19C - EMPOWERMENT-FINANCIAL AUDIT FY 2009-2010

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SANTA ANA EMPOWERMENT CORPORATION Notes to the Financial Statements (Continued) June 30, 2010 and 2009 All funds for the Empowerment Zone program are received directly by the City then passed through to the Organization who in turn reimburses subrecipients. The subrecipients' programs have been selected by the Organization to fulfill the goals stipulated in the approved strategic plan. The City is reimbursed for its administration costs associated with this agreement. The initial term of the agreement was through December 31, 2000; thereafter unless cancelled by the Organization through an action of its Board of Directors, which action shall take place no later than November 30 or any calendar year, the agreement shall be extended for the succeeding calendar year or until the termination date of the program. The outstanding advances from the City of Santa Ana were $52,756 and $393,404 at June 30, 2010 and 2009, respectively. (4) PROPERTY AND EQUIPMENT The Organization's property and equipment consist of the following at June 30: 2010 2009 Equipment $ 22,884 $ 22,884 Furniture 30,816 30,816 Subtotal 53,700 53,700 Less: accumulated depreciation (53,700) (53,700) Property and equipment, net of accumulated depreciation $ - $ - (5) GRANT RECEIVABLE The Organization receives all of its grant revenue from HUD through the City. Grant revenue is recognized when expenditures are incurred since all monies received are on a reimbursement basis. The amount due from HUD was $109,608 at June 20, 2010 and $436,029 at June 30, 2009. (6) LOANS RECEIVABLE On May 3, 2002, the Organization entered into an agreement with Taller San Jose, a subrecipient organization, whereby the Organization lent Taller San Jose $200,000 for the purchase of property that will be used for a vocational training program for young at-risk adults. The interest free loan is payable on July 1, 2009. The principal amount is deemed repaid by $2,353 on the first day of each calendar month. Taller San Jose is not obligated to make any payments to the Organization as long as the property is used for the Empowerment Zone program. In the event that the property is put to any other use than the designated Empowerment Zone program, the remaining principal balance would be payable in full to the Organization who would then return the funds to HUD. The outstanding balance was $0 and $2,353 at June 30, 2010 and 2009, respectively. 19C.-21