NewTown Macon 2014-2015 Audit by NewTown Macon

NEWTOWN MACON, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended June 30, 2015 and 2014

CONTENTS Page INDEPENDENT AUDITOR’S REPORT…………………………..…………………... 1 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statements of Financial Position………………………..…………….. 3 Consolidated Statements of Activities………………………………………………. 5 Consolidated Statements of Cash Flows……………………………….…..………... 8 Notes to the Consolidated Financial Statements…………………………………….. 10

Howard, Moore & McDuffie, P.C.

Members Partnering for CPA Practice Success

CERTIFIED PUBLIC ACCOUNTANTS

American Institute of Certified Public Accountants

Telephone (478) 742-5317 Facsimile (478) 738-0038 www.hmmcpaga.com

Georgia Society of Certified Public Accountants

577 Mulberry Street, Suite 1610, Post Office Box 4547 Macon, Georgia 31208-4547

INDEPENDENT AUDITOR’S REPORT To the Board of Trustees NewTown Macon, Inc. and Subsidiaries We have audited the accompanying consolidated financial statements of NewTown Macon, Inc. (a nonprofit organization) and Subsidiaries, which comprise the consolidated statements of financial position as of June 30, 2015 and 2014, and the related consolidated statements of activities 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 internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s 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 audit 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 auditor’s 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 auditor considers 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 NewTown Macon, Inc. and Subsidiaries as of June 30, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Macon, Georgia October 14, 2015

NEWTOWN MACON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION June 30, 2015 and 2014 2015 ASSETS CURRENT ASSETS Cash and cash equivalents Unconditional promises to give, current (Note 2) Accounts receivable Notes receivable including interest (Note 5) Related-party notes receivable (Note 5) Inventory Prepaid expenses Due from Macon-Bibb County Total Current Assets OTHER ASSETS Cash held for long-term purposes Beneficial interest in Community Foundation Funds (Note 3) Beneficial interest in Community Foundation Funds - endowment (Note 4) Property and equipment, net of accumulated depreciation of $175,902 and $177,918, respectively (Note 6) Property held for improvement (Note 6) Unconditional promises to give, net of current (Note 2) Notes receivable, net of current (Note 5) Related-party notes receivable (Note 5) Debt issuance costs, net of accumulated amortization of of $13,583 and $9,056, respectively Utility deposits Total Other Assets TOTAL ASSETS

The accompanying notes are an integral part of these financial statements. 3

295,216 682,310 14,956 49,172 43,149 6,085 12,091 32,905 1,135,884

2014

602,317 689,760 73,459 100,532 3,360 9,551 23,919 29,949 1,532,847

45,116 467,888

1,195,403

2,086,202

2,302,512

462,520 719,970 755,127 2,653,072 1,270,037

331,237 719,970 1,349,493 2,534,684 961,724

67,917 55 8,527,904

72,444 55 9,467,522

$ 9,663,788

$ 11,000,369

NEWTOWN MACON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Continued) June 30, 2015 and 2014 2015 LIABILITIES CURRENT LIABILITIES Accounts payable Accrued salaries and benefits Deferred revenue Current portion long-term debt (Note 17) Total Current Liabilities

32,301 25,978 7,050 135,828 201,157

2014

69,997 22,733 110,711 203,441

LONG-TERM LIABILITIES Due to Macon-Bibb debt service fund (Note 17) Total Long-Term Liabilities

4,231,755 4,231,755

3,615,195 3,615,195

TOTAL LIABILITIES

4,432,912

3,818,636

NET ASSETS Unrestricted Undesignated Designated Total Unrestricted Net Assets Temporarily restricted Permanently restricted TOTAL NET ASSETS

3,123,946 70,604 3,194,550 536,326 1,500,000 5,230,876

3,635,388 1,143,396 4,778,784 902,949 1,500,000 7,181,733

$ 9,663,788

$ 11,000,369

TOTAL LIABILITIES AND NET ASSETS

The accompanying notes are an integral part of these financial statements. 4

NEWTOWN MACON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ACTIVITIES For the Years Ended June 30, 2015 and 2014 2015 CHANGES IN UNRESTRICTED NET ASSETS UNRESTRICTED REVENUES, GAINS AND OTHER SUPPORT Support Contributions Special Events Donated facilities and services Membership fees Program Services Government grants and performance contracts Georgia Sports Hall of Fame Rental income and other Investment return, net Total Unrestricted Revenues, Gains and Other Support NET ASSETS RELEASED FROM RESTRICTIONS Restrictions satisfied by payments TOTAL UNRESTRICTED REVENUES, GAINS AND OTHER SUPPORT EXPENSES Program Services Increasing Residents Transitional Property Live Downtown Loft Loan Fund Cherry Street Lane Other Growing Jobs Community Improvement District Macon Music Incubator Business Recruitment & Development Other

The accompanying notes are an integral part of these financial statements. 5

118,729 93,709 133,750

2014

218,964 18,274 79,265 85,000

267,154 64,528 270,340 18,643

288,161 71,065 233,515 15,517

966,853

1,009,761

626,368

525,915

1,593,221

1,535,676

19,302 3,409 141,141 29,601 231,584 425,037

109,368 27,476 140,228 59,750 183,243 520,065

4,421 20,917 12,224 150,089 187,651

9,985 108,060 118,045

NEWTOWN MACON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ACTIVITIES (Continued) For the Years Ended June 30, 2015 and 2014 2015 EXPENSES (Continued) Creating a Sense of Place Ocmulgee Heritage Trail Trolleys Promoting downtown's unique image and activity Advocating Progress Rail

338,509 69,583 1,280,814 1,688,906 6,500 6,500

Affiliates Georgia Sports Hall of Fame Gateway Initiative Fiscal Sponsor Macon Pops Fort Hawkins Total Program Expenses Supporting Services Management and general Fundraising Bad debt Total Supporting Services TOTAL EXPENSES INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS CHANGES IN TEMPORARILY RESTRICTED NET ASSETS Contributions Investment return, net Net assets released from restrictions by payment INCREASE (DECREASE) IN TEMPORARILY RESTRICTED NET ASSETS

The accompanying notes are an integral part of these financial statements. 6

2014 $

350,359 124,371 275,306 750,036 -

526,080 526,080

634,926 34,499 669,425

39,840 39,840

127,602 679,173 806,775

2,874,014

2,864,346

145,458 157,983 303,441

122,956 158,473 20,871 302,300

3,177,455

3,166,646

(1,584,234)

(1,630,970)

302,066 (42,321) 259,745 (626,368)

320,591 358,487 679,078 (525,915)

(366,623)

153,163

NEWTOWN MACON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ACTIVITIES (Continued) For the Years Ended June 30, 2015 and 2014

INCREASE (DECREASE) IN NET ASSETS NET ASSETS AT BEGINNING OF YEAR

2015 $ (1,950,857) 7,181,733

2014 $ (1,477,807) 8,659,540

NET ASSETS AT END OF YEAR

$ 5,230,876

The accompanying notes are an integral part of these financial statements. 7

7,181,733

NEWTOWN MACON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2015 and 2014

CASH FLOWS FROM (TO) OPERATING ACTIVITIES Increase (decrease) in net assets Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Contributions received by Community Foundation Expenses paid directly by Community Foundation Distributions received directly from Community Foundation (Gain) loss on investments at Community Foundation Discount on promises to give Depreciation and amortization (Gain) loss on disposal of property Property gifted to community Bad debt and forgiveness of debt (Increase) decrease in: Unconditional promises to give Accounts receivable Accrued interest Due from unrelated party Inventory Prepaid expenses Increase (decrease) in: Accounts payable Deferred revenue Accrued expenses NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM (TO) INVESTING ACTIVITIES Contributions received and restricted for long-term purposes Proceeds received from sale of real estate Cash disbursed in exchange for notes receivable Cash collected on notes receivable Cash paid for purchase of equipment and software NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES

The accompanying notes are an integral part of these financial statements. 8

2015

2014

$ (1,950,857)

$ (1,477,807)

(550,000) 28,122 1,449,278 16,426 (85,078) 13,389 9,000 16,335 -

(576,050) 28,943 1,178,850 (385,013) (65,352) 23,265 (39,817) 20,871

686,894 58,503 (20,663) (2,956) 3,466 11,828

971,910 (49,400)

(37,697) 7,050 4,747

(32,311) (27,177)

(342,213)

(384,324)

(45,116) (321,774) 90,495 -

823,601 (1,419,115) 298,197 (6,116)

(276,395)

(303,433)

(10,476) (7,741) 62,981

NEWTOWN MACON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) For the Years Ended June 30, 2015 and 2014 2015 CASH FLOWS FROM (TO) FINANCING ACTIVITIES Payments to Bibb County debt service fund Proceeds from bond fund NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND EQUIVALENTS, beginning of year CASH AND EQUIVALENTS, end of year

(21,510) 333,017

2014 $

(20,373) 887,831

311,507

867,458

(307,101) 602,317

179,701 422,616

295,216

602,317

122,619

91,839

Building acquired with bond proceeds

165,479

425,000

Interest accrued on notes receivable also due to Bibb County debt service reserve fund

163,188

106,805

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION Cash paid for interest Noncash investing and financing activities:

The accompanying notes are an integral part of these financial statements. 9

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1. NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities NewTown Macon, Inc. (the Organization) located in Macon, Georgia is a nonprofit organization dedicated to implementing a downtown planning and capital improvement program. The Organization has four wholly-owned subsidiaries to facilitate various projects. The Subsidiary, Urban Development Concepts, LLC was formed to manage the building renovation bond projects described in Note 17. The Subsidiaries, UDC Management, LLC, UDC Realty - Poplar Street, LLC, and UDC Realty, LLC were formed to own and manage the real estate that is used to carry out some of the projects listed below. Support for the Organization’s Loft Loan Fund comes from proceeds of the County Revenue Bonds, Series 2012. Support for the Ocmulgee Heritage Trail comes primarily from grants, third party reimbursements, and donor contributions. Support for the Georgia Sports Hall of Fame and other projects comes from donor contributions, program service revenue, and the local government. NewTown Macon, Inc. is also focused on increasing residents, growing jobs and creating a sense of place in downtown Macon. In its third revitalization phase beginning in 2013, the Organization expects to increase commercial occupancy rates by 25%, add 125 apartments, maintain at least 85% occupancy rates in existing apartments, and leverage at least $27 million in improvements to target blocks. As of June 30, 2015, commercial occupancy rates increased 17% for a total of 69%, 163 lofts were added, 97% occupancy was achieved, and $23.3 million in improvements to target blocks were leveraged. The Organization also managed the Georgia Sports Hall of Fame. The 43,000 square foot museum houses over 3,000 artifacts, honors more than 300 inductees, and is the country’s largest state sports museum. Other projects include: Increasing Residents:  Transitional Property Fund  Live Downtown Macon website  Cherry Street Lane Parking & Commercial Facility  Loft Loan Fund (bond projects)  Marketing and consultation to promote residential developments Growing Jobs:  Business recruitment and development  Promotion of downtown properties; marketing support for downtown; and property development services

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1. NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Nature of Activities (continued) Creating a Sense of Place:  Amerson River Park  Ocmulgee Heritage Trail  Macon Trolleys  Promoting downtown’s unique image and activity Affiliates  Gateway Initiative  Sports Hall of Fame Fiscal Sponsor  Fort Hawkins  Macon Pops Advocating Progress  Rail Basis of Accounting NewTown Macon, Inc. and Subsidiaries prepares its financial statements in accordance with U.S. generally accepted accounting principles. This basis of accounting involves application of accrual accounting; consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. Promises to Give and Other Receivables Unconditional promises to give are recorded when promised by a donor. Unconditional promises to give due in the next year are reflected as current promises to give and are recorded at their net realizable value. Unconditional promises to give due in two years and beyond are reflected as long-term promises to give and are recorded at the present value of their net realizable value, discounted using risk-free interest rates applicable to the years in which the promises are received. Management directly writes off potentially uncollectible promises to give during the year in which those promises are deemed uncollectible. Management believes that the use of the direct write-off method approximates the results that would be presented if an allowance for doubtful pledges was recorded. In addition, management expects uncollected pledges to be insignificant. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management directly writes off potentially uncollectible accounts during the year in which all collection efforts have been exhausted. Management believes all of the accounts receivable are fully collectible. Therefore, no allowance for doubtful receivables has been recorded.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1. NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation The Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Cash and Cash Equivalents For the purpose of the statements of cash flows, the Organization considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents, excluding cash restricted or designated for long-term purposes. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Buildings, Equipment, Improvements, and Depreciation Buildings, equipment, and improvements are stated at cost less accumulated depreciation. Depreciation is being provided by use of the straight-line method over the estimated useful lives of the related assets ranging from three to thirty-nine years. All property with a useful life of three years or greater and a cost greater than $2,500 is capitalized. Property held for improvement is not depreciated until placed into operation. Collections Collections items consist of music memorabilia that is held for educational and curatorial purposes. Each of the items is cataloged, preserved, and cared for. Collection items are recorded at cost if purchased and at fair value at date of accession if donated. Donated Equipment and Services Donated property and equipment are reflected as contributions in the accompanying financial statements at their estimated fair value at the date of donation. Such donations are reported as increases in unrestricted net assets unless the donor has restricted the donated assets to a specific purpose. Donated services are recognized as contributions if the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are preformed by people with those skills, and would otherwise be purchased by the Organization.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1. NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Expense Allocation Directly identifiable expenses are charged to programs and supporting services. Expenses related to more than one function are charged to programs and supporting services on the basis of periodic time and expenses studies. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Organization. Debt Issuance Costs Debt issuance costs relating to long-term debt are amortized over the term of the related debt (18 years) using the straight line method and are presented on the consolidated statement of financial position net of amortization. Income Taxes NewTown Macon, Inc. and Subsidiaries is exempt from federal income taxes under Internal Revenue Code Section 501(c)(3). However, income from certain activities not directly related to the Organizationâ&#x20AC;&#x2122;s tax-exempt purpose is subject to taxation as unrelated business income. There was no unrelated business taxable income for the years ended June 30, 2015 and 2014. In addition, the Organization qualifies for the charitable organization contribution deduction under section 170(b)(1)(A) and has been classified as an organization that is not a private foundation within the meaning of Section 509(a)(2). The Organization believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements. The Organizationâ&#x20AC;&#x2122;s federal and state information returns are subject to examination by the Internal Revenue Service (IRS) and state taxing authorities for three years after they are filed. Investments and Related Income The Organization carries investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position. Unrealized gains and losses are included in the consolidated statements of activities. Inventories Inventories consist of merchandise for the Georgia Sports Hall of Fame gift shop and are stated at cost.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1. NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Restricted and Unrestricted Revenue Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire (that is, when a stipulated time restriction ends or purpose restriction is accomplished) in the reporting period in which the revenue is recognized. All other donor-restricted contributions and revenues are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statement of activities as net assets released from restrictions. Principles of Consolidation The consolidated financial statements include the accounts of NewTown Macon, Inc. and its wholly owned subsidiaries, UDC Realty, LLC, UDC Management, LLC, UDC Realty Poplar Street, LLC, UDC Realty â&#x20AC;&#x201C; Terminal Avenue, LLC, and Urban Development Concepts, LLC. All material interorganization transactions have been eliminated. Reclassifications Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements. Subsequent Events According to the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 855-10-50-1, management is required to disclose the date through which subsequent events have been reviewed. Accordingly, management has reviewed subsequent events through October 14, 2015, which corresponds with the date that the financial statements were available to be issued. NOTE 2. PROMISES TO GIVE The Organization began a fundraising campaign during the year ended June 30, 2013 for funding of the projects described in Note 1. The contributions are generally available for unrestricted use on any of the Organizationâ&#x20AC;&#x2122;s projects, unless specifically restricted by the donor for a certain project. Promises to give to be received more than one year after June 30, 2015 are discounted at 4.5%.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 2. PROMISES TO GIVE (Continued) Unconditional promises to give are as follows at June 30: 2015 $ 682,310 793,837 1,476,147 (38,710) $ 1,437,437

Receivable in less than one year Receivable in one to five years Discount to present value Net unconditional promises to give

2014 $ 689,760 1,473,280 2,163,040 (123,787) $ 2,039,253

NOTE 3. BENEFICIAL INTEREST IN COMMUNITY FOUNDATION FUNDS During the year ended June 30, 2015, NewTown Macon, Inc. invested contributions directly into six funds maintained by The Community Foundation of Central Georgia. Under the agreement with The Community Foundation, NewTown Macon, Inc. periodically requests distributions from the funds for its program services. Some funds are held for long-term projects while others are required to be maintained in separate accounts due to donor restrictions. Money held in the funds is invested in money market accounts and pooled funds which are stated at quoted market value. Pooled funds consist of bonds, equity securities, fixed income securities, and cash and equivalents. Investment return is presented net of investment management fees of $2,481 and $2,605 in the consolidated statements of activities for the years ended June 30, 2015 and 2014, respectively. NOTE 4. ENDOWMENT FUNDS The Organizationâ&#x20AC;&#x2122;s endowment represents a donor-restricted fund for maintenance of the Ocmulgee Heritage Trail. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Interpretation of Relevant Law The Organization has interpreted the State Prudent Management of Institutional Funds Act (SPMIFA) as requiring the preservation of the fair value of the original gift as of the date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Organization classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Organization in a manner consistent with the standard of prudence prescribed by SPMIFA. 15

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 4. ENDOWMENT FUNDS (Continued) In accordance with SPMIFA, the Organization considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various funds (2) the purposes of the donor-restricted endowment funds (3) general economic conditions (4) the possible effect of inflation and deflation (5) the expected total return from income and the appreciation of investments (6) other resources of the Organization (7) the Organizationâ&#x20AC;&#x2122;s investment policies Donor-restricted Endowment Funds The Organization separately accounts for temporarily restricted income earned on the permanently restricted fund as well as the amounts expended from the temporarily restricted earnings. All temporarily restricted income is subject to the purpose restriction under the SPMIFA. If due to market conditions or appropriations, the fair value of accumulated temporarily restricted earnings falls below zero, this amount is reclassified to unrestricted net assets until the deficiency is corrected. Changes in donor-restricted endowment funds for the year ended June 30, 2015 are as follows: Permanently Temporarily Restricted Restricted Total Endowment net assets-beginning

$ 1,500,000

$ 802,512

$ 2,302,512

53,655

(94,965)

Total investment return

(41,310)

Amounts appropriated for expenditure

(175,000)

Investment return Investment income, net Realized and unrealized appreciation (depreciation)

Endowment net assets-ending

$ 1,500,000 $ 586,202

$ 2,086,202

Net assets related to the endowment earnings are deemed to be released once money has been spent from operating funds for the restricted purpose even though those funds have not yet been appropriated from the endowment fund.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 4. ENDOWMENT FUNDS (Continued) Funds with Deficiencies From time to time, the fair value of assets associated with the donor-restricted endowment funds may fall below the level that the donor or SPMIFA requires the Organization to retain as a fund of perpetual duration. In accordance with generally accepted accounting principles, deficiencies of this nature are reported in unrestricted net assets. There were no deficiencies associated with the donor-restricted endowment fund during the years ended June 30, 2015 or 2014. Return Objectives and Risk Parameters The Organization has adopted investment and spending policies, approved by the Board of Directors, for endowment assets that attempt to provide a predictable stream of funding for maintenance of the Ocmulgee Heritage Trail while also maintaining the purchasing power of the endowment assets over the long-term. Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income as well as capital appreciation, which exceeds the annual distribution with acceptable levels of risk. Endowment assets are invested in a well diversified asset mix, which includes equity and debt securities, that is intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make an annual distribution of 4%, while growing the funds if possible. Endowment assets include those assets of donor-restricted funds that the Organization must hold in perpetuity or for a donor-specified period. Under this policy, the endowment assets are invested in a manner to minimize the risk of large losses, preserve principal and increase the inflation adjusted value of the investment over time. This objective is to preserve the real purchasing power of the endowment by seeking long-term returns which either match or exceed the spending rate plus inflation. Spending Policy The Organization has a policy of appropriating for distribution each year 4% of its endowment fund’s account value based on a three-year rolling average. In establishing this policy, the Organization considered the long-term expected return on its investment assets and the possible effects of inflation. This policy is consistent with the Organization’s expectation that, over time, the total real return (return net of inflation) from investments will exceed the endowment’s pay-out rate, thus allowing for real growth of endowment assets.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 5. NOTES RECEIVABLE The following schedule outlines the principal and interest amounts owed by various parties to UDC Realty, LLC (the Subsidiary): June 30, 2015 Accrued Note Principal Interest Total Unrelated Party A $ 405,949 $ $ 405,949 B 54,546 54,546 C 393,500 21,480 414,980 D1 1,810,340 16,429 1,826,769 D2 D3 2,664,335 37,909 2,702,244 Related Party E 800,000 F 470,000 1,270,000 Total

$ 3,934,335

June 30, 2014 Accrued Principal Interest $

419,340 57,559 393,500 1,204,941 124,740 377,707 2,577,787

19,645 22,375 5,473 9,936 57,429

Total $

419,340 57,559 413,145 1,227,316 130,213 387,643 2,635,216

39,469 3,717 43,186

839,469 473,717 1,313,186

523,512 439,993 963,505

1,579 1,579

523,512 441,572 965,084

$ 81,095

$ 4,015,430

$ 3,541,292

$ 59,008

$ 3,600,300

The payment terms for the notes receivable issued by the Subsidiary as described below are approximate. Variables such as total loan proceeds, changes in interest rates, and timing of repayment will affect the monthly payments and length of the loan period. A - On June 25, 2013, the Subsidiary sold three buildings to a former tenant in exchange for a note receivable totaling $430,000. The mortgage bears interest at a rate of 5%. Monthly principal and interest payments are $2,838 starting September 23, 2013. The remaining principal and interest are due August 1, 2018. The note is collateralized by the buildings. The Subsidiary also assigned its lease contracts with other tenants on the properties to the buyer. B - On February 2, 2012, the Subsidiary loaned $60,000 to an unrelated party for renovation of a building in downtown Macon. Under the original note, the interest rate was 3% and monthly payments were $414 starting March 2, 2012. Interest and principal payments were made on the note until the loan agreement was amended June 1, 2015. Under the new agreement, the note bears interest at a rate of 5.05% until June 1, 2016 when it changes to 2% above the rate payable on the Series 2012 bonds described in Note 18. Interest only payments began June 1, 2015, and monthly principal and interest payments of $455 begin June 1, 2016. The final principal and interest payment is due April 1, 2030. The note is a second lien mortgage collateralized by the building under renovation. 18

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 5. NOTES RECEIVABLE (continued) C – During the year ended June 30, 2014, the Subsidiary sold a building for renovation to an unrelated party in exchange for a note receivable totaling $393,500. The note bears interest at a rate of 5.05% until June 1, 2016 when it changes to 2% above the rate payable on the Series 2012 bonds described in Note 18. Interest only payments began August 1, 2014, and monthly principal and interest payments of $3,445 begin June 1, 2016. The final principal and interest payment is due April 1, 2030. The note is a second lien mortgage collateralized by the building under renovation. D – As of the year ended June 30, 2015, the Subsidiary loaned a total of $1,918,927 to an unrelated party for renovation of a building in downtown Macon. The loan was originally represented by three separate notes receivable which were consolidated into one note when the loan was refinanced one February 23, 2015. The first note was dated June 29, 2012 with an interest rate of 4.05%. The second note was dated May 29, 2013 with an interest rate of 5.05%. The third note was dated November 8, 2013 with an interest rate of 5.05%. A payment of principal and interest totaling $260,634 was received January 17, 2014 and applied to the first note. Under the refinance agreement, the new note bears interest at a rate of 5.05% until June 1, 2016, and then changes to 2% above the rate payable on the Series 2012 bonds described in Note 18. Interest only payments began May 1, 2015, and monthly principal and interest payments of $15,204 begin June 1, 2016. The final principal and interest payment is due April 1, 2030. The note is a second lien mortgages collateralized by the building under renovation. Additional collateral includes a pledged membership interest in the developer’s company and a power of attorney to transfer the membership interest. E - During the years ended June 30, 2015 and 2014, the Subsidiary loaned a total of $800,000 to a board member’s company for renovation of a building in downtown Macon. The note bears interest at a rate of 5.05% until June 1, 2016, and then changes to 2% above the rate payable on the Series 2012 bonds described in Note 18. Interest only payments begin September 1, 2015, and monthly principal and interest payments of approximately $7,040 begin June 1, 2016. The final principal and interest payment is due April 1, 2030. The note is a second lien mortgage collateralized by the building under renovation. F - As of the year ended June 30, 2015 the Subsidiary loaned a total of $470,000 to a board member’s company for renovation of a building in downtown Macon. The note bears interest at a rate of 4.05% until June 1, 2016, and then changes to 1% above the rate payable on the Series 2012 bonds described in Note 18. Interest only payments began August 1, 2014, and monthly principal and interest payments of $3,666 begin June 1, 2016. The final principal and interest payment is due April 1, 2030. The note is a second lien mortgage collateralized by the building under renovation.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 6. PROPERTY, EQUIPMENT, AND IMPROVEMENTS Property, equipment, and improvements used in operations consisted of the following at June 30:

Buildings Land Other depreciable property Equipment Building and leasehold improvements Furniture and fixtures Collections Trolleys

Less accumulated depreciation $

2015 217,445 209,373 25,555 21,281 35,249 21,351 22,768 85,400 638,422 (175,902) 462,520

2014 99,962 191,213 25,555 27,954 21,749 25,554 31,768 85,400 509,155 (177,918) 331,237

Depreciation expense totaled $8,861 and $18,737 for the years ended June 30, 2015 and 2014, respectively. Property held for improvement consisted of the following at June 30: Buildings Building improvements Land

2015 51,362 98,608 570,000 719,970

2014 51,362 98,608 570,000 719,970

Property held for improvement is not in service, and therefore, not subject to depreciation. NOTE 7. DONATED SERVICES, MATERIALS, AND FACILITIES NewTown Macon, Inc. and Subsidiaries received donated professional services which included consulting fees, advertising and technical assistance. Donated services totaled $93,709 and $79,265 for the years ended June 30, 2015 and 2014, respectively.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 8. RESTRICTIONS ON NET ASSETS Temporarily restricted net assets were as follows for June 30:

Park and trail maintenance Otis Redding Memorial Building Renovation Amerson River Park Walnut Creek Extension Fort Hawkins Commission Other

2015 333,965 42,557 12,886 57,347 75,000 979 13,592 536,326

2014 767,430 44,457 41,114 37,991 6,233 5,724 902,949

Restricted funds are represented by investments in the Community Foundation funds, promises to give and cash. NOTE 9. DESIGNATIONS OF NET ASSETS The board of directors of NewTown Macon, Inc. and Subsidiaries designated net assets for the following purposes as of June 30: 2015 Cultural institution Georgia Sports Hall of Fame Fort Hawkins Commission

70,604 70,604

2014 $ 1,000,000 49,586 93,810 $ 1,143,396

NOTE 10. OPERATING LEASES The Organization leases office space at 479 Cherry Street in Macon, Georgia. The Organization leases the office for $1,604 on a month-to-month basis. Until December 2013, the Organization leased the Georgia Sports Hall of Fame building for $10,836 per month. The Development Authority of Bibb County purchased the building in December 2013, and NewTownâ&#x20AC;&#x2122;s subsidiary, Urban Development Concepts, LLC (UDC) entered into a new lease agreement with that local entity. The lease term was 40 years with monthly payments of $200 beginning January 1, 2014. The lease was cancelled September 8, 2015 when the building was sold to the Georgia Sports Hall of Fame which became a separate nonprofit organization shortly before that date. Rent expense for the office space and building totaled $21,650 and $85,465 for the years ended June 30, 2015 and 2014, respectively.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 11. CONCENTRATION OF CREDIT RISK At times, cash balances held at banks and financial institutions may exceed federally insured amounts. Deposits held in all accounts at the same bank by the same owner are aggregated, and the combined total is insured up to $250,000. Uninsured cash totaled $-0- and $33,273 as of June 30, 2015 and 2014, respectively. The Organization believes it mitigates this risk by depositing cash in major financial institutions. NOTE 12. COMPENSATED ABSENCES Full and part-time employees who work at least 20 hours per week are eligible to earn and use vacation time. Employees begin earning vacation time once they have completed their first full month of employment. Each employee may accrue up to thirty days vacation. Accrued vacation hours are payable upon termination of employment. Accrued vacation was $24,464 and $21,233 for the years ended June 30, 2015 and 2014, respectively. Employees are not paid for unused sick time upon termination; therefore no accrual has been made. NOTE 13. EMPLOYEESâ&#x20AC;&#x2122; RETIREMENT PLAN On July 1, 2001, the Organization began a 401(k) retirement plan. Under the plan employees may defer 3% to 22% of their salary through payroll deductions. NewTown Macon, Inc. matches employee contributions up to 50% of the contribution, not to exceed 6% of the employeeâ&#x20AC;&#x2122;s salary. The Organization paid approximately $12,560 and $13,282 in matching contributions to the plan during the year ended June 30, 2015 and 2014, respectively. NOTE 14. CAFETERIA PLAN On April 1, 2004, the Organization began a flexible benefits plan. The purpose of the Plan is to provide eligible employees a choice between cash and the specified welfare benefits described in the Plan Information Summary. Pre-tax contribution elections under the Plan are intended to qualify for the exclusion from income provided in Section 125 of the Internal Revenue Code of 1986. There were no administrative expenses associated with the flexible benefits plan. NOTE 15. FAIR VALUE MEASUREMENTS FASB ASC 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows on the next page.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 15. FAIR VALUE MEASUREMENTS (Continued) Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. The assetâ&#x20AC;&#x2122;s and liabilityâ&#x20AC;&#x2122;s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Assets at fair market value were as follows as of June 30, 2015: Quoted Prices in Active Markets (Level 1)

Fair Value Beneficial interest in Community Foundation Funds: Fixed income funds Domestic bonds International bonds Growth equity securities Aggressive growth equity securities

Beneficial interest in Community Foundation Funds - endowment funds: Fixed income funds Domestic bonds International bonds Growth equity securities Aggressive growth equity securities Total assets at fair value

425,756 7,022 2,341 21,279 11,490 467,888

20,862 344,223 114,741 1,043,101 563,275 2,086,202

$ 2,554,090

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 15. FAIR VALUE MEASUREMENTS (Continued) Assets at fair market value were as follows as of June 30, 2014:

Beneficial interest in Community Foundation Funds: Fixed income funds Domestic Bonds International bonds Growth equity securities Aggressive growth equity securities Total assets at fair value Beneficial interest in Community Foundation Funds - endowment funds: Fixed income funds Domestic Bonds International bonds Growth equity securities Aggressive growth equity securities Total assets at fair value

Fair Value

Quoted Prices in Active Markets (Level 1)

$ 1,151,391 7,335 2,445 22,229 12,003 1,195,403

23,025 379,915 126,638 1,151,256 621,678 2,302,512

$ 3,497,915

NOTE 16. RELATED PARTIES The Organization held a note receivable for one board member’s company totaling $473,717 and $441,572 for the years ended June 30, 2015 and 2014, respectively. The Organization held a note receivable for another board member’s company totaling $839,469 and $523,512 for the years ended June 30, 2015 and 2014, respectively. The two notes relate to the Organization’s Loft Loan Fund program. A board member is a member of a partnership that has a lease contract with the Organization. The Organization was reimbursed by the partnership $11,370 and $20,232 in losses related to the lease contract for the years ended June 30, 2015 and 2014, respectively. Another board member was paid $47,880 in commission related to the sale of a building during the year ended June 30, 2014. A portion of the commission was donated back to the Organization.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 17. COMMITMENTS Due to Debt Service Fund and Bond Project Management As part of a private/public partnership effort to renovate, rehabilitate and reconfigure several buildings in downtown Macon, on June 1, 2012, NewTown’s subsidiary Urban Development Concepts, LLC (the Subsidiary) entered into a management agreement with the Development Authority of Bibb County (the Authority) to manage those projects. The projects will be partially funded from County Revenue Bonds, Series 2012 the proceeds of which will not exceed $5,000,000. The Subsidiary’s responsibilities under the agreement include the following:          

Selecting the properties for development Developing the financial structure for the projects Taking on the role of point entity for developing the managed properties Supervising the design, construction contracts, plans, and specifications associated with the development of the managed properties Making loans or bridge loans with respect to the managed properties from requisitioned proceeds from the Bonds Approving disbursements of the proceeds of the Bonds to the contractors engaged with respect to the managed properties Overseeing the operations of the various dwelling units and commercial businesses as the various elements of the managed properties are placed in service Handling payment of expenses of the managed properties Collecting loan payments from the properties Remitting collections to the County for payment of debt service on the bonds.

The management agreement between the Authority and the Subsidiary names the Subsidiary as guarantor of the debt. In addition, because part of the Subsidiary’s contractual obligations under the agreement is to collect loan payments from property owners and remit the payments to the County, the Subsidiary is liable for repayment to the Bibb County debt service reserve fund of all bond proceeds that have been disbursed and the accrued interest on those proceeds. Interest accrues at the rate of 3.04% until June 1, 2016 at which time the bonds will be remarketed and the interest rate may increase, but will not exceed 8%. The liability is presented on the consolidated statements of financial position as due to Bibb County debt service fund. In the event that property owners default on their loan agreements with the Subsidiary, and the Subsidiary cannot obtain sufficient collateral from the owners, the Subsidiary may be required to satisfy the debt service fund obligation from its assets. Based on information gathered as part of its monitoring of risks, the Subsidiary’s management believes that the risk of default by property owners is at least reasonably possible. However, the Subsidiary’s management works closely with the property owners so that management can be immediately informed when problems arise. Additionally, management agreements with those owners stipulate an open dialogue throughout the project as well as financial transparency. Management believes these efforts partially mitigate the risks associated with its guarantee of the debt. 25

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 17. COMMITMENTS (Continued) As described in Note 5, the Subsidiary had approved and issued loans to property owners totaling $3,642,427 for building renovation as of June 30, 2015. The Subsidiary utilized bond proceeds totaling $135,945 for the purchase of, and improvements to, the Georgia Sports Hall of Fame building. The Subsidiary acquired a building for downtown loft construction with bond proceeds totaling $165,777 during the year ended June 30, 2015. In addition, the Subsidiary is responsible for repayment of bond issuance costs, interest and legal fees totaling $156,487 paid from the bond proceeds. Based on the total bond proceeds issued through June 30, 2015, future payments that the Subsidiary will be required to remit to the debt service reserve fund are as follows: June 30, 2016 2017 2018 2019 2020 Thereafter

Principal $ 275,000 285,000 295,000 305,000 2,940,636 $ 4,100,636

Interest $ 115,324 $ 125,434 117,074 108,410 99,442 374,935 $ 940,619 $

Total 115,324 400,434 402,074 403,410 404,442 3,315,571 5,041,255

Bibb County Bond Revenue, Series 2012 provides for a total of $5,000,000 proceeds available for the projects. As additional amounts are disbursed, the schedule of payments will change. The above schedule also assumes that interest payments will be made monthly. The schedule is based on the terms of the bond document. The liability recognized in the statements of financial position is comprised of draws from the bond fund and interest accrued on the related notes receivable for loft owners. Under the management contract with the Development Authority of Bibb County, amounts collected from the notes receivable are required to be set aside for remittance to the Countyâ&#x20AC;&#x2122;s debt service reserve fund for payment of the bonds. The difference between the totals in the schedule above and the liability on the statements of financial position is the interest that has not yet accrued on the loft bond fund borrowings by loft owners. NOTE 18. SUBSEQUENT EVENTS As mentioned in Note 10, the Georgia Sports Hall of Fame became a nonprofit organization separate and independent from NewTown Macon, Inc. and Subsidiaries in September 2015. During the same month, the Development Authority of Bibb County deeded the museum building and land to the subsidiary Urban Development Concepts, LLC. The Subsidiary in turn sold the building to the Georgia Sports Hall of Fame in exchange for a note receivable totaling $186,653. The note bears interest at a rate of 5.05% until June 1, 2016, and then changes to 2% above the rate payable on the Series 2012 bonds described in Note 17.

NEWTOWN MACON, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 18. SUBSEQUENT EVENTS (Continued) Interest only payments begin October 1, 2015, and monthly principal and interest payments of approximately $1,560 begin June 1, 2016. The final principal and interest payment is due April 1, 2030. The note is collateralized by a deed to secure debt on the property, all fixtures and improvements, and assignment of any lease income from the property. In addition, NewTown Macon, Inc. and Subsidiaries retain the right to reclaim the property in the event that it ceases to be used for the Georgia Sports Hall of Fame. In July 2014, Urban Development Concepts, LLC (the Subsidiary) approved a letter of commitment to loan $500,000 to a related party for renovation of a building in downtown Macon. The Subsidiary also approved a letter of commitment to loan $100,000 to an unrelated party for renovation of a building in downtown Macon. Assuming both parties accept the terms of the loans, these buildings will become the tenth and eleventh of the bond projects described in Notes 5 and 17. As of the date of this report, Macon-Bibb and Urban Development Authority have approved the issue of $10 million in new bonds which are expected to be available in January 2016. Half of the bonds will be used to refinance the previously loaned $5 million described in Note 17 at a fixed interest rate. The other $5 million will be used to fund loans for new loft projects. NOTE 19. LITIGATION As of the date of this report, a lawsuit is pending against NewTown Macon, Inc. for personal injury. Although NewTown Macon, Inc. is insured for this type of claim, it is at least reasonably possible that the case may be settled for more than the limits of the insurance liability policy. However, because no monetary amount for damages has been disclosed by the plaintiffs, the range of loss, if any, cannot be estimated at this time.