11-25Resolution No. 11 -25
RESOLUTION
AUTHORIZING EXECUTION OF A COMMUNITY DEVELOPMENT
BLOCK GRANT SUB - RECIPIENT AGREEMENT WITH
NHS OF THE FOX VALLEY
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that
Sean R. Stegall, City Manager, and Diane Robertson, City Clerk, be and are hereby authorized and
directed to execute a community development block grant sub - recipient agreement on behalf of the
City of Elgin with NHS of the Fox Valley for the NHS of the Fox Valley Foreclosure Prevention and
Pre - Purchase Individual Counseling Project, a copy of which is attached hereto and made a part
hereof by reference.
s/ Ed Schock
Ed Schock, Mayor
Presented: January 26, 2011
Adopted: January 26, 2011
Vote: Yeas: 5 Nays: 0
Attest:
s/ Diane Robertson
Diane Robertson, City Clerk
AGREEMENT
BETWEEN THE CITY OF ELGIN, AND
)D HOUSING SERVICES (NHS) OF THE FOX VALLEY
This AGREEMENT is entered into as of the 26th day of January 2011, by and
between the CITY OF ELGIN, an Illinois municipal corporation (hereinafter called "GRANTEE" or "CITY ") and
NHS OF THE FOX VALLEY, a not - for -profit corporation incorporated pursuant to the laws of the State of
Illinois, (hereinafter called "SUB - RECIPIENT ") having a principal place of business at 163 East Chicago Street,
Elgin, Illinois, 60120.
I. RECITALS
A. CITY has applied for Community Development Block Grant Funds (hereinafter referred
to as "CDBG funds' from the United States Department of Housing and Urban Development
(hereinafter called "HUD ") as provided by the Housing and Community Development Act of
1974, as amended (P.L. 93 -383) (hereinafter called "ACT ").
B. CITY has considered and approved the application of SUB - RECIPIENT for CDBG funds
allotted to CITY for distribution to SUB - RECIPIENT.
C. The CITY and SUB - RECIPIENT enter into this Agreement pursuant to their respective
powers to enter into such Agreements, as those powers are defined in the Illinois Constitution and
applicable statutes.
II. SCOPE OF THE PROJECT
A. SUB- RECIPMNT hereby agrees to perform, in a timely fashion, the activities provided
for herein, and those previously defined and identified in the Project Application and project
description submitted by the SUB - RECIPIENT, dated December 16, 2009, and entitled "NHS of
the Fox Valley Foreclosure Prevention and Pre - Purchase Individual Counseling Project," a copy
of which is attached hereto as Exhibit "A" and incorporated herein by this reference (hereinafter
referred to as the "PROJECT ").
B. _. All funding.provided..to. SUB - RECIPIENT shall be used solely to.. perform „individual
counseling services for both pre- purchase and foreclosure prevention for low- and moderate -
income families living in the City of Elgin. NHS of the Fox Valley would provide 850 hours of
counseling at $35 per hour, a maximum of 10 hours per homebuyer or home owner, benefitting
approximately 170 low to moderate - income Elgin families. Services provided at the facility are
to be consistent with the scope and intent of the PROJECT. All individuals served by SUB -
RECIPIENT pursuant to this agreement will be low and moderate income persons as defined by
24 CFR 570.208 (a)(2)(i)(A).
C. The SUB - RECIPIENT shall develop and submit to the CITY an Outcome Performance
Measurement Statement that establishes project goals and objectives, identifies performance
indicators, and estimates the number of clientele to be served. The SUB - RECIPIENT shall
provide quarterly Progress Reports to the CITY, reporting on the status of the PROJECT in
relation to the percent of project completion, accomplishments, effectiveness of the project as
related to the goals and objectives, and the clientele served, including nurhber served, client
access to the service (either new or improved access), and demographics. The progress reports
shall begin upon the signing of the Agreement and shall continue until the completion of this
project or until directed to discontinue such reports in writing by the CITY.
D. Prior to the expenditure of CDBG funds, SUB- RECIPIENT shall meet with the City's
Community Development Group staff to establish acceptable documentation and guidelines
regarding requests for payment for the activities described in the Scope of Work. No payment of
CDBG funds will be made by City without the required documentation.
E. SUB - RECIPIENT shall return to the CITY any program income, as defined in 24 CFR
Part 570.500(a), which is generated as a result of this PROJECT. All written requests for an
exception to this agreement shall be made, in writing, to the City's Community Development
Department explaining why the SUB - RECIPIENT needs the income, the specific activities the
SUB - RECIPIENT will undertake with the funds and how the SUB - RECIPIENT will report the
income and expenditures to the CITY. A written response to the request will be provided to
SUB - RECIPIENT from the CITY.
I : u • J�tl : ►t• y t � _ • :: ►M
A. The CITY shall distribute to SUB RECIPIENT, as SUB - RECIPIENTS portion of the
total grant received by the CITY and in consideration of the SUB - RECIPIENT'S undertaking to
perform the PROJECT, a maximum of $29,750 (hereinafter "Grant Funds', to be paid in the
manner provided for herein at Sections II (D) and VII, Prior to the initial payment of Grant
Funds, SUB - RECIPIENT shall submit, to the CITY, their Outcome Performance Measurement
Statement and progress report indicating client demographics and program status. SUB -
RECIPIENT shall submit quarterly progress reports, by the 101h day following the end of the
preceding quarter, to the CITY. The amount to be paid to SUB - RECIPIENT will be based upon
the work completed and the submittal of employee work reports in support of the invoiced
amount.
B. This PROJECT shall be identified as Project No. 154652 and Account No. 230 -0000-
791.30-99, which identifying numbers shall be used by SUB RECIPIENT on all payment
requests.
IV. SUB RECIPIENT'S COMPLIANCE WITH THE ACT
A. CITY shall assist SUB - RECIPIENT in making application for CDBG funds.
B. SUB - RECIPIENT shall abide by the Act and all HUD rules and regulations promulgated
to implement the Act.
C. SUB - RECIPIENT shall, upon request of the CITY, (1) assist in the completion of an
environmental review and (2) complete certifications showing equal employment opportunity
compliance including equal employment opportunity certifications with reference to the
PROJECT, as set forth in Exhibit "C" attached hereto and made a part hereof.
D. SUB - RECIPIENT, in performing under this Agreement, shall:
1. Not discriminate against any worker, employee, or applicant, or any member of
the public, because of race, creed, color, sex, age or national origin, nor otherwise
commit an unfair employment practice; and
2. Take affirmative action to insure that applicants are employed without regard to
race, creed, color, sex, age or national origin, with such affirmative action including, but
not limited to the following: Employment, upgrading, demotion or transfer, termination,
recruitment or recruitment advertising, layoff or termination, rates of pay or other forms
of compensation, selection for training, including apprenticeship.
E. SUB - RECIPIENT shall permit the CITY and the Department of Housing and Urban
Development to conduct on -site reviews, examine personnel and employment records and to
conduct any other procedures or practices to assure compliance with the provisions of this
agreement. SUB - RECIPIENT shall post in conspicuous places available to employees and
applicants for employment notices setting forth the provisions of Section IV (D) above.
F. SUB - RECIPIENT shall not violate any laws, state or federal rules or regulations,
including but not limited to those regarding a direct or indirect illegal interest on the part of any
employee or elected official of the SUB - RECIPIENT in the PROJECT or payments made
pursuant to this Agreement.
G. SUB - RECIPIENT hereby warrants and represents that neither the PROJECT, including
but not limited to any funds provided pursuant thereto, nor any personnel employed in the
administration of the program shall be in any way or to any extent engaged in the conduct of
political activities in contravention of Chapter 15 of Title 5, United States Code, commonly
known as the Hatch Act.
H SUB- RECIPIENT shall maintain records to show actual time devoted and costs incurred,
in relation to the PROJECT, and shall prepare and submit quarterly progress reports which
describe the work already performed and anticipated during the remaining time of the PROJECT.
Upon fifteen (15) days notice from the CITY, originals or certified copies of all time sheets,
billings, and other documentation used in the preparation of said progress reports shall be made
available for inspection, copying, or auditing by the CITY at any time during normal business
hours, at 150 Dexter Court, Elgin, Illinois.
I. SUB - RECIPIENT shall adopt the audit requirements of the Office of Management and
Budget (hereinafter "OMB') Circular A -133, "Audits of Institutions of Higher Learning and
Other Non -Profit Institutions." SUB - RECIPIENT shall submit to the CITY one copy of said
audit report. SUB - RECIPIENT shall permit the authorized representatives of the CITY, HUD
and the Comptroller General of the United States to inspect and audit all data and reports of the
SUB - RECIPIENT relating to its performance under the Agreement.
J. SUB - RECIPIENT and CITY shall at all times observe and comply with Title 24 CFR
Part 570 and all applicable laws, ordinances or regulations of the Federal, State, Comity, and local .
government, which may in any manner affect the performance of this Agreement.
1C SUB - RECIPIENT shall transfer to the CITY any unused CDBG funds and submit all
billings attributable to this Project at the time this Agreement expires.
L. SUB - RECIPIENT will ensure that any real property under the SUB - RECIPIENT'S
control that was acquired and/or improved in whole or in part with CDBG funds in excess of
$25,000 is used exclusively for the benefit of low and moderate income persons as defined by
HUD, for a period of 15 years after the expiration of this agreement
M. If during the 15 year period after the expiration of this Agreement, the SUB - RECIPIENT
disposes of any property under the SUB - RECIPIENT'S control that was acquired and/or
improved in whole or in part with CDBG funds in excess of $25,000, then the SUB - RECIPIENT
will reimburse the CITY in the amount of the current fair market value of the property less any
portion of the value attributable to expenditures of non -CDBG funds for acquisition of, or
improvement to, the property in accordance with 24 CFR 570.503(b)(8) and 24 CFR 570.505.
V. RIGHTS TO SUBCONTRACT
A. SUB - RECIPIENT shall not assign, transfer, subcontract or otherwise convey its rights or
obligations under this Agreement without the prior written consent of the CITY, which consent
may be withheld in the CITY'S sole discretion.
B. Administration of any subcontracts by the SUB - RECIPIENT shall be in conformance
with 24 CFR Part 570.200(d)(2) and Part 85.36.
VI. BILLING PROCEDURE
A. Upon Release of Grant Funds by HUD for the PROJECT, the CITY shall make
disbursements to the SUB - RECIPIENT as either reimbursement for advances made by SUB -
RECIPIENT or as advances for specific cash requirements of SUB - RECIPIENT for the
PROJECT. All claims of SUB - RECIPIENT, whether for reimbursement or advancement, shall
comply with the following requirements:
1. SUB - RECIPIENT shall submit a listing of all disbursements of CDBG Funds, on
a form provided by the Cr1 Y.
2. Any claim for advancement of CDBG Funds shall be limited to an amount
necessary for SUB - RECIPIENT to meet specific cash requirements for the PROJECT
and shall be disbursed by SUB - RECIPIENT within three (3) working days of receipt by
SUB - RECIPIENT.
3. Any request for reimbursement or advancement pertaining to work under
contracts from the SUB - RECIPIENT shall include the following:
a. For interim payments to contractors and subcontractors, certification that
the work for which payment is requested has been performed and is in place and
to the best of SUB - RECIPIENT'S knowledge, information and belief that, the
quality of such work is in accordance with the contract and subcontracts, subject
to: (i) any evaluation of such work as a functioning PROJECT upon substantial
completion; (ii) the results.of any subsequent_tests.permitted by the subcontract;
and (iii) any defects or deficiencies not readily apparent upon inspection of the
work; and
b. For final payment, that the work has been performed in a satisfactory
manner and in conformance with the contract.
4. Processing of all requests for payment shall be contingent upon the submission of
the required documentation by the contractor and subcontractor to the CITY that fully
complies with federal labor standards, uniform relocation act or any other applicable
federal, state, or local statutes, rules or regulations.
5. SUB - RECIPIENT shall forward to the CITY all billings, vouchers, and other
documents representing any accounts payable, in such timely and reasonable manner as
both parties shall determine; provided, however, that in no event shall such documents be
forwarded to the CITY later than twenty -one (21) days after SUB - RECIPIENT'S receipt
of such documents.
6. SUB - RECIPIENT shall cooperate with the CITY to facilitate the maintenance of
financial records by the CITY as required by Title 24 CFR 85.
B. Upon submission of an acceptable claim for Grant Funds, the CITY shall process such
claim and shall approve such claim for payment following approval by the City's Community
Development Department, for compliance with this Agreement and applicable HUD
requirements.
C. Except as provided for in Sections VIII and IX hereof, the CITY shall pay all required
payments against eligible project costs, as described in Section II.B, incurred by SUB -
RECIPIENT under this Agreement.
VII. ADMINISTRATION AND REPORTING REQUIREMENTS
A. SUB - RECIPIENT shall administer the Grant Funds in conformance with the regulations,
policies, guidelines and requirements of OMB Circular numbers A -110, and A -122, as they relate
to the acceptance and use of federal funds for the PROJECT.
B, SUB - RECIPIENT shall submit all required information to show compliance with
applicable laws, rules and regulations, as specified in this Agreement and shall submit to the
CITY a quarterly progress report, by the 10h day following the end of the preceding quarter.
Other reporting requirements are specified in Exhibit "B" attached hereto and made a part of this
Agreement.
VIII. TERMINATION OF AGREEMENT OR SUSPENSION OF PAYMENT
A. During the implementation of the PROJECT, the CITY may terminate this Agreement or
may suspend payment of Grant Funds to SUB - RECIPIENT for SUB - RECIPIENT'S substantial
breach of the Agreement, abandonment of the PROJECT or occurrence rendering impossible the
performance by SUB - RECIPIENT of this Agreement.
B. During the implementation of the PROJECT, the CITY may suspend payments of Grant
Funds, due to use of funds in a manner unrelated to SUB - RECIPIENT'S performing the
PROJECT, failure by SUB - RECIPIENT in submitting supporting information or documentation
for a claim, submission. by SUB- RECIPIENT. of incorrect or.. incomplete reports, or, SUB-
RECIPIENT'S suspension of its pursuit of the PROJECT.
C. In the event the CITY elects to terminate this Agreement or to suspend payments, for any
reason stated hereinabove in paragraph A and B of this Section VIII, it shall notify the SUB -
RECIPIENT, in writing, of such action, specifying the particular deficiency, at least five (5)
working days in advance of any such action and establishing a time and a place for the SUB -
RECIPIENT to refute the alleged deficiency at a time prior to the CITY S taking such action.
After allowing the SUB - RECIPIENT the opportunity to refute or correct the alleged deficiency, if
the alleged deficiency continues to exist, in the reasonable opinion of the CITY, the CITY may
withhold payment of the Grant Funds until such time as the violation or breach is remedied. No
action taken or withheld by the CITY under this paragraph shall relieve the SUB - RECIPIENT of
its liability to the CITY for any funds expended in violation of any of the terns of this
Agreement.
D. Unless terminated pursuant to the provisions of paragraph VIII herein, this agreement
shall terminate on December 31, 2011.
IX. REMEDIES
A. To the fullest extent permitted by law, SUB - RECIPIENT agrees to and shall indemnify,
defend and hold harmless the CITY, its officers, employees, boards and commissions from and
against any and all claims, suits, judgments, costs, attorneys fees, damages or any and all other
relief of liability arising out of or resulting from or through, or alleged to arise out of any breach
of this agreement; misuse or misapplication of funds derived pursuant to this agreement by SUB -
RECIPIENT; violation of any statutes, rules and regulations, directly or indirectly, by SUB -
RECIPIENT and/or any of its agents or representatives; or any negligent acts or omissions of
SUB - RECIPIENT or of SUB - RECIPIENT'S officers, employees, agents or subcontractors. In
the event of any action against the CITY, its officers, employees, agents, boards or commissions
covered by the foregoing duty to indemnify, defend and hold harmless, such action shall be
defended by legal counsel of the CITY'S choosing. The provisions of this paragraph shall
survive any termination and/or expiration of this Agreement.
B. In the event of loss of approved Grant Funds for the PROJECT as a result of any
violation or breach of this Agreement by the CITY, misuse or misapplication of funds received
from HUD unrelated to the PROJECT, or any violation of the statutes, nrtes and regulations of
HUD, directly or indirectly, the CITY and/or any of its agents or representatives, the CITY'S
liability to SUB - RECIPIENT shall be limited to any funds which have previously been provided
to SUB - RECIPIENT pursuant to this agreement. SUB - RECIPIENT hereby waives and releases
the CITY from any and all other liability pursuant to any such breach, misuse, misapplication or
violation of statutes, rules or regulations.
C. In the event HUD, or any other federal agency, makes any claim which would give rise to
invoking the remedy provisions, as set forth in paragraphs A or B of this Section IX, then the
CITY or SUB - RECIPIENT shall immediately notify the other party, in writing, providing the full
details of the alleged violation. To the extent that any such matter is not subject to exclusive
federal jurisdiction, venue for the resolution of any disputes or the enforcement of any rights
arising out of or in connection with this Agreement between the CITY and SUB - RECIPIENT
shall be in the Circuit Court of Kane County, Illinois.
D. In addition to any other remedies available to the CITY, if the CITY has lost or been
prevented from receiving any federal funds, other than the Grant Funds, as a result of any alleged
violation of law or other breach of this Agreement by SUB - RECIPIENT, or if SUB - RECIPIENT
fails to comply. with.any term of this award or Agreement, the_SUB- RECIPIENT shall .repay,
upon demand by the CITY, such amount of Grant Finds previously disbursed or allegedly due to
the SUB - RECIPIENT.
X. TIMELINESS
A. Time is of the essence of this agreement. SUB - RECIPIENT shall meet the schedule
deadlines listed below. Any milestone which the SUB - RECIPIENT does not achieve within two
months of the date listed will result in the SUB - RECIPIENT submitting a revised implementation
schedule for approval by the City's Community Development Staff. Failure to achieve these
deadlines may result in the loss or reduction of grant funds at the CITY'S discretion.
Milestones
Date
1" Quarter Counseling (Pre- purchase June 1, 2010
and foreclosure prevention)
2. 2' Quarter Counseling and Reporting September 1, 2010
3. 3'4 Quarter Counseling and Reporting December 1, 2010
4. 4s' Quarter Counseling and Reporting March 1, 2011
B. Total Number of Months Required for 12 Months
Project Completion
XI. MISCELLANEOUS PROVISIONS
A. AMENDMENTS - This Agreement constitutes the entire Agreement between the parties
hereto. Any proposed change in this Agreement shall be submitted to the other party for prior
approval. No modifications, additions, deletions, or the like, to this Agreement shall be effective
unless and until such changes are executed, in writing, by the authorized officers of each party.
B. SUBJECT TO FINANCIAL ASSISTANCE AGREEMENT - This Agreement is made
subject to financial assistance agreements between the CITY and the United States Department of
Housing and Urban Development, with the rights and remedies of the parties hereto being in
accordance with any such agreements.
C. ASSIGNMENT - except as provided in Section V hereof, SUB - RECIPIENT shall not
assign this Agreement or any part thereof and SUB - RECIPIENT shall not transfer or assign any
Grant Funds or claims due or to become due hereunder, without the written approval of the CITY
having first been obtained.
D. ATTORNEY'S OPINION - If requested, SUB - RECIPIENT shall provide an opinion of
its attorney, in a form reasonably satisfactory to the CITY, that all steps necessary to adopt this
Agreement, in a manner binding upon SUB - RECIPIENT, have been taken by SUB - RECIPIENT,
and that SUB - RECIPIENT is in compliance with applicable local, state and federal statues, rules
and regulations for the purpose of complying with this Agreement.
E. HEADINGS - The section headings of this Agreement are for convenience and reference
only and in no way define, limit, or describe the scope or intent of this Agreement, and should be
ignored in construing or interpreting this Agreement.
F. The terms of this Agreement shall be severable. In the event any of the terns or
provisions of this Agreement are deemed to be void or otherwise unenforceable for any reason,
the remainder of this Agreement shall remain in full force and effect.
G. This Agreement shall not be construed to create a joint venture, partnership, employment
or other agency relationship between the parties hereto.
IN WYf NESS WHEREOF, the parties hereto have executed this Agreement on the dates recited below.
CITY OF ELGIN, an Illinois Municipal Corporation
BY: , A 1'"d,
Sean R. Stega
City Manager
DATE: January 26, 2011
ATTEST:
Diane Robertson
City Clerk
SUB - RECIPIENT: NHS of the Fox Valley
163 East Chicago Street, Elgin, Illinois, 60120
BY: 'ems
John EcQ S,uC)6 C- zccvriv�
NHS of the Fox Valley D
DATE: Ocaemjber a9, 9,0117
ATTEST:
Javv�� -5 � t�hcs�oN
EXHIBIT A
SUB - RECIPIENT'S CDBG APPLICATION
CITY OF ELGIN CDBG PROGRAM
PROJECT APPLICATION
2010 -2011 PROGRAM YEAR
Date of Submittal: December 15, 2009
Project Name: NHS of the Fox Valley Foreclosure Prevention and Pre- Purchase Individual
Counseling Project
Project Address: 163 E. Chicago Street
City: Elgin State: Minis Zip Code: 60120
Census Tract, Block Group: 8505.00, 8506.00, 8508.00, 8509.00, 8510.00, 8511.00,
8512.00, 8513.00, 8514.00, 8515.00, 8516.00, 8517.00, 8518.01, 8518.02, 8519.02,
8519.03, 8519.04
Submitting Agency /Organization: NHS of the Fox Valley
Contact Person: John Groene /Johnny Placeres
Name: John Groene/ Johnny Placeres
Address: 163 E. Chicago Street
City: Elgin State: Illinois Zip Code: 60120
Telephone: 847- 695 -0399
Fax: 847 - 695 -7011
E -mail: inlaceres s.nhscbicago_org ieroene&hschicaeo.org
Amount of CDBG Funding Request: $29,750
PROJECT APPLICATION (continued)
1. PROJECT SCOPE AND PURPOSE:
Provide a detailed written statement that describes the scope of the proposed project,
how CDBG funds will be spent; the need for this project, and the anticipated benefits
resultingfrom this project.
NHS of the Fox Valley creates opportunities for people to live in affordable homes,
improve their lives, and strengthen their neighborhoods. We do this by: Educating and
preparing new homeowners for success; lending to help people buy, fix and keep their
homes; sustaining homeownership through foreclosure prevention services; preserving,
rehabbing and investing in housing; building powerful and enduring community
partnerships.
The strength of communities comes primarily from residents committed to the long term
success of their own community. Homeownership, even though its role as a wealth
building strategy has suffered in recent years due to the economic crisis and resulting
lower real estate values, continues to play a critical role in family and neighborhood
stabilization. Homeownership provides a stable environment in which families educate
and raise their children, homeowners are more likely to vote, become involved in local
schools, fight for a better tomorrow.
f'
f
Homeownership is under siege as the foreclosure crisis continues. According to the
Woodstock Institute, `=the six -county region showed an 18 percent increase in filings t'
from third quarter 2008 to third quarter 2009, while there was a 67 percent increase in
filings from second quarter 2009 to third quarter 2009. ...the rate of new filings is
increasing in collar counties and decreasing in Cook County. All collar counties saw at
least a 53 percent increase in new filings from last year. Kane Comity experienced a 96.6
percent increase in new filings---the biggest increase of the six -county region." Through
the first six months of 2009 in the city of Elgin, there were 442 new foreclosure filings.
NHS of the Fox Valley has a duel response to the foreclosure crisis — prevent as many
foreclosures as possible, while also preparing new homebuyers to take advantage of the
more affordable prices, which make homeownership affordable for more low- and
moderate - income families. Since NHS of the Fox Valley opened its doors in August of
2007, we have provided foreclosure prevention counseling to 331 families and 283
families have attended Homebuyer Education classes. NHS has saved 75 families from
foreclosure through foreclosure prevention counseling and intervention and created 13
new homeowners in Elgin.
NHS of the Fox Valley requests $29,750 to support individual counseling, both pre-
purchase and foreclosure prevention, for low- and moderate - income families living in the
city of Elgin. NHS of the Fox Valley would provide 850 hours of counseling at $35 per
hour, a maximum of 10 hours per homebuyer or homeowner, benefiting approximately
170 low- and moderate - income Elgin families. From this individual counseling, we
predict approximately 60 Elgin families saved from foreclosure and 15 new homeowners
— combined this would result in 75 fewer vacant, boarded properties in the city of Elgin.
i
2. PERFORMANCE MEASUREMENT:
Provide a list of project goals and objectives. Explain how the achievement of goals and
objectives will be measured or quantified
3.
4.
Provide 850 hours of individual, pre - purchase and foreclosure prevention counseling.
Provide individual foreclosure prevention counseling to 120 low- and moderate- income
Elgin families and prevent foreclosures for 60 Elgin low- and moderate - income families.
Provide individual pre- purchase counseling for 50 Elgin low- and moderate - income
families and create 15 new homeowners. NHS of the Fox Valley will provide quarterly
reports, using counseling tracking software, Home Counselor Online for pre - purchase,
and Just Price Solutions software for foreclosure prevention counseling.
NATIONAL OBJECTIVE:
Identify the National Objective that is met to qualify the project for CDBG funding.
Please refer to the list of objectives in Section 2.3.1.• National Objectives of this
document.
#1 Benefit low and moderate income persons or households as defined by Section 8
household income guidelines.
#2 Prevent or eliminate slums or blight (vacant, boarded properties).
ELIGIBLE ACTIVITY:
Identify the eligible activity that quakes the pr6jectfor CDBGfunding. Please refer to
the list of activities in Section 2.3.1: Eligible Activities of this document.
#3 Homeownership Assistance. Provision of financial assistant to low- and moderate -
income households to assist in the purchase of a home.
#8 Interim Assistance. Assistance to alleviate emergency conditions threatening public
health and safety or take immediate action to arrest deterioration until permanent
improvements are made.
5. LOW & MODERATE INCOME BENEFIT STATEMENT:
Explain how the proposed project benefits low and moderate income persons, households
or neighborhoods. Quanta the population benefiting from the proposed project.
Describe the method used to calculate the benefit.
Population benefiting from proposed project:
-Number of persons or households expected to benefit from the project: 200 households
-Number of low /moderate income persons/households expected to benefit from the
project. —170 low /moderate income households
Of the 170 low /moderate income households receiving individual counseling, it is
projected that 120 households will receive individual foreclosure counseling
and 50 households will receive individual pre- purchase counseling.
Individual foreclosure prevention counseling will consist of the following: household
income and expenses budget creation, overview of foreclosure prevention timeline,
overview of scams targeting homeowners at risk of foreclosure, overview of options
available to homeowner from current lender /servicer or other resources, preparation of
application for loss mitigation solutions offered by current lender /servicer, negotiation)
with current lender /servicer in terms of arriving at an affordable solution, review of offers
of loss mitigation from servicer.
Individual pre - purchase counseling will consist of the following: household income and
expenses budget creation, review of credit history, affordability calculations, down
payment analysis, and pre- approval for purchase financing (optional).
6. DOCUMENTATION AND REPORTING:
During the course of this project, you are required by federal regulations to provide
monthly or quarterly reports on the clientele benefiting from this project. Describe the
method you will use to collect and maintain the following information on the clientele you
serve:
• Number of persons/households
• Number of low and moderate income persons/households
• Household size and household income
• Race /ethnicity of clientele
• Number of female- headed households
Counseling hours provided will be tracked by NHS pre - purchase counseling tracking
software, "Home Counselor Online" and foreclosure prevention counseling tracking
software, "Just Price Solutions." In addition to number of low- and moderate - income
households served, household size, household income, racelethnicity of clientele, number
of female- headed households, NHS will also provide reporting on final outcomes: loan
modification, repayment plans, refinance, etc. for foreclosure prevention clients and pre-
approval for purchase financing, purchased housing, etc. for pre - purchase housing
counseling clients.
PROJECT APPLICATION (continued)
3. PROJECT COST ESTIMATE:
Provide cost information in the table below and/or attach additional cost estimate summaries.
Project Components (Direct Counseling only) Estimated Cost
A.—Homeownership Consultant $50,000
B.—Housing Counselor _ $42,000
C.-Direct Support $14,000
D _Management Support Services_ $25,000
Total Project Cost _$131,000
Total CDBG Funding Request _$29,750
Total Contribution From Other Funding Sources $101,250
8. OTHER PROJECT FUNDING SOURCES AND AMOUNTS:
Funding Source
A. Private Contribution support
B. Grand Victoria Foundation
C. _Kane County
D. NHS Loan Origination Revenue_
E.
Total Contribution From Other Funding Sources
Amount of Funding
$ _30,000
$ _10,000
$ 34,000
$ _27,250
$ _101,250
PROJECT APPLICATION (continued)
9. PROJECT UgPLEMENTATION:
List the major tasks that will be accomplished through this project and provide a completion date
for each task.
Task
A. 1" Quarter Counseling (Pre - purchase and
foreclosure prevention) and Reporting
B 2 "d Quarter Counseling and Reporting
C. 3rd Quarter Counseling and Reporting
D. 4a Quarter Counseling and Reporting
E.
Completion Date
Total number of months required for project completion: 12
September 1, 2010
December 1, 2010
March 1, 2010
June 1, 2010
i
4.
a. Mission Statement for your organization. (Please find attached).
b. Tax - exemption determination letters from the Federal Internal Revenue Service
and the State Franchise Tax Board. (Please find attached)
C. Articles of Incorporation and by -laws of your organization. (Please find
attached).
d. List of the Board of Directors including name, telephone number, address,
occupation or affiliation of each member. Identify principal officers of the
governing body. (Please find attached)
C. A letter or resolution from your Board of Directors authorizing the submission of
the proposed project(s). Documentation must be submitted providing the name,
title, address and telephone number of each individual authorized to negotiate for
and contractually bind the agency. (Please find attached)
f. Organizational chart describing the organization's administrative framework and
staff positions. (Please find attached)
g. Resume of the Chief Program Administrator and Chief Fiscal Officer. (Please
find attached.)
h. Most recent financial statement and independent audit report (Please find
attached).
NHS of the Fox Valley
Mission Statement
NHS of the Fox Valley creates opportunities for people to live in affordable
homes, improve their lives, and strengthen their neighborhoods. We do this
by: Educating and preparing new homeowners for success; lending to help
people buy, fix and keep their homes; sustaining homeownership through
foreclosure prevention services; preserving, rehabbing and investing in
housing; building powerful and enduring community partnerships.
r
Internal Revenue Service
Date: April 5, 2005
NEIGHBORHOOD HOUSING SERVICES OF
ELGIN INC
300 DOUGLAS AVE
ELGIN IL 60120- 4110 005
Dear Sir or Madam:
Department of the Treasury
P. O. Box 2508
Cincinnati, OH 45201
Person to Contact:
Paul Perry 31 -07423
Customer Service Representative
Toll Free Telephone Number:
8:30 a.m. to 5:30 p.m. ET
877- 829 -5500
Fax Number.
513- 263 -3756
Federal Identification Number:
36- 3133793
This is in response to your request of April 5, 2005, regarding your organization's tax -
exempt status.
In May 1981 we issued a determination letter that recognized your organization as exempt
from federal income tax. Our records indicate that your organization is currently exempt
under section 501(c)(3) of the Internal. Revenue Code.
Our records indicate that your organization is also classified as a public charity under
sections 509(a)(1) and 170(b)(1)(A)(vi) of the Internal Revenue Code.
Our records indicate that contributions to your organization are deductible under section
170 of the Code, and that you are qualified to receive tax deductible bequests, devises,
transfers or gifts under section 2055, 2106 or 2522 of the Internal Revenue Code.
If you have any questions, please call us at the telephone number shown in the heading of
this letter.
Sincerely,
D
Janna K. Skufca, Director, TE/GE
Customer Account Services
File Number 5239 -892-4
r
To all to who' m these Presents Shall Come, Greeting:
I, fesse White, Secretary of State of the State of Illinois, do hereby
certify that lam the keeper of the records of the Department of
Business Services. I certify that ¢
NITS OF THE FOX VALLEY, A DOMESTIC CORPORATION, INCORPORATED UNDER THE
LAWS OF THIS STATE ON MAY 26, 1981, APPEARS TO HAVE COMPLIED WITH ALL
THE PROVISIONS OF THE GENERAL NOT FOR PROFIT CORPORATION ACT OF THIS
STATE, AND AS OF THIS DATE, IS IN GOOD STANDING AS A DOMESTIC
CORPORATION IN THE STATE OF ILLINOIS.
In Testimony Whereof, I hereto set
my hand and cause to be affixed the Great Seal of
the State of Illinois, this 9TH
day of MARCH A.D. 2009
Amheo[iicaion B: 0906801827
Audwnd= aC h4p:1/"w,cyberdrwei11inois.mm SECRETARY OF STATE
OFFICE OF THE SECRETARY OF STATE
JESSE WRITE • Secretary of State
MARCH 14, 2008 5239 -897.4
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC
PAUL CERASOLI
1279 N MILWAUKEE AVE 5TH FL
CHICAGO, IL 60622
RE NHS OF THE FOX VALLEY
DEAR SIR OR MADAM:
ENCLOSED YOU, WILL FIND THE ARTICLES OF AMENDMENT FOR THE ABOVE NAMED
CORPORATION.
FEES IN THIS CONNECTION HAVE BEEN RECEIVED AND CREDITED.
THE ENCLOSED DOCUMENT MUST BE RECORDED IN THE OFFICE OF THE RECORDER
OF THE COUNTY IN WHICH THE REGISTERED OFFICE OF THE CORPORATION IS
LOCATED.
SINCERELY YOURS,
JESSE WHITE
SECRETARY OF STATE
DEPARTMENT OF BUSINESS SERVICES
CORPORATION DIVISION
TELEPHONE (217) 782 -6961
JW:CD
SPcinVW Mnois 62756
FORM NFP 110.30 (rev, Dec, 2003)
ARTICLES OF AMENDMENT
General Not For Profit Corporation Act
Jesse White, Secretary of State
Department of Business Services
501 S. Second St., Rm. 350 FILED
Springfield, IL 62758 i� V
217 -782 -1632
www.cyberdrivaillinols.com MAR 14 2006
Ramat payment in the form of a JESSE WtirE
check or money order payable SECRETARY OF STAlir
to Secretary of State.
Submit in duplicate — — — — Type or Print dearly in black Ink
1. Corporate Name (See Note 1 on back.):
Fling Fee: $25 Approved.
Do not write above this line --
2. Manner of Adoption of Amendment: �e Z$ z�7
The following amendment to the Articles of Incorporation was adopted on t in the man-
ner inkticcated below (check one only): M°"m °as �yaffi
By affirmative vote of a majority of the directors in office, at a meeting of the board of directors, in accordance with
Section 110.15. (See Note 2 on beck.)
❑ By written consent, signed by all the directors in office, in compliance with Sections 110.15 and 108.45. (See Note 8
on back-)
• By members at a meeting of members eniftled to vote by the affirmative vote of the members having not less than
the minimum number of votes necessary to adopt such amendment, as provided by this Act, the Articles of
Incorporation or the bylaws, in accordance with Section 110.20. (See Note 4 on back.)
• By written consent signed by members entitled to vote having not less than the minimum number of votes necessary
to adopt such amendment, as provided by this Act, the Articles of Incorporation, or the bylaws, in compliance, with
Sections 107,10 and 110.20, (See Note 5 on bade)
3. Text of Amendment:
(a.) When an amendment effects a name change, insert the new corporate name below. Use 3(b.) below for all other
amendments.'Artide 1: The Name of the Corporation is: �1 M41_
(b.) AD amendments other than name change.
If the amendment affects the corporate purpose, the amended purpose is required to be set forth in its entirety. if
there is not sufficient space to add the full text of the amendment, attach additional sheets of this size.
Printed by authority of the state of lianols. July 2DO7 -1 OM - C 130.17
I,.
4. The undersigned Corporation has caused these Articles to be signed by a duly authorized officer who affirms, under
penalties of perjury, that ft facts stated heroin are true and correct
All signatures must, be�in` BLACK INK �L
Dated _may" f' 15
keD Cif yaw ExExt Name of Corporation J ��°�•'
nnyGtahorized ofrfce's Soy r m� re
Direcivr-
Namebrid Tiitle (type or prinil
5. If there are no duty authorized officers, the persons designated under Section 101.10(b)(2) must sign below and print
name and title.
The undersigned affirms, under penalties of perjury, that the facts stated herein are true.
Dated ,
Month & Day Year
Name and Title (print)
ftnamre Name and Title (print)
Signature
signature
Now and Title Wig)
New and Title (prim)
NOTES
1. State the true and exact corporate name as it appears on the records of the Secretary of State BEFORE any amend-
ment herein is reported.
2. Directors may adopt amendments without member approval only when the corporation has no members, or no mem-
bers entitled to vote pursuant to §110.15.
3. Director approval may be: ' , .,
a- by vote at a director's meeting (either Krinual or special), or
b. by consent, in writing, without a meeting.
4. All amendments not adopted under Sec. 110.15 require that:
a. the board of directors adopt a resolution setting forth the proposed amendment, and
b. the members approve the amendment
Member approval may be:
a- by vote at a members meeting (either annual or special), or
b. by consent, in writing, without a meeting.
To be adopted, the amendment must receive the affirmative vote or consent of the holders of at least two - thirds of the
outstanding members entitled to vote on the amendment (but If class voting applies, also at least a two -thirds vote
within each class is required).
The Articles of Incorporation may supersede the two-thirds vote requirement by specifying any smaller or larger vote
requirement not less than a majority of the outstanding votes of such members entitled to vote, and not less than a
majority within each class when class voting applies. (Sec. 11020)
5. When member approval is by written consent, all members must be given notice of the proposed amendment at least
five days before the consent is signed. If the amendment Is adopted, members who have not signed the consent must
be promptly notified of the passage of the amendment. (Sec. 107.10 & 110.20)
Printed by authority of the State of Winois. July 2007 -10M - C 130.17
AMENDED AND RESTATED BYLAWS
OF
NHS OF THE FOX VALLEY
(formerly known as NEIGHBORHOOD HOUSING SERVICES OF ELGIN, INC.)
Effective as of August 1, 2007
ARTICLE I
OFFICES
The corporation shall maintain in the State of Illinois a registered office and a registered
agent at such office within the State of Illinois as may from time to time be designated by the
board of directors. The principal office of the corporation in the State of Illinois shall be at 1279
North Milwaukee Avenue, 5th Floor, Chicago, Illinois or such other Iocation as from time to
time shall also be the principal office in the State of Illinois of the member. The Fox Valley area
office of the corporation shall be located at such place in that area as may from time to time be
designated by the board of directors.
ARTICLE II
SECTION 1. SOLE MEMBER_ The corporation shall have one (1) class of member,
consisting of one (1) member, designated herein as the "member" or the "member of the
corporation." The initial member of the corporation is Neighborhood Housing Services of
Chicago, Inc., an Illinois not for profit corporation ('NHS Chicago').
SECTION 2. TRANSFER OF MEMBERSHIP. Membership in the corporation shall
be transferable either by operation of law to the legal successor in interest of the member or
voluntarily by the member to any organization which, at the time of such transfer, is then
described in and qualified under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended, or the corresponding provision of any future United States Internal Revenue Law (the
"Code "). Membership in the corporation shall not otherwise be assignable or transferable.
SECTION 3. VOTING RIGHTS. The member shall be entitled to one (1) vote on
each matter submitted to a vote of, or for approval by, the member.
SECTION 4. RECORD DATE FOR MEMBER, For the purpose of determining the
member entitled to notice of any meeting of the member or any adjournment thereof, the board
of directors may fix, in advance, a date as the record date for any such determination of the
member. Any such record date shall not be more than sixty (60) days and not less than five (5)
days before the date of such meeting.
CHOW309898773
SECTION 5. REPRESENTATIVE. The voting and all other membership rights ofthe
member shall be exercisable by an individual duly elected or appointed to be its representative
by the board of directors of the member or any executive committee thereof. The corporation
shall be entitled to rely on the most - recently dated written evidence of the election or
appointment of a representative which the member delivers to the secretary of the corporation,
whether by letter or other notice signed by or at the direction of the board of directors of the
member or such executive committee, or by certified copy of the resolution electing or
appointing such representative. All notices and other communications which may or shall be
given or directed by or on behalf of the corporation or the board of directors to the member shall
be given or directed to the member's representative.
SECTION 6. RESERVED RIGHTS AND POWERS OF MEMBER In addition to
all rights and powers of members having the right to vote under the Illinois General Not For
Profit Corporation Act of 1986, as amended (the "Act ") and the rights and powers granted to the
member under other provisions of these bylaws, the member of the corporation shall have the
following voting rights and approval powers, and none of the following actions shall be taken by
the board of directors of the corporation except with the prior or concurrent written affirmative
vote or approval of the member:
A. The adoption,' amendment or repeal of any mission or similar statement of the
corporation and of any subsidiary of the corporation;
B. The adoption, amendment or repeal of any provision of the Articles of Incorporation
or these bylaws and of the articles of incorporation, bylaws, articles of formation,
operating agreement, joint venture agreement, partnership agreement, bust
agreement or other governing document of any subsidiary or affiliate of the
corporation;
D. The merger, consolidation or the dissolution of the corporation or of subsidiary or
affiliate of the corporation, including with respect to any such dissolution the
distabutees to receive the net assets upon any such dissolution and other actions to
be taken to wrap up the affairs of the corporation or of any such subsidiary or
affiliate;
E. The sale, lease, exchange, mortgage, pledge, encumbrance or disposition of all, or
substantially all, of the assets, with or without goodwill, of the corporation or of any
subsidiary or affiliate of the corporation;
F. The formation, establishment or incorporation of any subsidiary or affiliate of the
corporation;
G. The acquisition of any direct or indirect equity ownership interest by the corporation
or by any subsidiary or affiliate of the corporation in any partnership, joint venture,
limited liability company or other entity, or the making of any loan by the
corporation or any such subsidiary or affiliate to any such partnership, joint venture,
limited liability company or other entity or to third parties;
CHGOV309998773
II. The incurrence of any indebtednessby by or on behalf of the corporation or any
subsidiary or affiliate of the corporation in amounts in excess of limits to be fixed,
from time to time, by the member in writing, or the entry by the corporation or into
any guaranty of payment or performance, or the granting of any security interest,
pledge, mortgage or encumbrance in, of or on of any property of the corporation or
of any subsidiary or affiliate of the corporation,
I. Approve the annual budgets for the corporation and any unbudgeted expenditures to
be incurred by the corporation and any subsidiary of the corporation in amounts in
excess of limits to be fixed, from time to time, by the member,
J. Approve the purchase by the corporation or any subsidiary of the corporation or
entity controlled by any subsidiary of the corporation of any property to be used for
housing purposes and the business plan for any real estate development;
IC Approve all charitable and educational programs to be administered or conducted by
the corporation or any subsidiary of the corporation to carry out the purposes of the
corporation, including without limitation homeowner and homebuyer education
programs and financial assistance programs;
L. Approve the extemal audit firm for the corporation and approve the annual
audit/review report for the corporation and any subsidiary of the corporation; and
M. Approve the hiring, engagement or appointment of all staff consultants, agents,
professionals and others to assist in carrying out the purposes and resolves of the
corporation and the selection of banks and other depositaries of fiords or assets of
the corporation.
Neither the board of directors of the corporation nor any committee thereof; nor any officer or
employee of the corporation, shall take any action either in contradiction of any of the foregoing
rights or without first having secured the necessary approvals as may be required by these bylaws.
In the exercise of its approval or voting rights, the member may simply grant or withhold its
approval in whole or in part, or, in its sole discretion, prescribe such other or different action as it
may deem appropriate.
ARTICLE III
MEETINGS OF MEMBER
SECTION 1. ANNUAL MEETING. A regular annual meeting of the member shall be
held in October of each year commencing in 2008 for the purpose of the election of the board of
directors and the transaction of such other business as may come before the meeting.
SECTION 2. SPECIAL MEETING. Special meetings of the member may be called
by the member or by the board of directors of the corporation..
CHGOM09898773
SECTION 3. PLACE OF MEETING. The board of directors or the member may
designate any place as the place of meeting for any special meeting called by the board of
directors or the member, respectively. If no designation is made or if a special meeting is
otherwise called, the place of meeting shall be the principal office of the corporation in the State
of Illinois.
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, date, and
hour of any meeting of the member shall be delivered personally, by electronic mail, by
facsimile transmission, or by U.S. mail, to the member not less than three (3) (or such greater
minimum period as may be required by statute) nor more than sixty (60) days before the date of
such meeting by or at the direction of the board of directors or the other person calling the
meeting. In case of a special meeting or when required by statute or by these bylaws, the
purpose for which the meeting is called shall be stated in the notice. If mailed by U.S. mail, the
notice of a meeting shall be deemed delivered when deposited in the United States mail
addressed to the member at its address as it appears on the records of the corporation, with
postage thereon prepaid If sent by electronic mail or by facsimile transmission, the notice of a
meeting shall be deemed delivered one (1) business day after completion of successful
transmission to the member at its electronic mail address and facsimile number, respectively, as
they appear on the records of the corporation. If delivered by personal delivery, the notice shall
be deemed delivered upon receipt by the member.
SECTION 5. QILORUM. The member shall constitute a quorum at any meeting of the
member. If a quorum is not present at any meeting of the member, any officer or director of the
corporation present may adjourn the meeting at any time without further notice. At any
adjourned meeting at which a quorum shall be present, any business may be transacted which
might have been transacted at the original meeting. If a quorum is present at any meeting of the
member, the affirmative vote of the member present and voted, either in person or by proxy,
shall be the act of the member.
SECTION 6. PROXIES. The representative of a member may authorize another
person or persons to act for the member by written proxy, but no proxy shall be voted or acted
upon after eleven (11) months from its date unless otherwise provided in the proxy.
SECTION 7. INFORMAL ACTION BY MEMBER Any action which may be taken
at the annual meeting of the member, or at a special meeting of the member, may be taken
without a meeting if a consent in writing, setting forth the action so taken, shall be signed by the
representative of the member.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The affairs of the corporation shall be managed
by its board of directors, which shall have such powers as are set forth in other Articles hereof
and other powers including, but not limited to, the following, but subject to the approval rights of
the member as set forth in Article III or elsewhere in these bylaws:
CHGM30999M3 4
A. Interpreting the provisions of the articles of incorporation and bylaws.
B. Controlling the fiords of the corporation and designating its depositaries.
C. Authorizing expenditures from the fiords of the corporation to implement
its goals and purposes.
D. Performing all other acts consistent with the articles of incorporation and
bylaws that may be needed to carry out the purposes and resolves of the
corporation
SECTION 2. NUMBER TERM AND ELECTIONS
A. NUMBER. All directors in office as of June 28, 2007 are hereby
removed as of the effective date of these bylaws. From and after the effective date of
these bylaws, the number of directors shall be three (3), consisting initially of Dan Watts,
Allen Rodriguez and Tommie Fitzgibbons. The number of directors may be decreased by
amendment of this section to not fewer than three (3) or increased to any number from
time to time by amendment of this section, unless the Articles of Incorporation provide
that a change in the number of directors shall be made only by amendment to the Articles
of Incorporation.
B. TERM.. From and after the effective date of these bylaws, each director
shall otherwise hold office for the term of one (1) year and until his successor shall have
been elected and qualified. A director may serve more than one (1) term of office as a
director, which terms may, but need not, be successive.
C. ELECTION OF DIRECTORS. At the annual meeting of the member,
the member may nominate at least that number of candidates for directors equal to the
number of directors to be elected. The member shall be entitled to vote one (1) vote for
each position on the board of directors to be filled at such meeting. Voting shall not be
cumulative. The nominees receiving the largest number of votes shall be elected as
directors_
SECTION 3. REGULAR MEETINGS. A regular annual meeting of the board of
directors shall be held without other notice than these bylaws in November of each year
commencing in 2008 on such date and at such time and place as shall be set in the call for such
meeting by or at the request of the board of directors, or the president of the corporation or the
member. The board of directors may provide by resolution the time and place for the holding of
additional regular meetings of the board without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board of directors may
be called by or at the request of the president of the corporation, or by the member, or by any two
(2) directors. The person or persons calling the meeting may fix any place as the place for
holding any special meeting of the board of directors called by him or them.
SECTIONS. NOTICE. Except as otherwise required by statute, notice of any special
meeting of the board of directors shall be given at least three (3) days prior thereto by written
CHGOD30989M3
notice to each director which shall be delivered personally, by electronic mail, by facsimile
transmission, or by U.S. mail, with a concurrent courtesy copy of such notice to the member. If
mailed by U.S. mail, the notice of a meeting shall be deemed delivered when deposited in the
United States mail addressed to the director at his address as it appears on the records of the
corporation, with postage thereon prepaid. If sent by electronic mail or by facsimile
transmission, the notice of a meeting shall be deemed delivered one (1) business day after
completion of successful transmission to the director at his electronic mail address and facsimile
number, respectively, as they appear on the records of the corporation. If delivered by personal
delivery, the notice shall be deemed delivered upon receipt by the director. Notice of any special
meeting of the board of directors may be waived in writing signed by the person or persons
entitled to the notice either before or after the time of the meeting. The attendance of a director
at any meeting shall constitute waiver of notice of such meeting, except where a director attends
a meeting for the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. The business to be transacted at and the purpose of a
special meeting of the board shall be specified in the notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the board of directors shall constitute a quorum
for the transaction of business at any meeting of the board. If a quorum is not present at said
meeting, a majority of the directors present may adjourn the meeting to another time without
further notice.
SECTION 7. MANNER OF ACTING. The act of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the board of directors, unless the act of
a greater number is required by statute, these bylaws or the Articles of Incorporation.
SECTION 8. INFORMAL ACTION BY DIRECTORS. Any action required by the
Act or these bylaws to be taken at a meeting of the board of directors, or any other action which
may be taken at a meeting of the board of directors, may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all directors.
SECTION 9. RESIGNATION OF DIRECTORS. A director may resign at any time
by written notice delivered to the board of directors or the president of the corporation. Such a
resignation is effective when the notice is delivered unless the notice specifies a future date. The
pending vacancy may be filled before the effective date, but the successor shall not take office
until the effective date.
SECTION 10. REMOVAL OF DIRECTORS. Any director may be removed by the
affirmative vote of the member, with or without cause, at any regular or special meeting of the
member the written notice of which meeting shall be delivered to or waived by the member and
which shall state that a purpose of the meeting is to vote upon the removal of the one or more
directors named in the notice. Only the named director or directors may be removed at such
meeting.
SECTION 11. VACANCIES. Vacancies occurring in the board of directors, or any
directorship to be filled by reason of an increase in the number of directors, shall be filled by
vote of the member, at any regular or special meeting of the member. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
CHG01\309898773 6
SECTION 12. COMPENSATION. Directors shall serve without compensation in that
capacity or reimbursement of expenses incurred in attending meetings of the board of directors,
any committee thereof; the Council (as hereinafter defined) or the member, provided, that
nothing herein contained shall be construed to preclude any director from serving the corporation
in any capacity other than as an officer or director and receiving reasonable compensation
therefor.
SECTION 13. MEETINGS BY CONFERENCE COMMUNICATIONS
EQUIPMENT. Unless specifically prohibited by the Articles of Incorporation or these bylaws,
members of the board of directors, or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or such committee, through the use of a
conference telephone or other communications equipment by means of which all persons
participating in the meeting can communicate with each other, and participation in such a
meeting shall constitute attendance and presence in person at the meeting of the person or
persons so participating.
SECTION 14. NO PROXIES. No director may act by proxy on any matter.
ARTICLE V
COAC IITTEES
SECTION L COMMITTEES OF DIRECTORS. The board of directors, by
resolution adopted by a majority of the directors in office, may designate and create one or more
committees and appoint directors or such other persons as the board designates to serve thereon,
each of which committees shall have at least two (2) directors and a majority of the committee's
membership shall be directors. Such committees, to the extent provided in said resolution, the
Articles of Incorporation or these bylaws, shall have and exercise the authority of the board of
directors in the management of the corporation; but the designation and appointment of such
committees and the delegation thereto of authority shall not operate to relieve the board of
directors, or any individual director, of any responsibility imposed upon it or him by law,
including, without limitation, Section 108.40 of the Act. Subject to the foregoing, the board of
directors may refer or assign any matter to any committee and discharge or terminate any such
committee.
SECTION 2. TERM OF OFFICE. Each member of a committee shall continue as
such until his successor is appointed, unless the committee shall be sooner terminated, or unless
such member be removed from such committee, or unless such member shall cease to qualify as
a member thereof. Each member of a committee shall serve at the pleasure of the board of
directors.
SECTION 3. CHAIRMAN. One member of each committee shall be appointed
chairman by the board of directors.
SECTION 4. VACANCIES. Vacancies in the membership of any committee may be
filled by appointments made in the same manner as provided in the case of the original
appointments.
CHG0I1W9898T73
SECTION 5. QUORUM. Unless a greater number shall be provided in the resolution
of the board of directors designating and appointing a committee or in these bylaws, a majority
of the whole committee shall constitute a quorum and the act of a majority of the members
present at a meeting at which a quorum is present shall be the act of the committee.
SECTION 6. RULES. The board of directors may adopt rules for the government of
any committee not inconsistent with these bylaws.
SECTION 7. INFORMAL ACTION BY COMMITTEE. Any action which may be
taken at a meeting of a committee may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all committee members.
SECTION 8. COMMUNITY ADVISORY COUNCIL. The board of directors shall
by resolution establish a community advisory council (the "Council') for the purpose of making
recommendations to the board of directors regarding programs and activities to carry out the
charitable and educational purposes of the corporation in the Fox Valley area or such other
communities, if any, in Northern Illinois as may from time to time be served by the corporation.
The Council shall not act on behalf of the corporation or bind it to any action. The board of
directors may set such qualifications for membership on the Council as the board in its sole
discretion determines, except that no member of the Council shall be an officer or director of the
corporation. No member of the Council shall be entitled to receive any compensation for
services rendered in such capacity or reimbursement for expenses of attendance at any meeting
Of the Council or, if so requested, attendance at any meeting of the board of directors of the
corporation, the board of directors of the member of the corporation, or any committee, task
force or other advisory group of either the corporation or the member.
SECTION 9. OTHER ADVISORY BODIES. The board of directors may create and
appoint persons to a commission, advisory body, task force or other such body which may or
may not have directors as members, which body shall not act on behalf of the corporation or bind
it to any action, but may make recommendations to the board of directors or to the officers of the
corporation. Members of any such body shall be selected on the basis of such qualifications as
the board of directors may from time to time determine. No member of any such body shall be
entitled to receive any compensation for services rendered in such capacity or reimbursement for
expenses of attendance at any meeting of such body or, if so requested, attendance at any
meeting of the board of directors of the corporation, the board of directors of the member of the
corporation, or any committee, task force or other advisory group of either the corporation or the
member.
ARTICLE VI
SECTION 1. OFFICERS. The officers of the corporation shall be a president, a
treasurer and a secretary and such vice presidents, assistant treasurers, assistant secretaries or
other officers as may be appointed by the board of directors. Officers whose authority and duties
are not prescribed in these bylaws shall have the authority and perform the duties prescribed
from time to time by the board of directors. Any two or more offices may be held by the same
CHGomo989s'n3
person except for the office of president and treasurer. Except for the office of secretary or
assistant secretary, all officers must be directors of the corporation or then - current officers;
directors or employees of the member.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the regular annual meeting of the board of
directors. If the election of officers shall not be held at such meeting, such election shall be held
as soon thereafter as may be convenient. Vacancies may be filled at any meeting of the board of
directors. Each officer shall hold office until his successor shall have been duly elected and
qualified, unless the office is vacated prior to that time. Election of an officer shall not of itself
create contract rights.
SECTION 3. REMOVAL. Any officer elected or appointed by the board of directors
may be removed by the board of directors whenever in its judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
SECTION 4. VACANCIES. A vacancy occurring in any office because of death,
resignation, removal, disqualification or otherwise may be filled by the board of directors for the
unexpired portion of the term.
SECTIONS. PRESIDENT. The president shall be the principal executive officer of
the corporation. Subject to the direction and control of the board of directors, he shall be in
charge of the business and affairs of the corporation; he shall see that the resolutions and
directives of the board of directors are carried into effect except in those instances in which that
responsibility is assigned to some other person by the board of directors; and, in general, he shall
discharge all duties incident to the office of president and such other duties as may be prescribed
by the board of directors. The president shall preside at all meetings of the board of directors.
Except in those instances in which the authority to execute is expressly delegated to another
officer or agent of the corporation or a different mode of execution is expressly prescribed by the
board of directors or these bylaws, he may execute for the corporation any contracts or other
instruments which the board of directors has authorized to be executed, and he may accomplish
such execution either under or without the seal of the corporation and either individually or with
the secretary, any assistant secretary, or any other officer thereunto authorized by the board of
directors, according to the requirements of the form of the instrument.
SECTION 6. VICE PRESIDENT. Each vice president, if any, shall assist the
president in the discharge of his duties as from time to time may be assigned to him by the
president or by the board of directors. In the absence of the president or in the event of his
inability or refusal to act, any vice president shall perform the duties of the president and when
so acting, shall have all the powers of and be subject to all the restrictions upon the president
SECTION 7. TREASURER The treasurer shall be the principal accounting and
financial officer of the corporation. He shall: (a) have charge of and be responsible for the
maintenance of adequate books of account for the corporation; (b) have charge and custody of all
funds of the corporation, and be responsible therefor, and for the receipt and disbursement
CHG0100969M3 9
thereof; and (c) perform all the duties incident to the office of treasurer and such other duties as .
from time to time may be assigned to him by the president or by the board of directors.
SECTION 8. SECRETARY. The secretary shall record the minutes of the meetings of
the board of directors in one or more books provided for that purpose; see that all notices are
duly given in accordance with the provisions of these bylaws or as required by law; be custodian
of the corporate records and of the seal of the corporation; keep a register of the post office
address of each director which shall be famished to the secretary by such director, and perform
all duties incident to the office of secretary and such other duties as from time to time may be
assigned to him by the president or by the board of directors.
SECTION 9. ASSISTANT VICE PRESIDENTS ASSISTANT TREASURERS
AND ASSISTANT SECRETARIES. The assistant vice presidents, assistant treasurers and
assistant secretaries shall perform such duties as shall be assigned to them by the vice president,
the treasurer or the secretary, respectively, or by the president or the board of directors.
SECTION 10. COMPENSATION. Officers shall serve without compensation in that
capacity or reimbursement of expenses incurred in attending meetings of the board of directors,
any committee thereof, the Council or the member; provided, that nothing herein contained shall
be construed to preclude any director from serving the corporation in any capacity other than as
an officer or director and receiving reasonable compensation therefor.
ARTICLE VII
CONTRACTS, CHECKS, DEPOSITS AND FUNDS
SECTION 1. CONTRACTS. The board of directors may authorize any officer or
officers, agent or agents of the corporation, in addition to the officers so authorized by these
bylaws, to enter into any contract or execute and deliver any instrument in the name of and on
behalf of the corporation and such authority may be general or confined to specific instances.
SECTION 2. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of the
corporation, shall be signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the board of directors. In
the absence of such determination by the board of directors, such instruments shall be signed by
the treasurer or an assistant treasurer and countersigned by the president or the vice president of
the corporation.
SECTION 3, DEPOSITS. All funds of the corporation shall be deposited from time to
time to the credit of the corporation in such banks, trust companies or other depositaries as the
board of directors may select.
SECTION 4. GRANTS AND GIFTS. The board of directors may apply for and/or
accept on behalf of the corporation any grant, contribution, gift, bequest or devise for the general
purposes or for any special purposes of the corporation.
CHGG11309898773 10
ARTICLE VIII
BOOKS AND RECORDS
The corporation shall keep correct and complete books and records of account and shall
also keep minutes of the proceedings of the board of directors and committees having any of the
authority of the board of directors. All books and records of the corporation may be inspected by
the member and by any director, or the agent or attorney or the member or any director, for any
proper purpose at any reasonable time.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the board of directors.
ARTICLE X
POLITICAL CAMPAIGNS
The corporation shall not, at any time, directly participate or intervene in any political
campaign on behalf of or in opposition to any candidate for public office or, except as an
insubstantial part of its activities, attempt to influence the passage or defeat of legislative
proposals. This provision shall not be construed to prevent any officer or director in his
individual capacity from engaging in any of the foregoing activities.
ARTICLE XI
INDEMNIFICATION
SECTION 1. OBLIGATION TO INDEMNIFY. Subject to Sections 5, 6 and 7 of this
Article, the corporation shall indemnify each director, officer, committee chairman, committee
member, employee and agent of the corporation against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonable incurred by him in
connection with any action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), brought against him or in
which he is named as a party or with respect to which he is threatened to be named as a party by
reason of the fact that he is or was a director, officer, committee chairman, committee member,
employee or agent of the corporation, or who is or was serving at the request of the corporation
as a director, officer, employer or agent of another corporation or enterprise, if the person
seeking indemnification acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of no
contest or its equivalent, shall not of itself, create a presumption that the person seeking
indemnification did not act in good faith and in a manner in which he reasonably believed to be
in or not opposed to the best interests of the corporation, or, with respect to any criminal action
CHGOM09999773 - 11
or proceeding, a presumption that the person seeking indemnification had reasonable cause to
believe that his conduct was unlawful.
SECTION 2. MANNER OF DETERMINING ELIGIBIF,TTY. Any indemnification
shall be made by the corporation upon a determination that indemnification of such person is
proper in the circumstances because he has met the applicable standard of conduct set forth in
Section 1 of this Article. Such determination shall be made only as authorized in the specific
case (i) by the board of directors by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (ii)if such a quorum is not obtainable or, even if
obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a
written opinion.
SECTION 3. ADVANCE PAYMENTS OF EXPENSES. Expenses incurred in
defending a civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding, as authorized by the board of
directors in the specific case, upon receipt of an undertaking by or on behalf of the person
seeking indemnification to repay such amount, unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in this Article.
SECTION 4. CONTRACT RIGHTS. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which a person seeldng
indemnification may be entitled under any agreement, vote of disinterested directors or
otherwise, both as to action in his official capacity and_ as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a director, officer,
committee chairman, committee member, employee or agent of the corporation and shall inure to
the benefit of the heirs, executors and administrators of such person.
SECTION 5. INSURANCE. The obligation of the corporation under this Article shall
not be limited to the proceeds of liability insurance policies actually paid to the corporation or
directly to or for the benefit of the person claiming indemnification under this Article. The
corporation may purchase and maintain insurance on behalf of any person who is a director,
officer, committee chairman, committee member, employee or agent of the corporation against
any liability asserted against him or incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article.
SECTION 6. REPORT TO MEMBER If the corporation has paid indemnity or has
advanced expenses under this article to a director, officer, committee chairman, committee
member, employee or agent, the corporation shall report the indemnification or advance in
writing to the member with or before the notice of the next meeting of the member.
SECTION 7. MUTATION ON INDEMNIFICATION. Notwithstanding any
provision of this article to the contrary, any indemnification of its officers, directors and any
other persons who constitute the corporation's "organization managers" under Section 4958 of
the Code, including the payment of insurance premiums therefor, shall be limited to the
circumstances in which such indemnification shall not be an "excess benefit transaction" under
Section 4958 of the Code and the applicable regulations thereunder, and in no event shall the
CHGOD.309898773 12
total compensation of an indemnified organization manager, including such manager's allocable
share of any such insurance premium, be caused thereby to exceed reasonable compensation
under chapter 42 of the Code.
ARTICLE XII
SEAL
The corporate seal, if any, shall have inscribed thereon the name of the corporation and
the words "Corporate Seal, Illinois."
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of the Act or under the
provisions of the Articles of Incorporation or the bylaws of the corporation, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XIV
AMENDMENTS
The power to alter, amend, or repeal the bylaws or adopt new bylaws shall be vested in
the board of directors, subject to the affirmative approval of the member as provided in Article
III. Such action may be taken at a regular or special meeting of the board of directors for which
written notice of such purpose shall be given, with a concurrent copy of such notice to the
member The bylaws may contain any provisions for the regulation and management of the
affairs of the corporation not inconsistent with law or the Articles of Incorporation.
ARTICLE XV
MISCELLANEOUS
All words used in the singular number shall mean, extend to and include the plural where
applicable and vice versa and all words used in any gender shall mean, extend to and include any
other gender, all as the context may require.
Article and section headings are for the convenient reference only and are not a part of
the context of these bylaws.
Any waiver or consent given by the board of directors or any officer or the member shall
be effective only in the specific instance and for the purpose for which given and shall not be
deemed a waiver or consent for or with respect to any other person, instance, purpose or
circumstances.
CH0011309898T73 13
C
Actions required by Iaw or by these bylaws to be "written," to be "in writing," to have
"written consent" or "written approval" and the Mce by or of the member, directors, or committee
members, and any resignation by any officer, director, employee or agent of the corporation,
shall include any consent, approval, vote, resignation or other communication transmitted or
received by the corporation by facsimile, electronic mail or other electronic means and shall be
deemed to be the written consent or approval, resignation or other instrument in writing (as
applicable) signed by the sender identified therein whether or not containing an image of an
original signature of the sender.
A
l
CHGOMD989M3
14
NHS OF THE FOX VALLEY
BOARD OF DIRECTORS
2009-2010
Carl Pietraszewski — Vice President
Bank of America
135 S. LaSalle Ste. 740
Chicago,IL.60603
312- 992 -4755
Carl .nietraszewski(albankofamerica com
Karen Schock - Treasurer
355 Jefferson Street
Elgin, Illinois 60120
Home: 847 - 697 -2615
kschock(a�wowwaycom
Allen A. Rodriguez — President
Senior Vice President
Director of Community Affairs
Charter One Bank
71 South Wacker Drive
29`b FIoor
Chicago, Illinois 60606
Work: 312 -777 -3506
Fax: 312-777-3483
arodriquez (cr�,charteronebank_eom
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC.
CENTRAL BOARD OF DIRECTORS
2009 -2010
Thomas P. FitzGibbon, Jr.
Executive Vice President
MB Financial Bank, NA
President
MB Financial Bank Community Development
Corporation
6111 North River Road
Rosemont, Illinois 60018
Work 847- 653 -1996
Fax: 847 -653 -0080
tfit7.ab0n tnbfivancial com
Craig Gilmore, CPCU — (V.P. punning)
Director of Multicultural Markets
State Farm Insurance Companies
200 South Michigan Avenue
Suite 201
Chicago, IL 60604
Work. 312 -386 -9952
Fax: 312 - 386 -9957
Cr-aig.p_ih-note.blll@=tefitm.cor,a
Thomas Harazim
Senior Vice President & Group Manager
Corporate Banking
National City Bank
One North Franklin
20s' Floor
Locator C- L01 -20
Chicago, Illinois 60606
Work: 312 - 338 -2265
Fam 312 - 384 -4618
'Thomas harazimQnationalcit com
Dave Baptain
City of Elgin
150 Dexter Court
Elgin, Illinois 60120
Home: 847 - 741 -7375
dskaptain@mowxy-ay.co
Paul J. Lopez — (President)
Senior Vice President
Park Federal Savings Bank
1823 West 47" Street
Chicago, IL 60632
Work 73- 843 -1900
Fax: 773 - 434 -6043
Plopez@jmrkfed.com
Floyd Minor— (V.P.Operations)
5432 S. May Street
Chicago, 11, 60609
Home: 773 -538 -0100
Cell: 773 - 972 -6361
Fax: 773 -538 -3892
ifford4l PaoLcom
Allen A. Rodriguez
(V.P. Resource Development)
Senior Vice President
Director of Illinois Community Affairs
Charter One Bank
71 S. Wacker
M995
Chicago, IL 60606
Work, 312- 777 -3506
Fax: 312 - 777 -3483
Arodda,L ez cbaneronebard com
Jimmy Simmons
733 East W Street
Chicago, IL 60619
Home: 773 - 224 -3042
Cell: 773 - 727 -9571
whamVproductionsna comcastnet
Robert Steele
Cook County Commissioner
3936 W. Roosevelt Road
Chicago, IL 60624
Work: 773-722-0140
Fax: 773 -722 -0145
R.steele@xoberts_ to org
Betty Jo Swanson
7923 S. Carpenter
Chicago, II, 60620
Home: 773- 783 -1399
Fax: 773- 783 -2273
Bett �oswanson43�la yahoo com
Elizabeth Tilmon
6212 S. Claremont
Chicago, Illinois 60636
Home: 773 -436 -8571
=Lz6@ya—I-igo.com
Dave Veurink
Executive Vice President
TCF Bank
800 Burr Ridge Parkway
Burr Ridge, IL 60521
Work: 630 -986 -7068
Fax: 630 -986 -7892
dveurinkna tcfbank.com
Dan Watts – (Treasurer)
Executive Vice President
Park National Bank
801 N. Clark
Chicago, IL 60610
Work: 312- 664-5200
Fax: 312- 335 -4519
dwatts(a,parknatl com
Beth Witczak – (Secretary)
Managing Director
CRA & Fair Lending Officer
The Private Bank
120 S. LaSalle Street
Chicago, Illinois 60603
Work: 312 -564 -1444
Fax: 773 - 564 -6897
bwitczakCa theprivatebank.com
,t
c
Resolution
Of the Board of Directors of
Neighborhood Housing Services of Chicago, Inc.
December 15, 2009
AUTHORIZING APPLICATION FOR CITY OF ELGIN CDBG FUNDS
AND EXECUTION OF ALL NECESSARY DOCUMENTS
Whereas, in order to carry on the business of NHS of the Fox Valley, an Illinois not - for -profit corporation
(the "Company") the Company has determined that it is advisable and in its best interests to submit an
application for City of Elgin Community Development Funds for NHS of the Fox Valley Foreclosure
Prevention and Pre - Purchase Individual Counseling Project, (the Project); and
Whereas, the Project will prepare new homebuyers in the city of Elgin for sustainable homeownership
through individual counseling and assist current homeowners in city of Elgin in avoiding losing their
homes to foreclosure through individual counseling and intervention; and
Whereas, the City of Elgin must approve said application and will require the Company to execute a
Funding Agreement and other necessary documents upon such approval; and
Whereas, participating in the Project will help the Company promote and fulfill its charitable purposes;
NOW, THEREFORE, BE IT RESOLVED that Bruce Gottschall or Jim Wheaton, Executive Director, is
hereby authorized, empowered and directed to execute an application for city of Elgin Community
Development Funds, a Funding Agreement and such other necessary documents upon approval of the
application by the City of Elgin, and any requests for payment and documentation required to be submitted
by the Company to the City of Elgin requesting the dispersal of funds.
BE IT FURTHER RESOLVED, that all other ad and doings of the Executive Director, whether heretofore
or hereinafter taken, which are consistent with the purposes and intent of these resolutions shall be and the
same hereby are in all respects ratified, approved and confirmed.
BE IT FURTHER RESOLVED, that any changes to the Project description must be approved by NHS of
Chicago and NHS of the Fox Valley.
Approved By the Company's Board of Directors This December 15, 2009.
The below signed officers hereby certify that these Resolutions of NHS of the Fox Valley were duly
approved and adapred by the Board of Directors of NHS on December 15, 2009.
SIGNED: %-A A_ X + /,
ATTEST:
Vote: Ayes
Nays
Abstain
James K Wheaton
4903 N. Lawndale, # 2
Chicago, IL 60625
Professional Experience:
• 2005 to present: Deputy Director - Program Services & Strategy, Neighborhood Housing Services of Chicago,
Inc.
o Responsible for operations of NHS targeted neighborhoods, NHS' redevelopment activity, NLS'
lending, NHS' homeownership counseling and: education, foreclosure & delinquency counseling,
construction services, and marketing of lending, counseling & neighborhood -based services. Regularly
dealing with financial institutions invested in NHS' PSSA, City of Chicago Dept. of Community
Development, City of Chicago Dept. of Public Health, Illinois Housing Development Authority,
NeighborWorks America, Illinois Attorney General's office, AARP, HUD, and Illinois State Treasurer
on various programs managed or delivered by NHS/NLS. Work cooperatively with other NWA
organizations and other national housing organizations (e.g., Housing Partnership Network,
Opportunity Finance Network).
20042005: Acting Executive Director, NHS of Chicago, NLS and NHSRC (during James Johnson Fellowship
Year of Bruce Gotischall, Executive Director).
o While managing Lending, Construction, Home Ownership and Neighborhood managers to maintain
ongoing programs, worked with the Board of Directors and Committees in managing operations, and
internally with Resource Development staff on fund- raising, Finance staff on budgeting, and Hunan
Resources staff on a variety of training and staff performance issues.
1992 -2004: Associate Director, Lending & Homeownership Services, NHS of Chicago, NLS.
o Responsible for lending operations, home ownership counseling & education curriculum, and
foreclosure & delinquency counseling services of NLS & NHS of Chicago. Worked in developing
several new program initiatives (Chicago Family Housing Fund, N.O.R.M.A.L., PSSA 2003) with
lender partners and delivered programs to NHS customers. Developed in partnership with City of
Chicago and implemented TIF Neighborhood Improvement Programs, Lead -Safe Homes Initiative, and
Target Block Programs. Applied for and was successful in securing capital/grant funding from CDFI
Fund four different times between 1996 and 2006.
• 1991 -1992: Consultant, Community Development Issues, San Clemente, CA
o Consultant in areas of low /moderate income lending; housing counseling, board development; strategic
planning; & project management for non -profit organizations. Clients included Community
Corporation of Santa Monica; Neighborhood Reinvestment Corporation; and NeighborWorks programs
in California and Washington.
1987 -1991: Program Director, NHS of Chicago
o Responsible for all operational facets of two citywide home improvement loan programs (Chicago
Energy Savers Fund and Neighborhood/Chicago Home hmprovement Program), providing service
delivery to low /moderate income home owners in every neighborhood area of Chicago. Included
management of a consortium of 8 other non -profit community development organizations delivering the
services in addition to NHS of Chicago & its neighborhood offices as well as managing relationships
with funding entities - Bank of America, Illinois Housing Development Authority, and City of Chicago.
• 1984 -1987: Neighborhood Director, NHS of Chicago
o Responsible for management of 2 targeted neighborhood programs in the Central Austin and West
Humboldt neighborhoods, including direct lending activity and neighborhood development activities.
• 1983 -1984: Executive Director, Lake View Citizens Council, Chicago
o Managed operations of 35 -year old community -based organization in Chicago, and coordinated
community organizing for 8 community chapter organizations, tenant and block clubs.
• 1980 -1983: Executive Director, NHS of Milwaukee, WI
o Responsible for start-up of NHS program on Milwaukee's South Side, development and implementation
of lending policies & programs, underwriting guidelines, and rehab procedures.
• 1979 -1980: Editor, J.S. Paluch Publishing Co., Chicago
o Responsible for content development, layout, and copy - editing, substantive editing, and proofreading
for 3 monthly publications. Coordinated activity of photo & art departments, printers, and distribution-
1973-1979; Co-Pastor, Our Lady, Help of Christians parish, Chicago
o Co-pastor in a team ministry for Catholic parish and grade school on Chicago's West Side. Responsible
for adult education programs, youth programs, liaison with community organizations, group and
individual counseling.
• 1965 -1973: Various employments in Chicago area as commnunity organizer, bookstore manager, construction
laborer, butcher, and tutor at Cook County Jail.
Education:
• 1974, M. Div., University of St Mary of the Lake, Mundelein, IL
• 1970, B.A., Loyola University, Chicago (Major in English, Minor in Philosophy)
Other:
• Trainer in Community Lending Products and Community Lending Strategies; Mortgage Brokerage; First
Mortgage Origination; Home Improvement and Rehab Lending, and Reverse Mortgages at various NWA
national Training Institutes, 1992 to 2004.
• Consultant for nom -profit organizations regarding innovative lending strategies and loan products for
low /moderate income neighborhoods (1990 to present). Consulted for non -profit community development
programs in Illinois, Wisconsin, Indiana, Pennsylvania, Washington, Minnesota, Missouri, Ohio, California,
North Carolina, and New York.
• Awarded the `Affordable Housing Leadership Award' by the Illinois Mortgage Bankers' Association, 2003
• Certified (AARP) Reverse Mortgage Counselor
Kathleen T. Walsh
1685 Mill Street, Unit 602
Des Plaines, Illinois 60016
312 - 371 -0457 f
e- mail: kathleen.walsh@comcast.net
Areas of Expertise
• Management of teams in high performing organizations
• Regulatory compliance and monitoring
• Performance measurement and accountability
• Relationship development
• Public sector operations
• _ Program evaluation and organizational design
Professional Neighborhood Housing Services of Chicago Chicago, IL
Experience Chief Financial Officer
2007 - current • Responsible for financial management and information technology operations
• Manages complex financing operations related to finance, lending, servicing, and
asset management
• Oversees accounting and financial reporting related to mortgage banking, not -for-
profit accounting, and real estate including, intercompany transactions, investments in
limited partnerships, and Federal Single Audit guidelines
• Manages relationships with investors, lenders, program executives & Board members
• Reviews processes and internal controls to ensure effectiveness and efficiency of
operations; enhance processes through technology, improve policies and procedures
Heartland Alliance for Human Needs and Human Rights Chicago, IL
Chief Financial Officer
2006— 2007 Responsible for the overall financial management and information technology i
operations of Heartland Alliance and its partners, which includes primary care, dental,
mental health and substance abuse, supportive housing, economic security and legal
protection services; Directs finance department of forty staff, including three
controllers
• Facilitated a successful revenue cycle program review in primary care and dental
operations which resulted in a significant increase in Medicaid collections
• Implemented new automated general ledger system which included new dashboard
reports, streamlined accounts payable operations, and infrastructure for automated
purchase requisition system
• Established quarterly financial reporting to executive team
RPMG LLP Chicago, IL
Director, Midwest Public Sector Advisory Services
1995 -2006 • Manage multiple project teams of up to 10 and direct core staff of up to 11 ensuring
projects are completed on time, on budget, and in accordance with professional
standards
• Manage client relationships with municipalities, school districts, housing authorities,
transit agencies, park districts, state agencies, and not- for - profit organizations,
including federally funded programs
• Conduct high quality process and program evaluations, performance measurement
studies, regulatory compliance reviews, and costing studies to improve operational
efficiency and effectiveness, ensure accountability, identify cost savings, and increase
revenues for public sector clients
• Prepare policies and procedures and assist clients with implementation to ensure
compliance with laws and regulations
• Present reports to senior client executives
Kathleen T. Walsh
1685 Mill Street, Unit 602
Des Plaines, Illinois 60016
312- 371 -0457
e -mail: kathleen.walsh(a)comcast.net
• Lead employee mentoring program; co -chair Chicago Office women's leadership
initiative; and participate in firm -wide annual internal quality control reviews
• Led firm's first large outsourcing effort for a $4 billion Chicago area public school
district; conducted reviews of departments and programs to provide recommendations
for improving operational efficiency and effectiveness, enhancement opportunities
and cost savings, ensuring compliance, and identifying best practices; established
program management office to effectively coordinate engagement with client
representatives and manage multiple project teams
• Served as temporary chief financial officer for large Chicago social services agency
• Served as engagement manager on financial statement and Single (A -133) audits for
governments and not - for - profits
COOK COUNTY AUDITOR'S OFFICE Chicago, IL
Auditing Supervisor
1987 -1995 . Conducted reviews of County departments, including Federal programs, identifying
opportunities for operational improvement and issues of noncompliance with laws and
regulations, including the recovery of $2.1 million in County funds
• Prepared and presented reports to senior management and the Audit Committee for
review and follow -up
• Managed internal audit division of department and directed a staff of 15, ensuring
projects were completed on time, efficiently, and in accordance with professional
standards
• Updated and standardized internal office policies, procedures and manuals, office
audit report tracking system, time management system, and local area network
• Prepared indirect cost allocation plan for the County to identify costs eligible for
Federal reimbursement
Education HARVARD UNIVERSITY, Kennedy School of Government Cambridge, MA
Master in Public Administration, 2006
DEPAUL UNIVERSITY Chicago, IL
Bachelor of Science in Commerce - Accounting, 1987
(Strobel Scholars Honors Accounting Program)
Community Member, DePaul University Accounting Advisory Board — 2009 — current
Service Board Member, Resurrection High School — 2009 —current
Member, Resurrection High School Finance Committee — 2007 — current
Member, Resurrection High School Development Committee — 2006 - 2007
Board Member, DePaul University, Kellstadt Graduate School of Business Alumni Board,
1998 -2002
Board Member, Civic Federation, 2004 — 2005
Reviewer for over five years, Government Finance Officer's Association Special Review
Committee, Certificate of Achievement for Excellence in Financial Reporting
Reviewer for two years, Association of Government Accountant's Service Efforts and
Accomplishments Program
DePaul University, Corporate Day speaker to prospective students, 2001 -2005
Memberships American Institute of Certified Public Accountants
Illinois CPA Society
Certification Certified Public Accountant — State of Illinois
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Neighborhood Housing Services of Chicago, Inc. and Related Entities
(658,612)
Statement of Activities
(658,612)
Contractual Services - property subsidy
For the Period Ended
- -
(100,000)
Direct Costs of.Property Sold/Rented
October 31, 2009
842,164
$ - $ -
$ 842,164
Subtotal Other Operating Expenses
as of October 31, 2009
$ 83,662
Forgiveable Loans
Temporarily
Permanently
200,602
Unrestricted
Restricted
Restricted
Total
(in whole Ooffars)
Rental Expense
32,477
Support and revenues
Lower of Cost or Market AcUmIrnent
-
Support
Deprectiation and Amortization
113,229
Contributions and Private Grants
701,319
125,000
770,306
$ 826,319
Public Grants
135,501
-
6,776,689
135,501
Satisfaebon of Contribution Restrictions
1,023,112
(1,023,112)
(1,155,677)
$ (898,112) $ -
Total Support
$ 1,859,932
$ (898.112) $ -
$ 961 820
Revenues
-
Change in Net Assets after Minority Interest
$
(1,155,677)
Contractual Services
209,853
-
-
$2,659,653
Premium Income and Senridng Fees
331254
-
-
331,254
Property Management and Development Fees
153,991
-
-
153,991
Loan Processing Fees
282,691
-
-
282,691
Interest on Notes Receivable
264,150
-
-
264,160
Investment Interest
2.190
-
-
2,190
Rental Income
51,510
-
-
51,510
Miscellaneous
15,341
15,341
Total Revenues
$ 3.760,980
$ -
$ -
$ 3,760,980
Total Support and Revenues
$ 5,620,912
$ (898,112)
$ -
$4722,800
Net Assets Released from Usage Restrictions
Sab ofaction of usage restrictions
-
_
$ 5,620,912
,
, ,0
Expenses
Program services
Community Consult & Assist
1,760,954
-
-
1,760,954
Neighborhood Redevelopment
764,706
-
_
764,706
Community Lending Programs
1,481,948
-
-
1,461,948
Interest and real estate taxes
175,896
176,895
Total Program Services
$ 4.164,503
$ -
$ -
$ 4,164,502
Support Services
Management and General
1,463,551
-
" -
$1,463,551
Resource Development
378,229
-
378,229
Total Support Services
$ 1,841,780
$ -
$ -
$ 1,841,760
Indirect cost allocation
$ -
$ -
$
$0
Total Operating Expenses
$ 6,006,283
$ -
S -
$ 6,006282
Other Operating Income & Expenses
Sale of Property
(658,612)
- -
(658,612)
Contractual Services - property subsidy
(100,000)
- -
(100,000)
Direct Costs of.Property Sold/Rented
842,164
$ - $ -
$ 842,164
Subtotal Other Operating Expenses
83 ,552
$ 83,662
Forgiveable Loans
200,602
200,602
Bad Debt Expense
340,446
340,446
Rental Expense
32,477
32,477
Lower of Cost or Market AcUmIrnent
-
-
Deprectiation and Amortization
113,229
113229.00
Total Other Operating Expenses
$
770,306
770,306
Total Operating & Other Operating Expenses
$
6,776,689
6,776,589
Change in Net Assets before Minority Interest
$
(1,155,677)
$ (898,112) $ -
$(2,053:789)
Minority Interest
-
- -
-
Change in Net Assets after Minority Interest
$
(1,155,677)
$ (898,112) $ -
$ (2;053,789)
Net Assets at Beginning of Year
$
3,366,169
$10,628,556 $ 2,922,332
$16,937,057
Net Assets at End of Year
$
2,230,492
$ 9,730.444 $2,922,332
$14,883268
Page 14
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Neighborhood Housing Services of Chicago, Inc. and Related Entities
Comments on Financial Statements
As of October 31, 2009
Statements of Financial Position
NHS
L Accounts and Fees Receivable, Other — The October 2009 balance consists of:
Neighborwotks —NFMC
City of Chicago — NLP — Operations
Employee Assisted Housing Program
Chicago Community Trost
City of Chicago — HRAII,
North Lawndale- Greystone — City of Chicago
National Endowment for the Arts
Lead Safe Homes
Roseland - HRAIL
Other
Total
Z .Pledges Receivable --The balance consists of
State Farm Insurance
Northern Trust Bank
Citibank
Steans Family Foundation
Total
$531,342
308,333
68,750
46,250
19,459
4,649
4,167
1,994
1,873
1.2h2
198&Q59
30,000
20,000
1Q;000
7-875
$67,875
3, Loans Receivable (net) —The balance of Loans Receivable includes the following:
Loans Receivable $69,446
Allowance for loan loss (15 4001
Loans Receivable (net) $54-046
4. PropertyHeldforRehabilitsdon and Resale -REO properties that are not intended to be
rehabbed are now recorded by the loan originating entity - NHS. The account includes two
properties.
5. Program Receipts Payable —This account represents daily remittances on NHS loans,
primarily City of Chicago HELP loans approximating $600,000.
Notes to Financial Statements
p. t
Neighborhood Housing Services of Chicago, Inc_ and Related Entities
Comments on Financial Statements
As of October 31, 2009
6. Notes Payable —The balance is comprised of
MacArthur Foundation
$2,300,000
Northern Trust
750,000
Park National
231,274
Discount on below market
929
Total
$x.879,345
7. TernporadlyRes&cted Net Assets— The balance consists of $350,000 from the MacArthur
Foundation Foreclosure Prevention and Mitigation Project two-year grant, .imputed interest on
both the MacArthur Foundation Program Related Investment and Northern Trust Loan, and
the Chicago Community Tmst
NLS
8. Cash - The cash decreased from the prior month due to the origination of loans..
9. Cash and Cash Equivalents — Restdcted— This balance represents the investors' loan loss
reserve account balance on the 2002 & 2009 PSSA accounts,
10. Accounts acrd Fees Receivable, Other —The October 2009 balance consists of
Loan Closing Payoffs
$841 ,386
City of Chicago — Lead Safe Homes Grant*
787,591
City of Chicago — TIF
328,750
City of Chicago — NLP— Operations
303,333
City of Chicago — Target Block Program **
128,563
Chicago Climate Change Initiative
55,948
REO — Receivable
33 875
Total
SZ478,652
*Pass thm Grants to customers.
**Includes pass -thin Grants to customers and administrative fees.
11 Loans Held for Sale (net) — The balance of Loans Held for Sale includes the following.
Loans Held for Sale —1st & 2nd (net of construction escrows) $10,864,554
Loans Held for Sale — construction only 2,190,708
Allowance for loan loss 55 765
Loans Held for Sale (net) $11495497
Notes M Financial Statemffts
p. 2
Neighborhood Housing Services of Chicago, Inc and Related Entities
Comments on Financial Statements
As of October 3L 2009
12. Loans Receivable (net) —The balance of Loans Receivable includes the following.
Loans Receivable - Pattnetsbips $677,901
Loans Receivable — Single Family Mortgages 350,043
Allowance for loan loss 03
Loans Receivable (net) $872,741
13. Loans Receivable— Deferred (net) — The balance of Loans Receivable — Deferred includes
the following.
Loans Receivable *
$3,539,076
Allowance for loan losses
(999,427)
Discount on loans receivable
6(5 6;303)
Loans Receivable - Deferred (net)
S1.973346
*Deferred loans are made using temporarily restricted CDBG and CDFI funds. Upon
repayment from the borrower, the funds are to be used for new loans. Deferred loans made
through March 31, 2009 are recorded net of an allowance for loan losses as well as
discounted to present value. Loan losses are estimated to be thirty -five percent of the
balance. Loans are expected to become payable is eight years.
14. Properi7l3eld fbrRehabl/itation and Resale - REO properties that ate not intended to be
rehabbed ate now recorded by the loan originating entity - NIS. The balance contains four
properties.
15. Loan Loss Reserve —This balance represents the investor's loan loss reserve account balance
on the 2002 for $40,644 and 2009 for $123,526.
16. Program Receipts Payshle —This account represents the daily remittances on NLS loans.
17. Notes Payable — The balance is comprised ofi
Harris Bank Revolving Credit Facility
Northern Trust
Ford Foundation
Discount on below market
Total
$8,500,000
2,500,000
2,000,000
(L53,391)
$12.146.610
Notts to Finanaal Statements
p. 3
Neighborhood Housing Services of Chicago, Inc. and Related Entities
Comments on Financial Statements
As of October 31, 2009
18. TemporadlyRestricted Net Assets —The balance includes $2,987,106 in CDBG Loan Capital
— Available and $2,953,754 in CDBG Loan Capital —Used and $150,000 from the
MacArthur Foundation for the Foreclosure Prevention and Mitigation Project Grant
NHSRC
19. Accounts and Fees Receivable, Other— The balance consists of
Mercy Portfolio Service $30,000
Single Redevelopment Projects Sold 18,8'
Total $48,823
20. Accounts Receivable — Development Projects — This balance consists of:
Roseland New Homes Phase n
$360,096
Lawndale Gateway
97,122
Roseland Place
92,486
Roseland Village
58,846
South Chicago
14,013
New Homes West Humboldt
11.132
Total
$633,695
21. Accounts Receivable Partnerships — This balance represents interfund borrowings fox general
operating expenses, phis unpaid property management fees and partnetship fees.
22. PropettrBeld fot Rehab and Resale —The balance contains 19 lots and 18 buildings in
October 2009.
23. Deferred Revenues — The balance consists of:
City of Chicago — TBI2
National Trust for Historic Preservation
State of Illinois — DCCA
Home Depot
Total -
24. Notes Payable — The balance is comprised of-
Northern Trust
City of Chicago — Housing
Discount on below market
Total
$61,500
50,000
49,500
2S,745
$196.745
$1,750,000
485,313
588, 911
$L646_322
Notes to Fswvdal Stakmmtr
,t. 4
Neighborhood Housing Services of Chicago, Inc. and Related Entities
Comments on Financial Statements
As of October 31, 2009
25. Temporadl ,Restricted Net Assets— The balance consists of imputed interest from the
Northern Trust Loan.
NHSRC - Initiatives
26. Accounts Receivable Receiverships— In October 2009 there were 372 projects and in
October 2008 there were 179 projects.
M. Prooxam Receipts Payable — Receivership program income payable to the City of Chicago.
Notes to Finanad Statements
p. 5
Neighborhood Housing Services of Chicago, Ina and Related Entities
Comments on Financial Statements
As of October 312009
Statements of Activities
NHS
1) Satisfaction ofContribudon Restdclrons - The increase reflects the monthly release of a
portion of the MacArthur Foundation Foreclosure Prevention and Mitigation grants.
2) Contractual Services —The balance consists of
NWA - Counseling
$734,879
City of Chicago — NLP
538,466
NWA — Administration Fees
80,050
University of Chicago - EAHP
52,500
Gxeystone
34,866
Homecoming Rental Income
19,500
National Endowment for the Arts
16,667
City of Chicago — Lead Safe Homes
15,502
State Bill 1167
11,400
City of Chicago - HRAIL
6,245
Other
3 594
Total
$1513,671
NLS
3) Contributions and Private Grants —The amount represents the donated value of services for
the legal work associated with PSSA 2009. An offsetting charge was also made to legal
services expense.
4) Satisfaction ofcontnbution restrictions —The amount reflects the release of a portion of the
MacArthur Foundation Foreclosure Prevention and Mitigation grant and forgivable loans
made through the NIP -CDBG contract
5) Contractual Services — The balance includes:
City of Chicago — NLP $538,466
City of Chicago — TIF 109,411
City of Chicago — Lead Safe Homes 37,378
City of Chicago — Targeted Block 23,262
City of Chicago - IMAIL 3,538
Greystone 2.519
Total $714.574
Notes to Finaecid Statemen#
p. 6
l
Neighborhood Housing Services of Chicago, Inc_ and Related Entities
Comments on Financial Statements
As of October 31, 2009
6) Interest on Notes Receivable — The balance is lower than budget as a result of a slow down in
the origination of loans during April and May while the Revolving Ctedit Facility was
closing.
NHSRC - Initiatives
7) Contractual Service — This balance consists of
City of Chicago — Receivership Revenue $208,926
Receivership Fees 50,132
Interest Revenue Receivership 7.730
Total $266,788
Fox Valley
8) Contractual Service - 'Phis balance consists of
City of Elgin — Purchase of Service
$44,820
Kane County Counseling
20 000
Total
64 820
8) Premium Income and Servicing Fees— Represents Premium Fees on Loan Sales.
Notes to Financial Statements
p. 7
NEIGHBORHOOD HOUSING SERVICES
OF CHICAGO, INC AND RELATED ENTITIES
Chicago, Mi.nois
COMBINED FINANCIAL STATEMENTS
(INCLUDING SINGLE AUDTI)
March 31, 2009 and 2008
tom,.
i
{
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
COMBINED FINANCIAL STATEMENTS
(INCLUDING SINGLE AUDIT)
March 31, 2009 and 2008
CONTENTS
REPORT OF INDEPENDENT AUDITORS ..................................................... ............................... 1
FINANCIAL STATEMENTS
COMBINED STATEMENTS OF FINANCIAL POSITION ...................... ............................... 3
COMBINED STATEMENTS OF ACTIVITIES .............................................................. 4
COMBINED STATEMENTS OF CASH FLOWS ...................................... ............................... 6
NOTES TO COMBINED FINANCIAL STATEMENTS .................. :........................................ 7
SUPPLEMENTARY INFORMATION
COMBINING STATEMENT OF FINANCIAL POSITION - 2009 ........... ...............................
31
COMBINING STATEMENT OF FINANCIAL POSITION - 2008 ........... ...............................
32
COMBINING STATEMENT OF ACITVrIIHS - 2009 ............................... ...............................
33
COMBINING STATEMENT OF ACTIVITIES - 2008 ............................... .... .. ....... ..................
35
STATEMENTS OF ACTIVITIES - PERMANENTLY RESTRICTED NET ASSETS ...............
37
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS .................. ...............................
38
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING
STANDARDS............................................................................................. ...............................
40
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH
MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH OMB CIRCULAR A- 133 ................................... ...............................
42
SCHEDULE OF FINDINGS AND QUESTIONED COSTS ...................... ...............................
44
RESOLUTION OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS .........................
47
r
/ Crowe Homath_
Crowe Horwath LLP
MMW Y .M Mwrat.ral
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Neighborhood Housing Services of
Chicago, Inc. and Related Entities
Chicago, Illinois
We have audited the accompanying combined statements of financial position of Neighborhood
Housing Services of Chicago, Inc. and Related Entities (NHS) as of March 31, 2009 and 2008,
and the related combined statements of activities and cash flows for the years then ended.
These combined financial statements are the responsibility of NHS' management Our
responsibility is to express an opinion on these combined financial statements based on our
audits. We did not audit the financial statements of the Partnerships (see Note 1 for the list of
the partnerships), which statements reflect total assets of $18,450,558 and $19,210,100 and total
revenues of $108,350 and $1,873,153 for the years ended March 31, 2009 and 2008. Those
statements were audited by other auditors in accordance with auditing standards generally
accepted in the United States of America and whose reports have been furnished to us, and our
opinion, insofar as it relates to the amounts included for the Partnerships is based solely on the
reports of other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement The financial statements of
the Partnerships were not audited in accordance with GaoernmentAuditing Standards. An audit
includes examining on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the reports of other auditors provide a reasonable
basis for our opinion
In our opinion, based on our audits and the reports of other auditors, the combined financial
statements referred to above present fairly, in all material respects, the financial position of
Neighborhood Housing Services of Chicago, Inc. and Related Entities as of March 31, 2009 and
2008, and the changes in their net assets and their cash flows for the vears then ended, in
conformity with accounting principles generally accepted in the United States of America.
1. ` .
In accordance with Government Auditing Standards, we have also issued a report dated October
2, 2009 on our consideration of Neighborhood Housing Services internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements and other matters. The purpose of that report into describe the scope of
our testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should he read in conjunction with this report in considering
the results of our audit
Our audits and the reports of other auditors were made for the purpose of forming an opinion
on the combined financial statements taken as. a whole. The combining information and
permanently restricted statements of activities are presented for purposes of additional analysis
of the combined financial statements rather than to present the financial position and activities
of the individual entities. Such information has not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no opinion on
it The accompanying schedule of expenditures of federal awards is presented for additional
analysis as required by U.S. Office of Management and Budget Circular A -133,. Audits of States,
Local Governments, and Non - Profit Organizations, and is not a required part of the basic financial
statements_ The schedule of expenditures of federal awards has been subjected to the auditing
procedures applied in the audit of the combined financial statements and, in our opinion„ is
fairly stated in all material respects in relation to the combined financial statements taken as a
whole.
0,17we, 4$1wdA "�
Crowe Horwath LLP
Chicago, Illinois
October 2, 2009
9
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
COMBINED STATEMENT'S OF FINANCIAL POSITION
March 31, 2009 and 2008
See accompanying notes to combined financial statements.
0
t
2009
T
2008
ASSETS
Cash and cash equivalents
$ 3,261,161
$ 3,248,405
Cash and cash equivalents - restricted
1,887,314
2,440683
Accounts and fees receivable, other
6,136,094
4,275,011
Accounts receivable - receiverships
1,853,777
1,015593
Accounts receivable - development projects
926,967
777,248
Grants and contracts receivable
448,195
_ 1,171,102
Loans held for sale. (net of allowance for doubtful loans of $559,765
and $200,000)
9,271,052
12,261,106
Pledges receivable.
907,465
665,695
Loans receivable (net of allowance for doubtful loans of
$177,604 and $607,228)
531,217
886,841
Loans receivable - deferred (net of allowance for doubtful loans
and discount to present value of $1,565,730 and $555,322)
1,289,776
644,945
Loan servicing assets - -
-
- 4,173
Property held for rehabilitation and resale (net)
6,134,517
7,809,489
Property held for lease (net)
16,287,832
17,054,052
Property and equipment used in operations (net)
939,345
694,792
Capitalized intangible costs (net)
109,617
127,429
Prepaid expenses and other assets -
179283
171,913
Total assets
$ 50.163,612
$ 53.248.477
LIABILMES AND NET ASSETS
Liabilities
Accounts payable and accrued expenses
$ 2,763,211
$ 3,133,182
Loans in process
84,988
73,682
Deferred revenues
224,093
334,759
Program receipts_ payable
974,422
642,651
Customer deposits
243,832
236,491
Notes payable
28,343,832
30,787545
Total liabilities
$ 32,634,378
$ 35,208,310
Minority interest
635,953
1563,121
Net assets
Unrestricbed
3,342,393
3,677,388
Temporarily restricted
10,628556
8,145,722
Permanently restricted
2,922332
4453,936
Total net assets
S 16.893,281
$ 16.477.046
Total liabilities and net assets
S 50.163.612
$ 53.248.477
See accompanying notes to combined financial statements.
0
t
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
COMBINED STATEMENTS OF ACTIVITIES
Year ended March 31, 2009 with comparative totals for 2008
Change in net assets before minority interest and
Temporarily
Permanently
2008
Unrestricted
Restricted
Restricted Total
Total
Support and revenues
2,612484
Minority interest
1,027,036
-
Support
1,027,06
925,745
Release of Permanently Restricted Net Assets
1531.604
Contributions and private grants
$ 2,947,350
$ 2,803,400
$ - $ 5,750,750
S 4,700,671
Public grants
5381501
3,167,499
- 3,706,1100
4,114,121
Satisfaction of contribution restrictions
3,523,564
(3573564)
- _
_
Contribution on below market loans
Adjustment- For Valley beginning net assets
-
1.305,730
Total support
7,009,415
2,447,335
- 9,456,750
30,120522
Revenues
S 16893.287
$ jll6 046
Contractual services
4,284,351
-
- 4,284,361
2,601,688
Premiummcomeandservidngfees
1,188,215
-
- 1,188,215
899,826
Property management and development fees
116,725
-
- 116,715
79,849
L.oan processing fees
529,887
-
- 529887
606,295
Interest on notes receivable
843,675
-
- 843,675
742,647
Investment interest
46,150
-
- 46,150
126,216
Mrscellaneous
169,079
-
- 169.079
13ZS62
Rent and other
1,858,102
118581302
2.146.406.
Total revenues
9,036,184
9.036,184
7.365,489
Total support and revenues
16,1195599
2,447,335
- 18,492,934
- 17,486,011
Net assets released from usage restrictions
Satisfaction of usage restrictions on below
marketloans
164501
(164,5011
16;210,100
Z28ZS34
- 18,492934
17,486,011
Operating Expenses
Program services
Direct costs of property rented
1,976,613
-
- L976,613
1,866,627
Community consultation and assistance
2925,813
-
- 2,925,873
2,549,132
Neighborhood redevelopment
1,729,080
-
- 1,229,000
1,146,022
Community lending programs
2691,133
-
- 2691,133
2.379,986
Interest and real estate taxes
881 .774
881,774
1,194,127
Total program services
9.704.423
-
- .9704,5^3
9.135.894
( Support services
- - Management and general
2,898,135
-
- 289$135
2.556,991
Resource development
801,284
-
- 603.284
678,011
Total support services
3.701,419
-
- 3.701.419
3235.002
Total operating expenses
13.405.842
-
- 13A05.842
7237089,6
Other Operating Expenses
Forgivable loans
306,765
-
- 306,7,65
181,676
Deferred loans discount and allowance
1,010,408
-
- 11010,408
555,322
Sad debt expense
1,689,162
-
- 1,689,162
884,984
Lower of cost or market adjustment
2085,290
-
- 2005,290
350,000
Depreciation and amortization
144,670
-
- 144.670
147,662
Total other operating expenses
5.235.795
-
- 5.35.795
Z119,044
Total expenses -
18.641,637
- 18 641,637
14489,940
Change in art assets before net property sales,
minority interest and release of permanently
restricted net assets
(2431537)
%282834
- (148,703)
2996,071
Property sates
Sale of property
1,499,575
-
- 1,499575
1,759,925
Contractual services- property subsidies
327,727
-
- 327,727
357,400
Direct costs of property sold
(2,289ADD1
- (2.289.9001
(2.500.9121
Total property sales (net)
(462.0981
-
(462098f
(383.587)
Change in net assets before minority interest and
release of permanently restricted net assets
(2,893,635)
2282,834
-
(610,801)
2,612484
Minority interest
1,027,036
-
-
1,027,06
925,745
Release of Permanently Restricted Net Assets
1531.604
200,000
(1,731,6041
-
-
Change ar pet assets
(334,995)
2482834
(1,731,604)
416,235
3538,229
Net assets a beginning of year
3,677,388
8,145,722
4,653,936
16,477,46
12204;335
Adjustment- For Valley beginning net assets
-
-
-
734.482
Net assets at and of year
Cam- .-'182. 93
$ 10.628556
.4_ 2.922332
S 16893.287
$ jll6 046
(Continued)
4.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
COMBINED STATEMENTS OF ACTIVTITES
Year ended March 31, 2008
Support and revenues
Support
Contnbutions and private grants
Public grants
Satisfaction of contribution restrictions
Contribution on below market loans
Totalsupport
Revenues
Contractual services
Premium income and servicing fees
Property nuinagement and development fees
Loan processing fees
Interest on notes receivable
Investafentlnterest
Miscellaneous
. Rent and other
Total revenues
Total support and revenues
Net assets released from usage restrictions
Satisfaction of usage restrictions on below
market loans
Operating Expenses
Programservices
Direct costs of property rented
Community consultation and assistance
Neighborhood redevelopment
Community ]ending programs
Interest and real estate taxes
Total program services
Support services
Management and general
Resource development
Total support services
Total operating expenses
Other_ Operating Expenses
Forgivable loans
Deferred loans discount and allowance
Bad debt expense .
Lower of cost or market adjustment
Depreciation and amortization
Total other operating expenses
Total expenses _
Change in net assets before net property sales and
minority interest
Property sales
Sale of property
Contractual services - property subsidies
Direct costs of property sold
Total property sales (net)
Change in net assets before minority interest
Minority interest
Change in net assets
Net assets atbegirvdng of year
Adjustment - Fox Valley beginning net assets
Net assets at end of year
Total
$ 4,700,671
4,114,121
1305.730
10,720522
2,601,688
899,826
79,849
606,295
772,647
126,216
132,562
2,146,406
7.365A89
17,496,011
141.990 (141.9901
12527,026 4,773,995 185,000 17A86,011
1,866,627 -
Tempmady
permanently
Unrestricted
Restricted
Restricted
$ 2,8+.+,671
$ 1,845,000
$ -
528,417
3,400,704
185,000
1,635,459
(1435A59)
-
-
1.305,730
3.235,002
5,019,547
4,915,975
185,000
2,601488
-
-
899,8M
- 884,884
3501000 _
79,849
_
- 147.662
606,295
-
-
772,617
_
_
12,6,216
-
-
132,562
-
-
2.146,406
-
-
7.365A89
12385,036
0.915,975
185,000
Total
$ 4,700,671
4,114,121
1305.730
10,720522
2,601,688
899,826
79,849
606,295
772,647
126,216
132,562
2,146,406
7.365A89
17,496,011
141.990 (141.9901
12527,026 4,773,995 185,000 17A86,011
1,866,627 -
- 1,866,627
2,549,132
- 2,549,132
1,146)22 -
- 1,746,022
2379,986. -
- 2,379,986
111941127
- 1.194127
9.135.894
91135,894
2,556,991 -
- 2556,991
678.011
- '678,011
3735.002
3.235,002
12.370.696
12370.896
181,676 -
- 181,676
555,372 -
- 555,322
884,384 -
- 884,884
3501000 _
_ 350,000
147,662 -
- 147.662
2.119.044 -
- 2119.044
14.989.94(1
14A89.990
(1, 962,914) 0.773,985
7$51000 2,996,071
1,759,925
-
-
1,759,925
357,400
-
-
357,400
!2500.9121
(M,587i
-
(2500.9]21
(3845877
(2,346,501)
4,773,985
185,000
2,612,484
915.745
925.745
(1,42,0,7)
4,773,985
185,000
3,538,229
4,513,662
3,371,737
4,318,936
12,274,335
584.482
$ 3&77.3RR $
R.145.722 $
150.000
4&33.936
734.482
16.477.046
See accompanying notes to combined financial statements.
5.
l
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
COMBINED STATEMENTS OF CASH FLOWS
Years ended March 31, 2009 and 2008
Cash flows from investing activities
Contributions from pernmently restricted net assets -Fox Valley
2009
2008
Cash flows from operating activities
11,306.
(1,897,704).
Change in net assets
$ 416,235
$ 3,538,229
Adjustment to reconcile change in net assets to net cash from
-
(7,962)
operating activities ,
(6,821)
38,289
Depreciation and amortization expense
1,069,120
1,015,771
Bad debt expense
1,687,162
882,384
Contributions to permanently restricted net assets
-
(334.999)
Contribution; from permanently restricted net assets - Fox Valley
-
584482
Tower of cost or market adjustment
2 ,085,290
350AM
Loss on sale of property
789,825
740,987
Proceeds fromsale of property
1,499575.
1,759,925
Minority interest
(1,027,036)
(925,745)
Changes in assets and liabilities
Restricted cash
547,138
48,269
Accounts, fees; grants, and contracts receivable
(2,367,849)
- 948,505
Real estate tax and insurance esaow
(8,755)
138,059
Loans held for sale
29911054
(3,612,909)
Prepaid expenses and oche assets
1,451
92868
Loan servicing asset
4;173
59,301
Accounts payable and accrued expense
(243,176)
769,908
Deferred revenues
(105,998)
(87,866).
Programrec iptg payable
331,771
(2522,342)
Customer deposits
- 1168
8576
Net cash from operating activities
7 ,670,148
3,453,203
Cash flows from investing activities
Contributions from pernmently restricted net assets -Fox Valley
-
150,000
Net change in loans in process
11,306.
(1,897,704).
Net change in loans receivable outstanding
(1,978,569)
(1,267,336)
Net change in replacement or operating reserves
19,275
(7,962)
Net change in escrow deposits
(6,821)
38,289
Purchases of property used for rehabilitations and resale
(2,699,718)
(5,201,471)
Additions to property and equipment used in operations
(537,9091
(3188931
Net cash from investing activities
(5,192,286)
(8,54079)
Cash flows from financing activities
Proceeds from borrowings of debt
38,864,501
25,658,974
Repayment of debt
(41,308214)
(25592,964)
Due to general partner
(34,494)
102,298
Due to affiliates
13,101
130,419
Contributions to permanently restricted net assets
-
334,999
Net cash from financing activities
(2A65,106)
633,726
Net change in cash and cash equivalents
12,756
(4,418,150)
Cash and cash equivalents at beginning of year
- 3,248A05
7,666555
Cash and cash equivalents at end of.yeaz
4 3.251.161
$ 3.248.405
Supplemental disclosure of cash flow information
Cash paid for interest
$ 943,013
$ 943,676
See accompanying notes to combined financial statements.
) HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 1- NATURE OF OPERATIONS
Neighborhood Housing Services of Chicago, Inc
Neighborhood Housing Services of Chicago, Inc. (NHS) was organized in 1975 exclusively for
charitable purposes under the Illinois General Not - for -Profit Corporation Act and is tax
exempt under Section 501(c)(3). NHS was organized to provide services to residents and
owners of real property including (i) dissemination of information concerning housing and
community improvement programs, (ii) stimulation in the availability of improvement loans
and other financing to assist and encourage the preservation, repair, and improvement of the
supply of residential housing, (iii) encouragement for all levels of government to provide'
services, improvements, and incentives to stimulate the housing conservation process, (iv)
improvement of the flow of information and communication between community residents,
City and County government, and financial institutions regarding financing terms and
methods, as well as cooperative efforts to prevent community deterioration, (y) providing
technical assistance in both housing matters and other activities for the community good, (vi)
encouragement and assistance in formation of local organizations of community residents to
achieve these goals, and (vii) financial support of these community organizations, and
providing loan funds for those who could not otherwise obtain financing. NHS is a
Community Development Financial Institution (CDFI), certified by the United States
Department of the Treasury as of September 19, 1996, and is a chartered member of
NeighborWorks America
r"
Through NHS' partner network of Corporations, Foundations and Governmental Agencies,
NHS' operations are funded by contributions and grants from the corporate community,
governmental agencies, individuals, and contract services. Neighborhood residents,
representatives from NHS' corporate partners, professional staff and other partners work
together to rehabilitate and improve housing facilities in Chicago neighborhoods including,
West Englewood, West Humboldt Park Roseland, North Lawndale, Back of the
Yards /Garfield Boulevard, Chicago Lawn /Gage Park, Auburn Gresham Englewood, South
Chicago, as well as the suburban Fox Valley Community area-
The financial statements present the information of Neighborhood Housing Services of
Chicago and its Related Entities, including, Neighborhood Lending Services, Inc., NHS
Redevelopment Corporation, NHSRC Initiatives, Inc., NHS of the Fox Valley, various limited
partnership and other related entities as described below.
Neighborhood Lending Services, Inc.
Neighborhood Lending Services, Inc. (NLS), was organized in 1987 under the Illinois General
Not-for-Profit Corporation Act and is tax exempt under Section 501(c)(3). The purposes for
which NLS was organized were (i) to receive, administer and disburse funds exclusively for
scientific; educational and charitable purposes without pecuniary gain to its members, (ii) to
make loans for the benefit of persons of low /moderate income who reside primarily in
targeted inner-city neighborhoods for improvements to their residences, (iii) to stem or
otherwise prevent deterioration of existing housing stock in targeted inner -city neighborhoods
and (iv) to provide improved housing facilities for persons of low and moderate income.
(Continued)
7.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO; INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31; 2009 and 2008
NOTE 1- NATURE OF OPERATIONS (Continued)
NLS is a residential mortgage licensee in the state of Illinois and a Community Development
Financial Institution (CDFI), certified by the United States Department of the Treasury on June
30, 1999. To meet organizational purposes, NLS operates a range of loan programs under the
Neighborhood Lending Program using both public and private resources to assist
homeowners in buying, sustaining ownership and rehabilitating their one (1) to four (4) unit
homes.
Particfpating, Sale and SeroicingAgreements
NLS originates first and subordinate residential mortgages, packages the loans into
Mortgage Loan Ownership Certificates, and sells the Certificates to investors
(Certificateholders) in accordance with Participating, Sale and Servicing Agreements
(PSSA's). Each PSSA has a three year Purchase Period wherein Certificateholders commit
to Purchase Certificates up to a specific amount The PSSA's are an agreement between
the Seller (NLS), the loan Servicer (NLS) *, and Certificateholders. Certificateholders are
financial institutions. PSSA Series 2002 was signed November 5, 2002, PSSA Series 2006
was signed January 10, 2006, and PSSA Series 2009 was signed April 24, 2009. The
following chart presents the original commitment to purchase, the amount purchased at
the end of the Purchase Period, and the PSSA balance as of March 31, 2009.
Series
Commitment to
Purchase
Purchased by
Certificateholders
PSSA.Balance
March 31, 2009
2002
$100,000,000
$72,833,363
$43,963,165,
2006
$100 ,000,000
$91,071,379
$83,232,359
2009
$110,250,000
N/A
N/A
The PSSA balances are not held by NLS, as the sale of the Certificates to the Certificateholders
is without recourse. NLS as Servicer sub- contracts out daily sub - servicing duties. NLS uses
several facilities to .originate and warehouse loans prior to We including a $10 million
Revolving Credit Facility provided by five financial institutions.
On May 5, 2009, NLS dosed a new Revolving Credit Facility with four lender banks for
$12 million
* MB Financial Bank was the original Servicer on Series 2006. An amendment agreed to by
the Certificateholders in June 2009 transferred Servicing to NLS.
NHS is the sole member of NLS and thus the NLS Board of Directors is accountable to the
Board of Directors of NHS. Accordingly, NLS has been combined with NHS in the
accompanying combined financial statements.
(Continued)
91
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS y
March 31, 2009 and 2008
NOTE 1- NATURE OF OPERATIONS (Continued)
NHS Redevelopment Corporation
NHS Redevelopment Corporation ( NHSRC) was organized in 1979 under the Illinois General
Not - for -Profit Corporation Act and is tax exempt under Section 501(c)(3). NHSRC was
organized to (i) to receive and administer funds exclusively for scientific, educational, and
charitable purposes, without pecuniary gain or profit to its members, (ii) to assist in projects,
undertakings, studies and other activities in cooperation and in conjunction with
governmental and civic bodies for the elimination of slum, blight, and blighting conditions,
(iii) to aid, assist and foster the planning, replanning development, renewal, redevelopment of
the City of Chicago, Illinois, (iv) to combat community deterioration, and (v) to promote
adequate housing, community facilities, and other related facilities and services and
conditions, economic or otherwise, conducive to the progress and general welfare of the
community.
Neighborhood rehabilitation activities include renovating and constructing single - family
homes for resale, renovating multi-family housing for rental, and renovating and managing
multi- family housing for others.
NHS is the sole member of NHSRC and thus the Board of Directors of NHSRC is accountable
to the Board of Directors of NHS. Accordingly, NHSRC has been combined with NHS in the
accompanying combined financial statements.
NHSRC Initiatives Inc
NHSRC Initiatives Inc. ( NHSRCI) was organized in December 2005 under the Illinois General
Not - for -Profit Corporation Act in part, but not limited to, the purpose of taking ownership of
or exercising control under court order of troubled and blighted buildings located within the
City of Chicago. These troubled and blighted buildings will then be rehabilitated to, at the
minimum, meet. the City of Chicago Building Code requirements, Some properties may be
sold to third pares using various city and federally funded programs.
NHS is the sole member of NHSRCI and thus the Board of Directors of NHSRCI is accountable
to the Board of Directors of NHS. Accordingly; NHSRCI has been combined with NHS in the
accompanying combined financial statements.
NHS of the Fox Valley
NHS of the Fox Valley was organized under the Illinois General Not-for-Profit Corporation
Act and is tax exempt under Section 501(c)(3). Effective August 1, 2007, NHS of Chicago
became affiliated with NHS of the Fox Valley (NHSFV), formerly known as Neighborhood
Housing Services of Elgin, Inc This affiliation was done with the approval and participation
of NeighborWorks America
(Continued)
9. t <;.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 1- NATURE OF OPERATIONS (Continued)
NHS of the Fox Valley was organized to combat community deterioration, to provide relief for
the poor, distressed or underprivileged and to lessen neighborhood tensions by: (a) providing
and sponsoring community -wide educational programs in the fundamentals of
homeownership and providing other assistance to potential and existing homebuyers and
homeowners who are low- income residents of communities, or residents of low- income
communities, in the Fox Valley area and other communities or areas of Northern Illinois from
time to time served by the corporation and (b) renewing pride; restoring confidence, and
stimulating reinvestment in and the revitalization of deteriorated urban neighborhoods in
communities in Area in partnership with low - income residents of the Area, residents of low -
income communities in the Area, public officials and Iocal governmental units in the Area, the
Area business community, private foundations and others interested in strengthening
communities in the Area and expanding the supply of affordable housing in the Area
NHS is the sole member of NHSFV and thus the Board of Directors of NHS of the Fox Valley
is accountable to the Board of Directors of NHS. Accordingly, NHS of the Fox Valley
activities; effective August 1, 2007, have been combined with NHS in the accompanying
combined financial statements.
Limited Partnerships
NHSRC acts as General or Co-General Partner of several limited partnerships which operate
affordable housing apartment complexes and senior housing facilities in Chicago. The limited
partnerships were designed to facilitate the allocation of low- income housing tax credits
(LIHTC's) to the limited partners. The following noted General Partner corporations are
wholly owned by NHSRC who acts as General or Co- General Partner with an ownership
percentage as noted in the following limited partnerships:
General Partner Corporations
New Partnership, Inc.
New Partnership, hnc
New Partnership, hnc
New Partnership, Inc
PC Austin, LLC
Roseland Ridge, Inc.
Pine Race II, Inc.
NHS Roseland SLF, hic."
NHS South Chicago SLF, Inc. **
Ownership%
Limited Partnerships
.01
701 N. Central Associates*
.01
600 N. Central Associates*
.01
East Garfield Park Limited*
.01
East Garfield Park II Limited*
.01
Pine Central Apartments
.001
Roseland Ridge Apartments
.001
Pine Race II Limited
.0051
Roseland SLF Associates
51 South Chicago SLF Associates
*The LIHTC compliance periods have expired.
** This corporation is a Co- General Partner of the corresponding Limited Partnership
(Continued)
10.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 1- NATURE OF OPERATIONS (Continued)
In June 2005, the Emerging Issues Task Force (EITT) issued EITF 04-05, Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity
When the Limited Partners Have Certain Rights (EITF 04 -05), which provides guidance on when a
general partner should consolidate a limited partnership. If a general partner in a limited
partnership is determined to have control, the general partner should include the limited
partnership in its consolidated financial statements. All of the General Partner corporations
wholly owned by NHSRC meet the requirements for consolidation in accordance with EITF
04-05, except for NHS Roseland SLF, Inc. and NHS South Chicago SLP, Inc. The partnership
financial statements are for the fiscal years ended December 31, 2008 and 2007. Significant
intercompany balances have been eliminated.
Several new development initiatives have been started by NHSRC wherein General Partner
corporations and limited partnerships have been established in advance of limited partnership
transaction closings.
Roseland Place Limited Partnership - Roseland. Place was formed in June 2008 with the
intention to develop a building with sixty affordable rental units for independent senior
living (62 years of age and older) and a center for the recreation of and provision of social
and other services to seniors. The General Partner of Roseland Place holding a .01% j•'
ownership interest is Roseland Place Inc. NFP, which was created in March 2008 by
NHSRC as an Illinois not - for -profit corporation and received 501(c)(3) status in March
2009. The Limited Partner holding a. 99.99% ownership interest is NHSRC. As of March
31, 2009, all pre - development costs are included as part of NHSRC. At closing scheduled
for late 2009, National Equity Fund 2009 Limited Partnership will purchase the 99.99%
limited partnership interest from NHSRC.
South Chicago SA Associates Limited Partnership - South Chicago SA will be formed with
the intention to develop an independent living facility for seniors. The partnership has
two Co- General partners, including South Chicago SA formed in December 2008 by
NHSRC as an Illinois for -profit corporation The second Co- General Partner is South
Chicago SA Partners, LLC, which was created as an Illinois Limited liability Company.
Roseland Village Limited Partnership - The Roseland Village limited partnership is
intended to be formed for the purpose of developing a ten -unit building for grandparents
raising grandchildren. The owner of Roseland Village holding a 100% ownership interest
is Roseland Village Inc., NFP, which was created in March 2009 by NHSRC as an Illinois
for -profit corporation An application for 501(c)(3) status has been submitted to the IRS.
As of March 31, 2009, all pre - development costs are capitalized on the books of NHSRC
(Continued)
11. ti
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 1- NATURE OF OPERATIONS (Continued)
79� Street Limited Partnership - 79th Street is intended to be formed to develop a building
with affordable rental units for independent senior living. The Non -Profit General Partner
Of 794h Street will be NHS Wrightwood, Inc., which was created in February 2009 by
NHSRC as an Illinois for -profit corporation; the Co-General Partner will be 79ffi Street
Development LLC, an Illinois limited liability company, and a Limited Partner will hold
the majority ownership interest
Other Related Entities
NHSRC is a member in a joint venture of Roseland New Homes Phase II, a limited liability
corporation, whose other sole member is Park Bank Initiatives (PBI). NHSRC and Park
National Bank are equal managing members of the corporation. Roseland New Homes Phase
II was created to construct new, single family homes and two flats in Chicago's Roseland
neighborhood.
NHSRC is a member of Lawndale Gateway, a limited liability company, whose members are
NHSRC and the Steams Family Foundation (SM. The purpose of the company is to acquire,
own, and hold parcels of property in Chicago's North Lawndale neighborhood for community
development SFF is the owner and NHSRC is acting as an independent contractor to manage
the project
NHSRC is a member of Boulevard Redevelopment Alliance, a limited liability company,
whose members are NHSRC, the Affordable Housing Preservation Foundation, and The Cara
Program. The purpose of the company was to develop twenty -five new homes in Chicago's
Back of the Yards neighborhood through the City of Chicago s New Homes for Chicago
program. The project is now complete and the company is in the process of being dissolved.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Financial Statement Presentation
Contributions - Contributions received, including unconditional promises to give, are
recognized in the period that the pledge is received from the donor.
Net Asset Classification - The Organization reports information regarding its financial
position and activities according to three classes of net assets (unrestricted net assets,
temporarily restricted net assets, and permanently restricted net assets) based upon the
existence or absence of donor - imposed restrictions.
(Continued)
12.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Loan Programs
Loans are evidenced by promissory notes, which are collateralized generally by a first
and /or second mortgage on the underlying residence. Neighborhood Lending Services,
Inc. loans are originated under the Neighborhood Lending Program. All of NHS' Loan
Programs are targeted to NHS Neighborhoods and other low /moderate income
neighborhoods in Clucago and Fox Valley.
(c) Cash and Cash Equivalents
Ilighly liquid debt instruments with a maturity of three months or less when purchased
are generally considered to be cash equivalents.
At March 31, 2009 and 2008, NHS, NLS, NHSRC, NHSRCL and NHSFV have cash on
deposit at Bank of America, MB Financial, and Harris Bank, which exceeds federally
insured limits of $250,000 each. The organization has not experienced any loss in such
accounts. Management believes the organization is not exposed to any significant credit
risk on cash. The Organization is required to keep certain restricted cash amounts in
separate bank accounts for PSSA Certificateholders and limited partnership reserve
accounts.
(d) Accounts and Fees Receivable
Accounts and fees receivable largely represent receivables from the City of Chicago. No
allowance for bad debt has been established because management considers all material
accounts receivable to be collectible.
(e) Loans Held for Sale
Loans held for sale represent loans originated and warehoused by NLS at cost for sale to
Certificate holders in accordance with the Participation, Sale, and Servicing Agreements.
(f) Loans Receivable
Loans receivable represent loans originated prior to the PSSA program, as well as notes
receivable from the limited partnerships.
(g) Allowance for Loan Losses on Loans Held for Sale and Loans Receivable
An allowance for loan losses has been established to provide for those loans which may
not be repaid in their entirety. The allowance is increased by provisions for loan losses
charged to expense and decreased by charge -offs, net of recoveries. Although a loan is
charged off by management when deemed uncollechble, collection efforts continue and
future recoveries may occur.
(Continued)
13. '
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTTI'IES
NOTES TO COMBINED FINANCIAL STATEMENTS
Mann 31, 2009 and 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The activities in allowance for loan losses are as follows:
Loans Held for Sale Allowance
Beginning balance
Adjustments
Ending balance
Loans Receivable Allowance
Beginning balance
Adjustments
Ending balance
2009
2008
$ 200,000
$ -
359,765
200,000
$ 559.765
$ 200:000
$ 607,228
$ 986,153
(429,624)
(378,925)
$ 1.77.604
$ 607.228
The allowance is maintained by management at a Ievel considered adequate to cover
losses that are currently anticipated based on past loss experience, general economic
conditions, information about specific borrower situations, including their financial
position and collateral values, and other factors and estimates which are subject to
change over time Estimating the risk of loss and amount of loss on any loan is
necessarily subjective and ultimate losses may vary from current estimates. These
estimates are reviewed periodically and as adjustments become necessary, they are
reported in earnings in the periods in which they become known.
A loan is considered impaired when it is probable that all principal and interest amounts
due will not be collected in accordance with the loan's contractual terms. Impairment is
recognized by allocating a portion of the allowance for loan losses to such a loan to the
extent that the recorded investment of an impaired loan exceeds its value or by writing
off the balance of the loan against loans receivable. A loans value is based on the loan s
underlying collateral or the expected future cash flows. Allocations for impaired loans
are considered in relation to the overall adequacy of the allowance for loan losses and
adjustments are made to the provision for loan losses as deemed necessary.
(h) Deferred Loans
As part of its Neighborhood. Lending Program contract with the "City of Chicago to
promote community development by preserving and expanding affordable home
ownership, NLS makes deferred loans using capital funds from the U.S Department of
Housing and Urban Development (H.U.D.) Community Development Block Grant
(CDBG). Deferred loans are subordinate loans used to complement private lending
products. These dollars can be used as "interim' funding for income eligible
transactions and "permanent' financing /subsidies for eligible families. Deferred loans
become due and payable upon the occurrence of a future event, such as transfer of title.
The CDBG funds are restricted in purpose and therefore recorded as temporarily
(Continued)
14.
) HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (`
March 31, 2009 and 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
restricted revenue. Upon repayment from the borrower, the funds are to be used for
similar Ioans.
Deferred loans are recorded net of an allowance for loan losses as well as discounted to
present value. Loan losses are estimated to be thirty -five percent of the balance. Loans
are expected to become payable in eight years. The allowance and discount amounts are
released from temporarily restricted net assets. A summary of the amounts recorded as
an allowance for loan losses and discounts to present value are as follows:
2009 2008
Deferred Loans Receivable Allowance and Discount
Beginning balance $ 555,322 $ -
Adjustments
Allowance for loan losses 757,208 242,219
Discount to present value 253,200 313,103
Adjustments subtotal 1,010,408 555,322
Ending balance
(i) Property Held for Rehabilitation and Resale
Property held for rehabilitation and resale represents property acquired by NHSRC for
the purpose of renovation, improvement and resale to homeowners. These properties
are stated at the lower of cost or fair market value. Fair market value is determined by
current market conditions, estimates of future sales prices, rehabilitation and
development costs, and carrying costs. NHSRC also receives subsidies from the City of
Chicago which offset a portion of the cost of properties purchased. Donated property
has been recorded at its fair market value at the date of donation_
Costs directly related to rehabilitation and construction projects (eg., payments to
contractors, interest title insurance, recording fees, etc.) are capitalized as incurred. The
valuation of these costs is reviewed on an ongoing basis. Any impairment is expensed in
the period determined.
(j) Property Held for Lease
Property Held for Lease represents the land, building, and improvements of the rental
properties for the affordable housing apartment complexes of the limited partnerships.
(Continued)
15.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Land, building, and improvements are recorded at cost and depreciated over their
estimated service lives ranging from 15 to 40 years.
(k) Property and Equipment Used in Operations
Purchased property and equipment are stated at cost Depreciation and amortization is
provided on a straight line basis over the estimated useful lives of the assets (buildings -
25 to 30 years; office fumfture and equipment -2 to 10 years; leasehold improvements -
3 years; computer hardware - 3 years and computer software - 3, years). Donated
property is recorded at its fair market value at the date of donation All property and
equipment greater than $1,000 is capitalized.
(1) Program Receipts Payable
Program receipts payable consists of program income generated from several grant
programs, including principal and interest payments on HELP loans and payments by
defendants on receivership cases. The program income is due to the City of Chicago.
(m) Customer Security Deposits
Customer security deposits consist primarily of tenant security deposits for the limited
partnership rental properties.
(n) Revenue Recognition
Grants and Contributions - Grants and contributions are recognized in the year that NHS
receives an unconditional promise to give from a donor. All grants and contributions are
considered to be available for unrestricted use unless specifically restricted by the donor.
Restricted revenues are recognized as unrestricted if the restrictions are met in the
current year.
Public Grants and Contractual Revenue - Public grants received from governmental
agencies in which services to be provided are agreed upon under contract, are
recognized as costs are incurred. A receivable is recorded to the extent that costs have
been incurred under the grant or contract and not reimbursed; conversely, deferred
revenues are recorded when grant advances and contractual revenue exceeds eligible
costs incurred.
Interest Income - Interest income is recorded in the program that holds the underlying
assets. Interest on loans of the loan programs are recorded when collected, which is not
(Continued)
16.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC.. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
materially different from the level yield method. The related interest expense is booked
when payments are made, which is not materially different from the accrual method.
(o) Donated Services
Donated professional services, specifically legal services, are reflected in the statement of
activities at fair value For the years ended March 31, 2009 and 2008, $149,755 and $0, in
donated legal services was recognized in connection with the 2009 PSSA. Additionally,
volunteers have donated their time to program services and fund- raising campaigns;
however, these donated services are not reflected in the financial statements since the
services do not require specialized skills.
(p) Fund- Raising Expenditures
Expenditures for fund- raising activities are identified in the combined financial
statements under the caption "Resource development" Included in fund- raising
activities are costs related to public relations and special events.
(q) Income Taxes
NITS, NL$, NHSRC and NHSFV are exempt from federal and state income taxes on
related income under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended.
No provision for income taxes has been made as there is no significant unrelated
business income. NHSRCI was not exempt from federal and state income taxes at
March 31, 2009. Any tax liability related to NHSRCI at March 31, 2009, is anticipated to
be nominaL
(r) Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Areas
where significant estimates that are sensitive to change in the near terns are used in the
accompanying financial statements include allowance for loan losses and the valuation
of properties held for rehabilitation and resale. Actual results could differ from those
estimates.
(Continued)
17. !
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(s) Reclassifications
Several reclassifications have been made to the prior year balances to conform to the
current year presentation. Such reclassifications were made for comparative purposes
only and do not restate the prior year financial statements.
NOTE 3 - PROPERTY AND EQUIPMENT USED IN OPERATIONS
A summary of property and equipment used in operations follows:
Land
Buildings
Office furniture and equipment
Leasehold improvements
Less accumulated depredation and amortization
NOTE 4 - PROPERTY HELD FOR LEASE
Land
Buildings
Office furniture and equipment
Leasehold improvements
Less accumulated depredation and amortization
NHS, NLS NHSRC,
'and NHSFV
2009 2008
$ 6,300
1,244086
910,699
396,601
2,557,686
(1,618,341)
$ 939:345
$ 6,300
1,236,546
624,921
300,698
2,168,465
_(1,473,673)
� 694.792
Partnerships
2009 2008
$ 527,896
25,730,448
152,692
29,019
26,440,055
(10,152,223)
Certain items of land and buildings are pledged as collateral for notes payable.
(Continued)
$ 527,896
25,581,858
152,692
29,019
26,291,465
(9,237,413)
$17 054.052
0
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 5 -NOTES PAYABLE
A summary of notes payable follows:
March 31, March 31,
2009 2008
M
Note payable to The Northern Trust Bank, interest only
payments of 2% due annually, January 1, principal due
January 1, 2018 $ 750,000 $ 750,000
Note payable of 3% to the John D. & Catherine T.
MacArthur Foundation; interest payments due quarterly
through April 1, 2017. Principal payments of $765,000,
$765,000, and $770,000 are due annually on April 1, 2015,
2016, and 2017, respectively. 2,300,000 2,300,000
Note payable to Park National Bank, interest and principal
due monthly, on July 1, 2016 principal is due. 231;274 235,929
20% of the $7;000,000 syndicated term loan from Harris
Bank, with monthly payments due until maturity date of
December 21, 2008. The interest rate is the lesser of 5% or
the applicable index rate plus 0.90 %. Loan paid in full as of
December 2008. 400200
Total NHS
3,281,274 3,686,129
Discount for imputed interest on below market interest and
interest free loans [see (1) below]. (401,9291 (437,084)
Net notes payable - NHS
NLS;
2,879,345 3,249,045
Note payable to the Northern Trust Bank, interest only
payments of 2% due annually, May 1, principal due May 1,
2017. $ 2,500,000 $ 2,500,000
Note Payable to the Ford Foundation interest only payable
due quarterly at 1% and principal due February 9, 2014. 2,000,000 2,000,000
(Continued)
19. i.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 5 - NOTES PAYABLE (Continued)
March 31,
2009
f,LS (Continued)
March 31,
2008
62% of the $7,000,000 syndicated term loan with Harris
Bank with monthly payments due until the maturity date
of December 21, 2008. The interest rate is the lesser of 5%
or the applicable index rate plus 0.90 %. Loan paid in full
as of December 2008. $ - $ 1,276,771
Outstanding balance on the $10,000,000 syndicated
revolving credit agreement with Harris Bank; Agent, and
interest rate equal to the prime rate (as defined) minus
1.75 %. 5,200,000 5,500,000
Total NLS
9,700,000 11,276,771
Discount for imputed interest on below market interest and
interest free loans [see (1) below] - NLS. (853,3901 (942,824)
Net notes payable - NLS
NHSRC
8,846,610 10,333,947
Note payable to The Northern Trust Bank, interest only
payments'of 2% due annually, on January 1, principal due
January 1, 2018. $ 1,750,000 $ 1,750,000
Note payable to the Department of Housing, City of
Chicago, payable in monthly installments of $458 with no
interest Monthly payments are to continue until March 1,
2025 at which time the remaining balance is due and
payable in full. The loan is secured by the underlying
mortgage receivable covering the property at 901 -903
North Hamlin Ave.
Note payable to the Department of Housing, City of
Chicago, payable in full upon the sale of property located
at 1756 N. Kedzie with no interest Property sold in July
2008.
(Continued)
488,061 493,557
- 158,971
20.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTIIZES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 5 - NOTES PAYABLE (Continued)
March 31, March 31,
2009 2008
NHSRC (Continued)
18% of the $7,000,000 syndicated terns loan from Harris
Bank, with monthly payments due until maturity date of
December 21, 2008. The interest rate is the lesser of 5% or
the applicable index rate plus 0.90 %. Loan paid in full as of
December 2008- $ $ 383,748
Total NHSRC
2,238,061 2,786,276
Discount for imputed interest on below market interest and
interest free loans [see (1) below]. (588,991 (628.9031
Net notes payable - NHSRC 1,649,070. 2,157,373
Total notes payable - NHS, NT S and NHSRC 15,219,335 17,749,176
Discount for imputed interest on below market interest and
interest free loans [See (1) below] - all entities (1,844,310) (2,008,8211
Total net notes payable (NHS, NLS and NHSRC) $13.375.025 $15,740365
(1) In accordance with SFAS No. 116, a 5% interest rate on below market interest loans and
interest free loans is imputed and included in temporarily restricted contribution
revenue in the year the loan is issued. The discount represents cumulative amounts of
net revenue that has been recognized due to below market interest loans. Each year, as
the interest expense is recognized, the discount amount decreases.
(2) Certain covenants as a condition of The Ford Foundation loan were not met at
March 31, 2009. Under the terms of the agreement with the Ford Foundation, the
existence of these covenant violations qualifies as an event of default. The agreement
provided for certain remedies in circumstances where an event of default exists
primarily the ability to make the debt immediately due and payable upon written
notice from the Foundation.
(Contained)
21.
F�
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENT'S
March 31, 2009 and 2008
NOTE 5 - NOTES PAYABLE (Continued)
701 N Central
The second mortgage note, dated May 28, 1986, and
modified March 1, 2002, is held by the City of Chicago in
the original amount of $343,250. The note bears interest at
0% per annum. Repayments of principal have been
deferred until the earlier of November 1, 2008, or the sale
or refinancing of the project, at which time the annual
principal payments will be due based upon a 13 -year
amortization. The loan matures on March 1, 2015. The
loan is collateralized by real estate held for lease and an
assignment of rents and leases.
December 31, December 31,
2008 2007
343,250 $ 343;250
The third mortgage note, dated March 6, 1987, is held by
the City of Chicago in the original amount of $270,000. The
note bears interest at 0% per annum. Principal repayment
is due the earlier of March 1, 2015, or the sale or
refinancing of the project The note is collateralized by real
estate held for Iease and an assignment of rents and leases. 270,000 270,000
Total 701 N. Central 613,250 613,250
600 N. Central
The second mortgage note, dated July 1987, is held by the
City of Chicago, Department of Housing in the original
amount of $515,321. Annual interest payments of 75% of
surplus cash are required, as stated in the Loan Agreement
with a minimum rate of 4% over the life of the loan
Interest of $391,628 on this note has not been accrued, as
payment is not probable due to cash flow constraints.
During 2008, interest paid amounted to $0. The remaining
interest and entire principal on the loan are due on October
1, 2018. The note is collateralized by real estate held for
lease and an assignment of rents and leases. 515,321 515,321
Total 600 N. Central 515,321 515,321
(Continued)
22.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 5 - NOTES PAYABLE (Continued)
December 31, December 31,
2008 2007
E Garfield Limited
The first mortgage note, dated January 1, 1990, is held by
Harris Bank in the original amount of $135;000. The note
bears interest at 10% per annum and is adjusted by the
lender as set forth in the mortgage note. Monthly
installments of $1,193 for principal and interest are based
on a 30 -year amortization of the original note balance. The
loan matures on April 1, 2020, and is collateralized by the
first mortgage on the property at 3502 -08 West Van Buren. $ 93,424 $ 98,550
An additional first mortgage note, dated January 1, 1990, is
held by Harris Bank in the original amount of $250,000.
The note bears interest at 10% per annum and is adjusted
by the lender as set forth in the mortgage note. Monthly
installments of $2,209 for principal and interest are based
on a 30 -year amortization of the original note balance. The
loan matures on April 1, 2020, and is collateralized by the
first mortgage on the property at 301 -11 S. Central Park 173,013 182;506
The second mortgage is held by the City of Chicago,
Department of Housing in the original amount of $530,680
with an interest rate of 2 %. Annual interest payments are
based upon an amount equal to, but not exceeding, 50% of
the surplus cash payment over 31 years. All outstanding
and unpaid principal and interest are due and payable at
the maturity date of March 1, 2020. The note is
collateralized by the second mortgage on the property at
3502 -08 West Van Buren 530,680 530,680
An additional second mortgage is held by the City of
Chicago, Department of Housing in the original amount of
$866,141 with an interest .rate of 2 %. Annual interest
payments are based upon an amount equal to, but not
exceeding, 50% of the surplus cash, as defined, payable
over 31 years. All outstanding and unpaid principal and
interest are due and payable at the maturity date of
March 1, 2020. The note is collateralized by the second
mortgage on the property at 301 -11 S. Central Park. 866.141 866,141
Total E. Garfield Limited 1,663,258 1,677,877
(Continued)
23.
i
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 5 - NOTES PAYABLE (Continued)
E Garfield Park II
The first mortgage note, dated April 1, 1995, is held by
Harris Bank in the original amount of $798,000. The note
bears interest of 7.0% per annum presently, and is adjusted
by the lender as set forth in the Mortgage Note Agreement
Monthly installments of $5,499 for principal and interest
are based on a 30 -year amortization of the original note
balance. The loan matures on September 1, 2014, at which
time the remaining balance is due and payable in full The
note is collateralized by real estate held for lease.
The second mortgage note, dated July 28, 1993, is held by
the Illinois Housing Development Authority in the original
amount of $500,000. The note bears no interest
Installments of $1,041 for principal are due monthly. The
loan matures on July 1, 2023, at which time the remaining
balance is due and payable in full. The note is '
collateralized by real estate held for lease.
The third mortgage note, dated. July 28, 1993, is held by the
City of Chicago, Department of Housing in the original
amount of $1,474,240. The note bears no ingest. Monthly
installments of principal are payable by the Partnership in
the amount of $624 beginning January 1, 1995, and
continuing through December 31, 2025, at which time the
remaining principal balance is due. The loan is
collateralized by investment in real estate held for lease-
Total E. Garfield Park II
Pine Central Limited
The first mortgage note, dated May 28, 1997, is held by
Harris Bank in the original amount of $625,000. The note
bears interest at 9.25% per annum. Monthly installments of
$5,136 for principal and interest are based on a 21 -year
amortization of the original note balance. The loan
matures on Joie 1, 2018. The note is collateralized by real
estate held for lease and an assignment of rents and leases.
(Continued)
December 31, December 31,
2008 2007
607,089 $ 629,725
317,794 330,288
1,369,408 1,376,896
2,294,291 2,336,909
564,485 573,634
24.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 5 -NOTES PAYABLE (Continued)
December 31, December 31,
2008 2007
Pine Central Limited (Continued)
The second mortgage note, dated May 28, 1997, is held by
the City of Chicago in the original amount of $3,206,780.
The note bears no interest and is payable in full at its
maturity date of May 28, 2027. The note is collateralized by
real estate held for leases and an assignment of rents and
leases. $ 3,206,780 $ 3,206,780
The third mortgage note, dated May 28,1997, is held by the
Chicago Low- Income Housing Trust Fund in the original
amount of $625,000. The note bears no interest and is
payable in full at its maturity date of May 28, 2029. The
note is collateralized by real estate held for lease and
assignment of rents and leases. 625.000 625 000
Total Pine Central Limited 4,396,265 4,405,414
Roseland Ridge Apartment Limited
The first mortgage note, dated November 30, 1999, is held
by Pacific Life Bank in the original amount of $400,000.
The note bears interest at 7.66% per annum Monthly
installments of $2,841 for principal and interest are based
on a 30 -year amortization of the original note balance, The
Ioan matures on December 31, 2030. The note is
collateralized by real estate held for lease and an
assignment of rents and leases. $ 362,080 $ 368;178
The second mortgage. note, dated December 17, 1999, is
held by the City of Chicago in the original amount of
$2,148,728. The note bears interest at 0% per annum and
the loan matures on April 17, 2031, at which time the entire
balance is due. The note is collateralized by real estate held
for lease and an assignment of rents and leases. 2,148,728 2,148,728
The third mortgage note, dated December 17, 1999, is held
by the City of Chicago in the original amount of $400,000.
The note bears interest at 0% per annum and the loan
matures on March L 2031, at which time the entire balance
is due. The note is collateralized by real estate held for
lease and an assignment of rents and Ieases. $ 400.000 $ 400,000
Total Roseland Ridge Apartment Limited 2,910,808 2,916,906
(Continued)
25.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 5 - NOTES PAYABLE (Continued)
Pine Race Il
The first mortgage note, dated June 24, 2004, is held by
Harris Trust in the original amount of $495,000. The note
bears interest at 1.00% over prime through April 1, 2005
and 7.00% after that date. Monthly installments of $3,328
for principal and interest are based on a 30 -year
amortization of the original note balance beginning April 1,
2005. The loan matures on December 31, 2024, at which
date the remaining balance will be due. The note is
collateralized by real estate held for lease and an
assignment of rents and leases.
A junior mortgage note, dated June 24, 2004, is held by the
Chicago Low - Income Housing Trust Fund in the original
amount of $495,000. The note bears interest at 0% per
annum, and the loan matures on June 24, 2035. Monthly
debt service is not required. The entire balance is -due at
maturity. The note is collateralized by real estate held for
lease and an assignment of rents and leases.
Another junior mortgage note, dated June 24, 2004, is held
by the City of Chicago m the original amount of $1,605,481.
The note bears interest at 0% per annum, and the loan
matures on June 24, 2035. Monthly debt service is not
required. The entire balance is due at maturity. The note is
collateralized by real estate held for lease and an
assignment of rents and leases.
Total Pine Race II
Total Partnership
Total NHS, NLS, NHSRC
Total NHS, NLS, NHSRC and Partnerships
(Continued)
December 31, December 31,
2008 2007
$ 475,133 $ 481,022 .
495,000 495,000
1,605,481
1,605,481
2575,614
2,581503
14,968,807
15,047,180
13,375,025
15,740,365
28343.832
30,787,545
26.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 5 - NOTES PAYABLE (Continued)
Maturities of notes payable before the $1,844,310 discount for imputed interest rate on below
market interest and interest free loans for the years subsequent to March 31, 2009, for NHS,
NLS, NHSRC and the Partnerships are as follows:
2010
2011
2012
2013
2014
Thereafter
Total
NHS, NLS
NHSRC
Partner "In
$ 5,209;415
$ 172,371
9,724
94,749
10,059
101,124
10,420
107,442
5,496
-
9,974,221
14,493,121
:1
Total
$,5,381,786
104,473
111;183
117,862
5,496
24,467342
As the partnerships are reported as of December 31, 2008, the 2009 partnership debt payments
include amounts through calendar year end 2008.
Northern Trust Bank entered into a $1.5 million dollar subordination agreement with NHS on
May 1, 1997. On May 1, 2007, this debt was converted to below market amortized debt
NOTE 6 - DEFERRED REVENUES
A summary of the changes in deferred revenues follows:
2009
Beginning Balance
Additions
Prepaid Rent
Redevelopment, vacant lots, REO
State of Illinois
NHSRC Troubled Building Initiatives II
NHS, NLS,
NHSRC, NHSRCI
& NHSFV Partnerships Total
$ 298,844 $ 35,915 $ 334,759
- 37,348 37,348
75,745 75,745
49,500 49,500
61,500 61,500
Deductions - funds expended during the year (298.8441 (35,915 (334.7591
Ending Balance 186 74 $ 37348 4 U9
(Continued)
27.
t
) HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 6 - DEFERRED REVENUES (Continued)
2008
Beginning Balance
Additions
NHS, NLS,
NHSRC Partnerships Total
$ 386,180 $ 20,503 $ 406,683
Prepaid Rent
-
35,915 35,915
HIS,
19,376
- 19,376
Chicago Home Improvement Program
8,981
- 8,981
Redevelopment, vacant lots, REO
59,512
- 59,512
State of Illinois
52,375
- 52,375
NHSRC Troubled Building
Initiative Il subsidies
Deductions - funds expended during
the year
Ending Balance
NOTE 7- PLEDGES RECEIVABLE
158,600 - 158,600
(386,180) (20,503 406 683
298.844 $ 35.915 '34.759
Pledges receivable at March 31, 2009 and 2008 are promises to give from various donors.
Pledges of $907,465 and $665,695 are to be received in less than one year.
NOTE 8 - CUSTOMER SUPPORT REVENUE
NLS earns a premium on certificate sales into the PSSA's. The 2006 PSSA, which expired on
March 17, 2009 had a 3% premium or $1,077,561 and $766,723 in fees during the years ended
March 31, 2009 and 2008.
NOTE 9- LEASES
NHS leases office space in several neighborhood offices throughout Chicago and Agin Rent
expense for all offices was $484,519 and $415,027 for the years ended March 31, 2009 and 2008.
During the year ended March 31, 2009, NHS negotiated an extension to its lease as well as
build -out of unused space through October 31, 2012 for its Central Office located at 1279 N.
Milwaukee. Avenue, Chicago, Illinois. NHS also leases various office equipment under long-
term leases. Office equipment rental was $209,373 and $212,754 for the years ended March 31,
2009 and 2008.
(Continued)
28.
NEIGHBORHOOD ROUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 9 - LEASES (Continued)
The total mizurnum annual rental payments under those leases are as follows:
2010
$ 592,197
2011
602,027
2012
510,420
2013
466,840
2014
497,705
Thereafter
508;742
Total
NOTE 10 - TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets are available for the following purposes
At March 31, 2009 and 2008, $3,688,065 and $1,777,449 of temporarily restricted net assets were
released from donor restrictions by incurring expenses satisfying the purpose specified by
donors or amortization of imputed interest At March 31, 2009 and 2008, $2,318,034 and
$2,309,857 of Public Grants - Loan. Capital represents deferred loans receivable. .
NOTE it - PERMANENTLY RESTRICTED NET ASSEI'S
Neighborworks America funds classified as permanently restricted are to be used for capital
purposes, including the funding of loans, rehabilitation of neighborhood properties, or
property development initiatives. Any earnings from such activity may be used for
unrestricted purposes. Permanently restricted net assets at March 31, 2009 and 2008 were
$2,922,332 and $4,653,936. For the fiscal year ended March 31, 2009, Neighborworks America
granted member organizations the ability to release up to 25% of their net asset balance, which
resulted in a release of $974,111 from permanently restricted to unrestricted. In addition,
NeighborWorks America granted NHS the ability to release $557,493 in recognition of bad
debt on previous lending capital efforts.
(Continued)
2009
2008
Program activities
Public grants - loan capital
$ 7,102,297
$ 5,014,536
Private grants - loan capital
199,733
156,671
Contributions and grants - operating
1,482,216
965,704 \
8;784,246
6,136,911
Imputed interest
1,844,310
2,008,811
Total temporarily restricted net assets
1Ob28S56
$ 8,145,722
At March 31, 2009 and 2008, $3,688,065 and $1,777,449 of temporarily restricted net assets were
released from donor restrictions by incurring expenses satisfying the purpose specified by
donors or amortization of imputed interest At March 31, 2009 and 2008, $2,318,034 and
$2,309,857 of Public Grants - Loan. Capital represents deferred loans receivable. .
NOTE it - PERMANENTLY RESTRICTED NET ASSEI'S
Neighborworks America funds classified as permanently restricted are to be used for capital
purposes, including the funding of loans, rehabilitation of neighborhood properties, or
property development initiatives. Any earnings from such activity may be used for
unrestricted purposes. Permanently restricted net assets at March 31, 2009 and 2008 were
$2,922,332 and $4,653,936. For the fiscal year ended March 31, 2009, Neighborworks America
granted member organizations the ability to release up to 25% of their net asset balance, which
resulted in a release of $974,111 from permanently restricted to unrestricted. In addition,
NeighborWorks America granted NHS the ability to release $557,493 in recognition of bad
debt on previous lending capital efforts.
(Continued)
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED EN III S
NOTES TO COMBINED FINANCIAL STATEMENTS
March 31, 2009 and 2008
NOTE 12- COMMITMENTS AND CONTINGENCIES
The Partnerships low - income housing tax credits are contingent on the ability to maintain
compliance in the applicable provisions of section 42 of the Internal Revenue Service code.
Failure to maintain compliance with occupant eligibility, and /or unit gross rent or to correct
noncompliance within a specified time period could result in recapture of previously claimed
tax credits plus interest In the event of an ongoing credit shortfall, Pine Race IL Inc may be
required to pay the Limited Partner of Fine Race II any remaining amount that is due and
owing to the Limited Partner.
According to the partnership loan and other regulatory agreements, the partnerships are
required to maintain certain escrows, deposits and reserves. For certain partnerships, the
replacement reserves were not fully funded as of December 31, 2008 as required by the
agreements.
As of December 31, 2008, New Partnerships, Inc. represented that as General Partner of 600 N.
Central, 701 N. Central, East Garfield Park Limited L and East Garfield Park Limited II, it was
obligated to fund deficits up to a maximum of one year's operating expense including debt
service and required reserve deposits. Additional, New Partnerships, Inc. represented that, to
the extent necessary, it intends to make loans to the individual partnerships to fund 2009
operating deficits up to the amount of the projected deficits.
NHS is involved in certain claims and litigation matters arising in the normal course of
business. It is the opinion of management, that pending matters will likely be resolved
without any material adverse effect upon the financial statements of NHS.
NOTE 13- SUBSEQUENT EVENTS
On April 24, 2009, NLS closed a new PSSA with a commitment of $110,250,000. The related
Revolving Credit Facility of $12,000,000 was closed on May 5, 2009.
30.
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NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
STATEMENTS OF ACTIVITIES - PERMANENTLY RESTRICTED NET ASSETS
March 31, 2009 and 2008
Support and revenues
Support
Public grants
Total support and revenues
Change in net assets
Net assets at beginning of year
Releases as granted by NeighborWorks America
Net assets at end of year
(Unaudited)
NHS NeighborWorks America.
Capital Fund
2009 2008
$ $ 335,000
335.000
335,000
4,653,436 4,318,936
(1,731,6044)
2 922 2 $ 4.653.936
37.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC AND RELATED ENTTITES
SCHEDULE OF EXPENDrtURES OF FEDERAL AWARDS
Year ended March 31, 2009
Federal appropriation under Public Law #103-325
U. S. Department of the Treasury
Community Development Financial institutions
Fund Agreement
Financial Assistance and Technical Assistance
Technical Assistance 21.020 071FA007137 67,671
Financial Assistance 21.020 MPA007137 17,850
(Continued)
0
r,
1
ter:
Federal
Agency a
Federal Grantor /Pass-Through
CPDA
Pass - Through
Federal
Grantor /Program Title
NaLba
Number
Exuenditures
Federal programs -
US. Department of Housing and Urban
Development -
Community Development Block Grants
(CDBG) -
Passed through City of Chfmgo
Department of Housing.
Senor Home Repair Program
14218
16051/19137
$ 75,858
Neighborhood Lording Program
Agreement- Operations
14218
7063
1,610,629
Neighborhood Lending Program
Agreement - Capital
14.218
7063
1,910,166
Troubled Building Initiative
14.218
8836
981,749
US. Department of Housing and Urban
4 ,578,402
Development -
-
HOME
Passed through City of Chicago
Department of Housing: '
Certified Housing Development
14.239
14665
50,000
U. S, Department of Housing and Urban
Development
The Housing & Recovery Act of 2006 Public
Law 110 -256
Passed through NeighborWorks America
National Foreclosure bfftigation Counseling
. Program
14256
N/A
675,255
US. Department of Housing and Urban
Development
Housing Counseling Assistance Program
Passed through Housing Partnership Network
14.169
07 -20
62,261
Federal appropriation under Public Law #95557
-
US. Department of the Treasury
Passed through NeighborWorks of America
Release from Capital Grants to Unrestricted
21.000
N/A
(1,531,604)
Release from Capital Grants - Permanently Restricted
(200,000)
Expendable Grants
998,103
Capital Grants - Temporarily Restricted
21.000
N/A
85,897
Capital Grants Received in prior year-
permanently restricted
4.653.936
4,006,332
Federal appropriation under Public Law #103-325
U. S. Department of the Treasury
Community Development Financial institutions
Fund Agreement
Financial Assistance and Technical Assistance
Technical Assistance 21.020 071FA007137 67,671
Financial Assistance 21.020 MPA007137 17,850
(Continued)
0
r,
1
ter:
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year ended March 31, 2009
U.S. Department of Housing and Urban
Development
Passed through Oty of Cbicago
Department of Health
Lead Based Paint Hazard Control Grant
Lead Based Paint Hazard Control Grant
Total federal programs
14900 12172 99,160
14.900 17197 885,003
984,163
$ SO.461.9'i4
Note to Schedule of Fxnmditures of Federal Awards, The Schedule of Fxpenditares of Federal Awards has been
prepared on the accrual basis of accounting.
39.
„ Crowe Horwath-
Crowe Horwath LLP
n mWH wath Intermtb al
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDrr OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Board of Directors
Neighborhood Housing Services of
Chicago, Inc. and Related Entities
Chicago, Illinois
We have audited the financial statements of Neighborhood Housing Services of Chicago, Inc.
and Related Entities (NHS) as of and for the year ended March 31, 2009, and have issued our
report thereon dated October 2, 2009. Our report was modified to include a reference to other
auditors. We conducted our audit in accordance with auditing standards generally accepted in
the United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Other
auditors audited the financial statements of the Partnerships, as described in our report on
NHS's financial statements. The financial statements of the Partnerships were not audited in
accordance with Government Auditing Standards.
Internal Control over Financial Reporting
In planning and performing our audit, we considered NHS's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of NHS's internal control over financial reporting. Accordingly, we do not express
an opinion on the effectiveness of NHS's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect misstatements on a timely basis. A significant deficiency is a control
deficiency, or combination of control deficiencies, that adversely affects the entity's ability to
initiate, authorize, record, process, or report financial data reliably in accordance with generally
accepted accounting principles such that there is more than a remote likelihood that a
misstatement of the entity's financial statements that is more than inconsequential will not be
prevented or detected by the entity's internal control.
40. f
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the entity's internal control
Our consideration of the internal control over financial reporting was for the limited purpose
descnbed in the first paragraph of this section and would not necessarily identify all deficiencies
in the internal control that might be significant deficiencies and, accordingly, would not
necessarily disclose all significant deficiencies that are also considered to be material
weaknesses. We did not identify any deficiencies in internal control over financial reporting that
we consider to be material weaknesses, as defined above.
C, ompliance and Other Matters
As part of obtaining reasonable assurance about whether NHS's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
We noted certain matters that we reported to management of NHS in a separate letter dated
October 2, 2009.
NHS' responses to the findings identified in our audit are described in the accompanying
schedule of findings and questioned costs. We did not audit NHS' response and, accordingly;
we express no opinion on it
This report is intended solely for the information and use of the board of directors, management,
federal awarding agencies, pass - through entities, others within the entity, and is not intended to
he and should not be used by anyone other than these specified- parties.
Cane, 4PIWO'0 4-4�p
Crowe Horwath LLp
Chicago, Illinois
October 2, 2009
41.
Crowe Horwath..
Crowe Horvath LLP
n Mm Ho aN InWnatb
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO
EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE w= OMB CIRCULAR A -133
The Board of Directors
Neighborhood Housing Services of
Chicago, Inc. and Related Entities
Chicago, Illinois
Compliance
We have audited the compliance of Neighborhood. Housing Services of Chicago, Inc and Related
Entities (NHS) with the types of compliance requirements described in the U.S. Office of
Management and Budget (OMB) Circular A -133 Compliance Supplement that are applicable to each of
its major federal programs for the year ended March 31, 2009. NHS' major federal programs are
identified in the summary of auditols results section of the accompanying schedule of findings and
questioned costs. Compliance with the requirements of laws, regulations, contracts, and, grants .
applicable to each of its major federal programs is the responsibility of NHS' management Our
responsibility is to express an opinion on NHS's compliance based on our audit
We conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A -133,
Audits of States, Loral Governments, and Non- Profit Organizations. Those standards and OMB Circular
A -133 require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a direct
and material effect on a major federal program occurred. An audit includes examining, on a test
basis, evidence about NHS's compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion. Our audit does not provide a legal detemvnation of NHS's
compliance with those requirements.
In our opinion, NHS complied, in all material respects, with the requirements referred to above that
are applicable to each of its major federal programs for the year ended March 31, 2009. However, the
results of our auditing procedures disclosed instances of noncompliance with those requirements,
which are required to be reported in accordance with OMB Circular A -133 and which are described
in the accompanying schedule of findings and questioned costs as item: 09 -01 and 09 -02.
r
Internal Control Over Compliance
The management of NHS is responsible for establishing and maintaining effective internal control
over compliance with the requirements of laws, regulations, contracts, and grants applicable to
federal programs. In planning and performing our audit, we considered NHS' internal control over
compliance with the requirements that could have a direct and material effect on a major federal
program in order to determine our auditing procedures for the purpose of expressing our opinion on
compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control
over compliance. Accordingly, we do not express an opinion on the effectiveness of NHS' internal
control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation
of a control does not allow management or employees, in the normal course of performing their
assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a
federal program on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the entity's ability to administer a federal program such
that there is more than a remote likelihood that noncompliance with a type of compliance
requirement of a federal program that is more than inconsequential will not be prevented or detected
by the entity's internal control
A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that material noncompliance with a type of compliance requirement
of a federal program will not be prevented or detected by the entity's internal control
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and would not necessarily identify all deficiencies in internal control
that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in
internal control over compliance that we consider to be material weaknesses, as defined above.
NHS' responses to the findings identified in our audit are described in the accompanying schedule of
findings and questioned costs. We did not audit NI-15's response and accordingly, we express no
opinion on it
This report is intended solely for the information and use of the board of directors, management,
others within the entity, federal awarding agencies and pass - through entities and is not intended to
be and should not be used by anyone other than these specified parties.
Crawe. 4nwdA l�f�''
Crowe Horwath LLP
Chicago, Illinois
October 2, 2009
43.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTTIIES
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
March 31, 2009
1. Financial Statements:
The type of report issued on the financial statements: Unqualified
Internal control over financial reporting.
• Material weakness(es) identified? ^ Yes X No
• Significant deficiencies identified
not considered to be material weaknesses? _ Yes X None reported
Noncompliance material to financial statements noted? _ Yes X No
Federal Awards:
Internal control over major programs:
• Material weakness(es) identified? A Yes X No
• Significant deficiencies identified
not considered to be material weaknesses? Yes X None reported
Type of auditor's report issued on compliance
for major programs: Unqualified
Any audit findings disclosed that are required
to be reported in accordance with section
510(a) of OMB Circular A -133? X Yes No
Identification.of major programs:
CFDA Numbers Name of Federal ProWam or Cluster
14.256 U.S. Department of Housing and Urban Development
The Housing & Recovery Act of 2008 Public Law 110 -256
Passed through NeighborWorks America
National Foreclosure Mitigation Counseling Program
14.218 U.S. Department of Housing and urban Development -
Community Development Block Grants
(CDBG)-
Passed through City of Chicago Department of Housing.
Senior Home Repair Program
Neighborhood Lending Program
Agreement- Operations and Capital
Troubled Building Initiative
Dollar threshold used to distinguish between
type A and type B programs: $318,858
Auditee qualified as low -risk auditee? _ Yes X No .
(Continued)
44.
i
)D HOUSING, SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
SCHEDULE OF FINDINGS AND QUESITONED COSTS
March 31, 2009
2. Findings related to financial statements that are required to be reported in accordance
with GALAS:
There were no findings related to this section.
3. Findings and questioned costs for federal awards including audit findings as described
in OMB Circular A -133 Section 510(a):
09 -01 Lack of Data Points in Foreclosure Counseling Files.
Lack of Data Points in Foreclosure Counseling Files
Immaterial Compliance
Finding
Statement of
During our review of the counseling files, we noted certain required data
Condition:
points were not collected and maintained in the file.
According to Section IV, Program Reporting Requirements, of the general
Criteria
grant agreement provided by NeighborWorks, "Data paints required for
each client are attached as Exhibit 1."
Effect of
The Organization is not in full compliance with grant requirements.
Condition
The grant agreement required certain data points be collected to receive
Questioned Costs
reimbursement It was noted for two items tested that required data
points for reimbursement were not collected resulting in $700 in
questioned costs.
Recommendation:
NHS should ensure all required data points are collected.'
The National Foreclosure Mitigation Program was new and the grantor
changed the data reporting requirements several months into the program
which required fewer data points to be collected. The changes to the data
Management
reporting requirements were made informally and the original agreement
Response:
was not modified_ Management does concur that all required data points
should be collected to support each counseling case. NHS Management
will work to obtain formal contract amendments to support requirement
changes.
45.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
March 31, 2009
09 -02 Ratio of Counseling Levels
Ratio of Counseling Levels
immaterial Compliance
Finding
While comparing the ratio of counseling levels to the required allocation,
it was noted that the counseling unit ratio between level 1,2, and 3 are all
Statement of
outside of the 50% variance from the required ratio stated in the grant
Conditiom
agreement We noted that the Organization communicated with the
grantor regarding this issue and created an action plan on ways to achieve
these requirements.
According to the National Foreclosure Mitigation Counseling grant
agreement, Statement of Work, Section A, "Ratio of level 1, IeveI 2, Level 3
Criteria:
counseling by the Grantee shall not vary by more than 50 %. Per Exhibit B,
"Level 1 counseling units should be 79% of the total, level 2 counseling units
should be 44 %, and level 3 counseling units should be 36Y ".
Effect of
The Organization is not in full compliance with grant requirements.
Condition
It is recommended that this requirement be monitored on a quarterly basis
Recommendation:
and potential initiatives be explored to bring the Organization into
compliance.
The National Foreclosure Mitigation program was new and the grantor
communicated to NHS after the original contract was signed that the
counseling units per level could vary. At the completion of the contract,
Management
the percentages achieved were different than the target projections in the
Response:
original contract In possession of this information, NeighborWorks
America informed NHS chat the final report for the grant was reviewed
and approved. NHS Management will work to obtain formal contract
amendments to support requirement changes.
i
46. t.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
RESOLUTION OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
March 31, 2009
08-01 Compliance Finding - Control Over Affiliate Reporting
Statement of Condition During our audit fieldwork, management disclosed that a separate
legal entity was created by NHS during 2005 known as "NHSRC Initiatives'. This separate legal
entity was created for the purpose of performing housing transactions related to NHS
participation in a receivership program with the City of Chicago. Changes in personnel within
the organization as well as the delay in utilizing the entity for operational purposes until early
2007 prevented adequate communication of the existence of the entity to the appropriate
individuals within the organization which resulted in a lack of control over reporting.
Although the reporting for this entity did not result in changes to the combined financial
statement presentation, this entity was not properly disclosed in recent audit reports.
Additionally; an application for IRS income tax exemption has not been filed, potentially
subjecting the organization to income tax expense that would have otherwise not applied.
Criteria All affiliates under the control of NHS should be reported and disclosed.
Effect of Condition: The complexity of the NHS organizational structure presents a risk of
inaccurate financial reporting where internal controls over the creation and monitoring of
affiliate organizations lacks appropriate attention.
Recommendation: We recommend that the organization reevaluate the effectiveness of entity
level controls which govern the appropriate methods of communicating information related to
significant organizational events that could potentially have a bearing on financial reporting.
Grantee Response at March 31, 2008: NHS management concurs that the communication of
information related to financial reporting should be improved. Improvements in the system of
internal control have already included a greater awareness of the necessity for communicating
information relevant to financial reporting as well as education of management and staff
throughout the organization of transactions requiring financial disclosures. Also, the approval
of new entities, including property development limited partnerships or joint ventures, by
individual Boards or Committees will be documented in meeting minutes and presented for
review at the NHS Central Board
Status: Corrected and will not be listed as a finding in the FY09 audit report
08 -02 Compliance Finding - Audit Adjustments
Statement of Condition: During the course of the audit certain required adjustments were
noted as part of testing procedures. The adjustments noted included the following items:
- Pledges Receivable and Contribution Revenue
- Allowance for Property Held for Rehabilitation and Resale
- Construction Loan Allowance
(Continued)
47.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
RESOLUTION OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
March 31, 2009
- Deferred Loan Allowance and Asset Present Value
- Certified Loan Loss Reserve
- Accounts Receivable Allowance
Criteria All adjusting entries should be made during the regular fiscal year -end closing
procedures.
Effect of Condition: The required recording of adjustments encountered as part of audit
procedures indicates the potential that internal financial statements may be materially misstated
during the course of the year.
Recommendation: We recommend that management continue to implement controls and
procedures to ensure the timely reconciliation and valuation of general ledger accounts.
Grantee Response at March 31, 2008: NHS management concurs with the recommendation to
improve the reconciliation and account valuation processes. The control improvements will
include increased education and training to finance department staff on the nature and timing
of adjustments to accounts based on their purpose, such as write -offs on old balances, valuation
requirements, proper account classifications, and reconciliations to subsidiary Iedgers and
systems. Also, the control improvements will include increased supervision and monitoring to
ensure that account adjustments are corrected and posted in a timely manner.
Status: Corrected and will not be listed as a finding in the FY09 audit report
(Continued)
48.
a
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED EMMIES
RESOLUTION OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
March 31, 2008
08-03 Compliance Finding - Approval of Journal Entries
Statement of Condition: Currently, journal entries are approved manually within the
accounting system. In conjunction with our journal entry testing we were unable to verify the
approval for certain adjustments that were selected as part of our procedures. The Chief
Financial Officer has implemented a policy requiring the review and approval of all journal
entries however this policy does not always seem to be consistently followed.
Criteria: All journal entries should contain a review and approval from an appropriate
individual
Effect of Condition: Lack of appropriate documentation of approvals of journal entries could
result in inappropriate or erroneous entries in the general ledger.
Recommendation: Approval of journal entries is very important in the system of segregation of
duties. Neighborhood Housing Services should document approval of all journal entries.
Grantee Response at March 31, 2008: The new journal entry approval policy was implemented
in December 2007. The policy has required education and training of staff as well as the
implementation of specific control techniques to facilitate the approval process. NHS concurs
with the recommendation that approval should be documented on all journal entries and will
continue to supervise and monitor team members to ensure that all journal entries requiring
approval obtain the appropriate approval.
Status: Corrected and will not be listed as a finding in the FY09 audit report
08-04 Comnliance Finding - Controls Over Construction Services
Statement of Condition During our fraud inquiries, we noted an instance related to the
construction services function that could have a financial statement impact of approximately
$100,000. Construction specialists are performing site visits on construction work, and
providing guidance to clients to sign off on construction work that has been completed. Based
on our inquiry, the controls over the construction area require a. more formal level oversight
review. In addition, implementing an external whistle blower policy could mitigate the risk that
inappropriate reviews are reported to the proper level of management
Criteria Controls should be improved over construction services, specifically, in regards to
oversight and whistle blower policies.
Effect of Condition Lack of controls over construction completion sign offs could result in NHS
incurring charges to complete construction which was previously funded.
(Continued)
49.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED. ENTITIES
RESOLUTION OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
March 31, 2008
Recommendation: We recommend improved controls over the construction services area,
including increased supervisory oversight over construction specialists and the implementation
of an external whistle blower policy.
Grantee Response at March 31, 2008: NHS management concurs with the recommendation to
improve controls related to the oversight provided by our staff to borrowers. NHS will be
evaluating the overall risks and benefits associated with the type and level of controls that
would need to be implemented in order to be effective. From an operational standpoint, we
will take into consideration available budgeted positions and workload. From a legal
perspective, we will review the existing documents signed by the borrower protecting NHS
assets_ From a financial standpoint, we will review the current process for approving payment
to our borrower's hired contractors to determine if additional supporting documentation would
mitigate any risk of making an unauthorized or questionable payment We expect that any new
controls would be implemented in the later part of fiscal year 2009.
Status: Corrected and will not be listed as a finding in the FY09 audit report
08-05 COmDhance Fundine - Program Income Due to the City of Chicago
Statement of Condition Account 28100 - Program Income Due to City was in the process of
being reconciled during our fieldwork, but was not completed in advance of the audit A
material reconciling difference remained unresolved.
Criteria: All general ledger accounts should be reconciled on a timely basis.
Effect of Condition Lack of adequate and timely account reconciliation could lead to inaccurate
financial reporting.
Recommendation This account should be investigated and reconciled in order to facilitate
accurate financial reporting.
Grantee Response at March 31, 2008: NHS is nearly completed with the reconciliation of the
Program Income Due to the City of Chicago account It appears that almost all of the funds in
the account are principal and interest remitted to NHS from loans originated under the City's
HELP Loan Program. We have begun initial conversations with the City focused on
redeploying those funds once the reconciliation is completed,
Status: Corrected and will not be listed as a finding in the FY09 audit report
(Continued)
50. �.
NEIGHBORHOOD HOUSING SERVICES OF CHICAGO, INC. AND RELATED ENTITIES
RESOLUTION OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
March 31, 2008
08-06 Compliance Finding - Accounting for Capital Funds from Neighborworks and CDBG
Statement of Condition During our testing of the NeighborWorks and CDBG capital grants, we
noted that NHS has not established a separate fund to track and account for permanently
restricted revolving loan and capital project funds received from NeighborWorks and CDBG.
Criteria According to Section IC of the general grant agreement provided by NeighborWorks,
"Permanently Restricted Capital Grant Funds require that the NeighborWorksG organization establish
and maintain a segregated Permanently Restricted Reoolmng Loan and Capital Projects Fund to account
exclusively for their use."
Effect of Condition The Organization is not in full compliance with grant requirements.
Recommendation We recommend that NHS establish a separate fund to record transactions
related to NeighborWorks and CDBG temporarily and permanently restricted revolving loan
and capital project fund balances.
Grantee Response at March 31, 2008: NHS management concurs that tracking and accounting
for permanently restricted revolving loan and capital project funds received from
NeighborWorks America (NWA) is necessary to ensure compliance with specific grant
requirements. Currently NHS tracks and accounts for NWA funds using general ledger Project
codes as well as spreadsheet listings. NHS uses the Fund code within its general ledger account
code structure to track activity by legal entity such as NHS, NLS, NHSRC, and NHS of the Fox
Valley so that it can run reports on each line of business.
Status: NHS is currently reviewing its entire GL account code structureto determine the most
beneficial redesign that will allow it to meet its financial reporting requirements and its
contractual requirements to NWA.
51.
EXHIBIT B
ASSURANCES
The SUB - RECIPIENT hereby assures and certifies that it will comply with the regulations, policies, guidelines
and requirements with respect to the acceptance and use of CDBG funds in accordance with the ACT and City of
Elgin policies. Also, the SUB - RECIPIENT certifies with respect to the grant that:
1. It possesses legal authority to make a grant submission to the City and to execute a community
development and housing program;
2. Its governing body has duly adopted or passed as an official act, a resolution, motion or similar action
authorizing the person identified as the official representative of the SUB - RECIPIENT to execute the
Agreement, all understandings and assurances contained herein, and directing the authorization of the
person identified as the official representative of the SUB - RECIPIENT to act in connection with the
execution of the Agreement and to provide such additional information as may be required.
3. Prior to submission of its application to the City, the SUB - RECIPIENT has:
(A) Met the citizen participation requirements of 570.301(b) and has provided citizens with:
(I) The estimate of the amount of CDBG funds proposed to be used for activities that will
benefit persons of low and moderate income; and
(2) Its plan for minimizing displacement of persons as a result of activities assisted with
CDBG funds and to assist persons actually displaced as a result of such activities;
(B) Prepared its application in accordance with the policies of the City of Elgin and made the
application available to the public;
4. The grant will be conducted and administered in compliance with:
(A) Title VI of the Civil Rights Act of 1964 (Pub. L. 88 -352 42 U.S.C. Sec 2000d et seq.) and
implementing regulations issued at 24 CFR Part I;
(B) Title VIII of the Civil Rights. Act of 1968 (Pub. L. 90 -208), as, amended; and that the SUB -
RECIPIENT will administer all programs and activities related to housing and community
development in a manner to affirmatively further fair housing,
(C) Section 109 of the Housing and Community Development Act of 1974, as amended; and the
regulations issued pursuant hereto;
(D) Section 3 of the Housing and Urban Development Act of 1968, as amended;
(E) Executive Order 11246 -Equal Opportunity, as amended by Executive Orders 11375 and 12086,
and implementing regulations issued at 41 CFR Chapter 60;
(F) Executive Order 11063 -Equal Opportunity in Housing, as amended by Executive Order 12259,
and implementing regulations at 24 CFR Part 107;
(G) Section 504 of the Rehabilitation Act of 1973 (Pub. L. 93 -112), as amended, and implementing
regulations when published in effect;
(II) The Age Discrimination Act of 1975 (Pub. L. 94 -135), as amended, and implementing
10
regulations when published for effect;
(n The relocation requirements of Title 11 and the acquisition requirements of Title III of the
Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended,
and the implementing regulations at 24 CFR Part 42, as required under 24 CFR 570.606;
(J) The labor standards requirements as set forth in 24 CFR Part 570, Subpart K and HUD
regulations issues to implement such requirements;
(K) Executive Order 11988 relating to the evaluation of flood hazards and Executive Order 11738
relating to the prevention, control and abatement of water pollution;
(L) The flood insurance purchase requirements of Section 102(a) of the Flood Disaster Protection Act
of 1973 (Pub. L. 93 -234);
(M) The Fair Housing Act (42 U.S.C. 3601 -20);
5. Its notification, inspection, testing and abatement procedures concerning lead -based paint will comply
with 570.608 and 24 CFR Part 35; and
6. When a grant is in excess of $100,000 it will comply with all applicable standards, orders, or
requirements issued under Section 308 of the Clean Air Act (42 U.S.C. 1857(h), Section 508 of the Clean
Water Act (33 U.S.C. 1368), Executive Order 11738, and Environmental Protection Agency regulation
(40 CFR Part 15), which prohibit the use under nonexempt Federal contracts, grants or loans, of facilities
included on the EPA list of Violating Facilities. The provision shall require reporting of violations to the
City, HUD, and to the AESOP Assistant Administrator for Enforcement (EN -329).
7. It has developed its application so as to give maximum feasible priority to activities which benefit low
and moderate income families or aid in the prevention or elimination of slums or blight; (the application
may also include activities which the SUB - RECIPIENT certifies are designed to meet other community
development needs having a particular urgency because existing conditions pose a serious and immediate
threat to the health or welfare of the community, and other financial resources are not available);
8. It is following the current City of Elgin Consolidated Plan which has been approved by HUD pursuant to
570.306; and
9. It will not attempt to recover any capital costs of public improvements assisted in whole or in part with
funds provided under Section 106 of the ACT or with amount resulting from a guarantee under Section
108 of the ACT by assessing any amount against properties owned and occupied by persons of low and
moderate income, including any fee charged or assessment made as a condition of obtaining access to
such public improvements, unless: (1) funds received under Section 106 of the ACT are used to pay the
proportion of such fee or assessment that relates to the capital costs of such public improvements that are
financed from revenue sources other than under Title I of the ACT; or (2) for purposes of assessing any
amount against properties owned and occupied by low and moderate income persons, the SUB -
RECIPIENT certifies that it lacks sufficient funds received under Section 106 of the ACT to comply with
the requirements of subparagraph (1) above.
10. The SUB - RECIPIENT certifies that it will provide a drug -free workplace by:
(A) Publishing a statement notifying employees that the unlawful manufacture, distribution,
dispensing, possession or use of a controlled substance is prohibited in the SUB - RECIPIENT'S
workplace and specifying the actions that will be taken against employees for violation of such
prohibition;
11
(B) Establishing a drug -free awareness program to inform employees about:
(1) The dangers of drug abuse in the workplace;
(2) The SUB - RECIPIENT'S policy of maintaining a drug -free workplace;
(3) Any available drug counseling, rehabilitation, and employee assistance programs; and
(4) The penalties that may be imposed upon employees for drug abuse violations occurring
in the workplace.
(C) Making it a requirement that each employee to be engaged in the performance of the grant be
given a copy of the statement required by paragraph (A);
(D) Notifying the employee in the statement required by paragraph (A) that, as a condition of
employment under the grant, the employee will:
(1) Abide by the terms of the statement; and
(2) Notify the employer of any criminal drug statute conviction for a violation occurring in
the workplace no later than five days after such conviction;
(E) Notifying the City of Elgin's Community Development Department within ten (10) days after
receiving notice under subparagraph (D)(2) from an employee or otherwise receiving actual
notice of such conviction;
(F) Taking one of the following actions, within 30 days of receiving notice under subparagraph
(D)(2), with respect to any employee who is so convicted:
(1) Taking appropriate personnel action against such an employee, up to and including
termination; or
(2) Requiring such employee to participate satisfactorily in a drug abuse assistance or
rehabilitation program approved for such purposes by a Federal, State, or local health,
law enforcement, or other appropriate agency;
(G) Making a good faith effort to continue to maintain a drug -free workplace through implementation
of paragraphs (A), (B), (C), (D), (E) and (F).
11. It has adopted and is enforcing a policy prohibiting the use of excessive force by law enforcement
agencies within its jurisdiction against any individuals engaged in nonviolent civil rights demonstrations.
12. In regards to lobbying, the SUB - RECIPIENT certifies:
(A) No Federal appropriated funds have been paid or will be paid, by or on behalf of the SUB -
RECIPIENT, to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract, the making of any
Federal grant, the making of any Federal loan, the entering into of any cooperative agreement,
and the extension, continuation, renewal, amendment, or modification of any Federal contract,
grant, loan, or cooperative agreement.
(B) If any funds other than Federal appropriated funds have been paid or will be paid to any person
for influencing or attempting to influence an officer or employee of any agency, a Member of
Congress, an officer or employee of Congress, or an employee of a Member of Congress in
connection with the Federal contract, grant, loan, or cooperative agreement, the undersigned shall
complete and submit Standard Form -LLL, "Disclosure Form to Report Lobbying," in accordance
with its instructions.
IN
(C) The SUB - RECIPIENT shall require that the language of this certification be included in the
award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts
under grants, loans, and cooperative agreements) and that all sub - recipients shall certify and
disclose accordingly.
This certification is a material representation of fact upon which reliance was placed when this
transaction was made or entered into. Submission of this certification is a prerequisite for making
or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who
fails to file the required certification shall be subject to a civil penalty of not less than $10,000
and not more than $100,000 for each such failure.
13
EXHIBIT C
EQUAL EMPLOYMENT OPPORTUNITY CERTIFICATION
Community Development Block Grant Program
City of Elgin
The undersigned understands and agrees that it is a SUB - RECIPIENT of the Community Development Block
Grant Program of the City of Elgin. The undersigned also agrees there shall be no discrimination against any
employee who is employed in carrying out work from the assistance received from the City of Elgin and the
Department of Housing and Urban Development, or against any applicant for such employment, because of race,
color, religion, sex, age or national origin, including but not limited to employment, upgrading, demotion or
transfer; recruitment or recruitment advertising; lay off or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship.
The SUB - RECIPIENT further agrees to the following:
(1) It will incorporate or cause to be incorporated into any grant contract, loan, grant insurance or guarantee
involving Federally assisted construction work, or modification thereof, which is paid for in whole or in
part with finds obtained from the Community Development Block Grant program, the language
contained in HUD Equal Employment Opportunity Regulations at 42 CFR 130.15(b), in Executive Order
11246, as amended by Executive Orders 11375 and 12006, and implementing regulations issued in 41
CFR Chapter 60.
(2) It will be bound by said equal opportunity clause with respect to its own employment practices when it
participates in any Community Development Block Grant Program construction.
(3) It will assist and cooperate actively with the City of Elgin, the Department of Housing and Urban
Development and the Secretary of Labor in obtaining the compliance of contractors and subcontractors
with the equal opportunity clause and the rules, regulations and relevant orders of the Secretary of Labor.
(4) It will famish the City of Elgin, the Department of Housing and Urban Development and the Secretary of
Labor such information as they may require for the supervision of such compliance, and will otherwise
assist the City of Elgin and the Department of Housing and Urban Development in the discharge of
primary responsibility for securing compliance,
(5) It will refrain from entering into. any.contract. or contract_ modification subject to Executive Order 11246
of September 24, 1965, with a contractor debarred from or who has not demonstrated eligibility for
government contracts and Federally assisted construction contracts pursuant to the Executive Order.
(6) It will carry out such sanctions and penalties for violation of the equal opportunity clause as may be
imposed upon contractors and subcontractors by the Secretary of Labor, the City of Elgin or the
Department of Housing and Urban Development.
(7) In the event that SUB - RECIPIENT fails or refuses to comply with the undertaking, the City of Elgin, or
the Department of Housing and Urban Development may take any or all of the following actions; cancel,
terminate or suspend, in whole or in part, this grant, refrain from extending any further assistance to the
SUB - RECIPIENT until satisfactory assurance of future compliance has been received; and refer the case
to the Department of Housing and Urban Development for appropriate legal proceedings.
14
SUB - RECIPIENT: NHS of the Fox Valley
163 East Chicago Street, Elgin, Illinois, 60120
DATE: Deo'e -m l' c29 �O f C�
ATTEST:
Zor�e -s K. W h �U -Fo>J
15
Report to Mayor & Members of City Council
MEETING DATE: January 12, 2011
ELGIN
THE CITY IN THE SUBURBS
INITIATIVE C: Community Development Block Grant Sub- Recipient Agreement with
Neighborhood Housing Services of the Fox Valley
COMMUNITY GOAL
Neighborhood Vitality and Quality Housing
OBJECTIVE
• Providing financial support to Neighborhood Housing Services of the Fox Valley
through the Community Development Block Grant Program
PURPOSE
• Providing homebuyer and foreclosure prevention counseling by helping current
homeowners avoid foreclosure and to educate future homeowners to avoid
foreclosure filings
RECOMMENDATION
Authorize staff to execute a Sub - Recipient Agreement with Neighborhood
Housing Services of the Fox Valley to assist with individual counseling for both
pre - purchase and foreclosure prevention in the amount of $29,750
BACKGROUND
Neighborhood Housing Services (NHS) of the Fox Valley, a not - for - profit housing, counseling
and lending organization, was founded in July 2007 to provide homeownership assistance
through educating and preparing new homeowners for success; lending to help individuals and
families in the Elgin area to buy, fix, and keep their homes; and sustaining homeownership
through foreclosure prevention. NHS' mission is to create opportunities for people to live in
affordable homes, improve their lives and strengthen their neighborhoods.
NHS of the Fox Valley, a related entity and affiliate of Neighborhood Housing Services of
Chicago, Inc., is the first neighborhood office outside Chicago.
NHS of the Fox Valley applied for Community Development Block Grant (CDBG) funds in 2009.
The funding was approved by the city council in March 2010 and incorporated into the 2010
Annual Updated Action Plan. The plan was submitted to the Department of Housing and Urban
Development (HUD) and approved in May 2010.
NHS of the Fox Valley was allocated $29,750 from the 2010 CDBG program year. NHS of the Fox
Valley will use the funds to provide individual counseling and guidance to low- and moderate -
income families living in the city on home pre - purchase and foreclosure prevention issues
related to buying and owning a home in Elgin.
OPERATIONAL ANALYSIS
Homeownership, as a wealth building strategy, has suffered in recent years due to the
economic crisis and the resulting lower real estate values. With homeownership on the decline
as the foreclosure crisis continues, NHS functions as both an educational, lending and
counseling organization.
NHS fights the foreclosure crisis on two fronts — preventing as many foreclosures as possible,
while also preparing new homeowners to take advantage of the more affordable prices, making
homeownership affordable to low- and moderate - income families.
1. Individual foreclosure prevention counseling will address the following issues:
• Establishing a household income and expenses budget;
• Creating a foreclosure prevention timeline;
• Becoming aware of scams targeting homeowners at risk of foreclosure;
• Understanding options available to homeowners from current lender or other
resources; and
• Preparing an application for loss mitigation solutions offered by current lender
and negotiating the terms of an affordable solution and reviewing offers of loss
mitigation with current lender.
2. Individual home pre - purchase counseling will address the following issues:
• Establishing a household income and expenses budget;
• Reviewing credit history;
• Calculating affordability;
• Analyzing down payment options; and
• Securing pre - approval for purchase financing.
Since NHS of the Fox Valley opened its doors in 2007, 331 families have gone through
foreclosure prevention counseling and 283 families have attended Homebuyer Education
classes. NHS of the Fox Valley has saved 75 families from foreclosure through prevention
counseling and intervention and created 13 new homeowners in Elgin.
Counseling hours provided will be tracked by NHS pre - purchase counseling tracking software
known as "Home Counselor Online" and foreclosure prevention counseling tracking software
known as "Just Price Solutions." In addition to serving the low- and moderate - income
households, NHS will make available information on outcomes of loan modification, repayment
plans, refinancing, etc. to foreclosure prevention clients, and information on pre - approval for
purchase financing, purchased housing, etc., to pre - purchase housing counseling clients.
NHS of the Fox Valley was also awarded $37,548 in Neighborhood Stabilization Program (NSP)
funds in 2010 to counsel prospective homebuyers who could potentially purchase the homes
that the city and its partners are rehabilitating under the program. The organization will be
required to comply with all federal requirements of the CDBG Grant Program and NSP as well as
the city's sub - recipient agreement.
INTERESTED PERSONS CONTACTED
Staff of the Community Development Department contacted Jen Carr, Vice President and
Manager of the Community Lending Team for Northern Trust and also a Board Member of the
NHS of the Fox Valley, to gauge her recent and past experiences with NHS of the Fox Valley. She
reported a continued positive experience and expressed an appreciation for the value of the
organization's services to the community.
FINANCIAL ANALYSIS
The CDBG grant is proposed to be used solely to provide individual counseling for both home
pre - purchase and foreclosure prevention to low- and moderate - income families living in the
city. The overall cost to administer the program by NHS over a 12 -month period is estimated at
$131,000. To supplement the amount requested through the CDBG program, NHS uses other
funding sources such as the Grand Victoria Foundation, local and state government grants,
private charitable contributions and revenue originated from NHS Loans. A more detailed
assessment is provided within their application package.
BUDGET IMPACT
FUND(S)
ACCOUNT(S)
PROJECT #(S)
AMOUNT
BUDGETED
AMOUNT
AVAILABLE
CDBG
230- 0000 - 791.30 -99
1 154652
$29,750
$29,750
LEGAL IMPACT
None.
ALTERNATIVE COURSES OF ACTION
The city council may choose not to approve the Sub - Recipient Agreement with NHS of the Fox
Valley.
NEXT STEPS
1. Execute a sub - recipient agreement with NHS of the Fox Valley
2. Assist the sub - recipient with project implementation and management
3. Process payment as approved by the agreement
4. Complete review and monitoring of NHS' clientele files by May 2011 to ensure
compliance with the national objectives of the program that requires service to low- to
moderate - income persons
5. Request and review quarterly reports from the sub - recipient
6. Submit annual reports to HUD on the sub - recipient's activities
7. Prepare sub - recipient files for on -site monitoring by HUD prior to closing out project
Prepared by:
Denise Momodu, Associate Planner
Reviewed by:
Sarosh Saher, Senior Planner
Reviewed by:
Marc Mylott, Community Development Director
Reviewed by:
Colleen Lavery, Chief Financial Officer
Reviewed by:
William A. Cogley, Corporation Counsel /Chief Development Officer
Final Review by:
Richard G. Kozal, Assistant City Manager /Chief Operating Officer
Approved by:
Sean R. Stegall, City an er
ATTACHMENTS
A: Draft Sub - recipient Agreement between the City of Elgin and NHS of Fox Valley
ELGIN
THE CITY IN THE SUBURBS-
DATE: February 8, 2011
TO: Denise Momodu, Associate Planner
FROM: Jennifer Quinton, Deputy City Clerk
SUBJECT: Resolution No. 11 -25, Adopted at the January 26, 2011, Council Meeting
Enclosed you will find the agreement listed below. Please distribute this agreement to the other
party and keep a copy for your records if you wish. If you have any questions please feel free to
contact our office 847 - 931 -5660 and we will do our best to assist you. Thank you.
• Community Development Block Grant Sub - Recipient Agreement with NHS of the Fox
Valley