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Chicago, Illinois Comprehensive Annual Financial Report For the Year Ended December 31, 2009

Prepared by:

Comptroller’s Office Finance Division

Kids perform at CHA holiday event

CHICAGO HOUSING AUTHORITY Chicago, Illinois

Comprehensive Annual Financial Report For the Year Ended December 31, 2009

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Table of Contents

I. INTRODUCTORY SECTION

Letter of Transmittal ................................................................................................................ 7 Certificate of Achievement for Excellence in Financial Reporting................................................ 12

Organizational Chart ................................................................................................................ 13

List of Principal Officials .......................................................................................................... 14

II. FINANCIAL SECTION

Report of Independent Auditors ................................................................................................ 18

Management’s Discussion and Analysis (Required Supplementary Information)......................... 22

Basic Financial Statements

Statements of Net Assets – Proprietary Fund Type .................................................................... 36

Statements of Revenues, Expenses, and Changes in Net Assets – Proprietary Fund Type ........... 37 Statements of Cash Flows – Proprietary Fund Type ................................................................... 38

Statements of Fiduciary Net Assets – Fiduciary Fund Type ........................................................ 39

Statements of Changes in Fiduciary Net Assets – Fiduciary Fund Type ...................................... 40

Notes to the Basic Financial Statements ................................................................................... 41

Required Supplementary Information

Schedule of Funding Progress .................................................................................................. 73

Supplementary Information – Enterprise Fund

Combining Schedule of Program Net Asset Accounts ................................................................. 76

Combining Schedule of Program Revenues, Expenses, and Changes in Net Asset Accounts ....... 78 Combining Schedule of Program Cash Flow Accounts ............................................................... 80

Low Rent Housing Program

Schedules of Net Asset Accounts .............................................................................................. 84

Schedules of Revenues, Expenses and Changes in Net Asset Accounts ...................................... 85

Schedules of Cash Flow Accounts ............................................................................................ 86

City/State Housing Program


Schedules of Revenues, Expenses, and Changes in Net Asset Accounts ..................................... 89


Housing Choice Voucher (Section 8) Programs


Schedules of Revenues, Expenses, and Changes in Net Asset Accounts ..................................... 93 Schedules of Cash Flow Accounts ............................................................................................ 94

CHICAGO HOUSING AUTHORITY Chicago, Illinois

Comprehensive Annual Financial Report For the Year Ended December 31, 2009

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Table of Contents

Supplementary Information – Enterprise Fund (Continued) Other Grant Programs

Schedules of Net Asset Accounts .............................................................................................. 96 Schedules of Revenues, Expenses, and Changes in Net Asset Accounts ..................................... 97


Financial Data Schedule Combining Schedule of Programs

Asset Management Projects ...................................................................................................... 100

Supportive Housing for Persons with Disabilities ..................................................................... 200

N/C S/R Section 8 Programs ................................................................................................... Development Program ..............................................................................................................

Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation ..........................

Revitalization of Severely Distressed Public Housing Program ...................................................

Resident Opportunity and Supportive Services ......................................................................... 203

Housing Choice Vouchers ........................................................................................................

AARA-Public Housing Capital-Competitive (CFRC)…………………………………………………………. AARA-Public Housing Capital-Formula (CFRG)………………………………………………………………

Crime Victim Assistance...........................................................................................................

WIA-Summer Youth Job Program……………………………………………………………………………….

Disaster Housing Assistance Grant .......................................................................................... 206

State/Local .............................................................................................................................. Fiduciary Pension Trust ...........................................................................................................

Central Office Cost Center ........................................................................................................

III. STATISTICAL SECTION (Unaudited) Net Assets by Component ......................................................................................................... 212

Change in Net Assets by Program ............................................................................................. 213

Revenues, Expenses, and Changes in Net Assets ..................................................................... 214

Significant Own-source Revenue .............................................................................................. 215

Long-term Debt ........................................................................................................................ 216 Other Long-term Liabilities ....................................................................................................... 217

Pledged Revenue Coverage ....................................................................................................... 218 City of Chicago – Demographic and Economic Statistics............................................................ 219

Employee Demographics – All Programs ................................................................................... 220

Number of Employees by Department – All Programs ................................................................ 221

Resident Household Information – Low Rent and City/State Housing Programs ......................... 222 Resident Household Information – Housing Choice Voucher (Section 8) Programs ..................... 223

Resident Income Information – Housing Choice Voucher (Section 8) Programs ........................... 224

Resident Head of Household Information – Housing Choice Voucher (Section 8) Programs ......... 225

Principal Employers ................................................................................................................ 226

Capital Asset Statistic by Volume ............................................................................................ 227

I. INTRODUCTORY SECTION

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CHICAGO HOUSING AUTHORITY LIST OF PRINCIPAL OFFICIALS

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Name Title BOARD OF COMMISSIONERS Martin Nesbitt ......................................................................... Chairperson Hallie Amey ............................................................................. Board Member Dr. Mildred Harris ................................................................... Board Member Michael Ivers ........................................................................... Board Member Carlos Ponce ........................................................................... Board Member Sandra Young ......................................................................... Board Member Deverra Beverly…………………………………………………………… Board Member Myra King………………………………………………………………….. Board Member SENIOR MANAGEMENT Lewis Jordan........................................................................... Chief Executive Officer Kris Warren............................................................................. Chief Operating Officer Elias Rosario ........................................................................... Chief Financial Officer Scott Ammarell........................................................................ General Counsel Marilyn Jefferson .................................................................... Acting Executive Vice

President Organizational Effectiveness

Adrienne Minley ...................................................................... Executive Vice President External Affairs

Linda Kaiser…………………………… ......................................... Executive Vice President Resident Services

William Little ........................................................................... Executive Vice President Development Management

Pamela Mitchell-Boyd .............................................................. Executive Vice President Board of Commissioners

II. FINANCIAL SECTION

Lewis A. Jordan, Chief Executive Officer

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Ernst & Young LLP

233 South Wacker Drive

Chicago, Illinois

60606

Tel: (312) 879–2000

www.ey.com

Report of Independent Auditors The Board of Commissioners Chicago Housing Authority Chicago, Illinois

We have audited the accompanying financial statements of the Proprietary Fund Type and Fiduciary Fund Type activities of the Chicago Housing Authority as of and for the years ended December 31, 2009 and 2008, which collectively comprise the Chicago Housing Authority’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Chicago Housing Authority’s management. Our responsibility is to express opinions on these financial statements based on our audits. We did not audit the financial statements of the Chicago Housing Authority Employee’s Retirement Plan (the “Plan”), which is shown as the Fiduciary Fund Type - Pension Trust Fund as of and for the years ended December 31, 2009 and 2008. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Plan, is based on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Chicago Housing Authority’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Chicago Housing Authority’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Proprietary Fund Type activities and the Fiduciary Fund Type activities of the Chicago Housing Authority as of December 31, 2009 and 2008, and the respective changes in financial position and, where applicable, cash flows thereof for the years then ended in conformity with U.S. generally accepted accounting principles.

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The Management’s Discussion and Analysis and the Schedule of Funding Progress on pages 22 through 33 and 73 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We and the other auditors have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audits were conducted for the purpose of forming opinions on the Chicago Housing Authority’s basic financial statements. The accompanying Introductory Section, combining schedule of programs on pages 76 through 81, individual program schedules on pages 84 through 98, Financial Data Schedules on pages 100 through 208, and Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining schedule of programs, individual program schedules, and Financial Data Schedules have been subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial statements and, in our opinion, based on our audits and the report of other auditors, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The Introductory and Statistical Sections have not been subjected to the auditing procedures applied by us and the other auditors in the audits of the basic financial statements and, accordingly, we express no opinion on them.

26 April 2010

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Management’s Discussion and Analysis

(Required Supplementary Information)

Oakwood Shores replacement housing for Madden-Wells

CHICAGO HOUSING AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) DECEMBER 31, 2009

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MANAGEMENT’S DISCUSSION AND ANALYSIS Management’s Discussion and Analysis of the Authority’s performance for the years ended December 31, 2009 and 2008, is prepared as a supplement to the accompanying year-end financial statements. We respectfully request readers consider the information presented here in conjunction with additional information furnished in our transmittal letter. (Pages 7-11) FINANCIAL HIGHLIGHTS 2009 • The assets of the Authority exceeded its liabilities by $1.8 billion (net assets). Of this

amount, $413.7 million (unrestricted net assets) is available to meet ongoing obligations to residents and creditors; $6.1 million is restricted for specific purposes (restricted net assets) and $1.3 billion is invested in capital assets, net of related debt.

• Total net assets of the Authority increased $133.2 million from prior year. This change is mainly due to capital contributions of $141.3 million coupled with operating loss of $352.6 million offset by net nonoperating revenue of $344.4 million.

• Capital asset additions and transfers from construction in progress of $464.6 million included rehabilitation and revitalization of units in the Authority’s Family, Senior, Scattered Sites, and Mixed Income / Finance housing portfolios. Total additions and transfers from construction in progress decreased $61.6 million (11.7%) from the prior year due to a decrease in overall project completion percentage at the end of 2009.

• Asset dispositions, primarily related to structural demolition and sales, totaled $37.4 million, resulting in a realized loss of $5.4 million.

• Long-term debt decreased $27.7 million due to scheduled debt service, bond premium

and issuance cost amortization. 2008 Total assets were $1.6 billion greater than total liabilities (net assets). Amounts invested in capital assets, net of related debt were $1.3 billion, representing an increase of $171.0 million from the prior year. Restricted net assets of $7.1 million increased $3.4 million, while unrestricted net assets increased $78.8 million to $361.9 million. Capital assets increased $39.1 million, net of additions, dispositions, and depreciation. Current year income before contributions of $11.3 million decreased $35.7 million from the prior year income of $47.0 million.


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OVERVIEW OF THE BASIC FINANCIAL STATEMENTS The Authority’s basic financial statements consist of the following: (1) Fund Financial Statements, and (2) Notes to the Basic Financial Statements. This report also contains Required Supplementary Information (Schedule of Funding Progress), Supplementary Information, (Enterprise Fund, Specific Programs, Financial Data Schedule), and Statistical Information. Fund Financial Statements are groupings of accounts used to maintain control over resources segregated for specific activities or objectives. The Authority, like other state, local, or quasi-governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The Authority’s funds include a Proprietary Fund Type and a Fiduciary Fund Type. The Authority’s Proprietary Fund Type is comprised of a single enterprise fund with “business-type” activities intended to recover all or a portion of their costs through fees and charges for services. Since the Authority maintains its activities as a single enterprise fund, its Proprietary Fund financial statements provide information about the activities of the Authority as a whole. The Statements of Net Assets present information on the Authority’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as useful indicators as to whether the Authority’s financial health is improving or deteriorating. The Statements of Revenues, Expenses, and Changes in Net Assets present information showing how the Authority’s net assets changed during the fiscal year. The Authority reports all changes in net assets as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The Statements of Cash Flows report how the Authority’s cash and cash equivalents were used in and provided by its operating, non-capital financing, capital and related financing, and investing activities during the periods reported. Added to beginning-year cash balances, the net of these activities reconcile to the cash and cash equivalent balances at December 31, 2009 and 2008. These statements are prepared on a cash basis and present cash receipt and disbursement information. The Authority uses the direct method of presenting cash flows, which includes a reconciliation of net cash used by operating activities to operating loss. Fiduciary Fund Type. The Authority’s Fiduciary Fund Type is comprised of a pension trust fund that accounts for resources held for the benefit of employees and retirees of the Authority. The Statements of Fiduciary Net Assets and Statements of Changes in Fiduciary Net Assets present financial information about pension trust activities for which the Authority acts solely as an agent for the benefit of its employees and retirees. Fiduciary activities do not include Authority-wide measures of operational accountability, because fiduciary resources do not support the Authority’s enterprise fund programs.


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Notes to the Basic Financial Statements. These financial statement disclosures are an integral part of the financial statements. Such disclosures are essential to a full understanding of the information provided in the fund financial statements. The notes are located on pages 41 through 70. Other Information. In addition to the fund financial statements and the notes, this report presents certain Required Supplementary Information concerning the Authority’s progress in funding its pension obligation to its employees. The required supplementary information is on page 73 of this report. Supplementary Information. This report includes supplementary combining and individual “program” schedules that present the Authority’s enterprise fund financial statements in more detail by providing information on its housing and client-service program activities. In addition, a combining HUD-developed and required Financial Data Schedule (FDS) is included. The FDS is a reporting format used to disclose to HUD all of the Authority’s activities at the property and program level. The FDS begins on page 100. Statistical Information. A statistical section provides information on the Authority’s financial trends, revenue capacity, debt capacity, demographic and economic information and operating information. The statistical information begins on pages 212 through 228.


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FINANCIAL ANALYSIS Net Assets The Authority’s overall financial position improved during the fiscal year. Total net assets increased $133.2 million (8.2%). Net assets are summarized and segregated by type in the following table:

2009 2008 2007Current and Other Assets 810,877,163$ 680,100,548$ 576,831,561$ Capital Assets, Net of

Accumulated Depreciation 1,538,565,410 1,481,260,480 1,442,135,671 Total Assets 2,349,442,573 2,161,361,028 2,018,967,232

Current Liabilities 194,335,834 178,451,666 176,846,997 Noncurrent Liabilities 400,679,063 361,656,971 391,888,259

Total Liabilities 595,014,897 540,108,637 568,735,256

Net Assets 1,754,427,676$ 1,621,252,391$ 1,450,231,976$

2009 2008 2007Invested in Capital Assets,

Net of Related Debt 1,334,539,457$ 1,252,221,044$ 1,163,465,152$ Restricted 6,144,815 7,130,148 3,695,864 Unrestricted 413,743,404 361,901,199 283,070,960

Total Net Assets 1,754,427,676$ 1,621,252,391$ 1,450,231,976$

Net Assets

Net Assets by Type

2009 • 76.1% of the Authority’s net assets are in “invested in capital assets, net of related

debt.” The Authority’s capital assets are mainly comprised of housing portfolio assets operated and maintained to provide housing to low income residents.

• 0.4% of the Authority’s net assets are subject to external restrictions on their use, stipulated by the resource providers.

• The remaining balance, unrestricted net assets (23.6%), represents the residual component of net assets that are available to support ongoing obligations.


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• Unrestricted net assets increased $51.8 million from prior year due mainly to increases in capital program “soft” revenues combined with increases in Low Rent Housing and Housing Choice Voucher subsidies.

2008 Amounts invested in capital assets; net of related debt increased $88.8 million (7.6%) from prior year due to construction activity and loans to private developers to create mixed-income communities that include low-income units for Authority residents. Restricted net assets increased $3.4 million (92.9%). Unrestricted net assets increased $78.8 million (27.8%) due mainly to increases in capital contributions. Change in Net Assets Operating revenues and expenses summarized:

2009 2008 2007Operating Revenues:Tenant Rent 40,438,472$ 38,363,613$ 35,842,974$ Intergovernmental Rental

Assistance (HUD) 1,094,147 1,113,785 895,991 Administrative Fees 29,898,525 28,789,404 27,888,522 Other Revenue 1,677,151 2,596,956 2,923,054

Total Operating Revenues 73,108,295 70,863,758 67,550,541

Operating Expenses:Administrative 85,059,221 85,086,814 85,064,679 Tenant Services 56,128,369 52,657,720 53,155,696 Utilities 27,343,892 32,966,567 38,619,125 Maintenance 74,540,010 74,379,033 77,267,217 Protective Services 18,015,410 15,606,471 27,620,916 General 24,798,674 6,403,175 10,697,311 Depreciation 139,819,854 115,603,635 102,661,126

Total Operating Expenses 425,705,430 382,703,415 395,086,070

Operating Loss (352,597,135)$ (311,839,657)$ (327,535,529)$

Operating Loss


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The Authority’s net nonoperating revenues summarized:

2009 2008 2007Nonoperating Revenues:Intergovernmental Revenue (HUD) 700,200,067$ 648,690,652$ 677,053,029$ Intergovernmental Revenue (Other) 1,080,240 34,909 1,802,478 Investment Income 4,745,632 12,184,507 16,407,659 Other 1,282,423 385,619 4,040,274

Total Nonoperating Revenues 707,308,362 661,295,687 699,303,440

Nonoperating Expenses:Housing Assistance Payments 339,923,256 319,635,569 307,082,779 Interest Expense 17,266,832 16,815,093 17,090,382 Other 5,673,002 1,684,777 606,739

Total Nonoperating Expenses 362,863,090 338,135,439 324,779,900

Net Nonoperating Revenues 344,445,272$ 323,160,248$ 374,523,540$

Net Nonoperating Revenues

2009 The Authority’s Low Rent Housing and Housing Choice Voucher (“HCV”) business-type activities increased net assets by $79.0 million and $45.0 million, respectively; accounting for 93.1 percent of the total growth in net assets. Key elements of the increase are as follows:

• Operating revenues increased $2.2 million (3.2%) from the prior year. The increases are

attributable to HCV administrative fees and Low Rent Housing tenant rent revenue. Tenant rent increased due to the continuing return of resident’s relocation for unit rehabilitation and revitalization. Administrative fees increased due to an increase in the HUD reimbursement rate per unit leased.

• Operating loss increased $40.8 million (13.1%). This is due to an overall increase of $43.0 million in operating expenses coupled with an increase of $2.2 million in operating revenue. Principal contributors to the total net operating loss relate to increases in depreciation for additional capital assets placed in service and recognition of potential lawsuit decree liability.

• Total net nonoperating revenues increased $21.3 million (6.6%). Nonoperating

revenues increased $46.1 million, while nonoperating expenditures increased $24.8 million. The increases are chiefly due to increases in intergovernmental revenue HUD for capital improvement and HCV subsidy pro-ration. The increases in revenues were offset by increases in housing assistance payments for increased units leased.


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2008 Operating revenues increased $3.3 million (4.9%) from the prior year. Operating losses were $15.7 million less than the prior year, as total operating expenses decreased $12.4 million (3.1%). Total net nonoperating revenues decreased $51.4 million (13.7%). Nonoperating revenue decreased $38.0 million, while nonoperating expenses increased $13.4 million.

2009 2008 2007(Loss) Income Before Capital Contributions (8,151,863)$ 11,320,591$ 46,988,011$ Capital Contributions 141,327,148 159,699,824 101,739,462 Change in Net Assets 133,175,285$ 171,020,415$ 148,727,473$

Loss Before Capital Contributions

2009 Loss before capital contributions was $8.2 million, a decrease of $19.5 million from the prior year gain of $11.3 million. The change is the result of net non-capital expenditure operating loss ($40.8 million), coupled with increases in net nonoperating revenues ($21.3 million) due primarily to increases in HUD intergovernmental revenue for capital improvement soft-cost, public housing operating subsidy, investment maturities, loss on disposition of assets, and increased housing assistance payments. 2008 Income before capital contributions of $11.3 million decreased $35.7 million from the prior year income of $47.0 million. The change is the result of net non-capital expenditure operating income ($15.7 million), coupled with decreases in nonoperating revenues ($51.4 million). Program Activities The following table shows Enterprise Fund program revenues and expenses on a gross basis. Operating and nonoperating revenues are included in total revenues, and operating and nonoperating expenses are included in total expenses.


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Program revenues and expenses:

2009 2008 2007Program Revenues (Gross):Rent and Other 43,209,770$ 42,074,354$ 39,662,019$ HCV Administrative Fees 29,898,525 28,789,404 27,888,522 Operating Subsidy and Grants 221,852,257 193,319,861 201,985,141 HCV Subsidy 480,063,700 455,536,543 476,933,549 Capital Contributions 141,327,148 159,699,824 101,739,462 Investment and Other 5,392,405 12,439,283 20,384,750

Total Program Revenues 921,743,805 891,859,269 868,593,443

Program Expenses (Gross):Low Rent Housing 360,640,238 323,438,743 339,317,343 City/State Housing 689,221 1,042,310 1,407,085 HCV Administrative 59,820,511 56,480,567 50,813,981 Other Grant Programs 4,555,460 1,741,795 3,547,661 Housing Assistance

Payments 339,923,256 319,635,569 307,082,779 Interest and Other 22,939,834 18,499,870 17,697,121

Total Program Expenses 788,568,520 720,838,854 719,865,970

Change in Net Assets 133,175,285 171,020,415 148,727,473 Net Assets, January 1 1,621,252,391 1,450,231,976 1,301,504,503

Net Assets, December 31 1,754,427,676$ 1,621,252,391$ 1,450,231,976$

Enterprise Fund Activities

Program Revenues 2009 • Program revenues increased $29.9 million (3.4%). Increases in operating subsidy and

grants and HCV subsidy ($53.1 million) as well as increases relating to HCV administrative fees coupled with rent and other ($2.2 million) are chief reasons for this change. Decreases in funding of $25.4 million for capital contributions and investment and other, offset these amounts.

• Total decreases were mainly the result of a 2008 capital contribution debt of $25.8 million forgiveness by HUD. The debt forgiveness was forgiven by HUD per the 2008 Amended and Restated Moving to Work Agreement.


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2008 Program revenues increased $23.3 million (2.7%). Total net growth resulted primarily from increased capital construction activity ($58.0 million) and HCV administrative fees coupled with rent and other ($3.3 million). Decreases in funding of $38.0 million in operating subsidy and grants, HCV subsidy, and investment and other, offset these amounts. Program Expenses 2009 • Program expenses increased $69.3 million (9.6%); which is primarily due to increases

in HAP payments, HCV administrative, interest and other, Low Rent Housing and Other Grants ($69.6 million); coupled with a decrease in City/State program costs ($0.3 million).

• Low Rent Housing expenses increased $37.2 million due to increases in administrative, protective services, general, maintenance and depreciation expenses ($44.7 million) coupled with decreases in tenant services ($1.7 million) and utilities ($5.8 million) for natural gas.

• Housing Choice Voucher (HCV - Section 8) program expense increased ($3.3 million) over prior year. This increase is attributable to current year rise in tenant services related consulting fees.

2008 Program expenses increased $1.0 million (0.1%) due primarily to increases in HAP payments, HCV administrative and interest and other cost ($19.0 million) coupled with decreases in Low Rent Housing, City/State, and Other Grant program costs ($18.0 million). The main increase in expenses are attributed to the Authority’s HCV program tenant services related consulting fees and additional assets placed in service during the year. Liquidity The Authority’s “working capital” is the difference between its current assets and current liabilities and represents the “amount of net current resources” available for use in the course of ongoing business activities. The “current ratio” reflects the “relationship” of these classifications and is a measure of the Authority’s ability to pay short-term obligations. 2009 • Working capital increased $84.6 million from the prior year due principally to increases

in current assets ($100.4 million) and current liabilities ($15.9 million).


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• The rise in current assets was primarily due to net increases in current cash and investments ($71.1 million) relating to unspent cash derived from Section 8 Programs. The increase also includes HUD intergovernmental receivables ($32.8 million) related to capital construction activities offset by a decrease in prepaid expenses ($2.7 million).

Current ratio of 2.44:1 increased 0.34:1 from 2.10:1 in the prior year, suggesting the Authority has improved its short-term financial standing from prior year.

2009 2008 2007Current Assets 474,281,275$ 373,838,827$ 330,083,411$ Less: Current Liabilities (194,335,834) (178,451,666) (176,846,997) Working Capital 279,945,441$ 195,387,161$ 153,236,414$

Current Assets 474,281,275$ 373,838,827$ 330,083,411$ Divided by: Current Liabilities (194,335,834)$ (178,451,666)$ (176,846,997)$ Current Ratio 2.44:1 2.10:1 1.87:1

Working Capital and Current Ratio

2008 Working capital increased $42.2 million from the prior year due to the combination of increases in current assets combined with increases in current liabilities. Current ratio of 2.10:1 increased 0.23:1 from 1.87:1 in the prior year, suggesting the Authority’s ability to pay short-term obligations improved. CAPITAL ASSETS 2009 Capital assets include land, structures, capital leases, equipment, and construction-in-progress. At December 31, 2009, capital assets, net of depreciation totaled $1.5 billion. The Authority’s net capital assets increased $57.3 million or 3.9% over prior year. Mixed-income capital lease units constructed through mixed-financing arrangements with private developers continues to grow. In 2009, the Authority acquired 466 additional mixed-income capital lease units. The Authority uses these developer-managed units to house its residents. Current-year additions of $206.9 million were primarily comprised of construction-in-progress assets ($174.7 million), capital leases ($28.3 million), and equipment ($3.9 million). Refer to Note 4 of the basic financial statements for more detailed information regarding capital assets.


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The Authority’s capital assets summarized:

2009 2008 2007

Land 214,794,246$ 194,529,983$ 102,624,379$ Structures 1,892,305,577 1,703,757,377 1,464,668,926 Capital Leases 133,576,895 105,316,777 91,664,121 Equipment 28,685,386 25,216,377 23,494,235 Construction in Progress 152,685,380 225,262,427 442,094,889

Total Capital Assets 2,422,047,484 2,254,082,941 2,124,546,550 Less Accumulated

Depreciation (883,482,074) (772,822,461) (682,410,879) Net Capital Assets 1,538,565,410$ 1,481,260,480$ 1,442,135,671$

Capital Assets

2008 The Authority’s net capital assets increased $39.1 million or 2.7 percent compared to the prior year. Current-year additions of $162.7 million were comprised of construction-in-progress assets ($147.3 million), capital leases ($13.7 million) and equipment ($1.7 million). DEBT ADMINISTRATION 2009 At December 31, 2009, the Authority’s total debt was $210.4 million. Debt decreased $27.7 million (11.6%) due primarily to debt service on bonds and energy service loans ($28.0 million), along with loss on refunding ($0.3 million). Refer to Note 8 of the basic financial statements for more detailed information.


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The Authority’s outstanding debt summarized:

2009 2008 20072006 Capital Revenue Bonds 199,130,000$ 223,645,000$ 246,960,000$ 2006 Capital Revenue Bonds,

Net Premium 5,643,007 6,476,920 7,528,518 2006 Capital Revenue Bond Loss

on Refunding (747,052) (1,082,484) (1,597,786) Energy Service Loans 6,416,964 9,067,657 11,631,642 HUD Emergency Modernization

Advance 25,780,301 Total Outstanding Debt 210,442,919$ 238,107,093$ 290,302,675$

Outstanding Debt

2008 The Authority’s total debt decreased $52.2 million (18.0%) due primarily to debt service on bonds and energy service loans ($25.9 million), bond premium amortization and loss of refunding ($0.5 million) and the forgiveness of HUD related debt ($25.8 million). PENSION TRUST FUND The Authority’s financial statement presentation includes a fiduciary component unit Chicago Housing Authority Employees’ Retirement Plan and Trust (“Trust”). Please refer to Note 1 of the basic financial statements for information on how to obtain the separately issued financial statements of this fiduciary component unit. REQUESTS FOR ADDITIONAL INFORMATION The Authority designed the financial report to provide the reader with a general overview of its finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Chief Financial Officer at 60 E. Van Buren, 11th Floor, Chicago, Illinois 60605.

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Basic Financial Statements

Old Town Square

CHICAGO HOUSING AUTHORITYSTATEMENTS OF NET ASSETSPROPRIETARY FUND TYPE - ENTERPRISE FUNDDECEMBER 31, 2009 AND 2008

2009 2008ASSETS:Current Assets:Cash and Cash Equivalents, Unrestricted 122,389,443$ 52,684,132$ Cash and Cash Equivalents, Restricted 11,102,885 1,310,941 Investments at Fair Value, Unrestricted 263,202,404 271,614,718 Tenant Accounts Receivable, Net of Allowance 993,873 1,015,703 Intergovernmental Receivable (HUD) 71,667,096 38,882,233 Miscellaneous Receivable 1,228,992 868,511 Interest Receivable, Current Portion 869,234 1,703,415 Notes and Mortgages Receivable, Current Portion 65,928 296,845 Prepaid Expenses 2,722,420 5,423,329 Advances to Resident and Private Managers 39,000 39,000

Total Current Assets 474,281,275 373,838,827

Noncurrent Assets:Cash and Cash Equivalents, Restricted 13,107,421 9,695,741 Investments at Fair Value, Restricted 4,016,697 4,547,357 Net Pension Asset, Restricted 8,507,183 7,711,634 Notes and Mortgages Receivable, Net of Current Portion 284,167,319 262,913,264 Interest Receivable 24,045,153 18,417,444 Other Noncurrent Assets 2,752,115 2,976,281 Capital Assets, not Depreciated:

Land 214,794,246 194,529,983 Construction in Progress 152,685,380 225,262,427

Capital Assets, Net of Accumulated Depreciation:Structures 1,162,615,899 1,053,577,947 Equipment 8,469,885 7,890,123

Total Noncurrent Assets 1,875,161,298 1,787,522,201

Total Assets 2,349,442,573 2,161,361,028

LIABILITIES:Current Liabilities:Accounts Payable 24,396,751 27,789,691 Intergovernmental Payable (HUD) 1,776,433 198,158 Accrued Wages & Payroll Taxes 1,953,126 1,617,816 Accrued Compensated Absences 1,395,723 1,301,499 Accrued Interest Payable 4,990,019 5,609,965 Accrued Liabilities 63,440,606 79,488,719 Tenant Security Deposits 1,700,693 1,451,764 Unearned Revenue 48,383,870 5,852,205 Insurance Reserves, Current Portion 8,471,199 4,199,034 Capital Lease Obligations, Current Portion 1,010,560 832,451 Current Maturities, Long-Term Debt and Current Portion of

Net Unamortized Bond Premium 10,914,832 27,664,173 Other Current Liabilities 25,902,022 22,446,191

Total Current Liabilities 194,335,834 178,451,666

Noncurrent Liabilities:Family Self-Sufficiency Liability 3,117,163 3,030,877 Insurance Reserves, Net of Current Portion 26,104,251 14,802,699 Capital Lease Obligations, Net of Current Portion 118,075,101 90,948,351 Long-Term Debt, Net of Current Maturities and Current Portion of Net Unamortized Bond Premium 199,528,087 210,442,920 Other Noncurrent Liabilities 53,854,461 42,432,124

Total Noncurrent Liabilities 400,679,063 361,656,971

Total Liabilities 595,014,897 540,108,637

NET ASSETS:Invested in Capital Assets, Net of Related Debt 1,334,539,457 1,252,221,044 Restricted for:

Demolition Grants 3,598,669 4,076,790 Capital Projects 2,546,146 3,053,358

Unrestricted 413,743,404 361,901,199

Total Net Assets 1,754,427,676$ 1,621,252,391$

The notes to the basic financial statements are an integral part of these statements.

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CHICAGO HOUSING AUTHORITYSTATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSPROPRIETARY FUND TYPE - ENTERPRISE FUNDYEARS ENDED DECEMBER 31, 2009 AND 2008

2009 2008

OPERATING REVENUES:

Tenant Rent, Net of Allowance 40,438,472$ 38,363,613$

Intergovernmental Rental Assistance (HUD) 1,094,147 1,113,785

Other Tenant Revenue 215,160 517,224

Administrative Fees 29,898,525 28,789,404

Other Revenue 1,461,991 2,079,732

Total Operating Revenues 73,108,295 70,863,758

OPERATING EXPENSES:

Administrative 85,059,221 85,086,814

Tenant Services 56,128,369 52,657,720

Utilities 27,343,892 32,966,567

Maintenance 74,540,010 74,379,033

Protective Services 18,015,410 15,606,471

General 24,798,674 6,403,175

Depreciation 139,819,854 115,603,635

Total Operating Expenses 425,705,430 382,703,415

OPERATING LOSS (352,597,135) (311,839,657)

NONOPERATING REVENUES (EXPENSES):

Intergovernmental Revenue (HUD) 700,200,067 648,690,652

Intergovernmental Revenue (Other) 1,080,240 34,909

Nonintergovernmental Revenue 635,650 130,843

Investment Income 4,745,632 12,184,507

Interest Expense (17,266,832) (16,815,093)

Housing Assistance Payments (339,923,256) (319,635,569)

Bond Issuance Cost Amortization (276,470) (400,436)

Loss on Disposition of Assets (5,396,532) (1,284,341)

Other Nonoperating Revenue 646,773 254,776

Net Nonoperating Revenues 344,445,272 323,160,248

(LOSS) INCOME BEFORE CAPITAL CONTRIBUTIONS (8,151,863) 11,320,591

Intergovernmental Capital Contributions (HUD and Other) 141,327,148 159,699,824

CHANGE IN NET ASSETS 133,175,285 171,020,415

TOTAL NET ASSETS, JANUARY 1 1,621,252,391 1,450,231,976

TOTAL NET ASSETS, DECEMBER 31 1,754,427,676$ 1,621,252,391$


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CHICAGO HOUSING AUTHORITYSTATEMENTS OF CASH FLOWS PROPRIETARY FUND TYPE - ENTERPRISE FUNDYEARS ENDED DECEMBER 31, 2009 AND 2008

2009 2008

CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from HUD 32,539,893$ 30,172,635$

Receipts from Tenants and Others 42,126,637 40,516,028

Payments to CHA and Private Manager Employees (87,646,196) (89,598,630)

Payments to Vendors and Suppliers (214,437,766) (150,944,237)

Other Non-operating Cash Receipts 419,079 254,776

Net Cash Used by Operating Activities (226,998,353) (169,599,428)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Intergovernmental Operating Subsidy and Grants (HUD) 220,649,233 192,938,509

Intergovernmental Housing Assistance Subsidy (HUD) 521,770,243 454,287,335

Intergovernmental Operating Grants (Other) 1,643,845 (531,647)

Nonintergovernmental Operating Grants 635,650 130,843

Housing Assistance Payments (339,923,256) (319,635,569)

Transfers In (Out) 1 -

Net Cash Provided by Noncapital Financing Activities 404,775,716 327,189,471

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES:

Interest Paid on Capital Debt (18,563,871) (13,114,615)

Principal Paid on Capital Debt (26,987,081) (26,214,417)

Intergovernmental Capital Contributions (HUD) 109,170,774 118,616,765

Acquisition and Construction of Capital Assets (153,034,798) (162,021,193)

Net Cash Used by Capital and Related Financing Activities (89,414,976) (82,733,460)

CASH FLOWS FROM INVESTING ACTIVITIES:

Gross Maturities of Investments 18,653,290,813 29,855,500,351

Gross Purchases of Investments (18,644,347,841) (29,953,589,071)

Investment Income 5,094,534 13,175,007

Loans Disbursed to Developers (19,202,734) (52,481,137)

Decrease in Mortgage Receivable (288,224) (572,341)

Net Cash Used by Investing Activities (5,453,452) (137,967,191)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 82,908,935 (63,110,608)

CASH AND CASH EQUIVALENTS, JANUARY 1 63,690,814 126,801,422

CASH AND CASH EQUIVALENTS, DECEMBER 31 146,599,749$ 63,690,814$

DECEMBER 31, CASH AND CASH EQUIVALENTS:

Unrestricted, Current 122,389,443$ 52,684,132$

Restricted, Current 11,102,885 1,310,941

Restricted, Noncurrent 13,107,421 9,695,741 TOTAL UNRESTRICTED AND RESTRICTED, DECEMBER 31 146,599,749$ 63,690,814$

Reconciliation of Operating Loss to Net Cash

Used by Operating Activities:

Operating Loss (352,597,135)$ (311,839,657)$

Adjustments to Reconcile:

Depreciation 139,819,854 115,603,635

Other Nonoperating Cash Receipts 419,079 254,776

Changes in Assets and Liabilities:

Receivables (4,191,013) (4,663,404)

Prepaid Expenses & Other Noncurrent Assets 2,648,603 (550,579)

Net Pension Asset (795,549) 144,658

Accounts Payable (5,828,884) 10,603,791

Accrued Wages & Payroll Taxes 335,310 627,083

Accrued Compensated Absences 94,224 (109,009)

Accrued Liabilities (26,596,605) (11,856,246)

Tenant Security Deposits 248,929 225,830

Unearned Revenue 119,565 (451,268)

Other Liabilities 3,665,266 34,078,147

Insurance Reserves 15,573,717 (2,366,242)

Family Self Sufficiency Liability 86,286 699,057

Total Adjustments 125,598,782 142,240,229

Net Cash Used by Operating Activities (226,998,353)$ (169,599,428)$

SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:

Loss on Disposition of Assets (5,396,532)$ (1,284,341)$

Note receivable in exchange of capital asset 1,532,180

Amortization of Net Bond Premium 833,916 1,051,598

Amortization of Bond Issuance Costs 611,901 915,738

Increase in Capital Lease Obligations 27,304,859 12,916,465

HUD Debt Forgiveness - 25,780,300


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CHICAGO HOUSING AUTHORITYSTATEMENTS OF FIDUCIARY NET ASSETSFIDUCIARY FUND TYPE - PENSION TRUST FUNDDECEMBER 31, 2009 AND 2008

2009 2008ASSETS:Cash and Cash Equivalents, Restricted 891,441$ 926,383$

Total Cash and Cash Equivalents, Restricted 891,441 926,383

Investments at Fair Value:Fixed Income Collective Trust Account 17,098,922 15,638,805 Mutual Funds 6,376,627 4,226,255 Common Stock 15,833,583 12,622,260

Total Investments 39,309,132 32,487,320

Total Cash, Cash Equivalents, and Investments at Fair Value 40,200,573 33,413,703

Interest and Dividends Receivable 19,458 19,613 Due From Brokers - 18,517

Total Assets 40,220,031 33,451,833

LIABILITIES:Accrued Liabilities 84,827 87,199 Due To Brokers - 21,010

Total Liabilities 84,827 108,209

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS 40,135,204$ 33,343,624$


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CHICAGO HOUSING AUTHORITYSTATEMENTS OF CHANGES IN FIDUCIARY NET ASSETSFIDUCIARY FUND TYPE - PENSION TRUST FUNDYEARS ENDED DECEMBER 31, 2009 AND 2008

2009 2008ADDITIONS TO NET ASSETS:Investment Income:Net Appreciation (Depreciation) in Fair Value of Investments 6,043,982$ (15,332,761)$ Interest and Dividends, Less Investment Expense 1,045,867 1,410,797

Net Investment Income (Loss) 7,089,849 (13,921,964)

Other Income 12,678 13,474 Total Income (Loss) 7,102,527 (13,908,490)

Employer Contributions 6,265,818 4,361,880 Total Additions 13,368,345 (9,546,610)

DEDUCTIONS FROM NET ASSETS:Benefits Paid Directly to Participants

or Beneficiaries, Including Direct Rollovers 6,126,119 6,307,106 Administrative Expenses 450,646 508,328

Total Deductions 6,576,765 6,815,434

CHANGE IN NET ASSETS 6,791,580 (16,362,044)

NET ASSETS, JANUARY 1 33,343,624 49,705,668

NET ASSETS, DECEMBER 31 40,135,204$ 33,343,624$


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CHICAGO HOUSING AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2009 AND 2008

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and Program Descriptions The Chicago Housing Authority (Authority) is a municipal corporation, established by the City of Chicago (“the City”) in 1937. The Authority engages in the development, acquisition, leasing, operation, and administration of a HUD funded Low Rent Housing Program and other federally assisted programs. The governing body of the Authority consists of a Chairperson and a Board of Commissioners, appointed by the Mayor of the City of Chicago. The Authority is not considered a component unit of the City. Housing Portfolio. The Authority is the owner of housing units located throughout the City. Private Management firms are responsible for property level management of the Authority’s entire portfolio. The Authority’s assets, liabilities, net assets, and changes in net assets are included in its enterprise fund and are segregated by program activity as follows: Low Rent Housing Program. The Low Rent Housing Program is the Authority’s primary source of operating funds. The program is designed to provide subsidized housing to low-income residents. Under the Low Rent Housing Program, the Authority owns public housing units located throughout the city for which the Authority receives dwelling rental income from tenants as well as an operating subsidy provided by HUD. Total operating revenues generated from this program in 2009, amounted to $41.2 million. Capital grants, funded by HUD, are used for demolition, new construction, rehabilitation of existing structures, and management and operation of existing public housing. The Habitat Company, a court-appointed receiver (“Receiver”), oversees the Authority’s construction of new non-elderly housing. The Receiver was appointed in 1987 to ensure compliance with a court decree mandating that the Authority provide low-income family housing throughout the city.

City/State Housing Program. Under the City/State Program, the Authority owns and operates project-based Section 8 housing. The Authority is a “private landlord” for which each Authority-owned unit receives a rental assistance subsidy from HUD. The subsidy, plus tenant rents, provides the Authority with market rate rents on each unit. In 2009, total operating revenues generated from this program amounted to $1.3 million. Housing Choice Voucher (Section 8) Programs. The Authority administers the leasing of privately owned units throughout the city through these programs. These voucher based programs establish partnerships between the Authority and private housing providers across the city. Through contractual agreements, private consulting firms manage the Section 8 programs for the Authority. Annual contribution contracts with HUD provide authorization to fund the Housing Choice

CHICAGO HOUSING AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS (CONTINUED)


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Voucher and Moderate Rehabilitation programs. Each contract is represented by a separate “fund,” or accounting entity, to account for assets, liabilities, revenues, and expenses. The Authority earns administrative fees (revenue) from HUD for facilitating and managing the public/private housing partnership. In 2009, administrative fee revenue generated from this program totaled $30.0 million. The financial schedules in this CAFR for the Housing Choice Voucher (Section 8) programs combine the financial position, results of operations, and cash flows of the Housing Choice Voucher and Moderate Rehabilitation Programs. Other Grant Programs. These are ancillary grants that primarily provide funding for programs and services to residents. These programs principally include: MacArthur grants funded by the MacArthur Foundation, and The ROSS service grants provided by HUD. Operating revenues generated from other grant programs totaled $643,027 in 2009.

B. Reporting Entity The reporting entity for the Authority includes its Enterprise and Pension Trust Funds. The Authority’s financial statement presentation includes the Chicago Housing Authority Employees’ Retirement Plan and Trust (Trust). The Trust is a legally separate fiduciary component unit. It is fiscally dependent on the Authority and performs services exclusively for Authority employees. A seven-member board appointed by the Authority governs the Trust. The Trust’s administrator prepares separate financial statements that are available at the Trust’s administrative offices at 60 East Van Buren 11th Floor, Chicago Illinois, 60605. Blended Component Units. The Central Advisory Council (CAC) was organized to serve as the duly elected Resident Advisory Council to the Authority on all matters vital to the interests of the Authority’s residents. The CAC is deemed a blended component unit because it is fiscally dependent on the Authority and provides services almost exclusively for the benefit of the Authority. Therefore, the CAC’s operating activities are included in the Authority’s basic financial statements. The CAC is financed through a funding agreement with the Authority. In 2009 and 2008, the Authority provided $1.5 million and $1.8 million of funding, respectively, to CAC. Related Organizations. The Chicago Metropolitan Housing Development Corporation (CMHDC) is a related, though legally separate, not-for-profit Corporation. CMHDC does not meet the board appointment and fiscal dependency criteria of the related GASB pronouncements and is not considered part of the Authority’s reporting entity. In 2008, one (1) Authority employee served on CMHDC’s seven-member governing board. In 2008, the Authority paid $6,490, primarily for consulting services and relocation units provided by CMHDC. In 2003, the Authority advanced $1.5 million to CMHDC to finance 16 units in conjunction with the Domain Lofts mixed-income finance development. The note bears no interest and matures on December 31, 2023 (Refer to Note 3 for further information on the Authority’s notes and mortgages receivable). CMHDC issues separate audited financial statements which may be obtained at CMHDC’s offices at 200 W. Adams Street Suite 1710, Chicago, IL 60606.



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Windows of Opportunity Inc. (Windows) is also a related, legally separate, not-for-profit organization. Windows creates partnerships to link all of the City’s public and assisted housing residents to resources that will improve the quality of their lives. Windows provides individuals and families expanded opportunities and the tools they need to become self-sufficient. In 2009 and 2008, the Authority provided $314,796 and $242,500 of respective funding to the organization. Windows is not considered part of the Authority’s reporting entity, as the board appointment and fiscal dependency criteria of the related GASB pronouncements are not met. C. Fund Accounting

The accounts of the Authority are organized utilizing the Fund Accounting model. A fund is an independent fiscal accounting entity with a self-balancing set of accounts. The Authority maintains the following fund types:

Proprietary Fund. The Authority’s operations are accounted for in a single Enterprise Fund. Enterprise Funds account for those operations financed and operated in a manner similar to private business or where the Authority has decided that determination of revenues earned, costs incurred, and net income is necessary for management accountability. Enterprise Funds may elect to apply either GASB or Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, if such standards are not in conflict. The Authority has elected not to apply FASB pronouncements issued after November 30, 1989.

Fiduciary Fund. The Authority’s Pension Trust Fund is used to account for the assets and liabilities of the Authority’s retirement plan. The Trust is accounted for using the accrual basis of accounting. The Trust recognizes employer contributions in the period contributions are due.

D. Basis of Accounting and Measurement Focus

The basis of accounting for the funds used by the Authority is determined by measurement focus. The flow of economic resources measurement focus and the accrual basis of accounting are used to account for the Authority’s Enterprise and Pension Trust Funds. Under this method, revenues are recorded when earned and expenses are recorded when incurred. Assets and liabilities associated with the operation of these funds are included in the statements of net assets.

Impending Pronouncements. GASB Statement No. 53, (“GASB 53”), Accounting and Financial Reporting for Derivative Instruments. The objective of this statement is to improve financial reporting by requiring governments to measure certain derivative instruments at fair value. The requirements of this new statement become effective for fiscal periods beginning after June 15, 2009. The Authority is continuing to evaluate the impact of GASB 53.



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GASB Statement No. 51, (“GASB 51”) Accounting and Financial Reporting for Intangible Assets. The objective of this statement is to establish accounting and financial reporting requirements for intangible assets among state and local governments. GASB 51 requires that all intangible assets be classified as capital assets (except for those explicitly excluded from the scope of the new standard). The requirements of the new statement become effective for fiscal periods beginning after June 15, 2009. The Authority is continuing to evaluate the impact of GASB 51.

E. Cash, Cash Equivalents and Investments

The Authority considers all securities, including certificates of deposit and short-term investments, with maturities of three months or less to be cash equivalents. Portions of the Authority’s cash, cash equivalents, and investments are restricted by “use” limitations externally imposed by creditors, funding source agreements, or legislation. Restricted cash includes HUD Family Self-Sufficiency (FSS) escrow amounts for residents in the self-sufficiency program. Restricted cash and investments also include HUD demolition grants, tenant security deposits and amounts set aside for debt service in accordance with debt covenants. The Authority’s investments are reported at fair value with changes in fair values reported as a component of non-operating revenue. The fair value of investments is determined by reference to quoted market prices.

F. Transaction Flow Assumption

For expenses that are eligible for payment from either restricted or unrestricted resources, the Authority utilizes a combination of resources depending upon certain criteria at the time of each disbursement. The criteria include disbursement amount, expiration date of available resources, and the liquidity of each source as determined by the Authority’s cash management and investment strategy.

G. Tenant, Intergovernmental, and Other Receivables

Intergovernmental amounts are due from HUD and other federal agencies for current-year program operating and housing assistance subsidies earned but not received at year-end. These receivable amounts also contain unreimbursed capital costs. Other receivables represent amounts due from parties other than HUD or other federal agencies. All account, note, and mortgage receivable balances are reviewed periodically to determine whether they are collectible. Allowance account estimates are established for receivable amounts when collection is doubtful. As of December 31, 2009 and 2008, allowances for tenant accounts receivable were $872,235 and $839,804, respectively. In 2009 a net increase in the allowance of $32,431 was included in tenant revenue. In 2008, a net reduction in the allowance of $36,737 was included in tenant revenue. The Authority does not record allowances for HUD accounts receivable, as such balances are either settled annually (Section 8 voucher program) or are the result of timing differences. The Authority determined that no allowance for Intergovernmental Receivables (Other) was required as of December 31, 2009.



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H. Prepaid Expenses and Other Noncurrent Assets

Prepaid expenses represent amounts paid in advance of the period in which it benefits. Prepaid expenses consist primarily of the current portion of insurance premiums, utilities, and bond issuance costs. Other noncurrent assets consist of the long-term portion of both insurance premiums and bond issuance costs.

I. Advances to Resident and Private Managers

Advances to resident and private managers represent advances provided to a Resident Management Company and the Senior Housing Advisory Council as “advance reimbursements” for operating costs. The balance of advances to resident and private managers at December 31, 2009, represents the remaining amounts held by a resident management company.

J. Capital Assets

The Authority capitalizes assets with a cost of more than $5,000 and a useful life greater than one year. Land, structures, and equipment are recorded in the Enterprise Fund program that acquires such assets, and any associated long-term liabilities are recorded in the corresponding fund that reimburses such activities. Capital assets are recorded at cost or at fair value at time of acquisition or donation, respectively. Charges for maintenance and repairs are expensed when incurred, and capital improvements are capitalized. Interest incurred during the construction phase is also included as part of the capitalized amount of construction in progress. However, no interest was capitalized in 2009 and 2008 for construction related activities. Depreciation of capital assets is computed using the straight-line method assuming the following useful lives:

Category Useful Life (in Years)

Buildings 40 Site Improvements 20 Furniture 8 Equipment 5&8 Vehicles 5 Buildings and Site Modernization 10

The Authority reviews depreciable lives of capital assets on a periodic basis and makes adjustments on a prospective basis to reflect a shorter useful life or a change in intent with respect to the asset. Upon retirement or other disposition of capital assets, the cost and related accumulated depreciation are removed from the program’s accounts and any gain or loss is included in the program’s current-year operations. If an indicator of impairment is identified and the decline in service utility was unexpected and significant, an impairment loss is calculated in consideration of whether the capital asset will continue to be used by the Authority. An impairment loss is generally measured by identifying the historical cost of the service utility of the capital asset that cannot be used due to the impairment event



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or circumstance. Impaired capital assets that will no longer be used by the Authority are reported at the lower of carrying value or fair value, or written off entirely. In 2009, the Authority recorded a loss on disposition of assets of approximately $5.4 million which represents the net carrying value of capital assets identified for demolition.

The Authority classifies properties under grant specific development or rehabilitation as construction in progress until total grant funding is “substantially complete”. The Authority deems a grant “substantially complete” when total grant expenditures equals ninety percent (90%) or more of the total grant award. Rehabilitation costs funded by Section 8 (MTW) programs or debt financing are classified as construction in progress until the project is ready for its intended use.

Demolition. In accordance with its Plan for Transformation, the Authority incurs substantial costs to demolish existing buildings and ready the demolition sites for development to attract investors to build mixed financing-mixed income communities in which the Authority participates. All such costs are necessary to convey the land to private developers for redevelopment under ninety-nine year leases. The Authority capitalizes demolition costs that result in construction from which it receives a future economic benefit.

Capital Asset Impairment. The Authority performs semiannual procedures to assess the condition of its capital assets and identify potential indicators of asset impairments. The Authority did not identify any asset impairments in 2009. The Authority identified one (1) permanently impaired asset in 2008. The vacant building located at 4556 S. Woodlawn was deemed impaired in 2008 due to building foundation issues. This asset impairment resulted in $238,325 (net book value) of capital assets to be written off as loss on disposition of capital assets.

Accrued Liabilities, Unearned Revenue, and Other Current Liabilities

Accrued Liabilities. Accrued liabilities consist of amounts payable for utilities, protective services, construction contracts, and services or goods provided by vendors and suppliers.

Unearned Revenue. The Authority’s unearned revenue balances represent the receipt of HUD and other intergovernmental program funding applicable to future periods.

Other Current Liabilities. Other current liabilities primarily represent contract retention amounts withheld from contractors’ billings pending acceptance of work. In addition, balances include Davis-Bacon liabilities for violations related to competitive payroll rates, Minority Business Enterprise/Women Business Enterprise liabilities applicable to participation requirements for minority and women businesses, Disabled Business Enterprise, and accrued real estate taxes.



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K. Accrued Compensated Absences

Vested or accumulated vacation leave is recorded as an expense of applicable enterprise fund programs as the benefits accrue.

L. Long-Term Debt and Net Unamortized Bond Premium

The Authority records revenue bond discounts and premiums, and amortizes such amounts over the lives of the bond issues using the effective interest rate method. The cost of debt issuance is deferred and amortized over the expected lives of the revenue bonds. Unamortized bond issuance costs are classified as Other Noncurrent Assets on the statements of net assets.

M. Other Noncurrent Liabilities

The Authority’s other noncurrent liabilities are unearned credits comprised primarily of unclaimed property, drug seizure receipts, Section 3 retention, deferred interest income associated with certain notes receivable, deferred gain and revenue on mixed finance transactions. Section 3 retentions are required amounts set aside for tenant education, training, and scholarships.

N. Deferred Compensation Plan

Employees are eligible to defer a portion of their salaries until future years under the Authority’s Internal Revenue Code Section 457 Deferred Compensation Plan. The deferred compensation is not available to employees until separation, retirement, death, or unforeseeable emergency. Third-party administrators provide administrative services and maintain the investment portfolio of the plan. The plan’s assets are in trust accounts with plan administrators for the exclusive benefit of participants and are not considered assets of the Authority. Accordingly, such assets and the corresponding liabilities to employees are not included in the Authority’s financial statements.

O. Net Assets

Net assets are comprised of three categories: (1) invested in capital assets net of related debt, (2) restricted net assets, and (3) unrestricted net assets. Each component of net assets is reported separately on the statements of net assets.

Invested in capital assets, net of related debt is the balance of capital assets less accumulated depreciation, net of outstanding related debt.

Restricted net assets are subject to constraints externally imposed by funding agencies or legislation. The amount of restricted net assets is calculated by reducing the carrying value of restricted assets by their related liabilities. Restricted net assets include cash received from the State of Illinois as capital



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improvement grants and receipts from HUD as demolition grants. These items are restricted by agreements that detail specific purpose and use.

The unrestricted component of net assets represents the portion remaining after the “invested in capital assets” and “restricted” amounts have been determined. The Authority’s positive value of unrestricted net assets may be used to meet ongoing obligations. P. Revenues, Expenses and Capital Contributions

Operating revenues and expenses. The Authority’s operating revenues are derived from charges to residents and others for services provided. Operating expenses are costs incurred during the operation of its primary housing activities. Such revenues and expenses are reported as earned or incurred, respectively.

Nonoperating revenues and expenses. The Authority’s nonoperating revenues primarily include non-exchange revenue from subsidies and grants; which are recognized when funds are measurable or at the time of compliance with program expenditure requirements, in accordance with GASB Statement No. 33 “Accounting and Financial Reporting for Non-exchange Transactions.” Nonoperating expenses are expenditures derived from transactions other than those associated with the Authority’s primary housing operations and are reported as incurred. Capital Contributions. The Authority’s capital contributions relate primarily to federal capital grants. For reporting purposes, revenue is recognized when expenditures are incurred. Advance receipts are initially recorded as unearned revenue.

Interfund Transactions and Elimination

Fund unrestricted cash and investment balances are consolidated in the Low Rent Housing Program to derive financial leverage. Interfund receipt and spending activity between fund entities is reported in self-balancing “Due To/Due From” memorandum accounts. For reporting purposes these balances are eliminated in supplementary combining schedules of net assets and not shown in the basic financial statements. However, Interfund balances are included in the presentation of the supplementary information’s Financial Data Schedule.

2. DEPOSITS AND INVESTMENTS Cash and Investments Cash and investments for the Enterprise and Pension Trust Funds as of December 31, 2009 and 2008, are classified in the accompanying financial statements as follows:



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2009 2008

Statements of Net Assets:

Enterprise Fund:

Cash and Investments 413,818,850$ 339,852,889$

Total Enterprise Fund 413,818,850$ 339,852,889$

Pension Trust Fund:

Cash and Investments 40,200,573$ 33,413,703$

Total Pension Trust Fund 40,200,573$ 33,413,703$

As of December 31, 2009, Enterprise Fund cash and investments consist of the following:

2009 2008

Deposits With Financial Institutions 48,881,017$ 26,249,588$

Investments 364,937,833 313,603,301

Total Enterprise Fund, Per Note 413,818,850$ 339,852,889$

For the year ended December 31, 2009, cash and investments for the Pension Trust Fund are classified in the accompanying financial statements as follows:

2009 2008

Cash and Cash Equivalents 891,441$ 926,383$

Fixed Income Collective Trust Account 17,098,922 15,638,805

Common Stock / Mutual funds 22,210,210 16,848,515

Total Pension Trust Fund, Per Note 40,200,573$ 33,413,703$

Pension Trust Fund cash and investments summarized:

2009 2008

Deposits 891,441$ 926,383$

Investments 39,309,132 32,487,320

Total Pension Trust Fund 40,200,573$ 33,413,703$

Enterprise Fund Investments Authorized by Debt Agreements Investment of debt proceeds held by the Authority’s bond trustee is governed by provisions of the debt agreements, rather than the general provisions of the Authority’s investment policy. The table below identifies the investment types that are authorized for investments held by the bond trustee.

1) Government Obligations. 2) Obligations of any of the following federal agencies whose obligations

represent the full faith and credit of the United States of America, including:

Export-Import Bank



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Farm Credit System Financial Assistance Corporation Farmers Home Administration

General Services Administration U.S. Maritime Administration Small Business Administration Government National Mortgage Association HUD Federal Housing Administration

3) Senior debt obligations which at the time of purchase are rated “AAA” by

S&P, “AAA” by Moody’s, and, if rated by Fitch, “AAA” by Fitch, issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.

4) U.S. denominated deposit accounts, federal funds, and bankers acceptances

with domestic commercial banks which have a rating on their short-term certi

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