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MADISON POINTE, LLC

FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

Under provisions of state law, this report Is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the LegislativeAuditor and, where appropriate, at the office of the parish clerk'of court.

Release Date AUG 2 7 20H

MADISON POINTE, LLC

FINANCIAL REPORT


TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITORS' REPORT 2-3

FINANCIAL STATEMENTS

BALANCE SHEETS 4-5

STATEMENTS OF OPERATIONS 6

STATEMENTS OF MEMBERS'EQUITY (DEFICIT) 7

STATEMENTS OF CASH FLOWS 8-9

NOTES TO FINANCIAL STATEMENTS 10-15

SUPPLEMENTARY INFORMATION

SCHEDULE OF EXPENSES 16-17

SCHEDULE OF OPERATING INCOME AND EXPENSE VARIANCES-AMEC MODEL PROFORMA TO ACTUAL COMPARISONS 18-19

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAVDITim STANDARDS 20-21

SCHEDULE OF FINDINGS AND RESAPONSES 22

SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS 23

LITTLE & ASSOCIATES LLC CERTIFIED PUBLIC ACCOUNTANTS

Wm. TODD LITTLE. CPA

INDEPENDENT AUDITORS' REPORT To the Members of Madison Pointe, LLC Baton Rouge, Louisiana

We have audited the accompanying financial statements of Madison Pointe, LLC (a Louisiana Limited Liability Company), which comprise the balance sheets as of December 31,2013 and 2012 and the related statements of operations, members' equity (deficit), and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of interaal control relevant to the preparation and fair presentation of financial statements that are free fi-om material misstatement, whether due to firaud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Madison Pointe, LLC as of December 31, 2013 and 2012, and the results of its operations, changes in members' equity (deficit), and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedule of Expenses and the Schedule of Operating Income and Expense Variances - AMEC Model Proforma To Actual Comparisons are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

PHONE (318) 361-9600 • FAX (318) 361-9620 • 805 NORTH 31®^ STREET • MONROE, LA 71201 MAILING ADDRESS: P. O. BOX 4058 • MONROE, LA 71211-4058

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have issued our report dated June 6, 2014. on our consideration of Madison Pointe, LLC'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 to describe the scope of our testing of 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 Madison Pointe, LLC's internal control over financial reporting and compliance. btanaaras in considering Madison Kointe, LLC S internal co

June 6, 2014

MADISON POrNTE, LLC BALANCE SHEETS

DECEMBER 31,

ASSETS

CURRENT ASSETS Cash and Cash Equivalents - Operations Cash and Cash Equivalents - Development Accounts Receivable - Tenants (Net of Allowance for Doubtful Accounts) Accounts Receivable - Management Company Prepaid Expenses Total Current Assets

2013

892 5,911 3,762 2,146 3,365

16,076

2012

55,213 48,161 3,793 1,473 2,758

111,398

RESTRICTED DEPOSITS AND FUNDED RESERVES Operating Reserve Replacement Reserve Tax and Insurance Escrow Tenants' Security Deposits

Total Restricted Deposits and Funded Reserves

40,426 38,678 34,792 11,354

125,250

75,000 11,924 18,348 11,449

116,721

PROPERTY AND EQUIPMENT Buildings Site Improvements Furniture and Equipment Total

Less: Accumulated Depreciation Net Depreciable Assets

ConsUTiction and Development in Progress Land

Total Property and Equipment

5,312,018 526,177 498,214

6,336,409 (433,413) 5,902,996

41,299 145,428

6,089,723

5,312,018 525,327 498,214

6,335,559 (224,482) 6,111,077

145,428 6,256,505

OTHER ASSETS Permanent Loan Costs LHC Financing Costs Accurriulated Amortization

Total Other Assets

Total Assets

25,325 67,501 (11,078) 81,748

$ 6.312,797

18,000 67,501 (5,093) 80,408

$ 6,565,032

The accompanying notes are an integral part of these financial statements.

4

MADISON POINTE, LLC BALANCE SHEETS

DECEMBER 31,

LIABILITIES AND MEMBERS' EQUITY

2013 2012 CURRENT LIABILITIES

Accounts Payable $ 4,435 $ 2,112 Deferred Rental Income - 224 LHC Asset Management Fee Payable 15,281 10,! 03 Property Taxes Payable 29,072 28,603 Due To Related Party 290 Development Costs Payable - 3,871 Accrued Interest Payable 3,951 11,409 Construction Loan - Cross Keys Bank - 725,000 Current Portion of Long-Term Debt 8,701 ^

Total Current Liabilities 61,730 781,322

DEPOSITS Tenant Security Deposits 10,300 10,300

Total Deposits 10,300 10,300

LONG-TERM LIABILITIES Mortgage Payable - Cross Keys Bank 712,996 Note Payable - LHC - 1602 5,179,199 5,577,599 Total Long-Term Liabilities 5,892,195 5,577,599

Total Liabilities 5,964,225 6,369,221

MEMBERS' EQUITY

Total Members'Equity 348,572 195,811

Total Liabilities and Members'Equity $ 6,312,797 $ 6,565,032


5

MADISON POINTE, LLC STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,

REVENUE Rental Income Tenant Assistance Payments Vacancy NSF, Forfeitures, Late Fees and Damages, Etc. Bad Debt Other Income

Total Revenue

EXPENSES Maintenance and Repairs Administrative Utilities Management Fees Taxes Insurance Interest Depreciation and Amortization

Total Expenses


6

2013 2012

$ 201,012 $ 214,533 66,457 43,743 (8,181) (4,655) 16,793 13,840

(10,785) (5,001) - 17

265,296 262,477

86,789 59,566 46,818 49,685 6,128 4,739

22,584 21,918 32,250 32,131 23,747 17,362 43,611 46,738 214,916 211,800 476,843 443,939

Net Income (Loss) from Operations (211,547) (181,462)

OTHER INCOME (EXPENSE) Interest Income 405 427 Forgiveness of Debt 398,400 398,401

Total Other Income (Expense) 398,805 398,828

Net Income (Loss) S 187,258 S 217,366

MADISON POINTE, LLC STATEMENTS OF MEMBERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Madison Bridgewater Pointe Holdings,

Total GP, LLC LLC

Members' Equity (Deficit), January I, 2012 J : (21,555) $ (10,993) $ (10,562)

Net Income 217,366 110,857 106,509

Members' Equity (Deficit), December 31, 2012 195,811 99,864 95,947

Distributions (34,497) - (34,497)

Net Income 187,258 95,502 91,756

Members' Equity (Deficit), December 31,2013 3 : 348,572 $ 195,366 $ 153,206

Profit and Loss Percentages 100.00% 51.00% 49.00%

The accompanying notes arc an integral part of these financial statements.

7

MADISON POFNTE, LLC STATEMENTS OF CASH FLOWS


2013 2012

CASH FLOWS FROM OPERATING ACiiVITIES: Net Income (Loss) $ 187,258 $ 217,366

Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities:

Depreciation 214,916 211,800 Forgiveness of Debt (398,400) (398,401)

(Increase)Decrease in Accounts Receivable - Tenants 31 (3,259) (Increase)Decrease in Accounts Receivable - Other (673) (1,473)

(Increase)Decrease in Prepaid Expenses (607) (2,758) (Increase)Decrease in Tax and Insurance Escrow (16,444) (17,902)

Increase (Decrease) in Accounts Payable 2,323 (2,366)

Increase (Decrease) in Deferred Rental Income (224) (1,642)

Increase (Decrease) in LHC Asset Management Fee Payable 5,178 10,103 Increase (Decrease) in Property Taxes Payable 469 28,603 Increase (Decrease) in Accrued Interest Payable (7,458) 11,409 Net Security Deposits Received (Paid) 95 (828)

Total Adjustments (200,794) (166,714) Net Cash Provided (Used) by Operating Activities (13,536) 50,652

CASH FLOWS FROM INVESTING ACnVITIES: Acquisition/Construction of Property and Equipment (42,149) (47,462)

Deposits to Opjerating Reserve 34,574 (75,000) Deposits to Replacement Reserve (33,551) (12,014) Withdrawals from Replacement Reserve 6,797 90

Net Cash Provided (Used) by Investing Activities (34,329) (134,386)

CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds From Construction Loan - 298,352 Payoff of Construction Loan (725,000) -Proceeds From Issuance of Long-Term Debt 725,000 -Principal Payment on Long-Term Debt (3,303) -Payment of Permanent Loan Costs (7,325) -Payment of LHC Financing Costs - (401) Advance from Related Parties 290 -Payment of Construction Costs Payable - (50,000) Payment of Development Costs Payable (3,871) (33,029) Payment of Developer Fee Payable - (128,550) Distribution to Limited Partner (34,497) -Advance to Gemini - . (2,824)

Net Cash Provided (Used) by Financing Activities (48,706) 83,548

Net Increase (Decrease) In Cash and Cash Equivalents (96,571) (186)

Cash and Cash Equivalents, Beginning of Year 103,374 103,560

Cash and Cash Equivalents, End of Year $ 6,803 $ . 103,374


MADISON POINTE, LLC STATEMENTS OF CASH FLOWS


2013 2012

Cash and Cash Equivalents Operations Development

Total Cash and Cash Equivalents

Supplemental Disclosures of Cash Flow Information:

Cash paid During the Year for Interest

$ 892 $ 55,213 5,911 48,161

$ 6,803 $ 103,374

51,069 $ 35,294

The accompanying notes arc an integral part of these financial statements.

9

MADISON POINTE, LLC NOTES TO THE FINANCIAL STATEMENTS


NOTE A - ORGANIZATION

Madison Pointe, LLC (the Company) was organized in 2009 to develop, construct, own, maintain, and operate a 40-unit rental housing apartment complex for persons of low and moderate income. The apartment complex is located in Tallulah, Louisiana. The major activities and operations of the Company are governed by the Operating Agreement (the Operating Agreement) and are subject to the administrative directives, rules, and regulations of federal and state regulatory agencies, including but not limited to, the state housing finance agency. Such administrative directives, rules, and regulations are subject to change by federal and state agencies.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows.

Basis of Accounting

The financial statements of the Company are prepared on the accrual basis of accounting and in accordance with accounting principles generally accepted in the United States of America.

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. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents represent unrestricted cash and all highly liquid and unrestricted debt instruments purchased with a maturity of three months or less.

Collateralization Policy for Financial Instruments

The Company does not require collateral to support financial instruments subject to credit risk.

Property, Equipment and Depreciation

Land, buildings, improvements, and equipment are recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives using the straight-line method. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the statement of operations.

Buildings 40 years Furniture, Fixtures and Equipment 10 years Site Improvements 20 years

10


- DECEMBER 31, 2013 AND 2012

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Amortization

Permanent loan costs are amortized over the term of the permanent mortgage loan using the straight-line method. LHC Financing Costs are amortized using the straight-line method. As of December 31, 2013 and 2012, accumulated amortization totaled $ 11,078 and $5,093.

Rental Income

Rental income is recognized as rentals become due. Rental payments received in advance are deferred until earned. Ail leases between the Company and the tenants of the property are operating leases.

Tenant rent charges for the current month are due on the first of the month. Tenants who are evicted or move out are charged with damages or cleaning fees, if applicable. Tenant accounts receivable consists of amounts due for rental income, other tenant charges and charges for damages and cleaning fees in excess of forfeited security deposits. The Company does not accrue interest on tenant accounts receivable balances.

Tenant receivables are reported net of an allowance for doubtful accounts in the amount of $16,597 and $5,001 as of December 31, 2013 and 2012, respectively. Management's estimate of the allowance is based on historical collection experience and a review of the current status of tenant accounts receivable. It is reasonably possible that management's estimate of the allowance will change.

Income Taxes

No provision or benefit for income taxes has been included in these financial statements since taxable income or loss passes through to, and is reportable by, the Members individually. The time limit for taxing authorities to examine the Company's income tax returns is generally three years from the date of filing or the due date, whichever is later, unless civil or criminal fraud is proven, for which there is no time limit.

FASB ASC 360, Property, Plant, and Equipment

FASH ASC 360, Property, Plant, and Equipment requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Application of the impairment provisions of FASB ASC 360, Property, Plant, and Equipment has not materially affected the Company's reported earnings, financial condition or cash flows.

NOTE C - DEPOSITS WITH FINANCIAL INSTITUTIONS

The Company has various accounts at Cross Keys Bank. The noninterest-bearing and interest-bearing accounts, in the aggregate, are insured by the Federal Deposit Insurance Corporation up to 3250,000. As of December 31, 2013, there were no uninsured deposits.

11



NOTE D - RESTRICTED DEPOSITS AND RESERVES

Tenants' Security Deposits

Tenants' security deposits are held in a separate bank account in the name of the apartment complex. At December 31, 2013, this account was fiinded in an amount greater than the security deposit liability.

Operating Reserve

In accordance with the 1602 Regulatory Agreement Financing Certification, the Operating Reserve Account shall be established in the initial amount of $75,000. To the extent funds are available, a balance at least equal to $75,000 shall be maintained in the Operating Reserve Account during the compliance period. At December 31,2013 and 2012, this account was funded in the amount of $40,426 and $75,000, respectively.

Replacement Reserve

In accordance with the 1602 Replacement Reserve Agreement, the Company shall establish the Replacement Reserve in the initial amount of $20,000 upon the execution and delivery of the 1602 investment documents (December, 2011). The Company also is required to fund the Replacement Reserve Account monthly in the amount of $1,000 commencing on the date the first scheduled monthly payment is due and continuing on the same day of each successive month until the end of the Review Period which is 60 months after the first scheduled monthly payment date. As of December 31, 2013 and 2012, the account had a balance of $38,678 and $11,924. For the year ended December 31, 2013, $12,000 was required to be funded to the Replacement Reserve account. The actual amount funded during 2013 was $33,500, which resulted in the account being adequately funded.

Replacement Reserve 2013

Beginning Balance $ 11,924 Deposits 33,500 Interest 51 Withdrawals (6,797)

Ending Balance S 38,678

NOTE E - MEMBERS AND CAPITAL CONTRIBUTIONS

The Company has two Members (Madison Pointe GP, LLC and Bridgewater Holdings, LLC). The Company records capital contributions as received. For the years ended December 31, 2013 and 2012, no capital contributions were made by the Members. During 2013, the Company made distributions in the amount of $34,497 to Bridgewater Holding, LLC, which is the Administrative Member.

NOTE F - NOTES PAYABLE

Construction Loan - Cross Keys Bank

The Company entered into a construction loan agreement with Cross Keys Bank on February 23, 2011. The maximum loan amount that can be drawn is $725,000. Interest on the loan is based on a variable rate, which was 5.58% at December 31, 2013, and is payable monthly. The loan matured on June 15,

12


DECEMBER 31,2013 AND 2012

NOTE F - NOTES PAYABLE (CONTINUED)

Construction Loan — Cross Keys Bank (Continued)

2013. The loan was primarily collateralized by a mortgage on real property and a security agreement. As of December 31, 2013 and 2012, the balance of the loan was $0- and $725,000. The loan balance was paid off during 2013 through permanent financing with Cross Keys Bank.

Permanent Loan - Cross Keys Bank

On June 21, 2013, the Company entered into a permanent loan agreement with Cross Keys Bank in the amount of $725,000. The loan is collateralized by a mortgage on real property and a security agreement. Simple interest is assessed on the unpaid principle balance of the loan at a rate of 6.57% per annum. The Company will make 179 regular payments in the amount of $4,654.81 and one irregular payment for the remaining balance of the loan on the maturity date, June 15, 2028. As of December 31, 2013 the outstanding principle balance of the loan is $721,697.

Note Payable — LHC - 1602 Funds

On February 23, 2011, the Company entered into a loan agreement in the amount of $5,976,000 with LHC, formerly the Louisiana Housing Finance Agency. In order to obtain this financing, the Company entered into a 1602 Sub Award Investment Agreement ("Agreement") with LHC. In accordance with the Agreement, LHC provided cash assistance to the Company by providing 1602 Investment Funds to the Company in the form of a loan, as evidenced by the 1602 Sub Award Promissory Note ("1602 Note"). The 1602 Note is noninterest bearing and requires no repayment unless a recapture event occurs. The 1602 Note shall mature on the earliest to occur of (i) Recapture Event; (ii) acceleration following an event of default under the permanent loan documents that is not cured within any applicable grace or cure period; or (iii) December 31, 2026, the last day of the compliance period for the Project. At the end of each year during the Compliance Period and so long as no Recapture Event has occurred, the principal amount of the 1602 Note shall be reduced by an amount equal to the principal balance of the 1602 Note as of the first day of the Compliance Period times a fraction in which the numerator is one (I) and the denominator is fifteen (15). The note is collateralized by the 1602 Act of Mortgage. As of December 31, 2013 and 2012, the principal balance of the loan totaled $5,179,199 and $5,577,599, respectively. As of December 31,2013 and 2012, the forgiveness of debt was $398,400 and $398,401, respectively.

Maturities of Long-Term Debt

Year Ending

December 31, Amount

2014 $ 8,701

2015 $ 9,290

2016 $ 9,919

2017 $ 10,591

2018 $ 11,308

Thereafter $ 5,851,087

13



NOTE F - NOTES PAYABLE (CONTINUED)

The aggregate maturities of long-term debt for the next five years cannot be reasonably estimated since certain of the Company's long-term debt is expected to be forgiven.

NOTE G - MANAGEMENT AGENT COMPENSATION

Per the Management Agreement entered into on January 14, 2011, with Gemini Real Estate Holdings, Inc. (an affiliate of the General Partner), management fees are charged at an amount equal to 8.5% of gross collected revenue during the previous month. During 2013 and 2012, management fees totaling $22,584 and $21,918 were incurred. As of December 31, 2013 and 2012, no management fees were payable to Gemini Real Estate Holdings, Inc. During 2013 and 2012, management fees were overpaid to Gemini Real Estate Holdings, Inc. in the amount of $673 and $1,473, respectively. For the year ended December 31, 2013 and 2012, the total owed to the Company for the overpayment of management fees was $2,146 and $1,473, respectively, and has been included in Accounts Receivable - Management Company on the balance sheet.

NOTE H-TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

During 2013, a deposit for Evangeline Estates, an affiliate of the General Partner, in the amount of $290 was incorrectly made to the Company. As of December 31, 2013, the Company owed $290 to Evangeline Estates.

NOTE I - LHC ASSET MANAGEMENT FEE

Per the 1602 Asset Management Agreement, entered into February I, 2011, the Company is to compensate the Louisiana Housing Corporation (LHC) (the Asset Manager) an asset management fee. The Company agrees to pay Foley & Judell, L.L.P. on behalf of the Asset Manager so long as the 1602 loan documents are in effect (i) an initial asset management fee to Foley & Judell, L.L.P. of $25,500 at closing and (ii) an annual asset management fee commencing with the execution of this 1602 Asset Management Agreement in the amount of $5,000 to Foley & Judell, L.L.P. The annual fee shall be due and payable to the Asset Manager commencing at the end of the first year of the project's compliance period (December, 2011). The annual fee shall be due and payable to the Asset Manager on each January 1 and shall be adjusted each year by the consumer price index. For the years ended December 31, 2013 and 2012, the Company incurred $5,178 and $10,103 in asset management fees. As of December 31, 2013 and 2012, the Company owed $15,281 and $10,103 in asset management fees payable.

NOTE J - COMPANY PROFITS AND LOSSES AND DISTRIBUTIONS

All Company profits and losses are allocated according to Section 11 of the Operating Agreement. All Company distributions are distributed according to Section 11 of the Operating Agreement.

NOTE K - ADVERTISING

The Company expenses advertising costs as such cost are incurred. The Company incurred advertising costs in the amount of $37 and $1,165 for the years ended December 31,2013 and 2012.

14


DECEMBER 31,2013 AND 2012

NOTE L - PROPERTY TAXES

The Company incurred property taxes of $29,644 and $29,952 for the years ended December 31, 2013 and 2012. As of December 31, 2013 and 2012, property taxes payable amounted to $29,072 and $28,603, respectively.

NOTE M - TAXABLE INCOME (LOSS)

A reconciliation of financial statement net income (loss) to taxable income (loss) of the Company for the years ended December31, 2013 and 2012 is as follows:

2013 2012

Financial statement net income (loss) $ 187,258 $ 217,366 Adjustments:

Excess of depreciation for income tax purposes over financial reporting purposes 12,182 (10,922)

BookAFax Timing Differences ^^

Taxable income (loss) as shown on tax return $ 199,440 $ 206,444

NOTE N - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

The Company's primary asset is Madison Pointe Subdivision. The Company's operations are concentrated in the low-income real estate market. In addition, the Company operates in a heavily regulated environment. The operations of the Company are subject to the administrative directives, rules and regulations of federal and state regulatory agencies, including but not limited to, the state housing financing agency. Such administrative directives, rules and regulations are subject to change by federal and state agencies. Such changes may occur with little notice or inadequate funding to pay for related cost, including the additional administrative burden, to comply with a change.

NOTE O - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through June 6, 2014, the date which the financial statements were available for issue.

NOTE P - RECLASSIFICATIONS

The prior year's financial statements have been reclassified to conform to the current year's financial statements presentation.

15

SUPPLEMENTARY INFORMATION

MADISON POINTE, LLC

SCHEDULE OF EXPENSES


2013 2012

MAINTENANCE AND REPAIRS

Salaries

Contract

Supplies and Materials

Painting and Decorating

Cleaning

Repairs

Services

Grounds

Garbage and Trash Removal

Total Maintenance and Repairs

ADMINISTRATIVE

Manager Salaries

Auditing Expense

Bookkeeping and Accounting Service

Legal Fees

Advertising

Lease-Up and Marketing

Telephone

OfTice Supplies

Postage

Bank Charges

Travel

Training Expense

Administrative

LHC Asset Management Fee

Miscellaneous

Total Administrative

UTILITIES

Electricity

Water and Sewer

Total Utilities

6,236

13,597

16,917

456

440

2,619

1,709 44,425

390

86,789

21,916

7,279

6,220

37

3,459

966

229

754

452

71 5,178

257 46,818

4,410

1,718

6,128

8,166

5,961

4,598

205

745

305

1,371

37,975

240

59,566

20,914

6,408

1,631

80

1,165

397

3,415

2,720

229

786

404

538

475 10,103

420 49,685

3,820

919

4,739

16

MADISON POINTE, LLC SCHEDULE OF EXPENSES


2013 2012 TAXES

Real Estate Taxes $ 29,644 $ 29,952 Payroll Taxes 2,606 2,179 Total Taxes S 32,2^ $ 32,137

INSURANCE Property and Liability Insurance $ 21,187 $ 15,444 Workmans Compensation Insurance 1,311 872 Health Insurance and Other Employee Benefits 1,249 1,046 Total Insurance $ 23,747 $ 17,362

INTEREST EXPENSE Interest on Mortgage $ 43,611 $ 46,738 Total Interest Expense $ 43,611 $ 46,738

17

MADISON PCINTE, LLC

SCHEDULE OF OPERATING INCOME AND EXPENSE VARIANCES -

AMEC MODEL PROFORMA TO ACTUAL COMPARISONS

FOR THE YEAR ENDED DECEMBER 31,2013

3.00% fonattoo Rate for locorne/Expeases

3.50% InflatiOD Rate for Replacement Reserve

Income Statement

2013 2012

Year 3 Year 3

AMEC Model Actual Explanation of Variances Exceeding 5.00%

Rental Income

Residential-

5121 Rental Income GROSS VACANCY $ 247,614 S 267,469

5121 Rental Income NET VACANCY - -5190 Other - -5140 Stores & Commercial- - -

Total Rental Income: 247,614 267,469

Vacancies: Enter as Negative •100%

5220 Apartments- (17.333) (8,181)

5240 Stores & Coramereial- - -5270 Garage & Parking Spaces- - -5290 Miscellaneous Concessions- - -

Total Vacancies: (17,333) (8.181)

Net Rental Incomer 230,281 259,2««

Other Income & Bad Debt •4% 5910 Laundry & Vending- • -6370 Apartment Bad Debt- Enter as Neg. • (10,785)

6370 Commercial Bad Debt- Enter as Ncg. - -5920 NSF, Damages & Late Charges, Other- 6,365 16,793

Total Other Income: 6p)65 6,008

EFFECTIVE GROSS INCOME 236,646 265,296

Admin. Exps 19%

6210 Advert ising- - 37

6250 Admin. Exps - 18,566 5,222

6310 Oflice Salaries- 16,974 21,916

6311 Oflice Supplies'- - 966 6320 Managcmcnt Fee- 12,625 22,584

6330 Management or Super. Sal- - -6331 Mgmt. or Super. Free Rent Unit- - -6340 Legal Expenses (Projeci)- - -6350 Auditing Exps. (Project)- - 7.279

6351 Bookkeeping Fees/Acct. Scrvices- - 6,220

LHFA Asset Management Fee 5,305 5,178 Total Admin. Less Management Fee

Total Admin. Exps.:

40,845 46,818

53,470 69,402

18

2013

Year 3

AMEC Model

2012

Year 3

Actual Utilities Expense -68%

Total O & M Expenses:

Taxes & Insurance

6710 Real EstJite Taxes-

6711 Payroll T axes (FIC A)-

6719 Misc. Taxes, Licenses. &. Permits-

6720 Property & Liability Insurance-

6721 Fidelity Send Insurance-

6722 Worfctneti's Compensation-

6723 Health Ins. & Other Emp.Benefits-

6279 Other Insurance-

Total Taxes & Insurance:

TOTAL OPERATUVG EXPENSES:

Per unit

NET OPERATING INCOME:

Replacement Reserves

ADJUSTED NTT OPERATING INCOME

Explanation of Variances Exceeding 5.00%

6420 Fuel Oil/Coal- - . 6420 Fuel for Domestic Hot Water- - -6450 Electricity (Light & Misc. Power)- 19,096 4,410

6451 Water- . 1,718

6452 Gas- - -6453 Sewer- . -

Total Utilities Exps.: 19,096 6,128

O & M Expenses )02%

6510 O&M Payroll- 16,486 6,236

6515 O&M Supplies- - 19,532

6520 O&M Contract- • 60,171

6525 Garbage & Trash Removal- - 390

6530 Security Payroll/Contract- - -6545 Elevator Maintenance/Contract- - -6546 HVACR&M- - 460

6570 Other Expenses- - -6590 Misc. 0 & M Expenses- 25,462 -

Neighborhood Nenvork- - -41,948 86,789

47%

21.218 29,644

. 2,606

. -16.974 21.187

. -- 1,311 . 1,249 . -

38,192 55,997

38%

152,706 218316

4.363 6.238

S S3,940 $ 46,980

•5% s 12,608 $ 33,500

s 7U32 S 13,480

19

LITTLE & ASSOCIATES LLC CERTIFIED PUBLIC ACCOUNTANTS

Wm. TODD LITTLE, CPA

N

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

Independent Auditor's Report

To the Members Madison Pointe, LLC Baton Rouge, Louisiana

We have audited, in accordance with the 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, the financial statements of Madison Pointe, LLC, as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise Madison Pointe, LLC's basic financial statements, and have issued our report thereon dated June 6,2014.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Madison Pointe, LLC's internal control over financial reporting (internal control) to determine the 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 Madison Pointe, LLC's internal control. Accordingly, we do not express an opinion on the effectiveness of Madison Pointe, LLC'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 Madison Pointe, LLC's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with govemance.

•7(1 PHONE (318) 361-9600 • FAX (318) 361-9620 • 805 NORTH 318^ STREET • MONROE. LA712ai

MAILING ADDRESS: P. O. BOX 4058 • MONROE, LA 71211^058

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 may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Madison Pointe, LLC's financial statements are free from 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 puipose of this report is solely to describe the scope of our testing of intemal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Madison Pointe, LLC's intemal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Madison Pointe, LLC's intemal control and compliance. Accordingly, this communication is not suitable for any other purpose.

li e Monroe, Louisiana June 6, 2014

21

Madison Pointe, LLC Schedule of Findings and Responses

For the Year Ended December 31,2013

Schedule 1

SECTION I ̂ SUMMARY OF AUDIT RESULTS

Financial Statement Audit

Type of auditors' report issued:

Internal Control over financial reporting: Material Weaknesses identified?

Significant deficiencies identified that are not considered to be material weaknesses?

Noncompliance material to financial statements noted?

Yes

Unmodified

X No

Yes X None Noted

Yes X None Noted

SECTION II - FINDINGS - FINANCIAL STATEMENTS AUDIT

None

22

Schedule 2

Madison Pointe, LLC Summary Schedule of Prior Audit Findings

For the Year Ended December 31,2013

The status of the prior year audit findings are summarized as follows:

None

23

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