NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
1NYC TRANSITIONAL FINANCE AUTHORITYANNUAL REPORT 2012
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
Table of Contents
LETTER FROM THE CHAIRMAN 1
SUMMARY OF COLLECTION AND APPLICATION OF REVENUES 3–6
INDEPENDENT AUDITORS’ REPORT 8
MANAGEMENT’S DISCUSSION AND ANALYSIS 9–17
BASIC FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED JUNE 30, 2012 AND 2011:
Government-Wide Financial Statements:
StatementsofNetAssets(Deficit) 18
StatementsofActivities 19
Governmental Funds Financial Statements:
GovernmentalFundsBalanceSheets 20–21
ReconciliationsoftheGovernmentalFundsBalanceSheetstotheStatementsofNetAssets(Deficit) 22
GovernmentalFundsStatementsofRevenues,ExpendituresandChangesinFundBalances 23–24
ReconciliationsoftheGovernmentalFundsStatementsofRevenues,Expendituresand ChangesinFundBalancestotheStatementsofActivities 25
Notes to Financial Statements 26–37
DIRECTORS AND MANAGEMENT 38
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
1Letter from the Chairman
IampleasedtopresenttheFiscalYear2012annualreportoftheNewYorkCityTransitionalFinanceAuthority(the“TFA”). Thisreportcontainscompleteauditedfinancialinformationforthisfiscalyear,whichbeganonJuly1,2011.
TheTFAisapublicbenefitcorporationwhoseprimarypurposeistofinanceaportionofNewYorkCity’scapitalimprovementplan.TheNewYorkStateLegislatureapprovedthelawauthorizingthecreationoftheNYCTransitionalFinanceAuthorityonMarch5,1997(Chapter16oftheLawsof1997,the“Act”).TheActincludedgovernancebyaBoardoffivedirectorsconsistingofthefollowingofficialsoftheCity:theDirectorofManagement&Budget(whoalsoservesasChairperson),theCommissionerofFinance,theCommissionerofDesign&Construction,theComptroller,andtheSpeakeroftheCityCouncil.
TheActhasbeenamendedseveraltimestoincreasetheamountofdebttheTFAisauthorizedtoissue.Mostrecently,theActwasamendedin2009whichpermittedtheTFAtohaveoutstanding$13.5billionofFutureTaxSecuredBonds(excludingRecoveryBonds).Inaddition,theTFAmaynowissueadditionalFutureTaxSecuredBondsprovidedthattheamountofsuchadditionalbonds,togetherwiththeamountofindebtednesscontractedbytheCityofNewYork,doesnotexceedthedebtlimitoftheCityofNewYork.AsofJuly1,2012,theCity’sdebt-incurringmarginwithinthedebtlimitoftheCitywas$24.17billion.
LegislationenactedinApril2006enablestheAuthoritytohaveoutstandingupto$9.4billionofbonds,notesorotherobligationsforpurposesoffundingcostsofthefive-yeareducationalfacilitiescapitalplanfortheCityschoolsystem,whicharetobepaidforfromNewYorkStateBuildingAidtobereceivedbytheAuthoritysubjecttoannualappropriationbytheNewYorkStateLegislature.
InFiscalYear2012,theTFAissued$4.98billionofFutureTaxSecuredBonds(including$300millionofQualifiedSchoolConstructionBonds)and$650millionofBuildingAidRevenueBonds(including$100millionofQualifiedSchoolConstructionBonds).
AsofJuly1,2012,theTFAhad$19.59billionofFutureTaxSecuredBonds(excludingRecoveryBonds)and$5.31billionofBuildingAidRevenueBondsoutstanding.TheTFAhad$1.37billionofbondsoutstandingtopaycostsrelatedtoorarisingfromtheWorldTradeCenterattackonSeptember11,2001(“RecoveryBonds”).
Respectfullysubmitted,
Mark Page Chairman
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
2
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
3Summary of Collection and Application of Revenues
* State Building Aid is initially available to pay debt service coming due and payable but not already provided for with respect to Senior Bonds and Parity Debt issued
prior to the Fiscal 2007 Series S-1 Building Aid Revenue Bonds.
** Within the respective retention period, once each of the First-Month and Full Requirement is satisfied, State Building Aid flows to either the School Bond Account
or the City of New York.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
4Summary of Collection and Application of Revenues
Source: NYC OMB.
All figures shown herein are calculated on a cash basis. Figures after fiscal year 2004 do not reflect deductions for State Oversight Retention Requirements.
1. The decrease in Tax Revenues from fiscal year 2008 to fiscal year 2009 is attributable, in part, to an adjustment in fiscal year 2009 by the State for overpayments of
Personal Income Tax Revenues in fiscal years 2002 through 2009 in the amount of $597.3 million and, in part, to the economic recession.
2. Forecast
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
5Summary of Collection and Application of Revenues
1. Coverage is based on total Tax Revenues received in the fiscal year indicated divided by Tax Revenues required to be retained by the Authority in such year for debt
service, calculated without giving effect to prepayments of Authority debt service with grants from the City.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
6Summary of Collection and Application of Revenues
1. The increase in State Building Aid in fiscal years 2001 and 2002 is largely attributable to the City’s use of pay-as-you-go capital in fiscal years 2000 through 2002,
the full amount of which was aided in fiscal years 2001 and 2002. Subsequently, the Education Law was changed to provide that projects paid for with pay-as-you-go
capital would be aided over a 30-year period rather than in one fiscal year.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
7
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
8Independent Auditors’ Report
To the Board of Directors of the New York City Transitional Finance Authority
We have audited the accompanying financial statements of the governmental activities and each major fund of the New York City Transitional Finance Authority (the “Authority”), a component unit of The City of New York, as of and for the year ended June 30, 2012, which collectively comprise the basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Authority’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Authority for the year ended June 30, 2011, were audited by other auditors whose report, dated September 28, 2011, expressed an unqualified opinion on those statements and included an explanatory paragraph that described the adoption of Governmental Accounting Standards Board Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 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, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2012 financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and each major fund of the Authority as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 9 through 17 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming an opinion on the 2012 financial statements that collectively comprise the Authority’s basic financial statements. The sections titled Letter from the Chairman, Summary of Collection and Application of Revenues, and Directors and Management, as listed in the foregoing table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.
September 27, 2012
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Management’s Discussion and Analysis
ThefollowingisanarrativeoverviewandanalysisofthefinancialactivitiesoftheNewYorkCityTransitionalFinanceAuthority(the“Authority”)asofJune30,2012and2011andfortheyearsthenended.ItshouldbereadinconjunctionwiththeAuthority’sgovernment-widefinancialstatements,governmentalfundsfinancialstatementsandthenotestothefinancialstatements.Theannualfinancialstatementsconsistoffourparts:(1)management’sdiscussionandanalysis(thissection);(2)thegovernment-widefinancialstatements,(3)thegovernmentalfundsfinancialstatements;and(4)thenotestothefinancialstatements.
Thegovernment-widefinancialstatementsoftheAuthority,whichincludethestatementsofnetassets(deficits)andthestatementsofactivities,arepresentedtodisplayinformationaboutthereportingentityasawhole,inaccordancewithGovernmentalAccountingStandardsBoard(“GASB”)standards.ThisistoprovidethereaderwithabroadoverviewoftheAuthority’sfinances.Thegovernment-widefinancialstatementsarepreparedusingtheeconomicresourcesmeasurementfocusandtheaccrualbasisofaccounting.Accordingly,revenueisrecognizedwhenearnedandexpensesarerecordedwhenaliabilityisincurred,regardlessofthetimingoftherelatedcashflows.
TheAuthority’sgovernmentalfundsfinancialstatements(general,capitalanddebtservicefunds)arepresentedusingthecurrentfinancialresourcesmeasurementfocusandthemodifiedaccrualbasisofaccounting.Revenueisrecognizedwhenitbecomessusceptibletoaccrual,whichiswhenitbecomesbothmeasurableandavailabletofinanceexpendituresinthecurrentfiscalperiod.Revenuesareconsideredavailableifreceivedwithintwomonthsafterthefiscalyearend.Expendituresarerecognizedwhentherelatedliabilityisincurred,exceptforprincipalandinterestonbondspayableandliabilitiesonarbitragerebatepayable,whichisrecognizedwhendue.
Thereconciliationsofthegovernmentalfundsbalancesheetstothestatementsofnetassets(deficit)andreconciliationsofthegovernmentalfundsstatementsofrevenues,expendituresandchangesinfundbalancestothestatementsofactivitiesarepresentedtoassistthereaderinunderstandingthedifferencesbetweengovernment-wideandgovernmentalfundsfinancialstatements.
FUTURE TAX SECURED BONDS
TheAuthority’sauthorizinglegislationlimitedtheamountofAuthoritybondsandnotesissuedforTheCityofNewYork’s(“TheCity’s”)generalcapitalpurposes(“FutureTaxSecuredBonds”or“FTSBonds”)to$13.5billion,(excludingRecoveryBonds,discussedbelow)asofJune30,2009.OnJuly11,2009authorizinglegislationwasenactedunderChapter182oftheLawsofNewYork,2009,whichpermitstheAuthoritytohaveoutstanding$13.5billionofFTSBonds,(excludingRecoveryBonds).Inaddition,Chapter182permitstheAuthoritytoissueadditionalFutureTaxSecuredBondsprovidedthattheamountofsuchadditionalbonds,togetherwiththeamountofindebtednesscontractedbyTheCity,doesnotexceedthedebtlimitofTheCity.Attheendoffiscalyear2012,TheCity’sandtheAuthority’scombineddebt-incurringcapacitywasapproximately$22.8billion.Infiscalyears2012and2011,theAuthorityissued$4.98billionand$4.25billion,respectivelyofFTSBonds.TheAuthorityhadFutureTaxSecuredSeniorBondsoutstandingof$3.58billionand$5.22billionandSubordinatebonds(excludingRecoveryBonds)of$16.01billionand$12.41billionasofJune30,2012and2011,respectively.
TheAuthorityisalsoauthorizedtohaveoutstanding$2.5billionofbondsandnotestopaycostsrelatedtoorarisingfromtheWorldTradeCenterattackonSeptember11,2001(“RecoveryBonds”).TheAuthorityhadRecoveryBondsoutstandingasofJune30,2012and2011of$1.37billionand$1.47billion,respectively.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Management’s Discussion and Analysis (continued)
FUTURE TAX SECURED BONDS (CONTINUED)
Ofthe$4.98billionand$4.25billionFTSBondsissuedinfiscalyears2012and2011,$0and$1.31billion,respectivelywereBuildAmericaBonds(“BABs”)and$300.0millionand$147.0million,respectivelywereQualifiedSchoolConstructionBonds(“QSCBs”).TheBABsandtheQSCBswerecreatedundertheAmericanRecoveryandReinvestmentActof2009(“ARRA”or“StimulusAct”).TheBABsandQSCBsaretaxablebondsforwhichtheAuthorityreceivesacashsubsidypaymentfromtheUnitedStatesTreasury.Infiscalyears2012and2011,theAuthorityearnedsubsidypaymentsof$57.81millionand$51.84milliononitsBABsand$24.11millionand$19.61milliononitsQSCBs.TheproceedsoftheBABswereusedtofinanceTheCity’scapitalexpendituresandtheQSCBsproceedsareusedtofinanceTheCity’seducationalfacilities.
ThefollowingsummarizesthedebtserviceactivityforFTSBondsinfiscalyear2012(inthousands):
ThefollowingsummarizesthedebtserviceactivityforFTSBondsinfiscalyear2011(inthousands):
SENIOR FTS BONDS
SUBORDINATE FTS BONDS: RecoveryBonds
ParityBonds
BuildAmericaBonds
QualifiedSchoolConstructionBonds
TOTAL SUBORDINATE FTS BONDS
TOTAL FTS BONDS PAYABLE
$ 5,216,175 $ 300,000 $ (1,272,320) $ (662,915) $ 3,580,940 $ 160,893
1,466,200
8,964,845
3,045,645
397,060
13,873,750
$ 19,089,925
74,600
4,304,210
–
300,000
4,678,810
$ 4,978,810
(169,100)
(760,790)
–
–
(929,890)
$ (2,202,210)
–
(244,920)
–
–
(244,920)
$ (907,835)
1,371,700
12,263,345
3,045,645
697,060
17,377,750
$ 20,958,690
8,677
420,386
165,184
20,532
614,779
$ 775,672
Total Interest
Payments FY 2012
Outstanding Principal
Balance at June 30, 2012
Outstanding Principal
Balance at June 30, 2011
Principal Defeased
Issued/ Converted
Principal Retired
SENIOR FTS BONDS
SUBORDINATE FTS BONDS: RecoveryBonds
ParityBonds
BuildAmericaBonds
QualifiedSchoolConstructionBonds
TOTAL SUBORDINATE FTS BONDS
TOTAL FTS BONDS PAYABLE
$ 6,589,865 $ (482,490) $ (261,255) $ (629,945) $ 5,216,175 $ 227,167
1,466,200
5,835,190
1,731,240
250,000
9,282,630
$ 15,872,495
–
3,270,450
1,314,405
147,060
4,731,915
$ 4,249,425
–
(115,415)
–
–
(115,415)
$ (376,670)
–
(25,380)
–
–
(25,380)
$ (655,325)
1,466,200
8,964,845
3,045,645
397,060
13,873,750
$ 19,089,925
7,338
298,863
122,897
15,336
444,434
$ 671,601
Total Interest
Payments FY 2011
Outstanding Principal
Balance at June 30, 2011
Outstanding Principal
Balance at June 30, 2010
Principal Defeased
Issued/ Converted
Principal Retired
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Management’s Discussion and Analysis (continued)
BUILDING AID REVENUE BONDS
TheAuthorityisalsoauthorizedtohaveoutstandingupto$9.4billionofBuildingAidRevenueBonds,notesorotherobligations(“BARBs”),securedbybuildingaidfromtheStateofNewYork(the“State”)thatisreceivedbytheAuthoritypursuanttotheassignmenttotheAuthoritybyTheCityinfiscalyear2007(the“Assignment”).TheCityassigneditsbuildingaid,whichissubjecttoannualappropriationbytheState,totheAuthorityforthepurposeoffundingcostsofthefive-yeareducationalfacilitiescapitalplanforTheCityschoolsystemandtopayitsadministrativeexpenses.TheAuthorityissued$650.0millionofBARBsinfiscalyear2012and$650.0millionofBARBsinfiscalyear2011.TheAuthorityhadBARBsoutstandingasofJune30,2012and2011of$5.31billionand$4.73billion,respectively.
Ofthe$650.0millionBARBsissuedineachoffiscalyears2012and2011,$295.75millionwereBuildAmericaBonds(“BABs”)in2011and$100.0millionwereQualifiedSchoolConstructionBonds(“QSCBs”)issuedineachfiscalyear.TheBABsandQSCBsaretaxablebondsforwhichtheAuthorityreceivescashsubsidypaymentfromtheUnitedStatesTreasury.Infiscalyears2012and2011,theAuthorityearnedsubsidypaymentsof$7.01millionand$4.52milliononitsBABsand$7.70millionand$26.5thousandonitsQSCBs.TheproceedsoftheBABsareusedtofinanceTheCity’scapitalexpendituresandtheQSCBsproceedsareusedtofinanceTheCity’seducationalfacilities.
ThefollowingsummarizesthedebtserviceactivityforBARBsinfiscalyear2012(inthousands):
Tax-exemptBonds
BuildAmericaBonds
QualifiedSchoolConstructionBonds
TOTAL BARBS PAYABLE
Tax-exemptBonds
BuildAmericaBonds
QualifiedSchoolConstructionBonds
TOTAL BARBS PAYABLE
$ 4,334,100
295,750
100,000
$ 4,729,850
$ 4,221,155
–
–
$ 4,221,155
$ 550,000
–
100,000
$ 650,000
$ 254,250
295,750
100,000
$ 650,000
$ (71,190)
–
–
$ (71,190)
$ (65,455)
–
–
$ (65,455)
$ –
–
–
$ –
$ (75,850)
–
–
$ (75,850)
$ 4,812,910
295,750
200,000
$ 5,308,660
$ 4,334,100
295,750
100,000
$ 4,729,850
$ 211,898
22,909
2,613
$ 237,420
$ 207,838
–
–
$ 207,838
Total Interest
Payments FY 2012
Total Interest
Payments FY 2011
Outstanding Principal
Balance at June 30, 2012
Outstanding Principal
Balance at June 30, 2011
Outstanding Principal
Balance at June 30, 2011
Outstanding Principal
Balance at June 30, 2010
Principal Defeased
Principal Defeased
Issued/ Converted
Issued/ Converted
Principal Retired
Principal Retired
ThefollowingsummarizesthedebtserviceactivityforBARBsinfiscalyear2011(inthousands):
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Management’s Discussion and Analysis (continued)
BUILDING AID REVENUE BONDS (CONTINUED)
InaccordancewithGASBstandards,thebuildingaidrevenueistreated,forreportingpurposes,asCityrevenuepledgedtotheAuthority.TheAuthorityretainssufficientbuildingaidrevenuetoservicetheBARBsdebtandtopayitsadministrativeexpenses.UnderthecriteriaestablishedbyGASB,theassignmentofbuildingaidrevenuebyTheCitytotheAuthorityisconsideredacollateralizedborrowing,duetoTheCity’scontinuinginvolvementnecessaryforcollectionofthebuildingaid.TheAuthorityreportsasanasset(DuefromNewYorkCity—futureStatebuildingaid)thecumulativeamountithasdistributedtoTheCityfortheeducationalfacilitiescapitalplan,netofthecumulativeamountofbuildingaidithasretained.Onthefundfinancialstatements,thedistributionstoTheCityforitseducationalfacilitiescapitalprogramarereportedasanyotherfinancinguseoffunds.BuildingaidretainedbytheAuthorityistreatedasanyotherfinancingsourceastheamountretainedisaccountedforasarepaymentoftheamountsloanedtoTheCity.
BelowisatablesummarizingthetotalbuildingaidrevenuesfromtheState,remittancesto TheCityandthebalancesretainedbytheAuthority forthefiscalyearsendingJune30(inthousands),
BuildingaidreceivedfromNewYorkState
BuildingaidremittedtoNewYorkCity
TOTAL RETAINED FOR BARBS DEBT
SERVICE AND OPERATING EXPENSES
$ 906,746
(698,047)
$ 208,699
$ 894,478
(478,126)
$ 416,352
$ 829,949
(449,675)
$ 380,274
2012 2011 2010
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Management’s Discussion and Analysis (continued)
FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENT-WIDE FINANCIAL STATEMENTS
ThefollowingsummarizestheactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),
REVENUES
Personalincometaxretained
UnrestrictedgrantfromNewYorkCity
Federalsubsidy
Investmentearnings
TOTAL REVENUES
EXPENSES
DistributionstoNewYorkCity
forgeneralcapitalprogram
Interestexpense
Other
TOTAL EXPENSES
CHANGE IN NET ASSETS
NET DEFICIT - BEGINNING OF YEAR
NET DEFICIT - END OF YEAR
$ 616,864
878,884
96,630
2,220
1,594,598
2,330,776
888,087
150,779
3,369,642
(1,775,044)
(18,485,107)
$ (20,260,151)
$ 695,044
789,697
75,991
1,357
1,562,089
3,469,002
870,183
108,482
4,447,667
(2,885,578)
(15,599,529)
$ (18,485,107)
$ 190,646
370,524
14,885
3,307
579,362
3,146,860
721,707
35,158
3,903,725
(3,324,363)
(12,275,166)
$ (15,599,529)
$ (78,180)
89,187
20,639
863
32,509
(1,138,226)
17,904
42,297
(1,078,025)
1,110,534
(2,885,578)
$ (1,775,044)
$ 504,398
419,173
61,106
(1,950)
982,727
322,142
148,476
73,324
543,942
438,785
(3,324,363)
$ (2,885,578)
2012 2011 2010 2012/2011 2011/2010
TheAuthorityreceivedCitygrantsof$878.88millionand$789.70millioninJune2012and2011,respectively.ThereceiptofCitygrantsreducestheamountofPITneededtoberetainedbytheAuthorityinfuturefiscalyearsforitsdebtservicepaymentsonFTSBondsanditsadministrativeexpenses.
Aspreviouslydiscussed,theAuthorityissuedBABsandQSCBsforthefirsttimeinfiscalyear2010.TheAuthorityearned$96.63millionand$75.99millioninFederalinterestsubsidiesinJune30,2012andJune30,2011,respectively.Theincreasedsubsidyrevenueinfiscalyears2012and2011wasduetotheadditionalissuanceofthesetaxablebonds.
Investmentearningsareprimarilybasedoncapitalprojectholdings,debtserviceholdingsandinterestratefluctuationsduringthefiscalyear.Assuch,theincreaseininvestmentearningsinfiscalyear2012comparedtofiscalyear2011wasprimarilyduetheincreasedcapitalprojectanddebtserviceholdingsduringfiscalyear2012.
Totalfiscalyear2012expensesdecreasedmainlybecauseofthedecreasedissuanceoftheAuthority’scapitalprojectbondswhencomparedtothebondstheAuthorityissuedin2011.ThisdecreaseresultedinlessbondproceedsavailablefortransfertoTheCity.
Interestexpenseincreasedinfiscalyears2012and2011by$17.90millionand$148.48millionduetotheincreaseinoutstandingbonds.
Variance
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Management’s Discussion and Analysis (continued)
FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENT-WIDE FINANCIAL STATEMENTS (CONTINUED)
Otherexpensesconsistprimarilyofamortizationcostsrelatedtotheissuanceofdebt,theAuthority’sadministrativeexpenses,andfederalsubsidiestransferredtoTheCity.Theincreaseof$42.30millioninotherexpensesinfiscalyear2012wasprimarilyduetothetransferof$20.64millionmoreoffederalsubsidiestoTheCity.
ThefollowingsummarizestheAuthority’sassets,liabilities,andnetassets(deficits)asofJune30(inthousands),
Totalassetsincreasedinfiscalyear2012by$1.2billionwhencomparedtofiscalyear2011mainlybecausetherewasapproximately$636millionmoreinamountduefromTheCityforcollateralizedborrowingaspreviouslydiscussed.Inaddition,infiscalyear2012therewasanincreaseofcapitalbondproceedsholdingsofapproximately$616million,whichwillbeavailabletotransfertoTheCityinfiscalyear2013.
Totalliabilitiesincreasedbyapproximately$3.0billionprimarilybecauseinfiscalyear2012theAuthorityhadapproximately$2.4billionmoreinoutstandingbonds.
FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENTAL FUNDS FINANCIAL STATEMENTS
TheAuthorityusesfivegovernmentalfundsforreportingitsactivities:(1)ageneralfund,(2)abuildingaidrevenuebondscapitalprojectfund(“BARBsCPF”),(3)afuturetaxsecuredbondscapitalprojectfund(“FTSBondsCPF”),(4)abuildingaidrevenuebondsdebtservicefund(“BARBsDSF”),and(5)afuturetaxsecuredbondsdebtservicefund(“FTSBondsDSF”).Infiscalyear2011,theAuthorityimplementedGovernmentalAccountingStandardsBoardStatementNo.54,Fund Balance Reporting and Governmental Fund Type Definitions(“GASB54”).GASB54resultedinthecreationofageneralfundandtherestatementofthoseactivitiesthatwereformerlypresentedinthedebtservicefundsandnowreportedunderageneralfund.TheAuthoritynowaccountsforandreportsinthegeneralfunditsadministrativeandoperatingexpendituresalongwiththeresourcesusedorheldforusetopayforthoseoperatingactivities,pursuanttotheIndenture.
ASSETS
TOTAL ASSETS
LIABILITIES
Currentliabilities
Non-currentliabilities
TOTAL LIABILITIES
NET ASSETS (DEFICITS)
Restricted
Unrestricted
TOTAL DEFICIT - END OF YEAR
$ 7,746,581
1,692,502
26,314,230
28,006,732
1,336,945
(21,597,096)
$ (20,260,151)
$ 6,551,298
1,552,029
23,484,376
25,036,405
745,643
(19,230,750)
$ (18,485,107)
$ 5,374,891
1,015,544
19,958,876
20,974,420
437,286
(16,036,815)
$ (15,599,529)
$ 1,195,283
140,473
2,829,854
2,970,327
591,302
(2,366,346)
$ (1,775,044)
$ 1,176,407
536,485
3,525,500
4,061,985
308,357
(3,193,935)
$ (2,885,578)
2012 2011 2010 2012/2011 2011/2010
Variance
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June30,2012and2011
Management’s Discussion and Analysis (continued)
FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENTAL FUNDS FINANCIAL STATEMENTS (CONTINUED)
ThefollowingsummarizestheGeneralFundactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),
Theincreaseinrevenuesinfiscalyear2012wasprimarilyduetotheAuthorityreceiving$29.3millionmoreofFederalinterestsubsidieswhencomparedtotheamountofsubsidiesreceivedinfiscalyear2011.Infiscalyear2011,theAuthorityreceived$59.1millionmoreininterestsubsidiesthaninfiscalyear2010.Aspreviouslydiscussed,theAuthorityissuedBABsandQSCBsforthefirsttimeinfiscalyear2010.Theincreasedsubsidyrevenueinfiscalyears2012and2011wasduetotheadditionalissuanceofthesetaxablebonds.
ThefollowingsummarizestheBARBsCPFactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),
FUND BALANCE-beginningofyear Revenues
Expenditures
Otherfinancingsources(uses)-net
FUND BALANCE-endofyear
FUND BALANCE-beginningofyear Revenues
Expenditures
Otherfinancingsources(uses)-net
FUND BALANCE-endofyear
$ 16,423
117,565
(113,624)
182
$ 20,546
$ 143,948
158
(849,568)
705,462
$ –
$ 11,984
84,989
(80,870)
320
$ 16,423
$ –
36
(515,081)
658,993
$ 143,948
$ 9,941
13,704
(11,661)
–
$ 11,984
$ 56
280
(279)
(57)
$ –
$ 4,439
32,576
(32,754)
(138)
$ 4,123
$ 143,948
122
(334,487)
46,469
$ (143,948)
$ 2,043
71,285
(69,209)
320
$ 4,439
$ (56)
(244)
(514,802)
659,050
$ 143,948
2012
2012
2011
2011
2010
2010
2012/2011
2012/2011
2011/2010
2011/2010
Variance
Variance
TheAuthority’sbondproceedsanddistributionstoTheCityarereportedasotherfinancingsources(uses)inthegovernmentalfunds.Aspreviouslydiscussed,theAuthorityissuedBARBsinfiscalyear2012anddistributedthoseproceedsandthe$143.9milliononhandfromfiscalyear2011toTheCitytofinanceitseducationalfacilitiescapitalprogram.Thetotalfiscalyear2012distributionresultedina$0fundbalance.
AstheAuthoritydidnotissueanyBARBsinfiscalyear2010,approximately$279thousandofremainingfiscalyear2009BARBsproceedsandrelatedinterestearningsweredistributedtoTheCityinfiscalyear2010,resultingina$0fundbalance.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
16
June30,2012and2011
Management’s Discussion and Analysis (continued)
FUND BALANCE-beginningofyear Revenues
Expenditures
Otherfinancingsources(uses)-net
FUND BALANCE-endofyear
FUND BALANCE-beginningofyear Revenues
Expenditures
Otherfinancingsources(uses)-net
FUND BALANCE-endofyear
FUND BALANCE-beginningofyear Revenues
Expenditures
Otherfinancingsources(uses)-net
FUND BALANCE-endofyear
$ 601,695
598
(2,345,052)
3,079,704
$ 1,336,945
$ 585,994
1,277
(308,610)
208,476
$ 487,137
$ 966,871
1,470,650
(3,158,468)
1,605,573
$ 884,626
$ 436,803
1,767
(3,490,940)
3,654,065
$ 601,695
$ 525,386
(822)
(273,293)
334,723
$ 585,994
$ 554,834
1,462,993
(1,051,712)
756
$ 966,871
$ –
613
(3,166,235)
3,602,425
$ 436,803
$ 368,980
1,205
(225,130)
380,331
$ 525,386
$ 841,034
552,707
(859,231)
20,324
$ 554,834
$ 164,892
(1,169)
1,145,888
(574,361)
$ 735,250
$ 60,608
2,099
(35,317)
(126,247)
$ (98,857)
$ 412,037
7,657
(2,106,756)
1,604,817
$ (82,245)
$ 436,803
1,154
(324,705)
51,640
$ 164,892
$ 156,406
(2,027)
(48,163)
(45,608)
$ 60,608
$ (286,200)
910,286
(192,481)
(19,568)
$ 412,037
2012
2012
2012
2011
2011
2011
2010
2010
2010
2012/2011
2012/2011
2012/2011
2011/2010
2011/2010
2011/2010
Variance
Variance
Variance
FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENTAL FUNDS FINANCIAL STATEMENTS (CONTINUED)
ThefollowingsummarizestheFTSBondsCPFactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),
Totalfiscalyear2012expendituresdecreasedprimarilybecauseofthedecreasedissuanceoftheAuthority’scapitalprojectbondswhencomparedtothebondstheAuthorityissuedin2011.ThisdecreaseresultedinlessbondproceedsavailablefortransfertoTheCity.Thefiscalyear2012netdecreaseofotherfinancingsourcesanduseswasalsoduetotheissuanceoflessFTScapitalprojectdebt.
ThefollowingsummarizestheBARBsDSFactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),
ExpendituresintheBARBsDSFareprimarilythedebtservicepaymentsonoutstandingBARBs.Theotherfinancingsourcesusesnet,consistprimarilyofStatebuildingaidretainedbytheAuthorityinfiscalyears2012,2011and2010,respectively.
ThefollowingsummarizestheFTSBondsDSFactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
17
June30,2012and2011
Management’s Discussion and Analysis (continued)
FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENTAL FUNDS FINANCIAL STATEMENTS (CONTINUED)
TheFTSBondsDSFrevenueconsistsprimarilyofgrantsfromTheCityandPITretainedbytheAuthority.TheAuthorityreceivedunrestrictedgrantsfromTheCityof$878.88millionand$789.70millioninfiscalyears2012and2011,respectively.ThesegrantsandthePITretainedareusedtoservicetheAuthority’sFTSBondsdebtserviceanditsadministrativeexpenses.
Expendituresincreasedinfiscalyear2012overfiscalyear2011dueprimarilytothereofferingofapproximately$1.6billionofFTSBonds.Theincreasedexpenditureisoffsetwithreofferedbondproceedsreportedintheotherfinancingsources.Otherfinancingsources(uses)consistprimarilyoftheproceedsfromFTSBondsissuedfortherefundingofFTSBonds,proceedsfromreofferedFTSBondsandthepaymenttotheescrowagentfortherefundedbonds.
ThisfinancialreportisdesignedtoprovideageneraloverviewoftheAuthority’sfinances.QuestionsconcerninganyoftheinformationinthisreportorrequestsforadditionalfinancialinformationshouldbedirectedtoRaymondOrlando,ManagerofInvestorRelations,theNewYorkCityTransitionalFinanceAuthority,255GreenwichStreet,NewYork,NY10007.
* * * * * *
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
18
AsofJune30,2012and2011
(inthousands)
$ 22,881
1,832,410
1,168,942
404,831
4,151,937
117,728
47,852
$ 7,746,581
$ 404,831
310,282
3,970
327,099
646,320
25,621,030
(210,994)
904,194
28,006,732
1,366,945
(21,597,096)
$ (20,260,151)
$ 18,832
1,165,997
1,420,967
297,023
3,515,027
108,903
24,549
$ 6,551,298
$ 297,023
286,727
4,458
301,706
662,115
23,157,660
(198,080)
524,796
25,036,405
745,643
(19,230,750)
$ (18,485,107)
2012 2011
ASSETS
Unrestrictedcashandcashequivalents
Restrictedcashandcashequivalents
Restrictedinvestments
PersonalincometaxreceivablefromNewYorkState
DuefromNewYorkCity-futureStatebuildingaid
Unamortizedbondissuancecosts
Other
TOTAL ASSETS
LIABILITIES
PersonalincometaxpayabletoNewYorkCity
DistributionpayabletoNewYorkCitycapitalprograms
Accruedexpenses
Accruedinterestpayable
Bondspayable
Portionduewithinoneyear
Portiondueafteroneyear
Unamortizeddeferredbondrefundingcosts
Unamortizedbondpremium
TOTAL LIABILITIES
NET ASSETS (DEFICIT)
Restrictedforcapitalprojects
Unrestricted
TOTAL DEFICIT
The accompanying notes are an integral part of these financial statements.
Statements of Net Assets (Deficit)
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
19
FortheyearsendedJune30,2012and2011
$ 8,144,202
(7,527,338)
616,864
878,884
96,630
2,220
1,594,598
21,344
2,330,776
92,280
22,184
888,087
14,971
3,369,642
(1,775,044)
(18,485,107)
$ (20,260,151)
$ 7,601,070
(6,906,026)
695,044
789,697
75,991
1,357
1,562,089
18,005
3,469,002
62,865
17,776
870,183
9,836
4,447,667
(2,885,578)
(15,599,529)
$ (18,485,107)
2012 2011
Statements of Activities
REVENUES
Personalincometaxrevenue
LessremittancestoNewYorkCity
Personal income tax revenue retained
UnrestrictedgrantfromNewYorkCity
Federalinterestsubsidy
Investmentearnings
TOTAL REVENUES
EXPENSES
Generalandadministrativeexpenses
DistributiontoNewYorkCityforgeneralcapitalprogram
DistributionoffederalinterestsubsidytoNewYorkCity
Amortizationofdeferredbondrefundingcosts
Interestexpense
Amortizationofdebtissuancecosts
TOTAL EXPENSES
CHANGE IN DEFICIT
DEFICIT - BEGINNING OF YEAR
DEFICIT - END OF YEAR
The accompanying notes are an integral part of these financial statements.
(inthousands)
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
20
ASSETS
Unrestrictedcashandcashequivalents
Restrictedcashandcashequivalents
Restrictedinvestments
Personalincometaxreceivablefrom
NewYorkState
Other
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
LIABILITIES
Accruedexpenses
DistributionpayabletoNewYorkCity
forcapitalprograms
Deferredpersonalincometaxrevenue
Personalincometaxpayableto
NewYorkCity
TOTAL LIABILITIES
FUND BALANCES
Restrictedfor:
CapitaldistributiontoNewYorkCity
Debtservice
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES AND FUND BALANCES
The accompanying notes are an integral part of these financial statements.
AsofJune30,2012
$ 22,881
1,832,410
1,168,942
404,831
19,273
$ 3,448,337
$ –
107,642
777,116
404,831
–
$ 1,289,589
$ –
76,804
391,826
–
18,826
$ 487,456
$ –
1,647,951
–
–
–
$ 1,647,951
$ –
13
–
–
–
$ 13
$ 22,881
–
–
–
447
$ 23,328
$ 3,970
310,282
355,000
49,831
719,083
$ 132
–
355,000
49,831
404,963
$ 319
–
–
–
319
$ 724
310,282
–
–
311,006
$ 13
–
–
–
13
$ 2,782
–
–
–
2,782
1,336,945
1,371,763
20,546
2,729,254
$3,448,337
–
884,626
–
884,626
$ 1,289,589
–
487,137
–
487,137
$ 487,456
1,336,945
–
–
1,366,945
$ 1,647,951
–
–
–
–
$ 13
–
–
20,546
20,546
$ 23,328
Total Governmental
Funds
Building Aid Revenue
Bonds
Building Aid Revenue
Bonds
Capital Projects Debt Service
Future Tax
Secured
Future Tax
Secured
General Fund
Governmental Funds Balance Sheets
(inthousands)
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
21
ASSETS
Unrestrictedcashandcashequivalents
Restrictedcashandcashequivalents
Restrictedinvestments
Personalincometaxreceivablefrom
NewYorkState
Other
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
LIABILITIES
Accruedexpenses
DistributionpayabletoNewYorkCity
forcapitalprograms
Deferredpersonalincometaxrevenue
Personalincometaxpayableto
NewYorkCity
TOTAL LIABILITIES
FUND BALANCES
Restrictedfor:
CapitaldistributiontoNewYorkCity
Debtservice
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES AND FUND BALANCES
The accompanying notes are an integral part of these financial statements.
AsofJune30,2011
$ 18,832
1,165,997
1,420,967
297,023
320
$ 2,903,139
$ –
112,283
854,805
297,023
–
$ 1,264,111
$ –
20,152
566,162
–
–
$ 586,314
$ –
730,046
–
–
–
$ 730,046
$ –
303,516
–
–
–
$ 303,516
$ 18,832
–
–
–
320
$ 19,152
$ 4,458
286,727
190,000
107,023
588,208
$ 217
–
190,000
107,023
297,240
$ 320
–
–
–
320
$ 624
127,727
–
–
128,351
$ 568
159,000
–
–
159,568
$ 2,792
–
–
–
2,792
745,643
1,552,865
16,423
2,314,931
$ 2,903,139
–
966,871
–
966,871
$ 1,264,111
–
585,994
–
585,994
$ 586,314
601,695
–
–
601,695
$ 730,046
143,948
–
–
143,948
$ 303,516
–
–
16,423
16,423
$ 19,152
Total Governmental
Funds
Building Aid Revenue
Bonds
Building Aid Revenue
Bonds
Capital Projects Debt Service
Future Tax
Secured
Future Tax
Secured
General Fund
Governmental Funds Balance Sheets
(inthousands)
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
22
AsofJune30,2012and2011
$ 2,729,254
117,728
(904,194)
28,579
4,151,937
(26,267,350)
(327,099)
$ 2,314,931
108,903
(524,796)
24,229
3,515,027
(23,819,775)
(301,706)
210,994
$ (20,260,151)
198,080
$ (18,485,107)
2012 2011
Reconciliations of the Governmental Funds Balance Sheets to the Statements of Net Assets (Deficit)
TOTAL FUND BALANCES –governmentalfunds
Amountsreportedforgovernmentalactivitiesinthestatementsofnetassets
(deficit)aredifferentbecause:
Costsofbondissuancearereportedasexpendituresingovernmentalfunds
financialstatementsuponissuance.However,inthestatementsofnetassets
(deficit),thecostsofbondissuancearereportedascapitalizedassetsand
amortizedoverthelifeofthebonds.
Bondpremiumsarereportedasotherfinancingsourcesinthegovernmental
fundsfinancialstatements.However,inthestatementsofnetassets(deficit),
bondpremiumsarereportedasacomponentofbondspayableandamortized
overthelifeofthebonds.
FederalInterestsubsidyonBABsandQSCBsisrecognizedwhentherelated
bondinterestisreported.Onthestatementsofnetassets(deficit),theamountof
thesubsidyapplicabletotheaccruedbondinterestisreceivableasoffiscalyear
end.However,inthegovernmentalfundsbalancesheetwherenobondinterest
isreportedaspayableuntildue,nosubsidyreceivableisreported.
DistributionstoTheCity’seducationalfacilitiescapitalprogramfromBARBs
proceedsarereportedasanotherfinancingsourceinthegovernmentalfunds
financialstatements.However,inthestatementofnetassets(deficit),theyare
reportedasduefromTheCity.
Someliabilitiesarenotdueandpayableinthecurrentperiodfromfinancial
resourcesavailablecurrentlyatyear-endandarethereforenotreportedinthe
governmentalfundsfinancialstatements,butarereportedinthestatementsof
netassets(deficit).Thoseliabilitiesconsistof:
Bondspayable
Accruedinterestpayable
Costsofbondrefundingsarereportedasexpendituresingovernmentalfunds
financialstatements.However,inthestatementofnetassets(deficit),those
costsandtherelatedgainorlossaredeferredandamortizedovertheshorterof
theremaininglifeoftheolddebtorthelife ofthenewdebt.
NET ASSETS (DEFICIT) OF GOVERNMENTAL ACTIVITIES
The accompanying notes are an integral part of these financial statements.
(inthousands)
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
23
REVENUES
Personalincometaxrevenue
LessremittancestoNewYorkCity
Personal income tax revenue retained
UnrestrictedgrantfromNewYorkCity
Federalinterestsubsidy
Investmentearnings
TOTAL REVENUES
EXPENDITURES
Interestexpense
Interestexpenseeconomicdefeasance
Costsofdebtissuance
DistributionstoNewYorkCityfor
generalcapitalprogram
Distributionsoffederalinterestsubsidy
toNewYorkCity
Principalamountsofbondsretired
DefeasanceEscrow
Principalamountsofeconomicdefeased
bondsretired
Refundingbondissuancecosts
Generalandadministrativeexpenses
TOTAL EXPENDITURES
Excess (deficiency) of revenues
over expenditures
OTHER FINANCING SOURCES (USES)
Principalamountofbondsissued
DistributionstoNewYorkCityfor
educationalfacilitiescapitalprograms
Refundingbondproceeds
Bondpremium,netofdiscount
Paymentsofrefundedbonds
TransferfromNewYorkCity-buildingaid
Transfersin(out)
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGES IN FUND BALANCES
FUND BALANCES - BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
The accompanying notes are an integral part of these financial statements.
FortheyearendedJune30,2012
$ 7,979,202
(7,362,338)
616,864
878,884
92,280
2,220
1,590,248
$ 7,953,923
(7,362,338)
591,585
878,884
–
181
1,470,650
$ –
–
–
–
–
1,277
1,277
$ 25,279
–
25,279
–
92,280
6
117,565
$ –
–
–
–
–
598
598
$ –
–
–
–
–
158
158
1,013,092
–
18,235
2,330,776
92,280
2,273,400
170,391
–
10,195
21,344
5,929,713
(4,339,465)
775,672
–
–
–
–
2,202,210
170,391
–
10,195
–
3,158,468
(1,687,818)
237,420
–
–
–
–
71,190
–
–
–
–
308,610
(307,333)
–
–
–
–
92,280
–
–
–
–
21,344
113,624
3,941
–
–
14,276
2,330,776
–
–
–
–
–
–
2,345,052
(2,344,454)
–
–
3,959
–
–
–
–
–
–
–
3,959
(3,801)
3,450,000
(845,609)
2,178,810
561,806
(799,918)
208,699
–
4,753,788
414,323
2,314,931
$ 2,729,254
–
–
2,178,810
225,420
(799,918)
–
1,261
1,605,573
(82,245)
966,871
$ 884,626
–
–
–
–
–
208,699
(233)
208,476
(98,857)
585,994
$ 487,137
–
–
–
–
–
–
182
182
4,123
16,423
$ 20,546
2,800,000
–
–
280,828
–
–
(1,124)
3,079,704
735,250
601,695
$ 1,336,945
650,000
(845,609)
–
55,558
–
–
(96)
(140,147)
(143,948)
143,948
$ –
Total Governmental
Funds
Building Aid Revenue
Bonds
Building Aid Revenue
Bonds
Capital Projects Debt Service
Future Tax
Secured
Future Tax
Secured
General Fund
Governmental Funds Statements of Revenues, Expenditures and Changes in Fund Balances
(inthousands)
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
24
REVENUES
Personalincometaxrevenue
LessremittancestoNewYorkCity
Personal income tax revenue retained
UnrestrictedgrantfromNewYorkCity
Federalinterestsubsidy
Investmentearnings
TOTAL REVENUES
EXPENDITURES
Interestexpense
Interestexpenseeconomicdefeasance
Costsofdebtissuance
DistributionstoNewYorkCityfor
generalcapitalprogram
Distributionsoffederalinterestsubsidy
toNewYorkCity
Principalamountsofbondsretired
Principalamountsofeconomicdefeased
bondsretired
Refundingbondissuancecosts
Generalandadministrativeexpenses
TOTAL EXPENDITURES
Excess (deficiency) of revenues
over expenditures
OTHER FINANCING SOURCES (USES)
Principalamountofbondsissued
DistributionstoNewYorkCityfor
educationalfacilitiescapitalprograms
Refundingbondproceeds
Bondpremium,netofdiscount
Paymentsofrefundedbonds
TransferfromNewYorkCity-buildingaid
Transfersin(out)
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGES IN FUND BALANCES
FUND BALANCES - BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
The accompanying notes are an integral part of these financial statements.
FortheyearendedJune30,2011
$ 7,672,070
(6,977,026)
695,044
789,697
62,865
1,357
1,548,963
$ 7,649,950
(6,977,026)
672,924
789,697
–
372
1,462,993
$ –
–
–
–
–
(822)
(822)
$ 22,120
–
22,120
–
62,285
4
84,989
$ –
–
–
–
–
1,767
1,767
$ –
–
–
–
–
36
36
879,415
24
26,439
3,469,002
62,865
441,665
460
3,441
18,005
4,901,316
(3,352,353)
–
–
4,501
–
–
–
–
–
–
4,501
(4,465)
–
–
21,938
3,469,002
–
–
–
–
–
3,490,940
(3,489,173)
207,838
–
–
–
–
65,455
–
–
–
273,293
(274,115)
671,577
24
–
–
–
376,210
460
3,441
–
1,051,712
411,281
–
–
–
–
62,865
–
–
–
18,005
80,870
4,119
4,250,000
(510,580)
649,425
128,122
(795,042)
416,352
–
4,138,277
785,924
1,529,007
$ 2,314,931
–
–
649,425
64,829
(713,708)
–
210
756
412,037
554,834
$ 966,871
–
–
–
–
(81,334)
416,352
(295)
334,723
60,608
525,386
$ 585,994
–
–
–
–
–
–
320
320
4,439
11,984
$ 16,423
3,600,000
–
–
54,275
–
–
(210)
3,654,065
164,892
436,803
$ 601,695
650,000
(510,580)
–
9,018
–
–
(25)
148,413
143,948
–
$ 143,948
Total Governmental
Funds
Building Aid Revenue
Bonds
Building Aid Revenue
Bonds
Capital Projects Debt Service
Future Tax
Secured
Future Tax
Secured
General Fund
Governmental Funds Statements of Revenues, Expenditures and Changes in Fund Balances
(inthousands)
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
25
FortheyearsendedJune30,2012and2011
$ 785,924
(4,899,425)
795,042
(14,335)
442,125
16,603
(60,922)
510,580
(416,352)
13,216
(57,944)
$ 414,323
(5,628,810)
970,309
(11,989)
2,273,400
3,264
(403,319)
845,609
(208,699)
4,350
(33,482)
–
$ (2,885,578)
–
$ (1,775,044)
2012 2011
Reconciliations of the Governmental Funds Statements of Revenues, Expenditures and Changes in Fund Balances to the Statements of Activities
NET CHANGES IN FUND BALANCES –totalgovernmentalfunds
Amountsreportedforgovernmentalactivitiesinthestatementsofactivitiesaredifferentbecause:
Bondproceedsprovidecurrentfinancialresourcestogovernmentalfunds,butbondsissuedincrease
long-termliabilitiesonthestatementsofnetassets(deficit).
Refundingbondproceedsandpaymentstorefundedbondescrowholderarereportedasother
financingsourcesandusesinthegovernmentalfunds,butincreaseanddecreaselong-term
liabilitiesinthestatementsofnetassets(deficit).
Thegovernmentalfundsreportcostsofbondrefundingsasexpenditures.However,inthestatements
ofactivities,thecostsofbondrefundingsareamortizedovertheshorterofthelifeofthebonds
refundedorthelifeofthebondsissuedtoadvancerefundthebonds.
Repayment(includingdefeasance)ofbondprincipalisanexpenditureinthegovernmentalfunds,but
therepaymentreduceslong-termliabilitiesinthestatementofnetassets(deficit).
Thegovernmentalfundsreportthecostsofdebtissuanceasexpenditures.However,inthe
statementsofactivities,thecostofdebtissuanceisamortizedoverthelifeoftherelateddebt.
Thegovernmentalfundsreportbondpremiums/discountsasotherfinancingsources/uses.However,
inthestatementsofactivities,bondpremiums/discountsareamortizedoverthelivesoftherelated
debtasinterestexpense.
DistributionstoTheCity’seducationalfacilitiescapitalprogramfromBARBsproceedsarereported
asanotherfinancinguseingovernmentalfunds.However,inthestatementsofactivities,
distributionsofBARBsproceedsarereportedasduefromNewYorkCity-futureStatebuildingaid.
RetentionofbuildingaidisreportedsimilartoatransferfromTheCity,asanotherfinancingsourcein
thegovernmentalfunds.However,inthestatementsofactivities,buildingaidretainedisreported
asareductionoftheamountduefromNewYorkCity-futureStatebuildingaid.
FederalinterestsubsidyonBABsandQSCBsisrecognizedwhentherelatedbondinterestcostis
reported.Onthestatementofactivities,thesubsidyrevenueintheamountapplicabletothe
accruedbondinterestexpenseisaccruedasoffiscalyearend.However,inthegovernmental
fundswhereinterestexpenditureisreportedwhendue,nosubsidyrevenueisaccruedasof
yearend.
Interestisreportedonthestatementofactivitiesontheaccrualbasis.However,interestisreported
asanexpenditureinthegovernmentalfundswhentheoutlayoffinancialresourcesisdue.
Other(bonddiscount)
CHANGE IN NET ASSETS (DEFICIT)-governmentalactivities
The accompanying notes are an integral part of these financial statements.
(inthousands)
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Notes to Financial Statements
1. ORGANIZATION AND NATURE OF ACTIVITIES
TheNewYorkCityTransitionalFinanceAuthority(the“Authority”)isacorporategovernmentalentityconstitutingapublicbenefitcorporationandaninstrumentalityoftheStateofNewYork(the“State”).TheAuthorityisgovernedbyaBoardoffivedirectors,consistingofthefollowingofficialsofTheCityofNewYork(“TheCity”):theDirectorofManagementandBudget(whoalsoservesasChairperson),theCommissionerofFinance,theCommissionerofDesignandConstruction,TheCityComptrollerandtheSpeakerofTheCityCouncil.AlthoughlegallyseparatefromTheCity,theAuthorityisafinancinginstrumentalityofTheCityandisincludedinTheCity’sfinancialstatementsasablendedcomponentunit,inaccordancewiththeGovernmentalAccountingStandardsBoard(“GASB”)standards.
TheAuthoritywascreatedbyStatelegislationenactedin1997toissueandsellupto$7.5billioninbondsandnotes(“FutureTaxSecuredBonds”or“FTSBonds”)tofundaportionofthecapitalprogramofTheCity,thepurposeofwhichistomaintain,rebuildandexpandtheinfrastructureofTheCityandtopaytheAuthority’sadministrativeexpenses.
InJune2000,theStateLegislatureincreasedto$11.5billiontheAuthority’scapacitytoissuebondsandnotesforgeneralCitycapitalpurposes.Withinthe$11.5billion,theStateLegislatureincreasedtheamountofFTSBondswhichmaybeissuedasvariableratedebtfrom$750millionto$2.3billion.InJuly2006,thestatutorycapacitytoissuebondsandnotesforgeneralcapitalpurposesofTheCitywasincreasedby$2billion;asofJune30,2007,theAuthorityhadissueditsstatutorylimitof$13.5billionofFTSBonds.InJuly2009,authorizinglegislationwasenactedunderChapter182oftheLawsofNewYork,2009whichpermitstheAuthoritytohaveoutstanding$13.5billionofFTSBonds.Inaddition,Chapter182permitstheAuthoritytoissueadditionalFutureTaxSecuredBondsprovidedthattheamountofsuchadditionalbonds,togetherwiththeamountofindebtednesscontractedbyTheCity,doesnotexceedthedebtlimitofTheCity.AsofJune30,2012,TheCity’sandtheAuthority’scombineddebt-incurringcapacitywasapproximately$22.8billion.
OnSeptember13,2001,theStateLegislatureauthorizedtheAuthoritytohaveoutstandinganadditional$2.5billionofbondsandnotes(“RecoveryBonds”)tofundTheCity’scostsrelatedtoandarisingfromeventsonSeptember11,2001attheWorldTradeCenter,notwithstandingthelimitsdiscussedabove.
StatelegislationenactedinApril2006additionallyenablestheAuthoritytohaveoutstandingupto$9.4billionofBuildingAidRevenueBonds(“BARBs”),notesorotherobligationsforpurposesoffundingcostsofthefive-yeareducationalfacilitiescapitalplanforTheCityschoolsystemandtheAuthority’sadministrativeexpenses.
TheAuthoritydoesnothaveanyemployees;itsaffairsareadministeredbyemployeesofTheCityandofanothercomponentunitofTheCity,forwhichtheAuthoritypaysamanagementfeeandoverheadbasedonitsallocatedshareofpersonnelandoverheadcosts.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Thegovernment-widefinancialstatementsoftheAuthority,whichincludethestatementsofnetassets(deficit)andthestatementsofactivities,arepresentedtodisplayinformationaboutthereportingentityasawhole,inaccordancewithGovernmentalAccountingStandardBoard(“GASB”)standards.Thestatementsofnetassets(deficit)andthestatementsofactivitiesarepreparedusingtheeconomicresourcesmeasurementfocusandtheaccrualbasisofaccounting.Revenuesarerecordedwhenearnedandexpensesarerecordedwhenaliabilityisincurred,regardlessofthetimingoftherelatedcashflows.
TheAuthority’sgovernmentalfundfinancialstatements(general,capitalanddebtservicefunds)arepresentedusingthecurrentfinancialresourcesmeasurementfocusandthemodifiedaccrualbasisofaccounting.Revenueisrecognizedwhenitbecomessusceptibletoaccrual,whichiswhenitbecomesbothmeasurableandavailabletofinanceexpendituresinthecurrentfiscalperiod.Revenuesareconsideredavailableifreceivedwithintwomonthsafterthefiscalyearend.Expendituresarerecognizedwhentherelatedliabilityisincurred,exceptforprincipalandinterestonbondspayableandliabilitiesonarbitragerebatepayable,whichisrecognizedwhendue.
TheAuthorityusesfivegovernmentalfundsforreportingitsactivities:(1)ageneralfund,(2)abuildingaidrevenuebondscapitalprojectfund(“BARBsCPF”),(3)afuturetaxsecuredbondscapitalprojectfund(“FTSBondsCPF”),(4)abuildingaidrevenuebondsdebtservicefund(“BARBsDSF”),and(5)afuturetaxsecuredbondsdebtservicefund(“FTSBondsDSF”).ThetwocapitalprojectfundsaccountforresourcestobetransferredtoTheCity’scapitalprogramsinsatisfactionofamountsduetoTheCityandthetwodebtservicefundsaccountfortheaccumulationofresourcesforpaymentofprincipalandinterestonlong-termdebtandcertaininterestonshort-termdebt.TheGeneralFundaccountsforandreportsallfinancialresourcesnotaccountedforinthecapitalanddebtservicefunds,includingtheAuthority’sadministrativeexpenses.
B. Fundbalancesareclassifiedaseither:1)nonspendable,2)restricted,or3)unrestricted.Unrestrictedfundbalanceisfurtherclassifiedas:(a)committed,(b)assigned,or(c)unassigned.
TheBoardofDirectorsoftheAuthority(the“Board”)constitutestheAuthority’shighestlevelofdecision-makingauthorityandresolutionsadoptedbytheBoardthatconstrainfundbalancesforaspecificpurposeareaccountedforandreportedascommittedforsuchpurposeunlessanduntilasubsequentresolutionalteringthecommitmentisadoptedbytheBoard.
FundbalanceswhichareconstrainedforuseforaspecificpurposebasedonthedirectionofanyofficeroftheAuthoritydulyauthorizedunderitsbondindenturetodirectthemovementofsuchfundsareaccountedforandreportedasassignedforsuchpurpose,unlessoruntilasubsequentauthorizedactionbythesameoranotherdulyauthorizedofficer,orbytheBoard,istakenwhichremovesorchangestheassignment.Whenbothrestrictedandunrestrictedresourcesareavailableforuseforaspecificpurpose,itistheAuthority’spolicytouserestrictedresourcesfirstthenunrestrictedresourcesastheyareneeded.Whencommitted,assigned,orunassignedresourcesareavailableforusforaspecificpurpose,itistheAuthority’spolicytousecommittedresourcesfirst,thenassignedresources,andthenunassignedresourcesastheyareneeded.
ResourcesconstrainedfordebtserviceorredemptioninaccordancewiththeAuthority’sIndentureisclassifiedasrestrictedonthestatementsofnetassets(deficit)andthegovernmentalfundsbalancesheets.
C.Bondandbondanticipationnotepremiums,discountsandissuancecostsarecapitalizedandamortizedoverthelivesoftherelateddebtusingtheinterestmethodinthegovernment-widefinancialstatements.Thegovernmentalfundfinancialstatementsrecognizethepremiumsanddiscounts,aswellasdebtissuancecosts,duringthecurrentperiod.Thefaceamountofdebtissuedandpremiumreceivedarereportedasotherfinancingsources,whilediscountsondebtissuancesarereportedasotherfinancinguses.Issuancecosts,whetherornotwithheldfromtheactualdebtproceedsreceived,arereportedasdebtserviceexpenditures.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D.Deferredbondrefundingcostsrepresenttheaccountinglossincurredinadvancerefundingofoutstandingbonds.Thedeferredbondrefundingcostsareamortizedovertheshorteroftheremaininglifeoftheolddebtorthelifeofthenewdebt.Inthedebtservicefunds,costsofthebondrefundingarereportedasexpenditureswhenincurred.
E. Interestexpenseisrecognizedontheaccrualbasisinthegovernment-widefinancialstatements.Interestexpendituresarerecognizedwhenbondinterestisdueinthegovernmentalfundfinancialstatements.
F. TheAuthorityreceivesTheCitypersonalincometaxes,imposedpursuanttoStatelawandcollectedonbehalfoftheAuthoritybytheState,toserviceitsfuturetaxsecureddebtandpayaportionofitsadministrativeexpenses.FundsforFTSBondsdebtservicearerequiredtobesetasidepriortotheduedateoftheprincipalandinterest.PersonalincometaxesinexcessofamountsneededtopaydebtserviceandadministrativeexpensesoftheAuthorityareavailabletoberemittedtoTheCity.Duringfiscalyears2012and2011,unrestrictedgrantswerereceivedfromTheCity,asdescribedinNote6.
G.TheAuthorityreceivesbuildingaidpaymentsbytheState,subjecttoStateannualappropriation,pursuanttotheassignmentbyTheCityofthebuildingaidpaymentstotheAuthoritytoserviceitsbuildingaidrevenuebondsandpayaportionofitsadministrativeexpenses.DuetoTheCity’scontinuinginvolvementnecessaryforthecollectionofthebuildingaid,thisassignmentisconsideredacollateralizedborrowingbetweenTheCityandtheAuthority.TheAuthorityreports,onitsstatementofnetassets,anasset(DuefromNewYorkCity—futureStatebuildingaid)representingthecumulativeamountithasdistributedtoTheCityfortheeducationalfacilitiescapitalplan,netofthecumulativeamountofbuildingaidithasretained.Onthefundfinancialstatements,thedistributionstoTheCityforitseducationalfacilitiescapitalprogramarereportedasanotherfinancinguseoffunds.BuildingaidretainedbytheAuthorityistreatedasanotherfinancingsourceastheamountretainedisaccountedforasarepaymentoftheamountsloanedtoTheCity.DuringtheyearsendedJune30,2012and2011,theAuthorityretained$208.70millionand$416.35million,respectivelyofStatebuildingaidtobeusedforBARBsdebtserviceanditsadministrativeexpenses.
H.TomaintaintheexemptionfromFederalincometaxofinterestonbondsissuedbytheAuthority,theAuthoritywillfundamountsrequiredtoberebatedtotheFederalgovernmentpursuanttoSection148oftheInternalRevenueCodeof1986,asamended(the“Code”).TheCoderequiresthepaymenttotheUnitedStatesTreasuryoftheexcessoftheamountearnedonallobligationsovertheamountthatwouldhavebeenearnedifthegrossproceedsoftheissuewereinvestedatarateequaltotheyieldontheissue,togetherwithanyearningsattributabletosuchexcess.Constructionfunds,debtservicefundsoranyotherfundsoraccountsfundedwithproceedsofsuchbonds,includingearnings,orpledgedtoorexpectedtobeusedtopayinterestonsuchbondsaresubjecttothisrequirement.Paymentistobemadeaftertheendofthefifthbondyearandaftereveryfifthbondyearthereafter,andwithin60daysafterretirementofthebonds.TheAuthoritywasnotrequiredtomakeanarbitragerebatepaymentinfiscalyears2012and2011.
TheAuthorityreceivesasubsidyfromtheUnitedStatesTreasuryduetotheAuthority’sissuanceoftaxableBuildAmericaBonds(“BABs”)andtaxableQualifiedSchoolConstructionBonds(“QSCBs”)undertheAmericanRecoveryandReinvestmentActof2009.Thissubsidyisrecognizedwhentherelatedbondinterestisreported.Onthestatementsofnetassets,theamountofthesubsidyrelatedtotheaccruedbondinterestisreportedasareceivableatyearend,whileinthegovernmentalfundsbalancesheetswherenobondinterestisreportedaspayableuntildue,nosubsidyreceivableisreported.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
I. NewlyAdoptedStandardsandStandardsIssuedButNotYetEffective:
AsacomponentunitofTheCity,theAuthorityimplementsnewGASBstandardsinthesamefiscalyearastheyareimplementedbyTheCity.ThefollowingarediscussionsofthestandardsrequiringimplementationinthecurrentyearandstandardswhichwillormayimpacttheAuthorityfutureyears.
• InNovember2010,GASBissuedStatementNo.60,Accounting and Financial Reporting for Service Concession Agreements (“GASB60”).GASB60establishesthefinancialreportingforserviceconcessionagreements,whichareatypeofpublic-privateorpublic-publicpartnership.GASB60iseffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2011.AstheAuthorityhasnotenteredintoanyserviceconcessionagreements,GASB60isnotexpectedtohaveanimpactontheAuthority’sfinancialstatements.
• InNovember2010,GASBissuedStatementNo.61,The Financial Reporting Entity: Omnibus — An Amendment of GASB Statement No. 14 and No. 34(“GASB61”).GASB61amendsexistingstandardsrelatingtothecompositionandreportingofthegovernmentalfinancialreportingentity.GASB61iseffectiveforfinancialstatementsforperiodsbeginningafterJune15,2012,butisnotexpectedtohaveanimpactontheAuthorityoritsstatusbecauseitisablendedcomponentunitofTheCity.
• InDecember2010,GASBissuedStatementNo.62,Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 GASB and AICPA Pronouncements(“GASB62”).GASB62incorporatesalargevolumeofFASBandAICPAaccountingpronouncementsintotheGASBhierarchyofgenerallyacceptedaccountingprinciplesforU.S.stateandlocalgovernments.GASB62iseffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2011.TheAuthorityhasnotcompletedtheprocessofevaluationGASB62,butdoesnotexpectittohaveanimpactonitsfinancialstatements.
• InJune2011,GASBissuedStatementNo.63,Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position (“GASB63”).GASB63establishesnewreportingrequirementsoftwoelements(deferredoutflowsofresourcesanddeferredinflowsofresources)andrenamestheStatementofNetAssetstoStatementofNetPosition,aswellasreportedNetAssets,andcomponentsthereof,toNetPosition.GASB63iseffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2011.TheAuthorityhasnotcompletedtheprocessofevaluatingGASB63,butitisexpectedtochangeonlytheformattingandnamingoftheAuthority’sstatementofpositionandcomponentsthereof,withnooverallfinancialimpact.
• InJune2011,GASBissuedStatementNo.64,Derivative Instruments: Application of Hedge Accounting Termination Provision (“GASB64”).GASB64clarifiestheexistingrequirementsfortheterminationofhedgeaccountingupondefaultorterminationofaswapcounterpartyorswapcounterparty’screditsupportprovider.GASB64iseffectiveforfinancialstatementsforperiodsbeginningafterJune15,2011.AstheAuthorityhasnotenteredintoanysuchagreements,GASB64doesnothaveanimpactonitsfinancialstatements.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
• InMarch2012,GASBissuedStatementNo.65,Items Previously Reported as Assets and Liabilities(“GASB65”).GASB65establishesaccountingandreportingstandardsthatreclassifycertainitemsthatarecurrentlyreportedasassetsandliabilitiestodeferredoutflowsofresourcesordeferredinflowsofresourcesandrecognizecertainitemscurrentlybeingreportedasassetsandliabilitiesasoutflowsandinflowofresources.Inaddition,itlimitstheuseofthetermdeferredinthefinancialstatementpresentation.TheprovisionsofGASB65areeffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2012.TheAuthorityhasnotcompletedtheprocessofevaluatingGASB65,butitexpectstohaveanaccountingchangeonhowdebtissuancecostisrecognizedandreportingthegovernmentwidefinancialstatementsinthatthecarryingvalueofcostofissuancewillnotbereportedonthestatementofnetassets,resultinginarestatementofbeginningnetassets.
• InMarch2012,GASBissuedStatementNo.66,Technical Corrections-2012 an amendment of GASB Statements No. 10 and No. 62(“GASB66”).GASB66resolvesconflictingaccountingandreportingguidancethatresultedfromtheissuanceoftwopronouncements,StatementNo.54,Fund Balance Reporting and Governmental Fund Type Definitions,andStatementNo.62,Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30,1989 FASB and AICPA Pronouncements.TheprovisionsofGASB66areeffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2012.TheAuthorityhasnotcompletedtheprocessofevaluatingGASB66,butdoesnotexpectittohaveanimpactonitsfinancialstatements.
• InJune2012,GASBissuedStatementNo.68,Accounting and Financial Reporting for Pensions(“GASB68”).GASB68establishesstandardsofaccountingandfinancialreportingfordefinedbenefitpensionsanddefinedcontributionpensionsprovidedtotheemployeesofstateandlocalgovernmentalemployers.TherequirementsofGASB68areeffectiveforfinancialstatementsforperiodsbeginningafterJune15,2014.TheAuthorityhasnotcompletedtheprocessofevaluatingGASB68,butdoesnotexpectittohaveanimpactonitsfinancialstatements.
J. ThepreparationoffinancialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirestheAuthority’smanagementtomakeestimatesandassumptionsindeterminingthereportedamountsofassetsandliabilities,disclosureofcontingentassetsandliabilitiesasofthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpenditures/expensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Notes to Financial Statements (continued)
3. CASH AND CASH EQUIVALENTS
TheAuthority’scashandcashequivalentsasofJune30,2012and2011,areasfollows(inthousands):
$ 524
1,831,886
1,832,410
117
22,764
22,881
$ 1,855,291
$ 333
1,165,664
1,165,997
210
18,622
18,832
$ 1,184,829
2012 2011
RESTRICTED CASH AND CASH EQUIVALENTS:
Cash
Cashequivalents(seeNote4)
TOTAL RESTRICTED CASH AND CASH EQUIVALENTS
UNRESTRICTED CASH AND CASH EQUIVALENTS
Cash
Cashequivalents(seeNote4)
TOTAL UNRESTRICTED CASH AND CASH EQUIVALENTS
TOTAL CASH AND CASH EQUIVALENTS
AsofJune30,2012and2011,theAuthority’srestrictedcashandcashequivalentsconsistedofbankdeposits,moneymarketfunds,U.S.Treasuries,andsecuritiesofgovernmentsponsoredenterprisesheldbytheAuthority’sTrusteeintheTrustee’sname.
AsofJune30,2012and2011,theAuthority’sunrestrictedcashandcashequivalentsconsistedofbankdeposits,moneymarketfundsandsecuritiesofgovernmentsponsoredenterprisesheldbytheAuthority’sTrusteeintheTrustee’sname.
AsofJune30,2012and2011,thecarryingamountsandbankbalancesofunrestrictedbankdepositswere$117thousandand$210thousand,respectively,andwereinsuredbytheFDIC.
TheAuthority’sinvestmentsclassifiedascashequivalentsconsistedofU.S.GovernmentSecuritiesandCommercialPaperthathasanoriginalmaturitydateof90daysorlessfromthedateofpurchase.TheAuthorityvaluesthoseinvestmentsatfairvalue(seeNote4belowforadiscussionoftheAuthority’sinvestmentpolicy).
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June30,2012and2011
Notes to Financial Statements (continued)
4. INVESTMENTS
EachaccountoftheAuthoritythatisheldpursuanttotheIndenturebetweentheAuthorityanditsTrustee,asamendedandasrestatedDecember1,2010,(the“Indenture”)maybeinvestedinsecuritiesorcategoriesofinvestmentsthatarespecificallyenumeratedaspermittedinvestmentsforsuchaccountpursuanttotheIndenture.
Custodial Credit Risk—Istheriskthat,intheeventofthefailureofthecustodian,theAuthoritymaynotbeabletorecoverthevalueofitsinvestmentsorcollateralsecuritiesthatareinthepossessionofanoutsideparty.AllinvestmentsareheldintheTrustee’snamebytheTrustee.
Credit Risk—TheAuthority’sinvestmentsareprimarilygovernmentsponsoredenterprisediscountnotes.AllcommercialpaperheldbytheAuthorityisnonassetbackedcommercialpaperandisratedA1+byStandardPoor’sRatingServicesandP1byMoody’sInvestorServices.
Interest Rate Risk—SubstantiallyalloftheAuthority’sinvestmentsmatureinoneyearorless.Investmentswithlongertermmaturitiesarenotexpectedtobeliquidatedpriortomaturity,therebylimitingexposurefromrisinginterestrates.
TheAuthority’sinvestments,includingcashequivalentsasofJune30,2012and2011,areasfollows(inthousands):
$ 63,877
1,290,247
1,646,704
3,000,828
(1,831,886)
$ 1,168,942
$ 1,689
1,552,904
1,032,038
2,586,631
(1,165,664)
$ 1,420,967
513
22,251
22,764
(22,764)
$ –
1,622
17,000
18,622
(18,622)
$ –
2012 2011
RESTRICTED INVESTMENTS:
Moneymarketfunds
SecuritiesofU.S.governmentagencies
Commercialpaper
TOTAL RESTRICTED INVESTMENTS
Less:amountsreportedascashequivalents
TOTAL RESTRICTED INVESTMENTS
UNRESTRICTED:
Moneymarketfunds
SecuritiesofU.S.governmentagencies
TOTAL UNRESTRICTED INVESTMENTS
Less:amountsreportedascashequivalents
TOTAL UNRESTRICTED INVESTMENTS
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Notes to Financial Statements (continued)
SENIOR FTS BONDS
SUBORDINATE FTS BONDS: RecoveryBonds
ParityBonds
BuildAmericaBonds
QualifiedSchoolConstructionBonds
TOTAL SUBORDINATE FTS BONDS
TOTAL FTS BONDS PAYABLE
SENIOR FTS BONDS
SUBORDINATE FTS BONDS: RecoveryBonds
ParityBonds
BuildAmericaBonds
QualifiedSchoolConstructionBonds
TOTAL SUBORDINATE FTS BONDS
TOTAL FTS BONDS PAYABLE
$ 5,216,175
$ 6,589,865
$ 300,000
$ (482,490)
$ (1,272,320)
$ (261,255)
$ (662,915)
$ (629,945)
$ 3,580,940
$ 5,216,175
$ 160,893
$ 227,167
1,466,200
8,964,845
3,045,645
397,060
13,873,750
$ 19,089,925
1,466,200
5,835,190
1,731,240
250,000
9,282,630
$ 15,872,495
74,600
4,304,210
–
300,000
4,678,810
$ 4,978,810
–
3,270,450
1,314,405
147,060
4,731,915
$ 4,249,425
(169,100)
(760,790)
–
–
(929,890)
$ (2,202,210)
–
(115,415)
–
–
(115,415)
$ (376,670)
–
(244,920)
–
–
(244,920)
$ (907,835)
–
(25,380)
–
–
(25,380)
$ (655,325)
1,371,700
12,263,345
3,045,645
697,060
17,377,750
$ 20,958,690
1,466,200
8,964,845
3,045,645
397,060
13,873,750
$ 19,089,925
8,677
420,386
165,184
20,532
614,779
$ 775,672
7,338
298,863
122,897
15,336
444,434
$ 671,601
Total Interest
Payments FY 2012
Total Interest
Payments FY 2011
Outstanding Principal
Balance at June 30, 2012
Outstanding Principal
Balance at June 30, 2011
Outstanding Principal
Balance at June 30, 2011
Outstanding Principal
Balance at June 30, 2010
Principal Defeased
Principal Defeased
Issued/ Converted
Issued/ Converted
Principal Retired
Principal Retired
5. BONDS PAYABLE
PursuanttotheNewYorkCityTransitionalFinanceAuthorityAct(the“Act”),asamended,theAuthorityisauthorizedtohaveoutstanding$13.5billionofFTSBonds,excludingRecoveryBonds.Inaddition,Chapter182permitstheAuthoritytoissueadditionalFutureTaxSecuredBondsprovidedthattheamountofsuchadditionalbonds,togetherwiththeamountofindebtednesscontractedbyTheCity,doesnotexceedthedebtlimitofTheCity.AsofJune30,2012,TheCity’sandtheAuthority’scombineddebt-incurringcapacitywasapproximately$22.8billion.TheAuthorityisalsoauthorizedtohaveoutstanding$2.5billionofRecoveryBondsandnotestopaycostsrelatedtoorarisingfromtheWorldTradeCenterattackonSeptember11,2001.
TheIndenturepermitstheAuthoritytoissueSeniorandSubordinateFTSBondswhichconsistsofRecoveryBonds,BuildAmericaBonds,QualifiedSchoolConstructionBonds,andotherparitydebt.AsofJune30,2012and2011,theAuthorityhad$3.58billionand$5.22billion,respectively,ofSeniorbondsoutstanding.TheAuthorityisauthorizedtoissueSeniorFTSBondsinanamountnottoexceed$12billioninoutstandingprincipalandsubjecttoa$330millionlimitonquarterlydebtservice.SubordinateFTSBondsoutstandingasofJune30,2012and2011,were$17.38billionand$13.87billion,respectively.TotalFTSBondsoutstandingatJune30,2012and2011was$20.96billionand$19.09billion,respectively.
Infiscalyears2012and2011,thechangesinFTSBondspayablewereasfollows(inthousands):
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
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June30,2012and2011
Notes to Financial Statements (continued)
5. BONDS PAYABLE (CONTINUED)
AsofJune30,2012,theinterestratesontheAuthority’soutstandingFTSfixedratebondsrangedfrom1.50%to5.50%ontax-exemptbondsand.60%to6.27%ontaxablebonds.
TheAuthorityfundsitsdebtservicerequirementsforallFTSBondsanditsadministrativeexpensesfromgrantmoney,whenavailable,andpersonalincometaxescollectedonitsbehalfbytheStateand,undercertaincircumstancesifitwerenecessary,salestaxes.SalestaxesareonlyavailabletotheAuthorityiftheamountsofpersonalincometaxrevenuesfallbelowstatutorilyspecifieddebtservicecoveragelevels.NosalestaxrevenueswerereceivedorrequiredduringthefiscalyearsendingJune30,2012and2011.TheAuthorityremitsanyexcesspersonalincometaxnotrequiredforitsdebtservicepaymentsanditsadministrativeexpensestoTheCity.TheAuthorityhasnotaxingpower.
OnJune30,2012and2011,theAuthorityhad$3.30billionand$3.74billion,respectively,ofFTSBondsvariableratebondsoutstanding,consistingof$222.4millionofAuctionRateSecurities(“ARSs”)and$3.08billionand$3.52billion,respectively,ofVariableRateDemandBonds(“VRDBs”).TheinterestrateontheARSsisestablishedweeklybyanauctionagentatthelowestclearingratebaseduponbidsreceivedfrombrokerdealers.TheinterestrateontheARSscannotexceed12%.Infiscalyears2012and2011,theinterestrateontheARSsaveraged.53%and.49%,respectively.TheVRDBsbearadailyrate,atwo-dayrateoraweeklyrateandrepresentthelowestrateofinterestthatwouldcausetheadjustableratebondstohaveamarketvalueequaltotheprincipalamount.Theratescannotexceed9%ontaxexemptbondsand12%ontaxablebonds.Infiscalyears2012and2011,theVRDBratesaveraged.45%and.32%,respectively,ontaxexemptbondsand.28%and.39%,respectively,ontaxablebonds.
OnAugust23,2011,theAuthorityissued$450million,Fiscal2012SeriesAFTSBondsandtogetherwiththepremiumreceivedof$62.77millionandanequitycontributionfromcurrentrevenueof$11.81million,currentandadvancerefunded$484.88millionofitsoutstandingFTSBonds.Thisrefundingresultedinanaccountinglossof$25.52million,whichwasrecordedasdeferredbondrefundingcostsonthestatementofnetassets(deficit).TheAuthorityineffectreducedtheaggregatedebtserviceby$41.81millionandobtainedaneconomicbenefitof$34.06million.TheAuthorityalsoreoffered$482.49millionofthefiscal2003SeriesBBonds,$171.97millionofthefiscal2002SeriesBBondsand$74.60millionofthefiscal2003Series1BRecoveryBonds.
OnNovember1,2011,theAuthorityissued$250million,Fiscal2012SeriesBandCFTSBondsandtogetherwiththepremiumreceivedof$25.38millionandanequitycontributionfromcurrentrevenueof$4.45million,currentandadvancerefunded$256.5millionofitsoutstandingFTSBonds.Thisrefundingresultedinanaccountinglossof$13.91million,whichwasrecordedasdeferredbondrefundingcostsonthestatementofnetassets(deficit).TheAuthorityineffectreducedtheaggregatedebtserviceby$16.95millionandobtainedaneconomicbenefitof$12.83million.TheAuthorityalsoreoffered$882.22millionofthefiscal2003SeriesABonds.
OnJune22,2012,theAuthoritydefeased$166.45millionofoutstandingFTSBondswithcurrentrevenueof$170.39million.TheescrowdepositedwiththeAuthority’sTrusteewasfundedwithDefeasanceCollateral(asdefinedintheAuthority’sIndenture)toprovideforallfuturedebtserviceonthedefeasedbonds.TherefundingusingDefeasanceCollateralresultedintherefundedbondsbeingremovedfromreportedbondsoutstanding.Thisrefundingresultedinaccountinggainof$4.32million.
OnFebruary1,2011,theAuthorityreoffered$482.49millionofFiscal2003BTermBondsasfloatingratebonds,thusavoidingtheinterestratebeingconvertedto10%.ThesebondsweresubsequentlyreofferedasfixedrateinAugust2011.
OnApril25,2011,theAuthorityissued$649.43million,Fiscal2011SeriesEandFFTSBondsandtogetherwiththepremiumreceivedof$64.8million,currentandadvancedrefunded$655.33millionofitsoutstandingFTSBonds.Thisrefundingresultedinanaccountinglossof$37.2million,whichwasrecordedasdeferredbondrefundingcostsonthestatementofnetassets(deficit).TheAuthorityineffectreducedtheaggregatedebtserviceby$40.32millionandobtainedaneconomicbenefitof$31.18million.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
35
June30,2012and2011
Notes to Financial Statements (continued)
5. BONDS PAYABLE (CONTINUED)
ThebondsrefundedwithDefeasanceCollateralhavebeenremovedfromthefinancialstatementsasaliabilityoftheAuthority.AsofJune30,2012and2011,theAuthorityhadFTSBondsrefundedwithDefeasanceCollateraltotaling$8.75billionand$7.76billion,respectively,ofwhich$1.85billionand$1.40billion,respectively,arestilltobepaidfromtheDefeasanceCollateralheldintheescrowaccountsondepositwiththeAuthority’sescrowTrustee.
DebtservicerequirementsasofJune30,2012,forFTSBonds,includingRecoveryBonds,payabletotheirmaturityareasfollows(inthousands):
YearendingJune30,
2013
2014
2015
2016
2017
2018 to 2022
2023 to 2027
2028 to 2032
2033 to 2037
2038to2042
TOTAL
(a) The variable interest rates used in this table were .29% on tax-exempt bonds and .45% on auction bonds, if variable interest is calculated at 5.00% on tax-
exempt and auction bonds per annum (which are the rates utilized for retention), the total interest would increase to $13.12 billion from the $11.30 billion in
the above table.
$ 198,215
200,470
198,725
88,765
75,730
475,825
1,121,405
1,140,465
81,340
–
$ 3,580,940
$ 438,225
590,780
673,630
819,105
863,590
4,502,555
3,360,195
2,534,345
2,385,895
1,209,430
$ 17,377,750
$ 118,464
108,213
97,953
90,224
86,307
384,249
266,890
86,249
3,435
–
$ 1,241,984
$ 722,072
721,413
698,716
671,665
639,606
2,701,490
1,938,831
1,219,720
640,856
98,838
$ 10,053,207
$ 316,679
308,683
296,678
178,989
162,037
860,074
1,388,295
1,226,714
84,775
–
$ 4,822,924
$ 1,160,297
1,312,193
1,372,346
1,490,770
1,503,196
7,204,045
5,299,026
3,754,065
3,026,751
1,308,268
$ 27,430,957
$ 1,476,976
1,620,876
1,669,024
1,669,759
1,665,233
8,064,119
6,687,321
4,980,779
3,111,526
1,308,268
$ 32,253,881
Principal
Principal
Interest (a)
Interest (a)
Total
Total
Total Debt Service
Senior Subordinate
InadditiontotheAuthority’sauthorizationtoissueFTSBonds,StatelegislationenactedinApril2006enablestheAuthoritytohaveoutstandingupto$9.4billionofBuildingAidRevenueBonds,notesorotherobligations(“BARBs”)forpurposesoffundingcostsofthefive-yeareducationalfacilitiescapitalplanforTheCity’sschoolsystemandcertainadministrativeexpenditures.AsofJune30,2012and2011,theAuthorityhad$5.31billionand$4.73billion,respectively,ofBARBsoutstanding.
Underthislegislation,theBARBsarepayablefromtheStatebuildingaidpayablebytheStateandassignedtotheAuthoritybyTheCity.TheseStateaidpaymentsaresubjecttoannualappropriationfromtheState.InaccordancewiththelegislationandtheIndenture,BARBsbondholdersdonothaveanyrighttothepersonalincometaxrevenuesorsalestaxrevenues.
OnSeptember10,2010,theAuthoritydeposited$81.33millionofretainedbuildingaidintoanescrowaccountwiththeAuthority’sTrusteeforthepaymentof$75.85millionofBARBsdueinfiscalyear2013.
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
36Notes to Financial Statements (continued)
5. BONDS PAYABLE (CONTINUED)
Infiscalyears2012and2011,thechangesinBARBspayablewereasfollows(inthousands):
Tax-exemptBonds
BuildAmericaBonds
QualifiedSchoolConstructionBonds
TOTAL BARBS PAYABLE
Tax-exemptBonds
BuildAmericaBonds
QualifiedSchoolConstructionBonds
TOTAL BARBS PAYABLE
$ 4,334,100
295,750
100,000
$ 4,729,850
$ 4,221,155
–
–
$ 4,221,155
$ 550,000
–
100,000
$ 650,000
$ 254,250
295,750
100,000
$ 650,000
$ (71,190)
–
–
$ (71,190)
$ (65,455)
–
–
$ (65,455)
$ –
–
–
$ –
$ (75,850)
–
–
$ (75,850)
$ 4,812,910
295,750
200,000
$ 5,308,660
$ 4,334,100
295,750
100,000
$ 4,729,850
$ 211,898
22,909
2,613
$ 237,420
$ 207,838
–
–
$ 207,838
Total Interest
Payments FY 2012
Total Interest
Payments FY 2011
Outstanding Principal
Balance at June 30, 2012
Outstanding Principal
Balance at June 30, 2011
Outstanding Principal
Balance at June 30, 2011
Outstanding Principal
Balance at June 30, 2010
Principal Defeased
Principal Defeased
Issued/ Converted
Issued/ Converted
Principal Retired
Principal Retired
AsofJune30,2012,theinterestratesontheAuthority’soutstandingBARBsfixedratebondsrangedfrom2.00%to6.00%ontax-exemptbondsand4.80%to7.13%ontaxablebonds.
DebtservicerequirementsatJune30,2012,forBARBspayabletomaturityareasfollows(inthousands):
YearendingJune30,
2013
2014
2015
2016
2017
2018 to 2022
2023 to 2027
2028 to 2032
2033 to 2037
2038to2042
TOTAL
$ 9,880
108,675
113,960
119,775
127,800
725,695
906,300
1,170,475
1,501,400
524,700
$ 5,308,660
$ 272,616
269,112
264,921
260,298
255,110
1,182,794
989,527
715,839
369,145
43,073
$ 4,622,435
$ 282,496
377,787
378,881
380,073
382,910
1,908,489
1,895,827
1,886,314
1,870,545
567,773
$ 9,931,095
Principal
Interest (a)
Total
June30,2012and2011
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
37Notes to Financial Statements (continued)
5. BONDS PAYABLE (CONTINUED)
AsofJune30,2012and2011,theAuthoritymaintaineditsrequireddebtserviceaccountsasfollows(inthousands):
RequiredforFTS
RequiredforBARBs
$ 5,725
$ 9,880
$ 12,155
$ 71,190
$ 170,922
$ 272,616
$ 190,488
$ 237,420
Principal
Principal
Interest
Interest
June 30, 2012 June 30, 2011
TheAuthorityheldapproximately$708.11millionand$764.23millioninexcessofamountsrequiredtoberetainedforFTSBondsdebtserviceundertheIndentureasofJune30,2012and2011,respectively.TheAuthorityheldapproximately$186.13millionand$277.70millioninexcessofamountsrequiredtoberetainedforBARBsdebtserviceundertheIndentureasofJune30,2012and2011,respectively.
6. UNRESTRICTED GRANT FROM THE CITY OF NEW YORK
Infiscalyears2012and2011,theAuthorityreceivedunrestrictedgrantsfromTheCityintheamountof$878.88millionand$789.70million,respectively.ThesefundsareusedtofunddebtservicerequirementsforFTSBondsandadministrativeexpensesduringthefiscalyearsendingJune30,2013and2012,respectively.TheCitygrantisreportedasanassignedfundbalanceinthegovernmentalfundsbalancesheets.
7. ADMINISTRATIVE COSTS
TheAuthority’smanagementfee,overheadandexpendituresrelatedtocarryingouttheAuthority’sduties,includingremarketingandliquidityfeesnotfundedfrombondproceedsorinvestmentearnings,arefundedfromthepersonalincometaxes,buildingaidrevenueandgrantrevenue.
8. SUBSEQUENT EVENTS
OnJuly19,2012,theAuthorityissued$850million,Fiscal2013SeriesS-1BARBsBonds;thetax-exemptproceedsofwhichwillbeusedtofundthecostsofthefive-yeareducationalfacilitiescapitalplanforTheCity’sschoolsystemandcertainadministrativeexpenditures.
OnAugust28,2012,theAuthorityissued$800million,Fiscal2013SeriesAFTSBonds,comprisedofSubseriesA-1,$100millionoftax-exemptbonds;SubseriesA-2,$150millionoftaxableQualifiedSchoolConstructionBonds;SubseriesA-3,$200millionoftaxablebondsandSubseriesA-4toA-7,$350millionoftax-exemptvariableratebonds.TheproceedsoftheFiscal2013AFTSBondswillbeusedforTheCity’scapitalprograms.TheAuthorityalsoissuedFiscal2013SeriesBFTSBonds;thetax-exemptproceedswereusedtorefundprioroutstandingbonds.
* * * * * *
June30,2012and2011
NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012
38Directors and Management
DIRECTORS
Mark Page Chairman,DirectorofManagementandBudget oftheCityofNewYork
David Burney CommissioneroftheDepartmentofDesign andConstructionoftheCityofNewYork
Christine Quinn SpeakeroftheCounciloftheCityofNewYork
David Frankel CommissionerofFinanceoftheCityofNewYork
John C. Liu ComptrolleroftheCityofNewYork
OFFICERS
Alan L. Anders ExecutiveDirector
F. Jay Olson Treasurer
Majorie E. Henning Secretary
Prescott D. Ulrey GeneralCounsel
Michele Mark Levine Comptroller
Robert Balducci DeputyComptroller
Kemraj Narine AssistantComptroller
Philip Wasserman DeputyTreasurer
Albert F. Moncure, Jr. AssistantSecretary
DIRECTOR OF MEDIA AND INVESTOR RELATIONS
Raymond J. Orlando 212.788.5875 [email protected]
THE NEW YORK CITY TRANSITIONAL FINANCE AUTHORITY
255GreenwichStreet,6thFloor,NewYork,NY10007
P212.788.5877|F212.788.9197|www.nyc.gov/tfa