R apides F inance A uthority
A nnual Financial R eport
For the Y ear Ended July 31, 2000
Release [:)ate_ ~_ _-,_-C).r_] --L~l -- T able of C ontents
Page lndependenl A uditors' R eport 1
Balance Sheet 2
Statem ent of R evenue, Expenses and C hanges in R etained Earnm gs 3
Statem ent of Cash Flow s 4
N otes to lqnan cial Statem ents 5-16
Independent A uditors" R eport O n C om pliance and on Internal Control over Financial R eporting B ased on an A udit of Financial Statem ents Performed in A ccordance w ith G overnm ental Auditing Standard~ 17-18
Sum m ary of Findings and Questioned Cost 19
M anagem ent's Corrective A ction Plan 20
Schedule of Prior Findings and Questioned Cost 21
Schedule of Per D iem Paid to Board M em bers 22
R O ZIER , H A RRING TO N & M CK AY C ERTIFIED P UBLIC A CCO UNTANTS 1407 PETERMAN DRIVE ~ A LEXANDRIA, LOUISIANA 71301 JOHN S. ROZIER, IV. CPA M . DALE HARRINOTON, CPA MARKS. M cKAY~ CPA ALF.XANDRIA, LOUISIANA 71316"2178 LEE W. W/LUS. CPA TEt.ZPNON-F (318) 442-IBOS LAWRENCE E. MAYEAUX, CPA T~LECOPIER (318) 487-2027
O ctober 23, 2000
ndenendent Auditors' Renort
To the Rapides Finance Authority A lexandria, Louisiana
W e have audited the accompanying general purpose financial statements of the Rapides Finance Authority, a com ponent unit of the Rapides Parish Police Jury, as of July 31, 2000 and for the year then ended~ as listed in the table of contents. These general purp ose financial statem ents are the responsibility of th e R apides Finance A uthority's m anagem ent. O ur responsibility is to express an opinion on th ese general purpose financial statements based on our audit.
W e conducted our audit in acco rdance with generally accepted auditing standards and Government A uditing Standards issued by the Com ptroller G eneral of the U nited States. Those standards require that w e plan an d perform the audit to obtain reasonable assurance about w hether the general purpose
financial statem ents are free of m aterial m isstatem ent. An audit includes exam ining, on a test basis,
evidence supportin~g the am ounts and disclosures in the general purp ose financial statem ents. An audit also includes assessing the acco unting principles used and significant estim ates m ade by m anagem ent, as w ell as evaluating the overall general purpose financial statem ent presentation. W e believe th at our audit provides a reasonable basis for our opinion.
In our opinion the general purp ose financial statem ents referred to above present fairly, in all
m aterial respects, the financial position of the Rapides Finance Authority, as of July 31, 2000, an d the results of' its operations and cash flow s of its proprietar y fund type for the year then ended in conform ity w ith gan erally accepted accounting principles.
In accordance w ith Government Auditing Statulard~, w e have also issued a report dated October 23, 2000, on our consideration of the Rapides Finance Authority's internal control over financial reporting and our tests of its com pliance w ith certain provisions of law s, regulations, co ntracts an d grants. That report is an inlegl'al part of an audit performed in accordan ce with Govem m entAuditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit w as perform ed for the purpose of form ing an opinion on the general purp ose financial
statem ents taken as a w hole. The accom panying schedule of per diem paid to Boar d is presented for purp oses of additional analysis an d is not a required part of the general purp ose financial statem ents of Rapides Finance Authority. Such information has been subjected to the auditing procedures applied in
-M um be~ Am erican Instllute of Cert Ifl~d Public A~ ount~nts ~ S~ lety of Louisiana, CPAn - ]. R apides F inance A uthority O ctober 23, 2000 Page 2 the audit of ttle general purpose financial statem ents and in our opinion, is fairly presented in all m aterial respects in relation to the general purpose finaneial statem ents taken as a w hole.
ROZIER, HARRINGTON & M cKA Y Certified Public Accountants
- 2- I~ P ID E S FIN A N CE A U TH O R IT Y B alance Sheet July 31, 2000
n Proprietary F..u_ _n_ d Type Enterprise Fund A SSETS: Cash and cash equivalents $ 2,212,644 A ssets restricted by bond indenture: Cash and cash equivalents 451,765 lnvesl illents 13,552,734 Loans, net of allow ance for loan losses of$130,999 2,430,559 O ther assels 753.689
Total assets $ 19,401,39]
Liabilities: Bonds payable, net of deferred financing cost of $258,325 $ 13,934,775 A ccrued inlerest expense 81.879
Total liabilities 14,016,654
Fund eq u_ [It.y_:. Retained eayrtings: 5,384,737
Total fund equity 5,384,737
Total liabilities and fund equity $ 19,401,391
The accom panying notes are an Integral part of the fln~lncial statem ents,
- 3- R A P ID E S FIN A N C E A U TH O R IT Y Statement of Revenue, Expenses and Changes in Retained Earnings F or the Year E nded July 31, 2000
~ oprietarv Fund Type Enterprise Fund
Interest int:o.m e: Interest on loans $ 168,093 Interest on deposits and investm ents 1,004,645
Total interest incom e 1,172,738
Interest ex.pense: Interest on bonds payable 1,012,981
N et interest incom e 159,757
Provision for loan losses
N et interest incom e afler provision for loan losses 159,757
O ther incom e: M iscellaneous Fees 10,218
Total O ther In com e 10,218
O ther expenses: Bond trustee fees 18,704 Legal an d professional 54,060 Econom ic developm ent 1,172 Other 27,382
Total O ther F, xpense 101,318
Net Income (loss) before change in fair value of investments 68,657
Net increase (decre ase) in fair value of inveslm ents _ _ g 41,s~6
Net Income (loss) (173,206)
R etained ea rnings - beginning of year 5.557.943
R etained earnings - end of year
The accom panyln8 notes art* an integral part of the financial statem ents
- 4- R A P ID E S FIN A N CE A U TH O R ITY Statem ent of Cash Flows l~br the Year E nded July 31, 2000
Pr .~ rietary Fund Type Enterprise Fund
Net income (loss) $ (173,206) Adjustments to reco ncile operating income to net cash provided by operating activities: fi~terest e~pense 1,012,981 h~terest revenue from cash and investm ents (1,004,645) (Increase) Decrease in fair value of investm ents 241,863 (Increase) decrease in loans receivable 340,165 D isbursem ent of Series 98 Program Cost - ~ (539,907) Net cash I)rovided (used) by operating activities _ ~ , (122,749)
Interest on bonds payable (618,806) D isbursem ents to redeem bonds - ~ (699,681) Net cash i)rovided (used) by capital and related financing activities
Proceeds from m aturiW and redemption of securities 508,388 Purchase of m ot4gage back ed securities (5,049,383) Interest collected foam cash and investm ent securities 770,266 N et change in investm en t contract 5,42~399 Net cash provided (used) by non-capital financing activities 1.656_670
Net increase (decre ase) in cash 215,434
Beginning cash balance 2,448,975
Ending cash Indance 2,664,409
R estricted cash hal an ce 451_765
U nrestricted cash balance
For the year ended July 31 , 2000, there w ere no in vesting, capital, and finan cing activities that did not result in cas h receipts of paym ents.
The accom panying notes are an integral par1: of the financial statem ents. The Rapides Finance Authority, form erly known as Rapides Parish Housing and M ortgage Finance Authority, w as created thru ugh a trust indenture dated D ecem ber 14, 1978. The Authority is organized as a Public Trust as defined by state law . Rapides Parish is the designated beneficiary of the trust.
The Govenmlental Accounting Standards Board (GASB) Statement No. 14 established criteria for determ ining w hich co m ponent units should be considered part of a financial reporting ent ity. The basic criterion for including a potential com ponent unit w ithin a reporting entity is financial acco untability. The G A SB has set forth criteria to be considered in determ ining financial acco untability. This criteria includes: 1. Appointing a voting majority of an organ ization's governing body, and a. The ability of the reporting entity to im pose its w ill on that organization and/or
b. The potential for the organization to provide specific financial benefits to or im pose specific financial burdens on the reporting entity.
2. Organizations for which the reporting entity does not appoint a voting, majority but are fiscally dependent on the reporting entity.
3. Organizations for w hich the reporting entity finan cial statem ents w ould be m isleading if data of the organ ization is not included because of the nature or significance of the relations hip
Based on the previous criteria, the Authority is a co m ponent unit of the Rapides Parish Police Jury. The ac om panying com ponent unit financial statem ents present inform ation only on the funds maintained by the Authority and do not present information on the police jury, the general governm ent sern,ice provided by that governm ental unit, or other governm ental units that comprise the financial reporting entity.
The Authority uses an enterprise fund to report its financial position, results of operations and cash flow s. Enterprise funds are used to account for activities sim ilar to those found in the com m ercial sector. Enterprise funds use the aco ru al basis of acco unting w hich requires revenues to be reco gnized w hen earned and expenses ar e recognized w hen incurred.
The basis of ac ount ing follow ed by enterprise funds is sim ilar to acco unting practices utilized by business enterprises. D ue to these sim ilar ities, proprietary funds ar e allow ed to follow certain pronouncements that arc developed by the Financial Accounting Standards Board (FASB) for N otes To F inancial Statem ents business enterprises, ttow ever, the Authority only applies those FA SB pronouncem ents that w ere issued on or before N ovem ber 30, 1989.
U se of E stim ates: The preparation of financial statem ents in conform ity w ith generally accepted acco unting principles requires m anagem ent to m ake estim ates and assum ptions that afect certain reported am ounts and disclosures. A ccordingly, actual results could difer from those estim ates.
Encum brance A ccounting: Purchase orders, contracts, and other com m itm ents to engage in future expenditures are referred to as encum bran ce s. Since encum brances do not represent liabilities or current expenditures, encumbrances are not reported in the accompanying financial statem ents.
C ash and (Sash E ouivalents: Amounts reported as cash and cash equivalents (restricted and unrestricted) include all cash on hand, cash in bank acco unts, certifica tes of deposit and highly liquid investm ents.
Statem ent of C ash Flow s: For the purpose of reporting ca sh flow s, cash and cash equivalents includes all cash on hand, cash in banks and ce ltifleates of deposit.
The Authority has incurred various financing costs including underwriting fees, trustee fees, various professional fees, and gains or losses on the refunding of certain debts in connection w ith issuing bonds. In accordance w ith generally accepted accounting standards, reco gnition of these costs has been defened and amortized over the expected life of the applicable bond issue. The annual am ortization reported as a com ponent of the Authofity's interest expense. A m ortization is com puted using m ethods that are intended to approxim ate recognition of a constant rate of interest expense.
The Authority is authorized by state law and its trust indenture to acquire certain investm ent securities including obligations of the U nited States or its agencies. Investm ents are reported at fair value based on quotes provided by the Authority's bond tru stee.
Certain investm ent contracts held by the Authority are not negotiable and the value of these contracts is not efe ted by financial m ar kets. Accordingly, these investm ent contracts are reported at co st.
Cash on deposits and ca sh equivalents at July 3 l, 2000 consisted of the follow ing am ounts
- 7- N otes To Financial Statem ents
Cash on (;ash Deposit Eg,u ivalents Total
D eposits held by the Authority's local fiscal agent $ 1,758,026 $ $ 1,758,026 D eposits held by Rapides Parish Poliee Jury's fiscal agent in the Police Jury's bank account 454,618 454,618 D eposits held by the bond trustees 24,363 24,363 H ighly liquid short-term investm ents adm inistered by the bond trustee 427.402 427.402
Total Cash and Cash Equivalents 2,237,007 427,402 2,664,409 Restricted Cash and Cash Equivalents 24.363 427.402 451.765
Unrestricted Cash and Cash Equivalents $ 2,212,644 $ $ 2,212 644
Cash on deposit is secured by $100,000 in FD IC coverage and the rem ainder of the deposits are uncollaterialized. The cash equivalents are considered uninsured and unregistered securities held in the A uthority's nam e.
All of the Rapides Finance Authority's investment securities are subject to restrictions imposed by various bond indentures. Furtherm ore, these investm ent sec urities are held in tru st accounts established pursuant to the bond indentures. Totals for each bond indenture are presented as follow s:
Series 1998 B ond Indenture $ 7,378,650 Series 1991 B ond Indenture 6.174.084
Total Investm ents $ 13.552,734
A description of each investm ent security portfolio is presented as follow s:
Series 1998 Bond Indenture: Proceeds from the Series 1998 bond issue are used to create a m arket for single fam ily hom e m ortgages attributable to first tim e hom e buyers residing w ithin Rapides Parish. This is accomplished by using the proceeds to purchase securities that are backed by pools of qualifying mortgages. The M ortgage Backed Securities (M BS) acquired as a result of this program are guar anteed as to tim ely paym ent of principal and interest by the G overnm ent N ational M ortgage Association (GNM A) or the Federal National M ortgage Association (FNM A). Furthermore, the M BS are considered uninsured and unregistered securities held in the Authority's nam e.
In addition to the acquisition of M BS, the term s of the series 1998 bond indenture also authorize the trustee to temporarily invest funds with FGIC Capital M arket Services Inc. (FGIC). Under the terms N otes To Financial Statem ents
of the investm ent co nlract w ith FG1C am ounts investm ented m ust be secured by collateral consisting of cash, securities guaranteed by the U nited States G overnm ent, securities issued by certain U nited States Government Agencies or debt obligations have a rating in the highest category from M oody's and S&P. The collateral is held by an agent mutually agreed upon by FGIC and the trustee. Furtherm ore, the investm ents contracts are guaranteed by G eneral Electric Capital Corporation, a N ew Y ork Corporation. Since these investm ents are not evidenced by securities that exist in physical or book entry form, the investments are not subjecl to classification by credit: risk categories as defined by the Governm ental Accounting Standards Board.
Investm ents held in the Series 1998 portfolio are sum m arized as follow s
M ORTGAGE BACKED SECURITIES - guaranteed by GNM A or FM N A. The bonds are sched uled to m ature in 2029; how ever, aetual repaym ent w ill be based on the paym ent history associated w ith underlying pools of single fam ily hom e m ortgages. These bonds pay interest m onthly at the follow ing rates:
Annual rate of 6.10% $ 5,359,150 A nnual rate of 5.45% 1,155,639
PRO G RAM INVESTM ENT CON TRA CT - The trustee is allow ed to invest up to $8,034,000 earn ing interest at a rate of 5.36% . Interest is payable in sem i-annual installm ents due oil June 1~t and D ecem ber Ia of each year . The contract term inates July 1, 2001; however, the trustee m ay w ithdraw funds as needed on or after D ecem ber 1, ]998 635,483
FLO AT IN VI2STM E NT CON TRACT - The tru stee is allow ed to invest up to $9,000,000 earn ing int erest at a rate of 5.36% . Interest is payable in sem i-annual instalhnents clue on June Ist and D ecem ber 1a of each year. The contract term inates D ecem ber 1, 2030; how ever, the trustee m ay w ithdraw fu nds on dem and prior to term ination 228_ 378
Total investm ents, Series 1998 tru st indenture $ 7.378.650
Series 1991 Bond Indenture: Term s of the series 1991 bond indenture require am ounts held by the trustee to be "continuously and fully secured for the benefit of the issuer and the owners of the bonds by investm ent thereof in investm ent securities." Investm ent securities acquired under this provision are considered to be uninsured and unregistered securities held in the Authority's nam e. Investm ent securities held by the tru stee are presented as follow s:
- 9- N otes To Financial Statem ents
A "zero coupon" bond guaranteed by the Federal N ational M ortgage A ssociation ("FNM A"). This bond does not pay interest prior to maturity and it is scheduled to m ature at its face value of $3,555,000 on July 5, 2014. The Authority has pledged this bond to secure it s Series 1991A bond issue. $ 1,344,146
A "zero coupon" bond gu aranteed by FNM A . This bond does not pay interest prior to m aturity and it is scheduled to m ature at its face value of $7,745,000 on July 5, 2014. The Authority has pledged this bond to secure its Series 1991B bond issue. 2,928,385
M ortgage backed securities guar anteed by FN M A . These bonds pay interest m onthly based on an annual rate of 7.5~/0 . The bonds feature a stated m aturity date of D ecem ber 1~ 2010; how ever, actual repaym ent is based on the paym ent history resulting from m ortgage loans acquired by FN M A w ith proceeds from the issue of these securities. The Authority has pledged these m ortgage backed securities to secure its Series 1991A bond issue. 1,854,105
Striped U nited States Treasury securities w ith contractual m aturities described as follow s:
M aturing aflel one through five years w ith a face value of $36,000 30,039 M aturing a 17.409 _fler five_t_h_so_ugh ten years with a face value of $28,000
Total Investm ents. Series 1991 trust indenture $ 6.174.084
The Authority engages in a variety of lending activities w hich ar e intended to benefit Rapides Parish. Loans receivable at July 31, 2000 are sum m arized as follow s:
Residential m ortgage loans secured by a first m ortgage on the borrow ers principal residence. The loans w ere originated through conventional, Federal }:lousing Administration (FHA) and Veterans Administrations (VA) programs. Each loan earns interest at a rate of 8.125% w ith an original m aturity of thirty years; how ever, borrow ers are allow ed to repay all or a portion of the outstanding balance prior to m aturity. Paym enls ar e collected by servicing agents appointed by the authority in exchange for co m pensation that is based on the unpaid principal balance. In addition to the guarantees provided by var ious FH A and VA program s, the Authority has purchased supplem ental insuran ce that provides lim iled coverage in the event of a default. $ 686,550
Loans to various local governm ental units. These loans feature original m atu rity of ten years w ith interest ranging from 4.75% to 6.5% . 1,562,888
- 10- N otes To Financial Statem ents
Loan to a nonprofit health care provider originated on September 27, 1996 in the am ount of $150,000. This loan is payable in 60 m onthly installm ents of $3,191 including interest com puted at a rate of 10% . The loan is currently in default; however, a judgment against the health care provider has been rendered in favor of the Rapides Finance Authority. At the present time, the value of the judgment is unknow n. 130,999
Loans to cxm lm ercial enterprises w ith original m aturities ranging from five to eight years, payable in m onthly installm ents w ith interest eornputed at a rate of I 1.5% . The loans are sc vred by the borrow er's corporate assets including accounts receivable, inventory and equipm ent. Further security is provide by guarantees from various stockholders and certain personal property pledged by stockholders. 181,121
Total loans 2,561,558
Reserve for loan losses (130.999
Loans net of reserve for loan losses $ 2.430.559
A s described above, the Authority has provided a loan for a nonprofit health care provider. D ue to poor experience with this loan and since value of a judgment rendered in favor of the Rapides Finance Authority is currently unk now n, it w as necessary to establish a reserve for potential losses. Changes in the. allow ance for loan losses are presented as follow s:
B alance at beginning of year $ 130,999 Provision charged to operating expense Loans charged of Recoveries on previously charged off loans
Balance at end of year $ 130 999
Total Long-term D ebt $ ]3.934.775 N otes To Financial Statem ents
Series 1998 Bonds'. Series 1998 consist of the follow ing bonds dated July 15, 1998. At July 31, 2000, series 1991 debt consisted of the follow ing balances:
Seri_e~_1991 B onds: Class A $ 4,700,000 (;lass A (Super Sinker) 2,300,000 Class B 800,000 D eferred Financing Cost ( U "I_,6~5 )_
Total $ 7.622.343
To a large extent, m aturity of the am ounts presented above is influenced by the collection of various m ortgage loans and m ortgage backed securities. Since m aturity is not based on a fixed schedule, presenting a sum m ary of contractual m aturities is not considered appropriate. A description of each security included in the Series 1998 issue is presented as follow :
- JC_a~s_' A _ Revenue Bonds w ith a par value of $4,700,000. Interest is based on a rate of 5.45% , interest is payable in sem i-annual installm ents due of June 1~ and D ecem ber 1~ of each year. The bonds are scheduled to m ature serially beginning June 1, 20:19 w ith the final installm ent due D ecem ber 1, 2030; how ever, actual m aturity w ill be influenced by m andatory and optional redem ption provisions.
Class A (_S_u_l~_r Sinke~ - Revenue Bonds with a par value of $2,300,000. Interest is based on a rate of 4.9% , interest is payable in sem i-annual installm ents due of June 1~t
and D ecem ber 1a of each year. The bonds are scheduled to m ature serially beginning June 1, 2001 w ith the final installm ent due D ecem ber 1, 2018; how ever, actual m atu rity w ill be influenced by m andatory mad optional redem ption provisions.
C las.s _t~ - F, evenue Bonds w ith a par value of $800,000. Interest is based on a rate of 5.35~/0 ~ interest is payable in sem i-annual installm ents due of June 1st and D ecem ber
1~t of each 3'ear. The bonds are scheduled to m ature serially beginning D ecember 1, 2024 w ith the final installm ent due June 1, 2026; how ever, actual m aturity w ill be influenced by m andatory and optional redem ption provisions.
Security for the Series 1998 bonds consist of bond proceeds held by a trustee for the purpose of acquiring m ortgage backed securities pursuant to the Rapides Finance Authority's Home M ortgage Loan Program . M ortgage backed securities acquired pursuant to the Program w ill also serve as security for the Series 1998 bonds. The m ortgage backed securities w ill be guaranteed as to tim ely paym ent of principal and interest by the G overnm ent N ational M ortgage Association or the Federal N ational M ortgage A ssociation.
- 12- N otes I'o F inancial Statem ents
nd
hal R ede At the Authority's option, the bonds m ay be redeem ed on or after June 1 , 2008 fi-om any available source of funds . An optional redemption may be in w hole or in part. Redem ption prices expressed as a percentage of'par value are presented as follows:
R edem ption D ates: Price
June I, 2008 through Novem ber 30, 2008 102%
D ecem ber 1, 2008 through M ay 31, 2009 101% June 1, 2009 and thereafter 100%
Series 1991 debt consist of various bonds issued on D ecem ber 19 , 1991. At July 31, 2000 series 1991 debt c~onsisted of the follow ing balances: ,
- 13- Series 1991 B onds: Class A - I $ 65,974 Class A-2 1,692,050 Class A-3 125,901 Class B-I 600,896 Class B -2 122,014 Class C 3,786,265 D eferred Financing Cost (80.668
Total $ 6.312.432
To a large extent, m aturity of the am ounts presented above is influenced by the collection of various m ortgage loans an d m ortgage backed securities. Since m aturity is not based oll a fixed schedule, presenting a sum nlary of contractual m aturities is not considered appropriate. A description of each security included in the Series 1991 issue is presented as follow :
Taxable R efunding Bonds Series 1991A - This bond issue is sec ured by various M ortgage Backed Securities (M BS) issued by the Federal National M ortgage Association ("FNM A'). The bonds are also sec ured by a $3,555,000 face am ount FNM A "zero coupon" security w ith a m aturity date of July 5, 2014. See the accom panying disclosure for "Investm ents" for further inform ation regarding the securities I:,ledged to these bonds.
The Series 1991A are lim ited obligations of the Rapides Finance Authority and are payable solely from revenues and other am ounts derived by the Authority from the M B S issued by FN M A . This issue includes three classes of bonds that are described as follow s:
- JC .as_s A_ ./I_ - Revenue bonds w ith a par value of $4,200,000 issued D ecember 19, 1991 at 100.503% of the par value. Interest is payable of the first day of each m onth based
on a rate of 7.5% per annum . The bonds have a stated m aturity date of N ovember 1, 2011; how ever, this assum es that no prepaym ents will occur. A ctual principal
paym ents are influenced by the rate at w hich principal on the M BS is collected . Principal paym ents are due on each interest paym ent date and are paid from funds rem aining after paym ent of interest due on the series 1991A bonds. The Rapides
Finance Authority m ay redeem these bonds at any tim e al?ter D ece mber 1, 2001 at a redem ption price equal to 100% of the unpaid principal am ount.
_Cla_s_s_ A-?_. -. Revenue bonds with a par value of $1,800,000 issued December 19, 1991 at 89.g97% of the par value. Interest is payable of the first day of each m onth based
on a rate of 7.5% per annum . The bonds have a stated m aturity date of N ovember 1,
2011; how ever, this assum es that no prepaym ents w ill occur. A ctual principal
paym ents are influenced by the rate at w hich principal on the M BS is collected.
Principal paym ents are scheduled to begin w hen the Class A-I bonds are paid in full. These paym ents w ill be due on each interest paym ent date and ar e paid from funds rem aining after paym ent of interest due on the series 1991A bonds. The Rapides
- 14- N otes 7"o F inancial Statem ents
Finance Authority m ay redeem tbese bonds at any tim e after D ecem ber 1, 2001 at a redem ption price equal to 100% of the unpaid principal am ount.
Cla~ss A_ :.3 - Revenue bonds w ith a par value of $400,000 issued December 19, 1991 at 13.725% of the par value. These bonds feature no paym ent of principal or interest prior to m aturity. The bonds ar e scheduled to m ature at par value on July 10, 2014 and are not subject to redemption prior to maturity.
Taxable Refnnding B onds Series 1991B - This bond issue is secured by a portfolio of loans referred to as 'TILE SERIES B M ORTGAGE LO AN S". The Series B M ortgage Loans earn interest at a rate of 8.125% and ar e secured by a first m ortgage on the borrowers residence. In addition, the Series B loans are covered by a m ortgage insurance policy that provides lim ited coverage against default.
The bonds are also secured by cash on deposit in the am ount of $285,000 held in an ace ount referred to as the "'ISIQUIDITY RESERVE". Further security is provided by a $7,745,000 face amount FNM A "zcrn coupon" security w ith a m aturity date of July 5, 2014. See the accom panying disclosure fu r "Investments" for further inform ation regar ding investm ent securities pledged to these bonds.
The Series 1991B ar e lim ited obligations of the Rapides Finance Authority and are payable solely from funds provided by the Series B M ortgage Loans and certain additional security described above. This issue includes tw o classes of bonds that are described as follow s:
Class ]~1 -- Revenue bonds with a par value of $3,270,000 issued December 19, 1991 at 94.815% of the par value. Interest is payable of the first day of each m onth based on a r~te of 7.375% per annum . The bonds have a stated m aturity date of N ovem ber 1, 2011; how ever, this assum es that no prepaym ents w ill occur. A ctual principal paym ents are influenced by the rate at which principal on the Series B M ortgage Loans is collected. Principal paym ents are due on each interest paym ent date and are paid from funds rem aining after paym ent of interest due and certain fees. The Rapides Finance Authority m ay redeem these bonds at any tim e after D ecember l, 2001 at a
redem ption price equal to 100% of the unpaid principal am ount,
Class ]~:2 - Revenue bonds with a par value of $400~000 issued December 19, 1991 at 13.005% of the par value. These bonds feature no paym ent of principal or interest prior to m aturity. The bonds ar e scheduled to m ature at par value on July 10, 2014 and are not subject to redemption prior to maturity.
R esidual R evcnue C apital A ppreciation R efunding Bonds Series 1991C - Revenue bonds w ith a par value of $10,500,000 dated January 21, 1992 an d issued at approxim ately 19.3% of the par value. These bonds feature no paym ent of principal or interest prior to maturity. The bonds are scheduled to m ature at par value on July 10, 2014. The Rapides Finance Authority m ay redeem these
- 15- N otes 7"o Financial Statem ents
bonds at any tim e on or after January 1, 2002. Applicable redem ption prices are presented as follow s:
R edem otion Period R edem ption Price January 1, 2002 - D ec em ber 31, 2002 103% January 1, 2003 - D ecem ber 31, 2003 102% January 1, 2004 - D ecem ber 31, 2004 101% January 1, 2005 - D ecem ber 31, 2005 100%
The Series 1991C are lim ited obligations of the Rapides Finance Authority and ar e payable solely from "residual revenue". The bond indenture defines residual revenue as follow s:
"R esidual Revenues" m eans, collectively, all am ounts received w ith respect to the M BS and all am ounts received w ith respect to the Series B M ortgage Loans and all amounts held under the Series B Indenture (including amounts transferred to the Series B Trustee after payment in full of the Series A bonds) after payment in full of the all Series ][~ bonds.
The Authority is exposed to various risk of loss related to torts; theR, dam age or destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Authority insures against these risk described above by purchasing com m ereial insurance coverage. Settled e/aim s resulting from these insured risk have not exceeded insurance coverage in any of the past three fiscal years.
The Authority has issued certain bonds for the sole purpose of funding loans to various educational institutions aJ~d m anufaeturing enterprises. These bonds are lim ited and special revenue obligations of the Authority payable solely from funds collec ted as a result of the loans funded by the bond proce eds. Furtherm ore, the bonds are not an obligation of the State, Parish or any political subdivision. Acco rdingly, the bonds are not reported as liabilities in the accom panying financial statem ents. Sched uled m aturities associated with these bonds are presented as follows:
O cto_be~ Principal Amount
2001 2002 245,000 2003 26O,000 2004 280,0O0 2005 305,000 Thereafter 11.505.000
Total $ 12.595 000
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R O ZIER , H A RRING TO N & M CK AY C ERTIFIED PUBLIC A CCO UNTANTS 1407 PETERM AN DRIVE ~ A LEXANDRI A, LOUISIANA 71301 JOHN 8. ROZIER, IV, CPA M* DALE HARRINOTON, CPA POST OFFICE BOX 12178 MARK 8. M CKAY, CPA ALEY.ANDRIA, LOUISIANA 71316-2178 LEE W . W IlLIS, CPA TELEPHONE (318) 442-1808 LAWRENCE E. MAYEAUX, CPA TELECOPIER (318) 487-2027
O ctober 23, 2000
1ND r~PENDENT AUD ITORS' REPORT ON COM PLIAN CE AND ON IN TERN AL CON TROL OVER FIN AN CIAL REPORTIN G BA SED ON AN A U D IT O F FIN AN CIAL STA TEM EN TS PERFO RM ED IN A CCORD AN CE W ITH GO VERNAtEN TA UDITING STANDARDS
Rapides Finance Authority A lexandria, ]Lx)uisiana
W e have audited the financial statem ents of the R apides Finance Authority, as of and for the year ended July 31~ 2000, and have issued our report thereon dated October 23, 2000. W e conducted our audit in acc~)rdance with generally accepted auditing stan dards and the standards applicable to financial audits co ntained in G overnm ent Auditing Standards, issued by the Com ptroller General of the U nited States
A s part of obtaining reasonable assurance about w hether the Rapides Finance Authority's financial statem ents are fi'ee of m aterial m isstatem ent, w e perform ed tests of its com pliance w ith certain provisions of law s, regulations, contracts and grants, nonco m pliance w ith w hich could have a direct and m aterial efect o11 the determ ination of financial statem ent am ounts. However, providing an opinion on compliance with those provisions was not an objective of our audit an d, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of nonco m pliance that are required 1o be reported under Governm ent Auditing Standards .
In planning and perform ing our audit, w e considered the Rapides Finance Authority's internal control over financial rel)orting in order to determ ine our auditing procedures for the purpose of expressing our opinion on the financial statem ents and not to provide assurance on the intern al control over financial reporting. Our co nsideration of the internal co ntrol over finan cial reporting w ould not necessarily disclose all m atters in the internal control over financial reporting that might be m aterial w eaknesses. A m aterial weakness is a condition in which the design or operation of one or m ore of the internal co ntrol co m ponents does not reduce to a relatively low level the risk that m isstatem ents in am ounts that would be m aterial in relation to the financial statem ents being audited m ay occur and not be detected within a tim ely period by employees in the norm al course of perform ing th eir assigned functions. W e noted no m atters involving th e internal co ntrol over financial reporting an d its operation th at we consider to be m aterial w eaknesses.
.M em bo~ American institute of Cort h'illd Public Al:m unta nts 4" Society of Loulsllna, CPAa
~ 17- R apides I~nance A uthority O ctober 23, 2000 Page 2
This report is intended for the inform ation of m anagem ent. H ow ever, this report is a m atter of public record and its distribufon is not lim ited.
Certified Public Accountan ts
- 18- Summary of l~ndings and Questioned Cost
PA R T I- SUM M A R Y O F A UD ITOR 'S R ESUL TS,
~ The Independent Auditors" Report on the financial statem ents for the Rapides Finance Authority as of July 31, 2000 and for the year then ended expressed an unqualified opinion. ~ The results of the audit disclosed no instoJ~ces of noncom pliance that are considered to be m aterial to the financial statem ents of the Rapides Finance Authority. ~ The Rapides Finance Authority did not receive any Federal Awar ds; therefore, no reporting under OM B Circular A-133 w as necessary.
T H - A RE R E O UIR ED TO B E R EPOR TED IN A CCORD A N CE A CCEP TED G O VER NM EN TA L A UD ITIN G STAN DAR D S:
~ N one
PA R T IH - FIN W IIICIt StlA LL IN CL UD E A UD ~
~ N/A ,
- 19- M anagem ent's Corrective A ction Plan
SECTION 1 INTERN A L CO N TR OL AN D CO M PLIANCE M A TERIA L TO TH E FINAN CIA L STATEM ENTS.
No findings w ere reported in the schedule of findings and Response - N/A questions cost.
SECTION 11 IN T ER N A L C O N TR O L A N D C O M PLIAN C E M A TER IA L TO FEI)ER A L A W A R D S
N/A - The Aufl~ority did not receive federal financial Response - N/A assistance
SECTION Ill M A N A G EM EN T LETTER
N o findings were reported in the schedule of findings and Response - N /A questions cost.
- 20- Schedule of Prior Findings and Questioned Cost
SECTIO N I INTERNAl., CO N TRO L AN D CO M PLIAN CE M ATERIAL TO TH E FINANCIA L STATEM EN2~.
No findings ofthv nature w ere reported as a result of the Response - N/A previous audit.
SECTION II IN TERN AL CON TROL AND COM PLIAN CE M A TERIAL TO FEDERA L AW ARD S
N o findings of the nature w ere reported as a result of the Response - N/A previ ous audit.
SECTION Ill M AN A G E M ENT LETTER ] No findings of the naturc were reported as a result of the/ Response - N/A previous audit.
- 21- R A P ID E S FIN A N C E A U TH O R FFY Schedule of Per Diem Paid to Board M em bers F or the Year E nded July 31, 2000
B arry H ines $ 3,300 D avid B utler 1,100
,lam es M organ 1,300 G ranvel M etoyer 1,000 Jack D ew itt 1,100 A m os W esley 1,200 D avid B ates 1,200 M orton H enderson ] ,300 Jack B ram e 1,200 Tom N ash 1,100 B obble Clifton 1,000 Chm les Jotm son 800 (',andy Christophe 800
Total $ 16,400
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