Troy Local Development Corporation

Chair Board Members Jeff Betts Seamus Donnelly Tom Casey Vice-Chair Andy Ross Executive Director Audit & Finance Committee Meeting Dylan Turek March 27, 2024 9:00 a.m. AGENDA I. Minutes from the March 24, 2023 Audit and Finance Committee meeting. II. 2023 Audit Presentation – Wojeski & Co., CPAs III. Adjournment  Audit and Finance Committee Meeting Minutes March 24, 2023 9:00 a.m. BOARD MEMBERS PRESENT: Steven Strichman, Andy Ross, Chris Nolin, Jeff Betts and Kiani Conley-Wilson. ABSENT: D ALSO IN ATTENDANCE: Cathryn Crummey, Matt Jones, Dylan Turek, Deanna Dal Pos, John Kane, Chris Stephens and Denee Zeigler R The committee meeting was called to order at 9:00 a.m. I. Minutes T AF The board reviewed minutes from the November 18, 2022 audit and finance committee meeting. Steven Strichman made a motion to approve the minutes. Jeff Betts and Kiani Conley-Wilsom abstained. Andy Ross seconded the motion,motion carried. II. Audit Presentation by Wojeski & Co. Chris Stephens presented the deliverables of the cy2022 audit completed by his team at Wojeski & Co. He provided a summary of two documents: Report to the Board and Financial Statements and Independent Auditor’s Report. Mr. Stephens noted that the report to the board is required communication that is issued at the end of an audit. He explained that management is responsible for the accounting policies used by the organization. Mr. Stephens noted a new accounting standard for leases that will be retroactive to 2021. He noted that there were no transactions that lacked authoritative guidance or consensus and all significant transactions were recorded in the correct period. Mr. Stephens advised no disagreements with management and requested that management supply us with a management letter showing everything was complete and accurate. He added that it was not found that the LDC had consultations with any other firms. 1  Mr. Stephens reviewed the audited financial statements with the board members. He explained on page one shows the independent auditor’s report on the financial statements. The auditor’s responsibility is to plan and perform an audit to express our opinion. Mr. Stephens advised that they are issuing an unmodified or clean audit. He noted that the annual reports required for the ABO have been reviewed. Steven Strichman made a motion to approve the cy2023 Report to the Board and Audited Financial Statements and recommend to the full board. Christopher Nolin seconded the motion, motion carried. III. Adjournment With no other items to discuss, the audit and finance committee meeting was adjourned at 9:26 a.m. Christopher Nolin made a motion to adjourn the audit and finance committee meeting at 9:26 a.m. Andy Ross seconded the motion, motion carried. D R T AF 2 TROY LOCAL DEVELOPMENT CORPORATION Report to the Board For the Year Ended December 31, 2023 FT DRA DATE To the Board of Troy Local Development Corporation We have audited the financial statements of Troy Local Development Corporation (the "Corporation") for the year ended December 31, 2023, and we will issue our report thereon dated DATE. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated January 9, 2024. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings FT Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Corporation are described in Note A to the financial statements. As described in Note A to the financial statements, the Agency D adopted the following Governmental Accounting Standards Board (GASB) statements in 2023:  RA GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements (GASB 94): The Standard was adopted on a retrospective basis as of the beginning of the earliest period presented. The adoption did not result in any reclassifications or restatements of changes in net position or net position.  GASB Statement No. 96 – Subscription-Based Information Technology Arrangements (SBITA) (GASB 96): The Standard was adopted on a retrospective basis as of the beginning of the earliest period presented. The adoption did not result in any reclassifications or restatements of changes in net position or net position.  Portions of GASB No. 99 – Omnibus 2022 (GASB 99) – The requirements of the standard that were effective upon issuance and the requirements that were effective for all fiscal years beginning after June 15, 2022 were adopted in the current year. These portions of the standards were adopted on a retrospective basis as of the beginning of the earliest period presented. The adoption did not result in any reclassifications or restatements of changes in net position or net position. We noted no transactions entered into by the Corporation during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. 1 Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the Corporation's financial statements were:  Management's estimate of the allowance for uncollectible loans is based on management’s evaluation of the collectability of the outstanding loan receivables, including historical loss experience and economic conditions.  Management’s estimate of the depreciable lives and estimated residual value of capital assets is based on the estimated useful length of individual assets and is estimated on a straight-line basis.  Management’s estimate of the discount rate used in the calculation of leases receivable and the related deferred inflows of resources is based on the rate that the Corporation would charge and is consistent with historical rates charged by the Corporation under its revolving loan program.  FT Management’s estimate of the term used in the calculation of leases receivable and the related deferred inflows of resources is based on the initial lease term per the underlying lease agreement and managements determination of the likelihood that any included extension or termination options will be exercised. D We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole. RA Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was: The disclosure of the carrying value of property held for development and resale in Note E to the financial statements is sensitive because it is possible that the value of the land may not be recoverable by the Corporation. We were not able to obtain appropriate audit evidence to make a reasonable estimation of impairment, if any, on any of the Corporation’s property held for development and resale. Accordingly, we have modified our opinion for this departure from generally accepted accounting principles. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them 2 to the appropriate level of management. The following material misstatements detected as a result of audit procedures were corrected by management.  An adjustment to correct accrued interest payable.  Adjustments to increase the allowance and bad debt based on the current year loan receivable activity.  Adjustment to record the lease receivable and related deferred inflows of resources for the Empire Solar Lease.  Adjustments to correct the current year lease activity in accordance with GASB 87.  An adjustment to correct the loss on the sale of the Alamo property. Disagreements with Management For the purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations FT We have requested certain representations from management that are included in the management representation letter dated DATE. Management Consultation with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing D and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Corporation’s financial statements or a determination of the type of auditor's opinion that may be expressed on RA those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Corporation's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters Management has omitted the management’s discussion and analysis information that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. We were not engaged to report on the Agency’s annual report that is defined by Section 2800 of the New York State Public Authorities Law, Annual Reports by Authorities. Our 3 responsibility under professional standards is to consider whether a material inconsistency exists between the annual report and the audited financial statements that includes our report thereon. The annual report has not been subjected to the auditing procedures applied to the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Restriction on Use This information is intended solely for the use of the information and use of the Board of Directors and management of Troy Local Development Corporation and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, FT DRA 4  TROY LOCAL DEVELOPMENT CORPORATION Financial Statements and Independent Auditor’s Report FT December 31, 2023 DRA TROY LOCAL DEVELOPMENT CORPORATION December 31, 2023 Financial Statements Independent Auditor’s Report ................................................................................ 1 Statement of Net Position ...................................................................................... 4 Statement of Revenues, Expenses and Change in Net Position ................................... 5 Statement of Cash Flows ....................................................................................... 6 Notes to Financial Statements ................................................................................ 7 Compliance Report Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an FT Audit of Financial Statements Performed in Accordance with Government Auditing Standards ........................................................................ 15 DRA  INDEPENDENT AUDITOR’S REPORT To the Board of Directors Troy Local Development Corporation Troy, New York Report on the Audit of the Financial Statements Qualified Opinion We have audited the accompanying financial statements of Troy Local Development Corporation (the "Corporation") as of and for the year ended December 31, 2023, and the FT related notes to the financial statements, which collectively comprise the Corporation’s basic financial statements as listed in the table of contents. In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the financial statements referred to above present fairly, in all material respects, the financial position of the Corporation as of December 31, 2023 and the changes in financial position and its cash flows for the year then ended in accordance with D accounting principles generally accepted in the United States of America. Basis for Qualified Opinion RA As discussed in Note A to the financial statements, management of the Corporation is unable to estimate the possible impairment to the historical cost of some of its real property. In our opinion, this estimate is required in order to conform with accounting principles generally accepted in the United States of America. The effects of this analysis and any resulting adjustment on the Corporation’s net position and change in net position is not reasonably determinable. We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Governmental Auditing Standards issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the audit of the Financial Statements section of our report. We are required to be independent of the Corporation, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control 1 relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Corporation’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Governmental Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood FT that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Governmental Auditing Standards, we:  Exercise professional judgment and maintain professional skepticism throughout the D audit.  Identify and assess the risks of material misstatement of the financial statements, RA whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Corporation’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, amount other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. 2 Required Supplementary Information Management has omitted the Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not part of the basic financial statements, is required by the Government Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Annual Report of the Corporation as defined by Section 2800 of the New York State Public Authorities Law, Annual Reports by Authorities, but does not include the basic financial statements and our auditor’s report thereon. Our opinion on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read FT the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. D Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated RA DATE on our consideration of the Corporation's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to 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 effectiveness of the Corporation’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Corporation's internal control over financial reporting and compliance. Albany, New York DATE 3 TROY LOCAL DEVELOPMENT CORPORATION Statement of Net Position December 31, 2023 ASSETS CURRENT ASSETS Cash and cash equivalents $ 296,371 Accounts receivable, net 796 Loans receivable, net 30,083 Leases receivable - current portion 238,593 Prepaid expenses 6,857 TOTAL CURRENT ASSETS 572,700 NONCURRENT ASSETS Capital assets, net FT Property held for development and resale Leases receivable Security deposits TOTAL ASSETS 519,492 1,967,310 675,674 614 3,735,790 D LIABILITIES RA CURRENT LIABILITIES Loan payable, current portion Accounts payable and accrued expenses Due to other government Accrued interest 167,000 10,808 215,000 10,923 TOTAL CURRENT LIABILITIES 403,731 LONG-TERM LIABILITIES Loan payable, long-term 328,000 TOTAL LIABILITIES 731,731 DEFFERED INFLOWS OF RESOURCES Leases 811,325 NET POSITION Net investment in capital assets 519,492 Unrestricted 1,673,242 TOTAL NET POSITION $ 2,192,734 See accompanying notes to financial statements. 4 TROY LOCAL DEVELOPMENT CORPORATION Statement of Revenues, Expenses and Change in Net Position For the Year Ended December 31, 2023 OPERATING REVENUES Lease income $ 239,831 Grant income 135,830 Loan interest and fees 9,389 Other income 3,602 TOTAL OPERATING REVENUES 388,652 OPERATING EXPENSES Economic development grants 129,362 Professional fees 110,064 Insurance 20,264 Property taxes Bad debts Depreciation Utilities Other expenses FT TOTAL OPERATING EXPENSES 12,135 9,389 4,829 1,858 190 288,091 DRA NON-OPERATING INCOME (EXPENSE) Interest income on leases Interest income on bank accounts Loss on sale of Alamo Property Interest expense OPERATING INCOME TOTAL NON-OPERATING EXPENSE 100,561 41,339 265 (26,418) (31,271) (16,085) CHANGE IN NET POSITION 84,476 NET POSITION, beginning of year 2,108,258 NET POSITION, end of year $ 2,192,734 See accompanying notes to financial statements. 5 TROY LOCAL DEVELOPMENT CORPORATION Statement of Cash Flows For the Year Ended December 31, 2023 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $ 3,322 Proceeds from lease revenue 22,220 Proceeds from grants 135,830 Payments to vendors (264,970) NET CASH USED IN OPERATING ACTIVITIES (103,598) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Payment on loan payable (167,000) Interest paid on loan payable (34,883) FT Proceeds from the sale of land held for development Proceeds from interest on bank accounts Proceeds from lease principal Proceeds from lease interest NET CASH PROVIDED BY CAPITAL AND RELATED FINANCING ACTIVITIES 115,000 265 180,574 41,339 135,295 D NET INCREASE IN CASH AND CASH EQUIVALENTS Cash, cash equivalents and restricted cash at beginning of year RA CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH USED IN OPERATING ACTIVITIES $ 31,697 264,674 296,371 Operating income $ 100,561 Adjustments to reconcile operating income to net cash used in operating activities: Depreciation 4,829 Bad debts 9,389 Changes in operating assets and liabilities: Accounts receivable (280) Loans receivable (9,389) Prepaid expenses 145 Accounts payable and accrued expenses 8,758 Deferred inflow of resources - leases (217,611) NET CASH USED IN OPERATING ACTIVITIES $ (103,598) See accompanying notes to financial statements. 6 TROY LOCAL DEVELOPMENT CORPORATION Notes to Financial Statements December 31, 2023 NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Troy Local Development Corporation (the “Corporation”) is a not-for-profit corporation that was established in 1987 for the purposes of constructing, acquiring, rehabilitating, and improving buildings or sites in the City of Troy, New York (“City”), or to assist financially in the construction, acquisition, rehabilitation, and improvement of buildings or sites within the City, and to foster employment opportunities for City residents, including business retention and attraction, and job creation and retention. The Corporation is a public instrumentality of and supporting organization for, but is separate and apart from, the City. Basis of Presentation FT The Corporation’s financial statements are prepared using the accrual basis in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. D The accounting and financial reporting treatment applied to the Corporation is determined by its measurement focus. The transactions of the Corporation are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and RA liabilities associated with the operations are included on the statement of net position. Net position is classified into three components – net investment in capital assets; restricted; and unrestricted. These classifications are defined as follows, if applicable: Net investment in capital assets: consists of capital assets, net of accumulated depreciation reduced by the outstanding balances of any related debt obligations and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets and increased by balances of deferred outflows of resources related to those assets. If there are significant unspent related debt proceeds at year end, the portion of the debt attributable to the unspent proceeds is not included in the calculation of net investment in capital assets. Rather that portion of the debt is included in restricted net position. Restricted net position: This component of net position represents external restrictions on net position imposed by creditors, grantors, contributors, laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted net position: This component represents net position that does not meet the definition of "restricted". When both restricted and unrestricted resources are available for use, it is the Corporation’s policy to use restricted resources first, then unrestricted resources as needed. 7 TROY LOCAL DEVELOPMENT CORPORATION Notes to Financial Statements--Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Use of Estimates The preparation of financial statements in conformity with U.S. GAAP in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents The Corporation considers as cash all demand deposits and all highly liquid investments which are readily convertible to cash. Accounts Receivable FT Accounts receivable are non-interest bearing and are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability based on a review of outstanding receivables, historical collection information and current economic conditions. In the opinion of Corporation management, all receivable balances are considered collectible; accordingly, no allowance for doubtful accounts has been recorded. D Loans Receivable Loans receivable are carried at their estimated collectible amounts. The Corporation determines its allowance for doubtful accounts by regularly evaluating individual receivables RA and considering collateral value, financial condition, credit history, and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Capital Assets Acquisition of property and equipment are recorded at cost. Expenditures for acquisitions, renewals, and betterments are capitalized, whereas remediation, maintenance, and repair costs are expensed as incurred. When property and equipment is sold or otherwise disposed of, the appropriate accounts are relieved of costs and accumulated depreciation, and any resultant gain or loss is credited or charged to the change in net position. Depreciation is provided for in amounts to relate the cost of depreciable assets to operations over their estimated useful lives on a straight-line basis using an estimated life of 40 years. Property Held for Development and Resale Property held for development and resale is recorded at cost and is carried at the lower of cost or fair value. Major additions, renewals, and betterments are capitalized, whereas remediation, maintenance, and repair costs are expensed as incurred. When property held for development or resale is sold or otherwise disposed of, the appropriate accounts are relieved of costs and any resultant gain or loss is credited or charged to the change in net position. 8 TROY LOCAL DEVELOPMENT CORPORATION Notes to Financial Statements--Continued NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Property Held for Development and Resale--Continued Recognition of impairment of property held for development and resale is required when events and circumstances indicate that an entity will not be able to recover the carrying amount of these assets. The Corporation recognizes an impairment loss, equal to the amount by which the carrying amount of an asset exceeds its fair value, if the carrying amount of the asset is not recoverable. As of the year ended December 31, 2023, the Corporation is unable to make a reasonable estimation of impairment, if any, on any of its capital assets. Revenue and Expense Recognition Revenue consists of exchange revenue such as project fees and nonexchange revenue such FT as grants and contributions. Grant income is recognized as costs are incurred. Contribution revenue is recognized when received. Expenses are recognized when incurred. The Corporation distinguishes operating revenues and expenses from non-operating items. Operating revenues are determined based on the services provided by the Corporation. Operating expenses include the costs associated with providing those services. All revenues D and expenses not meeting this definition are reported as nonoperating revenues and expenses. RA Deferred Inflows of Resources In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. Leases As a lessor, the Corporation recognizes a lease receivable and deferred inflow of resources for any lease with a term greater than 12 months. The lease receivable is recorded at the present value of the lease payments to be received during the lease term. The lease term will be adjusted based on the existence of any extension or termination options when it is reasonably certain that the Corporation or the lessee will exercise those options. The deferred inflow of resources is initially measured at an amount equal to the initial measurement of the related lease receivable plus certain additional amounts received from the lessee at or before the commencement of the lease that is related to future periods less any lease incentives. The deferred inflows of resources is recognized as lease revenue on a straight-line basis over the term of the lease. Income Taxes The Corporation is exempt from income taxes as a not-for-profit corporation under Section 501(c)(3) of the Internal Revenue Code and comparable New York State law. Accordingly, no provisions have been made for income taxes in these financial statements. 9 TROY LOCAL DEVELOPMENT CORPORATION Notes to Financial Statements--Continued NOTE A--CORPORATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- -Continued Adoption of New Accounting Pronouncements During the year ended December 31, 2023, the Corporation implemented GASB Statements No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements; No. 96, Subscription-Based Information Technology Arrangements; and a portion of No. 99, Omnibus 2022. GASB Statement No. 94 improves financial reporting by addressing issues related to public-private and public-public partnerships arrangements (“PPPs”). GASB statement No. 96 improves financial reporting by establishing a definition for Subscription-Based Information Technology Arrangements (“SBITAs”) and providing uniform guidance for accounting and financial reporting for transactions that meet that definition. GASB Statement No. 99 enhances comparability in the application of accounting and financial reporting requirements and improves the consistency of authoritative literature FT related to GASB Statements Nos. 87, 94 and 96. The implementation of GASB Statements No. 94, 96, and a portion of 99 did not have a material impact on the Corporation’s financial position or results from operations. Subsequent Events The Corporation evaluates transactions that occur subsequent to year end for potential D recognition or disclosure in the financial statements through the date on which the financial statements are available to be issued. The financial statements were approved by management and available to be issued on DATE. RA NOTE B--CASH AND CASH EQUIVALENTS The Corporation’s investment policies are governed by New York State statutes and the Corporation’s own written investment policy. The Corporation is authorized to use demand deposit accounts, money market accounts, and certificates of deposit. Permissible investments include obligations of the U.S. Treasury and those of New York State and its municipalities and school districts. All cash of the Corporation is maintained in accounts covered by the Federal Deposit Insurance Corporation (FDIC). In accordance with state law, collateral is required for demand deposits and certificates of deposit not covered by FDIC insurance. The Corporation’s uninsured deposits are collateralized by accounts held by the pledging financial institution agent in the Corporation’s name. The total amount of collateralized uninsured deposits was approximately $44,000 for the year ended December 31, 2023. 10 TROY LOCAL DEVELOPMENT CORPORATION Notes to Financial Statements--Continued NOTE C--LOANS RECEIVABLE The Corporation administers an economic development loan program with the primary objective of stimulating the City’s economic base in order to create new job opportunities. Loans are made to eligible borrowers meeting targeted economic criteria at market interest rates, currently 5% on the loan administered by the Corporation. Loans made under the program are generally collateralized by machinery, equipment, or real property of the borrower. Certain loans require fixed monthly payments while others are due in one lump sum payment. A summary of loans receivable is as follows as of December 31, 2023: Loans receivable $ 52,205 Allowance for doubtful accounts (22,122) Loans receivable, beginning of year Capitalized interest and late fees FT $ $ $ 30,083 42,817 9,388 52,205 D NOTE D--CAPITAL ASSETS Capital assets activity for the year ended December 31, 2023 is as follows: Land RA Buildings and improvements Accumulated depreciation Total, net $ Beginning Balance $ 397,501 191,051 588,552 (64,231) 524,321 $ $ Additions (4,829) (4,829) - - - Subtractions $ $ - - - - - $ 397,501 $ Ending Balance 191,051 588,552 (69,060) 519,492 NOTE E--PROPERTY HELD FOR DEVELOPMENT OR RESALE Property held for development of resale consisted of the following as of December 31, 2023: King Fuels Sites $ 1,894,810 Federal Street 59,000 16 Northern Drive 13,500 $ 1,967,310 11 TROY LOCAL DEVELOPMENT CORPORATION Notes to Financial Statements--Continued NOTE F--LOAN PAYABLE During 2006, the Corporation entered into a loan agreement with the City for $3,000,000 to be used for property acquisition and economic development. The agreement requires semi- annual interest payments at 5% and annual principal payments to the City as billed by the United States Department of Housing and Urban Development (HUD) Section 108 loan authorization pursuant to the Brownfields Economic Development Initiative (“BEDI”). The loan matures in August 2026 and is collateralized by a mortgage on real property. The loan contains a provision that in an event of default, outstanding principal amounts together with accrued and unpaid interest will become immediately due. Activity in loans payable for the year ended December 31, 2023, was as follows: Principal Principal Loan payable Less current portion $ FT Outstanding at 12/31/2022 662,000 $ Additions - $ Redemptions (167,000) $ $ A summary of future principal payments and estimated interest payments is as follows: Outstanding at 12/31/2023 495,000 167,000 328,000 DRA Year Ending December 31, 2024 2025 2026 $ $ Bond Principal 167,000 167,000 161,000 495,000 $ $ Bond Interest 26,216 17,448 8,597 52,261 $ $ Total Debt Service Requirements 193,216 184,448 169,597 547,261 NOTE G--LEASES Facility Lease The Corporation has an active lease agreement arising from the leasing of property owned by the Corporation. The lease agreement requires monthly lease payments of approximately $6,100 that increases annually by a percentage equal to the increase in the Consumer Price Index (CPI). The initial term expired on 12/31/2023 and included two 5- year renewal options. The initial 5-year option period was renewed, and accordingly, is included in the lease term. In addition, the lease agreement required a $10,000 annual road remediation fee that expired on December 31, 2023. National Grid License Agreement In December of 2021, the Corporation entered into a license agreement with National Grid that grants National Grid an exclusive right to enter the Kings Fuel site for the exclusive purpose of undertaking an environmental remediation project. The term of the agreement began in February 2022 and runs through December 31, 2026 and can be extended if necessary. 12 TROY LOCAL DEVELOPMENT CORPORATION Notes to Financial Statements--Continued NOTE G--LEASES--Continued National Grid License Agreement--Continued The agreement calls for monthly license fees that decrease over the term of the agreement as each phase of the remediation project is completed. The original monthly license fees, which are subject to change depending on the term of each phase, are payable to the Corporation as follows: Phase Expected Term Payment Phase I 18 Months $10,765/month Phase II 24 Months $9,921/month Phase III 20 Months $7,894/month In addition, the agreement requires National Grid to pay the Corporation a Road and FT Parking Lot Paving Credit in the amount of $239,400. The credit shall be payable to the Corporation in three equal installments of $79,800 payable with the first monthly license fee payment for Phase II, Phase III and with the final monthly license fee payment upon completion of the Remediation project. The total amount of revenue recognized under the agreements are as follows for the year D ended December 31, 2023: RA Amortization of deferred inflows of resources - leases $ 217,611 Variable lease payments 18,000 Short-term lease payments 4,220 Total lease revenue 239,831 Interest revenue 41,339 $ 281,170 The Corporation did not recognize revenue associated with residual value guarantees and termination penalties. The following is a schedule of future payments that are included in the measurement of the lease receivable: Year Ending December 31, Principal Interest Total 2024 $ 238,593 $ 36,000 $ 274,593 2025 245,102 24,304 269,406 2026 160,191 15,226 175,417 2027 177,452 6,720 184,172 2028 78,226 2,463 80,689 Thereafter 14,703 3,297 18,000 $ 914,267 $ 88,010 $ 1,002,277 13 TROY LOCAL DEVELOPMENT CORPORATION Notes to Financial Statements—Continued NOTE H--COMMITMENTS AND CONTINGENCIES Environmental Risks The Corporation is developing and implementing a plan for environmental remediation and site development on the King Fuel properties with assistance from the New York State Department of Environmental Conservation and National Grid. Preliminary testing and clean-up efforts began in late 2007 and are expected to continue for several years. The Corporation funding assistance has been provided through the BEDI grant and loan funds. Program Grant and Loan Commitments The Corporation has approved various applications for funding under its loan and grant programs. Funding of the approved amounts is dependent upon the applicant meeting various documentation requirements. NOTE I--RELATED PARTY TRANSACTIONS City of Troy FT The City of Troy provides staff support and office space to the Corporation without compensation. D Troy Industrial Development Authority During the year ended December 31, 2017, the Corporation and the Troy Industrial RA Development Authority (IDA) entered into a fee sharing agreement. Under the agreement, the IDA will provide the Corporation a portion of the administration fee for board approved projects that include the Corporation’s involvement. During the year ended December 31, 2023, the Corporation received no administrative fees from the IDA pursuant to this agreement. Troy Capital Resource Corporation In June 2022, the Troy Capital Resource Corporation (CRC) provided the Corporation with a loan in the amount of $215,000. The loan is noninterest bearing and is due upon demand with a final maturity date of May 31, 2027. The loan was collateralized by proceeds from the planned sale of a property owned by the Corporation (see Note E). The note is recorded in the financial statement line “Due to other government” on the Statements of Net Position. 14  COMPLIANCE REPORT FT DRA  INDEPENDENT AUDITOR’S 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 To the Board of Directors Troy Local Development Corporation Troy, New York We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audit contained in FT Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Troy Local Development Corporation ("Corporation"), which comprise the statement of net position as of December 31, 2023, and the related statements of revenues, expenses and change in net position, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated DATE. D Report on Internal Control Over Financial Reporting RA In planning and performing our audit of the financial statements, we considered Corporation's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Corporation's internal control. Accordingly, we do not express an opinion on the effectiveness of Corporation's internal control. 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 and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. 15 Report Compliance and Other Matters As part of obtaining reasonable assurance about whether the Corporation'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. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Albany, New York DATE FT DRA 16