Community Development Banking List
01-24-2009, 05:58 AM
Original message from: ccoffer@gmhf.com
communitydevelopmentbanking-l@cornell.edu
This posting pertains to a somewhat specific and technical accounting
and financial reporting issue: implementing the new Fair Value
accounting standards SFAS No. 157 and SFAS No. 159 specifically for
loans receivable, contributions receivable, and EQ2/PRI debt capital.
As none of these instruments has "quoted prices in active markets for
identical assets or liabilities that the reporting entity has the
ability to access at the measurement date," it is likely that we will
value these instruments using the income approach (the present value
discount method) as in past years, but with different rationale for the
discount rates used. Thus determining the appropriate discount rate for
each instrument is ultimately our unresolved issue.
Organization summary: Greater Minnesota Housing Fund is a certified
CDFI supporting the creation and preservation of affordable housing. We
have been awarded large, multi-year grants from various sources over the
years. This contribution income has supported primarily two types of
program related activities: 1) programs and grants, and 2) affordability
gap lending. These "gap" loans include both single- and multi-family
housing, and are generally 30 year maturity, 0% interest,
non-amortizing, subordinated mortgage loans. Several years ago we began
also making shorter-term loans for such purposes as pre-development,
land acquisition, infrastructure, construction, LIHTC bridge, and more
recently foreclosure-related acquisition/rehabilitation. These
"interim" loans are typically 2-5 year maturity, 2-5% interest, a mix of
recourse and secured. We have leveraged our interim lending with
EQ2/PRI debt capital, generally 5-10 year maturity at 2-5% interest.
To summarize, we have four distinct classes of financial instruments
whose fair value we must determine in accordance with the new fair value
accounting standards:
* Contributions receivable
* Gap loans receivable
* Interim loans receivable
* EQ2/PRI debt capital
I welcome your insights, experiences and informed discussion. Please
feel free to contact me directly.
Thank you,
Curtis A. Coffer, PhD, CPA
Director, Finance and Accounting
Greater Minnesota Housing Fund
332 Minnesota Street, Suite 1201-East
Saint Paul, Minnesota 55101
p: 651.221.1997x120
f: 651.221.1904
ccoffer@gmhf.com
www.gmhf.com
communitydevelopmentbanking-l@cornell.edu
This posting pertains to a somewhat specific and technical accounting
and financial reporting issue: implementing the new Fair Value
accounting standards SFAS No. 157 and SFAS No. 159 specifically for
loans receivable, contributions receivable, and EQ2/PRI debt capital.
As none of these instruments has "quoted prices in active markets for
identical assets or liabilities that the reporting entity has the
ability to access at the measurement date," it is likely that we will
value these instruments using the income approach (the present value
discount method) as in past years, but with different rationale for the
discount rates used. Thus determining the appropriate discount rate for
each instrument is ultimately our unresolved issue.
Organization summary: Greater Minnesota Housing Fund is a certified
CDFI supporting the creation and preservation of affordable housing. We
have been awarded large, multi-year grants from various sources over the
years. This contribution income has supported primarily two types of
program related activities: 1) programs and grants, and 2) affordability
gap lending. These "gap" loans include both single- and multi-family
housing, and are generally 30 year maturity, 0% interest,
non-amortizing, subordinated mortgage loans. Several years ago we began
also making shorter-term loans for such purposes as pre-development,
land acquisition, infrastructure, construction, LIHTC bridge, and more
recently foreclosure-related acquisition/rehabilitation. These
"interim" loans are typically 2-5 year maturity, 2-5% interest, a mix of
recourse and secured. We have leveraged our interim lending with
EQ2/PRI debt capital, generally 5-10 year maturity at 2-5% interest.
To summarize, we have four distinct classes of financial instruments
whose fair value we must determine in accordance with the new fair value
accounting standards:
* Contributions receivable
* Gap loans receivable
* Interim loans receivable
* EQ2/PRI debt capital
I welcome your insights, experiences and informed discussion. Please
feel free to contact me directly.
Thank you,
Curtis A. Coffer, PhD, CPA
Director, Finance and Accounting
Greater Minnesota Housing Fund
332 Minnesota Street, Suite 1201-East
Saint Paul, Minnesota 55101
p: 651.221.1997x120
f: 651.221.1904
ccoffer@gmhf.com
www.gmhf.com