUDIT RESULTS Financial Statements: Type of auditor's report issued:Unmodified Internal control over financial reporting: Material weakness identified?No Significant deficiencies identified that are not considered to be material weaknesses?None reported Noncompliance material to financial statements noted?No Federal Awards: Internal Control over major programs: Material weakness identified?No Significant deficiencies identified that are not considered to be material weaknesses?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 2 CFR 200.516(a)?No Identification of major programs: CFDA Number 93.600 10.559 Dollar threshold used to distinguish between Type A and Type B programs:$750,000 Auditee qualified as low-risk auditee?Yes Name of Federal Program or Cluster DPHHS Head Start Summer Food Service Program SECTION II –FINANCIAL STATEMENT FINDINGS The audit report for the year ended June 30, 2020, reported no findings. SECTION III –FEDERAL AWARD FINDINGS AND QUESTIONED COSTS The audit report for the year ended June 30, 2020, reported no findings. SECTION IV –STATUS OF CORRECTIVE ACTION ON PRIOR FINDINGS The audit report for the year ended June 30, 2019, reported no findings. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS www.azworld.com MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E FY 2022/2023 Subrecipient Grant Agreement – ARPA Household Efforts Exhibit Exhibit B Treasury Guidance DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 1 ted ieethe due ADD cover page November xx, 2021 Version: 2.0 November 15, 2021 Version: 2.1 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 2 Coronavirus State and Local Fiscal Recovery Funds Guidance on Recipient Compliance and Reporting Responsibilities On March 11, 2021, the American Rescue Plan Act was signed into law, and established the Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery Fund, which together make up the Coronavirus State and Local Fiscal Recovery Funds (“SLFRF”) program. This program is intended to provide support to State, territorial, local, and Tribal governments in responding to the economic and public health impacts of COVID-19 and in their efforts to contain impacts on their communities, residents, and businesses. This guidance provides additional detail and clarification for each recipient’s compliance and reporting responsibilities under the SLFRF program, and should be read in concert with the Award Terms and Conditions, the authorizing statute, the SLFRF implementing regulation, and other regulatory and statutory requirements, including regulatory requirements under the Uniform Guidance (2 CRF Part 200). Please see the Assistance Listing in SAM.gov under assistance listing number (formerly known as CFDA number), 21.027 for more information. Please Note: This guidance document applies to the SLFRF program only and does not change nor impact reporting and compliance requirements for the Coronavirus Relief Fund (“CRF”) established by the CARES Act. This guidance includes two parts: Part 1: General Guidance This section provides an orientation to recipients’ compliance responsibilities and the U.S. Department of the Treasury’s (“Treasury”) expectations, and recommends best practices where appropriate under the SLFRF Program. A. Key Principles……………………..……………………………………………………. P. 3 B. Statutory Eligible Uses…………………………………………………………………. P. 3 C. Treasury’s Rulemaking……………………………………………………….………… P. 4 D. Uniform Guidance (2 CFR Part 200)……………..…………………………………… P. 6 E. Award Terms and Conditions………………………………...………………………... P. 10 Part 2: Reporting Requirements This section provides information on the reporting requirements for the SLFRF program. A. Interim Report…...…………………………………………………………………...…. P. 14 B. Project and Expenditure Report…………….…………………………………...……. P. 15 C. Recovery Plan Performance Report..………………..……………………….….…… P. 22 Appendix 1: Expenditure Categories…………………………………………………….…… P. 30 Appendix 2: Evidenced-Based Intervention Additional Information…………………….…. P. 32 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 3 Part 1: General Guidance This section provides an orientation on recipients’ compliance responsibilities and Treasury’s expectations and recommended best practices where appropriate under the SLFRF program. Recipients under the SLFRF program are the eligible entities identified in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 (the “SLFRF statute”) that receive a SLFRF award. Subrecipients under the SLFRF program are entities that receive a subaward from a recipient to carry out the purposes (program or project) of the SLFRF award on behalf of the recipient. Recipients are accountable to Treasury for oversight of their subrecipients, including ensuring their subrecipients comply with the SLFRF statute, SLFRF Award Terms and Conditions, Treasury’s Interim Final Rule, and reporting requirements, as applicable. A. Key Principles There are several guiding principles for developing your own effective compliance regimes: • Recipients and subrecipients are the first line of defense, and responsible for ensuring the SLFRF award funds are not used for ineligible purposes, and there is no fraud, waste, or abuse associated with their SLFRF award; • Many SLFRF-funded projects respond to the COVID-19 public health emergency and meet urgent community needs. Swift and effective implementation is vital, and recipients must balance facilitating simple and rapid program access widely across the community and maintaining a robust documentation and compliance regime; • Treasury encourages recipients to use SLFRF-funded projects to advance shared interests and promote equitable delivery of government benefits and opportunities to underserved communities, as outlined in Executive Order 13985, On Advancing Racial Equity and Support for Underserved Communities Through the Federal Government; and • Transparency and public accountability for SLFRF award funds and use of such funds are critical to upholding program integrity and trust in all levels of government, and SLFRF award funds should be managed consistent with Administration guidance per Memorandum M-21-20 and Memorandum M-20-21. B. Statutory Eligible Uses As a recipient of an SLFRF award, your organization has substantial discretion to use the award funds in the ways that best suit the needs of your constituents – as long as such use fits into one of the following four statutory categories: 1. To respond to the COVID-19 public health emergency or its negative economic impacts; 2. To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to such eligible workers of the recipient, or by providing grants to eligible employers that have eligible workers who performed essential work; 3. For the provision of government services, to the extent of the reduction in revenue of such recipient due to the COVID–19 public health emergency, relative to revenues collected in the most recent full fiscal year of the recipient prior to the emergency; and 4. To make necessary investments in water, sewer, or broadband infrastructure. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 4 Treasury adopted an Interim Final Rule to implement these eligible use categories and other restrictions on the use of funds under the SLFRF program.1 It is the recipient’s responsibility to ensure all SLFRF award funds are used in compliance with these requirements. In addition, recipients should be mindful of any additional compliance obligations that may apply – for example, additional restrictions imposed upon other sources of funds used in conjunction with SLFRF award funds, or statutes and regulations that may independently apply to water, broadband, and sewer infrastructure projects. Recipients should ensure they maintain proper documentation supporting determinations of costs and applicable compliance requirements, and how they have been satisfied as part of their award management, internal controls, and subrecipient oversight and management. C. Treasury’s Rule Treasury’s Interim Final Rule details recipients’ compliance responsibilities and provides additional information on eligible and restricted uses of SLFRF award funds and reporting requirements. Your organization should review and comply with the information contained in Treasury’s Interim Final Rule, and any subsequent final rule when building appropriate controls for SLFRF award funds. 1. Eligible and Restricted Uses of SLFRF Funds. As described in the SLFRF statute and summarized above, there are four enumerated eligible uses of SLFRF award funds. As a recipient of an award under the SLFRF program, your organization is responsible for complying with requirements for the use of funds. In addition to determining a given project’s eligibility, recipients are also responsible for determining subrecipient’s or beneficiaries’ eligibility and must monitor use of SLFRF award funds. To help recipients build a greater understanding of eligible uses, Treasury’s Interim Final Rule establishes a framework for determining whether a specific project would be eligible under the SLFRF program, including some helpful definitions. For example, Treasury’s Interim Final Rule establishes: • A framework for determining whether a project “responds to” a “negative economic impact” caused by the COVID-19 public health emergency; • Definitions of “eligible employers”, “essential work,” “eligible workers”, and “premium pay” for cases where premium pay is an eligible use; • A definition of “general revenue” and a formula for calculating revenue lost due to the COVID-19 public health emergency; • A framework for eligible water and sewer infrastructure projects that aligns eligible uses with projects that are eligible under the Environmental Protection Agency’s Drinking Water and Clean Water State Revolving Funds; and • A framework for eligible broadband projects designed to provide service to unserved or underserved households, or businesses at speeds sufficient to enable users to generally meet household needs, including the ability to support the simultaneous use of work, education, and health applications, and also sufficiently robust to meet increasing household demands for bandwidth. Treasury’s Interim Final Rule also provides more information on four important restrictions on use of SLFRF award funds: recipients may not deposit SLFRF funds into a pension fund; recipients that are States or territories may not use SLFRF funds to offset a reduction in net tax revenue caused by the recipient’s change in law, regulation, or administrative interpretation; and recipients may not use SLFRF funds as non-Federal match where 1 Treasury’s Interim Final Rule is effective as of May 17, 2021, and public comments are due July 16, 2021. This guidance may be clarified consistent with the final rule. https://www.govinfo.gov/content/pkg/FR-2021-05-17/pdf/2021-10283.pdf DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 5 prohibited. In addition, the Interim Final Rule clarifies certain uses of SLFRF funds outside the scope of eligible uses, including that recipients generally may not use SLFRF funds directly to service debt, satisfy a judgment or settlement, or contribute to a “rainy day” fund. Recipients should refer to Treasury’s Interim Final Rule for more information on these restrictions. 2. Eligible Costs Timeframe. Your organization, as a recipient of an SLFRF award, may use SLFRF funds to cover eligible costs that your organization incurred during the period that begins on March 3, 2021 and ends on December 31, 2024, as long as the award funds for the obligations incurred by December 31, 2024 are expended by December 31, 2026. Costs for projects incurred by the recipient State, territorial, local, or Tribal government prior to March 3, 2021 are not eligible, as provided for in Treasury’s Interim Final Rule. Recipients may use SLFRF award funds to provide assistance to households, businesses, nonprofits, and individuals within the eligible use categories described in Treasury’s Interim Final Rule for costs that those households, businesses, nonprofits, and individuals incurred prior to March 3, 2021. For example, a. Public Health/Negative Economic Impacts: Recipients may use SLFRF award funds to provide assistance to households, small businesses, and nonprofits – such as rent, mortgage, or utility assistance – for costs incurred by the household prior to March 3, 2021, provided that the recipient state, territorial, local or Tribal government did not incur the cost of providing such assistance prior to March 3, 2021. b. Premium Pay: Recipients may provide premium pay retrospectively for work performed at any time since the start of the COVID-19 public health emergency. Such premium pay must be “in addition to” wages and remuneration already received and the obligation to provide such premium pay must not have been incurred by the recipient prior to March 3, 2021. c. Revenue Loss: Treasury’s Interim Final Rule gives recipients broad discretion to use funds for the provision of government services to the extent of reduction in revenue. While calculation of lost revenue begins with the recipient’s revenue in the last full fiscal year prior to the COVID-19 public health emergency and includes the 12-month period ending December 31, 2020, use of funds for government services must be forward looking for costs incurred by the recipient after March 3, 2021. d. Investments in Water, Sewer, and Broadband: Recipients may use SLFRF award funds to make necessary investments in water, sewer, and broadband. Recipients may use SLFRF award funds to cover costs incurred for eligible projects planned or started prior to March 3, 2021, provided that the project costs covered by the SLFRF award funds were incurred by the recipient after March 3, 2021. Any funds not obligated or expended for eligible uses by the timelines above must be returned to Treasury, including any unobligated or unexpended funds that have been provided to subrecipients and contractors as part of the award closeout process pursuant to 2 C.F.R. 200.344(d). For the purposes of determining expenditure eligibility, Treasury’s Interim Final Rule provides that “incurred” has the same meaning given to “financial obligation” in 2 CFR 200.1. 3. Reporting. Generally, recipients must submit one initial interim report, quarterly or annual Project and Expenditure reports which include subaward reporting, and in some cases annual Recovery Plan reports. Treasury’s Interim Final Rule and Part 2 of this guidance provide more detail around SLFRF reporting requirements. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 6 D. Uniform Administrative Requirements The SLFRF awards are generally subject to the requirements set forth in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR Part 200 (the “Uniform Guidance”). In all instances, your organization should review the Uniform Guidance requirements applicable to your organization’s use of SLFRF funds, and SLFRF-funded projects. Recipients should consider how and whether certain aspects of the Uniform Guidance apply. The following sections provide a general summary of your organization’s compliance responsibilities under applicable statutes and regulations, including the Uniform Guidance, as described in the 2020 OMB Compliance Supplement Part 3. Compliance Requirements (issued August 18, 2020). Note that the descriptions below are only general summaries and all recipients and subrecipients are advised to carefully review the Uniform Guidance requirements and any additional regulatory and statutory requirements applicable to the program. 1. Allowable Activities. Each recipient should review program requirements, including Treasury’s Interim Final Rule and the recipient’s Award Terms and Conditions, to determine and record eligible uses of SLFRF funds. Per 2 CFR Part 200.303, your organization must develop and implement effective internal controls to ensure that funding decisions under the SLFRF award constitute eligible uses of funds, and document determinations. 2. Allowable Costs/Cost Principles. As outlined in the Uniform Guidance at 2 CFR Part 200, Subpart E regarding Cost Principles, allowable costs are based on the premise that a recipient is responsible for the effective administration of Federal awards, application of sound management practices, and administration of Federal funds in a manner consistent with the program objectives and terms and conditions of the award. Recipients must implement robust internal controls and effective monitoring to ensure compliance with the Cost Principles, which are important for building trust and accountability. Assistance Listing The Assistance Listing for the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) was published May 28, 2021 on SAM.gov under Assistance Listing Number (“ALN”), formerly known as CFDA Number, 21.027. The assistance listing includes helpful information including program purpose, statutory authority, eligibility requirements, and compliance requirements for recipients. The ALN is the unique 5-digit number assigned to identify a federal assistance listing, and can be used to search for federal assistance program information, including funding opportunities, spending on USASpending.gov, or audit results through the Federal Audit Clearinghouse. To expedite payments and meet statutory timelines Treasury issued initial payments under an existing ALN, 21.019, assigned to the CRF. If you have already received funds or captured the initial number in your records, please update your systems and reporting to reflect the new ALN 21.027 for the SLFRF program. Recipients must use ALN 21.027 for all financial accounting, subawards, and associated program reporting requirements for the SLFRF awards. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 7 SLFRF Funds may be, but are not required to be, used along with other funding sources for a given project. Note that SLFRF Funds may not be used for a non-Federal cost share or match where prohibited by other Federal programs, e.g., funds may not be used for the State share for Medicaid.2 Treasury’s Interim Final Rule and guidance and the Uniform Guidance outline the types of costs that are allowable, including certain audit costs. For example, per 2 CFR 200.425, a reasonably proportionate share of the costs of audits required by the Single Audit Act Amendments of 1996 are allowable; however, costs for audits that were not performed in accordance with 2 CFR Part 200, Subpart F are not allowable. Please see 2 CFR Part 200, Subpart E regarding the Cost Principles for more information. a. Administrative costs: Recipients may use funds for administering the SLFRF program, including costs of consultants to support effective management and oversight, including consultation for ensuring compliance with legal, regulatory, and other requirements.3 Further, costs must be reasonable and allocable as outlined in 2 CFR 200.404 and 2 CFR 200.405. Pursuant to the SLFRF Award Terms and Conditions, recipients are permitted to charge both direct and indirect costs to their SLFRF award as administrative costs. Direct costs are those that are identified specifically as costs of implementing the SLFRF program objectives, such as contract support, materials, and supplies for a project. Indirect costs are general overhead costs of an organization where a portion of such costs are allocable to the SLFRF award such as the cost of facilities or administrative functions like a director’s office.45 Each category of cost should be treated consistently in like circumstances as direct or indirect, and recipients may not charge the same administrative costs to both direct and indirect cost categories, or to other programs. If a recipient has a current Negotiated Indirect Costs Rate Agreement (NICRA) established with a Federal cognizant agency responsible for reviewing, negotiating, and approving cost allocation plans or indirect cost proposals, then the recipient may use its current NICRA. Alternatively, if the recipient does not have a NICRA, the recipient may elect to use the de minimis rate of 10 percent of the modified total direct costs pursuant to 2 CFR 200.414(f). b. Salaries and Expenses: In general, certain employees’ wages, salaries, and covered benefits are an eligible use of SLFRF award funds. Please see Treasury’s Interim Final Rule for details. 3. Cash Management. SLFRF payments made to recipients are not subject to the requirements of the Cash Management Improvement Act and Treasury’s implementing regulations at 31 CFR part 205 or 2 CFR 200.305(b)(8)-(9). As such, recipients can place funds in interest-bearing accounts, do not need to remit interest to Treasury, and are not limited to using that interest for eligible uses under the SLFRF award. 4. Eligibility. Under this program, recipients are responsible for ensuring funds are used for eligible purposes. Generally, recipients must develop and implement policies and 2 See 42 CFR 433.51 and 45 CFR 75.306. 3 Recipients also may use SLFRF funds directly for administrative costs to improve efficacy of programs that respond to the COVID-19 public health emergency. 31 CFR 35.6(b)(10). 4 2 CFR 200.413 Direct Costs. 5 2 CFR 200.414 Indirect Costs. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 8 procedures, and record retention, to determine and monitor implementation of criteria for determining the eligibility of beneficiaries and/or subrecipients. Your organization, and if applicable, the subrecipient(s) administering a program on behalf of your organization, will need to maintain procedures for obtaining information evidencing a given beneficiary, subrecipient, or contractor’s eligibility including a valid SAM.gov registration. Implementing risk-based due diligence for eligibility determinations is a best practice to augment your organization’s existing controls. 5. Equipment and Real Property Management. Any purchase of equipment or real property with SLFRF funds must be consistent with the Uniform Guidance at 2 CFR Part 200, Subpart D. Equipment and real property acquired under this program must be used for the originally authorized purpose. Consistent with 2 CFR 200.311 and 2 CFR 200.313, any equipment or real property acquired using SLFRF funds shall vest in the non-Federal entity. Any acquisition and maintenance of equipment or real property must also be in compliance with relevant laws and regulations. 6. Matching, Level of Effort, Earmarking. There are no matching, level of effort, or earmarking compliance responsibilities associated with the SLFRF award. See Section C.1 (Eligible and Restricted Uses of SLFRF Funds) for a discussion of restrictions on use of SLFRF funds. SLFRF funds may only be used for non-Federal match in other programs where costs are eligible under both SLFRF and the other program and use of such funds is not prohibited by the other program. 7. Period of Performance. Your organization should also develop and implement internal controls related to activities occurring outside the period of performance. For example, each recipient should articulate each project’s policy on allowability of costs incurred prior to award or start of the period of performance. All funds remain subject to statutory requirements that they must be used for costs incurred by the recipient during the period that begins on March 3, 2021, and ends on December 31, 2024, and that award funds for the financial obligations incurred by December 31, 2024 must be expended by December 31, 2026. Any funds not used must be returned to Treasury as part of the award closeout process pursuant to 2 C.F.R. 200.344(d). 8. Procurement, Suspension & Debarment. Recipients are responsible for ensuring that any procurement using SLFRF funds, or payments under procurement contracts using such funds are consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327, as applicable. The Uniform Guidance establishes in 2 CFR 200.319 that all procurement transactions for property or services must be conducted in a manner providing full and open competition, consistent with standards outlined in 2 CFR 200.320, which allows for non-competitive procurements only in circumstances where at least one of the conditions below is true: the item is below the micro-purchase threshold; the item is only available from a single source; the public exigency or emergency will not permit a delay from publicizing a competitive solicitation; or after solicitation of a number of sources, competition is determined inadequate.6 Recipients must have and use documented procurement procedures that are consistent with the standards outlined in 2 CFR 200.317 through 2 CFR 200.320. The Uniform Guidance requires an infrastructure for competitive bidding and contractor oversight, including maintaining written standards of conduct and prohibitions on dealing with suspended or debarred parties. Your organization must ensure adherence to all applicable local, State, and federal procurement laws and regulations. 9. Program Income. Generally, program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under 6 2 CFR 200.320(c)(1)-(3) and (5) DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 9 Federal awards and principal and interest on loans made with Federal award funds. Program income does not include interest earned on advances of Federal funds, rebates, credits, discounts, or interest on rebates, credits, or discounts. Recipients of SLFRF funds should calculate, document, and record the organization’s program income. Additional controls that your organization should implement include written policies that explicitly identify appropriate allocation methods, accounting standards and principles, compliance monitoring checks for program income calculations, and records. The Uniform Guidance outlines the requirements that pertain to program income at 2 CFR 200.307. Treasury intends to provide additional guidance regarding program income and the application of 2 CFR 200.307(e)(1), including with respect to lending programs. 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. See Part 2 of this guidance for a full overview of recipient reporting responsibilities. 11. Subrecipient Monitoring. SLFRF recipients that are pass-through entities as described under 2 CFR 200.1 are required to manage and monitor their subrecipients to ensure compliance with requirements of the SLFRF award pursuant to 2 CFR 200.332 regarding requirements for pass-through entities. First, your organization must clearly identify to the subrecipient: (1) that the award is a subaward of SLFRF funds; (2) any and all compliance requirements for use of SLFRF funds; and (3) any and all reporting requirements for expenditures of SLFRF funds. Next, your organization will need to evaluate each subrecipient’s risk of noncompliance based on a set of common factors. These risk assessments may include factors such as prior experience in managing Federal funds, previous audits, personnel, and policies or procedures for award execution and oversight. Ongoing monitoring of any given subrecipient should reflect its assessed risk and include monitoring, identification of deficiencies, and follow-up to ensure appropriate remediation. Accordingly, your organization should develop written policies and procedures for subrecipient monitoring and risk assessment and maintain records of all award agreements identifying or otherwise documenting subrecipients’ compliance obligations. Recipients should note that non-entitlement units of local government (NEUs) are not subrecipients under the SLFRF program. They are SLFRF recipients that will report directly to Treasury. Recipients should also note that subrecipients do not include individuals and organizations that received SLFRF funds as end users to respond to the negative economic impacts of COVID-19 on these organizations. Such individuals and organizations are beneficiaries and not subject to audit pursuant to the Single Audit Act and 2 C.F.R. Part 200, Subpart F. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 10 Separately or in addition, many recipients may choose to provide a subaward (e.g., via contract or grant) to other entities to provide services to other end—users. For example, a recipient may provide a grant to a nonprofit to provide homeless services to individuals experiencing homelessness. In this case, the subaward to a nonprofit is based on the services that the Recipient intends to provide, assistance to households experiencing homelessness, and the nonprofit is serving as the subrecipient, providing services on behalf of the recipient. Subrecipients are subject to audit pursuant to the Single Audit Act and 2 CFR part 200, subpart F regarding audit requirements. 12. Special Tests and Provisions. Treasury has received comments on the Interim Final Rule and will adopt a final rule after responding to these comments. In addition, Treasury may add clarifications to the Final Rule and other subregulatory guidance as well as frequently asked questions. Across each of the compliance requirements above, Treasury described some best practices for development of internal controls. The table below provides a brief description and example of each best practice. Table 1: Internal controls best practices Best Practice Description Example Written policies and procedures Formal documentation of recipient policies and procedures Documented procedure for determining worker eligibility for premium pay Written standards of conduct Formal statement of mission, values, principles, and professional standards Documented code of conduct / ethics for subcontractors Risk-based due diligence Pre-payment validations conducted according to an assessed level of risk Enhanced eligibility review of subrecipient with imperfect performance history Risk-based compliance monitoring Ongoing validations conducted according to an assessed level of risk Higher degree of monitoring for projects that have a higher risk of fraud, given program characteristics Record maintenance and retention Creation and storage of financial and non-financial records. Storage of all subrecipient payment information. E. Award Terms and Conditions The Award Terms and Conditions of the SLFRF financial assistance agreement sets forth the compliance obligations for recipients pursuant to the SLFRF statute, the Uniform Guidance, and Treasury’s Interim Final Rule. Recipients should ensure they remain in compliance with all Award Terms and Conditions. These obligations include the following items in addition to those described above: 1. SAM.gov Requirements. All eligible recipients are also required to have an active registration with the System for Award Management (SAM) (https://www.sam.gov). To ensure timely receipt of funding, Treasury has stated that Non-entitlement Units of Government (NEUs) who have not previously registered with SAM.gov may do so after receipt of the award, but before the submission of mandatory reporting.7 2. Recordkeeping Requirements. Generally, your organization must maintain records and financial documents for five years after all funds have been expended or returned to Treasury, as outlined in paragraph 4.c. of the Award Terms and Conditions. Treasury may 7 See flexibility provided in https://www.whitehouse.gov/wp-content/uploads/2021/03/M_21_20.pdf. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 11 request transfer of records of long-term value at the end of such period. Wherever practicable, such records should be collected, transmitted, and stored in open and machine-readable formats. Your organization must agree to provide or make available such records to Treasury upon request, and to the Government Accountability Office (“GAO”), Treasury’s Office of Inspector General (“OIG”), and their authorized representative in order to conduct audits or other investigations. 3. Single Audit Requirements. Recipients and subrecipients that expend more than $750,000 in Federal awards during their fiscal year will be subject to an audit under the Single Audit Act and its implementing regulation at 2 CFR Part 200, Subpart F regarding audit requirements.8 Recipients and subrecipients may also refer to the Office of Management and Budget (OMB) Compliance Supplements for audits of federal funds and related guidance and the Federal Audit Clearinghouse to see examples and single audit submissions. 4. Civil Rights Compliance. Recipients of Federal financial assistance from the Treasury are required to meet legal requirements relating to nondiscrimination and nondiscriminatory use of Federal funds. Those requirements include ensuring that entities receiving Federal financial assistance from the Treasury do not deny benefits or services, or otherwise discriminate on the basis of race, color, national origin (including limited English proficiency), disability, age, or sex (including sexual orientation and gender identity), in accordance with the following authorities: Title VI of the Civil Rights Act of 1964 (Title VI) Public Law 88-352, 42 U.S.C. 2000d-1 et seq., and the Department's implementing regulations, 31 CFR part 22; Section 504 of the Rehabilitation Act of 1973 (Section 504), Public Law 93-112, as amended by Public Law 93-516, 29 U.S.C. 794; Title IX of the Education Amendments of 1972 (Title IX), 20 U.S.C. 1681 et seq., and the Department's implementing regulations, 31 CFR part 28; Age Discrimination Act of 1975, Public Law 94-135, 42 U.S.C. 6101 et seq., and the Department implementing regulations at 31 CFR part 23. In order to carry out its enforcement responsibilities under Title VI of the Civil Rights Act, Treasury will collect and review information from non-Tribal recipients to ascertain their compliance with the applicable requirements before and after providing financial assistance. Treasury’s implementing regulations, 31 CFR part 22, and the Department of Justice (DOJ) regulations, Coordination of Non-discrimination in Federally Assisted Programs, 28 CFR part 42, provide for the collection of data and information from recipients (see 28 CFR 42.406). Treasury may request that recipients submit data for post- award compliance reviews, including information such as a narrative describing their Title VI compliance status. This collection does not apply to Tribal Governments. 8 For-profit entities that receive SLFRF subawards are not subject to Single Audit requirements. However, they are subject to other audits as deemed necessary by authorized governmental entities, including Treasury, the GAO, and Treasury’s OIG. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 12 Part 2: Reporting Guidance There are three types of reporting requirements for the SLFRF program. • Interim Report: Provide initial overview of status and uses of funding. This is a one-time report. See Section A, page 14. • Project and Expenditure Report: Report on projects funded, expenditures, and contracts and subawards over $50,000, and other information. See Section B, page 15. • Recovery Plan Performance Report: The Recovery Plan Performance Report (the “Recovery Plan”) will provide information on the projects that large recipients are undertaking with program funding and how they plan to ensure program outcomes are achieved in an effective, efficient, and equitable manner. It will include key performance indicators identified by the recipient and some mandatory indicators identified by Treasury. The Recovery Plan will be posted on the website of the recipient as well as provided to Treasury. See Section C, page 22. The reporting threshold is based on the total award amount allocated by Treasury under the SLFRF program, not the funds received by the recipient as of the time of reporting. States and territories are also required to submit information on their distributions to NEUs. Please refer to Section D for additional details. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 13 Table 2: Reporting requirements by recipient type Tier Recipient Interim Report Project and Expenditure Report Recovery Plan Performance Report 1 States, U.S. territories, metropolitan cities and counties with a population that exceeds 250,000 residents By August 31, 2021 or 60 days after receiving funding if funding was received by October 15, with expenditures by category By January 31, 2022, and then 30 days after the end of each quarter thereafter9 By August 31, 2021 or 60 days after receiving funding, and annually thereafter by July 3110 2 Metropolitan cities and counties with a population below 250,000 residents which received more than $10 million in SLFRF funding Not required 3 Tribal Governments which received more than $30 million in SLFRF funding 4 Tribal Governments which received less than $30 million in SLFRF funding By April 30, 2022, and then annually thereafter11 5 Metropolitan cities and counties with a population below 250,000 residents which received less than $10 million in SLFRF funding 6 NEUs Not required Note: Based on the period of performance, reports will be collected through April 30, 2027. See the specific due dates listed in Sections B and C. The remainder of this document describes these reporting requirements. User guides describing how and where to submit required reports will be posted at www.treasury.gov/SLFRPReporting and updated on a regular basis. 9 Interim Final Rule Page 111 10 Interim Final Rule page 112 11 Interim Final Rule Page 111 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 14 A. Interim Report States, U.S. territories, metropolitan cities, counties, and Tribal governments are required to submit a one-time interim report with expenditures12 by Expenditure Category covering the period from March 3rd to July 31, 2021, by August 31, 2021 or sixty (60) days after first receiving funding if the recipient’s date of award is between July 15, 2021 and October 15, 2021. The recipient will be required to enter obligations13 and expenditures and, for each, select the specific expenditure category from the available options. See Appendix 1 for Expenditure Categories (EC). 1. Required Programmatic Data Recipients will also be required to provide the following information if they have or plan to have expenditures in the following Expenditure Categories. a. Revenue replacement (EC 6.114): Key inputs into the revenue replacement formula in the Interim Final Rule and estimated revenue loss due to the Covid-19 public health emergency calculated using the formula in the Interim Final Rule as of December 31, 2020. • Base year general revenue (e.g., revenue in the last full fiscal year prior to the public health emergency) • Fiscal year end date • Growth adjustment used (either 4.1 percent or average annual general revenue growth over 3 years prior to pandemic) • Actual general revenue as of the twelve months ended December 31, 2020 12 For purposes of reporting in the SLFRF portal, an expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). 13 For purposes of reporting in the SLFRF portal, an obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. 14 See Appendix 1 for the full Expenditure Category (EC) list. References to Expenditure Categories are identified by “EC” followed by numbers from the table in Appendix 1. Comparison to reporting for the CRF This guidance does not change the reporting or compliance requirements pertaining to the CRF. Reporting and compliance requirements for the SLFRF are separate from CRF reporting requirements. Changes from CRF to SLFRF include: • Project, Expenditure, and Subaward Reporting: The SLFRF reporting requirements leverage the existing reporting regime used for CRF to foster continuity and provide many recipients with a familiar reporting mechanism. The data elements for the Project and Expenditure Report will largely mirror those used for CRF, with some minor exceptions noted in this guidance. The users’ guide will describe how reporting for CRF funds will relate to reporting for the SLFRF. • Timing of Reports: CRF reports were due within 10 days of each calendar quarter end. For quarterly reporters, SLFRF reporting will be due 30 days from quarter end. For annual reporters, SLFRF reporting will be due on an annual schedule (see table below). • Program and Performance Reporting: The CRF reporting did not include any program or performance reporting. To build public awareness and accountability and allow Treasury to monitor compliance with eligible uses, some program and performance reporting is required for SLFRF. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 15 • Estimated revenue loss due to the Covid-19 public health emergency as of December 31, 2020 • An explanation of how revenue replacement funds were allocated to government services (Note: additional instructions and/or template to be provided in users’ guide) In calculating general revenue and the other items discussed above, recipients should use audited data if it is available. When audited data is not available, recipients are not required to obtain audited data if substantially accurate figures can be produced on an unaudited basis. Recipients should use their own data sources to calculate general revenue, and do not need to rely on revenue data published by the Census Bureau. Treasury acknowledges that due to differences in timing, data sources, and definitions, recipients’ self-reported general revenue figures may differ from those published by the Census Bureau. Recipients may provide data on a cash, accrual, or modified accrual basis, provided that recipients are consistent in their choice of methodology throughout the covered period and until reporting is no longer required. Recipients’ reporting should align with their own financial reporting. In calculating general revenue, recipients should exclude all intergovernmental transfers from the federal government. This includes, but is not limited to, federal transfers made via a State to a locality pursuant to the CRF or SLFRF. To the extent federal funds are passed through States or other entities or intermingled with other funds, recipients should attempt to identify and exclude the federal portion of those funds from the calculation of general revenue on a best-efforts basis. Consistent with the broad latitude provided to recipients to use funds for government services to the extent of reduction in revenue, recipients will be required to submit a description of services provided. This description may be in narrative or in another form, and recipients are encouraged to report based on their existing budget processes and to minimize administrative burden. For example, a recipient with $100 in revenue replacement funds available could indicate that $50 were used for law enforcement operating expenses and $50 were used for pay-go building of sidewalk infrastructure. As discussed in the Interim Final Rule, these services can include a broad range of services but may not be used directly for pension deposits or debt service. Reporting requirements will not require tracking the indirect effects of Fiscal Recovery Funds, apart from the restrictions on use of Fiscal Recovery Funds to offset a reduction in net tax revenue. In addition, recipients must indicate that Fiscal Recovery Funds were not used to make a deposit in a pension fund. B. Project and Expenditure Report All recipients are required to submit Project and Expenditure Reports. 1. Quarterly Reporting The following recipients are required to submit quarterly Project and Expenditure Reports: • States and U.S. territories • Tribal governments that received more than $30 million in SLFRF funding • Metropolitan cities and counties with a population that exceeds 250,000 residents • Metropolitan cities and counties with a population below 250,000 residents that are allocated more than $10 million in SLFRF funding DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 16 For these recipients, the initial quarterly Project and Expenditure Report will cover three calendar quarters from March 3, 2021 to December 31, 2021 and must be submitted to Treasury by January 31, 2022. The subsequent quarterly reports will cover one calendar quarter and must be submitted to Treasury within 30 calendar days after the end of each calendar quarter. Quarterly reports are not due concurrently with applicable annual reports. The table below summarizes the quarterly report timelines: Report Year Quarter Period Covered Due Date 1 2021 2 - 4 March 3 – December 31 January 31, 2022 2 2022 1 January 1 – March 31 April 30, 2022 3 2022 2 April 1 – June 30 July 31, 2022 4 2022 3 July 1 – September 30 October 31, 2022 5 2022 4 October 1 – December 31 January 31, 2023 6 2023 1 January 1 – March 31 April 30, 2023 7 2023 2 April 1 – June 30 July 31, 2023 8 2023 3 July 1 – September 30 October 31, 2023 9 2023 4 October 1 – December 31 January 31, 2024 10 2024 1 January 1 – March 31 April 30, 2024 11 2024 2 April 1 – June 30 July 31, 2024 12 2024 3 July 1 – September 30 October 31, 2024 13 2024 4 October 1 – December 31 January 31, 2025 14 2025 1 January 1 – March 31 April 30, 2025 15 2025 2 April 1 – June 30 July 31, 2025 16 2025 3 July 1 – September 30 October 31, 2025 17 2025 4 October 1 – December 31 January 31, 2026 18 2026 1 January 1 – March 31 April 30, 2026 19 2026 2 April 1 – June 30 July 31, 2026 20 2026 3 July 1 – September 30 October 31, 2026 21 2026 4 October 1 – December 31 March 31, 2027 2. Annual Reporting The following recipients are required to submit annual Project and Expenditure Reports: • Tribal governments that received less than $30 million in SLFRF funding • Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding • NEUs. To facilitate reporting, each NEU will need a NEU Recipient Number. This is a unique identification code for each NEU assigned by the State or territory to the NEU as part of its request for funding. For these recipients, the initial Project and Expenditure Report will cover from March 3, 2021 to March 31, 2022 and must be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30. The table below summarizes the report timelines: Report Period Covered Due Date 1 March 3, 2021 – March 31, 2022 April 30, 2022 2 April 1, 2022 – March 31, 2023 April 30, 2023 3 April 1, 2023 – March 31, 2024 April 30, 2024 4 April 1, 2024 – March 31, 2025 April 30, 2025 5 April 1, 2025 – March 31, 2026 April 30, 2026 6 April 1, 2026 – December 31, 2026 April 30, 2027 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 17 3. Required Information The following information will be required in Project and Expenditure Reports for both quarterly and annual reporting: a. Projects: Provide information on all SLFRF funded projects. Projects are new or existing eligible government services or investments funded in whole or in part by SLFRF funding. For each project, the recipient will be required to enter the project name, identification number (created by the recipient), project expenditure category (see Appendix 1), description, and status of completion. Project descriptions must describe the project in sufficient detail to provide understanding of the major activities that will occur, and will be required to be between 50 and 250 words. Projects should be defined to include only closely related activities directed toward a common purpose. Recipients should review the Required Programmatic Data described in 3.g. below and define their projects at a sufficient level of granularity. Note: For each project, the recipient will be asked to select the appropriate Expenditure Category based on the scope of the project (see Appendix 1). Projects should be scoped to align to a single Expenditure Category. For select Expenditure Categories, the recipient will also be asked to provide additional programmatic data (described further below). b. Expenditures: Once a project is entered the recipient will be able to report on the project’s obligations and expenditures. Recipients will be asked to report: • Current period obligation • Cumulative obligation • Current period expenditure • Cumulative expenditure c. Project Status: Once a project is entered the recipient will be asked to report on project status each reporting period, in four categories: • Not Started • Completed less than 50 percent • Completed 50 percent or more • Completed d. Adopted Budget (States, U.S. territories, metropolitan cities and counties with a population that exceeds 250,000 residents only): Each state, territory and metropolitan city and county with a population that exceeds 250,000 residents will provide the budget adopted for each project by its jurisdiction associated with SLFRF funds. Treasury will use this information to better understand the intended impact, identify opportunities for technical assistance, and understand the recipient’s progress in program implementation. Treasury is not approving or pre-approving projects or budgets. • Recipients will enter the Adopted Budget based on information that exists currently in the recipient’s financial systems and the recipient’s established budget process. Treasury understands that recipients may use different budget processes. For example, a recipient may consider a project budgeted once a legislature has appropriated funds; whereas another recipient may consider a project budgeted at the moment when the funds have been obligated. • Additional information will be provided on the differences between Adopted Budget, Obligations, and Expenditures as part of the forthcoming User Guide. e. Project Demographic Distribution – Collection of this data will be phased in; no data will be collected in this area before April 2022: Recognizing the disproportionate impact of the pandemic-related recession on low-income and economically disadvantaged communities, DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 18 the Interim Final Rule encourages recipients to direct Fiscal Recovery Funds toward disproportionately impacted communities. Recipients are encouraged to design projects that prioritize economic and racial equity and promote equitable outcomes. Treasury is committed to supporting recipients in executing and reporting on projects that promote equity. In a subsequent version of the Reporting Guidance and User Guide, which will be released after the issuance of the Fiscal Recovery Fund Final Rule, Treasury will issue detailed requirements for reporting the project demographic distribution of Fiscal Recovery Fund projects. f. Subawards: Each recipient shall also provide detailed obligation and expenditure information for any contracts and grants awarded, loans issued, transfers made to other government entities, and direct payments made by the recipient that are greater than $50,000. Recipients do not also need to submit separate monthly subaward reports to FSRS.gov as required pursuant to the 2 CFR Part 170, Appendix A award term regarding reporting subaward and executive compensation, which is included in the SLFRF Award Terms and Conditions. Treasury will submit this reporting on behalf of recipients using the $50,000 reporting threshold, timing, and data elements discussed in this guidance. If recipients choose to continue reporting to FSRS.gov in addition to reporting directly to Treasury on these funds, they may do so and will be asked to notify Treasury as part of their quarterly submission. In general, recipients will be asked to provide the following information for each Contract, Grant, Loan, Transfer, or Direct Payment greater than $50,000: • Subrecipient identifying and demographic information (e.g., DUNS number and location) • Award number (e.g., Award number, Contract number, Loan number) • Award date, type, amount, and description • Award payment method (reimbursable or lump sum payment(s)) • For loans, expiration date (date when loan expected to be paid in full) • Primary place of performance • Related project name(s) • Related project identification number(s) (created by the recipient) • Period of performance start date • Period of performance end date • Quarterly obligation amount • Quarterly expenditure amount • Project(s) • Additional programmatic performance indicators for select Expenditure Categories (see below) Aggregate reporting is required for contracts, grants, transfers made to other government entities, loans, direct payments, and payments to individuals that are below $50,000. This information will be accounted for by expenditure category at the project level. As required by the 2 CFR Part 170, Appendix A award term regarding reporting subaward and executive compensation, recipients must also report the names and total compensation of their five most highly compensated executives and their subrecipients’ executives for the preceding completed fiscal year if (1) the recipient received 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as provided by 2 CFR 170.320 (and subawards), and received $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 19 Transparency Act (and subawards), and (2) if the information is not otherwise public. In general, most SLFRF Recipients are governmental entities with executive salaries that are already disclosed, so no additional information must be reported. The recipient is responsible for the subrecipients’ compliance with registering and maintaining an updated profile on SAM.gov. g. Civil Rights Compliance: Treasury will request information on recipients’ compliance with Title VI of the Civil Rights Act of 1964, as applicable, on an annual basis. This information may include a narrative describing the recipient’s compliance with Title VI, along with other questions and assurances. This collection does not apply to Tribal Governments. h. Ineligible Activities: Tax Offset Provision (States and territories only): Treasury may collect additional information related to the Tax Offset Provision as described in section 602(c)(2) of the Social Security Act and implemented under 31 CFR 35.8 as part of the Project and Expenditure Report, such as but not limited to revenue reducing covered changes. Please see Section C.11 (Recovery Plan, Ineligible Activities: Tax Offset Provision) for more information. i. Required Programmatic Data (other than infrastructure projects): For all projects listed under the following Expenditure Categories (see Appendix 1), the information listed must be provided in each report. 1. Payroll for Public Health and Safety Employees (EC 1.9) – Collection to begin in January 2022: • Number of government FTEs responding to COVID-19 supported under this authority 2. Household Assistance (EC 2.1-2.5) – Collection to begin January 2022: • Brief description of structure and objectives of assistance program(s) (e.g., nutrition assistance for low-income households) • Number of households served (by program if recipient establishes multiple separate household assistance programs) • Brief description of recipient’s approach to ensuring that aid to households responds to a negative economic impact of Covid-19, as described in the Interim Final Rule 3. Small Business Economic Assistance (EC 2.9) – Collection of this data will be phased in; no data will be collected in this area before April 2022: • Brief description of the structure and objectives of assistance program(s) (e.g., grants for additional costs related to Covid-19 mitigation) • Number of small businesses served (by program if recipient establishes multiple separate small businesses assistance programs) • Brief description of recipient’s approach to ensuring that aid to small businesses responds to a negative economic impact of COVID-19, as described in the Interim Final Rule 4. Aid to Travel, Tourism, and Hospitality or Other Impacted Industries (EC 2.11-2.12) – Collection of this data will be phased in; no data will be collected in this area before April 2022: • If aid is provided to industries other than travel, tourism, and hospitality (EC 2.12), a description of pandemic impact on the industry and rationale for providing aid to the industry • Brief narrative description of how the assistance provided responds to negative economic impacts of the COVID-19 pandemic DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 20 • For each subaward: o Sector of employer (Note: additional detail, including list of sectors to be provided in a users’ guide) o Purpose of funds (e.g., payroll support, safety measure implementation) 5. Rehiring Public Sector Staff (EC 2.14) – Collection to begin in January 2022: • Number of FTEs rehired by governments under this authority 6. Education Assistance (EC 3.1-3.5) – Collection to begin in January 2022: • The National Center for Education Statistics (“NCES”) School ID or NCES District ID. List the School District if all schools within the school district received some funds. If not all schools within the school district received funds, list the School ID of the schools that received funds. These can allow evaluators to link data from the NCES to look at school-level demographics and, eventually, student performance.15 7. Premium Pay (both Public Sector EC 4.1 and Private Sector EC 4.2) – Collection to begin in January 2022: • List of sectors designated as critical to the health and well-being of residents by the chief executive of the jurisdiction, if beyond those included in the Interim Final Rule (Note: a list of sectors will be provided in the forthcoming users’ guide). • Number of workers to be served • Employer sector for all subawards to third-party employers (i.e., employers other than the State, local, or Tribal government) (Note: a list of sectors will be provided in the forthcoming users’ guide). • For groups of workers (e.g., an operating unit, a classification of worker, etc.) or, to the extent applicable, individual workers, for whom premium pay would increase total pay above 150 percent of their residing State’s average annual wage, or their residing county’s16 average annual wage, whichever is higher, on an annual basis: o A brief written narrative justification of how the premium pay or grant is responsive to workers performing essential work during the public health emergency. This could include a description of the essential workers’ duties, health or financial risks faced due to COVID-19, and why the recipient government determined that the premium pay was responsive to workers performing essential work during the pandemic. This description should not include personally identifiable information; when addressing individual workers, recipients should be careful not to include this information. Recipients may consider describing the workers’ occupations and duties in a general manner as necessary to protect privacy. 8. Revenue replacement (EC 6.1) – Collection began in August 2021: Under the Interim Final Rule, recipients calculate revenue loss using data as of four discrete points during the program: December 31, 2020, December 31, 2021, December 31, 2022, and December 31, 2023. Revenue loss calculated as of December 31, 2020 will be reported in the Interim Report, as described above. For future calculation dates, revenue loss will be reported only in the Quarter 4 reports 15 For more information on NCES identification numbers see https://nces.ed.gov/ccd/districtsearch/ (districts) and https://nces.ed.gov/ccd/schoolsearch/ (schools). 16 County means a county, parish, or other equivalent county division (as defined by the Census Bureau). See 31 CFR 35.3. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 21 due January 31, 2022, January 31, 2023, and January 31, 2024. Reporting on revenue loss should include: • General revenue collected over the past 12 months as of the most recent calculation date, as outlined in the Interim Final Rule (for example, for the January 31, 2022 report, recipients should provide 12 month general revenue as of December 31, 2021). • Calculated revenue loss due to the Covid-19 public health emergency; and • An explanation of how the revenue replacement funds were allocated to government services (note: additional instructions and/or template to be provided in user guide). In calculating general revenue and the revenue loss due to the COVID-19 public health emergency, recipients should follow the same guidance as described above for the Interim Report. j. Required Programmatic Data for Infrastructure Projects (EC 5): For all projects listed under the Water, Sewer, and Broadband Expenditure Categories (see Appendix 1), more detailed project-level information is required. Each project will be required to report expenditure data as described above, but will also report the following information: 1. All infrastructure projects (EC 5) – Collection to begin in January 2022: • Projected/actual construction start date (month/year) • Projected/actual initiation of operations date (month/year) • Location (for broadband, geospatial location data) • For projects over $10 million (based on expected total cost): a. A recipient may provide a certification that, for the relevant project, all laborers and mechanics employed by contractors and subcontractors in the performance of such project are paid wages at rates not less than those prevailing, as determined by the U.S. Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly known as the “Davis-Bacon Act”), for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the civil subdivision of the State (or the District of Columbia) in which the work is to be performed, or by the appropriate State entity pursuant to a corollary State prevailing-wage-in-construction law (commonly known as “baby Davis- Bacon Acts”). If such certification is not provided, a recipient must provide a project employment and local impact report detailing: ▪ The number of employees of contractors and sub-contractors working on the project; ▪ The number of employees on the project hired directly and hired through a third party; ▪ The wages and benefits of workers on the project by classification; and ▪ Whether those wages are at rates less than those prevailing.17 Recipients must maintain sufficient records to substantiate this information upon request. b. A recipient may provide a certification that a project includes a project labor agreement, meaning a pre-hire collective bargaining agreement consistent with section 8(f) of the National Labor Relations Act (29 U.S.C. 158(f)). If the recipient does not provide such certification, the recipient must provide a project workforce continuity plan, detailing: 17 As determined by the U.S. Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly known as the “Davis-Bacon Act”), for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the civil subdivision of the State (or the District of Columbia) in which the work is to be performed. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 22 ▪ How the recipient will ensure the project has ready access to a sufficient supply of appropriately skilled and unskilled labor to ensure high-quality construction throughout the life of the project; ▪ How the recipient will minimize risks of labor disputes and disruptions that would jeopardize timeliness and cost-effectiveness of the project; ▪ How the recipient will provide a safe and healthy workplace that avoids delays and costs associated with workplace illnesses, injuries, and fatalities; ▪ Whether workers on the project will receive wages and benefits that will secure an appropriately skilled workforce in the context of the local or regional labor market; and ▪ Whether the project has completed a project labor agreement. c. Whether the project prioritizes local hires. d. Whether the project has a Community Benefit Agreement, with a description of any such agreement. 2. Water and sewer projects (EC 5.1-5.15) Collection to begin in January 2022 and required once the project starts: • National Pollutant Discharge Elimination System (NPDES) Permit Number (if applicable; for projects aligned with the Clean Water State Revolving Fund) • Public Water System (PWS) ID number (if applicable; for projects aligned with the Drinking Water State Revolving Fund) 3. Broadband projects (EC 5.16-5.17) Collection to begin in January 2022: • Confirm that the project is designed to, upon completion, reliably meet or exceed symmetrical 100 Mbps download and upload speeds. o If the project is not designed to reliably meet or exceed symmetrical 100 Mbps download and upload speeds, explain why not, and o Confirm that the project is designed to, upon completion, meet or exceed symmetrical 100 Mbps download speed and between at least 20 Mbps and 100 Mbps upload speed, and be scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed. • Please note: additional programmatic data will be required for broadband projects beginning in July 2022 and will be defined in a subsequent version of the Reporting Guidance. k. NEU Documentation (NEUs only): Each NEU will also be asked to provide the following information once their accounts are established in Treasury’s Reporting Portal and prior to the due date for their first annual Project and Expenditure Report (due April 30, 2022): • Copy of the signed award terms and conditions agreement (which was signed and submitted to the State as part of the request for funding) • Copy of the signed assurances of compliance with Title VI of the Civil Rights Act of 1964 (which was signed and submitted to the State as part of the request for funding) • Copy of actual budget documents validating the top-line budget total provided to the State as part of the request for funding NEU accounts will be established in Treasury’s Portal based on information provided by the States or territories, as further described in Section Part 2 D below. C. Recovery Plan Performance Report States, territories, metropolitan cities, and counties with a population that exceeds 250,000 residents will also be required to publish and submit to Treasury a Recovery Plan performance report (“Recovery Plan”). Each Recovery Plan must be posted on the public-facing website of DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 23 the recipient by the same date the recipient submits the report to Treasury. This reporting requirement includes uploading a link to the publicly available document report along with providing data in the Treasury reporting portal. The Recovery Plan will provide the public and Treasury information on the projects recipients are undertaking with program funding and how they are planning to ensure program outcomes are achieved in an effective, efficient, and equitable manner. While this guidance outlines some minimum requirements for the Recovery Plan, each recipient is encouraged to add information to the plan they feel is appropriate to provide information to their constituents on efforts they are taking to respond to the pandemic and promote economic recovery. Each jurisdiction may determine the general form and content of the Recovery Plan, as long as it includes the minimum information determined by Treasury. Treasury will provide a recommended template but recipients may modify this template as appropriate for their jurisdiction. The Recovery Plan will include key performance indicators identified by the recipient and some mandatory indicators identified by Treasury. The initial Recovery Plan will cover the period from the date of award to July 31, 2021 and must be submitted to Treasury by August 31, 2021, or 60 days after receiving funding. Thereafter, the Recovery Plan will cover a 12-month period and recipients will be required to submit the report to Treasury within 30 days after the end of the 12-month period (by July 31). The table below summarizes the report timelines: Annual Report Period Covered Due Date 1 Award Date – July 31, 2021 August 31, 2021 2 July 1, 2021 – June 30, 2022 July 31, 2022 3 July 1, 2022 – June 30, 2023 July 31, 2023 4 July 1, 2023 – June 30, 2024 July 31, 2024 5 July 1, 2024 – June 30, 2025 July 31, 2025 6 July 1, 2025 – June 30, 2026 July 31, 2026 7 July 1, 2026 – December 31, 2026 March 31, 2027 The Recovery Plan will include, at a minimum, the following information: 1. Executive Summary Provide a high-level overview of the jurisdiction’s intended and actual uses of funding including, but not limited to: the jurisdiction’s plan for use of funds to promote a response to the pandemic and economic recovery, key outcome goals, progress to date on those outcomes, and any noteworthy challenges or opportunities identified during the reporting period. 2. Uses of Funds Describe in further detail your jurisdiction’s intended and actual uses of the funds, such as how your jurisdiction’s approach would help support a strong and equitable recovery from the COVID-19 pandemic and economic downturn. Describe any strategies employed to maximize programmatic impact and effective, efficient, and equitable outcomes. Given the broad eligible uses of funds and the specific needs of the jurisdiction, please also explain how the funds would support the communities, populations, or individuals in your jurisdiction. Your description should address how you are promoting each of the following, to the extent they apply: a. Public Health (EC 1): As relevant, describe how funds are being used to respond to COVID-19 and the broader health impacts of COVID-19 and the COVID-19 public health emergency. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 24 b. Negative Economic Impacts (EC 2): As relevant, describe how funds are being used to respond to negative economic impacts of the COVID-19 public health emergency, including to households and small businesses. c. Services to Disproportionately Impacted Communities (EC 3): As relevant, describe how funds are being used to provide services to communities disproportionately impacted by the COVID-19 public health emergency. d. Premium Pay (EC 4): As relevant, describe the approach, goals, and sectors or occupations served in any premium pay program. Describe how your approach prioritizes low-income workers. e. Water, sewer, and broadband infrastructure (EC 5): Describe the approach, goals, and types of projects being pursued, if pursuing. f. Revenue Replacement (EC 6): Describe the loss in revenue due to the COVID-19 public health emergency and how funds have been used to provide government services. Where appropriate, recipients should also include information on your jurisdiction’s use (or planned use) of other federal recovery funds including other programs under the American Rescue Plan such as Emergency Rental Assistance, Housing Assistance, and so forth, to provide broader context on the overall approach for pandemic recovery. 3. Promoting equitable outcomes Describe efforts to promote equitable outcomes, including how programs were designed with equity in mind. Please include in your description how your jurisdiction will consider and measure equity at the various stages of the program, including: a. Goals: Are there particular historically underserved, marginalized, or adversely affected groups that you intend to serve within your jurisdiction? b. Awareness: How equal and practical is the ability for residents or businesses to become aware of the services funded by the SLFRF? c. Access and Distribution: Are there differences in levels of access to benefits and services across groups? Are there administrative requirements that result in disparities in ability to complete applications or meet eligibility criteria? d. Outcomes: Are intended outcomes focused on closing gaps, reaching universal levels of service, or disaggregating progress by race, ethnicity, and other equity dimensions where relevant for the policy objective? Treasury encourages uses of funds that promote strong, equitable growth, including racial equity. Please describe how your jurisdiction’s planned or current use of funds prioritizes economic and racial equity as a goal, names specific targets intended to produce meaningful equity results at scale, and articulates the strategies to achieve those targets. In addition, please explain how your jurisdiction’s overall equity strategy translates into the specific services or programs offered by your jurisdiction in the following Expenditure Categories: a. Negative Economic Impacts (EC 2): assistance to households, small businesses, and non-profits to address impacts of the pandemic, which have been most severe among low-income populations. This includes assistance with food, housing, and other needs; employment programs for people with barriers to employment who faced negative economic impacts from the pandemic (such as residents of low-income neighborhoods, minorities, disconnected youth, the unemployed, formerly incarcerated people, veterans, and people with disabilities); and other strategies that provide disadvantaged groups with access to education, jobs, and opportunity. b. Services to Disproportionately Impacted Communities (EC 3): services to address health disparities and the social determinants of health, build stronger neighborhoods and communities (e.g., affordable housing), address educational disparities (e.g., evidence- based tutoring, community schools, and academic, social-emotional, and mental health DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 25 supports for high poverty schools), and promote healthy childhood environments (e.g., home visiting, child care). The initial report must describe efforts to date and intended outcomes to promote equity. Each annual report thereafter must provide an update, using qualitative and quantitative data, on how the recipients’ approach achieved or promoted equitable outcomes or progressed against equity goals during the performance period. Please also describe any constraints or challenges that impacted project success in terms of increasing equity. In particular, this section must describe the geographic and demographic distribution of funding, including whether it is targeted toward traditionally marginalized communities. For the purposes of the SLFRF, equity is described in the Executive Order 13985 On Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, as issued on January 20, 2021. 4. Community Engagement Please describe how your jurisdiction’s planned or current use of funds incorporates written, oral, and other forms of input that capture diverse feedback from constituents, community- based organizations, and the communities themselves. Where relevant, this description must include how funds will build the capacity of community organizations to serve people with significant barriers to services, including people of color, people with low incomes, limited English proficient populations, and other traditionally underserved groups. 5. Labor Practices Describe workforce practices on any infrastructure projects being pursued (EC 5). How are projects using strong labor standards to promote effective and efficient delivery of high-quality infrastructure projects while also supporting the economic recovery through strong employment opportunities for workers? For example, report whether any of the following practices are being utilized: project labor agreements, community benefits agreements, prevailing wage requirements, and local hiring. 6. Use of Evidence The Recovery Plan should identify whether SLFRF funds are being used for evidence-based interventions18 and/or if projects are being evaluated through rigorous program evaluations that are designed to build evidence. Recipients must briefly describe the goals of the project, and the evidence base for the interventions funded by the project. Recipients must specifically identify the dollar amount of the total project spending that is allocated towards evidence- based interventions for each project in the Public Health (EC 1), Negative Economic Impacts (EC 2), and Services to Disproportionately Impacted Communities (EC 3) Expenditure Categories.19 Recipients are exempt from reporting on evidence-based interventions in cases where a program evaluation is being conducted. Recipients are encouraged to use relevant evidence Clearinghouses, among other sources, to assess the level of evidence for their interventions and identify evidence-based models that could be applied in their jurisdiction; such evidence clearinghouses include the U.S. Department of Education’s What Works Clearinghouse, the U.S. Department of Labor’s CLEAR, and the Childcare & Early Education Research Connections and the Home Visiting Evidence of Effectiveness clearinghouses from 18As noted in Appendix 2, evidence-based refers to interventions with strong or moderate levels of evidence. 19 Of note, recipients are only required to report the amount of the total funds that are allocated to evidence-based interventions in the areas of Public Health, Negative Economic Impacts, and Services to Disproportionately Impacted Communities that are marked by an asterisk in Appendix 1: Expenditure Categories. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 26 Administration for Children and Families, as well as other clearinghouses relevant to particular projects conducted by the recipient. In such cases where a recipient is conducting a program evaluation in lieu of reporting the amount of spending on evidence-based interventions, they must describe the evaluation design including whether it is a randomized or quasi- experimental design; the key research questions being evaluated; whether the study has sufficient statistical power to disaggregate outcomes by demographics; and the timeframe for the completion of the evaluation (including a link to completed evaluation if relevant).20 Once the evaluation has been completed, recipients must post the evaluation publicly and link to the completed evaluation in the Recovery Plan. Once an evaluation has been completed (or has sufficient interim findings to determine the efficacy of the intervention), recipients should determine whether the spending for the evaluated interventions should be counted towards the dollar amount categorized as evidence-based for the relevant project. For all projects, recipients may be selected to participate in a national evaluation, which would study their project along with similar projects in other jurisdictions that are focused on the same set of outcomes. In such cases, recipients may be asked to share information and data that is needed for the national evaluation. Recipients are encouraged to consider how a Learning Agenda, either narrowly focused on SLFRF or broadly focused on the recipient’s broader policy agenda, could support their overarching evaluation efforts in order to create an evidence-building strategy for their jurisdiction.21 Appendix 2 contains additional information on evidence-based interventions for the purposes of the Recovery Plan. 7. Table of Expenses by Expenditure Category Please include a table listing the amount of funds used in each Expenditure Category (See Appendix 1). The table should include cumulative expenses to date within each category, and the additional amount spent within each category since the last annual Recovery Plan. 8. Project Inventory List the name and provide a brief description of all SLFRF funded projects. Projects are new or existing eligible government services or investments funded in whole or in part by SLFRF funding. For each project, include the project name, funding amount, identification number (created by the recipient and used thereafter in the quarterly Program and Expenditure Report), project Expenditure Category (see Appendix 1), and a description of the project which includes an overview of the main activities of the project, the approximate timeline, primary delivery mechanisms and partners, if applicable, and intended outcomes. Include a link to the website of the project if available. This information will provide context and additional detail for the information reported quarterly in the Project and Expenditure Report. For infrastructure investment projects (EC 5), project-level reporting will be more detailed, as described for the Project and Expenditure Report above. Projects in this area may be grouped by Expenditure Category if needed, with further detail (such as the specific project name and identification number) provided in the Project and Expenditure Report. For infrastructure projects, descriptions should note how the project contributes to addressing climate change. 9. Performance Report The Recovery Plan must include key performance indicators for the major SLFRF funded projects undertaken by the recipient. The recipient has flexibility in terms of how this information is presented in the Recovery Plan, and may report key performance indicators for 20 For more information on the required standards for program evaluation, see OMB M-20-12. 21 For more information on learning agendas, please see OMB M-19-23 DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 27 each project, or may group projects with substantially similar goals and the same outcome measures. In some cases, the recipient may choose to include some indicators for each individual project as well as crosscutting indicators. Performance indicators should include both output and outcome measures. Output measures, such as number of students enrolled in an early learning program, provide valuable information about the early implementation stages of a project. Outcome measures, such as the percent of students reading on grade level, provide information about whether a project is achieving its overall goals. Recipients are encouraged to use logic models22 to identify their output and outcome measures. While the initial report will focus heavily on early output goals, recipients must include the related outcome goal for each project and provide updated information on achieving these outcome goals in annual reports. In cases where recipients are conducting a program evaluation for a project (as described above), the outcome measures in the performance report should be aligned with those being evaluated in the program. To support their performance measurement and program improvement efforts, recipients are permitted to use funds to make improvements to data or technology infrastructure and data analytics, as well as program evaluations. 10. Required Performance Indicators and Programmatic Data While recipients have discretion on the full suite of performance indicators to include, a number of mandatory performance indicators and programmatic data must be included. These are necessary to allow Treasury to conduct oversight as well as understand and aggregate program outcomes across recipients. This section provides an overview of the mandatory performance indicators and programmatic data. This information may be included in each recipient’s Recovery Plan as they determine most appropriate, including combining with the section above, but this data will also need to be entered directly into the Treasury reporting portal. Below is a list of required data for each Expenditure Category: a. Household Assistance (EC 2.2 & 2.5) and Housing Support (EC 3.10-3.12): • Number of people or households receiving eviction prevention services (including legal representation) • Number of affordable housing units preserved or developed b. Negative Economic Impacts (EC 2): • Number of workers enrolled in sectoral job training programs • Number of workers completing sectoral job training programs • Number of people participating in summer youth employment programs c. Education Assistance (EC 3.1-3.5): • Number of students participating in evidence-based tutoring programs23 d. Healthy Childhood Environments (EC 3.6-3.9): • Number of children served by childcare and early learning (pre-school/pre-K/ages 3- 5) • Number of families served by home visiting The initial report should include the key indicators above. Each annual report thereafter should include updated data for the performance period as well as prior period data, and a brief 22 A logic model is a tool that depicts the intended links between program investments and outcomes, specifically the relationships among the resources, activities, outputs, outcomes, and impact of a program. 23 For more information on evidence-based tutoring programs, refer to the U.S. Department of Education’s 2021 ED COVID-19 Handbook (Volume 2), which summarizes research on evidence- based tutoring programs (see the bottom of page 20. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 28 narrative adding any additional context to help the reader interpret the results and understand the any changes in performance indicators over time. To the extent possible, Treasury also encourages recipients to provide data disaggregated by race, ethnicity, gender, income, and other relevant factors. 11. Ineligible Activities: Tax Offset Provision (States and territories only) The following information is required for Treasury to ensure SLFRF funding is not used for ineligible activities. In each reporting year, States and territories will report certain items related to the Tax Offset Provision as described in section 602(c)(2) of the Social Security Act and implemented by 31 CFR 35.8. Additional guidance will be forthcoming for reporting requirements regarding the tax offset provision and additional information that Recipients will report once the Final Rule goes into effect. a. Revenue-reducing Covered Changes: Collection began August 2021: For each reporting year, a recipient must report the value of covered changes that the recipient predicts will have the effect of reducing tax revenue in a given reporting year (revenue-reducing covered changes), similar to the way it would in the ordinary course of its budgeting process. The value of these covered changes may be reported based on estimated values produced by a budget model, incorporating reasonable assumptions, that aligns with the recipient government’s existing approach for measuring the effects of fiscal policies, and that measures relative to a current law baseline. The covered changes may also be reported based on actual values using a statistical methodology to isolate the change in year-over-year revenue attributable to the covered change(s), relative to the current law baseline prior to the change(s). Estimation approaches should not use dynamic methodologies that incorporate the projected effects of the policies on macroeconomic growth. In general, and where possible, reported values should be produced by the agency of the recipient government responsible for estimating the costs and effects of fiscal policy changes. Recipients must maintain records regarding the identification and predicted effects of revenue-reducing covered changes. The term “covered change,”” and “tax revenue” are described in the Interim Final Rule, 31 CFR 35.3. For additional information, see 602(c)(2) of the Social Security Act, the Interim Final Rule, and 31 CFR 35.8. D. Distributions to NEUs Each State and territory is asked to provide regular updates on their NEU distribution as well as their distributions to units of general local government within counties that are not units of general local government (Non-UGLG). The distribution template generally requests information on whether the local government has (1) received funding; (2) declined funding and requested a transfer to the State under Section 603(c)(4) of the Act; or (3) not taken action on its funding or declined funding. For NEUs, states and territories should be prepared to report on their information, including the following: • NEU name • NEU DUNS number • NEU Taxpayer Identification Number (TIN) • NEU Recipient Number (a unique identification code for each NEU assigned by the State or territory to the NEU as part of the request for funding) • NEU contact information (e.g., address, point of contact name, point of contact email address, and point of contact phone number) • NEU authorized representative name and email address DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 29 • Initial allocation and, if applicable, subsequent allocation to the NEU (before application of the 75 percent cap) • Total NEU reference budget (as submitted by the NEU to the State or territory as part of the request for funding) • Amount of the initial and, if applicable, subsequent allocation above 75 percent of the NEU’s reference budget which will be returned to Treasury • Payment amount(s) • Payment date(s) States with “weak” minor civil divisions (i.e., Illinois, Indiana, Kansas, Missouri, Nebraska, North Dakota, Ohio, and South Dakota) should also list any minor civil divisions that the State deemed ineligible. For each eligible NEU that declined funding and requested a transfer to the State under Section 603(c)(4), the State or territory must also attach a form signed by the NEU, as detailed in the Guidance on Distributions of Funds to Non-Entitlement Units of Local Government. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 30 Appendix 1: Expenditure Categories The Expenditure Categories (EC) listed below must be used to categorize each project as noted in Part 2 above. The term “Expenditure Category” refers to the detailed level (e.g., 1.1 COVID-10 Vaccination). When referred to as a category (e.g., EC 1) it includes all Expenditure Categories within that level. 1: Public Health 1.1 COVID-19 Vaccination ^ 1.2 COVID-19 Testing ^ 1.3 COVID-19 Contact Tracing 1.4 Prevention in Congregate Settings (Nursing Homes, Prisons/Jails, Dense Work Sites, Schools, etc.)* 1.5 Personal Protective Equipment 1.6 Medical Expenses (including Alternative Care Facilities) 1.7 Capital Investments or Physical Plant Changes to Public Facilities that respond to the COVID-19 public health emergency 1.8 Other COVID-19 Public Health Expenses (including Communications, Enforcement, Isolation/Quarantine) 1.9 Payroll Costs for Public Health, Safety, and Other Public Sector Staff Responding to COVID-19 1.10 Mental Health Services* 1.11 Substance Use Services* 1.12 Other Public Health Services 2: Negative Economic Impacts 2.1 Household Assistance: Food Programs* ^ 2.2 Household Assistance: Rent, Mortgage, and Utility Aid* ^ 2.3 Household Assistance: Cash Transfers* ^ 2.4 Household Assistance: Internet Access Programs* ^ 2.5 Household Assistance: Eviction Prevention* ^ 2.6 Unemployment Benefits or Cash Assistance to Unemployed Workers* 2.7 Job Training Assistance (e.g., Sectoral job-training, Subsidized Employment, Employment Supports or Incentives)* ^ 2.8 Contributions to UI Trust Funds 2.9 Small Business Economic Assistance (General)* ^ 2.10 Aid to Nonprofit Organizations* 2.11 Aid to Tourism, Travel, or Hospitality 2.12 Aid to Other Impacted Industries 2.13 Other Economic Support* ^ 2.14 Rehiring Public Sector Staff 3: Services to Disproportionately Impacted Communities 3.1 Education Assistance: Early Learning* ^ 3.2 Education Assistance: Aid to High-Poverty Districts ^ 3.3 Education Assistance: Academic Services* ^ 3.4 Education Assistance: Social, Emotional, and Mental Health Services* ^ 3.5 Education Assistance: Other* ^ 3.6 Healthy Childhood Environments: Child Care* ^ 3.7 Healthy Childhood Environments: Home Visiting* ^ 3.8 Healthy Childhood Environments: Services to Foster Youth or Families Involved in Child Welfare System* ^ DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 31 3.9 Healthy Childhood Environments: Other* ^ 3.10 Housing Support: Affordable Housing* ^ 3.11 Housing Support: Services for Unhoused Persons* ^ 3.12 Housing Support: Other Housing Assistance* ^ 3.13 Social Determinants of Health: Other* ^ 3.14 Social Determinants of Health: Community Health Workers or Benefits Navigators* ^ 3.15 Social Determinants of Health: Lead Remediation ^ 3.16 Social Determinants of Health: Community Violence Interventions* ^ 4: Premium Pay 4.1 Public Sector Employees 4.2 Private Sector: Grants to Other Employers 5: Infrastructure24 5.1 Clean Water: Centralized Wastewater Treatment 5.2 Clean Water: Centralized Wastewater Collection and Conveyance 5.3 Clean Water: Decentralized Wastewater 5.4 Clean Water: Combined Sewer Overflows 5.5 Clean Water: Other Sewer Infrastructure 5.6 Clean Water: Stormwater 5.7 Clean Water: Energy Conservation 5.8 Clean Water: Water Conservation 5.9 Clean Water: Nonpoint Source 5.10 Drinking water: Treatment 5.11 Drinking water: Transmission & Distribution 5.12 Drinking water: Transmission & Distribution: Lead Remediation 5.13 Drinking water: Source 5.14 Drinking water: Storage 5.15 Drinking water: Other water infrastructure 5.16 Broadband: “Last Mile” projects 5.17 Broadband: Other projects 6: Revenue Replacement 6.1 Provision of Government Services 7: Administrative 7.1 Administrative Expenses 7.2 Evaluation and Data Analysis 7.3 Transfers to Other Units of Government 7.4 Transfers to Non-entitlement Units (States and territories only) *Denotes areas where recipients must identify the amount of the total funds that are allocated to evidence-based interventions (see Use of Evidence section above for details) ^Denotes areas where recipients must report on whether projects are primarily serving disadvantaged communities (see Project Demographic Distribution section above for details) 24 Definitions for water and sewer Expenditure Categories can be found in the EPA’s handbooks. For “clean water” expenditure category definitions, please see: https://www.epa.gov/sites/production/files/2018-03/documents/cwdefinitions.pdf. For “drinking water” expenditure category definitions, please see: https://www.epa.gov/dwsrf/drinking-water-state- revolving-fund-national-information-management-system-reports. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 32 Appendix 2: Evidenced-Based Intervention Additional Information What is evidence-based? For the purposes of the SLFRF, evidence-based refers to interventions with strong or moderate evidence as defined below: Strong evidence means that the evidence base can support causal conclusions for the specific program proposed by the applicant with the highest level of confidence. This consists of one or more well-designed and well-implemented experimental studies conducted on the proposed program with positive findings on one or more intended outcomes. Moderate evidence means that there is a reasonably developed evidence base that can support causal conclusions. The evidence base consists of one or more quasi-experimental studies with positive findings on one or more intended outcomes OR two or more non- experimental studies with positive findings on one or more intended outcomes. Examples of research that meet the standards include: well-designed and well-implemented quasi- experimental studies that compare outcomes between the group receiving the intervention and a matched comparison group (i.e., a similar population that does not receive the intervention). Preliminary evidence means that the evidence base can support conclusions about the program’s contribution to observed outcomes. The evidence base consists of at least one non- experimental study. A study that demonstrates improvement in program beneficiaries over time on one or more intended outcomes OR an implementation (process evaluation) study used to learn and improve program operations would constitute preliminary evidence. Examples of research that meet the standards include: (1) outcome studies that track program beneficiaries through a service pipeline and measure beneficiaries’ responses at the end of the program; and (2) pre- and post-test research that determines whether beneficiaries have improved on an intended outcome. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 33 Revision Log Version Date Published Summary of changes 1.0 June 17, 2021 Initial publication 1.1 June 24, 2021 • Pg. 12, removed references to “summary” level with respect to reporting by Expenditure Categories in the Interim Report to avoid confusion. • Pg. 13, revised the coverage period end date for the Interim Report from June 30, 2021 to July 31, 2021 to align with the IFR. • Pg. 13, removed references to “summary” level with respect to reporting by Expenditure Categories in the Interim Report to avoid confusion. • Pg. 31, removed references to “summary level” with respect to Expenditure Categories in Appendix 1 to avoid confusion. 1.1 September 30, 2021 • Announced the extension in the Project and Expenditure Report submission date, originally due on October 31, 2021. 2.0 November 5, 2021 • Updated Subrecipient Monitoring section to clarify beneficiaries and recipients. • Updated references to Interim Final Rule comment period as comment period is closed. • Updated reporting tiers, thresholds and timelines in Part 2 Table 2, Reporting Requirements by recipient type, as well as Part 2 A and Part 2 B. • Updated reporting periods for Interim Report and Project and Expenditure reports. • Added concept of Adopted Budget to Project and Expenditure Report data fields. • Noted phase in of Required Programmatic Data in the Project and Expenditure Report. • Removed certain data fields from the Ineligible Activities: Tax Offset Provision under the Recovery Plan. • Separated reporting of NEU Distributions (for States and territories) from the Interim Report and Project and Expenditure Reports as information will be provided on an ongoing basis. 2.1 November 15, 2021 • Updated pages 9 and 11 to note that civil rights certification is not applicable to Tribal Governments. DocuSign Envelope ID: 1A4EF7D7-D5F2-40BE-B3A3-672E7048836E