TFA Annual Report 2012 - Welcome to NYC.gov...As of July 1, 2012, the TFA had $19.59 billion of Future Tax Secured Bonds (excluding Recovery Bonds) and $5.31 billion of Building Aid

NYC TRANSITIONAL FINANCE AUTHORITY ANNUAL REPORT 2012

1NYC TRANSITIONAL FINANCE AUTHORITYANNUAL REPORT 2012


Table of Contents

LETTER FROM THE CHAIRMAN 1

SUMMARY OF COLLECTION AND APPLICATION OF REVENUES 3–6

INDEPENDENT AUDITORS’ REPORT 8

MANAGEMENT’S DISCUSSION AND ANALYSIS 9–17

BASIC FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED JUNE 30, 2012 AND 2011:

Government-Wide Financial Statements:

StatementsofNetAssets(Deficit) 18

StatementsofActivities 19

Governmental Funds Financial Statements:

GovernmentalFundsBalanceSheets 20–21

ReconciliationsoftheGovernmentalFundsBalanceSheetstotheStatementsofNetAssets(Deficit) 22

GovernmentalFundsStatementsofRevenues,ExpendituresandChangesinFundBalances 23–24

ReconciliationsoftheGovernmentalFundsStatementsofRevenues,Expendituresand ChangesinFundBalancestotheStatementsofActivities 25

Notes to Financial Statements 26–37

DIRECTORS AND MANAGEMENT 38


1Letter from the Chairman

IampleasedtopresenttheFiscalYear2012annualreportoftheNewYorkCityTransitionalFinanceAuthority(the“TFA”). Thisreportcontainscompleteauditedfinancialinformationforthisfiscalyear,whichbeganonJuly1,2011.

TheTFAisapublicbenefitcorporationwhoseprimarypurposeistofinanceaportionofNewYorkCity’scapitalimprovementplan.TheNewYorkStateLegislatureapprovedthelawauthorizingthecreationoftheNYCTransitionalFinanceAuthorityonMarch5,1997(Chapter16oftheLawsof1997,the“Act”).TheActincludedgovernancebyaBoardoffivedirectorsconsistingofthefollowingofficialsoftheCity:theDirectorofManagement&Budget(whoalsoservesasChairperson),theCommissionerofFinance,theCommissionerofDesign&Construction,theComptroller,andtheSpeakeroftheCityCouncil.

TheActhasbeenamendedseveraltimestoincreasetheamountofdebttheTFAisauthorizedtoissue.Mostrecently,theActwasamendedin2009whichpermittedtheTFAtohaveoutstanding$13.5billionofFutureTaxSecuredBonds(excludingRecoveryBonds).Inaddition,theTFAmaynowissueadditionalFutureTaxSecuredBondsprovidedthattheamountofsuchadditionalbonds,togetherwiththeamountofindebtednesscontractedbytheCityofNewYork,doesnotexceedthedebtlimitoftheCityofNewYork.AsofJuly1,2012,theCity’sdebt-incurringmarginwithinthedebtlimitoftheCitywas$24.17billion.

LegislationenactedinApril2006enablestheAuthoritytohaveoutstandingupto$9.4billionofbonds,notesorotherobligationsforpurposesoffundingcostsofthefive-yeareducationalfacilitiescapitalplanfortheCityschoolsystem,whicharetobepaidforfromNewYorkStateBuildingAidtobereceivedbytheAuthoritysubjecttoannualappropriationbytheNewYorkStateLegislature.

InFiscalYear2012,theTFAissued$4.98billionofFutureTaxSecuredBonds(including$300millionofQualifiedSchoolConstructionBonds)and$650millionofBuildingAidRevenueBonds(including$100millionofQualifiedSchoolConstructionBonds).

AsofJuly1,2012,theTFAhad$19.59billionofFutureTaxSecuredBonds(excludingRecoveryBonds)and$5.31billionofBuildingAidRevenueBondsoutstanding.TheTFAhad$1.37billionofbondsoutstandingtopaycostsrelatedtoorarisingfromtheWorldTradeCenterattackonSeptember11,2001(“RecoveryBonds”).

Respectfullysubmitted,

Mark Page Chairman


2


3Summary of Collection and Application of Revenues

* State Building Aid is initially available to pay debt service coming due and payable but not already provided for with respect to Senior Bonds and Parity Debt issued

prior to the Fiscal 2007 Series S-1 Building Aid Revenue Bonds.

** Within the respective retention period, once each of the First-Month and Full Requirement is satisfied, State Building Aid flows to either the School Bond Account

or the City of New York.



Source: NYC OMB.

All figures shown herein are calculated on a cash basis. Figures after fiscal year 2004 do not reflect deductions for State Oversight Retention Requirements.

1. The decrease in Tax Revenues from fiscal year 2008 to fiscal year 2009 is attributable, in part, to an adjustment in fiscal year 2009 by the State for overpayments of

Personal Income Tax Revenues in fiscal years 2002 through 2009 in the amount of $597.3 million and, in part, to the economic recession.

2. Forecast



1. Coverage is based on total Tax Revenues received in the fiscal year indicated divided by Tax Revenues required to be retained by the Authority in such year for debt

service, calculated without giving effect to prepayments of Authority debt service with grants from the City.



1. The increase in State Building Aid in fiscal years 2001 and 2002 is largely attributable to the City’s use of pay-as-you-go capital in fiscal years 2000 through 2002,

the full amount of which was aided in fiscal years 2001 and 2002. Subsequently, the Education Law was changed to provide that projects paid for with pay-as-you-go

capital would be aided over a 30-year period rather than in one fiscal year.


7


8Independent Auditors’ Report

To the Board of Directors of the New York City Transitional Finance Authority

We have audited the accompanying financial statements of the governmental activities and each major fund of the New York City Transitional Finance Authority (the “Authority”), a component unit of The City of New York, as of and for the year ended June 30, 2012, which collectively comprise the basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Authority’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Authority for the year ended June 30, 2011, were audited by other auditors whose report, dated September 28, 2011, expressed an unqualified opinion on those statements and included an explanatory paragraph that described the adoption of Governmental Accounting Standards Board Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2012 financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and each major fund of the Authority as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 9 through 17 be presented to supplement the basic financial statements. Such information, although not a 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. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming an opinion on the 2012 financial statements that collectively comprise the Authority’s basic financial statements. The sections titled Letter from the Chairman, Summary of Collection and Application of Revenues, and Directors and Management, as listed in the foregoing table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

September 27, 2012


9

June30,2012and2011

Management’s Discussion and Analysis

ThefollowingisanarrativeoverviewandanalysisofthefinancialactivitiesoftheNewYorkCityTransitionalFinanceAuthority(the“Authority”)asofJune30,2012and2011andfortheyearsthenended.ItshouldbereadinconjunctionwiththeAuthority’sgovernment-widefinancialstatements,governmentalfundsfinancialstatementsandthenotestothefinancialstatements.Theannualfinancialstatementsconsistoffourparts:(1)management’sdiscussionandanalysis(thissection);(2)thegovernment-widefinancialstatements,(3)thegovernmentalfundsfinancialstatements;and(4)thenotestothefinancialstatements.

Thegovernment-widefinancialstatementsoftheAuthority,whichincludethestatementsofnetassets(deficits)andthestatementsofactivities,arepresentedtodisplayinformationaboutthereportingentityasawhole,inaccordancewithGovernmentalAccountingStandardsBoard(“GASB”)standards.ThisistoprovidethereaderwithabroadoverviewoftheAuthority’sfinances.Thegovernment-widefinancialstatementsarepreparedusingtheeconomicresourcesmeasurementfocusandtheaccrualbasisofaccounting.Accordingly,revenueisrecognizedwhenearnedandexpensesarerecordedwhenaliabilityisincurred,regardlessofthetimingoftherelatedcashflows.

TheAuthority’sgovernmentalfundsfinancialstatements(general,capitalanddebtservicefunds)arepresentedusingthecurrentfinancialresourcesmeasurementfocusandthemodifiedaccrualbasisofaccounting.Revenueisrecognizedwhenitbecomessusceptibletoaccrual,whichiswhenitbecomesbothmeasurableandavailabletofinanceexpendituresinthecurrentfiscalperiod.Revenuesareconsideredavailableifreceivedwithintwomonthsafterthefiscalyearend.Expendituresarerecognizedwhentherelatedliabilityisincurred,exceptforprincipalandinterestonbondspayableandliabilitiesonarbitragerebatepayable,whichisrecognizedwhendue.

Thereconciliationsofthegovernmentalfundsbalancesheetstothestatementsofnetassets(deficit)andreconciliationsofthegovernmentalfundsstatementsofrevenues,expendituresandchangesinfundbalancestothestatementsofactivitiesarepresentedtoassistthereaderinunderstandingthedifferencesbetweengovernment-wideandgovernmentalfundsfinancialstatements.

FUTURE TAX SECURED BONDS

TheAuthority’sauthorizinglegislationlimitedtheamountofAuthoritybondsandnotesissuedforTheCityofNewYork’s(“TheCity’s”)generalcapitalpurposes(“FutureTaxSecuredBonds”or“FTSBonds”)to$13.5billion,(excludingRecoveryBonds,discussedbelow)asofJune30,2009.OnJuly11,2009authorizinglegislationwasenactedunderChapter182oftheLawsofNewYork,2009,whichpermitstheAuthoritytohaveoutstanding$13.5billionofFTSBonds,(excludingRecoveryBonds).Inaddition,Chapter182permitstheAuthoritytoissueadditionalFutureTaxSecuredBondsprovidedthattheamountofsuchadditionalbonds,togetherwiththeamountofindebtednesscontractedbyTheCity,doesnotexceedthedebtlimitofTheCity.Attheendoffiscalyear2012,TheCity’sandtheAuthority’scombineddebt-incurringcapacitywasapproximately$22.8billion.Infiscalyears2012and2011,theAuthorityissued$4.98billionand$4.25billion,respectivelyofFTSBonds.TheAuthorityhadFutureTaxSecuredSeniorBondsoutstandingof$3.58billionand$5.22billionandSubordinatebonds(excludingRecoveryBonds)of$16.01billionand$12.41billionasofJune30,2012and2011,respectively.

TheAuthorityisalsoauthorizedtohaveoutstanding$2.5billionofbondsandnotestopaycostsrelatedtoorarisingfromtheWorldTradeCenterattackonSeptember11,2001(“RecoveryBonds”).TheAuthorityhadRecoveryBondsoutstandingasofJune30,2012and2011of$1.37billionand$1.47billion,respectively.


10

June30,2012and2011

Management’s Discussion and Analysis (continued)

FUTURE TAX SECURED BONDS (CONTINUED)

Ofthe$4.98billionand$4.25billionFTSBondsissuedinfiscalyears2012and2011,$0and$1.31billion,respectivelywereBuildAmericaBonds(“BABs”)and$300.0millionand$147.0million,respectivelywereQualifiedSchoolConstructionBonds(“QSCBs”).TheBABsandtheQSCBswerecreatedundertheAmericanRecoveryandReinvestmentActof2009(“ARRA”or“StimulusAct”).TheBABsandQSCBsaretaxablebondsforwhichtheAuthorityreceivesacashsubsidypaymentfromtheUnitedStatesTreasury.Infiscalyears2012and2011,theAuthorityearnedsubsidypaymentsof$57.81millionand$51.84milliononitsBABsand$24.11millionand$19.61milliononitsQSCBs.TheproceedsoftheBABswereusedtofinanceTheCity’scapitalexpendituresandtheQSCBsproceedsareusedtofinanceTheCity’seducationalfacilities.

ThefollowingsummarizesthedebtserviceactivityforFTSBondsinfiscalyear2012(inthousands):

ThefollowingsummarizesthedebtserviceactivityforFTSBondsinfiscalyear2011(inthousands):

SENIOR FTS BONDS

SUBORDINATE FTS BONDS: RecoveryBonds

ParityBonds

BuildAmericaBonds

QualifiedSchoolConstructionBonds

TOTAL SUBORDINATE FTS BONDS

TOTAL FTS BONDS PAYABLE

$ 5,216,175 $ 300,000 $ (1,272,320) $ (662,915) $ 3,580,940 $ 160,893

1,466,200

8,964,845

3,045,645

397,060

13,873,750

$ 19,089,925

74,600

4,304,210

–

300,000

4,678,810

$ 4,978,810

(169,100)

(760,790)

–

–

(929,890)

$ (2,202,210)

–

(244,920)

–

–

(244,920)

$ (907,835)

1,371,700

12,263,345

3,045,645

697,060

17,377,750

$ 20,958,690

8,677

420,386

165,184

20,532

614,779

$ 775,672

Total Interest

Payments FY 2012

Outstanding Principal

Balance at June 30, 2012



Principal Defeased

Issued/ Converted

Principal Retired

SENIOR FTS BONDS


ParityBonds

BuildAmericaBonds




$ 6,589,865 $ (482,490) $ (261,255) $ (629,945) $ 5,216,175 $ 227,167

1,466,200

5,835,190

1,731,240

250,000

9,282,630

$ 15,872,495

–

3,270,450

1,314,405

147,060

4,731,915

$ 4,249,425

–

(115,415)

–

–

(115,415)

$ (376,670)

–

(25,380)

–

–

(25,380)

$ (655,325)

1,466,200

8,964,845

3,045,645

397,060

13,873,750

$ 19,089,925

7,338

298,863

122,897

15,336

444,434

$ 671,601

Total Interest

Payments FY 2011





Principal Defeased

Issued/ Converted

Principal Retired


11

June30,2012and2011


BUILDING AID REVENUE BONDS

TheAuthorityisalsoauthorizedtohaveoutstandingupto$9.4billionofBuildingAidRevenueBonds,notesorotherobligations(“BARBs”),securedbybuildingaidfromtheStateofNewYork(the“State”)thatisreceivedbytheAuthoritypursuanttotheassignmenttotheAuthoritybyTheCityinfiscalyear2007(the“Assignment”).TheCityassigneditsbuildingaid,whichissubjecttoannualappropriationbytheState,totheAuthorityforthepurposeoffundingcostsofthefive-yeareducationalfacilitiescapitalplanforTheCityschoolsystemandtopayitsadministrativeexpenses.TheAuthorityissued$650.0millionofBARBsinfiscalyear2012and$650.0millionofBARBsinfiscalyear2011.TheAuthorityhadBARBsoutstandingasofJune30,2012and2011of$5.31billionand$4.73billion,respectively.

Ofthe$650.0millionBARBsissuedineachoffiscalyears2012and2011,$295.75millionwereBuildAmericaBonds(“BABs”)in2011and$100.0millionwereQualifiedSchoolConstructionBonds(“QSCBs”)issuedineachfiscalyear.TheBABsandQSCBsaretaxablebondsforwhichtheAuthorityreceivescashsubsidypaymentfromtheUnitedStatesTreasury.Infiscalyears2012and2011,theAuthorityearnedsubsidypaymentsof$7.01millionand$4.52milliononitsBABsand$7.70millionand$26.5thousandonitsQSCBs.TheproceedsoftheBABsareusedtofinanceTheCity’scapitalexpendituresandtheQSCBsproceedsareusedtofinanceTheCity’seducationalfacilities.

ThefollowingsummarizesthedebtserviceactivityforBARBsinfiscalyear2012(inthousands):

Tax-exemptBonds

BuildAmericaBonds


TOTAL BARBS PAYABLE

Tax-exemptBonds

BuildAmericaBonds


TOTAL BARBS PAYABLE

$ 4,334,100

295,750

100,000

$ 4,729,850

$ 4,221,155

–

–

$ 4,221,155

$ 550,000

–

100,000

$ 650,000

$ 254,250

295,750

100,000

$ 650,000

$ (71,190)

–

–

$ (71,190)

$ (65,455)

–

–

$ (65,455)

$ –

–

–

$ –

$ (75,850)

–

–

$ (75,850)

$ 4,812,910

295,750

200,000

$ 5,308,660

$ 4,334,100

295,750

100,000

$ 4,729,850

$ 211,898

22,909

2,613

$ 237,420

$ 207,838

–

–

$ 207,838

Total Interest

Payments FY 2012

Total Interest

Payments FY 2011









Principal Defeased

Principal Defeased

Issued/ Converted

Issued/ Converted

Principal Retired

Principal Retired

ThefollowingsummarizesthedebtserviceactivityforBARBsinfiscalyear2011(inthousands):


12

June30,2012and2011


BUILDING AID REVENUE BONDS (CONTINUED)

InaccordancewithGASBstandards,thebuildingaidrevenueistreated,forreportingpurposes,asCityrevenuepledgedtotheAuthority.TheAuthorityretainssufficientbuildingaidrevenuetoservicetheBARBsdebtandtopayitsadministrativeexpenses.UnderthecriteriaestablishedbyGASB,theassignmentofbuildingaidrevenuebyTheCitytotheAuthorityisconsideredacollateralizedborrowing,duetoTheCity’scontinuinginvolvementnecessaryforcollectionofthebuildingaid.TheAuthorityreportsasanasset(DuefromNewYorkCity—futureStatebuildingaid)thecumulativeamountithasdistributedtoTheCityfortheeducationalfacilitiescapitalplan,netofthecumulativeamountofbuildingaidithasretained.Onthefundfinancialstatements,thedistributionstoTheCityforitseducationalfacilitiescapitalprogramarereportedasanyotherfinancinguseoffunds.BuildingaidretainedbytheAuthorityistreatedasanyotherfinancingsourceastheamountretainedisaccountedforasarepaymentoftheamountsloanedtoTheCity.

BelowisatablesummarizingthetotalbuildingaidrevenuesfromtheState,remittancesto TheCityandthebalancesretainedbytheAuthority forthefiscalyearsendingJune30(inthousands),

BuildingaidreceivedfromNewYorkState

BuildingaidremittedtoNewYorkCity

TOTAL RETAINED FOR BARBS DEBT

SERVICE AND OPERATING EXPENSES

$ 906,746

(698,047)

$ 208,699

$ 894,478

(478,126)

$ 416,352

$ 829,949

(449,675)

$ 380,274

2012 2011 2010


13

June30,2012and2011


FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENT-WIDE FINANCIAL STATEMENTS

ThefollowingsummarizestheactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),

REVENUES

Personalincometaxretained

UnrestrictedgrantfromNewYorkCity

Federalsubsidy

Investmentearnings

TOTAL REVENUES

EXPENSES

DistributionstoNewYorkCity

forgeneralcapitalprogram

Interestexpense

Other

TOTAL EXPENSES

CHANGE IN NET ASSETS

NET DEFICIT - BEGINNING OF YEAR

NET DEFICIT - END OF YEAR

$ 616,864

878,884

96,630

2,220

1,594,598

2,330,776

888,087

150,779

3,369,642

(1,775,044)

(18,485,107)

$ (20,260,151)

$ 695,044

789,697

75,991

1,357

1,562,089

3,469,002

870,183

108,482

4,447,667

(2,885,578)

(15,599,529)

$ (18,485,107)

$ 190,646

370,524

14,885

3,307

579,362

3,146,860

721,707

35,158

3,903,725

(3,324,363)

(12,275,166)

$ (15,599,529)

$ (78,180)

89,187

20,639

863

32,509

(1,138,226)

17,904

42,297

(1,078,025)

1,110,534

(2,885,578)

$ (1,775,044)

$ 504,398

419,173

61,106

(1,950)

982,727

322,142

148,476

73,324

543,942

438,785

(3,324,363)

$ (2,885,578)

2012 2011 2010 2012/2011 2011/2010

TheAuthorityreceivedCitygrantsof$878.88millionand$789.70millioninJune2012and2011,respectively.ThereceiptofCitygrantsreducestheamountofPITneededtoberetainedbytheAuthorityinfuturefiscalyearsforitsdebtservicepaymentsonFTSBondsanditsadministrativeexpenses.

Aspreviouslydiscussed,theAuthorityissuedBABsandQSCBsforthefirsttimeinfiscalyear2010.TheAuthorityearned$96.63millionand$75.99millioninFederalinterestsubsidiesinJune30,2012andJune30,2011,respectively.Theincreasedsubsidyrevenueinfiscalyears2012and2011wasduetotheadditionalissuanceofthesetaxablebonds.

Investmentearningsareprimarilybasedoncapitalprojectholdings,debtserviceholdingsandinterestratefluctuationsduringthefiscalyear.Assuch,theincreaseininvestmentearningsinfiscalyear2012comparedtofiscalyear2011wasprimarilyduetheincreasedcapitalprojectanddebtserviceholdingsduringfiscalyear2012.

Totalfiscalyear2012expensesdecreasedmainlybecauseofthedecreasedissuanceoftheAuthority’scapitalprojectbondswhencomparedtothebondstheAuthorityissuedin2011.ThisdecreaseresultedinlessbondproceedsavailablefortransfertoTheCity.

Interestexpenseincreasedinfiscalyears2012and2011by$17.90millionand$148.48millionduetotheincreaseinoutstandingbonds.

Variance


14

June30,2012and2011


FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENT-WIDE FINANCIAL STATEMENTS (CONTINUED)

Otherexpensesconsistprimarilyofamortizationcostsrelatedtotheissuanceofdebt,theAuthority’sadministrativeexpenses,andfederalsubsidiestransferredtoTheCity.Theincreaseof$42.30millioninotherexpensesinfiscalyear2012wasprimarilyduetothetransferof$20.64millionmoreoffederalsubsidiestoTheCity.

ThefollowingsummarizestheAuthority’sassets,liabilities,andnetassets(deficits)asofJune30(inthousands),

Totalassetsincreasedinfiscalyear2012by$1.2billionwhencomparedtofiscalyear2011mainlybecausetherewasapproximately$636millionmoreinamountduefromTheCityforcollateralizedborrowingaspreviouslydiscussed.Inaddition,infiscalyear2012therewasanincreaseofcapitalbondproceedsholdingsofapproximately$616million,whichwillbeavailabletotransfertoTheCityinfiscalyear2013.

Totalliabilitiesincreasedbyapproximately$3.0billionprimarilybecauseinfiscalyear2012theAuthorityhadapproximately$2.4billionmoreinoutstandingbonds.

FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENTAL FUNDS FINANCIAL STATEMENTS

TheAuthorityusesfivegovernmentalfundsforreportingitsactivities:(1)ageneralfund,(2)abuildingaidrevenuebondscapitalprojectfund(“BARBsCPF”),(3)afuturetaxsecuredbondscapitalprojectfund(“FTSBondsCPF”),(4)abuildingaidrevenuebondsdebtservicefund(“BARBsDSF”),and(5)afuturetaxsecuredbondsdebtservicefund(“FTSBondsDSF”).Infiscalyear2011,theAuthorityimplementedGovernmentalAccountingStandardsBoardStatementNo.54,Fund Balance Reporting and Governmental Fund Type Definitions(“GASB54”).GASB54resultedinthecreationofageneralfundandtherestatementofthoseactivitiesthatwereformerlypresentedinthedebtservicefundsandnowreportedunderageneralfund.TheAuthoritynowaccountsforandreportsinthegeneralfunditsadministrativeandoperatingexpendituresalongwiththeresourcesusedorheldforusetopayforthoseoperatingactivities,pursuanttotheIndenture.

ASSETS

TOTAL ASSETS

LIABILITIES

Currentliabilities

Non-currentliabilities

TOTAL LIABILITIES

NET ASSETS (DEFICITS)

Restricted

Unrestricted

TOTAL DEFICIT - END OF YEAR

$ 7,746,581

1,692,502

26,314,230

28,006,732

1,336,945

(21,597,096)

$ (20,260,151)

$ 6,551,298

1,552,029

23,484,376

25,036,405

745,643

(19,230,750)

$ (18,485,107)

$ 5,374,891

1,015,544

19,958,876

20,974,420

437,286

(16,036,815)

$ (15,599,529)

$ 1,195,283

140,473

2,829,854

2,970,327

591,302

(2,366,346)

$ (1,775,044)

$ 1,176,407

536,485

3,525,500

4,061,985

308,357

(3,193,935)

$ (2,885,578)

2012 2011 2010 2012/2011 2011/2010

Variance


15

June30,2012and2011


FINANCIAL HIGHLIGHTS AND OVERALL ANALYSIS — GOVERNMENTAL FUNDS FINANCIAL STATEMENTS (CONTINUED)

ThefollowingsummarizestheGeneralFundactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),

Theincreaseinrevenuesinfiscalyear2012wasprimarilyduetotheAuthorityreceiving$29.3millionmoreofFederalinterestsubsidieswhencomparedtotheamountofsubsidiesreceivedinfiscalyear2011.Infiscalyear2011,theAuthorityreceived$59.1millionmoreininterestsubsidiesthaninfiscalyear2010.Aspreviouslydiscussed,theAuthorityissuedBABsandQSCBsforthefirsttimeinfiscalyear2010.Theincreasedsubsidyrevenueinfiscalyears2012and2011wasduetotheadditionalissuanceofthesetaxablebonds.

ThefollowingsummarizestheBARBsCPFactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),

FUND BALANCE-beginningofyear Revenues

Expenditures

Otherfinancingsources(uses)-net

FUND BALANCE-endofyear


Expenditures



$ 16,423

117,565

(113,624)

182

$ 20,546

$ 143,948

158

(849,568)

705,462

$ –

$ 11,984

84,989

(80,870)

320

$ 16,423

$ –

36

(515,081)

658,993

$ 143,948

$ 9,941

13,704

(11,661)

–

$ 11,984

$ 56

280

(279)

(57)

$ –

$ 4,439

32,576

(32,754)

(138)

$ 4,123

$ 143,948

122

(334,487)

46,469

$ (143,948)

$ 2,043

71,285

(69,209)

320

$ 4,439

$ (56)

(244)

(514,802)

659,050

$ 143,948

2012

2012

2011

2011

2010

2010

2012/2011

2012/2011

2011/2010

2011/2010

Variance

Variance

TheAuthority’sbondproceedsanddistributionstoTheCityarereportedasotherfinancingsources(uses)inthegovernmentalfunds.Aspreviouslydiscussed,theAuthorityissuedBARBsinfiscalyear2012anddistributedthoseproceedsandthe$143.9milliononhandfromfiscalyear2011toTheCitytofinanceitseducationalfacilitiescapitalprogram.Thetotalfiscalyear2012distributionresultedina$0fundbalance.

AstheAuthoritydidnotissueanyBARBsinfiscalyear2010,approximately$279thousandofremainingfiscalyear2009BARBsproceedsandrelatedinterestearningsweredistributedtoTheCityinfiscalyear2010,resultingina$0fundbalance.


16

June30,2012and2011



Expenditures




Expenditures




Expenditures



$ 601,695

598

(2,345,052)

3,079,704

$ 1,336,945

$ 585,994

1,277

(308,610)

208,476

$ 487,137

$ 966,871

1,470,650

(3,158,468)

1,605,573

$ 884,626

$ 436,803

1,767

(3,490,940)

3,654,065

$ 601,695

$ 525,386

(822)

(273,293)

334,723

$ 585,994

$ 554,834

1,462,993

(1,051,712)

756

$ 966,871

$ –

613

(3,166,235)

3,602,425

$ 436,803

$ 368,980

1,205

(225,130)

380,331

$ 525,386

$ 841,034

552,707

(859,231)

20,324

$ 554,834

$ 164,892

(1,169)

1,145,888

(574,361)

$ 735,250

$ 60,608

2,099

(35,317)

(126,247)

$ (98,857)

$ 412,037

7,657

(2,106,756)

1,604,817

$ (82,245)

$ 436,803

1,154

(324,705)

51,640

$ 164,892

$ 156,406

(2,027)

(48,163)

(45,608)

$ 60,608

$ (286,200)

910,286

(192,481)

(19,568)

$ 412,037

2012

2012

2012

2011

2011

2011

2010

2010

2010

2012/2011

2012/2011

2012/2011

2011/2010

2011/2010

2011/2010

Variance

Variance

Variance


ThefollowingsummarizestheFTSBondsCPFactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),

Totalfiscalyear2012expendituresdecreasedprimarilybecauseofthedecreasedissuanceoftheAuthority’scapitalprojectbondswhencomparedtothebondstheAuthorityissuedin2011.ThisdecreaseresultedinlessbondproceedsavailablefortransfertoTheCity.Thefiscalyear2012netdecreaseofotherfinancingsourcesanduseswasalsoduetotheissuanceoflessFTScapitalprojectdebt.

ThefollowingsummarizestheBARBsDSFactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),

ExpendituresintheBARBsDSFareprimarilythedebtservicepaymentsonoutstandingBARBs.Theotherfinancingsourcesusesnet,consistprimarilyofStatebuildingaidretainedbytheAuthorityinfiscalyears2012,2011and2010,respectively.

ThefollowingsummarizestheFTSBondsDSFactivitiesoftheAuthorityfortheyearsendedJune30(inthousands),


17

June30,2012and2011



TheFTSBondsDSFrevenueconsistsprimarilyofgrantsfromTheCityandPITretainedbytheAuthority.TheAuthorityreceivedunrestrictedgrantsfromTheCityof$878.88millionand$789.70millioninfiscalyears2012and2011,respectively.ThesegrantsandthePITretainedareusedtoservicetheAuthority’sFTSBondsdebtserviceanditsadministrativeexpenses.

Expendituresincreasedinfiscalyear2012overfiscalyear2011dueprimarilytothereofferingofapproximately$1.6billionofFTSBonds.Theincreasedexpenditureisoffsetwithreofferedbondproceedsreportedintheotherfinancingsources.Otherfinancingsources(uses)consistprimarilyoftheproceedsfromFTSBondsissuedfortherefundingofFTSBonds,proceedsfromreofferedFTSBondsandthepaymenttotheescrowagentfortherefundedbonds.

ThisfinancialreportisdesignedtoprovideageneraloverviewoftheAuthority’sfinances.QuestionsconcerninganyoftheinformationinthisreportorrequestsforadditionalfinancialinformationshouldbedirectedtoRaymondOrlando,ManagerofInvestorRelations,theNewYorkCityTransitionalFinanceAuthority,255GreenwichStreet,NewYork,NY10007.

* * * * * *


18

AsofJune30,2012and2011

(inthousands)

$ 22,881

1,832,410

1,168,942

404,831

4,151,937

117,728

47,852

$ 7,746,581

$ 404,831

310,282

3,970

327,099

646,320

25,621,030

(210,994)

904,194

28,006,732

1,366,945

(21,597,096)

$ (20,260,151)

$ 18,832

1,165,997

1,420,967

297,023

3,515,027

108,903

24,549

$ 6,551,298

$ 297,023

286,727

4,458

301,706

662,115

23,157,660

(198,080)

524,796

25,036,405

745,643

(19,230,750)

$ (18,485,107)

2012 2011

ASSETS

Unrestrictedcashandcashequivalents

Restrictedcashandcashequivalents

Restrictedinvestments

PersonalincometaxreceivablefromNewYorkState

DuefromNewYorkCity-futureStatebuildingaid

Unamortizedbondissuancecosts

Other

TOTAL ASSETS

LIABILITIES

PersonalincometaxpayabletoNewYorkCity

DistributionpayabletoNewYorkCitycapitalprograms

Accruedexpenses

Accruedinterestpayable

Bondspayable

Portionduewithinoneyear

Portiondueafteroneyear

Unamortizeddeferredbondrefundingcosts

Unamortizedbondpremium

TOTAL LIABILITIES

NET ASSETS (DEFICIT)

Restrictedforcapitalprojects

Unrestricted

TOTAL DEFICIT

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

Statements of Net Assets (Deficit)


19

FortheyearsendedJune30,2012and2011

$ 8,144,202

(7,527,338)

616,864

878,884

96,630

2,220

1,594,598

21,344

2,330,776

92,280

22,184

888,087

14,971

3,369,642

(1,775,044)

(18,485,107)

$ (20,260,151)

$ 7,601,070

(6,906,026)

695,044

789,697

75,991

1,357

1,562,089

18,005

3,469,002

62,865

17,776

870,183

9,836

4,447,667

(2,885,578)

(15,599,529)

$ (18,485,107)

2012 2011

Statements of Activities

REVENUES

Personalincometaxrevenue

LessremittancestoNewYorkCity

Personal income tax revenue retained


Federalinterestsubsidy

Investmentearnings

TOTAL REVENUES

EXPENSES

Generalandadministrativeexpenses

DistributiontoNewYorkCityforgeneralcapitalprogram

DistributionoffederalinterestsubsidytoNewYorkCity

Amortizationofdeferredbondrefundingcosts

Interestexpense

Amortizationofdebtissuancecosts

TOTAL EXPENSES

CHANGE IN DEFICIT

DEFICIT - BEGINNING OF YEAR

DEFICIT - END OF YEAR


(inthousands)


20

ASSETS




Personalincometaxreceivablefrom

NewYorkState

Other

TOTAL ASSETS

LIABILITIES AND FUND BALANCES

LIABILITIES

Accruedexpenses

DistributionpayabletoNewYorkCity

forcapitalprograms

Deferredpersonalincometaxrevenue

Personalincometaxpayableto

NewYorkCity

TOTAL LIABILITIES

FUND BALANCES

Restrictedfor:

CapitaldistributiontoNewYorkCity

Debtservice

Unassigned

TOTAL FUND BALANCES

TOTAL LIABILITIES AND FUND BALANCES


AsofJune30,2012

$ 22,881

1,832,410

1,168,942

404,831

19,273

$ 3,448,337

$ –

107,642

777,116

404,831

–

$ 1,289,589

$ –

76,804

391,826

–

18,826

$ 487,456

$ –

1,647,951

–

–

–

$ 1,647,951

$ –

13

–

–

–

$ 13

$ 22,881

–

–

–

447

$ 23,328

$ 3,970

310,282

355,000

49,831

719,083

$ 132

–

355,000

49,831

404,963

$ 319

–

–

–

319

$ 724

310,282

–

–

311,006

$ 13

–

–

–

13

$ 2,782

–

–

–

2,782

1,336,945

1,371,763

20,546

2,729,254

$3,448,337

–

884,626

–

884,626

$ 1,289,589

–

487,137

–

487,137

$ 487,456

1,336,945

–

–

1,366,945

$ 1,647,951

–

–

–

–

$ 13

–

–

20,546

20,546

$ 23,328

Total Governmental

Funds

Building Aid Revenue

Bonds


Bonds

Capital Projects Debt Service

Future Tax

Secured

Future Tax

Secured

General Fund

Governmental Funds Balance Sheets

(inthousands)


21

ASSETS




Personalincometaxreceivablefrom

NewYorkState

Other

TOTAL ASSETS

LIABILITIES AND FUND BALANCES

LIABILITIES

Accruedexpenses

DistributionpayabletoNewYorkCity

forcapitalprograms

Deferredpersonalincometaxrevenue

Personalincometaxpayableto

NewYorkCity

TOTAL LIABILITIES

FUND BALANCES

Restrictedfor:

CapitaldistributiontoNewYorkCity

Debtservice

Unassigned

TOTAL FUND BALANCES

TOTAL LIABILITIES AND FUND BALANCES


AsofJune30,2011

$ 18,832

1,165,997

1,420,967

297,023

320

$ 2,903,139

$ –

112,283

854,805

297,023

–

$ 1,264,111

$ –

20,152

566,162

–

–

$ 586,314

$ –

730,046

–

–

–

$ 730,046

$ –

303,516

–

–

–

$ 303,516

$ 18,832

–

–

–

320

$ 19,152

$ 4,458

286,727

190,000

107,023

588,208

$ 217

–

190,000

107,023

297,240

$ 320

–

–

–

320

$ 624

127,727

–

–

128,351

$ 568

159,000

–

–

159,568

$ 2,792

–

–

–

2,792

745,643

1,552,865

16,423

2,314,931

$ 2,903,139

–

966,871

–

966,871

$ 1,264,111

–

585,994

–

585,994

$ 586,314

601,695

–

–

601,695

$ 730,046

143,948

–

–

143,948

$ 303,516

–

–

16,423

16,423

$ 19,152

Total Governmental

Funds


Bonds


Bonds


Future Tax

Secured

Future Tax

Secured

General Fund

Governmental Funds Balance Sheets

(inthousands)


22

AsofJune30,2012and2011

$ 2,729,254

117,728

(904,194)

28,579

4,151,937

(26,267,350)

(327,099)

$ 2,314,931

108,903

(524,796)

24,229

3,515,027

(23,819,775)

(301,706)

210,994

$ (20,260,151)

198,080

$ (18,485,107)

2012 2011

Reconciliations of the Governmental Funds Balance Sheets to the Statements of Net Assets (Deficit)

TOTAL FUND BALANCES –governmentalfunds

Amountsreportedforgovernmentalactivitiesinthestatementsofnetassets

(deficit)aredifferentbecause:

Costsofbondissuancearereportedasexpendituresingovernmentalfunds

financialstatementsuponissuance.However,inthestatementsofnetassets

(deficit),thecostsofbondissuancearereportedascapitalizedassetsand

amortizedoverthelifeofthebonds.

Bondpremiumsarereportedasotherfinancingsourcesinthegovernmental

fundsfinancialstatements.However,inthestatementsofnetassets(deficit),

bondpremiumsarereportedasacomponentofbondspayableandamortized

overthelifeofthebonds.

FederalInterestsubsidyonBABsandQSCBsisrecognizedwhentherelated

bondinterestisreported.Onthestatementsofnetassets(deficit),theamountof

thesubsidyapplicabletotheaccruedbondinterestisreceivableasoffiscalyear

end.However,inthegovernmentalfundsbalancesheetwherenobondinterest

isreportedaspayableuntildue,nosubsidyreceivableisreported.

DistributionstoTheCity’seducationalfacilitiescapitalprogramfromBARBs

proceedsarereportedasanotherfinancingsourceinthegovernmentalfunds

financialstatements.However,inthestatementofnetassets(deficit),theyare

reportedasduefromTheCity.

Someliabilitiesarenotdueandpayableinthecurrentperiodfromfinancial

resourcesavailablecurrentlyatyear-endandarethereforenotreportedinthe

governmentalfundsfinancialstatements,butarereportedinthestatementsof

netassets(deficit).Thoseliabilitiesconsistof:

Bondspayable

Accruedinterestpayable

Costsofbondrefundingsarereportedasexpendituresingovernmentalfunds

financialstatements.However,inthestatementofnetassets(deficit),those

costsandtherelatedgainorlossaredeferredandamortizedovertheshorterof

theremaininglifeoftheolddebtorthelife ofthenewdebt.

NET ASSETS (DEFICIT) OF GOVERNMENTAL ACTIVITIES


(inthousands)


23

REVENUES






Investmentearnings

TOTAL REVENUES

EXPENDITURES

Interestexpense

Interestexpenseeconomicdefeasance

Costsofdebtissuance

DistributionstoNewYorkCityfor

generalcapitalprogram

Distributionsoffederalinterestsubsidy

toNewYorkCity

Principalamountsofbondsretired

DefeasanceEscrow

Principalamountsofeconomicdefeased

bondsretired

Refundingbondissuancecosts


TOTAL EXPENDITURES

Excess (deficiency) of revenues

over expenditures

OTHER FINANCING SOURCES (USES)

Principalamountofbondsissued


educationalfacilitiescapitalprograms

Refundingbondproceeds

Bondpremium,netofdiscount

Paymentsofrefundedbonds

TransferfromNewYorkCity-buildingaid

Transfersin(out)

TOTAL OTHER FINANCING SOURCES (USES)

NET CHANGES IN FUND BALANCES

FUND BALANCES - BEGINNING OF YEAR

FUND BALANCES - END OF YEAR


FortheyearendedJune30,2012

$ 7,979,202

(7,362,338)

616,864

878,884

92,280

2,220

1,590,248

$ 7,953,923

(7,362,338)

591,585

878,884

–

181

1,470,650

$ –

–

–

–

–

1,277

1,277

$ 25,279

–

25,279

–

92,280

6

117,565

$ –

–

–

–

–

598

598

$ –

–

–

–

–

158

158

1,013,092

–

18,235

2,330,776

92,280

2,273,400

170,391

–

10,195

21,344

5,929,713

(4,339,465)

775,672

–

–

–

–

2,202,210

170,391

–

10,195

–

3,158,468

(1,687,818)

237,420

–

–

–

–

71,190

–

–

–

–

308,610

(307,333)

–

–

–

–

92,280

–

–

–

–

21,344

113,624

3,941

–

–

14,276

2,330,776

–

–

–

–

–

–

2,345,052

(2,344,454)

–

–

3,959

–

–

–

–

–

–

–

3,959

(3,801)

3,450,000

(845,609)

2,178,810

561,806

(799,918)

208,699

–

4,753,788

414,323

2,314,931

$ 2,729,254

–

–

2,178,810

225,420

(799,918)

–

1,261

1,605,573

(82,245)

966,871

$ 884,626

–

–

–

–

–

208,699

(233)

208,476

(98,857)

585,994

$ 487,137

–

–

–

–

–

–

182

182

4,123

16,423

$ 20,546

2,800,000

–

–

280,828

–

–

(1,124)

3,079,704

735,250

601,695

$ 1,336,945

650,000

(845,609)

–

55,558

–

–

(96)

(140,147)

(143,948)

143,948

$ –

Total Governmental

Funds


Bonds


Bonds


Future Tax

Secured

Future Tax

Secured

General Fund

Governmental Funds Statements of Revenues, Expenditures and Changes in Fund Balances

(inthousands)


24

REVENUES






Investmentearnings

TOTAL REVENUES

EXPENDITURES

Interestexpense

Interestexpenseeconomicdefeasance

Costsofdebtissuance


generalcapitalprogram

Distributionsoffederalinterestsubsidy

toNewYorkCity

Principalamountsofbondsretired

Principalamountsofeconomicdefeased

bondsretired

Refundingbondissuancecosts


TOTAL EXPENDITURES

Excess (deficiency) of revenues

over expenditures

OTHER FINANCING SOURCES (USES)

Principalamountofbondsissued


educationalfacilitiescapitalprograms

Refundingbondproceeds

Bondpremium,netofdiscount

Paymentsofrefundedbonds

TransferfromNewYorkCity-buildingaid

Transfersin(out)

TOTAL OTHER FINANCING SOURCES (USES)

NET CHANGES IN FUND BALANCES

FUND BALANCES - BEGINNING OF YEAR

FUND BALANCES - END OF YEAR


FortheyearendedJune30,2011

$ 7,672,070

(6,977,026)

695,044

789,697

62,865

1,357

1,548,963

$ 7,649,950

(6,977,026)

672,924

789,697

–

372

1,462,993

$ –

–

–

–

–

(822)

(822)

$ 22,120

–

22,120

–

62,285

4

84,989

$ –

–

–

–

–

1,767

1,767

$ –

–

–

–

–

36

36

879,415

24

26,439

3,469,002

62,865

441,665

460

3,441

18,005

4,901,316

(3,352,353)

–

–

4,501

–

–

–

–

–

–

4,501

(4,465)

–

–

21,938

3,469,002

–

–

–

–

–

3,490,940

(3,489,173)

207,838

–

–

–

–

65,455

–

–

–

273,293

(274,115)

671,577

24

–

–

–

376,210

460

3,441

–

1,051,712

411,281

–

–

–

–

62,865

–

–

–

18,005

80,870

4,119

4,250,000

(510,580)

649,425

128,122

(795,042)

416,352

–

4,138,277

785,924

1,529,007

$ 2,314,931

–

–

649,425

64,829

(713,708)

–

210

756

412,037

554,834

$ 966,871

–

–

–

–

(81,334)

416,352

(295)

334,723

60,608

525,386

$ 585,994

–

–

–

–

–

–

320

320

4,439

11,984

$ 16,423

3,600,000

–

–

54,275

–

–

(210)

3,654,065

164,892

436,803

$ 601,695

650,000

(510,580)

–

9,018

–

–

(25)

148,413

143,948

–

$ 143,948

Total Governmental

Funds


Bonds


Bonds


Future Tax

Secured

Future Tax

Secured

General Fund

Governmental Funds Statements of Revenues, Expenditures and Changes in Fund Balances

(inthousands)


25

FortheyearsendedJune30,2012and2011

$ 785,924

(4,899,425)

795,042

(14,335)

442,125

16,603

(60,922)

510,580

(416,352)

13,216

(57,944)

$ 414,323

(5,628,810)

970,309

(11,989)

2,273,400

3,264

(403,319)

845,609

(208,699)

4,350

(33,482)

–

$ (2,885,578)

–

$ (1,775,044)

2012 2011

Reconciliations of the Governmental Funds Statements of Revenues, Expenditures and Changes in Fund Balances to the Statements of Activities

NET CHANGES IN FUND BALANCES –totalgovernmentalfunds

Amountsreportedforgovernmentalactivitiesinthestatementsofactivitiesaredifferentbecause:

Bondproceedsprovidecurrentfinancialresourcestogovernmentalfunds,butbondsissuedincrease

long-termliabilitiesonthestatementsofnetassets(deficit).

Refundingbondproceedsandpaymentstorefundedbondescrowholderarereportedasother

financingsourcesandusesinthegovernmentalfunds,butincreaseanddecreaselong-term

liabilitiesinthestatementsofnetassets(deficit).

Thegovernmentalfundsreportcostsofbondrefundingsasexpenditures.However,inthestatements

ofactivities,thecostsofbondrefundingsareamortizedovertheshorterofthelifeofthebonds

refundedorthelifeofthebondsissuedtoadvancerefundthebonds.

Repayment(includingdefeasance)ofbondprincipalisanexpenditureinthegovernmentalfunds,but

therepaymentreduceslong-termliabilitiesinthestatementofnetassets(deficit).

Thegovernmentalfundsreportthecostsofdebtissuanceasexpenditures.However,inthe

statementsofactivities,thecostofdebtissuanceisamortizedoverthelifeoftherelateddebt.

Thegovernmentalfundsreportbondpremiums/discountsasotherfinancingsources/uses.However,

inthestatementsofactivities,bondpremiums/discountsareamortizedoverthelivesoftherelated

debtasinterestexpense.

DistributionstoTheCity’seducationalfacilitiescapitalprogramfromBARBsproceedsarereported

asanotherfinancinguseingovernmentalfunds.However,inthestatementsofactivities,

distributionsofBARBsproceedsarereportedasduefromNewYorkCity-futureStatebuildingaid.

RetentionofbuildingaidisreportedsimilartoatransferfromTheCity,asanotherfinancingsourcein

thegovernmentalfunds.However,inthestatementsofactivities,buildingaidretainedisreported

asareductionoftheamountduefromNewYorkCity-futureStatebuildingaid.

FederalinterestsubsidyonBABsandQSCBsisrecognizedwhentherelatedbondinterestcostis

reported.Onthestatementofactivities,thesubsidyrevenueintheamountapplicabletothe

accruedbondinterestexpenseisaccruedasoffiscalyearend.However,inthegovernmental

fundswhereinterestexpenditureisreportedwhendue,nosubsidyrevenueisaccruedasof

yearend.

Interestisreportedonthestatementofactivitiesontheaccrualbasis.However,interestisreported

asanexpenditureinthegovernmentalfundswhentheoutlayoffinancialresourcesisdue.

Other(bonddiscount)

CHANGE IN NET ASSETS (DEFICIT)-governmentalactivities


(inthousands)


26

June30,2012and2011

Notes to Financial Statements

1. ORGANIZATION AND NATURE OF ACTIVITIES

TheNewYorkCityTransitionalFinanceAuthority(the“Authority”)isacorporategovernmentalentityconstitutingapublicbenefitcorporationandaninstrumentalityoftheStateofNewYork(the“State”).TheAuthorityisgovernedbyaBoardoffivedirectors,consistingofthefollowingofficialsofTheCityofNewYork(“TheCity”):theDirectorofManagementandBudget(whoalsoservesasChairperson),theCommissionerofFinance,theCommissionerofDesignandConstruction,TheCityComptrollerandtheSpeakerofTheCityCouncil.AlthoughlegallyseparatefromTheCity,theAuthorityisafinancinginstrumentalityofTheCityandisincludedinTheCity’sfinancialstatementsasablendedcomponentunit,inaccordancewiththeGovernmentalAccountingStandardsBoard(“GASB”)standards.

TheAuthoritywascreatedbyStatelegislationenactedin1997toissueandsellupto$7.5billioninbondsandnotes(“FutureTaxSecuredBonds”or“FTSBonds”)tofundaportionofthecapitalprogramofTheCity,thepurposeofwhichistomaintain,rebuildandexpandtheinfrastructureofTheCityandtopaytheAuthority’sadministrativeexpenses.

InJune2000,theStateLegislatureincreasedto$11.5billiontheAuthority’scapacitytoissuebondsandnotesforgeneralCitycapitalpurposes.Withinthe$11.5billion,theStateLegislatureincreasedtheamountofFTSBondswhichmaybeissuedasvariableratedebtfrom$750millionto$2.3billion.InJuly2006,thestatutorycapacitytoissuebondsandnotesforgeneralcapitalpurposesofTheCitywasincreasedby$2billion;asofJune30,2007,theAuthorityhadissueditsstatutorylimitof$13.5billionofFTSBonds.InJuly2009,authorizinglegislationwasenactedunderChapter182oftheLawsofNewYork,2009whichpermitstheAuthoritytohaveoutstanding$13.5billionofFTSBonds.Inaddition,Chapter182permitstheAuthoritytoissueadditionalFutureTaxSecuredBondsprovidedthattheamountofsuchadditionalbonds,togetherwiththeamountofindebtednesscontractedbyTheCity,doesnotexceedthedebtlimitofTheCity.AsofJune30,2012,TheCity’sandtheAuthority’scombineddebt-incurringcapacitywasapproximately$22.8billion.

OnSeptember13,2001,theStateLegislatureauthorizedtheAuthoritytohaveoutstandinganadditional$2.5billionofbondsandnotes(“RecoveryBonds”)tofundTheCity’scostsrelatedtoandarisingfromeventsonSeptember11,2001attheWorldTradeCenter,notwithstandingthelimitsdiscussedabove.

StatelegislationenactedinApril2006additionallyenablestheAuthoritytohaveoutstandingupto$9.4billionofBuildingAidRevenueBonds(“BARBs”),notesorotherobligationsforpurposesoffundingcostsofthefive-yeareducationalfacilitiescapitalplanforTheCityschoolsystemandtheAuthority’sadministrativeexpenses.

TheAuthoritydoesnothaveanyemployees;itsaffairsareadministeredbyemployeesofTheCityandofanothercomponentunitofTheCity,forwhichtheAuthoritypaysamanagementfeeandoverheadbasedonitsallocatedshareofpersonnelandoverheadcosts.


27

June30,2012and2011

Notes to Financial Statements (continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Thegovernment-widefinancialstatementsoftheAuthority,whichincludethestatementsofnetassets(deficit)andthestatementsofactivities,arepresentedtodisplayinformationaboutthereportingentityasawhole,inaccordancewithGovernmentalAccountingStandardBoard(“GASB”)standards.Thestatementsofnetassets(deficit)andthestatementsofactivitiesarepreparedusingtheeconomicresourcesmeasurementfocusandtheaccrualbasisofaccounting.Revenuesarerecordedwhenearnedandexpensesarerecordedwhenaliabilityisincurred,regardlessofthetimingoftherelatedcashflows.

TheAuthority’sgovernmentalfundfinancialstatements(general,capitalanddebtservicefunds)arepresentedusingthecurrentfinancialresourcesmeasurementfocusandthemodifiedaccrualbasisofaccounting.Revenueisrecognizedwhenitbecomessusceptibletoaccrual,whichiswhenitbecomesbothmeasurableandavailabletofinanceexpendituresinthecurrentfiscalperiod.Revenuesareconsideredavailableifreceivedwithintwomonthsafterthefiscalyearend.Expendituresarerecognizedwhentherelatedliabilityisincurred,exceptforprincipalandinterestonbondspayableandliabilitiesonarbitragerebatepayable,whichisrecognizedwhendue.

TheAuthorityusesfivegovernmentalfundsforreportingitsactivities:(1)ageneralfund,(2)abuildingaidrevenuebondscapitalprojectfund(“BARBsCPF”),(3)afuturetaxsecuredbondscapitalprojectfund(“FTSBondsCPF”),(4)abuildingaidrevenuebondsdebtservicefund(“BARBsDSF”),and(5)afuturetaxsecuredbondsdebtservicefund(“FTSBondsDSF”).ThetwocapitalprojectfundsaccountforresourcestobetransferredtoTheCity’scapitalprogramsinsatisfactionofamountsduetoTheCityandthetwodebtservicefundsaccountfortheaccumulationofresourcesforpaymentofprincipalandinterestonlong-termdebtandcertaininterestonshort-termdebt.TheGeneralFundaccountsforandreportsallfinancialresourcesnotaccountedforinthecapitalanddebtservicefunds,includingtheAuthority’sadministrativeexpenses.

B. Fundbalancesareclassifiedaseither:1)nonspendable,2)restricted,or3)unrestricted.Unrestrictedfundbalanceisfurtherclassifiedas:(a)committed,(b)assigned,or(c)unassigned.

TheBoardofDirectorsoftheAuthority(the“Board”)constitutestheAuthority’shighestlevelofdecision-makingauthorityandresolutionsadoptedbytheBoardthatconstrainfundbalancesforaspecificpurposeareaccountedforandreportedascommittedforsuchpurposeunlessanduntilasubsequentresolutionalteringthecommitmentisadoptedbytheBoard.

FundbalanceswhichareconstrainedforuseforaspecificpurposebasedonthedirectionofanyofficeroftheAuthoritydulyauthorizedunderitsbondindenturetodirectthemovementofsuchfundsareaccountedforandreportedasassignedforsuchpurpose,unlessoruntilasubsequentauthorizedactionbythesameoranotherdulyauthorizedofficer,orbytheBoard,istakenwhichremovesorchangestheassignment.Whenbothrestrictedandunrestrictedresourcesareavailableforuseforaspecificpurpose,itistheAuthority’spolicytouserestrictedresourcesfirstthenunrestrictedresourcesastheyareneeded.Whencommitted,assigned,orunassignedresourcesareavailableforusforaspecificpurpose,itistheAuthority’spolicytousecommittedresourcesfirst,thenassignedresources,andthenunassignedresourcesastheyareneeded.

ResourcesconstrainedfordebtserviceorredemptioninaccordancewiththeAuthority’sIndentureisclassifiedasrestrictedonthestatementsofnetassets(deficit)andthegovernmentalfundsbalancesheets.

C.Bondandbondanticipationnotepremiums,discountsandissuancecostsarecapitalizedandamortizedoverthelivesoftherelateddebtusingtheinterestmethodinthegovernment-widefinancialstatements.Thegovernmentalfundfinancialstatementsrecognizethepremiumsanddiscounts,aswellasdebtissuancecosts,duringthecurrentperiod.Thefaceamountofdebtissuedandpremiumreceivedarereportedasotherfinancingsources,whilediscountsondebtissuancesarereportedasotherfinancinguses.Issuancecosts,whetherornotwithheldfromtheactualdebtproceedsreceived,arereportedasdebtserviceexpenditures.


28

June30,2012and2011


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D.Deferredbondrefundingcostsrepresenttheaccountinglossincurredinadvancerefundingofoutstandingbonds.Thedeferredbondrefundingcostsareamortizedovertheshorteroftheremaininglifeoftheolddebtorthelifeofthenewdebt.Inthedebtservicefunds,costsofthebondrefundingarereportedasexpenditureswhenincurred.

E. Interestexpenseisrecognizedontheaccrualbasisinthegovernment-widefinancialstatements.Interestexpendituresarerecognizedwhenbondinterestisdueinthegovernmentalfundfinancialstatements.

F. TheAuthorityreceivesTheCitypersonalincometaxes,imposedpursuanttoStatelawandcollectedonbehalfoftheAuthoritybytheState,toserviceitsfuturetaxsecureddebtandpayaportionofitsadministrativeexpenses.FundsforFTSBondsdebtservicearerequiredtobesetasidepriortotheduedateoftheprincipalandinterest.PersonalincometaxesinexcessofamountsneededtopaydebtserviceandadministrativeexpensesoftheAuthorityareavailabletoberemittedtoTheCity.Duringfiscalyears2012and2011,unrestrictedgrantswerereceivedfromTheCity,asdescribedinNote6.

G.TheAuthorityreceivesbuildingaidpaymentsbytheState,subjecttoStateannualappropriation,pursuanttotheassignmentbyTheCityofthebuildingaidpaymentstotheAuthoritytoserviceitsbuildingaidrevenuebondsandpayaportionofitsadministrativeexpenses.DuetoTheCity’scontinuinginvolvementnecessaryforthecollectionofthebuildingaid,thisassignmentisconsideredacollateralizedborrowingbetweenTheCityandtheAuthority.TheAuthorityreports,onitsstatementofnetassets,anasset(DuefromNewYorkCity—futureStatebuildingaid)representingthecumulativeamountithasdistributedtoTheCityfortheeducationalfacilitiescapitalplan,netofthecumulativeamountofbuildingaidithasretained.Onthefundfinancialstatements,thedistributionstoTheCityforitseducationalfacilitiescapitalprogramarereportedasanotherfinancinguseoffunds.BuildingaidretainedbytheAuthorityistreatedasanotherfinancingsourceastheamountretainedisaccountedforasarepaymentoftheamountsloanedtoTheCity.DuringtheyearsendedJune30,2012and2011,theAuthorityretained$208.70millionand$416.35million,respectivelyofStatebuildingaidtobeusedforBARBsdebtserviceanditsadministrativeexpenses.

H.TomaintaintheexemptionfromFederalincometaxofinterestonbondsissuedbytheAuthority,theAuthoritywillfundamountsrequiredtoberebatedtotheFederalgovernmentpursuanttoSection148oftheInternalRevenueCodeof1986,asamended(the“Code”).TheCoderequiresthepaymenttotheUnitedStatesTreasuryoftheexcessoftheamountearnedonallobligationsovertheamountthatwouldhavebeenearnedifthegrossproceedsoftheissuewereinvestedatarateequaltotheyieldontheissue,togetherwithanyearningsattributabletosuchexcess.Constructionfunds,debtservicefundsoranyotherfundsoraccountsfundedwithproceedsofsuchbonds,includingearnings,orpledgedtoorexpectedtobeusedtopayinterestonsuchbondsaresubjecttothisrequirement.Paymentistobemadeaftertheendofthefifthbondyearandaftereveryfifthbondyearthereafter,andwithin60daysafterretirementofthebonds.TheAuthoritywasnotrequiredtomakeanarbitragerebatepaymentinfiscalyears2012and2011.

TheAuthorityreceivesasubsidyfromtheUnitedStatesTreasuryduetotheAuthority’sissuanceoftaxableBuildAmericaBonds(“BABs”)andtaxableQualifiedSchoolConstructionBonds(“QSCBs”)undertheAmericanRecoveryandReinvestmentActof2009.Thissubsidyisrecognizedwhentherelatedbondinterestisreported.Onthestatementsofnetassets,theamountofthesubsidyrelatedtotheaccruedbondinterestisreportedasareceivableatyearend,whileinthegovernmentalfundsbalancesheetswherenobondinterestisreportedaspayableuntildue,nosubsidyreceivableisreported.


29

June30,2012and2011



I. NewlyAdoptedStandardsandStandardsIssuedButNotYetEffective:

AsacomponentunitofTheCity,theAuthorityimplementsnewGASBstandardsinthesamefiscalyearastheyareimplementedbyTheCity.ThefollowingarediscussionsofthestandardsrequiringimplementationinthecurrentyearandstandardswhichwillormayimpacttheAuthorityfutureyears.

• InNovember2010,GASBissuedStatementNo.60,Accounting and Financial Reporting for Service Concession Agreements (“GASB60”).GASB60establishesthefinancialreportingforserviceconcessionagreements,whichareatypeofpublic-privateorpublic-publicpartnership.GASB60iseffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2011.AstheAuthorityhasnotenteredintoanyserviceconcessionagreements,GASB60isnotexpectedtohaveanimpactontheAuthority’sfinancialstatements.

• InNovember2010,GASBissuedStatementNo.61,The Financial Reporting Entity: Omnibus — An Amendment of GASB Statement No. 14 and No. 34(“GASB61”).GASB61amendsexistingstandardsrelatingtothecompositionandreportingofthegovernmentalfinancialreportingentity.GASB61iseffectiveforfinancialstatementsforperiodsbeginningafterJune15,2012,butisnotexpectedtohaveanimpactontheAuthorityoritsstatusbecauseitisablendedcomponentunitofTheCity.

• InDecember2010,GASBissuedStatementNo.62,Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 GASB and AICPA Pronouncements(“GASB62”).GASB62incorporatesalargevolumeofFASBandAICPAaccountingpronouncementsintotheGASBhierarchyofgenerallyacceptedaccountingprinciplesforU.S.stateandlocalgovernments.GASB62iseffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2011.TheAuthorityhasnotcompletedtheprocessofevaluationGASB62,butdoesnotexpectittohaveanimpactonitsfinancialstatements.

• InJune2011,GASBissuedStatementNo.63,Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position (“GASB63”).GASB63establishesnewreportingrequirementsoftwoelements(deferredoutflowsofresourcesanddeferredinflowsofresources)andrenamestheStatementofNetAssetstoStatementofNetPosition,aswellasreportedNetAssets,andcomponentsthereof,toNetPosition.GASB63iseffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2011.TheAuthorityhasnotcompletedtheprocessofevaluatingGASB63,butitisexpectedtochangeonlytheformattingandnamingoftheAuthority’sstatementofpositionandcomponentsthereof,withnooverallfinancialimpact.

• InJune2011,GASBissuedStatementNo.64,Derivative Instruments: Application of Hedge Accounting Termination Provision (“GASB64”).GASB64clarifiestheexistingrequirementsfortheterminationofhedgeaccountingupondefaultorterminationofaswapcounterpartyorswapcounterparty’screditsupportprovider.GASB64iseffectiveforfinancialstatementsforperiodsbeginningafterJune15,2011.AstheAuthorityhasnotenteredintoanysuchagreements,GASB64doesnothaveanimpactonitsfinancialstatements.


30

June30,2012and2011



• InMarch2012,GASBissuedStatementNo.65,Items Previously Reported as Assets and Liabilities(“GASB65”).GASB65establishesaccountingandreportingstandardsthatreclassifycertainitemsthatarecurrentlyreportedasassetsandliabilitiestodeferredoutflowsofresourcesordeferredinflowsofresourcesandrecognizecertainitemscurrentlybeingreportedasassetsandliabilitiesasoutflowsandinflowofresources.Inaddition,itlimitstheuseofthetermdeferredinthefinancialstatementpresentation.TheprovisionsofGASB65areeffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2012.TheAuthorityhasnotcompletedtheprocessofevaluatingGASB65,butitexpectstohaveanaccountingchangeonhowdebtissuancecostisrecognizedandreportingthegovernmentwidefinancialstatementsinthatthecarryingvalueofcostofissuancewillnotbereportedonthestatementofnetassets,resultinginarestatementofbeginningnetassets.

• InMarch2012,GASBissuedStatementNo.66,Technical Corrections-2012 an amendment of GASB Statements No. 10 and No. 62(“GASB66”).GASB66resolvesconflictingaccountingandreportingguidancethatresultedfromtheissuanceoftwopronouncements,StatementNo.54,Fund Balance Reporting and Governmental Fund Type Definitions,andStatementNo.62,Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30,1989 FASB and AICPA Pronouncements.TheprovisionsofGASB66areeffectiveforfinancialstatementsforperiodsbeginningafterDecember15,2012.TheAuthorityhasnotcompletedtheprocessofevaluatingGASB66,butdoesnotexpectittohaveanimpactonitsfinancialstatements.

• InJune2012,GASBissuedStatementNo.68,Accounting and Financial Reporting for Pensions(“GASB68”).GASB68establishesstandardsofaccountingandfinancialreportingfordefinedbenefitpensionsanddefinedcontributionpensionsprovidedtotheemployeesofstateandlocalgovernmentalemployers.TherequirementsofGASB68areeffectiveforfinancialstatementsforperiodsbeginningafterJune15,2014.TheAuthorityhasnotcompletedtheprocessofevaluatingGASB68,butdoesnotexpectittohaveanimpactonitsfinancialstatements.

J. ThepreparationoffinancialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirestheAuthority’smanagementtomakeestimatesandassumptionsindeterminingthereportedamountsofassetsandliabilities,disclosureofcontingentassetsandliabilitiesasofthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpenditures/expensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.


31

June30,2012and2011


3. CASH AND CASH EQUIVALENTS

TheAuthority’scashandcashequivalentsasofJune30,2012and2011,areasfollows(inthousands):

$ 524

1,831,886

1,832,410

117

22,764

22,881

$ 1,855,291

$ 333

1,165,664

1,165,997

210

18,622

18,832

$ 1,184,829

2012 2011

RESTRICTED CASH AND CASH EQUIVALENTS:

Cash

Cashequivalents(seeNote4)

TOTAL RESTRICTED CASH AND CASH EQUIVALENTS

UNRESTRICTED CASH AND CASH EQUIVALENTS

Cash

Cashequivalents(seeNote4)

TOTAL UNRESTRICTED CASH AND CASH EQUIVALENTS

TOTAL CASH AND CASH EQUIVALENTS

AsofJune30,2012and2011,theAuthority’srestrictedcashandcashequivalentsconsistedofbankdeposits,moneymarketfunds,U.S.Treasuries,andsecuritiesofgovernmentsponsoredenterprisesheldbytheAuthority’sTrusteeintheTrustee’sname.

AsofJune30,2012and2011,theAuthority’sunrestrictedcashandcashequivalentsconsistedofbankdeposits,moneymarketfundsandsecuritiesofgovernmentsponsoredenterprisesheldbytheAuthority’sTrusteeintheTrustee’sname.

AsofJune30,2012and2011,thecarryingamountsandbankbalancesofunrestrictedbankdepositswere$117thousandand$210thousand,respectively,andwereinsuredbytheFDIC.

TheAuthority’sinvestmentsclassifiedascashequivalentsconsistedofU.S.GovernmentSecuritiesandCommercialPaperthathasanoriginalmaturitydateof90daysorlessfromthedateofpurchase.TheAuthorityvaluesthoseinvestmentsatfairvalue(seeNote4belowforadiscussionoftheAuthority’sinvestmentpolicy).


32

June30,2012and2011


4. INVESTMENTS

EachaccountoftheAuthoritythatisheldpursuanttotheIndenturebetweentheAuthorityanditsTrustee,asamendedandasrestatedDecember1,2010,(the“Indenture”)maybeinvestedinsecuritiesorcategoriesofinvestmentsthatarespecificallyenumeratedaspermittedinvestmentsforsuchaccountpursuanttotheIndenture.

Custodial Credit Risk—Istheriskthat,intheeventofthefailureofthecustodian,theAuthoritymaynotbeabletorecoverthevalueofitsinvestmentsorcollateralsecuritiesthatareinthepossessionofanoutsideparty.AllinvestmentsareheldintheTrustee’snamebytheTrustee.

Credit Risk—TheAuthority’sinvestmentsareprimarilygovernmentsponsoredenterprisediscountnotes.AllcommercialpaperheldbytheAuthorityisnonassetbackedcommercialpaperandisratedA1+byStandardPoor’sRatingServicesandP1byMoody’sInvestorServices.

Interest Rate Risk—SubstantiallyalloftheAuthority’sinvestmentsmatureinoneyearorless.Investmentswithlongertermmaturitiesarenotexpectedtobeliquidatedpriortomaturity,therebylimitingexposurefromrisinginterestrates.

TheAuthority’sinvestments,includingcashequivalentsasofJune30,2012and2011,areasfollows(inthousands):

$ 63,877

1,290,247

1,646,704

3,000,828

(1,831,886)

$ 1,168,942

$ 1,689

1,552,904

1,032,038

2,586,631

(1,165,664)

$ 1,420,967

513

22,251

22,764

(22,764)

$ –

1,622

17,000

18,622

(18,622)

$ –

2012 2011

RESTRICTED INVESTMENTS:

Moneymarketfunds

SecuritiesofU.S.governmentagencies

Commercialpaper

TOTAL RESTRICTED INVESTMENTS

Less:amountsreportedascashequivalents

TOTAL RESTRICTED INVESTMENTS

UNRESTRICTED:

Moneymarketfunds

SecuritiesofU.S.governmentagencies

TOTAL UNRESTRICTED INVESTMENTS

Less:amountsreportedascashequivalents

TOTAL UNRESTRICTED INVESTMENTS


33

June30,2012and2011


SENIOR FTS BONDS


ParityBonds

BuildAmericaBonds




SENIOR FTS BONDS


ParityBonds

BuildAmericaBonds




$ 5,216,175

$ 6,589,865

$ 300,000

$ (482,490)

$ (1,272,320)

$ (261,255)

$ (662,915)

$ (629,945)

$ 3,580,940

$ 5,216,175

$ 160,893

$ 227,167

1,466,200

8,964,845

3,045,645

397,060

13,873,750

$ 19,089,925

1,466,200

5,835,190

1,731,240

250,000

9,282,630

$ 15,872,495

74,600

4,304,210

–

300,000

4,678,810

$ 4,978,810

–

3,270,450

1,314,405

147,060

4,731,915

$ 4,249,425

(169,100)

(760,790)

–

–

(929,890)

$ (2,202,210)

–

(115,415)

–

–

(115,415)

$ (376,670)

–

(244,920)

–

–

(244,920)

$ (907,835)

–

(25,380)

–

–

(25,380)

$ (655,325)

1,371,700

12,263,345

3,045,645

697,060

17,377,750

$ 20,958,690

1,466,200

8,964,845

3,045,645

397,060

13,873,750

$ 19,089,925

8,677

420,386

165,184

20,532

614,779

$ 775,672

7,338

298,863

122,897

15,336

444,434

$ 671,601

Total Interest

Payments FY 2012

Total Interest

Payments FY 2011









Principal Defeased

Principal Defeased

Issued/ Converted

Issued/ Converted

Principal Retired

Principal Retired

5. BONDS PAYABLE

PursuanttotheNewYorkCityTransitionalFinanceAuthorityAct(the“Act”),asamended,theAuthorityisauthorizedtohaveoutstanding$13.5billionofFTSBonds,excludingRecoveryBonds.Inaddition,Chapter182permitstheAuthoritytoissueadditionalFutureTaxSecuredBondsprovidedthattheamountofsuchadditionalbonds,togetherwiththeamountofindebtednesscontractedbyTheCity,doesnotexceedthedebtlimitofTheCity.AsofJune30,2012,TheCity’sandtheAuthority’scombineddebt-incurringcapacitywasapproximately$22.8billion.TheAuthorityisalsoauthorizedtohaveoutstanding$2.5billionofRecoveryBondsandnotestopaycostsrelatedtoorarisingfromtheWorldTradeCenterattackonSeptember11,2001.

TheIndenturepermitstheAuthoritytoissueSeniorandSubordinateFTSBondswhichconsistsofRecoveryBonds,BuildAmericaBonds,QualifiedSchoolConstructionBonds,andotherparitydebt.AsofJune30,2012and2011,theAuthorityhad$3.58billionand$5.22billion,respectively,ofSeniorbondsoutstanding.TheAuthorityisauthorizedtoissueSeniorFTSBondsinanamountnottoexceed$12billioninoutstandingprincipalandsubjecttoa$330millionlimitonquarterlydebtservice.SubordinateFTSBondsoutstandingasofJune30,2012and2011,were$17.38billionand$13.87billion,respectively.TotalFTSBondsoutstandingatJune30,2012and2011was$20.96billionand$19.09billion,respectively.

Infiscalyears2012and2011,thechangesinFTSBondspayablewereasfollows(inthousands):


34

June30,2012and2011


5. BONDS PAYABLE (CONTINUED)

AsofJune30,2012,theinterestratesontheAuthority’soutstandingFTSfixedratebondsrangedfrom1.50%to5.50%ontax-exemptbondsand.60%to6.27%ontaxablebonds.

TheAuthorityfundsitsdebtservicerequirementsforallFTSBondsanditsadministrativeexpensesfromgrantmoney,whenavailable,andpersonalincometaxescollectedonitsbehalfbytheStateand,undercertaincircumstancesifitwerenecessary,salestaxes.SalestaxesareonlyavailabletotheAuthorityiftheamountsofpersonalincometaxrevenuesfallbelowstatutorilyspecifieddebtservicecoveragelevels.NosalestaxrevenueswerereceivedorrequiredduringthefiscalyearsendingJune30,2012and2011.TheAuthorityremitsanyexcesspersonalincometaxnotrequiredforitsdebtservicepaymentsanditsadministrativeexpensestoTheCity.TheAuthorityhasnotaxingpower.

OnJune30,2012and2011,theAuthorityhad$3.30billionand$3.74billion,respectively,ofFTSBondsvariableratebondsoutstanding,consistingof$222.4millionofAuctionRateSecurities(“ARSs”)and$3.08billionand$3.52billion,respectively,ofVariableRateDemandBonds(“VRDBs”).TheinterestrateontheARSsisestablishedweeklybyanauctionagentatthelowestclearingratebaseduponbidsreceivedfrombrokerdealers.TheinterestrateontheARSscannotexceed12%.Infiscalyears2012and2011,theinterestrateontheARSsaveraged.53%and.49%,respectively.TheVRDBsbearadailyrate,atwo-dayrateoraweeklyrateandrepresentthelowestrateofinterestthatwouldcausetheadjustableratebondstohaveamarketvalueequaltotheprincipalamount.Theratescannotexceed9%ontaxexemptbondsand12%ontaxablebonds.Infiscalyears2012and2011,theVRDBratesaveraged.45%and.32%,respectively,ontaxexemptbondsand.28%and.39%,respectively,ontaxablebonds.

OnAugust23,2011,theAuthorityissued$450million,Fiscal2012SeriesAFTSBondsandtogetherwiththepremiumreceivedof$62.77millionandanequitycontributionfromcurrentrevenueof$11.81million,currentandadvancerefunded$484.88millionofitsoutstandingFTSBonds.Thisrefundingresultedinanaccountinglossof$25.52million,whichwasrecordedasdeferredbondrefundingcostsonthestatementofnetassets(deficit).TheAuthorityineffectreducedtheaggregatedebtserviceby$41.81millionandobtainedaneconomicbenefitof$34.06million.TheAuthorityalsoreoffered$482.49millionofthefiscal2003SeriesBBonds,$171.97millionofthefiscal2002SeriesBBondsand$74.60millionofthefiscal2003Series1BRecoveryBonds.

OnNovember1,2011,theAuthorityissued$250million,Fiscal2012SeriesBandCFTSBondsandtogetherwiththepremiumreceivedof$25.38millionandanequitycontributionfromcurrentrevenueof$4.45million,currentandadvancerefunded$256.5millionofitsoutstandingFTSBonds.Thisrefundingresultedinanaccountinglossof$13.91million,whichwasrecordedasdeferredbondrefundingcostsonthestatementofnetassets(deficit).TheAuthorityineffectreducedtheaggregatedebtserviceby$16.95millionandobtainedaneconomicbenefitof$12.83million.TheAuthorityalsoreoffered$882.22millionofthefiscal2003SeriesABonds.

OnJune22,2012,theAuthoritydefeased$166.45millionofoutstandingFTSBondswithcurrentrevenueof$170.39million.TheescrowdepositedwiththeAuthority’sTrusteewasfundedwithDefeasanceCollateral(asdefinedintheAuthority’sIndenture)toprovideforallfuturedebtserviceonthedefeasedbonds.TherefundingusingDefeasanceCollateralresultedintherefundedbondsbeingremovedfromreportedbondsoutstanding.Thisrefundingresultedinaccountinggainof$4.32million.

OnFebruary1,2011,theAuthorityreoffered$482.49millionofFiscal2003BTermBondsasfloatingratebonds,thusavoidingtheinterestratebeingconvertedto10%.ThesebondsweresubsequentlyreofferedasfixedrateinAugust2011.

OnApril25,2011,theAuthorityissued$649.43million,Fiscal2011SeriesEandFFTSBondsandtogetherwiththepremiumreceivedof$64.8million,currentandadvancedrefunded$655.33millionofitsoutstandingFTSBonds.Thisrefundingresultedinanaccountinglossof$37.2million,whichwasrecordedasdeferredbondrefundingcostsonthestatementofnetassets(deficit).TheAuthorityineffectreducedtheaggregatedebtserviceby$40.32millionandobtainedaneconomicbenefitof$31.18million.


35

June30,2012and2011



ThebondsrefundedwithDefeasanceCollateralhavebeenremovedfromthefinancialstatementsasaliabilityoftheAuthority.AsofJune30,2012and2011,theAuthorityhadFTSBondsrefundedwithDefeasanceCollateraltotaling$8.75billionand$7.76billion,respectively,ofwhich$1.85billionand$1.40billion,respectively,arestilltobepaidfromtheDefeasanceCollateralheldintheescrowaccountsondepositwiththeAuthority’sescrowTrustee.

DebtservicerequirementsasofJune30,2012,forFTSBonds,includingRecoveryBonds,payabletotheirmaturityareasfollows(inthousands):

YearendingJune30,

2013

2014

2015

2016

2017

2018 to 2022

2023 to 2027

2028 to 2032

2033 to 2037

2038to2042

TOTAL

(a) The variable interest rates used in this table were .29% on tax-exempt bonds and .45% on auction bonds, if variable interest is calculated at 5.00% on tax-

exempt and auction bonds per annum (which are the rates utilized for retention), the total interest would increase to $13.12 billion from the $11.30 billion in

the above table.

$ 198,215

200,470

198,725

88,765

75,730

475,825

1,121,405

1,140,465

81,340

–

$ 3,580,940

$ 438,225

590,780

673,630

819,105

863,590

4,502,555

3,360,195

2,534,345

2,385,895

1,209,430

$ 17,377,750

$ 118,464

108,213

97,953

90,224

86,307

384,249

266,890

86,249

3,435

–

$ 1,241,984

$ 722,072

721,413

698,716

671,665

639,606

2,701,490

1,938,831

1,219,720

640,856

98,838

$ 10,053,207

$ 316,679

308,683

296,678

178,989

162,037

860,074

1,388,295

1,226,714

84,775

–

$ 4,822,924

$ 1,160,297

1,312,193

1,372,346

1,490,770

1,503,196

7,204,045

5,299,026

3,754,065

3,026,751

1,308,268

$ 27,430,957

$ 1,476,976

1,620,876

1,669,024

1,669,759

1,665,233

8,064,119

6,687,321

4,980,779

3,111,526

1,308,268

$ 32,253,881

Principal

Principal

Interest (a)

Interest (a)

Total

Total

Total Debt Service

Senior Subordinate

InadditiontotheAuthority’sauthorizationtoissueFTSBonds,StatelegislationenactedinApril2006enablestheAuthoritytohaveoutstandingupto$9.4billionofBuildingAidRevenueBonds,notesorotherobligations(“BARBs”)forpurposesoffundingcostsofthefive-yeareducationalfacilitiescapitalplanforTheCity’sschoolsystemandcertainadministrativeexpenditures.AsofJune30,2012and2011,theAuthorityhad$5.31billionand$4.73billion,respectively,ofBARBsoutstanding.

Underthislegislation,theBARBsarepayablefromtheStatebuildingaidpayablebytheStateandassignedtotheAuthoritybyTheCity.TheseStateaidpaymentsaresubjecttoannualappropriationfromtheState.InaccordancewiththelegislationandtheIndenture,BARBsbondholdersdonothaveanyrighttothepersonalincometaxrevenuesorsalestaxrevenues.

OnSeptember10,2010,theAuthoritydeposited$81.33millionofretainedbuildingaidintoanescrowaccountwiththeAuthority’sTrusteeforthepaymentof$75.85millionofBARBsdueinfiscalyear2013.


36Notes to Financial Statements (continued)


Infiscalyears2012and2011,thechangesinBARBspayablewereasfollows(inthousands):

Tax-exemptBonds

BuildAmericaBonds


TOTAL BARBS PAYABLE

Tax-exemptBonds

BuildAmericaBonds


TOTAL BARBS PAYABLE

$ 4,334,100

295,750

100,000

$ 4,729,850

$ 4,221,155

–

–

$ 4,221,155

$ 550,000

–

100,000

$ 650,000

$ 254,250

295,750

100,000

$ 650,000

$ (71,190)

–

–

$ (71,190)

$ (65,455)

–

–

$ (65,455)

$ –

–

–

$ –

$ (75,850)

–

–

$ (75,850)

$ 4,812,910

295,750

200,000

$ 5,308,660

$ 4,334,100

295,750

100,000

$ 4,729,850

$ 211,898

22,909

2,613

$ 237,420

$ 207,838

–

–

$ 207,838

Total Interest

Payments FY 2012

Total Interest

Payments FY 2011









Principal Defeased

Principal Defeased

Issued/ Converted

Issued/ Converted

Principal Retired

Principal Retired

AsofJune30,2012,theinterestratesontheAuthority’soutstandingBARBsfixedratebondsrangedfrom2.00%to6.00%ontax-exemptbondsand4.80%to7.13%ontaxablebonds.

DebtservicerequirementsatJune30,2012,forBARBspayabletomaturityareasfollows(inthousands):

YearendingJune30,

2013

2014

2015

2016

2017

2018 to 2022

2023 to 2027

2028 to 2032

2033 to 2037

2038to2042

TOTAL

$ 9,880

108,675

113,960

119,775

127,800

725,695

906,300

1,170,475

1,501,400

524,700

$ 5,308,660

$ 272,616

269,112

264,921

260,298

255,110

1,182,794

989,527

715,839

369,145

43,073

$ 4,622,435

$ 282,496

377,787

378,881

380,073

382,910

1,908,489

1,895,827

1,886,314

1,870,545

567,773

$ 9,931,095

Principal

Interest (a)

Total

June30,2012and2011


37Notes to Financial Statements (continued)


AsofJune30,2012and2011,theAuthoritymaintaineditsrequireddebtserviceaccountsasfollows(inthousands):

RequiredforFTS

RequiredforBARBs

$ 5,725

$ 9,880

$ 12,155

$ 71,190

$ 170,922

$ 272,616

$ 190,488

$ 237,420

Principal

Principal

Interest

Interest

June 30, 2012 June 30, 2011

TheAuthorityheldapproximately$708.11millionand$764.23millioninexcessofamountsrequiredtoberetainedforFTSBondsdebtserviceundertheIndentureasofJune30,2012and2011,respectively.TheAuthorityheldapproximately$186.13millionand$277.70millioninexcessofamountsrequiredtoberetainedforBARBsdebtserviceundertheIndentureasofJune30,2012and2011,respectively.

6. UNRESTRICTED GRANT FROM THE CITY OF NEW YORK

Infiscalyears2012and2011,theAuthorityreceivedunrestrictedgrantsfromTheCityintheamountof$878.88millionand$789.70million,respectively.ThesefundsareusedtofunddebtservicerequirementsforFTSBondsandadministrativeexpensesduringthefiscalyearsendingJune30,2013and2012,respectively.TheCitygrantisreportedasanassignedfundbalanceinthegovernmentalfundsbalancesheets.

7. ADMINISTRATIVE COSTS

TheAuthority’smanagementfee,overheadandexpendituresrelatedtocarryingouttheAuthority’sduties,includingremarketingandliquidityfeesnotfundedfrombondproceedsorinvestmentearnings,arefundedfromthepersonalincometaxes,buildingaidrevenueandgrantrevenue.

8. SUBSEQUENT EVENTS

OnJuly19,2012,theAuthorityissued$850million,Fiscal2013SeriesS-1BARBsBonds;thetax-exemptproceedsofwhichwillbeusedtofundthecostsofthefive-yeareducationalfacilitiescapitalplanforTheCity’sschoolsystemandcertainadministrativeexpenditures.

OnAugust28,2012,theAuthorityissued$800million,Fiscal2013SeriesAFTSBonds,comprisedofSubseriesA-1,$100millionoftax-exemptbonds;SubseriesA-2,$150millionoftaxableQualifiedSchoolConstructionBonds;SubseriesA-3,$200millionoftaxablebondsandSubseriesA-4toA-7,$350millionoftax-exemptvariableratebonds.TheproceedsoftheFiscal2013AFTSBondswillbeusedforTheCity’scapitalprograms.TheAuthorityalsoissuedFiscal2013SeriesBFTSBonds;thetax-exemptproceedswereusedtorefundprioroutstandingbonds.

* * * * * *

June30,2012and2011


38Directors and Management

DIRECTORS

Mark Page Chairman,DirectorofManagementandBudget oftheCityofNewYork

David Burney CommissioneroftheDepartmentofDesign andConstructionoftheCityofNewYork

Christine Quinn SpeakeroftheCounciloftheCityofNewYork

David Frankel CommissionerofFinanceoftheCityofNewYork

John C. Liu ComptrolleroftheCityofNewYork

OFFICERS

Alan L. Anders ExecutiveDirector

F. Jay Olson Treasurer

Majorie E. Henning Secretary

Prescott D. Ulrey GeneralCounsel

Michele Mark Levine Comptroller

Robert Balducci DeputyComptroller

Kemraj Narine AssistantComptroller

Philip Wasserman DeputyTreasurer

Albert F. Moncure, Jr. AssistantSecretary

DIRECTOR OF MEDIA AND INVESTOR RELATIONS

Raymond J. Orlando 212.788.5875 [email protected]

THE NEW YORK CITY TRANSITIONAL FINANCE AUTHORITY

255GreenwichStreet,6thFloor,NewYork,NY10007

P212.788.5877|F212.788.9197|www.nyc.gov/tfa

Documents

TFA Annual Report 2012 - Welcome to NYC.gov...As of July 1, 2012, the TFA had $19.59 billion of Future Tax Secured Bonds (excluding Recovery Bonds) and $5.31 billion of Building Aid