Finance Committee Meeting

December 13, 2006

Objectives

z Review interim cash reporting limitations

z Review 1st and 2nd Quarter FY Performance
z Review Significant Variances to Budget
z Forecast events driving performance for the
balance of Fiscal Year 2007
Cash Reporting Limitations

z Interim Financials based on “Actual Cash” distributions for the period

z Quarterly reporting covers the period from April, 2006 through September,
2006 and does not capture current “pay the bills”, as accounting entries not are
not made until after they are approved

z Annual audits based on accrual basis, not cash basis, as requested

z Cash Reporting has several key flaws:

– Bills often lag well behind when service was rendered
– One invoice often covers multiple periods
– Monthly treatment will not match up with year end audited statements

z This interim update is being provided consistent with Accountant’s

recommendations for Quarterly review of expenditures
1st Quarter Performance Summary

z Favorable across all subtotals vs. %

budget Actual Variance Diff.
z Significant favorable capital
variance, primarily due to schedule Revenues 623,330 16,323 2.7%
timing
z Operating – Unfavorable property
management and interest expenses Expenses 242,147 17,229 6.6%
offset by lower solicitor fees and
advertising expenses
z Construction Management and
Architect fees also favorable; Net 381,183 33,552 9.7%
offsetting unfavorable business Operating
advisory fees and pre-opening
expenditures Income
z Cash controls in place to match
capital sources with uses Capital 1.146M 4.852M 80.9%
2nd Quarter Performance Summary

% z Slightly lower than projected

Actual Variance Diff. revenues drive unfavorable NOI
variance
Revenues 1.052M (26,206) -2.4% z Significant favorable capital
variance, primarily due to
schedule timing
z Operating – Unfavorable building
Expenses 205,800 (8,954) -4.5% utilities, surveys and advertising
offset by lower solicitor fees and
public relations
Net 846,590 (35,160) -4.0% z Special counsel fees unfavorable
Operating as such expenditures were
Income
unanticipated within the budget
z Other capital categories favorable
as cash controls in place to
Capital 658,092 7.215M 91.6% match capital sources with uses
FY 2007 Forecast Variables
z Access to Bond proceeds extended from May, 2006 to January,
2007
z Approximately $2.2M paid by RACL/PSP for Phase 1 work to
be recovered during January, 2007
z Existing payables to be extinguished at bond remarketing
z Construction costs ramp up starting February, 2007
z FY 2008 budget (forthcoming) will better capture current draw
schedule
z Advisory and Legal fees to be reduced during the construction
period
z Structured approach going forward with bank covenants and
controls
Summary

z Cash reporting methods pose limitations vs. accrual

method employed by auditors
z Matching capital sources with uses achieved
effective LCCCA cash management
z Budgeted vs. Actual construction expenditures
primarily attributable to favorable capital budget
z 1st half FY demonstrates that a $9,883 unfavorable
revenue variance contributed to $1,609 unfavorable
NOI variance (0.1%)